1. Bail or Jail (The Hindu)
2.Where are the jobs? (Live Mint)
3.Should agricultural income be taxed? (The Hindu)
1.Bail or Jail (The Hindu)
Synoptic line: It throws light on the delays in granting bail and social issues associated with it. (GS paper II)
- Inconsistency in bail system may be one of the reasons for the overcrowding of prisons. This means that prisons are buckling under the weight of inmate population. According to the Prison Statistics of India, the prison occupancy stands at 114 per cent.
- Hence, the law commission recommended to the government amendments to the bail provisions in the Criminal Procedure Code with emphasis on the early release on bail of undertrials.
- Bail is broadly used to refer to the release of a person charged with an offence, on his providing a security that will ensure his presence before the court or any other authority whenever required.
- The monetary value of the security, known also as the bail, or, more accurately, the bail bond, is set by the court having jurisdiction over the prisoner. The security may be cash, the papers giving title to property, or the bond of private persons of means or of a professional bondsman or bonding company.
- Courts have greater discretion to grant or deny bail in the case of persons under criminal arrest, e.g., it is usually refused when the accused is charged with homicide.
- The Criminal Procedure Code, 1973 (Cr.P.C. hereinafter), does not define bail, although the terms bailable offence and non-bailable offence have been defined in section 2(a) Cr.P.C.
Position with regard to India
- The Law Commission, in its 268th Report, highlights the problem in getting bail by remarking that it has become the norm for the rich and powerful to get bail with ease, while others languish in prison.
- Commission, headed by former Supreme Court judge B.S. Chauhan, grimly observes that the existing system of bail in India is inadequate and inefficient to accomplish its purpose.
- The main reason that 67% of the current prison population is made up of under-trials is the great inconsistency in the grant of bail. Even when given bail, most are unable to meet the onerous financial conditions to avail it.
Recommendation of law commission
- The Supreme Court had noticed this in the past, and bemoaned the fact that poverty appears to be the main reason for the incarceration of many prisoners, as they are unable to afford bail bonds or provide sureties.
- The Commission’s report recommending a set of significant changes to the law on bail deserves urgent attention.
- It recommended that undertrials who have completed one-third of the maximum sentence for offences up to seven years be released on bail. Those who are awaiting trial for offences punishable with imprisonment of more than seven years, should be bailed out if they have completed one-half of their sentence.
- The Commission said new legal provisions for remission should be included to cover those undertrials who have already endured the full length of the maximum sentence. Prolonged periods in prison where undertrials and convicts were not segregated would only make hardened criminals of the former, it said.
- By sheer statistics, the report made a case for introducing urgent amendments to rescue undertrials. It said a majority of them (70.6 per cent) are illiterate or semiliterate and belong to socio-economically marginalised groups. Sixty-seven per cent of the prison population is awaiting trial.
- The Commission quoted an expert study which said that a majority of the arrests are for very minor prosecutions. Over 60 per cent of arrests were unnecessary and such arrests accounted for 42.3 per cent of jail expenditure.
- A perusal of the above cases highlights the strong anti-poor bias of the Indian criminal justice system. Even though the courts in some cases have tried to intervene and also have laid down certain guidelines to be followed but unfortunately nothing has been done about it. There is also a strong need felt for a complete review of the bail system keeping in mind the socio-economic condition of the majority of our population.
- While granting bail the court must also look at the socio-economic plight of the accused and must also have a compassionate attitude towards them. A proper scrutiny may be done to determine whether the accused has his roots in the community which would deter him from fleeing from the court.
Question: What reforms should be initiated to make bail policy more humane and justified. Discuss.
2.Where are the jobs? (Live Mint)
Synoptic line: It throws light on India’s problem of unemployment and possible solutions to it. (GS paper III)
- India may be the world’s fastest growing major economy, but the benefits of that growth do not seem to be percolating down to the masses. Job creation continues to be a major problem.
- Among sectors, the worst hit was the information technology (IT)-software industry, which saw a 24% year-on-year drop in hiring. Apart from stricter employment norms abroad, automation too has impacted new job creation. Other key industries like construction and business process outsourcing/IT enabled services too saw a 10% and 12% decline in hiring.
Need for good- paying jobs
- Jobs and livelihoods are what people want. Considering the huge population of the young that India has the largest in the world India should also be generating more jobs than other countries. But the Indian economy is a laggard in job creation despite good GDP (gross domestic product) growth.
- India’s rate of job creation is only two-thirds of the global average. Moreover, the employment elasticity of the Indian economy- the numbers of jobs it creates with economic growth has been declining in the last few years.
- Government must pull the aeroplane out of a nose-dive to lead the country to a vision of an inclusive India, where good jobs are available to all people everywhere, including Dalit men and women in the backwaters of India’s heartland.
- Moreover, even low unemployment rates are misleading because many of those shown as employed are actually engaged in low-paid jobs that they take up only because there is no alternative.
- Economists call this “disguised unemployment” or “underemployment”. Equally, the hundreds of thousands of applications for a few government jobs are misleading because the applicants are not all unemployed.
- Since government jobs at the lower levels pay much better than the market rate, those employed in the private sector want to switch to government jobs if they can.
Need for structural changes
- First, the workforce employed in agriculture must decline. In 2011-12, agriculture accounted for 18% of gross domestic product (GDP) and it absorbed about 50% of the workforce. Productivity per person in agriculture was therefore 18/50 = 36% of the national average. To maintain agricultural productivity at say 36% of the national average, the share of employment should decline to 31%. This is almost certainly too sharp a decline, but even if the employment share declines to 35%, it implies a major shift out of agriculture.
- The second structural change needed is to reduce the expectation from manufacturing as a provider of non-agricultural jobs. Faster growth in manufacturing has long been central to our economic strategy and must remain so. However, we have to recognize that technological change is likely to make manufacturing less employment generating than in the past. Most of the growth needed in non-agricultural employment will have to come from construction and the services sector, including health services, tourism-related services, retail trade, transport and logistics and repair services. A careful review of policies is needed to see how impediments to expansion in these sectors can be removed.
- The third structural change needed is a shift from informal sector employment to formal sector employment. Much of the demand for “high quality” employment opportunities today is a demand for jobs in the formal/organized sector. A shift away from the unorganized/informal sector to the organized/formal sector is desperately needed if we want to meet the expectations of the young.
- Rapid growth has to be central to any employment strategy for the simple reason that a faster growing economy will generate more jobs. Any notion that we can generate the employment we need without high growth would be seriously misleading. We can probably generate low quality, low productivity employment even if we fail on the growth front, but that is not what young people want. This means all the policies that are likely to accelerate growth are also critical for generating employment.
- The biggest opportunity for generating more employment in manufacturing lies in exporting simpler consumer goods to the world market, an area which China has long dominated, but which it is now likely to exit, as its wages rise. How well we can do this depends upon our ability to compete with others such as Bangladesh, Vietnam. Paradoxically, becoming competitive would involve faster modernization of these industries, which will involve a shift away from labour intensity, but if it allows an increase in the scale of operations, total employment could increase.
- Small and medium enterprises generate much more employment than large capital-intensive enterprises but we have not done enough to encourage this segment. India’s industrial structure suffers from what is called “the missing middle”. There are a few large enterprises, as is the case every where, and at the other end there are a large number of firms at the very small or micro level. There are too few middle-sized firms, employing between 100 and say 1,000 workers, and it is these firms that can upgrade technology, increase productivity, and demonstrate competitiveness in world markets.
- The policies needed to develop this middle group include lowering of corporate tax rates and abolition of incentives that favour more capital-intensive units, better public infrastructure, especially access to quality power supply at reasonable rates, improved logistics. Development of skills through a combination of apprenticeships and training institutes run by the private sector, with an eye to the demand for skills in the market, is also critical.
- We have the advantage of being located in Asia, which is the fastest-growing region in the world and which has not turned inward. We should work to reach an early conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement with the Association of Southeast Asian Nations (Asean) + 6. Indian industry has been ambivalent about RCEP because it fears that lower duties will make it difficult for them to compete. This underestimates the ability of the industry to become competitive if it has to. However, industry has legitimate concerns about having to pay high duties on inputs from outside the RCEP group, which would make us uncompetitive. The solution lies in lowering our general customs duties as much as possible.
- Start-ups are a new phenomenon and India has made a good beginning in this area. Technically skilled and business-oriented youth should be encouraged to explore the entrepreneurship option, and create jobs, rather than looking for secure wage employment. The ecosystem required for start-ups to flourish includes scientific and technical universities acting as innovation hubs, tax policies which encourage angel investing and other forms of start-up financing, a legal system which supports high standards of corporate governance, and supportive tax policies which encourage start-up financing. It goes without saying that a large proportion of start-ups will fail. They should be allowed to do so, without government stepping in compulsively to shore them up all the time.
Question– What can be the strategy for creating a robust formal job sector. What are the benefits of creating more formal jobs over informal jobs?
3.Should agricultural income be taxed? (The Hindu)
Synoptic line: It throws light on issue of whether there is need to tax agriculture income or not? (GS paper III)
- Recently federal policy think-tank NITI Aayog has proposed bringing agricultural income within the personal income tax net, to broaden the tax base and thereby enable the government to reduce the tax rate.
- According to NITI Aayog out of the around 220 million households in the country, about two-third live in rural areas and only about half of the 7.5crore households in urban areas who come under personal income tax bracket after accounting for the Rs2.5 lakh a year exemption limit. So, in order to widen the tax base of personal income tax, besides removing tax exemptions, rural income including agriculture income could be taxed.
- However, finance minister said there is no such proposal and the Centre has no power to impose tax on agricultural income.
The most famous attempt for taxing farm income in post-Independence India was the K.N. Raj committee report of 1972, which also examined feasibility and implementation issues. The Kelkar task force report of 2002 estimated that 95% of the farmers were below the tax threshold.
- According to the leftist ideology, in the post-reform period, the relative contribution of agricultural income to India’s GDP has shrunk at an alarming rate. During the period 1991 to 2016, the share of agriculture decreased from 32% to 15%. Compared with this, the workforce dependence on agriculture is still very high at around 49.7%.
- By the theory of economic transformation, the agriculture sector is expected to serve other sectors of the economy in terms of supplying raw material, investible surpluses and human resources. But quite deliberately, the terms of the trade are kept unfavorable to the agriculture sector. The technological and environmental constraints have not helped in the performance of the agriculture sector and consequently, the welfare of the population living in the countryside has not visibly improved.
- In the post-reform period, the process of economic development has led to the concentration of income and wealth in a few hands, leading to the unprecedented rise of the number of billionaires in India, but at the time the productivity of agriculture has gone down tremendously leaving behind deprived farmers.
- As per the National Sample Survey Office, the average per month income of a farm household in India in 2012-13 was just RS.6, 491. The income-expenditure gap for a majority of farmers is in the negative. More than one-third of the farmers have expressed their choice to leave the non-remunerative occupation.
- Further the Education and health privatisation has increased the cost of rural households and the burden of all this has adversely impacted agricultural households.
- The agrarian distress has been deepening, and there has been a rise in farmer suicides. The agrarian sector is in deep crisis. Instead of finding a viable policy to solve the crisis, floating the idea of taxing farming income is a great disservice to the sector.
- According to the rightist view, Agricultural income must be taxed. From the ruler’s time there was tax on the farmer’s produce, while staple food grains were spared, horticulture and plantations in some States continue to be taxed as these are seen as commercial crops.
- For develop our GDP, there is need for agriculture income to be taxed, the farmer with a small landholding of less than 2-3 hectares should be exempted from income tax. If the small farmer is a reality, so also are the big agricultural farmers with their luxury cars and rich industrialists who own farmlands, they should come under tax base.
- If the government takes a decision to levy tax on their income earned from agriculture, the government revenue will not only rise but there will be also an increase in the GDP ratio of agriculture.
- In 1972, there was an attempt on agriculture taxation, proposed by a committee headed by K.N. Raj for taxing the rich farmer. However, the committee’s recommendations were not implemented. Even Dr. B.R. Ambedkar favored taxing agricultural income. According to the Ambedkar’s view, tax should be levied on tax-paying capacity or income of the taxpayer, and that the rich must be taxed more and the poor less.
- The Taxation Enquiry Commission, which was set up in the 1953-54, also recommended revision of tax laws by taking into consideration the prices of agricultural produce. Taxing the rich industrialist who also owns corporate farms is not disservice.
- There are mainly two factors, due to which taxing agricultural income has not found favour,
- Nearly 60%, a majority of farmers in India are small farmers with small holdings and a small marketable surplus.
- There is no climate insurance for them drought and floods are very common. Around 40% of these farmers are women who do not have patta (title deed to the land they till) and do not have Kisan Credit Cards either.
- An agricultural tax would add to the stress faced by the farmer, there if fall in prices of crops even pulses price have collapsed, Chilli farmers are currently facing the brunt of fall price.
- There is need to devise a method that takes into account agricultural income beyond a certain threshold, acre should not be the criterion to tax the farmer, in India markets and monsoon determine the fate of the farmer.
- External factors impact income of agriculture as in Kerala, rubber plantations have collapsed, and coffee plantations have been affected by price fluctuations in Brazil and elsewhere. There is no proper policy to protect farmers from imports when international prices fall sharply.
- Our most important concern should be food security; young people are not attracted to farming any more. To attract them to agriculture there is need to assure them of a certain income. Before we tax, we should aim at increasing the flow of credit, especially to those who are dependent on the rains, or in coastal and hilly areas, and aim for enhancing the quality and cost competitiveness of farm commodities to make them globally competitive.
- We must tax the rich farmer and aim at bringing the small and mid-level farmers to levels where their produce can become competitive.
- India’s policy makers need to treat agriculture on par with other sectors, which means not just taxation but also removing multiple regulatory obstacles which limit opportunities for farmers.
- However, taxing agriculture has been a controversial issue in the country, it is very difficult to make a distinction between a poor farmer and a rich farmer, and however a move to tax agriculture should be packaged with steps to help farmers.
Question– What are the prospects for taxing agricultural income in India. Is it a breach with farmer centric policies?