The Hindu Editorial Analysis | 7th Feb’20 | PDF Download

For a data firewall

  •  German cybersecurity firm: medical details of millions of Indian patients were leaked and are freely available on the Internet.
  • Reason for the availability: the absence of any security in the Picture Archiving and Communications Systems (PACS) servers used by medical professionals and which seem to have been connected to the public Internet without protection.
  •  Public data leaks have been quite common in India. India lacks a comprehensive legal framework to protect data privacy.
  • The Draft Personal Data Protection Bill 2019 isstill to be tabled but could enable protection of privacy.
  • The draft Bill follows up on the provisions submitted by a committee of experts chaired by Justice B.N. Srikrishna to the Ministry of Electronics and Information Technology in 2018.
  • The committee sought to codify the relationship between individuals and firms/state institutions as one between “data principals” (whose information is collected) and “data fiduciaries” (those processing the data) so that privacy is safeguarded by design.
  • Bill tasks the fiduciary to seek the consent in a free, informed, specific, clear form (and which is capable of being withdrawn later) from the principal.
  • SADLY: it has removed the proviso from the 2018version of the Bill that said selling or transferring sensitive personal data by the fiduciary to a third party is an offense.
  • State institutions are granted exemption from seeking consent from principals to process or obtain their information.
  • A comprehensive Data Protection Act is the need of the hour.

Complicating the tax regime further

  •  Finance Minister Nirmala Sitharaman delivered the longest Budget speech in the history of independent India.
  • Ms. Sitharaman announced what she claimed was amove to provide significant relief to individual taxpayers by simplifying the income tax law.
  •  The relief, she said, will be in the form of lower tax rates for which individuals will have to give up on the exemptions they enjoy under the existing regime. The simplification of the income tax law, the finance minister said, will benefit both the assessees and the assessors.
  • In essence, the government decided to give a small section of taxpayers an opportunity to pocket more money, in the process hoping that they will give up on their savings instruments such as the Public Provident Fund and various life insurance products, and also abandon their investment in what in India is viewed as a safe haven asset — real estate.
  • Does the new tax regime really put more money into the hands of taxpayers?
  •  What FinMin delivered leaves, taxpayers, with double the amount of work — they now also have to compare the two systems and make a decision on which one is more favorable for them. It is ironic that the government, while disincentivizing investment in insurance on the one hand, is also attempting to publicly sell stakes in India’s largest insurance provider on the other hand.
  • Another factor complicating the taxpayers’ filing process is that it isn’t clear now which exemption will be scrapped in the near term and which one will continue in the long term.
  •  The second important issue with the new tax system is that it removes all incentives to save in an economy that is already seeing a steady decline in our household savings rate, fuelled by unemployment.
  • Nobel-winning behavioral economist RichardThaler has worked extensively on encouraging Americans to save for retirement.
  • It was disappointing that the Budget gave such a disproportionate emphasis on tax reform, considering the fact that taxpayers constitute hardly 2.5% of the population.
  • With 60% of the population engaged in agriculture and allied activities, any real demand stimulation would have had to begin with the rural sector.
  •  Hence, the low allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme and PM-KISAN was unfortunate.

Reducing custodial deaths

  •  On October 13, 2019, Pradeep Tomar, a security guard, rushed with his 10-year-old son to Pilkhua police station in Hapur district in Uttar Pradesh. He had been summoned for interrogation in connection with a murder case.
  • The son later said that his father was brutally tortured by the policemen in front of him for hours.
  • When Tomar’s condition deteriorated he was rushed to hospital, where he died.
  • An FIR was registered against four policemen after theNational Human Rights Commission took note of the case.
  • Earlier last year, a Delhi court sentenced five U.P.policemen to 10 years of rigorous imprisonment for torturing a man to death in custody in 2006.
  • The five policemen had abducted the victim on suspicion of his involvement in a car robbery and tortured him in custody. Later, after he died, they manipulated records to obliterate all evidence of custodial death and closed it as a case of suicide.
  • The case was transferred from a court in GautamBuddh Nagar to Delhi by the Supreme Court on the grounds that a fair trial would not be possible within the State.
  •  Pronouncing the verdict, the additional sessions judge Sanjeev Kumar Malhotra said, “The police play a major role in the administration of criminal justice. One of the reasons for custodial death is that the police feel that they have the power to manipulate evidence as the investigation is their prerogative and with such manipulated evidence, they can bury the truth.
  • ” He added, “They are confident that they will not be held accountable even if the victim dies in custody and even if the truth is revealed.”
  •  The Central Bureau of Investigation too use torture as a method of investigation.
  • In September 2016, B.K. Bansal, Director General of Corporate Affairs, and his son Yogesh committed suicide.
  •  In their suicide note, the two men listed the names of officers who had tortured their families in connection with a case of disproportionate assets.
  •  Bansal’s wife and daughter too had committed suicide two months earlier.
  • Expectedly, the agency exonerated all the accused. Custodial deaths have been on the increase in recent years.
  • They increased by 9% from 92 in 2016 to 100 in2017, according to the National Crime Records Bureau.
  •  The Supreme Court delivered a historic order in2006 on police reforms.
  • It stated, among other things, that every State should have a Police Complaints Authority where any citizen can lodge a complaint against policemen for any act of misdemeanor.
  •  However, only a few states such as Kerala, Jharkhand, Haryana, Punjab and Maharashtra have implemented the order.
  • Until exemplary punishment is meted out to policemen who are responsible for custodial deaths after proper judicial inquiry, not much can be expected to ameliorate the situation.
  •  Proper interrogation techniques coupled with use of scientific methods to extract the truth from suspects can go a long way in reducing custodial deaths.

Listening to the call of the informal

  • A week after the Budget, it is clear that successive policies of the government over the years have left the informal sector stigmatised.
  • The government and its policy advisers want to dress the sector up to their preferred versions of formality. However, in the process, they could dampen its growth potential, as two recent papers reveal.
  • National Bureau of Economic Research, economist Seema Jayachandran argues that there is no strong evidence from studies conducted in many developing countries that formalization improves business outcomes.
  • International Labour Organisation (ILO), economist Santosh Mehrotra calls formalisation an evolutionary process during which small, informal enterprises learn the capabilities required to operate in a more formal, global economy. He says they cannot be forced to formalise.
  • Who benefits from formalisation of informal firms?

Formalisation does reduce the last-mile costs for banks.

  • The state finds it easier to monitor and to tax the firms that adopt its version of formality.
  • However, the process can also produce adverse outcomes for the informal sector firms themselves, as anthropologist James C. Scott explains in Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed.
  •  In India, which currently faces an unemployment problem, the informal sector provides the vast majority of opportunities both for its youth and for people coming off the farm to earn incomes.
  • Hence, India’s policymakers need to look at the demerits of formalisation from the perspective of informal sector enterprises.
  • Ms. Jayachandran’s study reveals that most of the formalities imposed from above while making it easier for the state and the formal sector to do business with the informal sector, add to the costs of the firms that outweigh the benefits of formalisation.
  •  For example, small entrepreneurs gain from forming effective associations with their peers. They benefit greatly from ‘mentoring’. The skills of small entrepreneurs and their employees are best developed on-the-job.
  • The productivity of enterprises depends on their soft skills.
  •  There is a desire to connect small firms in India more firmly with global supply chains.
  • Mr. Mehrotra points out that the primary motivation of multinational companies for expanding their global supply chains is to tap into lower-cost sources of supply.
  •  When wages and costs increase in their source countries, they look for other lower-cost sources.
  • The lowest cost firms at the end of supply chains are generally informal. Thus, the push by the state to formalise firms is countered by the supply chain’s drive to lower its costs.
  •  The thrust of the Indian government’s policies should not be to reduce the size of the informal sector. Rather, it must be to improve working conditions for the citizens who earn incomes in the sector.
  • Their safety at work, their dignity, and their fair treatment by employers must be the thrust of any reform.
  •  Indeed, even in developed industrial countries, the informal sector is growing with advances in technologies, the emergence of new business models, and growth of the gig economy.
  •  Informal enterprises provide the transition space for people who have insufficient skills and assets to join the formal sector.
  •  Large schemes to provide enterprises with hard resources such as money and buildings, which the government finds easier to organize, are not sufficient for the growth of small enterprises.
  • Policymakers must learn how to speed up the process of learning within informal enterprises.
  •  The voices of tiny entrepreneurs in the rural heartlands and on the fringes of Indian cities must be listened to while developing policies for ‘ease of doing business’.
  •  Networks and clusters of small enterprises must be strengthened.
  •  Health insurance and availability of health services must be improved, and disability benefits and old-age pensions must be enhanced.
  • The purpose of ‘labor reforms’ must be changed to to provide safety nets, rather than make the workers’ lives even more precarious with misdirected attempts to increase flexibility.
  •  Small enterprises need other forms of support to play their vital role in increasing employment and incomes at the bottom of the pyramid.


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