EDITORIAL OF GANASHAKTI DATED 30-12-2010: P. CHIDAMBRAM SHOULD LEARN FROM BUDDHADEB BHATTACHARJEE HOW TO HONOUR FEDERALISM

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STUDENTS FEDERATION OF INDIA COMPLETES FORTY YEARS

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P. CHIDAMBRAM PLAYS INTO THE HANDS OF MAOISTS

D.O. No. 119-CM

December 28, 2010

Dear Shri Chidambram,

Kindly refer to your secret letter dated 21/22 December, 2010 which had been published in the media before it reached my office on 27.12.2010 at 11 A.M.

Your assessment of the situation in the State of West Bengal is surprising and is far from an impartial overview of the situation. Maoists have spread from across the bordering states and with the help of small section of local people are creating problems mostly in 28 police stations in three districts of West Bengal. They are trying to create their own areas of dominance. They are indiscriminately killing political opponents and even innocent people. They are attacking police stations, police camps and looting arms. They are also engaged in large scale extortions and other unlawful activities.

You are fully aware of these activities of the Maoists. The greatest challenge is how to contain the Maoists and defeat them finally both administratively and politically.

In recent times State and Central Police through their joint efforts have achieved major successes. Peace and normalcy have been restored in vast areas. People who were evicted earlier are going back to their homes. Govt/Panchayat office are functioning normally and so are the schools, markets and shops. Life is gradually coming back to normalcy in these areas but still we have problem in the areas bordering our state. Trinamool Congress which was earlier maintaining secret contacts with Maoist leaders and outfits are now openly organising meetings with them.

CPI (M) and it allies are trying their best to resist the Maoists by mobilizing people against them and in the process have lost more than 170 of their workers and leaders. Unfortunately, you are now blaming them for the present state of affairs. I am afraid it will divert the attention of all concerned who are struggling against Maoists, the greatest threat to our internal security.

As regards political clashes mentioned in your letter I would like to correct your figures. 32 Trinamool Congress supporters have been killed and 601 have suffered injuries while CPI (M) have lost 69 of their cadres and another 723 have been injured. Indian National Congress has lost one of their supporters and 111 have been injured during the period mentioned in your letter. I, however, agree that it is not a happy situation and I am doing my best to stop these senseless killings. I have repeatedly appealed to all the opposition parties to cooperate. All the parties except Trinamool Congress have come forward to cooperate. Trinamool Congress has refused to talk to administration. I am trying to disarm and demoblise all armed groups engaged in violence in some pockets of the state.

I strongly object to your using the word “Harmed” to mean the CPI (M) party workers without knowing the actual meaning of this nasty word coined by Trinamool Congress leaders.

More when we meet.

With regards,

Yours sincerely,

Sd/-

Buddhadeb Bhattacharjee

Shri P. Chidambram

Union Home Minister

New Delhi-110 001

AGARTALA, TRIPURA: 13TH FINANCE COMMISSION METES OUT INJUSTICE TO TRIPURA - Haripada Das

13th Finance Commission (13th FC), which submitted its report to the central government on February 2, 2010, made, like the earlier finance commissions, awards of non-plan committed expenditures for the period 2010-15 for various states. Thereafter, the central government formed a committee to examine the FC recommendations and decide to what extent the recommendations could be accepted. The committee’s report is termed as the Action Taken Report (ATR).

But the 13th FC award as well as the ATR painfully failed to appreciate the ground realities that prevail in the state of Tripura. Also, the award sanctioned to Tripura doesn’t have any reflection of the track record of prudent fiscal management of the state in the preceding years.

Before going into the details of the commission’s award to Tripura, we may have a look at the salient points of the memorandum which the Left Front government of Tripura submitted to the 13th FC.

SPECIAL DISPENSATION NEEDED FOR NE STATES

1) Considering the severe resource crunch of the states of the north-east (NE) region, non-plan revenue deficit grants may be provided for them.

2) Ten per cent of total central taxes may be earmarked for the NE states.

3) A one-time debt relief package may be recommended for the NE states so that they can get rid of debt liabilities dragging for many years.

4) Upgradation and special programme grants may be considered on a more liberal basis.

5) The non-plan expenditures including the salaries and pension of the employees of the TTAADC (Tripura Tribal Areas Autonomous District Council) may be granted separately.

6) Considering the specific problems the state of Tripura has been facing, such as cross border terrorism, extremist problems etc, increased expenditure for raising several IR battalions and modernisation of the police administration must be reimbursed from the centre.

7) In case of Tripura, the pre-devolution gap, i.e. the projected deficit in non-plan revenue from the non-plan expenditure, was estimated Rs 22,123.83 crore. The major amounts included therein were the revised emoluments of employees (with effect from January 1, 2009), which were obligatory after the Sixth Central Pay Commission recommendations. These emoluments included a revised salary bill of Rs 13924.43 crore, salary arrears of Rs 2200.00 crore, pensions of employees worth Rs 3944.79 crore and interest on loans amounting to Rs 2544.93 crore. The state government also urged the commission to provide a special grant for meeting cent percent the additional financial implications of salary and pension revisions with effect from January 1, 2006.

ON SHAREABLE RESOURCES

The state government strongly urged the commission to raise the states’ share to 50 per cent of the central taxes from the existing 30.5 per cent. Its memorandum said the policy of distribution of the shareable central taxes may be so devised that the underdeveloped states could get a higher percentage of shares in order to catch up with the advanced states. The commission was urged that while formulating such a policy, it must take into consideration the criteria such as infrastructural gap, demographic composition of population including the SC and ST percentages, states’ fiscal discipline and management, forest coverage etc.

So far as the GST (goods service tax) is concerned, the state urged that while 100 per cent state GST should be retained by the respective states, the central GST should be horizontally distributed among the states.

Tripura also sought a sanction of grants of Rs 4536.61 crore under different heads like local bodies, specific needs, calamity relief, maintenance of roads and bridges, public buildings, maintenance of forests, health and education etc. It requested the commission to consider providing a grant of Rs 125.00 crore from the CRF (central relief fund) and demanded simplification of the CRF guidelines so that the fund may be easily accessed by the states.

Table I shows the demands of the state and the 13th FC award item-wise.

TABLE I

Sl. No.	Item	Amt. Projected by State Government	Assessment and Award of 13th FC
	Own Revenue Receipt	(Rs in Crore)	(Rs in Crore)
1	Own Tax Revenue	4012.89	3699.15
2	Own non-tax Revenue	712.04	785.09
A	Total Revenue Receipt	4724.93	4484.24
1	Non-Plan Revenue Expenditure
2	Salary of employees	13924.43	7727.90
3	Arrear salary of employees	2200.00	0.00
4	Pension	3944.79	2779.09
5	Interest payment	2544.93	2649.88
6	Others	4234.61	3192.26
B	Total Revenue Expenditure	26848.76	16349.13
C	Non-Plan Revenue Deficit (B-A)	22123.83	11864.89
D	Other Grants	4536.61	1262.59
	Total Grants (C+D)	26660.44	13127.48

While submitting the projected non-plan revenue expenditure requirement of Rs 26,848.76 crore, the state government amply justified its demands in each items, particularly the committed expenditures like salaries, pensions and interest payments etc. But the 13th FC award assessed it as Rs 16,349.13 crore, much below the projected amount. The unrealistic and irrational nature of the commission’s assessment is clear from the fact that even in the current financial year, the salary and pension expenditures of the state stand at Rs 2000.00 crore and Rs 540.00 crore respectively, and these amounts will certainly go up in compound manner in the subsequent years. But the 13th Finance Commission arbitrarily ignored this fact.

INCREASED EXPENDITURE

Following the central government’s decision to give effect to the Sixth Central Pay Commission (6th CPC) recommendations for its employees, the state government constituted a pay review committee whose report suggested a revised pay scale based on the Sixth CPC report. After a careful scrutiny of the report, the state government implemented a revised pay scale for its employees, effective from January 1, 2009. However, this pay revision increased the salary expenditure from Rs 1289.69 crore in 2008-09 to Rs 1995.14 crore in 2009-10, up by 54.60 per cent. Similarly, the expenditure on pensions went up from Rs 356.43 crore in 2008-09 to Rs 537.13 crore in 2009-10, a 51 per cent hike. In spite of taking into consideration about 16,000 employees are likely to retire in the ongoing plan period, about 30,000 new recruitments and regularisation of about 7000 fixed-pay employees are expected to be made in this period. Besides yearly increments and release of DA/DR at six-monthly intervals, the state government projected an 11 per cent compound growth of expenditure every year in salary and pension. But the 13th FC totally ignored these hard facts of the state’s financial affairs.

A comparative assessment of year to year salary and pension expenditure and the 13th FC’s award are furnished in Table II alongside.

TABLE II

Assess- ment of	Item	2010-11	2011-12	2012-13	2013-14	2014-15	Total 2010-15
St Govt	Salary	2235.85	2481.79	2754.79	3057.82	3394.18	13924.43
13th FC Award		1505.05	1528.20	1548.67	1566.06	1579.92	7727.90
	Shortfall	730.80	953.59	1206.12	1491.76	1814.26	6196.53
St Govt	Pension	620.95	695.46	778.92	872.39	977.08	3944.80
13th FC Award		455.21	500.73	550.80	605.88	666.47	2779.09
	Shortfall	165.74	194.73	228.12	266.51	310.61	1165.71

(Rupees crore)

It is impossible for a resource-crunched state like Tripura to overcome this huge shortfall of Rs 6196.53 crore and Rs 1165.71 crore on salary and pension expenditures respectively, unless special financial support from the central government comes to it.

COMMISSION’S FORMULA

The formula that the 13th FC adopted for assessing the salary and pension expenditures during the award period is as below:

1) Implementation of revised pay scale from April 1, 2009 with retrospective effect from April 1, 2006.

2) Net reduction of the number of employees by one per cent per year.

3) Because of pay scale revisions, a 35 per cent one-time increase in salary expenditure in 2006-07 over the expenditure in 2005-06 taken as the base year.

4) In the subsequent years, the expected growth of salary expenditures because of three per cent increment and six per cent DA as well as one per cent reduction due to retirement of employees.

According to the above formula, the net yearly increase on salary expenditure stands 3 per cent + 6 per cent --1 per cent = 8 per cent. But the commission assessed the yearly growth in salary expenditure at 6 per cent for the award period. Here the commission arbitrarily reduced it by 2 per cent in calculating the yearly increase rate of salary expenditure for the award period.

Moreover, in calculating the award for the salary item, the commission deviated from its own accepted formula of 6 per cent yearly increase. The year to year calculations, according to the norms and formula of the 13th FC, is shown Table III alongside, taking 2005-06 as the base year, as per the financial position according to the Comptroller & Auditor General’s records.

TABLE III

Financial Year	Per Cent Increase	Amt. as 13th FC Formula	Award of 13th FC	Amount of Shortfall
2006-07

Source: www.pd.cpim.org/

MAMATA BANERJEE AND HER UPA GOVERNMENT PUSHES POOR PEOPLE INTO STREETS OF DARKNESS

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BRAZIL: DILMA ROUSSEF FIRST WOMAN PRESIDENT - Yohannan Chemerapally

THE decisive victory of Dilma Roussef in the run-off for the Brazilian presidency is a thumping endorsement of the outgoing government’s policies. The two successive terms of the charismatic president Luis Inacio Lula da Silva has turned Brazil into a sort of development model for the region and the rest of the world. Roussef was handpicked by Lula as the candidate of the ruling Workers Party (PT). She was his chief of staff during his second term in office.

Roussef will now become the first female head of state of South America’s most populous and powerful country. The president elect, while in her teens, was imprisoned and tortured when Brazil was under a brutal right wing military dictatorship that was in power from 1964-1985. Roussef was incarcerated for more than three years in the 1970’s. She was at the time a member of a Marxist guerrilla group seeking to overthrow the military dictatorship. Roussef, a cancer survivor, is the child of Bulgarian immigrant to Brazil. She is a trained economist but has never held an elective office before. She was picked from relative political obscurity by Lula and first made the minister of mines and energy in 2003. Her efficiency coupled with the hard work she put into her job, impressed Lula. He promoted her as his chief of staff during his second term in office.

Riding on the coattails of Lula’s enormous popularity, she was expected to sail through in the first round of the presidential contest held in the first week of October. President Lula who had personally campaigned for her enjoys an unprecedented 80 per cent public approval rating. But an unexpectedly strong showing by the candidate of the Green Party, Marina Silva, robbed her of an outright victory in the first round itself. Many PT voters opted for the Green Party candidate, a former minister in the Lula government, who had attracted strong support from Christian evangelical groups for her strong anti-abortion stance. Silva, an evangelical Christian, had taken nearly 20 per cent of the vote. Jose Serra, Roussef’s main challenger from the centre-right Brazilian Social Democracy Party (PSDB) had come second with 33 per cent of the vote in the first round.

BREAD AND BUTTER ISSUES

Roussef fell short of the 50 per cent needed to avoid a run-off. Opinion polls had predicted a landslide victory for Roussef in the first round itself. But the opinion polls were way off the mark. Silva was expected to poll only around 8 per cent of the polls. She stayed neutral in the run-off but the final results showed that most of her supporters, who were evangelical Christians like her, eventually shifted their support to Roussef, despite Serra and the PSDB focussing on the abortion issue. Christian evangelical groups from the US have made tremendous inroads into predominantly Catholic Brazil. However, in the final analysis, it was bread and butter issues which mattered with the electorate.

The fears that the Green Party vote would be transferred en bloc to Serra in the run-off were misplaced. Lula once again personally took charge of Roussef’s slightly faltering campaign and swung the electoral tide back in favour of the PT. Roussef won with 55 per cent of the vote. In retrospect, it has been an impressive turnaround for her. When her candidature was first announced last year, her popularity ratings were in the single digits. Till last year, many had considered Serra, a shoo-in for the presidency. Serra, who had contested against Lula four years ago, is a political veteran with an impressive resume. He is the popular governor of Sao Paulo state, the economic powerhouse of Brazil. But he turned out to be a lacklustre campaigner. He tried to emulate the tactics of the Republican Party in the US by campaigning on issues that are emotive for conservative Christians.

Not that Roussef set the campaign trail on fire. It was Lula’s decision to hit the road jointly with Roussef once again before the October 31 run-off elections that may have irrevocably turned the electoral tide. Lula’s record in office was in itself a selling point for Roussef. She promised the electorate that she would protect his legacy. The Brazilian economy is doing much better than it was under the previous eight years of PSDB rule. Per capita income grew by 23 per cent from 2002 to 2010 as against the 3.5 per cent in the previous eight years. Unemployment is at an all time low of 6.2 per cent. The minimum wage adjusted to inflation grew by 65 per cent during Lula’s presidency.

Another important social achievement in the last eight years was the “Bolsa Familia”, which provided cash grants to poor families on the condition that they send their children to school and follow health immunisation programs. More than 13 million families have so far benefited from this program. It has helped the government reduce illiteracy rates. The government’s prudent fiscal policies have facilitated the lifting of more than 19 million people from below the poverty line to middle class levels. Government subsidies have helped many poor Brazilians to build their own homes. Roussef, as Lula’s chief of staff, supervised the growth acceleration program (PAC) that supervised the distribution of financial aid to the impoverished parts of the country. Brazil however still trails Chile, Uruguay and Argentina in per capita income but the Brazilian economy is currently growing at a much faster rate.

LULA’S KEY ROLE

Speaking immediately after the final results were announced, the 62 year old Roussef acknowledged the key role played by Lula in her historic victory. Lula’s popularity also ensured that the coalition led by the ruling party got a working majority in both houses of parliament. She strongly hinted that Lula will continue to play an important role in guiding her government. “I will be knocking on his door often, which I am sure will always be open”, she said in her victory speech. She also reiterated her commitment to end “absolute poverty” in the country. “We cannot rest when Brazilians go hungry, while families are living on the streets, while poor children are abandoned”, the new Brazilian president elect pledged.

Continuity in foreign policy is also a given. Lula’s foreign policy initiatives put Brazil on the international centre stage. His last grand gesture was the joint initiative with Turkey to stave off punitive sanctions and the possibility of war against Iran. The Obama administration had not taken kindly to this and other steps taken by Brazil in the global arena. Brazil has also been supportive of governments like Venezuela, Bolivia and Ecuador, which have taken a strong stance against American policies in the region. From the beginning of his term in office, Lula was a steadfast backer of Venezuela’s Hugo Chavez, the standard bearer of the anti-American bloc in the region. One of the first things he did after being first elected to office in 2002 was to rush much needed gasoline supplies to Venezuela. The country was reeling due to shortages caused by a strike sponsored by the Venezuelan right wing parties.

The opposition candidate, Jose Serra, had criticised Lula’s foreign policy, especially his close relations with the leftist bloc of nations in Latin America. Serra on the campaign trail faulted the Brazilian government for not recognising the regime that was installed after a military coup in the Honduras last year. He has accused Venezuela of giving sanctuary to the FARC guerrillas battling the Colombian army. He also questioned the rationale of Brazil joining the trade bloc---Mercosur. The other members of this common market are Argentina, Paraguay and Uruguay. Venezuela is on the verge of joining the grouping which aims to integrate the South American economies and promote independence from the US. Lula had encouraged the Brazilian state controlled oil company—Petrobras to invest in Venezuela and Bolivia. Brazil is also a major moving force behind Unasur. This regional grouping, modelled after the European Union, was founded in 2008. Unasur seeks to unify Latin American nations into one unified bloc and make it more significant than the Organisation of American States (OAS). The US and Canada are members of the OAS. These two North American countries have been excluded from Unasur.

Serra, on the campaign trail, had said that Brazil was limiting its economic options by identifying too closely with the radical regimes in the region. 80 per cent of Brazil’s exports now go the South American market. Roussef is an avowed supporter of Latin American integration. She has said that Brazil should “strengthen ties with all our South American neighbours---through solidarity, not through imperialism”. Washington wants to roll back the “pink revolution” that has swept many parts of the continent. Today, Washington is left with only a few dependable allies in the region to do its bidding. A victory for the opposition in Brazil would have therefore been welcome news for Washington.

Source: People’s Democracy