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Why Nitish could play it safe in 2020 polls



Nitish Kumar

Recently, a big hoarding was prominently displayed outside the Janata Dal (United) office in Patna saying, ‘Kyun Karen Vichar, Thike to Hain Nitish Kumar?’

It was not in accordance with the JD(U)’s stand till recently where it glorified its leader, Nitish Kumar, and has presented him as a leader larger than life. So, what has changed in Bihar which has forced Nitish Kumar and his party, the JD(U) to adopt a defensive strategy more than a year before the upcoming assembly elections?

To understand why it has adopted a defensive strategy now, we need to first understand the factors and the scenarios which had helped Nitish Kumar take centre-stage in Bihar politics and overtime become the unquestionable power centre in the state. And then look at the sequence of events in the last few years which has reduced his confidence so much that he has been forced to take a defensive strategy for the upcoming 2020 assembly election in the state.

It’s a fact that Nitish Kumar has never been a mass leader and, in spite of all efforts, he has never been able to build strong cadre for his party in the state. Yet, he has not only reached the top in state politics but has consistently maintained his position at the top for one-and-a-half-decades now. If he doesn’t have mass following then how he could manage to defeat a true mass leader, Lalu Prasad, and how could he manage to keep the BJP, a strong cadre-based party on his side and on his conditions. Further how he has managed to consistently get support of the electorate in Bihar.

To understand all this we need to understand the political and social history of Bihar and the sequence of events in state politics over the last three decades. After independence, for the first five decades, the politics and society of Bihar were completely dominated by the upper castes. In 1991, Lalu Prasad broke this dominance and established himself as a leader of the poor, backward classes and minorities. He was largely popular in his first term, but in the second term his government for the first two years and then the Rabri Devi government for the rest of the term were marred by large-scale corruption charges, serious law and order problems and favoritism.

Society and state the government were dominated by the Yadavs, and the larger non-Yadav backward castes started feeling upset and uneasy. They didn’t want the Lalu Prasad regime to continue, but they were equally reluctant to support the BJP, which was regarded as an upper caste party. The Congress party had become irrelevant.

The BJP, which had after the downfall of the Congress party emerged strongly in the politics of the state, was struck at some point – it had brought the majority of the upper castes over to its side but it was not able to connect with the politically significant backward castes and the Muslims were against it anyway. So, it had clear realization that it won’t be able to challenge Lalu Prasad of its own in the foreseen future. Hence, when a few MPs of the erstwhile Janata Dal (RJD) broke away to form the Samata Party under the leadership of George Fernandes and Nitish Kumar, the BJP offered unconditional support to it.

Then, after the 2000 assembly elections, when the NDA got an opportunity to form the government, the BJP offered the chief minister’s post to Nitish Kumar even though his Samata party had only 34 MLAs, much less than the BJP’s 67. It was a strategic move by the BJP, and it worked for it as well as Nitish Kumar. The non-Yadav backward and scheduled castes accepted Nitish Kumar (an OBC)-led NDA as an option. He was acceptable to the upper castes as well as he was in alliance with the BJP and his image was of an honest and moderate leader. For many of the Muslims, who were as uneasy as many others in the Lalu-Rabri regime, found a credible option in Nitish Kumar due to his secular and honest credentials. With all such changes in the political-social dynamics of Bihar, the NDA won the 2005 assembly election with a thundering majority under Nitish Kumar’s leadership. Then onwards politics of Bihar has been revolving around Nitish Kumar.

So, the two factors which worked for Nitish Kumar were – the overall condition of hopelessness in Bihar during the last few years of the Lalu-Rabri regime and Nitish Kumar’s acceptability by the widely divided society of Bihar. Over time both the factors have diminished to a large extent more so in last five years – and this has brought down the stature of Nitish Kumar considerably in the politics of Bihar. The last three major elections held in Bihar – the 2014 general election, 2015 assembly election and the 2019 general election – has especial significance in this regard, the three elections combined together have brought major change in the political dynamics of Bihar, which was actually so favorable for Nitish Kumar till before the 2014 general election.

Let’s look at the three elections in the context of what change each one of these have brought in the political dynamics of Bihar. Shortly before the 2014 general election, the JD(U) came out of the NDA protesting against the BJP’s intent to declare Narendra Modi as its prime ministerial candidate for the 2014 general election. It was the first instance when the JD(U) was contesting an election without the BJP or any major party on its side. When the results were out, it was JD(U) which registered losses. It lost 18 of its existing seats, it could win only two seats and JD(U) candidates lost their deposit in 23 out of 38 seats they contested. The RJD and the Congress more or less maintained their vote share and tally. The BJP-led NDA won 32 out of the 40 seats in the state.

At the national level, the BJP got a majority of its own and the NDA tally was much higher. Modi became the Prime Pinister of India. Upset with these results, Nitish Kumar joined hands with Lalu Prasad, and both together got a massive mandate in the 2015 assembly election. This election revived Lalu Prasad and his party, RJD, in Bihar politics. The RJD won more seats than the JD(U) and its vote percentage was also higher than JD(U). Very soon, Nitish Kumar realized that he would lose political ground to Lalu Prasad and returned to the NDA fold.

The NDA fought the 2019 general election in the name of Narendra Modi everywhere in India and Bihar was not an exception. The NDA swept Bihar in this election winning 39 out of 40 seats and the credit was largely given to Narendra Modi and not Nitish Kumar.

Today’s Bihar is not as widely divided on caste lines as it was a decade back, and over time the other two major parties which were distant poles in the caste ridden politics of Bihar – the BJP and the RJD – have been able to gain acceptability from a wider section of social and political groups. Therefore, Nitish Kumar no more carries the advantage of being the only acceptable political option for different social and political groups in the state.

The BJP under the leadership of Narendra Modi and Amit Shah has been able to connect to the larger OBC, EBC classes everywhere in India and Bihar is definitely not an exception. In last few years, it has been able to develop and bring forward the leaders from the backward classes who have an appeal among the OBC and the EBC classes to such a level that they can pose a challenge to the dominance of Lalu Prasad and Nitish Kumar on backward class politics in the state. The RJD, under its new young leadership, is not only able to consolidate its core Yadav-Muslim support base but expand it beyond that. With the addition of new caste based parties – RLSP of Upendra Kushwaha, HAM of Jitan Ram Manjhi and VIP of Mukesh Sahni, a backward class centered or caste-based politics will not work for any party.

Therefore, every party wants to ensure it is acceptable to different sections of the society. Bihar has come out of the state of hopelessness, and the appetite for development and expectations from the government has increased manifold and Nitish Kumar hasn’t been able to cope up with this expectation for quite some time now. Everyone agrees that Nitish Kumar has brought Bihar to a decent state from a condition which looked completely hopeless to many – the law and order in the state has improved, there is better road connectivity and power supply, and there has been some hiring by government departments. But people feel that they have rewarded him enough for all this, and now expectations are clearly much more than what is getting delivered on the ground. There is also a feeling that Nitish Kumar is taking the electorate for granted, assuming that the people of Bihar have no option and this is based on facts.

The inability to root out encephalitis in Muzaffarpur has been worrisome. It caused deaths of hundreds of children, and each time the government appeared ill prepared to deal with the crisis. This was true of last time as well – the government was deemed irresponsible. Recent rains in the state for just two days created a flood-like situation in many cities including the capital Patna. And when Nitish Kumar termed it a natural disaster instead of taking responsibility for it, it again didn’t go down well with the people of Bihar who are not experiencing the ‘sushasan’ (good governance) which they expect from the government of their ‘Sushasan Babu’.

In spite of tall claims of development by the Nitish Kumar government, many are forced to leave Bihar and go to other states in search of jobs. Those doing so include the educated, skilled and non-skilled. This has been so for decades and there has been no considerable improvement during Nitish Kumar’s regime. Regardless of huge talent and cheap manpower available in the state, the Nitish Kumar government has not been able to convince industries to invest in the state. A similar situation prevails in the education sector. In last one decade, the number of institutes offering professional courses have increased, but still every year a large number of students have to go to other states for education.

To conclude, the two factors which helped Nitish Kumar emerge and dominate Bihar politics are no longer relevant – Bihar has moved much ahead from the state of hopelessness it once wallowed in and there is now high expectation from the government, which his government is not able to cope up with. And with the changing political social dynamics, Nitish Kumar has lost the edge of being the only acceptable political option for different sections of the society in the state. He has clear realization of both these facts, and so in such scenario – for the upcoming 2020 assembly election, the JD(U) seems to be going safe, and instead of making its last five-year work a poll issue, it is asking the electorate to trust the time-tested Nitish Kumar over others.

(Rahul Vatsa is a researcher. The views expressed are personal)

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Research and development activity to get hit as WD benefit to cease from FY21

According to experts, R&D activity is a key proponent of the ‘Make in India’ strategy and to further expand the manufacturing sector in the country.




Research and development activity

New Delhi, Feb 19 : India Inc’s R&D activity might get adversely impacted as weighted deduction (WD) benefits, including those on capital expenses, stand withdrawn from the next fiscal.

Till now, the Income Tax Act allowed for weighted deduction for all R&D activities.

However, four years back a sunset provision was introduced in the Budget on the availability of weighted deduction from April 1, 2020.

This deadline was expected to have been extended in this year’s Budget. However, that did not happen.

“The weighted deduction was a key reason for entities to invest in R&D infra. This withdrawal will impact future investments in this area,” said Amarjeet Singh, Senior Partner, International Tax and Regulatory, KPMG in India.

According to experts, R&D activity is a key proponent of the ‘Make in India’ strategy and to further expand the manufacturing sector in the country.

Besides, R&D investments into India have grown with many MNCs establishing their research bases here.

“The ‘Make in India’ programme has got the booster of a reduced tax rate. Similarly, had the government continued with the weighted deduction for R&D, it would have surely ensured that India marched ahead both in manufacturing and in the corresponding R&D,” said Gukul Chaudhri, Partner, Deloitte India.

“So, while India may not lose its tag as the R&D lab of the world, the availability of weighted deduction would have ensured that India continued as one of the most attractive destinations for R&D in the world,” Chaudhri added.

The Finance Act, 2016, restricted the availability of expenditure incurred on scientific research to 150 per cent from April 1, 2017, and no weighted deduction from April 1, 2020.

“Globally, most countries are encouraging R&D activity as it generates new ‘intellectual property’ (IP), which in turn creates sustainable revenues. Such IP or new product gives rise to a new industry and other supporting activities,” said Samir Kanabar, Partner, Tax and Regulatory Services, Ernst & Young.

“In India, several sectors like auto, pharma etc. have invested substantially in R&D facilities to develop new IPs, patents and hence, a new tax regime to boost R&D was a major expectation,” Kanabar added.

However, Suman Chowdhury, President, Ratings, Acuite Ratings and Research, said that the reduction in weighted tax deduction will not have any significant effect on India Inc’s R&D activity.

“India’s R&D activity has held steady at 0.7 per cent of GDP over 5 years and no visible signs of positive outcomes were seen emanating from private enterprises despite such benefits,” Chowdhury said.

“Nevertheless, corporates now enjoy a reduced effective corporate tax structure, which should more than compensate for the loss, at least for the manufacturing sector. Service oriented enterprises, whose business model thrives on innovation, do not require incentives to do R&D in our opinion,” Chowdhury added.

(Rohit Vaid can be contacted at [email protected])

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AGR risk for GAIL, OIL and Powergrid stays: Fitch




New Delhi, Feb 19 : India’s telecom-related regulatory dispute still is event risk for GAIL, OIL and Powergrid, Fitch Ratings said on wednesday.

Fitch Ratings continues to treat any payments that three India-based companies – GAIL (India) Limited (BBB-/Stable), Oil India Limited (BBB-/Stable) and Power Grid Corporation of India Ltd (BBB-/Stable) – may have to make under a demand notice from the Department of Telecom as an event risk for the companies’ ratings.

Fitch is not taking immediate rating action on the three companies, as the Supreme Court of India allowed the companies to withdraw their clarification applications on February 14, 2020, and resolve their dispute with Department of Telecom outside the court.

This is in stark contrast to the court’s decision to demand immediate payments from the telecom companies that are also involved in the dispute, Fitch added.

“We expect the three companies to eventually resolve the dispute, although resolution timing is uncertain. A speedy solution is important to prevent disrupting the companies’ investment plans and damaging their performance. The three companies are considering an appeal against the demand notices. We understand that they have the option to resolve the matter through alternate dispute-resolution mechanisms available to state-owned enterprises. This is in addition to the legal options available to telecom license holders in general,” it said.

The Department of Telecom has issued demand notices to GAIL, OIL and POWERGRID for Rs 1,831 billion, Rs 480 billion and Rs 220 billion, respectively.

The notices include license fees on non-telecom revenue and additional interest and penalties on the license fees. However, the three companies’ telecom-related revenue is insignificant, at around Rs 0.5 billion, Rs 0.01 billion and Rs 23 billion, respectively, for the same time period as the demand notices.

The three companies have created telecom infrastructure for internal use and have obtained national long distance and Internet service provider licenses to rent out spare capacity. They maintain that their licenses differ from the unified access licenses held by telecom companies, hence, the court’s decision on adjusted gross revenue for telecom companies does not apply to them.

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Kanpur tanneries asked to shut down again

Aftab Alam, a leather exporter, said the closure order would not only damage the business image of tanneries but would affect leather export too.




UP tanneries Business

Kanpur, Feb 17 : The Regional Pollution Control Board of Uttar Pradesh has ordered 248 tanneries in Jajmau area of Kanpur to stop their operations from February 19 till further orders, without assigning any reason.

The tanneries, which remained closed for a period of 13 months on the charge of polluting Ganga, were allowed to start production on December 20 for two months only.

S.B. Franklin, regional pollution control board officer, said the time limit of two months is expiring on February 19.

Feroz Alam of Small Tanners’ Association said that on December 20 last year, the government, while granting permission to run the units with half capacity, had also stated that the tanners would be allowed to run their units till next year if they followed the necessary norms and standards fixed by the pollution control board.

He said, “During the last two months, not a single notice was issued to any tannery by the regional pollution control board because the tanneries did not flout the norms set by it.”

He said that the UP Pollution Control Board (UPPCB) had not given any reason for the closure order now.

Aftab Alam, a leather exporter, said the closure order would not only damage the business image of tanneries but would affect leather export too.

He said the tanneries which have got orders from foreign companies would suffer if they failed to supply the goods in time.

The tanners would also face problems in getting new orders in future, he added.

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