Reality Check India

OBC quota – Data or Confrontation ?

Posted in Uncategorized by realitycheck on March 31, 2007

I would not be exagerrating to say that this issue is set to change Indian politics forever. We have come to a fork in the road, there is simply no parallel track left.

Two options

The stay is granted only on technical grounds. If the government produces data to justify the OBC classification, then the stay can be vacated even by an amateur lawyer.  On the other hand, if the government chooses to avoid data and involves in political moves such as bandhs, constitutional amendments, or referring to a constitution bench without data – we will be waging a war with the truth (data). Nobody has won and ever will win that war.

If you dont produce data for OBCs, remember this, others are watching. Muslims and Christians are not going to sit around and watch dominant communities have a party in the name of social justice. How can you ask them for data ?  (See “Survey says Christians are more backward than Muslims” )

If you dont produce data for OBCs, remember this, the truly backward will be easy pickings for left extremists. It is not the absence of a social justice initiative that drives a poor kid in Bastar into the Maoist fold. It is the feeling that even if the Indian social justice works exactly as designed, there is nothing in it for him.  He has reached a dead end with the Indian state.

What kind of data ?

If a doctor asks for your temperature, you dont say 5 foot 5 inches. This government is acting like that. PS Krishnan, the brains behind the governments defence maintains the following line.

The constitutional amendment is being challenged. So a constitution Bench should look into the case. There can be a dispute on the OBC figure being 46% or 35%, but there is no dispute on 27%.

This line of thinking looks good to people who do not want to scratch the surface. It wont pass learned scrutiny. If OBCs are 40%, then why on earth should they not get 27% ? How is this different from Muslims, who we know are 13% , why cant they get 10% ? (Read my earlier analysis of this faulty line of defence)

Census is certainly a part of the data, but it is not the most important. The court wants data that supports the following.

Show us data that suggests that the OBC group constitutes a “class” and that “class” is socially and educationally backward

In Indira Sawhney I, the court has upheld that a caste can be a class for the sake of reservations.  That however cant be the only criteria for OBCs, even though for SCs (Dalits) it is the only criteria.   So the task before this government is to prove that the list of castes (treated as classes) in the OBC lists are socially and educationally backward.

How to vacate the stay ?

Here is realitychecks idea to vacate this stay in 15 days.

1) Tap into school and university records for the past 10 years in all states.

2) Produce a lists of castes that are unable to make it in the open category despite attempting. (Admits vs Applications)

3) Produce a list of castes that are not able to make it to the reserved category despite attempting.

4) Produce a list of castes that are not attending college despite high enrollment in schools.

A natural fallout of the above is that every caste that is able to secure admissions in open category needs to leave the OBC group. The message must be that time is up, there are other needy castes that need space on the social justice platform.

Naturally, there will be strong resistance by groups whose privileges are now questioned. It will become a “prestige” issue. This is the time of statesmanship (which we cannot find in the Congress fold). There are alternatives to ease them out of the OBC group without throwing them out. Reality Check can suggest a stop gap scheme by setting aside a 5% quota for those castes who will lose their backward status. You can call this a “holding area” or a “monitor area”. OBC component castes will spend 2 years in this area before they completely migrate to the open competition. There are innovations like this that must be tried.  Of course, creamy layer cannot get benefits under any scheme, that is a separate issue altogether.

I think the above scheme is defensible in court.  Politicians have no role to play in the above scheme. Forward castes will not have much to complain because the beneficiaries are going to be those who will not have made it otherwise despite trying. We will have data to prove that.  Most of the above data is computerised these days and can be collected in a few days. Time is precious, lets get started.

It is sad we already wasted one day due to bandhs.

SC verdict tomorrow

Posted in Uncategorized by realitycheck on March 28, 2007

Update : SC stays OBC quota ( IBN, Indian Express )

This is a landmark judgement in the history of this country. It does not mark the end of affirmative action or social justice, it marks the beginning of it. It delivers social justice from the clutches of selfish politicians into the hands of truth and data.

This government has two options now. (1) Collect data and ensure social justice flows to the needy or (2) Blindly work up passions and engage in a massive exercise to prevent data collection.



Will it, wont it ? Life stories or data ?

Either way, tomorrow is going to be a milestone in the history of this country.

Open category faculty

Posted in Uncategorized by realitycheck on March 27, 2007

Pratap Bhanu Mehtas’ latest article in the Indian Express confirms our fears about the push for caste quotas in IIT,IISc,IIM,AIIMS.

The Central government has just engaged in the largest populist buyout of higher education since Independence. To facilitate rapid expansion of the system, necessitated by increased reservations, the government has raised the retirement age of university teachers to 65, with reappointment up to 70. There is an argument to be made that our retirement ages are too low. But this increase could at least have been linked to performance. Or it could have been used to leverage other radical reforms that universities badly need. But get this. The increase in retirement age has also been accompanied by a directive to first fulfil all outstanding quotas in teacher recruitment. What will be the consequence of this directive superimposed upon increase in retirement age? The effects will vary a bit, but its net result will be that there will be almost no new recruitment in the general category for at least five, possibly more, years.

[emp added] Source : The Indian Express

So, if any of you “open category” academics are nurturing ambitions of working in IITs, IISc, IIMs, or AIIMS – fine tune your plans accordingly.

Unlike SC/ST reservation which despite all its faults, is about social justice – the OBC quotas has become a tussle for caste supremacy. The TN parties have always resented IIT Madras for sticking out like a sore thumb, where merit trumped caste and politics. It was always seen as a safety valve where some brahmins were seen to be hiding and where OBCs had limited say as a caste group. Read this , this , and this.

Like other issues, this comes down to data. Castes in the OBC list must be examined in detail to ascertain the existance of social and educational backwardness first. If some castes can make such a strong play for professorships and deans at IISc and IIT, can they still be educationally backward ? Without this basic prerequisite, the whole policy is nothing but a tussle between

  • upper castes who do not have the political capital to classify themselves as backward
  • upper castes who have the required political capital and do not mind calling themselves backward in exchange for concrete benefits

After reading the Indira Sawhney judgement in full, I get a sinking feeling about data. Can we just expect “prudent and reasonable” classification of OBCs from the state governments. One check can be that a caste must have  graduate levels 20-25% below the state average. There must be some binding legal bar in the form of statistics.

Indira Sawhney – I

Posted in Uncategorized by realitycheck on March 23, 2007

The Indira Sawhney & Ors Vs Union of India – I (also known as the “Mandal judgement”) is available online in full at (Thanks to YFE) 

Read it in full. 

I leave you with a couple of paragraphs from the judgement

What does the expression “Backward Class of Citizens” in Article 16(4) signify and how should they be identified? This has been the singlemost difficult question tormenting this nation. The expression is not defined in the Constitution. What does it mean then?

Reality Check would like to add that the lack of an objective definition of OBCs has the potential to lay this country to waste. Yes, it is that bad. On one hand it denies equality of opportunity to hundreds of millions, on the other it makes a mockery of social justice for the truly deserving.

Today, this OBC quota policy is mired in litigation and there is no end in sight. Without a actionable definition of “backward”, how far can we go before a grand showdown ? The great T.T.Krishnamachari had predicted the impending constitutional mess.

Mr. Krishnamachari asked : “Who is a reasonable man and who is a prudent man? These are matters of litigation”.  

.  .  in response to . .

“What is a backward community”? . . . A backward community is a community which is backward in the opinion of the Government. My honourable Friend Mr. T.T. Krishnamachari asked me whether this rule will be justiciable. It is rather difficult to give a dogmatic answer. Personally I think it would be a justiciable matter. If the local Government included in this category of reservations such a large number of seats; I think one could very well go to the Federal Court and the Supreme Court and say that the reservation is of such a magnitude that the rule regarding equality of opportunity has been destroyed and the court will then come to the conclusion whether the local Government or the State Government has acted in a reasonable and prudent manner.

See links to Indira Sawhney II here “How Kerala got its cream back

The IIT Coaching Centre riddle

Posted in Uncategorized by realitycheck on March 19, 2007

Recently, the Tata Steel chief B. Muthuraman declared that his company didnt care for IITans any more.

At a recent event organized at the Indian Institute of Technology (IIT) in Chennai, Tata Steel managing director B. Muthuraman expressed disenchantment with its graduates. “We are not likely to recruit them any longer,” he said, adding his company preferred students from other colleges, who, though less endowed, were more amenable to company training. IIT guys tend to think too much of themselves.l

Source : Mangalorean

I will laugh off the “less endowed” comment. Coming from an ex-IITan like B.Muthuraman, he is probably using some JEE-style mathematical trick to prove his own statement “..IIT guys think too much of themselves” to be correct.

I was more interested to see if he had anything by way of data. Since, admissions data breakup is state secret, it is stunning to hear what he said.

During a recent year under review, 979 candidates from the south zone secured admission. Of them, 769 were from Andhra Pradesh, while Tamil Nadu accounted for 94 successful candidates, Karnataka, 84, and Kerala, for no more than 32 candidates

If true, this statement alone should come like a high voltage shock to the HRD ministry. With such a regional imbalance, what good is a caste based intervention (read quota) going to accomplish ? For every AP candidate who made it, there are plenty who “just missed out”. It is anyones guess that AP will project its dominance further  by monopolizing the new OBC quota as well.


He correctly guesses that coaching factories that have mushroomed in AP and Rajasthan are responsible for this grotesque imbalance.  A lot of bloggers and magazines have completely missed the point about these coaching centres.

Consider the fictional Q&A

Q) Design a contest which is not favourably biased towards those who prepare for it ?

A) Launch random midnight raids on students houses. Wake them up in the middle of the night and ask them 5 of the toughest questions from any subject.

Grade) Nice try but wrong. Now, coaching centres will merely upgrade themselves to offer a 1-2 hour warning via ground agents about the arrival of the quiz brigade.

There are suggestions everywhere about making the JEE much easier.  The question then is how easy must it be so that extra effort in the form of coaching is not of much value ? If it is too easy, then we have a situation where everyone is bunched at the top between 98-100%. The admissions profile will then pretty much follow caste or regional proportions because the law of diminishing returns kicks in early during the preparation stage.

Private gates to public property 

The coaching factories do pose a real problem. They now act as private gates to public property.  I would not have a problem with such institutes if they catered to Manipal or BITS or other private colleges. Today, we are talking about access to a 1% cess paid by all Indians, rich and poor, hindu or muslim, bengali and tamil. At the moment, there are very few who can afford the 50K-1L plus fees to even get a fair shot at the exams.  The first question is have these really become private gates ? Is there still a tougher but cheaper way to the IITs ? While seeking answers to these questions, we must recognize that science magazines, postal study materials, coaching in the form of neighbourhood retired professors, do not count.

As a first step, we must compile data about those who made it without the help of coaching factories. While my sources tell me that very few make it without expensive coaching, we need to have it verified.  Self study material and mock exams do not count because they can be made accessible to a much larger group.

Second step, is to maintain the tough JEE standards, but take steps to close the gap between the regular school syllabus and the JEE syllabus. As things stand, today attending JEE classes is like attending two schools with different syllabi at once.  The Kota-like residential factories, give an unfair advantage because the students can pretty much ignore the regular school.  By all means, ask the toughest trick questions but these must be rooted in something the student has learned in his regular school.

Third step, is to demystify the IITs themselves and tech education to a large extent. I have argued before about the absolute neglect of the three-year programs (BA, BSc, BCom). Our real universities which were once the shining beacons of education are now rotting (please visit Presidency, St Josephs Trichy, American and Madura for a realitycheck). The solution is to give their programs a stake in the new economy. The need of the hour is to convert these three year baccalaureate programs to four year ones. Why on earth cant we have a BSc Physics with computer minor working in a Wipro of Infosys ? Why cant we have BA English with a human factors minor designing web screens in our IT Majors ? We must adapt to changing times, the three year graduates have great difficulty getting L1, H1 or B1, or even EU visas. These visas are the bread and butter of our IT industry. By neglecting these traditional universities, we are digging our own grave.

The governments line of action towards these coaching factories must be, “Please bear with us while we decrease your relevance”.

Bloodbath in Chattisgarh

Posted in Uncategorized by realitycheck on March 15, 2007

In any other country in the world, this would have been the number one headline for atleast two weeks. 

Should we talk about the killing of 11 unarmed protestors in Nandigram by police fire (or) the killing of 49 policemen by naxal fire ? 

Reality Check thinks that the killings of the policemen are more shocking because the police represent the states’ monopoly over the use of violence (or in this case, the lack thereof). The monopoly over the use of force is the bedrock on which countries are built. India cannot progress beyond the kindergarten stage unless this monopoly is assured and enforced.  In fact, Max Weber even went to the extent of defining a state as an organization that has the legal monopoly over the use of physical force.

In the latest attack Naxalites attacked a police camp in Chattisgarhs Bijapur district killing 49 policemen. You would expect that the sheer magnitude of this attack and the fact that policemen were killed would be enough to make headlines for days on end. Not. Not in India.

Sahara Samay reports that the Naxals even shot those who ran to save their lives.

Raipur, March 15: As many as 49 security force personnel were killed on Thursday morning in a major attack by Maoists in Chhattisgarh’s Bijapur area.

The personnel of the Chhattisgarh Armed Force (CAF) and Special Police Officers (SPOs) were killed when Maoists attacked their Rani Bodali camp located in the interior of Bastar region, around 510 km south of capital Raipur.

The naxals set ablaze the police post and shot those running to save their life.

74 policemen, including 24 personnel of CAF 9th battalion and 50 SPOs deployed at the camp when the rebels attacked it.

Source : Sahara Samay

The time has come for Indians to accept the possibility that there need not be a non-violent solution to every violent problem.  Policies like “Naxals can claim their own bounty” will not help. The earlier attack on the Salwa Judum camp must have led to the policemen being better prepared to repulse a flash attack. What happened ? Can funds and lack of technology be any restriction here ? What are the issues here ?

Does the Indian state have the will and the resources to demonstrate to the Naxalites that violence will be met with even more furious violence ? A disproportionate use of force is a well known deterrent. Talk to the American police about it.  We have all seen on COPS how SWAT teams demonstrate their “macho power” even when the suspect is a 70 year old lunatic. I am not advocating airstrikes but something along the lines of “You hit me with a stone, I put a rocket launcher in your mouth and then hit you back with a stone“.

Does the Indian state, at the same time, have the will to define and address their social justice concerns ? Do they see any space for themselves on any of the social justice platforms in India (SC – ST – OBC – or minority) ? What is the way out for them ?

Most importantly.

Does the Indian state have the will to hold political parties like the AP Congress accountable for its Naxal policy ? Is it okay to make temporary policies based on electoral interests rather than national interest ?

Data before Quota

Posted in Uncategorized by realitycheck on March 8, 2007

The Supreme Court reserved its judgment on the bunch of petitions seeking a stay on the recently announced OBC Quota in central educational institutions.  Abi has more links here.

Next significant date is March 13, 2007.

“How did you quantify the social and educational backwardness of OBCs as a class and not as castes as in SCs? Until and unless a full determination of these indicators is done, how could this Act be given effect to,” the Bench asked.

Source: Times of India

Sign of things ?

Justice Arijit Pasayat and Justice L S Panta. “Unless and until it is determined by the Centre who is socially and economically backward, this Act cannot really be given effect,”

Source: FE

ASG Gopal Subramaniums’ arguments were along the lines of “we kept the open competition the same, so whats the issue ?”. Surely he knows that it is invalid because the quota is not just for todays seats, but also for future. Will a kid in 2010 accept that the open competition seats were kept the same in 2006 ? Besides, the main point in this case is, “unequal treatment of equals”. 

I suspect the Congress led UPA government knew the indefensibility of this scheme.  The cabinet should have listened to Kapil Sibal and HR Bharadwaj and not toed the line of dravidian ministers TR Baalu, Dr Anbumani Ramdoss, and Dayanidhi Maran.

Emboldened by the Sharad Pawar-Lalu Prasad support, the pro-OBCs Ministers responded with a “why-should-we-care-for-the Supreme Court” argument. This brought in Law Minister Hans Raj Bhardwaj

Source: The Hindu –  How the Cabinet lined up on the OBC quota

Now, we have come to a stage where the so called social politicians have to show their true colours. They must act and ensure the really backward do not lose out due to the inconvenience of collecting data.

The question in front of the political class is this :

Do you support the OBC quota (or) Do you support the caste list ?

In the Supreme Court tomorrow

Posted in Uncategorized by realitycheck on March 6, 2007

March 7, 2007

Eleven months and two days after Arjun Singh announced (April 5 2006) that the UPA government would reserve 27% of all seats in central education institutions for “other backward classes” – the case is coming up for hearing tomorrow.

These were the Supreme Courts three questions to the centre in May 2006 (basis of the norms of the OBC category, rationale behind these norms, proposed modalities and basis of modalities).

The centres final reply was filed last week (28th Feb 2007)

Holiday on the MAT ?

Posted in Uncategorized by realitycheck on March 6, 2007

The Union Budget recently proposed to bring the IT Services companies under the MAT (Minimum Alternate Tax) regime. It is important to note that the MAT is not new, it has just been extended to the IT companies who are enjoying tax holidays under Sec 10A ,B of the IT Act.

See earlier posts on the IT Tax issues ( Extending tax holidays to 2019 , Vote Bank (I) Pvt Ltd, Paging Kiran Karnik, Everyone loves a holiday )

The whole story is one of mind numbing complexity. Basically, there are a large number of companies in India who use the rules in the IT Act to compute income and the tax on that income, but they use the provisions in the Companies Act to compute their profit and loss account. The effect of this is that while they showed profits as per the provisions in the companies act and even declare dividends to their shareholders, the income tax paid is zero or very little. The most important reason for such discrepancy was the various exemptions claimed.

Let me try to see if I can pull this together. For an Indian company the effective tax rate now can fall between these two bounds.

1. Corporate tax – at 30% (add the 10% surcharge + 2 % education cess + 1% OBC education cess) – it is at 33.9% 

2. Minimum Alternate Tax – at 10% (add the 10% surcharge + 2% education + 1% new OBC quota cess) – it is at 11.3%

This means all IT companies who are paying less than 11.3% on their book profits now have to cough up the difference. Some companies such as Infosys are paying around 11.1%  already ($70M tax on $630M profit)  (see their balance sheet here) . So their exposure will be minimal.  The hit on smaller players is going to be large because they still have many units under the STPI tax holiday (Sec 10A,10B). Many of them may have to go from 0% to 11.3% this year.

Here is an analysis of some top IT companies tax exposure

For HCL Technologies, the MAT burden will be around Rs 63.41 crore as it has paid tax of Rs 10.67 crore in 2005-06 at the rate of 1.63 per cent of the pre-tax profit of Rs 653.83 crore. Cognizant Technologies will fork out Rs 38.64 crore, Teledata Rs 13.85 crore, Rolta India Rs 11.93 crore and Tech Mahindra Rs 9.77 crore. 
Smaller companies such as Mastek, Aztec, MphasiS, Cranes, i-Gate too will be adversely impacted as their effective tax rates are between 5-10 per cent .

Source : Business Standard

The MAT is just a side story. The real question is what is going to happen after the assessment year 2008-09 – when all tax holidays under Sec 10A, 10B lapse. The FM did not make any noise about that in this budget. While the corporates must be willing to pay the appropriate taxes, the government must offer clarity. How can any business forecast or arrange financing if such a huge policy is left in limbo ?

While many are hoping for SEZs to replace the STPI tax holidays. Some are just resorting to mind-reading.

The proposal by finance minister P Chidambaram to extend the minimum alternate tax (MAT) to information technology companies in Budget 2007-08 could well be the government’s way of telling them that the tax holiday on export profits would continue beyond 2009.

Source : Financial Express

Whenever, I talk about Indian IT and its tax relationship with the government – I take the example of the bus services some of these top companies run.

Commuting from work to office via public transport is something the government must provide or atleast facilitate. From Seoul to Malaysia to Singapore to Thailand to the subways of NY, Moscow, and almost all of the world – the bulk of employees arrive to work via public transport. Today, in India you have companies like Wipro operate miniature transit systems for their employees. They even have bus route numbers like 17A, 5D etc.  Why did this happen ? Shouldnt  employees just hop on to a train or bus at stops in JP Nagar, Madivala, Koramangala and alight at the Electronics city campus ? Why isnt this happening ? Is it because the local governments simply do not have the resources to roll out such infrastructure projects? Is it because the most dynamic sectors do not contribute to the tax kitty ?

Ultimately, the tax policies must favour growth and competition. Today, a small company must offer transit services, lifestyle facilities like gym, basketball courts, food courts, etc.  We need infrastructure services that benefit all – not just IT employees.

I would measure the success of the Indian IT story by how fast these private transport services disappear from the roads.

MJ Akbar’s take on the budget

Posted in Uncategorized by realitycheck on March 5, 2007


MJ Akbar is one of the few columnists I look forward to reading every week. He is a true intellectual because he is not afraid of pointing out that the emperor has no clothes. See my earlier post on him MJ Akbar gets is right on Sachar 

Recently, I found he has a blog. I cant tell if it is ghost written (by a certain Ilaxi who claims to be the “Official Blogger for MJ Akbar”). Anyway, I look forward to this blog.

Read his most recent column “The 2.5% rate of growth” where he takes apart the so-called Muslim appeasement policy of the UPA.

Not to worry, my friends: all this talk about helping Muslims was only lip service. When the time came to deliver in the budget, the Prime Minister had nothing to offer. We’ve seen the pattern before; Dr Singh’s government has repeated it. Other deprived sections like the Dalits and Backwards get concrete benefits; Indian minorities get enquiry commissions.

Source : Khaleej Times Online

Then he gets into facts and figures,

The so-called Muslim appeasement is a mere – hold your breath – 108 crores ! Recently, a land deal in Mumbai for a couple of acres was worth 200 crore.

The next paragraph notes that there are a number of districts with a concentration of minorities, but does not specify how many, for that might be both revealing and embarrassing. What is the provision? Rs108 crore. It is so small the money may not be visible by the time it reaches the district headquarters. Add to this scholarships worth Rs210.60 crore for all “minority communities.

. . . 

For a comparison, read paragraph 33: the allocation for schemes benefiting only Scheduled Castes and Tribes is Rs 3,271 crore, and for schemes in which they will get at least 20% benefit, the sum is Rs 17,691 crore. In addition there are scholarships worth Rs 790 crore for the children of these communities

This time however he stopped short of mentioning the OBCs allocation. Which – may I remind includes the “creamy layer”. The government has included a 1% cess on all taxes to fund this scheme. As rudimentary as it is – the muslims had data in the form of the Sachar report. The OBCs did not need a commission nor data about backwardness of its component castes. A 20-point program to address OBC backwardness was not acceptable. Only a direct quota at IIT and AIIMS would work for them.

Taxpayers across the board will have to bear the burden of additional cess of one percent that will be used to expand the capacity of educational institutions for implementing the caste-based quota.

Source: India Edu News 

6000 crores for OBC quota, everyone gets to pay. No Sachar style reports or other commissions were required. Our FMs life stories are sufficient.

 The increased education cess is expected to collect an extra Rs 6000 crore, or about 55 per cent more than what was collected this financial year. It is intended to help raise funds for the additional seats that have to be created in institutes of higher education to implement the 27 per cent reservation of seats for the other backward classes (OBCs).

Source : HT

The keyword is everyone across the board foots the 1% cess. This includes the backward muslims of our favourite Midnapore district, West Bengal, the muslims of Assam, the night soil carriers, the backward classes of Jammu, and any posterboy backward sections you can think of. 100% of Bengal and Assam have to pay the 1% cess for a social policy from which only 6.3% and 17.6% of them are eligible to benefit. (NSSO 61st Round). This cess is imposed on all taxes – not just income tax, so even the poor have to pay this cess on service tax and as an after effect of other indirect taxes.

The beneficiaries of this largesse are likely to be the creamy layer (who are not just above the poverty line but have a minimum per capita of Malaysia living in India). Do they face educational discrimination in the south – when they own most of the educational institutions ?

The poor pay for the rich, the really backward of the east pay for the aspirations of the TN and other southern “backward” castes, the wretched muslims of Midnapore pay for the muslims of Malabar and TN, the illiterate pay for the literate.

Social justice or poetic justice ? You decide.