Reality Check India

The real difference between Horizontal and Vertical quotas in India

Posted in Uncategorized by realitycheck on May 3, 2016

I had asked the following quiz on Twitter yesterday :

Thanks to all those who responded.  The real answer is not what you would expect and I hope to explain it in this post. You will be shocked.

The normal answer

Lets see what the usual answer to the question is because you need to understand what it is not to appreciate what it actually is.

The primary socio political organization in India is along the axis of the various Quota systems based on immutable (birth based) group identity. If you had say 100 seats – those are distributed in fixed quotas on basis of group membership identity The most common groups you know are SC/ST/OBC but there are even more fine grained ones at the states. For example Andhra Pradesh has SC/ST/OBC-1/OBC-2/3/4/5. Karnataka has OBC-A,OBC-B,OBC-2A, etc.  The key things to keep in mind in all these is

  • each of these groups have fixed quota
  • you cant be a member of more than one group
  • not all citizens have a group ; those not in any group are called unreserved candidates
  • all members with groups can participate in the open seats

Now, introduce a new  factor that allows you to be a member of more than one group. Say “Women” (purely as an example). If the announced womens quota was 30% ; each of these boxes get subdivided into 30%-70%. Thus within the SC 15% quota seats ; there is a sub quota of 30% for SC women. That is to say 5% of SC-Women and 10% for SC-Open.Similarly the OBC group is split up, the Unreserved seats are split up and so forth. Since this appears “visually” to be horizontal – they call this a horizontal quota.

This is where the fun starts.

This is not what the horizontal quota is.

Horizontal quota  is not merely a sub-quota within each group. It is a completely new quota system that works very differently. Lets dig deeper.


New terminology

As it is with all “Idea of India” schemes you need a terminology reset.  Let me introduce two new terms that more precisely describe quota system design. These terms are borrowed from the eminent sociologist and political scientist Marc Galanter.

  • Minimum Guarantee System :  Example -> OBC are guaranteed say 30% minimum
  • Over and Above System :  Example -> OBC are guaranteed 30% over and above whatever they get

Vertical quota is an Over and Above system. Horizontal Quota is a Minimum Guarantee system.

They look similar only on the surface.  Lets see what is really going on under the hood with an illustration.

Vertical quota selection

Say you had a total of 100 seats and a Vertical Quota (VQ) group assigned 30%.  You must do two rounds of assignment. In Round 1 – you set aside 70 seats corresponding to the unreserved quota; then allocate from a common merit list including VQ .  Then you do a separate Round 2 – this  time for 30 seats for which you only consider VQ candidates. This completes the process.

Horizontal quota selection

Say you had the same 100 seats but a Horizontal Quota (HQ) group assigned 30%.  You first do one round of assignment. In Round 1 – instead of setting aside 70 seats you consider ALL 100 seats.  Then  you allocate from common merit list including HQ.  Finish this process. Now take a long coffee break. Come back and look at the allocations. If there is a minimum of 30% HQ candidates in the final allocation. STOP THE PROCESS there is no need for Round 2. If there is  a short fall, say only 20% HQ candidates against their quota of 30%, then start a new Round 2. In this Round 2 : start by knocking out the last ranked non-HQ candidate and replacing by a HQ candidate until the 30% is met.  The Round 2 process ends at exactly 30%.

Whats the big deal yaar ? You may ask. In both systems the group is allowed to overshoot their quota. Look closer, the difference between the two system is like night and day. Merely mentioning a transition from a Over-And-Above scheme to a Minimum-Guarantee scheme will cause massive political upheaval of the kind we may have never seen.

What if we moved the OBC quota to a horizontal reservation scheme ?

Time for a little war gaming. Say a hypothetical future #core government announced that henceforth all OBC quotas will move from a vertical reservation to a horizontal scheme.

In states where the classification of OBC are questionable – this has the effect of cancelling the entire OBC quota year after year.  To go back to our illustration. In TN, it is well known that OBC group takes 70-80% of the seats in the Open Category.  In this scheme, the guaranteed-minimum is always met in Round 1. Therefore there will be no special Round 2 allocation. In other words, there is no OBC quota at all.

In effect, the guaranteed-minimum scheme a.k.a  “Horizontal Quota”  has a built in circuit breaker that prevents encroachment of the list. The only way to get an exclusive OBC quota  would be to eject advanced castes classified into the OBC lists that represent well in unreserved category. That would have the effect of bearing down pressure to benefit the really backward components in that list.

With the current vertical quota system, there is no such pressure.   This is the heart of the matter. About 50-70% of all Indian political activity is organized around these anomalies.


I have a great, sometimes unhealthy, interest in these kind of system design failures that constitute the nuts and bolts of the legal regime called “Idea of India”. Almost no one among hundreds of responses on my Twitter timeline got the distinction between horizontal and vertical quotas right. This is expected because these things are kept out of mainline debate by a compromised intellectual class in India.  The funny thing is even state governments get this wrong.  In K.R Santhi vs Teacher Recruitment Board (2012) the Tamilnadu govt made the error. In Rajesh Kumar Daria vs Rajasthan Public Service (2007) the Rajasthan Govt could not figure it out either.


I bet you never imagined there was so much hidden behind such a simple Quiz.

C’mon admit it 🙂 🙂




A Core Right agenda for a modern India

Posted in Uncategorized by realitycheck on March 26, 2016

Core right

Only a move towards Core Right can resurrect the Rule of Law in the Indian context.  We are working on a detailed Core Right position but here is a sneak peek.

  1. Education :  This is of the highest priority about ten times higher than item no 2 below.  The Right to Education Act must be repealed, the 93rd Amendment overturned, and all the sectarian preferences in education prior to RTE must also be revisited. This is of utmost importance. Without this clarity and principle at the top, the lower cadre may not be able to grapple with the fallouts of such sectarianism.
  2. Sectarian Purse: No 2 on Core Right is to preserve the secular nature of the public purse if you are to function as a coherent whole.  The issue oddly, is not that the state spends on minority only issues like Haj where only minorities have an interest but on public goods like scholarships, schools, public works (MSDP), loans, etc.  Areas where everyone has aspirations and interest. This is not to take away minority scholarships but to absorb the part into the whole.  The idea is to have common public goods and ensure equitable distribution within the program. Not to run separate programs.
  3. Quota : Idea of India always had the danger that at some arbitrary point, the inside group (with benefits) would collaborate and prevent outside groups (without benefits) from gatecrashing. This is the essence of the Jat, Patidar, and Kapu issues. In Idea of India framework each of these groups should demonstrate their violence potential as proof of their grievance. The way to exit this loop is to enter a regime of open data about utilization of benefits on a component basis. Also borderline cases like Tamilnadu have to be taken up by the court for final disposition one way or another.
  4. Temple : For Hindu society to have a shot at self correction (expel the beef brahmin and elevate the dalit) it must have in its control institutions.  By appropriating all the temple wealth for secular purposes, this institutional capacity is taken away while Churches have a large capacity to present to their flock in terms of education and hospitals.  That in essence is the matter of temple control. There are some issues around the kind of trust to which this will be handed over. But for starters – there can be a central law that mandates ‘labeling’ and ‘channeling’ of temple revenues. More on this later.
  5. Essential religious practice : A constitution amendment that would put cultural practices like Jallikattu, Nag Panchami, Dahi Handi and all others out of reach of simple PIL process in the courts. If US based NGOs like PETA want to ban Jallikattu they should be made to go to Parliament and use the statutory route. This makes it to the Core Right list because the security of such practices are essential to a pagan religion.
  6. Cow slaughter : Need to have  a better law that openly says that cows get protection due to their special position in Hindu religion. The laws also have to be deeper and more well thought out. An example might be for outlaw and enforce in letter the killing of male calves. Today the laws are worded as if the target is the butcher, consumer, and not the seller and the calf-killer. Can also institute a permanent amnesty regime by micro-chipping the herds. Today, if Congress comes back in MH the herds who are immune from slaughter today can be picked up.  The costs of maintaining cattle must also be borne as far as possible by Hindus via tax deductions and special assessments on temples.

One the Core Right process is started, the first ground rule: NO PRIVATE VIOLENCE should be tolerated.  The reason the state has no majesty in front of Jats and Kapus is that we do not have any answers to their questions. “Why cant I get what you are giving him”. Once you have a Core Right agenda in place, the state will restore its majesty and able to assert itself and claw its way back out of Idea of India land.

Cacophony around being forced to say Bharat Mata ki Jai

Posted in Uncategorized by realitycheck on March 22, 2016

EDIT ::: < the Core Right agenda that was here > has moved to a separate article here “A Core Right agenda for a Modern India”     please comment on that one.


The country is drifting from one meaningless issue to another.  As soon as the media stopped its din over the Wold Culture Festival they hopped on to the “Bharat Mata ki Jai” issue. I stumbled upon this article this morning by Asaduddin Owaisi.

No. This was not said in a deliberate way to create this so-called controversy. I said it on record because RSS chief Mohan Bhagwat has said that time has now come to teach people this particular slogan so that they could take pride in the country. I said I would not say. The Constitution doesn’t mandate it. It is my freedom of expression and religion. I have nothing against raising a slogan. I am very much aware of that. What is wrong if I say Jai Hind or Hindustan Zindabad.

Source  : Firstpost


The central issue  in this is the following.  We all know that Freedom of Expression essentially places a negative constraint on the state. That is the state cannot prevent you from saying, writing, or expressing.   The Bharat Mata ki Jai issue is different, can the state make you say, write, or express in other ways something you dont want to say?

The answer is Yes. In the case of Oaths and Affirmations, you may be forced to say things you may not want to say.

In 18th and 19th Century England, Catholics were cleverly excluded from public office for over 100 years by designing a special Oath of Allegiance.   Among other things all those who wanted public office in England had to state that the “King of England has ultimate supremacy over the Church and not the Pope”.  Obviously no Catholic would say that. So, they were ousted !!  Even in the Protestant fold, the Quakers would not agree to swear to tell the truth by the King James Bible. They insisted their entire life is about telling the truth and there is no special need to take an Oath. Because of this, Quakers were not allowed to testify and a lot of criminals got away because you cant bear witness if you wont take the Oath !!

Meaningless brouhaha

So India also has an Oaths and Affirmation (non religious) Act.  All Muslim MP have to and they do say those words when they are sworn in.  Curiously even the Indian Pledge “India is my country. All Indians are my brothers and sisters..”  are recited without protest at school functions.  You could ask if “All Indians are my brothers and sisters” does that make the country a mother?  Maybe.

What Owaisi seeks is clear legal rules. I have to agree with him on this. Everyone cannot be asked to separately contract with everyone else on matters such as this. What people seek is a single clear interface with law.  Someone cant just walk up to you and administer a private oath “Say XYZ or ..”  and then have you evaluate his particular violence potential against your own and then decide if  you want to say it or not. This is not how mature countries work.

Unfortunately even learned Right Wing are getting the dynamics wrong. Currently the discourse is with the foot soldier of Hindutva even though the BJP is in power. The centre must seize the discourse at the top level,  announce that sectarian laws will be dismantled, and private thuggery and enforcement will not be tolerated.  What is happening it the reverse. After having voted in a Core Right agenda, people find that nothing of that sort is happening, hence they want private enforcement. This leads to such stupid issues.




EDIT ::: < the Core Right agenda that was here > has moved to a separate article here









Explaining the 93rd Amendment to the BJP

Posted in Uncategorized by realitycheck on February 28, 2016

Recently a former social media volunteer and now an office bearer in the BJP govt at the Centre made the following comment in response to my #RTE tweets.

Let us not blame the Congress, the Right to Education Act as passed by the UPA did not exempt minority institutions – the Supreme Court did. So this is the court’s fault and not the Congress partys.

(from Twitter – dont recall exact words)


Another variant of this I’ve seen with very senior BJP members is “Please do not attack RTE on sectarian grounds, the law is not the problem the Constitution of India is” . The same sentiment is also expressed sometimes as “.. that minority thing  is a constitutional issue. Lets not go there – lets talk about teacher training instead“.

This mindset is disturbing on many levels and belies an understanding of the issues. Lets take a deeper look at the 93rd Amendment, history of Article 15, and the Right to Education Act.

 REUTERS/B Mathur VM/mk

REUTERS/B Mathur VM/mk


OBC Quota in Central Institutes used to piggyback

Twin issues that appear to be related but arent. The 93rd Amendment and the OBC Quota. Let us see how the Congress government brilliantly intertwined the two.

I have already written an article titled “A Brief History of the 93rd Constitutional Amendment” where I’ve covered some of the landmark Supreme Court judgments that made Hindu educational institutions gain  equal legal status as those run by minorities.  I want to pick up where I left off. Lets cut to one of the major efforts of the UPA-1 government, one  that took 4 years of extreme effort of Congress to accomplish. The 27% Quota for OBC (Other Backward Castes) in Central Educational Institutions like IIT/IIM/AIIMS/HCU etc.

First, as soon as UPA-1 stormed into power they realized that TMA Pai v State of Karnataka (2002)  had to be overturned. The final push came in Aug 2005 when the Supreme Court in a 7-judge bench P.A Inamdar & Ors vs State of Maharashtra affirmed the essential parity in Education between Hindus and Minorities.

Secondly, the OBC quota issue was raked up and had the vociferous support of all the parties. Even within the BJP the OBC bloc seems to have supported the quota.  Now here is how the two were mixed up. The UPA used the popular sentiment for OBC quota  to piggyback the 93rd Amendment. It is not at all clear to me that you even needed an amendment to provide the OBC Quota.   To explore this further you need a little bit of info about the Article 15 of our constitution.


History of Article 15.

Article 15 – the simplest of articles in all countries – had the most harrowing journey in India. The simple diktat was “thou shall not discriminate on basis of ..”   The original article read like this

15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.-

15 (1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
15 (2) No citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them, be subject to any disability, liability, restriction or condition with regard to
(a) access to shops, public restaurants, hotels and places of public entertainment; or
(b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public.

15(3) Nothing in this article shall prevent the State from making any special provision for women and children.


No sooner did the constituent assembly finish its job and the British has left our shores,  than this article was subject to mutilation.  Tamilnadu’s communal quota in college admissions was cancelled by a unanimous decision of the Madras High Court and then a Full 7 judges of the Supreme Court in State of Madras vs Champakam Dorairajan (1951) .  Even before the First Lok Sabha had met – Jawaharlal Nehru and others who had participated in the Constitution making just a few months earlier overturned the Supreme Court’s decision and passed the First Amendment.

The First Amendment added a new clause (4)  to Article 15 that read.

“15 (4) Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes.”.

Most of the states have been providing quotas to OBCs happily under the cover of  Article 15(4) even though it does not specifically mention education. There is no reason why the UPA cant provide the OBC quota in Central Educational Institutions under this same non-obstante  clause.  But this was presented as an imperative and with overwhelming support of the OBC bloc and JDU deserting the NDA at the last minute the 93rd Amendment was passed.

The 93rd Amendment (at that time known as the 104th Constitution Amendment Bill) added a new clause (5) to Article 15 that read.

“15 (5) Nothing in this article or in sub-clause (g) of clause (1) of article 19 shall prevent the State from making any special provision, by law, for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes or the Scheduled Tribes in so far as such special provisions relate to their admission to educational institutions including private educational institutions, whether aided or unaided by the State, other than the minority educational institutions referred to in clause (1) of article 30.”

Pay attention to the emphasized text to deduce the real intention of the 93rd Amendment.  It had nothing to do with the OBC quota at all but everything to do with restoring the minority advantage that TMA-Pai and finally P.A Inamdar had leveled out.  Specifically :

  • The new Art 15(5) was to abrogate Art 19(1)(g)  :  By this I mean  –  Art 19(1)(g) (‘right to carry out an occupation’)  which was used by TMA Pai to provide parity to Hindus was rendered waste as far as education was concerned.
  • Art 30(1) was to be a non-obstante for the new Art 15 (5) :  In other words :  nothing in Art 15(5) shall apply to minorities involved in education field.
  • Art 15(5) singular purpose appears to be  to drive a wedge and elevate Art 30(1) “the minority” and completely abrogate Art 19(1)(g) “the non minority”.


After so many years of observing Indian political economy, I now think that the non-Congress parties are simply not intellectually equipped to see through these things. In any event , the 93rd Amendment passes  and becomes an “enabling amendment”.  So you may ask “what is an enabling amendment ?”. What was it supposed to “enable” ?

It enabled the grand confiscation that was still to come as the  Right of Children to Free and Compulsory Education Act 2009. Also known as RTE.

The Enabling Amendment

This is a curious creature I now know is uniquely Indian. Essentially the court strikes down something as ultra vires (outside powers) of the constitution ; then the politicians go and change the constitution itself to give it that elusive power.  Now when the amendment itself is challenged the bar is suddenly very high.  The court has to use the ill defined “Basic structure” test. ( Side Note :   Justice Dalveer Bhandari thought that the 93rd Amendment was against the Basic structure even without the minority exemption. Luckily for UPA he wasnt around the court much longer)

Once again worth repeating what the Enabling Amendment contained and why the court had no role to harmonize  :

  • Explicitly exempted minorities in the amendment itself. Rather than depend on the court to harmonize with the protection already in Art 30. This ruled out some harmonizing with Art 30 – such as forcing minorities to admit own religion EWS or to force them to use lotteries.
  • Explicitly abrogated Art 19(1)(g) protection to Hindus (non minority) in the amendment itself. Rather than depend on the court to harmonize (for example by severing provisions impinging on full refund & autonomy in selection etc).

Now you can say that this was all just a happy co-incidence.

I was also wondering if the Congress really lucked out and that the amendment was phrased by accident.   Look at what Manish Tiwari of the Congress wrote recently about the Indira Sawhney judgment

On November 16, 1992, the Supreme Court by a majority of 6:3 upheld 27 per cent reservation for the socially and educationally backward classes (read Other Backward Castes) provided by the V.P. Singh government while striking down the 10 per cent reservation for economically backward sections of society provided by the successor Narasimha Rao government. ..

Why did 10 per cent reservation for the economically backward cutting across communities not covered by the existing quota architecture not find favour with the Supreme Court? For the simple reason that the Rao government was only paying lip service to the cause of economic reservation.

Kesri ensured that despite the amendment to the earlier Office Memorandum, no economic criterion was ever evolved and presented to the Supreme Court and no enabling constitutional amendment was carried out.

Source  DC : State of the Union : Regression for Progression by Manish Tiwari


So there you go. The Congress lawyers have been through this.  They knew very well from the ill fated econ quota in the Mandal saga that without an enabling amendment the laws were simply going to be struck down.

This was what they used in the Right to Education Act.

RTE Act as passed did not exempt minorities

As passed by the Parliament the Right to Education Act did not exempt minority institutions. But even I could smell the disaster from my little perch in nowhere land [ “RTE how well thought out is this – Dec 2009” ].

UPA-2 HRD Minister Mr Kapil Sibal met a lot of minority community leaders who were protesting the Right to Education Act.  I dont know exactly what transpired.  In any case, in no time the RTE was challenged in the Supreme Court and the unaided minority schools got exempted from the law  in a 2-1 Decision in Society of Unaided Private Schools Rajasthan vs Union of India (Apr 2012)  Why?

Because of two things :

  1. The enabling amendment  did not just keep quiet on minorities but explicitly exempted them   – it was a foregone conclusion that the court would strike it down for them. Leaving only the Hindus (non minority) wide open
  2. The court erred in not using the so called “Doctrine of Severability”. In short this doctrine means that if you chop off  too much from a given statute – what is left does not make sense (i.e. is an absurd outcome).  I guess only lawyers acquainted with the Lutyens and Supreme Court circuit  at a very close level can explain why this happened. For an excellent analysis of this read “RTE Analysis : A question of severability

Further down the road in May 2014 ; a 5-0 decision in Pramati Edu Society vs Union of India further pushed the RTE and exempted even the aided minority schools from the entire provisions of the act.  ( See pp 26 of judgment that uses the exemption in enabling amendment to waive the law)


So to cut a long story short :   The so called “Enabling Amendment”  allowed the government to  pass an ostensibly secular Act and the minorities can get out of it on a mere “facial challenge” – i.e. easy work.

If my friend got this far – I am sure he would realize what we are dealing with here.  The 93rd Amendment cannot be divorced from RTE. The latter is built on the former.



/ jh

Jat quota issue and the relative backwardness test

Posted in Uncategorized by realitycheck on February 21, 2016

About 10 railway stations are burnt, 60 trains stopped, schools, police stations burnt, a private armory looted, curfew in 6 towns in Haryana, 8 dead, police, paramilitary, and Army called in to douse the flames. This is a snapshot of what is happening in the immediate vicinity of the National Capital Territory of Delhi for the past 2 days.

Violence exploded in Rohtak as Jat protesters demanding reservation in jobs and education. Also set fire to a minister's home, damaged property and burnt police vehicles. Mobs blocked highways and rail tracks. EXPRESS PHOTO BY GAJENDRA YADAV 19 02 2016.


Why is this happening ? A lot of simplistic comment is floating around the internet and in media op-eds. Almost all of them blaming the Jats for indulging in this kind of violence. Some of the commentators frown on the entire quota system and urge the Jats to be magnanimous and not seek the forbidden fruit.  They dont realize that the quota system is a central part of the social and political system of organization known as the “Idea of India”. So its kind of odd that you’d call on a large group to sit outside the main political order.  In reality, these commentators don’t want to be bothered with analysis of these issues and would wish the problem would go away.

In this post, I will try to go to the root of the problem in as simple a language I can attempt. From a completely different angle. Hopefully at the end of this you will see that the real culprits may not be the Jats at all

Brief history

Here is a brief recap of the Jat quota issue just enough for you to follow the rest of this post.  India provides explicit quotas to various groups of communities. The keyword is ‘group’ not ‘communities’.  The largest such group is known as OBC – Other Backward Classes.  Various discrete communities / castes are included in these groups, they are maintained as “Lists”. These Lists are maintained for each state – called  State Lists, and a single list at the central level called a Central List. The idea is that for Central Govt slots (jobs, college seats, scholarships,  central police forces, and a host of other opportunities) they would use the Central list and for State Govt slots they would use the State list.  Now you may ask – ‘Well that is weird, how can a caste be in one list and not be in the other“.   Hold that question for a moment, you will realize even such simple questions cant elicit an answer.

Jats are in the state lists in a number of states like Rajasthan, Haryana, Delhi, UP, Bihar, HP, Uttarakhand and Gujarat. But they were not in the Central list. This meant they could only access the open category central govt slots and not access the large chunk of slots reserved exclusively for those in the Central OBC List. Due to sustained pressure and rioting.  The UPA Govt included them in the Central List in  March 2014.  Not surprisingly, the other castes already in the central list would not have a new competitor and decide to fight the inclusion of Jats. Keep in mind  that within each group (SC/ ST/ OBC) there is open competition among all castes in that list. Welfare associations representing the castes already in the Central List  took it to the Supreme Court in a case called Ram Singh and Ors vs Union of India. A two judge bench of the Supreme Court struck down the UPA Govts notification and thus denied entry of Jats into the Central List.  As things stand now, the quest  is to balance the Jat aspirations with the persuasive qualities of the judgment. That is the brief recap of the genesis and current position of the Jat quota.   Notice that I have not paid much attention to various govt bodies like NCBC and ICSSR etc. I believe these institutions are supposed to provide a check but the core rationale behind these institutions are missing.

For that you have to go a bit deeper.

Ram Singh & Ors v Union of India (link)

First thing to notice is the name of the case. It is Ram Singh & Ors vs Union of India. This is a PIL case initiated by an umbrella group called the “OBC Reservation Raksha Samiti”  presumably the gentleman Ram Singh was one of the petitioners.. The word “Raksha” in Hindi means protection. Protection against outsiders barging in to the group. This case is therefore the result of inside group resisting the outside group.  This may not seem important but forms the core of the issue as we will see.

So how does a caste get into the OBC list ? To answer that you have to refine that question. To get into a state OBC list you can petition the state govt and based on various considerations they may or may not grant that status. This is in fact where the major part of political effort is spent behind the scenes. For the procedure to get on to the Central list you have to go back to the 90’s.  When reservation in Central Govt jobs was introduced as part of adopting the Mandal Commission recommendations the act was challenged.  In an epic case called “Indira Sawhney & Ors vs Union of India“. The court upheld the quota and directed the govt to set up a body to examine claims of inclusion and exclusion. This body came to be known as the NCBC – National Commission for Backward Classes.  The idea is that there would be robust tribunal that would scrutinize the entire program and could examine such claims with great authority.  That turned out to be a disaster. The NCBC has not excluded a single group from the list nor has published any break up of utilization of each component. The entire exercise has a fatal flaw. The absence of ground rules. The lack of a single process or tests or even principles.  The inability to state the conditions for initial entry into the list and whether the same process would apply to new entrants.

On paper, the recommendation of NCBC is supposed to be binding on the govt. But the NCBC itself isnt doing its job because of lack of ground rules.  See how everything is linked back to the original anomaly?  The entire chain is based on an absurd premise that you can create these compact lists in a nation of thousands of claimants.  Most of us can hold our nose at this and pretend that nothing is wrong. Until a dominant and organized group like the Jats decide to challenge this scheme of things. They demand answers, no answers, then they want in by force. If that is what it takes. The Gujjars, the Vanniars, have all shown the way. For those parroting the “Constitutional Method” let me give you the reality check. A constitutional method requires simple ground rules (first principles) that stand alone. It never works when a court seeks to resolve conflicts between two groups. For that you need a conflict. And that is what the Jats are giving you.

Back to the Jat issue. In 2013, the Congress govt asked the NCBC for an opinion they said ‘no way’ without any convincing data. The Govt decided to go ahead and announce the inclusion of Jats anyway. Now this is the state of affairs as the case lands in the lap of a 2-judge bench of Justice Rohinton Nariman and Justice Ranjan Gogoi.

The judgment examines a lot of issues – particularly the powers of NCBC, the method used by ICSSR (the social agency which conducted a study), and some available data. They ruled against inclusion of Jats in the list on the following reasoning.

The perception of a self-proclaimed socially backward class of citizens or even the perception of the “advanced classes” as to the social status of the “less fortunates” cannot continue to be a constitutionally permissible yardstick for determination of backwardness, both in the context of Articles 15(4) and 16(4) of the Constitution. Neither can any longer backwardness be a matter of determination on the basis of mathematical formulae evolved by taking into account social, economic and educational indicators. Determination of backwardness must also cease to be relative; possible wrong inclusions cannot be the basis for further inclusions but the gates would be opened only to permit entry of the most distressed. Any other inclusion would be a serious abdication of the constitutional duty of the State. Judged by the aforesaid standards we must hold that inclusion of the politically organized classes (such as Jats) in the list of backward classes mainly, if not solely, on the basis that on same parameters other groups who have fared better have been so included cannot be affirmed.

pp 55. Ram Singh & Ors vs UOI

Put simply, what the bench is saying is. “The party is over folks, you cant get in merely because others have got in and they may be better positioned than you“.  This is akin to pulling up the ladder after a certain number of groups have acquired the ‘inside’ status. Do we really think a large organized community like Jats (or Marathas or Kapus) will accept this line of reasoning ?

The judgment went on to say that it prefers discovery of new backward classes like the Transgenders who cut across castes. This part of the judgment was celebrated in the media. I fail to see why Transgenders should be given any quota. Accommodation yes, quota no.

Equal or separate processes

In my view, the judgment is fatally flawed on the following point “Determination of backwardness must also cease to be relative; possible wrong inclusions cannot be the basis for further inclusions”  I would go a step further and state that the protests currently happening in Haryana turn on the moral unacceptability of this logic.

The judgment actually does  a remarkable job summarizing the relative positions of Jats, Ahirs, Yadavs, and Kurmis.  Reading the initial parts of the judgment you get the feeling like they are finally about to take the bull by the horns.. consider these factoids.

Uttar Pradesh and Uttarakhand, in the enrolment in higher and technical education, Jats lag behind Ahirs/Yadav

26 (out of 90) MLAs belonging to the Jat community and 4 Members of Parliament (out of 15), (Is this a factor ?)

Kurmis have 11.2% in professional education. Share of Jats is only.0.3% that is way below the share of Ahir and Kurmi shares (UP)

Among the Jats, 7.5% households have at least one member who is graduate, which is lower than the Ahir and Charan (RJ)

Jats with composite score of 1.17 are behind Gujars (1.34) and Ahirs (1.22). On net social standing, the composite score of Jats is 17.24, which is significantly lower than the Gujars (27.14) and Ahirs (19.85). On composite economic score, score of Jats is 16.55, lower than Gujars (19.38) but higher than the Ahirs (14.86). (Delhi)


After collating all this relative information, the judgment completely disappoints.The honorable judges dismiss the comparative data completely as of no relevance.

The question framed should not have been whether the proper procedure was followed in declaring Jats backward. Whether the NCBC rejection was binding and surrounding issues.

The question in my view  should have been framed as an Article 14 issue – as an ‘equal protection’ case. 

14. Equality before law The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth

The above sentence is the much mutilated Article 14 (equality) clause in the Indian constitution. Now I fully understand that the Indian constitution has juxtaposed “Idea of India” doctrine as an exception to “Rule of Law“.  Remember that the central proposition in Rule of Law is uniform application and that the central feature of Idea of India is to create separate processes for groups.

Even if this is the case, the equal protection clause must guarantee that every community has the same process to get into the exception category. I repeat that – its not that you cant pick out groups for separate treatment but the process used to pick out groups for such treatment must be uniform.

Now turn to the facts of the OBC lists – the Idea of India jurisprudence has split the population into “Inside groups” (those already included in the list) and “Outside groups” those wanting to get into the list.  The biggest problem is that those who are already inside did not go through the same process of measurement that the outsiders are being subject to. This is a gigantic anomaly that cant be brushed aside. This is especially important in a ‘game of spoils’ where there is no stigma to call your self anything as long as there are special and exclusive goods to be had.

Once you cast (no pun) the question as one of equal protection – it is clear that the Jats are being asked to come through a very highly fortified front door while there are others who are inside on much looser criteria through the back door.   Also the revisions to the lists are not happening even in boundary conditions like Tamilnadu. This only means that inside group members seem to be permanently immune from scrutiny and even quantifiable relative data to outside groups now will not be accepted.

A relative test

My view is exactly 180-degrees from the judgment. The inclusion and exclusion issues must be purely relative. There cannot be any absolute measure of backwardness because remember that within the OBC group there is a pure meritocracy. The “List” ought to be the central subject of all litigation and the main job of the statutory body and the judicial review process is to preserve the integrity of the list. All it should take for Group-A to declare the entire list invalid is to show that there is atleast one Inside Group that is better off than atleast one Outside Group.  At the state level, things are totally absurd. I have proved that in Tamilnadu the situation is out of control. There are no students from the open category getting through PG Medical Tamilnadu Seats in top colleges.

It is also important to not expand the domain where the quotas can be asserted. Especially dangerous is local body quota which distorts the entire democratic process itself. Another live wire is sectarian spending such as group wise scholarships, special schools and vocational training only for some groups, special financing, and such like.

Careful of that Pandora’s box

One of the dismaying phenom in India is the following : The establishment try some mad-scientist experiments with the Rule of Law (which evolved in the west as an outcome of centuries of bloodshed) , the experiment doesnt work, so they drop some assumptions and open an entirely new can of worms.  In the previous regime, if there were 8 people who could wrap their heads around the issues, when you drop down a level and open a can of worms only 4 can handle it. This has been going on for too long. Now no one seems to have control of the situation. Some new can of worms ready to be opened are.

Can all states be like Tamilnadu ? Declare 90-95% as backward ?

Can all groups (castes/religions) be given a pro-rata allocation ? Remember this was the issue in  Champakam Dorairajan vs Union of India that prompted the first amendment. Stunning we want to go back to the Communal G.O in Madras Presidency after 70 years of Independence.

In any invidious law ; the people always measure their impact with respect to other people. If a Jat aspirant loses a bank job, it is someone else who gets it. This is the source of the tension and only a relative test can soothe it.

Truly a crisis situation. Only next to the rot in our education laws.

Delhi schools run by non-minorities lose all admissions autonomy under media coverfire of lies and deceit

Posted in Uncategorized by realitycheck on January 7, 2016

This is not a post in response to an individual or a media reporter or columnist. A monumental change as been effected in the domain of education in Delhi. The true facts are being hidden by the media and as a result people are misinformed.

Essentially this is what happened : The AAP Govt in Delhi led by Arvind Kejriwal cancelled the “management quota” in private schools run by Hindus (non -minority) in Delhi.  There was a circular issued by the Delhi Govt that listed 62 “discriminatory criteria” and in hidden in that list was the ban on  “management quota”

To really understand what is going on you have to be informed of three things.

  1. What is a “management quota”
  2. How does the points system based lotteries work
  3. The applicability of this rule and the impact

What is a management quota ?

The 62 criteria ban almost everything along with a list of ridiculous or purely imaginative items.  Along with “Points for kids with a Labrador Male Dog at home” being banned – they also snuck in a ban on Management Discretion.  Gotcha !!  This kind of combing operation is required in all laws created by Idea of India types. Now lets see how this works.

The points that arent banned speak more about the arbitrary ass backwards rule making.

Second child points  are ALLOWED .  But First Child Points are “discrimination against parents desirous of seeking admission for child that is not first born”. You know why ? Because this is the Sibling Quota.

Alumni points are ALLOWED. But Parents Education are “discrimination”

So there is no rhyme or reason behind this. Be that as it may, this is not the main issue here. Along with a random laundry list of 62 banned items ( and not 62 other equally egregious items) – they banned “Management Quota”. This is where the crux of the situation is. May also be illegal as the Delhi HC has allowed it and an appeal is pending in SC. But first you need to know the facts of the matter.

At the present, non-minority unaided schools have to run three streams of admissions. The management quota can be 10-20% not sure what the number is but it has been in effect for a long time in Delhi

  1. 25% RTE LOTTERY- EWS+DG (Caste based – including OBC non-creamy layer at 6Lakhs/pa) all in one lottery pool
  2. 60% TRANSPARENT POINT LOTTERY – using a pre-announced points system + lottery (this is the 62 good points list)
  3. 15% MGMT – this is purely at discretion of management. Can give to anyone at their wish.

RTE lottery

This is the 25% quota introduced by UPA in non-minority schools.  Dont want to spend much time discussing this except to state the rules here are not being clearly propagated to the people because of its inherent immorality. The media creates a din and smokescreen by using “EWS” and does not talk that this quota is not for the poor at all. The quota is for EWS & DG (Disadvantaged group) in a single lottery pool, The lottery pool is in total violation of all known norms of classification by including a 1Lakh EWS with a 6 Lakhs OBC. This classification ought to be declared ultra vires of the constitution.. but I digress.  Lets just say this is a “political quota” and a moral and monetary tax levied on non-minority schools and move on to the real issue here today.

Points based lottery

When the points of all kids are computed they fall into buckets (say 4 buckets). What then happens is the following

  • At bucket 1 (highest points) if more candidates than seats. Lottery! If not all admitted and move to next
  • At bucket 2 (second highest) if more candidates than seats. Lottery !! If not all admitted and move to next
  • .. and so on.

So we have a multi level lottery system that is imposed on schools. Remember that if at any bucket the total number of seats is less than candidates, the lottery ends and people with lower points get NOTHING. This is not a quota system.

Repeat again with an example : Say if a kid was not an alumni kid and not a sibling and there were more alumni and siblings than seats – the school is required by LAW to give ALL SEATS TO ALUMNI and SIBLINGS. It does NOT MATTER HOW VIRTUOUS AND DESERVING OR POOR THE LOSING KIDS are   (This only applies to non-minority Hindu run schools only) So this is a morality code imposed on non-minority schools. But let us assume that is a further “tax” imposed and move to the main issue.


Management quota

Imagine if you, a charitable trust,  are running a school say Shree Shankara School in Delhi.  It is your own philanthropic project and you have built the school as per your own motivations and preferences.  The management quota of 10-20% is what allows you to GRANT a SEAT IN YOUR OWN SCHOOL to any kid who fits your description of your own philanthropic/educational impulses.

This is a complex issue below the surface so here is an example: You find a bright kid in your neighborhood who is poor or disadvantaged in ways that YOU think are valid. With a mgmt quota you can simply offer the kid a seat and derive that psychological satisfaction that drives all philanthropy. Without a mgmt quota you can enter him into a lottery system and hope she wins, in your own school.  This defeats all impulses that drive Hindus to participate in a school sector and deflates their social stature.  Remember that minorities can do whatever they want. In the same scenario :   you can have a Catholic priest walk by and see the same kid and act as a benevolent saviour on the spot  and therefore derive the psychological advantage that is denied to an equally placed Hindu.

On the institutional side : Removing management quota means that you have NOTHING to offer to anyone in exchange for anything in your own school.  This means no one has the private incentive to contribute to the school.  Remember that RTE quota does not offer a full refund for the EWS+DG group therefore the cross subsidy is borne by the other students anyway. One way for the school is to accommodate wealthier people and use that to build infrastructure that all other kids can then use , or to hire more expensive and better teachers that teach ALL other kids.  Without this quota – there is nothing left in the tank.

Another area is a lot of schools use their discretion to tie up with Corporates and Multinationals who need to accommodate their executives who get frequently transferred.  This is a win win situation as there is a corporate money that comes in and is used to elevate all the kids. Without mgmt quota, this cannot happen in Non-Minority schools.


The minority exemption

As I keep saying about the Right to Education Act,

A bad law that is bad for all is a bad law.

A bad law that applies only to your Group-A is not a law at all.


Minority schools can have any selection criteria and get pick and choose who they admit.  Education in India may not be a commercial activity due to its non-profit constraint but it is still a competitive sector.  It is competitive in a most basic strategic manner because it is widely recognized that schools are the only way a culture can replicate itself.   All philanthropic benefits are denied to Hindus and are fully extended to Christians because they are allowed to be true saviours. Why? Because a true saviour must necessarily have discretion.  They can also admit corporate kids, kids of important political figures, industrialists and extend their influence in other areas.

Minority schools are not on the fringe in Delhi. They form the creme of Delhi schools and all over India.

This is not to be interpreted as an intolerant attack on Christians. No country does this kind of law. Not even Italy.  If the law hypothetically also imposed on Christian schools we can turn it into a political issue and seek allies across the religious Idea of India divide.




LOLWATCH 4 : Public Edu in Idea of India response to PB Mehta

Posted in Uncategorized by realitycheck on December 25, 2015

PB Mehta has a new article in the Indian Express “Upside Down State” that talks about the Indian state and public goods.  He rightly notes the trend for the Indian state to  vacate space that any state ought to dominate (education and health) and to occupy space that has little public utility (airlines and hotels being the stock examples).

Yet proportionately, so little political effort has been expended to improve public education. It is a pipe dream to think that we can build a good, equitable education system without a major revival of public universities and government schools. And a strong public system will automatically “regulate” the private system by reducing demand. But it is a sign of how warped our thinking on the public and private has become that we are happy to hollow out the public where we should not, and regulate the private in ways that are counterproductive. –

Source IE :

Instead of a tweet series, I thought I’d just put up a short post on it.

The increasing trend with any analysis of Indian issues is the unwillingness of policymakers, think tanks, and public at large to confront the most glaring underlying framework that gives rise to the anomalies on the surface. This is the strange legal doctrine called “Idea of India” and the apparatus that is built around it. If you ignore this – you get everything wrong. Instead of a proper analysis you get only hand wringing.  Take the public education system.

  1. The division in Indian edu law is not private vs public at all. But  Minority vs Non-Minority. Call me a bigot but hear me out first. In Indian edu, law private minority aided schools which ought to be identical to public schools operate as defacto private schools . Post the Right to Education Act : Public Minority operates as Private.  Private Hindu operates as Public. When I say ‘operates as public’ I mean the loss of two things – 1) nomination power (which students to select)  2)  quotas which represent state confiscation.
  2. The high barriers to participation of majority community in education is the reason why politicians enter the education sector. They control the NOC (a No Objection Certificate) process – hence are able to self deal. Is this undesirable? The group here typically is largely not interested in education per se but for the profits in the sector. They maybe brawny netas but are in reality unsettled due to transient nature of their power and lack of legal guarantees – so do not invest in long term initiatives. It is also pertinent to note that they usually only enter higher ed and not schooling which is a tougher problem.
  3. What about Govt Schools ? PB Mehta  asks “so little political effort has been expended to improve public education”. What would a political effort in this space look like ? First of all it is very important to recognize the herd of elephants in the room. In “Idea of India” land the day to day realities are completely disconnected from these high level questions.  Post the 77th Amendment and even before that – communal quotas in Teacher Recruitment and Promotion far from delivering social justice has changed the nature of the product itself.  To explain : “More representation in Sector X (meritocratic teaching order) is not the same as Pro-Rata representation in a (communal group quota teacher order)”. In High court after High court – the cases of violation of recruitment in Teacher Recruitment Board, communal roster point anomalies, sub quotas are the routine cases. Keep in mind – govt teachers are extremely well paid, so there is no point in pouring more money into this. They also almost no accountability because the roster point system ensures their intra-se status relative to their peers.  I suppose at this point I need to mention how the 200 point communal roster in teacher promotion works but that would blow up this post.
  4. Why is there no political effort to do XYZ..” is only a question if the political effort to do XYZ will result in the blokes getting re-elected.  This is true in Rule of Law countries as it is in Idea of India.  A political effort to improve govt schools would require you to open up the following issues 1) Minority Aided school issue where different service and recruitment rules apply 2) Opening up the entire issue of quotas in recruitment and promotion 3) Subjecting teachers to measurement  not based on qualifications but on performance 4) giving the principal who may belong to an outside-group full power over teacher cadre from inside-groups 5) reopening the 77th amendment .. and on and on. see ? hardly a pleasant task.
  5. What is hardly a pleasant task for intellectuals is like kryptonite for politicians who have to work the Idea of India landscape. Any one who opens up the issue of quotas in teacher cadre risks not only drowning himself but taking his party along with him. The boat sinks.


So due to the unpleasantness of looking under the kimono of contemporary issues and always finding “Idea of India” type unapproachable issues it is better to just focus on the superficial.  Therefore groups that occupy a higher status like minorities just want out the the whole situation and carve islands of exemption for themselves.  This is not just the case in education but also in overall governance. Minorities who say “f_ this , just give us our share and we are gold” are encouraged by the UPA govt. This is how the sectarian scholarships, the MSDP public works in 25% minority districts and other schemes are headed.   This is countered by others on the Sanghi side  who want the kind-of-same-but-not-the-same thing but are not able to articulate that.  This is a dangerous situation.

The whole system is neither private nor public, neither regulated nor laissez faire, neither here no there.

And it is not even  10AM in Idea of India Stan.

National Herald : sordid case of self-dealing will test the entire fiduciary model

Posted in Uncategorized by realitycheck on December 13, 2015
Motilal Vohra, AICC treasurer at Parliament House in New Delhi, India (also Chairman of Board of AJL & also 12% owner of Young Indian )

Motilal Vohra, AICC Treasurer in 2012 demands payment from Congress MP/MLAs  (also Chairman of Board of AJL & also 12% owner of Young Indian ) Image Credit : Daily Mail UK

“You will not believe what the Congress party has gone and done ” – this is the reaction of many  who first read about the National Herald Scam that is currently rocking the country.  To assuage this initial shock , the Congress Party is tweeting frenetically various defences of real and imaginary charges that will in due course be heard in the court.

The transactions are extraordinary and unprecedented – as the Delhi High court judgment says. What makes the National Herald case hard to comment on is not that the transactions are one of a kind, but that the counter arguments put forth by the Congress Party challenge you to step down and question long settled assumptions. It is quite natural for most of us to exit at this point. Let me explain this further because this will be the target of this article.  We just know by intuition that self-dealing is wrong. We just assume that it is so based on our own moral and ethical codes passed on by our cultures.  Say you donate to Help Age India you assume that even though the money has left your hands  the trustees wont simply take all the money for their private use – even if the private use is virtuous. We sort of just get  it  that ‘you cant splitz the stuffs and run yaar‘ without having any statute dictate that to us. This is what is known fancifully as the Non Distribution Constraint.  Law meets morality and they agree.  Now let us drop that assumption : What is wrong if trustees are given total freedom to self deal. The range of self dealing transactions consists of outright larceny which is taking actual money and putting it in your wallet to spinning off  rival trusts and the ability to rearrange the concentration of interests at will.  Why not let the fiduciary persons instead prove their business acumen and efficiency ? This is where the Congress Party has taken the debate.  They deny outright larceny but that is not even the issue.

A 2 Min Recap of the Triple Play : Hop-Skip-Jump

There are three transactions in question. Lets call them Hop-Skip-Jump.

Hop : Associated Journals (AJL)  is a dormant Public Limited Company with large real estate assets it appears that it is a mixture of freehold and leasehold. If leasehold the property value is pro-rata adjusted for the remainder of the lease. The National Herald Building in the heart of New Delhi appears to be the most valuable property and hence the scam is named after it.  There are thousand plus shareholders and a board of directors whose chairman is Mr Motilal Vora. To wind up operations AJL needs to settle employee dues and that needed 90-odd crores and the Congress whose treasurer is also Mr Vora gives that money.

Skip : Now instead of owing 90Cr back to the Congress Party, a new company ( a Section 25 Private Limited Liability) called Young Indian is created. Starring in this new company are Sonia Gandhi, Rahul Gandhi, and Motilal Vora ! The Congress Party writes off the 90Cr loan without making any attempts to recover it and  transfers this  to this new company for a meager 50Lakhs.

Jump :  The new company Young Indian strikes a deal with AJL where lakhs of new shares are issued to Young Indian essentially washing out the existing shareholders into minuscule minority (1%) . This is conducted by the Chairman of the Board who is also Motilal Vora !! But the beneficiaries are Mrs Sonia Gandhi and Mr Rahul Gandhi with 76%.

Post this 3 step deal here are the positions of the parties :

  • Congress – poorer by 90Cr.
  • AJL shareholders – washout.
  • Young Indian – poorer by 5 Lakhs paid up capital but new trustee of AJLs estimated USD $1Billion  property base

The self dealing transactions which the Congress does not deny and their defences in detail for each of them are the following.

  • Hop   :  Mr Motilal Vora is  Treasurer of the All India Congress , the name itself implies someone who guards the ‘treasure’. This person is in a clear position of a fiduciary. In this case the fiduciary lends 90Cr to a Public Limited Company where he is the Chairman and MD of the board. It seems it was argued by Congress lawyers that BJP invests in Canbank Mutual Funds too !! What is missing is that mere disinterested investment is something a treasurer ought to do to maximize the beneficiary interest.  So they ask what if there is self dealing as long as it is beneficial in some abstract sense.
  • Skip : Write off loan. This is Vora again who loaned himself – the CMD behind the veil of AJL – writing off the loan. This loan is due  to the Congress Party coffers filled by thousands of members as a result of active solicitation. Here is a news story where Motilal Vora  demands party members pay up. ( “Vora feels the pinch as Congress Partymen dont pay up” / “Rajasthan legislators default Vora demands payment” ) The Congress response to this is two fold : 1)  Use the word “entrusted” in a clever way. This money apparently wasnt ‘entrusted’ to Congress to mean that Congress Treasurer does not have a Trustee, i.e. Fiduciary responsibility. 2) Question standing of outsiders. “You are an intolerant Sanghi hence who are you to ask, our tolerant Congress members dont care if their money is siphoned as you are incorrectly claiming.”
  • Jump : The most audacious – the loan that was written off is assigned to a special purpose vehicle called Young India , a Private Limited Liability company with Section 25 (non profit/ charity) status. Once again Vora is a director with 12% where  the 1-plus-3/4th majority (76%) is held by the Gandhis. Vora then using his position as Chairman of AJL turns over 99% of the company to this new company. I call Young Indian a special purpose vehicle because there is no evidence that it engaged in any other activity before or after the deal. To support the ‘jump’ transaction the Congress claims that not a single penny has been taken out and since this is non-profit company the Gandhis cannot financially benefit.


The Congress defence basically then consists of a) disowning fiduciary duty of the Congress Treasurer (no entrustment argument)  b) questioning standing ( if Congress members dont care who are you to ask)  c) since a non-profit company is now the owner of the properties there no wrongful gain (not a penny taken out)

The Fiduciary Test

By now it must be clear that the Congress is essentially not denying that the hop,skip, and jump transactions were instances of self dealing. What they are saying is that the deals are fair and that they wont take a penny.  This should alarm everyone who deals with Trust issues because it breaks the entire model. In my view, this is the essence of this case so lets see what this is about.

Who is a Fiduciary ?

“A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence”

A fiduciary “must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations.”

Source : Conflict of Interest a guide for Charities handbook by Charities Commission UK


Even though this is from the UK, this makes sense even in Indian context we have for long known the role of the Dharma Kartha – the temple manager who was entrusted with accounting expenses. The common law rules in this domain are not far off from the Indian traditions.

Now the central question is : If a fiduciary self deals can we allow that and then test it ex post facto on the basis of a fair deal test ?  If a treasurer acting as a fiduciary advances a loan to himself but paid 1% over market rate. Should that be allowed?   Here is where things get interesting.

Most countries especially those derived from common law tradition disallow any self dealing NO MATTER HOW beneficial it is to the trust. To understand why they do this – think about what will happen if they did the opposite.  Any trustee acting as the legal owner of  funds could  self deal in any manner – then it is the beneficiaries and donors to hit up the court seeking to void this or that transaction. The burden on the court is to examine EVERY such transaction to check if a fair deal was obtained. This is totally outside the domain of the courts expertise. So they just ban self dealing at the front end to prevent such painful ex post facto assessment.  The rule is called the “No Further Inquiry Test” – here is Lexis Nexis explaining the rule.

Self-dealing is simply not tolerated in the relationship between a fiduciary and those whose interests he or she is to protect.  In attempting to address the problem of self-dealing, a bright-line prohibition has evolved in trust law so that where self-dealing is found, the Court will make “no further inquiry.”  It is immaterial whether the transaction was fair, or even if it garnered favorable results.

Source : Lexis on the self dealing fiduciary



With corporates we generally have mechanisms to check self dealing by requiring executives to get permission from the board for certain types of transactions, various disclosure requirements for family member of directors, and finally the business judgment rule to test if senior executives did pursue meaningfully the best considered option. But the standard is much higher for those holding trust property such as the Congress Party. Now you understand why they are seeking to present that ‘funds are not entrusted rather just donated” ? A piddly wordplay is not an innocent sentence but a giant leap.. To suggest that people just throw money at the party and do not expect the treasurer to act in fiduciary capacity. For a minute stop here and see how low the party of Nehru , Gandhi , and Patel has sunk to make these kinds of arguments that appeals to ethics of very few.

Non profit – cant take a penny

The argument goes :  Even though the Young Indian company now owns the properties including National Herald House it is not a big deal because it is a Section 25 (Non Profit/ Charity) company so no profits/dividends/remuneration can be taken out. I dont think anyone really believes this argument.  First of all , the non-profit constraint does not preclude using the real estate assets for commercial use. So AJL which is now 99% owned by YI can rent out those properties but the money can be used by YI only to further its charity objectives. The stated objectives are to ‘inculcate secularism in youth’. What they have really done is to create a massive endowment which can then pay for various activities like funding think tanks, lucrative op-ed consulting contracts, partronizing various kinds of people as awards, not to mention building a large team of salaried staff. Therefore an entire ecosystem can be built without the directors Mrs Gandhi and Mr Gandhi and others taking ‘a penny out’.

In my view the real interesting thing that arises out of this case is the future of Indian Trust Law. If we do not adopt the “No further inquiry rule” in Indian courts then we will open up a Pandoras box that can go on to destroy the entire fiduciary-beneficiary relationship.

One interesting angle in this is the “Idea of India”. If you think there should be extraordinary processes – then it is perfectly understandable why the Gandhis are putting up such an unsightly fight. It is important that they demonstrate to the regional satraps like Laloo that they have an inside track in the law. That in itself is a major attraction for these groups who hold key to political power.  If you also concede that fiduciary self dealing be allowed if it is a fair-deal then you need to combine the two.  I would then argue that is absolutely a great deal that properties vest with the people who have immunities from pesky laws that affect the others.



More Links

Delhi HC Judgment :

S. Gurmurthy’s article explaining the transaction details

In Tito v Waddell (No 2) [1977] 3 All ER 129, 241 Megarry V-C said: “The self dealing rule is (to put it very shortly) that if a trustee sells the trust property to himself the sale is voidable by any beneficiary ex debito justitiae, however fair the transaction.”

A really good Self Dealing guide prepared by Price Waterhouse funded by  Ford Foundation (for US viewers). Explains  prohibited transactions and disqualified persons and IRS (US Tax guy) strict rules for 501(c)(3) – their version of Section 25 –



Analyzing Indian education law in light of Christian schools ban on Hindu symbols

Posted in Uncategorized by realitycheck on October 24, 2015


The picture above is a receipt of a Rs 500 fine imposed on a student for coming to Doveton School with a Mehandi – a temporary Hindu  tattoo.  The school is run by Doveton Protestant Schools Association one of the oldest schools in Chennai. The  details of the incident can be found in this news story. These incidents are becoming commonplace around the country just recently Hindu girls in Kanpur were severely punished by St Marys Convent for wearing a pagan string called Rakhee. Hindus tie this string to symbolize a brother sister bond on only one day every year. Similar restrictions are in place in most schools and by and large the Hindu student body abide by these rules.

When the father of the 7 year old protested, this is what the Christian management had to say.

“I told them it was a tradition in a Hindu function, and they told me that if that was the case then I should not admit my child in a Christian school,”

Prima facie this counter argument made by the school sounds impeccable. The exact equivalent would be “Why are you buying our product if you don’t like it” argument made by free market supporters. I try to analyze whether this argument has merit in this article in light of India’s unique sectarian laws governing education.

The sentiments on both sides

It is important to see this issue from the Christian school management point of view first.

Ye shall not make any cuttings in your flesh for the dead, nor print any marks upon you: I am the LORD.
Leveticus 19:28

Bindi – a dot on forehead of Hindu girls,  Vibhuti – a sacred ash mark, Sandal paste, Mehandi – the temporary tattoo for which the boy was fined –   are all markings on the body. There may be many Christians willing to accommodate this  but there may be many others for whom these are satanic symbols. If you are concerned about coercion of students into abandoning pagan symbols it is also fair to worry about coercing the school management into accepting satanic symbols.

This conflict is not limited to display of symbols but also to the prayers and surrounding culture of the school. Consider this example : According to Wiki,  “Onward Christian Soldiers”  is the founders Hymn [1]. The hymn has lines like “At the sign of triumph Satan’s host doth flee; on then, Christian soldiers, on to victory!” – Onward Christian Soldiers [ hymn ]

Now I am not sure if in this particular case students are forced to sing this hymn, but this would be a useful example to analyze the issue in the general case. Suppose that such a hymn were to be sung as prayer – would that be acceptable ? Even though there may be no coercion to sing along it is still jarring because the song clearly talks about destruction of non-believers.  On the other hand –  does the school NOT have the liberty to sing whatever hymn they want ?

Nature of the school – public or private

We need to first sort out  not if the school is Christian or Hindu but to determine if the school in question is public or private. This determination is not as simple as you would think because it is not just about the ownership but about whether a given school is ‘affected with the public interest’ and therefore is expected to pull back and behave in certain ways.

First let us see how this rights dilemma would be resolved in a “Rule of Law” country like the United States or any of the advanced countries. Next we will consider the skew introduced by the “Idea of India” legal regime due to its sectarian processes.  Finally we will try to model the current education situation in India in terms of contract.

Symbols and Prayers

The secular test for symbols is whether there is any functional impact on other children that somehow distract the teaching/learning experience. For example you may not allow a kid to wear a sombrero or a distracting Jedi costume to school.  This could block the view of teachers and obstruct other students. Similarly loose and skimpy dresses could be unsafe or lead to unwanted problems. The local customs prevalent in the territory where a school is located dictates a lot of what is acceptable even in these cases. In India, Hindu symbols like Mehandi, Bindi, do not have any functional impact at all. The only argument against them can be religious.

Prayers can be as sectarian, warlike, or denominational if the school is private. Advanced countries take great care to clearly demarcate the public from the private.  USA for example goes to great length not to fund private schools – even to the extent of questioning grant of library books and school bus routes [1]!  When the institution is public the rules for prayer are simple. Apart from a prohibition on proselytization,  prayers that ..” denigrate nonbelievers or religious minorities, threaten damnation, or preach conversion,” would not be permissible [1].

So in advanced countries the question reduces to  : What are the rules to determine if a school is public or private“.  Is it Private? Do whatever you want (subject to general rules for public order, sedition, and the other good stuff). Public ? Play by non-sectarian rules.

Public interest

As mentioned earlier, the Christian school management is essentially making a business analogy when he says “Why come here if you dont like our rules?” One can argue that unlike a grocery store, a school by nature of its activity is automatically ‘affected with the public interest’ and therefore must be subjected to fair and non-discriminatory regulations. However, let us concede that point and treat the school as a business.

The test for whether a business is public  or private is largely rooted in an ancient 1676 judgment by an English judge called Sir Matthew Hale [1] – who when writing about commercial activities of ports and customs houses coined the term ‘affected with the public interest’.  The tests  in simple terms –

  • If you take government money you are public – end of story. (this part is wrecked by Idea of India as we shall see)
  • If you operate under a franchise or  license from the crown or govt – your activities are affected with the public interest because you have secured a virtual monopoly
  • Natural monopolies such as public utilities, those requiring public right of way are all considered to be affected

Now if a business (like our school here) is affected with the public interest it does not mean the government owns and runs it. It usually means that the rates charged must be fair, non-discriminatory, and reasonable.  Each of these terms are precisely selected by western judicial scholars. ‘Non discriminatory’ means you cannot select your customers for special treatment. To give you an example :Airtel holds a license from the govt which controls a natural monopoly of airwave spectrum – hence they cannot offer special rates to Punjabi Males and then say “If you dont like this policy go to Idea”.  On the other hand a private wholesaler can offer special rates and finance packages to groups because due to absence of licensing or a monopoly situation he is free to use his best business judgment and discriminate.

The above is just obvious and most people just ‘get ‘ this at an instinctive level. Unfortunately, in India I do not know where the planes of agreement are anymore. This may be obvious but are people willing to scream if these principles of private-public separation are violated?

The school situation in USA and the west are clean – if you take money from the government you usually frame that as a contract. This is called a Charter Contract. Once a company signs a charter they no longer can discriminate or proselytize on the same lines of public schools.  The rules are so bright lined that even hosting a prayer meeting for a sick student in a California charter school was frowned upon recently.  The liberal and civil rights circuit in the west even forced charter schools to amend its contract when teachers were caught asking children to pray – even innocently [2]

The obsession in the west to separate the private from public domain especially in education is due to the recognition that separating the Church from the State must involve the domain of public education first. It is through education in schools that a culture can replicate itself, the school promoters gain stature in society, can use the school assets funded by the taxpayer for structured bargaining in other economic areas and so forth.

Barring the few sparks of tension this has worked beautifully for the west.

Now lets turn to India.

The Idea of India as a judicial doctrine

If you believe that  school education is the chief method of cultural reproduction is follows naturally that controlling this activity will be a target for those who think strategically.

The 10 Billion dollar secret of India’s education law is that it is sectarian and rooted in religious discrimination. This is how it works for those learning about these things for the first time.  India’s constitution has a ‘protective’ shield for minorities in two clauses called Article 29/30. The reasonable reading of these articles is that religious minorities shall be allowed to run their schools and colleges which are essential to preserve their culture. Over 60 years this simple clause has been the subject of such vexatious litigation as huge benches of supreme court judges tied themselves in knots over the issue. Since there are no principles being discussed the whole issue tilted to progressively favour minorities and subject Hindus to ever tightening regulation. This is due to two pulls. First the failure of the socialist state to provision education led to the state taking from private effort. Next this was challenged at each step as minority runs schools repelled each of these efforts that Hindu run schools could not.  In early 2000’s  a total of  21 judges of the Supreme Court in marathon deliberations over 3 years in TMA Pai series finally ruled that minorities have same protections as Hindus and are not on a higher pedestal . With this everyone thought the matter would rest. The Congress government however immediately upon getting elected in 2004  struck back with a vengeance and passed the 93rd Constitutional Amendment which obliterated the judicial consensus and restored the anti-Hindu tilt. The 93rd Amendment then enabled the innocuously named “Right to Education Act” which imposes toxic burdens and loss of autonomy for  Hindu-run schools while exempting in-toto Christian and other minority run schools.  I have written about this extensively in this article.

The current situation in India is split along minority/Hindu and aided/private axis as follows.

  • If you are a private unaided Hindu-run school – you need to follow RTE rules and need NOC (a No Objection Certificate – a uniquely Indian license) and other establishment rules
  • If you are an aided Hindu-run school – you need all of the above and you need to cede management control to school management committee. Essentially a shell.
  • If you are minority unaided school – you have full autonomy and the RTE does not apply to you. The NOC process is extraordinary because you can approach NCMEI that Hindus cannot.
  • If you are a minority aided school – you still have full autonomy except some very basic service conditions for teachers.

You can see how the Idea of India completely destroys the carefully constructed common law principles of  ‘affectation with public interest’.  If you are a minority – even if you run on public money you are treated like a private enterprise. If you are Hindu running the school without any government help – you are considered a public establishment.

Franchise models

Post  Pramati Educational Trust vs India [1]  the 93rd amendment was held to be valid and the minority both aided and unaided were exempted from the RTE Law, we can try to model the situation as contracts.

One of the key formalities if you want to operate a school  is the requirement of NOC (a No Objection Certificate – a license kind of). The NOC alongside an array of mind numbing procedures also stipulates a exclusivity question  “Is there an existing school nearby“.  Does this sound familiar ?  Yes due to the geographical exclusivity  these schools are operating under a franchise from the state.  I am ignoring another license called the “Essentiality Certificate” that have similar terms in some states are not  required of Christians, Muslims, and other minorities. In Delhi only Hindus need the EC as shown in the official rules below.

Any individual, association of individuals, society or trust, desiring to establish a new school, not being a minority school, shall before establishing such new school, give an intimation in writing to the administrator of his or their intention to establish such school. (Rule 44 of the Delhi School Education Rules, 1973)

Source : Official Delhi Govt Rules for Essentiality Certificate

Here is an attempt at formulating a contract model. You can think that the  Govt of India hands out private schools by four different franchise models.  You can also use the term Charters if you’d like. The franchises available are :

Maximum Autonomy Franchise (Platinum) :  Run the school however you want subject only to public order. Full autonomy in teacher hiring , selection of students, and fees – subject to basic controls only. State will ensure franchise exclusivity by distance criterion for NOC from competitor. You are allowed to perform any kind of prayer and force any kind of dress code and symbols on student body. Can fine and expel.

Medium Autonomy Franchise (Gold) : Run the school with major autonomy subject to basic service conditions for teachers. Some fee control, autonomy of selection of students for at least 50%. State ensures franchise exclusivity. You are allowed to select teachers, force any dress code and invoke any prayer.

Low autonomy (Copper) : Run the school under very specific rules under the Right to Education Act. Lose autonomy for selecting students, force cross subsidy to make up for deficit induced by state. Still retain autonomy in some management matters. Strict non discrimination rules under watch of hostile civil society jury means you cannot enforce uniformity or fee payment.

No autonomy (Clay) Franchise : This type of school is private in name only. All rules of Right to Education must be followed. Fees are fixed, teachers are appointed by caste quota and external govt agencies, teachers cannot be terminated. Management is illusory as real control of these schools are with the School Management Committees.

The mere fact that you have four types are franchises does not make them wrong or suspect. You could imagine that based on geographical and backwardness issues you can allocate more or less autonomy in exchange for government money or in line with social objectives. Once you lay out these types of franchises the question is what are the qualifications for obtaining one of these franchises.

Now if I told you that these are the qualifications :

  • If you are Hindu you cannot get Platinum and Gold franchises – even if you offer to foot the entire bill. The maximum you can get is a Copper Franchise.
  • If you are a Christian , Muslim or other minorities the minimum you can get is a Gold Franchise.
  • If you are a “linguistic minority” you are taking advantage of an escape vent so that the scheme cannot be called ONLY religious. You could, if you have the political clout, get a linguistic waiver and aspire for Platinum or Gold. (But you cannot have the NCMEI bat for you in the NOC stage)

Would you recoil at such an atrocious rule ? This is exactly the situation in India. This is not perpetrated by Sadhvi or Yogi but by modernists, liberals and think tanks support.

Once you model the situation as above you can see where the  Christian management draws its arguments from. Despite taking advantage of the virtual monopoly granted by the NOC, the exemption from uniform law, and  preferential treatment in allocation of franchise, they do not consider themselves to be ‘affected with the public interest’ and are therefore bound by only by private rules of business.

I have been an observer of various laws and institutions in India on this blog for the past 10 years. India’s education law is spectacularly isolated in the world – there is no country where the majority community faces special burdens by law in this sector. The education law is also remarkable for the complete absence of comment in Indian intellectual, think tank,  and liberal circles. For example the Pramati judgment which is of such a monumental nature overruling 50 years of evolution of jurisprudence and stamping finality to sectarian consideration in education  –  spurred no debate at all !!  Even on social media  if a handful of us stop talking no one will even know that such laws exist. In a way this is the best example of the liberal bigotry , a close mind without any curiosity. Free speech in its full definition allows the uninhibited discussion of *ALL* aspects, events, and laws.

I call this the business end of Idea of India.


The unprincipled partisan literary ‘revolt’ in India – 2 cases

Posted in Uncategorized by realitycheck on October 17, 2015

As of today about 44 Indian “intellectuals” have returned their Sahitya Akademi awards. The media which had just got off an outrage cycle on the Dadri murder found a great follow in when Former BJP thinker Sudheendhra Kulkarni was splashed with ink during a book release function in Mumbai.

What followed was a massive media campaign to amplify the attack as an attack on ‘Free Speech’ , ‘No space for intellectuals’, ‘Rising intolerance’. One Sahitya Akademi Returner the Gujarati literary doyen Anil Joshi while returning the award said ”

Joshi said that Monday’s attack on Sudheendra Kulkarni was regretful. “The ink that we use for writing books is being used to attack writers.

This is a very short post that contrasts this ink splash attack with another one during Sonia Gandhi’s heyday.




On Feb 20 2009, Subramanian Swamy was subjected to the following attack I have documented on my blog at that time

  • Attack inside the high court premises
  • Punches land on Swamy’s back
  • Eggs hurled at him – one struck him on the back of the head
  • One egg was directly smashed on his forehead
  • Another rotten egg found its target and broke on his face splashing contents
  • Bad words and casteist slogans were hurled ( ___ dog oliga ) see the linked blog post
  • << later the gang burnt a police station etc>> we wont go there

Now this was a 60 year old man, who had come to court to fight Chidambaram Natarajar case. This is what a real attack looks like. What did he do ? He wiped the eggs off his face – then eventually went on to win the case.

NONE of the current intellectuals raised their voice at that time. Shashi Tharoor was very much a rising star of the ruling Congress party then as he is now. There was no call for Sonia to say something. All those who are returning the Sakitya Academy awards today had the award then too. It never moved from their mantles in their drawing rooms. Our media probably even found the whole thing, an egg dripping Swamy hilarious.

In contrast, Sudheendhra baited trouble by conducting the show in Mumbai a victim of terror attacks like no other city. From all accounts it seems like there was no assault involved. He just got down from his car and calmly got his face painted with ink.



What about murder of rationalists ?  We will get to that later. Just let the contrasting attacks on Swamy and Kulkarni and the deluge of hypocrisy sink in !