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A Policy for Tea

reaction to hooliganism, the question that has to be asked is, why are the Chinese behaving like this in the first place? What frustrations ate they noisily working out, and what problems are they seeking to tackle? What design has actu- ated the latest outburst against India? It is towards this analysis that we must now bend our energies.

Waiting and Watching China

 them emotionally accept Israel in the normal scheme of West Asian politics, And, without wholehearted and unreserved Arab co-operation, there simply cannot be any peace in West Asia. What needs to be stressed is that, in getting this cooperation, the United Nations, against which Eshkol today raves, has a great role to play. It is nbt true that the United Nations encouraged the Arab build-up. Nor has Eshkol added to his prestige by running down that world body under whose shelter Israel has grown to its present stature.

Unexciting Debate on the Budget

 tion. This need not be a policy of standing still, if two considerations are kept in mind. A cut in investment outlay can be turned to advantage if the emphasis is turned to output and costs. In most industries and even in agriculture, past investment has created enough capacity to generate much larger output and income than have fructified so far or are indicated in formal terms. There is considerable scope for cashing in on these benefits till a further step-up in investment can be undertaken. The recession, which has hit some industries producing mainly capital and intermediate goods, must be used to shake down the high cost structure which these industries have built up over the years. Larger investment is desirable, of course, but more so is higher output at lower cost.

The Necessary Sharks

reaction to hooliganism, the question that has to be asked is, why are the Chinese behaving like this in the first place? What frustrations ate they noisily working out, and what problems are they seeking to tackle? What design has actu- ated the latest outburst against India? It is towards this analysis that we must now bend our energies.

Staving Off a Coke Famine

 shown that a chain of intercorporate investments, if cleverly forged, can achieve considerable tax saving in certain situations. To this extent, large business groups, especially those which have a large number of companies, get an advantage which is not available to smaller businesses. If reduction of concentration of economic power is one of the broader objectives of tax policy, this advantage should not be allowed to continue. True, some investments would be discouraged thereby but that is a question of laying down priorities and fixing differential effective rates of tax consistent with them. A company engaged in a priority industry should be taxed at less than the standard rate (as is done through development rebate and selective tax holiday) so that it would be able to make larger profits aod distribute larger dividends to attract fresh investment. Tax policy stops at this point; it does not have to be concerned with the status of the shareholder. This argument supports Bhoothalingam's plan for confining tax holiday benefits to companies and withdrawing them from shareholders. At present shareholders of a company eligible to tax holiday enjoy exemption from tax on dividends from the company. Bhoothalingam has recommended .that while the tax holiday be made more effective for companies, dividends distributed by these companies should be taxable in the hands of the shareholders in the usual course. The concern of fiscal policy is with the direction of investment, not the manner in which controlling and other investments are held.

East Pakistan Stiffe and Buy Off

 The Draft Outline envisaged expansion of Bhilai from 2.5 to 3.2 million tons, Rourkela from 1.8 to 2.5 million tons and Durgapur from 1.15 to 3.4 million tons to yield 3.2 million ingot tons of additional capacity by 1970-71, In addition, the first stage of Bokaro was also to be completed giving another 1.7 million tons of capacity. With all this the steel capacity at the end of the Plan was expected to be 14.8 million tons which was to yield an actual output of 11.7 million tons of ingot steel or 8.8 million tons of finished steel.

Steel Why Bokaro First

would be economical. In a world in which energy creation benefits vastly from. .technological orientation, India's coal " mining, which provides the country's major commercial fuel, continues to be primi-. tive and fragmented. ' Use of me- chanisation in mining, conveying, and loading for transport, requires far larger scales of operation than allowed by today's frag merited colliery ownership. In cooking coal this obstacle assumes serious proportions because mining losses and wastes are estimated at 70 per cent. These include, apart from the fines, a much larger proportion lost in the solid barriers between mines, in the supporting pillars which can be excavated only by incurring the exor- ftitant costs of stowing, and in the barriers round different manually- worked sections of a colliery. Amalgamation and mechanisation of these mines, which would maximise the efficient extraction of available reserves, have till now shown poor progress. Waking up, even though belatedly, to the need for larger mines, the Government had set up a Committee for Amalgamations in 1958. The Committee approved 54 amalgamations relating to 111 units (the coal industry has over 800), but out of these only 35 have been actually amalgamated. Nearly 10 years of sporadic effort and exhortation have indicated that the policy of voluntary amalgamation has signally failed. Three years ago, when C Subrama- niam was Minister for Steel, Mines and Metals, it seemed that powers might be assumed by the Union Government, as the Government in Britain did over three decades ago, to effect compulsory amalgamations. Yet that was not to be. And even if the States had not acted as restraining factors, it is not too certain that the public sector itself was equipped to assume the additional responsibility of re-orienting the amalgamated mines : the Coal Board has never had enough funds to fulfill its role of neutralising the rise in costs; the National Coal Development Corporation (NCDC) has yet to prove itself capable of creating the sound, 'well-knit organisation and smooth liaison with the Centre needed to give technical leadership to the other collieries; and the related Ministry at the Centre has itself been split and reunited twice "in these years which has prevented the emergence of the political perseverence and technical grasp required to make operational and public sense of the assumption of such statutory powers.

State Finances

Discrimination against East Pakistan is nowhere greater than in the army. West Pakistanis dominate the army in terms of numbers and control. Just about 5 ,per cent of the officers are Bengali and the proportion among the ranks is no larger. This has important implications. Article 238 of the new Pakistani constitution lays down that the country's Defence Minister mustr be at least a Lieutenant-General or an officer of equivalent rank in the navy or air force. It follows that no East Pakistani can reasonably hope to become Defence Minister and even less to head the Pakistan army

D A Linked to Cost of Living

 shown that a chain of intercorporate investments, if cleverly forged, can achieve considerable tax saving in certain situations. To this extent, large business groups, especially those which have a large number of companies, get an advantage which is not available to smaller businesses. If reduction of concentration of economic power is one of the broader objectives of tax policy, this advantage should not be allowed to continue. True, some investments would be discouraged thereby but that is a question of laying down priorities and fixing differential effective rates of tax consistent with them. A company engaged in a priority industry should be taxed at less than the standard rate (as is done through development rebate and selective tax holiday) so that it would be able to make larger profits aod distribute larger dividends to attract fresh investment. Tax policy stops at this point; it does not have to be concerned with the status of the shareholder. This argument supports Bhoothalingam's plan for confining tax holiday benefits to companies and withdrawing them from shareholders. At present shareholders of a company eligible to tax holiday enjoy exemption from tax on dividends from the company. Bhoothalingam has recommended .that while the tax holiday be made more effective for companies, dividends distributed by these companies should be taxable in the hands of the shareholders in the usual course. The concern of fiscal policy is with the direction of investment, not the manner in which controlling and other investments are held.

Better Collections, More Liquidity

NIGERIA was never a country with a common heritage; such unity as it possessed was British-imposed. The South had never been entirely at peace with the North since the latter had carfied out a 'jehad' early in the 19th century. And the slaughter last September of 30,000 men, wo- men and children of the Ibo tribe in the predominantly Muslim North as a result of which nearly 2 million Ibos were forced to flee to the East, foreshadowed the break-up of the tenuous federation. Now, the Eastern Region under its Governor, Colonel Odumegwu Ojukwu. has seceded.

Aid-Financed Fertilisers

 vestment, hotel interest have been -arguing, is possible only if development incentives are granted to the industry; the argument seems to have been accepted by the Government.

Tourism and the Budget

NIGERIA was never a country with a common heritage; such unity as it possessed was British-imposed. The South had never been entirely at peace with the North since the latter had carfied out a 'jehad' early in the 19th century. And the slaughter last September of 30,000 men, wo- men and children of the Ibo tribe in the predominantly Muslim North as a result of which nearly 2 million Ibos were forced to flee to the East, foreshadowed the break-up of the tenuous federation. Now, the Eastern Region under its Governor, Colonel Odumegwu Ojukwu. has seceded.

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