By James Perry

I have been a silent observer of all the letters, articles, meetings and comments about the Inner Line Permit (ILP). There have been some interesting and thoughtful ones and others from those who just seem to have jumped on the bandwagon of a topic which they really know little about. One of the more passionate writers and one who shows signs of actual research into the Act is Morning Star Sumer. I would be the first to step away from argument regarding the regulations and the first implementation of ILP and all its former reasons, with one who has researched it, such as him. However, I would like to bring forth some of my own thoughts and cautions.

Any system has its good points and its flaws: To say that ILP is the answer is a limited view of what will happen in the future. Getting caught up with the ILP somehow protecting the indigenous people and the transfer of land is saying that the problem of land transfer is because of some Act that is not directly directed at Land Transfer or that within the system now, there is no protection. As far as I see, protections are there. It is the misuses of those protections that are the problem. With or without ILP the problem is still that there are those who manipulate the system to their own short term benefit. I think it is inappropriate to mix up ILP with The Land transfer Act. The land transfer issue needs to be dealt with on its own not in conjunction with the ILP. Today it is the local people who have abused the system of Land Transfer, mainly, I believe because of the value being put on it. The tradition of inheritance of hereditary property is disappearing. As soon as land is traded with cash, and the demand is there then the system is warped. Just go to many rural areas of East Khasi Hills and Bhoi and many others. One will see that entire tracks of land have been bought by rich people then sold in small packs of only 2000 to 5000 sq. feet; sometimes even less and at ever increasing prices. All in the end displacing the poor and making the rich richer.

These lands at one time in the past were not allowed to be bought and sold. Now there are being traded on the open market, that did not change because of presence or non-existence of ILP and it will continue with or without this proposed Act. There are now land agents whose only cause is to find a seller and connect with a buyer to make their substantial commission – far above what most real-estate agents in western countries could ever fathom. These agents have little morals and will deal with almost anybody, there is and as far as I can see there are no regulations on them. They are often the ones making deals with non-indigenous people to buy land in others’ names – Why? Because land has become a commodity. If you look at land prices just 10 years ago in Mawlai and the prices now, it is phenomenal and unaffordable by many who do earn an honest living.

The point is, if protection of indigenous people is the goal, one should not be implementing a permit system set up in 1873. A new system should be implemented and developed. The modern day indigenous person does not require the same protections as in 1873. Things have changed and so too the circumstances. What they require is up for debate. Naturally any minority needs protection but one cannot expect that a single ILP system is the answer. Those of us who have been on the side of getting ILP and RAP in North East India, understand the bureaucracy involved in getting a simple document to travel in areas that we just want to visit and not be part of. It is often easier to go for a visit to many foreign countries like Thailand, Malaysia and others than to travel to areas in North East India. The majority of travellers are just passers-by and they are persecuted for the minority whose entry could be checked by some other regulation. If you want better control of Land Transfer – get regulations for Land Transfer. If you want regulation for outside labour in the State – get regulation for Outside labour. All regulations should be specific to the areas one wants to control. If a person wants to become a permanent resident of an area, the regulation should deal with them, not the ones who are in and out in a week to 10 days.

As Morning Star states: ‘One may find many obstacles in the way of development, but, ILP is not among them. If the race should eventually be removed from the planet, ILP will not be the cause of it.’ Conversely: Implementation of ILP will not stop the many causes of the disintegrating present indigenous society. Nor will implementations of ILP stop the causes that might remove the race from the planet. There are much bigger issues at play that may eventually remove the race from the planet, and these issues should be approached with a much greater passion than that given to the implementation of ILP.

Nor will the wishes: to keep culture and ethos of living and acting on the belief in of existence of God with or without a particular name, (2) respectfully acknowledging progenitors – maternal as well as paternal, (3) earning my livelihood honestly – sans corruption which all sane people should abhor; to share the Earth with others of my own kith and kin as equals, be protected by a strong Land Transfer Act.

A strong Land transfer Act is maybe needed but it is a humanly endeavour for our time on earth. Many of the wishes stated are more from a spiritual side and should be approached from that side.

(The author runs Cultural Pursuits a tourism agency and can be reached at [email protected])

Foreign investment in insurance
By Anjan Roy

Reacting to the announcement opening 40% foreign direct investment in insurance sector, leading politician, Sharad Jadav, had observed that if you are opening up al industries and activities to foreign investment why not allow this in government. Effective and catchy criticism, no doubt. It should sell well with people and opponents of government. But it also reflects and attitude which refuses to take in the advantages that such opening up can deliver to the country. To say the most provocative thing to the opponents, opening up such industries to foreign investment can even benefit the so called “aam aadmi”.

Before exactly, examining this, let us also take note of another more rational line of argument advanced by K.D. Singh, a businessman and now a political follower of Trinamool Congress chief Mamata Banerjee. He quoted some consultant’s report showing that insurance companies did not invest in infrastructure projects, rather they went on investing in equity markets. Hence, opening up of insurance sector to foreign investment is tantamount to making insurance schemes more risky, thereby putting the savings of common insurance subscribers to great danger.

Both these observations believe that with opening up insurance sector to foreign direct investment, the government takes leave. There will be no authority any where and regulation of insurance companies -and for that matter, governance itself-may just go out of the window.

The fact of the matter is that insurance sector in India is fairly well regulated. With its growth, the regulatory system could be and should be strengthened. Regulation of insurance or other financial sector entities also include stipulating certain broad guidelines for their investments. Take for instance the Reserve Bank of India’s guidelines that require any bank in India to put no less than 24% of its deposits in government securities under statutory liquidity ratio (SLR) provisions. Another 4.5% of its deposits have to be kept with the RBI in cash. The RBI is empowered to periodically change these as required under its monetary policy.

Similarly, insurance companies have to compulsorily invest part of their funds in government securities and in various other categories of securities which are basically debts and therefore these are lower risk assets. In fact, a future insurance regulator in its wisdom can impose a requirement that all Indian insurance companies having 49% foreign direct investment will be required to place a certain proportion of their premium collections in infrastructure sector bonds. Already, we have seen some semi-official bonds -such as, IDBI infrastructure bonds-enjoying tax benefits. Such bonds may qualify for placing funds of the insurance companies as well.

If large funds flow into India following opening up the sector to higher foreign investment, the loss is not of India’s. After all, if someone chooses to bring in his money – and all money is hard earned, including money from overseas-the risk is for the one who is doing such deals. India is gaining in the process that such funds can supplement domestic availability of funds. If funds come into India from global insurance companies, these will not be spent for terrorist funding or for bringing down the Indian state. It should come in to earn some dividends at best. There is a common supposition in the country that if funds flow from overseas, these will invariably be for some nefarious activity in this country. This is nothing but a form of economic persecution mania. It is time we grow up.

Secondly, world is not just waiting with bagful of money to pour into whatever is available in India. As a matter of fact, investors will have to be wooed to come and burn their money on Indian projects. China had most effectively done this after opening up and the results are for all to see. Today, China is in a position to dictate terms to the USA , it can lend its own money to Russia to lay pipelines for transportation of its gas and oil, the European Union comes to China’s doors to plead for funds to rescue its beleaguered debt-ridden countries and IMF looks upto to China to get supplementary assets.

It was not always so. China had to go out and present itself as a worthwhile destination for foreign investment. Even today, China is constantly at work to woo the large corporations of the developed world to come and invest, its ministers are constantly engaged with high officials of giant corporations to woo them into the country.

Funds flowing into India -and not going out-will always benefit. We have been watching the investment levels dropping in the country, as noted by none other than Prime Ministers’ Economic Advisory Council. Insurance companies coming into India will inevitably result in far greater competition in the insurance space and these will benefit no other than the common man. Large insurance investors are not just fly-by-night operators. They cannot salt away money from this country after coming in and investing in India. They would look forward to earning on their investment and that will mean sharing this with the government in the form of taxes.

On the other hand, in a fiercely competitive market, insurance companies -having foreign holding or not-will have to survive on the basis of its quality of service, the reliability of its performance and returns they give to their subscribers. If insurance products improve, will it not help the common man? You can argue that insurance is now subscribed by the rich and not poor. Are we looking forward to India’s poor ever remaining poor? Aren’t the poor getting a little better and eventually be able to buy insurance policies? Can we not devise insurance products for the poor? Abhijeet Banerjee in his Poor Economics has indicated how insurance products for the poor can altogether change the outlook for a poor family. Our regulators can stipulate some obligations -like priority sector obligations for banks-on the insurance companies.

One caveat: the policy for opening up the insurance sector has been denied to public sector insurers. The denial will work to their disadvantage. The capital appreciation that the public sector insurance giants could have been befitted from if their shares also were open to foreign investors, would have been mind boggling. LIC and GIC subsidiaries would have been the market beaters of the future and their market capitalisation might have surpassed many of the established private sector giants of today.

This is self-imposed abstinence and impoverisation. The private insurance companies and their existing owners will make a killing once the policy becomes operative. Their market capitalisation will catapult. But it will not happen to the much bigger public sector insurers by policy. What a shame.

This is happening because we are afraid of the market. We are artificially limiting the market for the public sector. In the end, it hurt the public sector than protect them. (IPA Service)