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5 May 2017 Editorial


5 MAY 2017

Different clocks

Changes in financial year need Centre-States coordination

Changes in the financial year need proper coordination between the Centre and States

Madhya Pradesh has decided to shift its financial year that now runs from April 1 to March 31, to align it with the Gregorian calendar year — that is, January 1 to December 31. The idea is not new and has been floated a few times, before as well as after Independence. Yet, the M.P. government’s move is abrupt as there was no hint of this plan when it presented its 2017-18 Budget a couple of months ago. That it was announced less than 10 days after Prime Minister Narendra Modi asked Chief Ministers to ‘take the initiative’ on suggestions to change the financial year indicates that the desire to be the first to act on his words accounts for the haste. The next State Budget will be presented in December or January, but the State’s transition plan for the changeover isn’t clear beyond its intent to speed up spending of funds earmarked in its Budget for the 12 months until March 2018, so that they are utilised by December 2017. There have been similar instances of BJP-administered States rushing into reforms where the Centre was reluctant or non-committal — such as labour laws — with little changing on the ground. A fiscal year rejig is not something that can be left to the States alone.

On its part, the Centre had appointed a committee under former Chief Economic Adviser Shankar Acharya on the desirability and feasibility of changing the fiscal year in line with the calendar year, aligning it with the practice in most countries as well as multilateral agencies. Its recommendations are still not in the public domain. The Union Budget was shifted from February 28 to February 1 this year, to ensure that funds are available with ministries from the first day of the financial year. By the same logic, will it be advanced further to November 1 if the financial year starts in January? Otherwise, eager States such as M.P. may start 2018 with a clean slate but will have to wait till February for clarity on the Union government’s priorities for the coming year and till April for Central funds. Going forward with different financial years in the States while taking no action at the Centre would be chaotic. It will, in addition, be a fresh nightmare for firms adapting to the Goods and Services Tax regime that will be introduced in the middle of this financial year. Additional uncertainties and differing tax deadlines for States are not likely to enthuse investors. Getting rid of colonial-era conventions may be necessary to make administration more efficient, but it is equally important to think through the reforms and work out a viable sequence. The Centre must make the Shankar Acharya panel report public, and clarify its own road map so that States and taxpayers may align with it.

New-look Hamas?

As the Palestinian group moderates its line, the opportunity for talks must not be lost

The new political charter of Hamas marks a departure from several of its earlier controversial positions, indicating that the Islamist movement is willing to take a more realistic view of the Israel-Palestine conflict. Over the years, Hamas has been criticised by rival Palestinian groups as well as the international community over its original charter and actions. It has shown willingness in the past to live with Israel, but its original charter, marked by anti-Semitic language and unrealistic objectives, was a major point of contention. For example, it vowed to “raise the banner of Allah over every inch of Palestine”, called for the “obliteration” of Israel, and repeatedly harped on its fight against the Jewish people. Though the new programme does not supplant the existing one, its key proposals run counter to the old document. Hamas now says it is not fighting the Jewish people but the Zionists, because they have occupied Palestine. Released by the group’s outgoing Political Bureau chief, Khaled Meshal, the new charter also insists that Hamas is not a revolutionary group that seeks to interfere in the affairs of other countries. Instead, it is merely fighting for Palestinian rights. More importantly, it is now ready to support the formation of a Palestinian state on the 1967 borders.

Israel has rejected the charter, saying Hamas is trying to “fool” the world. Still, if Hamas actually tones down its rhetoric and takes a more constructive line towards peace, that will be something the international community can scarcely ignore. By accepting the 1967 border for the first time, Hamas has acknowledged the existence of the state of Israel. It may not immediately recognise Israel or give up the right for armed resistance: both steps will be unpopular among its ranks given the historic hostility and the continuing occupation. But the evolution of its position suggests that it is ready for a compromise. Second, with these changes the differences between Hamas and Fatah, the other major Palestinian movement that rules the West Bank, in terms of their approach towards Israel have narrowed. Over time, the disparate approaches between the Fatah and Hamas, not to speak of a violent power struggle between them, had substantially weakened the Palestinian quest for statehood. There were efforts in recent times to bring both parties together to put up a united front against the occupation; it will be interesting to see whether Hamas’s new programme goes some way towards achieving this. Hamas released the document a few days before Palestinian President Mahmoud Abbas met Donald Trump in the White House. For years, both Israel and the international community avoided engaging Hamas, citing its hardline positions. But it has only grown in strength, making its consent inevitable for any durable solution to the conflict. If Hamas reinforces this message of moderation by addressing concerns about its support to violence, other parties in the conflict have the responsibility to respond constructively.

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