Proposed Aadhaar-type tagging gives more power to gau rakshaks, Cairn arbitration shows govt intent suspect

About 13-15 mn cattle & buffalo are killed every year. If govt wants to end this, who is going to pay `30,000 cr to feed them every year? Need a clear answer from govt, not delicious ambiguity.

The government proposal to give an Aadhaar-type ID to livestock, the news on the panel in London rejecting the government’s proposal to delay the Cairn Energy arbitration and even the decision to force stent manufacturers to maintain production in the face of price caps—all three were in the news this week—expose a command-and-control approach of the government that most investors will be wary of.

In itself, an identity tag for livestock—it is not clear if this only applies to cattle or also to buffaloes—is probably a good idea since, apart from ownership details, it will have information on the animal’s age, breed, and milk-yielding status, among others. But, in view of statements from leading BJP politicians that discourage killing cows and buffaloes for meat—and tacitly encourage the gau rakshak brigade to stop the killing of even male animals—this is likely to cause even more problems for those in either the dairy or the meat trade.

While those against killing of old cows as well as male animals, whether cattle or buffaloes, argue that the urine and dung generated have tremendous economic value even after the animal is past its prime, it is not clear whether this is greater than the costs of looking after animals; if it was, it is unlikely that 13-15 million cattle and buffaloes would be slaughtered each year.

Given that the share of male buffaloes declined from a low 19% of the total in 2007 to 15% in 2012 at an all-India level—it is 8% in Gujarat—it would appear slaughtering is an integral part of the sector’s economics. With over 9 million buffaloes killed for meat in 2012, this means over 8% of the population is killed every year. Even in the case of cattle, the male population has fallen from 42% at an all-India level to 36% in the same period, suggesting culling is taking place. If these 13-15 million cattle and buffaloes are not to be killed, this means dairy farmers need to look after them—Harish Damodaran, in The Indian Express, puts the daily feedstock cost for each animal at `60 per day.

By campaigning against such slaughter, the government is imposing a `28,470-32,850 crore annual cost on dairy farmers, apart from choking off the money they get from sale of the animals. Even if slaughter is discouraged, when cattle/buffaloes grow old, or milk output reduces, farmers may want to let them loose so that this huge burden can be reduced. With Aadhaar tags, however, the owners will be easy to trace and subject to questions on why, for instance, an 11-year old male animal or a post-lactating cow was let loose or sent to the slaughter-house. While politicians talk of more gaushalas, it is unlikely the government has the capacity to tend to 13-15 million new animals every year, and the number could be even higher if you assume a certain proportion of the population has to be culled each year.

In the case of Cairn Energy, it is true the original sin was that of the UPA, but while the BJP campaigned against tax terrorism, it didn’t repeal the bad law. It sought to justify this by saying while Parliament had to have the right to bring in a new law—the possibility of Parliament running amok is frightening for investors—it would not use the statute; indeed, it would let courts and arbitration panels to decide on existing cases.

That doesn’t really help in the case of Indian courts since they have to go by the law which makes retrospective taxation legal. While it does help if there is an international arbitration, as the Cairn case shows, the government is delaying the arbitration. Asking the panel to first determine whether tax cases could even be arbitrated under a bilateral investment treaty was to be expected since this has always been the government’s position, but if the idea was to hasten the decision, shouldn’t the government have eschewed this position? Asking the panel to grant a stay on grounds the government was defending a similar arbitration—with the Vedanta Group—was worse since it meant the freeze on Cairn Energy’s shares would last that much longer.

While the arbitration panel rejected both pleas, the fact that the government made them—it even slapped a penalty on Cairn Energy last week on top of the original tax demand—signals its intent is not honourable. The case of stents, as has been argued in this newspaper, is equally worrying. hether or not the price-cap policy was a good idea, surely manufacturers have the right to pull out if they want to? Given the government already levies some form of price controls on the entire pharmaceuticals sector and tacitly in agriculture—each time prices rise, stocking limits are reduced and export bans are introduced—it is a natural fear that this could be extended to other industries. For a government that is trying to convince investors India is a good place to be in, this has been a particularly bad week.