GD-WAT Bible
GD-WAT Bible
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GD-WAT Bible
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GD-WAT Bible
TABLE OF CONTENTS
Sr. No.
Topic
Pg No.
1
Can India become a 5 Trillion Dollar Economy by 2024?
2
Slowdown in Indian Economy- Reasons and Solutions
12
3
India-A Dangerous Country for Women
26
4
Agricultural Crisis in India - The Root Cause and Consequences
29
5
Sabarimala Issue: Tradition vs. Women’s Democratic Rights
35
6
How Can We Handle and Prevent Online Harassment ?
41
7
Are Streaming Platforms (Netflix etc.) a Threat to Conventional TV ?
44
8
Globalization is Dead and We Need to Invent a New World Order.
47
9
Does India Need a Bullet Train?
51
10
Will Insolvency and Bankruptcy Code Fix the Bank NPA Issue?
54
11
Is Artificial Intelligence “the worst event in the history of civilization”?
63
12
The Impact of Brexit on the Politics and Policies of the European Union
67
13
Umbrella Revolution in Hong Kong
71
14
Demonetisation and GST: What India Gained and Lost.
74
15
Citizenship Amendment Act – What is at Stake?
82
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1. Can India become a 5 trillion Dollar Economy by 2024?
Over last year and half, there has been a lot of buzz around the claim of making India a
5 trillion dollar economy by 2024. Finance Minister Nirmala Sitharaman also emphasised
the goal in her budget speech presented in July 2019. There was a mention in her budget
speech that by 2019, India had become 2.7 trillion dollar economy. Simple back of the
envelope calculations reveal that India will have to grow annually by more than 13%
every year for the period 2019-24 in order to reach 5 trillion dollar mark by 2024.
On this background, let us see how fast Indian economy has grown over the years. The
following line chart shows the rate of growth of Indian economy since 1961 (Chart plotted
using the World Bank data, taken with thanks from GDP Growth of India | India GDP
Growth 2019)
We can see that Indian economy has never grown substantially more than 10% in any
year since 1961. When the size of the economy is already the third largest in the world
in terms of Purchasing Power Parity, growing at that high rate is even more difficult due
to ‘large base effect’. We rely only on numbers, it seems difficult to achieve the goal at
the moment.
This is not to paint a pessimistic picture but to set the expectations right. Moreover, aims
are always set at higher levels, which bring out the best and in the process one achieves
the goals that seem unrealistic, though the ultimate goal is not achieved. As they say“Aim for the moon and if you miss, you will still be among the stars”. Therefore, in
this write-up, we will discuss the challenges and opportunities for getting that 5 trillion
dollars mark, say by 2025 or 2026, if not by 2024.
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Historic Perspective
India grew at more than 8% between 2003-04 and 2007-08 till India’s growth march was
halted by the global economic crisis of 2008. This was the fastest continuous 5-years
growth period in the history of independent India. The factors that contributed to this
rapid growth were a combination of domestic as well as international factors. In order to
grow at a high rate in the next 5 years, we will need similar (if not the same) confluence
of favourable domestic and external factors.
First let us revisit the domestic and international factors that contributed to India’s growth
story in the period 2003 to 2008.
Domestic factors
1.
The latter half of Atal Bihari Vajpayee’s government saw some really good economic
reforms. In 2001, the Vajpayee government launched the ambitious ‘Golden Quadrangular’ project to connect four metros with continuous good quality highways. The
Vajpayee government gave impetus to Public Private Partnership in highway building,
which paved the way for rapid construction of highways. The Vajpayee government
also initiated ‘Pradhan Mantri Gram Sadak Yojana’ for building all weather roads in
the rural area. Manmohan Singh’s government that followed the Vajpayee government
continued these good policy measures. The Golden Quadrilateral project was finally
completed in 2012.
Upto late 1990s and early 2000s, the state of highways in the country was really bad.
Importance of good road network for economic progress cannot be overemphasised.
These efforts paved the way for rapid economic growth in that period.
2.
The Vajpayee government continued the policy of P.V.Narasimha Rao’s government and diluted the government shareholding from several PSUs (this is called the
process of ‘disinvestment’). Manmohan Singh’s government continued the policy of
disinvestment and disinvested from the Airport Authority of India. However Manmohan Singh’s first term was constrained in disinvestment due to the opposition of
Communist parties, on whom the government was dependent for survival.
3.
The Vajpayee government brought much awaited reforms in the power sector through
the Electricity Act of 2003. It was an important milestone for attracting Public Private
Partnership in the power sector.
4.
The Vajpayee government undertook very important policy measures in the telecom
sector. Mobile phones were introduced in India in 1996 and calling rates were as
high as Rs.16 per minute in 1996. Significant part of these high rates was due to
high government taxes. Vajpayee government cut the taxes on telecom services and
also permitted the entry of private players in the telecom market. The competition
significantly reduced the prices. At one point of time up-to early 1990s, there was
a waiting period of as much as 10 years for getting a landline phone. However by
2003-04, almost everyone in the country had mobile phones. It was a great progress
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by any standards in a relatively short time. Progress in the telecom industry paved
the way for rapid economic progress in the following years.
5.
In 2002, India’s fiscal deficit was about 6% of GDP. Due to the efforts of Vajpayee
and Manmohan Singh governments, it was brought below 3% in 2008. The crisis of
2008-09 required the government to hike expenditure, as a result of which there was
a steep increase in the fiscal deficit post 2008-09.
(Reference: India Consolidated Fiscal Balance: % of GDP [1998 - 2019] [Data & Charts])
Similarly the efforts of both Vajpayee and Manmohan Singh governments in the time
period 2000 to 2006 contained inflation in manageable limits.
Since 1999, there was relative political stability in the country. That enabled the governments
to continue with their policies without any hindrance.
International Factors
In the year 2000-01, the US economy was hit by ‘dot com crash’. The attacks of 9/11
followed soon. As a result, by March 2002, the US economy plunged into a mild recession.
In response to the recession, the US Fed under Alan Greenspan cut interest rates multiple
times. By 2004, the interest rates in the US were at record low levels at almost 1%.
Whenever the interest rates in the US are low, the US financial institutions invest in other
countries that hold a promise of better returns. Due to good policy initiatives by the
government, India held the promise of better returns. Therefore, the foreign institutions
pumped in dollars in record quantity in India in that period. The data collected from the
‘Handbook of Statistics on Indian Economy’ published by RBI reveals that the foreign
exchange reserves of India rose from about $ 48 billion in late December 2001 to $101
billion in late December 2003 to $273 billion in late December 2007. (Reference: Statistical
Supplement)
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To summarize, there was a favourable confluence of the domestic and international factors
that contributed to the growth of Indian economy from 2003 to 2008.
Current situation
In this background, it is important to understand how the domestic and international
scenario is unfolding. These developments will determine how fast Indian economy can
grow.
A. Domestic factors
1.
Health of Banking industry
Banking industry is critical for any economy. Banks perform the important task of
lending to corporates that play an important role in the economy. Rapid growth of Indian
economy prior to 2008 and the developments from 2008 to 2014 sowed the seeds of what
later emerged as the crisis for the banking.
The problem of stalled projects
Assuming that the growth would continue for the foreseeable future, various corporations
went for new projects and/or expansion of their capacity. Banks also lent to these companies
aggressively with the assumption that the repayment would not be a problem because
economic progress would help these companies generate enough funds for repayment.
The second term of Manmohan Singh’s UPA government was marred by policy paralysis
to a great extent. Electricity Act of 2003 permitted private companies to install thermal
power plants. However, the coal required for these plants was to be procured from Coal
India Ltd. The procedure was to allot ‘coal linkage’ to the private companies, which were
decided in the meeting of a cabinet committee. From 2010 to 2012, the cabinet committee
did not meet regularly, which delayed the allotment of coal linkages. After the allegations of
corruption in coal linkages were made in 2012 (so called Coal Scam), there was even more
hesitancy on the part of the government in granting coal linkages. Important government
clearances such as environmental clearances took time. Similar were the woes of many
highway projects, which were held up for want of land acquisition.
The problem was that banks had already lent for these projects and construction was also
underway with repayments expected to start, usually 3 years after releasing the amount
by the bank. If a power plant could not start operations due to unavailability of coal,
where would the plant generate the amount required for repayment? This resulted in
piling up of NPAs in banks.
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On http://164.100.117.97/WriteReadData/userfiles/89.pdf, you can get an idea about the
quantum of the projects that were stalled for one reason of the other. The total expected
investment of all the stalled projects ran into Lakhs of Crore rupees.
Allegations of corruption in banking
There have been serious allegations that various corporates got loans from PSU Banks
through their political connection without any regard to credit-worthiness. This reason
also contributed to the problem of NPAs.
Disclosure of NPAs
For a number of years, banks had misused the loopholes in RBI regulations on disclosing
the NPAs. However, in 2016, the RBI under the then governor Raghuram Rajan made the
disclosure norms more stringent which banks could not easily bypass. As a result from
2016 onwards, banks were forced to disclose the real NPA numbers.
As we can see on Bank NPAs: June 2019, the total NPA in top 36 banks in the country
increased from 6.71 Lakh Crore rupees in March 2017 to 9.66 Lakh Crore rupees in March
2018. In reality, NPAs were already there but they were correctly reported.
Consequences of bad health of the banks
1. Banks become less willing to lend to new borrowers. RBI can temporarily prevent
the banks from lending through a mechanism called ‘Prompt Corrective Action’ (PCR) in
case NPAs pile up significantly. In the following graph, we can clearly see the effect of
slow-down in credit growth in 2017-18.
(Source: https://www.ceicdata.com/datapage/charts/ipc_india_domestic-credit-growth/?ty
pe=line&period=max&lang=en)
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Lending is an important and essential activity for ensuring economic growth. Any
reluctance by banks can put a spanner in the growth engine.
2.
Banks occupy a very important role in the economy and lie at the core of the economy.
Any large scale failure of banks would lead to significant disruptions in the economy.
At present, about 70% banking in India is controlled by PSU banks. Therefore, in
case of any trouble in PSU banks, it becomes imperative for the government to infuse
more funds and avert crisis in the PSU banks. Over last 11 years, the government
had to infuse about 3.15 Lakh Crore rupees in PSU banks (reference: https://www.
bloombergquint.com/economy-finance/psu-bank-recapitalisation-government-infusedrs-315-lakh-crore-in-public-sector-banks-in-last-10-years). Chunk of this was infused in
last 2 years. For example, in October 2017, the government infused 2.11 Lakh Crore
in PSU banks (Reference: https://economictimes.indiatimes.com/industry/banking/
finance/modi-govt-announces-mega-rs-2-lakh-11-thousand-crore-bank-recapitalisationand-rs-7-lakh-crore-road-plan/articleshow/61202075.cms?from=mdr) and announced
infusion of additional 70,000 Crores in the budget of 2019-2020.
These funds could have been better utilized by the government for building meaningful infrastructure in the country or for any other productive usage. In a way, this
was a waste of taxpayers’ money.
2. Bankruptcy Code
We have to live with the fact that the chunk of the amount stuck in NPA will be lost
and will not come back. The best course of action is to salvage whatever possible from
the borrower and remove that loan from the balance sheet of the bank. This process is
called ‘cleaning of balance sheet’ of the bank.
The problem was that all these years the laws of the country were not stringent enough
to force bankruptcy on the defaulter companies and recover the amount owed. In 2016,
Government of India implemented Bankruptcy Code to address this important lacuna.
More than 10,000 cases have been referred under Bankruptcy Code. Initially the cases of
large borrowers were focussed on. So far resolution of 94 large cases with total outstanding
of 1.7 Lakh Crore rupees has been completed, out of which about 70,000 Crore rupees
have been realised. (Reference:
https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/ibc-resolves-cases-of94-companies-with-liabilities-of-rs-1-7-lakh-crore/articleshow/69877266.cms?from=mdr)
3.
Goods and Services Tax
GST is the single biggest tax reform undertaken in the post-independent India. All the
indirect taxes such as Service Tax, Excise Duty etc have been combined into one GST.
Old system of having multiple taxes was time-consuming and led to significant loss of
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efficiency. This is a very important step by the government. However, there have been
concerns about the implementation of the scheme. During last 2.5 years, the implementation
of filing the tax returns under GST have been progressively simplified.
One important fallout of GST is that it has become very difficult to evade taxes under
GST. As a result, several transactions that were not included in the measure of economic
activity will be progressively reported.
All in all, GST is a significant step in the economic reforms in the country. It has a
potential to boost the growth in the coming years.
4.
Other government policies
Government’s performance on other policies has been a mixed bag. First of all, the aim
of streamlining infrastructure in cities by building metros is definitely a big plus point.
Government is also focusing big time on widening the highway infrastructure in many
places in the country. Some important road infrastructure work that was pending for years
such as Bogibil bridge in the North-East that significantly reduces travel time between
Assam and Arunachal Pradesh and Kollam bypass road have been completed. These steps
have the potential of ensuring long time growth.
However, on the other hand, certain steps taken by the government are inexplicable. No
matter all the tall claims made, demonetization exercise does not seem to have yielded
the results. Moreover during demonetization period, rules underwent multiple changes.
Initially, going for cashless (or less cash) economy found no mention in Prime Minister’s
address to the nation on 8th November 2016. However, later the cashless economy was
hailed as one grand aim of the exercise. All this seems inexplicable.
Government’s handling of the telecom sector is also inexplicable. When Jio was launched
in 2016 and initially everything was offered for free and later at very cheap prices, there
is a reason to suspect that the step was intended at capturing the market share through
predatory prices. The government, Telecom Regulatory Authority of India and the Competition
Commission should have stepped in to avert that, which did not happen. As a result, all
other players in the telecom industry have had to face the brunt.
Government’s approach seems more on the long term. The budget of 2019-2020 contained
a number of provisions to boost Electric vehicles. However, the concerns of the automobile
industry that is currently facing slowdown have not been addressed. On the other hand,
import duty on certain spare parts used in automobiles has been hiked. Electric vehicles
may be the future. However, giving all the emphasis on electric vehicles, while neglecting
the short-term concerns of the automobile industry seems baffling.
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B. International Factors
International situation is not as stable as it was in the 2003-2008 period. The US under
Donald Trump has become more protective. The US has imposed tariffs on imports from
China. As a result, China also retaliated, leading to a trade war between the US and
China. There has been a lot of talk of agreement being reached between the US and
China, which has not yet culminated. There are protectionist tendencies in other parts of
the world, as can be seen from the Brexit referendum. This new wave of protectionism
can harm the flow of capital into India.
The situation in the Middle East, especially Syria continues to be volatile. Russia is solidly
backing Assad and helped him survive despite all odds. Further, Russia under Vladimir
Putin is very aggressive and is not willing to give in to the pressure of the West.
In the neighborhood of India also things are not very rosy. China is trying to encircle
India through efforts such as OBOR. Any repeat of an incident such as Pulwama attack
can potentially lead to escalation between India and Pakistan, which can derail India’s
growth engine.
Verdict
Considering the combination of domestic and international factors as well as government
policies, reaching the 5 trillion dollar mark by 2024 seems difficult. However, the government
is taking some right initiatives, which will help us to reach the mark, if not by 2024, may
be by 2026 or 2027. In order for that to materialize, the international situation should not
deteriorate in terms of war or conflicts. Moreover, the government should desist from
taking inexplicable decisions.
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2. Slowdown in Indian Economy- Reasons and Solutions
Meaning of Economic Growth:
The term economic growth is associated with economic progress and advancement.
Economic growth can be defined as an increase in the capacity of an economy to produce
goods and services within a specific period of time. An important characteristic of economic
growth is that it is never uniform or same in all sectors of an economy For example,
in a particular year, the telecommunication sector of a country has marked a significant
contribution in economic growth whereas the mining sector has not performed well as
far as the economic growth of the country- is concerned.
Type of Economic Growth:
1.
Boom and Bust Business Cycles: If economic growth is high-speed and inflationary,
then the level of growth will become unsustainable. This could lead to a recession
like the Great Recession in 2008. However, this type of growth is typical of a business cycle.
2.
Export-led: The Japanese and Chinese economy have experienced export-led growth
thanks to a high current account surplus. This is because they have significantly more
exports than imports.
3.
Consumer-led: The US economy is dependent on consumer spending to stimulate
economic growth. As a result, they also have a higher current account deficit.
4.
Commodity-led: These economies are dependent on their natural resources like oil or
iron ore. For example, Saudi Arabia has had a very prosperous economy thanks to
its oil exports. However, this can cause a problem when commodity prices fall, and
there aren’t other industries to balance things out.
In economics, economic growth refers to a long-term expansion in the productive potential
of the economy to satisfy the wants of individuals in the society. Sustained economic
growth of a country’ has a positive impact on the national income and level of employment,
which further results in higher living standards.
Apart from this, it plays a vital role in stimulating government finances by enhancing tax
revenues. This enables the government to earn extra income for the further development
of an economy. The economic growth of a country can be measured by comparing the
level of Gross National Product (GNP) of a year with the GNP of the previous year. In
real sense, economic growth is related to increase in per capita national output or net
national product of a country that remain constant or sustained for many years.
Economic growth can be achieved when the rate of increase in total output is greater
than the rate of increase in population of a country. For example, in 2005-2006, the rate
of increase in India’s GNP was 9.1%, while its population growth rate was 1.7%.
In such a case, per capita increase in GNP would be 7.4% (=9.1-1.7). On the other hand,
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if the rate of increase in GNP and population is same then the actual growth of GNP
would be zero, which implies that there is a decrease in per capita income.
As a result, there would be no economic growth. Therefore, in such a case, standard of
living of people would not improve even when there is an increase in the total output
of a country. However, such a growth is better than the stagnation of an economy.
The economic growth of a country is possible if strengths and weaknesses of the economy
are properly analysed.Economic analysis provides an insight into the essentials of an
economy. It is a systematic process for determining the optimum use of scarce resources
and selecting the best alternative to achieve the economic goal. Moreover, economic analysis
helps in assessing the causes of different economic problems, such as inflation, depression,
and economic instability. It is performed by taking into consideration various economic
variables, such as demand, supply, prices, production cost, wages, labor, and capital.
The economic growth of a country may get hampered due to a number of factors, such
as trade deficit and alterations in expenditures by governmental bodies. Generally, the
economic growth of a country is adversely affected when there is a sharp rise in the
prices of goods and services.
Following are some of the important factors that affect the economic growth of
a country:
(a) Human Resource/ Human Capital:
Refers to one of the most important determinants of economic growth of a country. The
quality and quantity of available human resource can directly affect the growth of an
economy.
The quality of human resource is dependent on its skills, creative abilities, training, and
education. If the human resource of a country is well skilled and trained then the output
would also be of high quality.
On the other hand, a shortage of skilled labor hampers the growth of an economy,
whereas surplus of labor is of lesser significance to economic growth. Therefore, the human
resources of a country should be adequate in number with required skills and abilities,
so that economic growth can be achieved
(b) Natural Resources:
Affect the economic growth of a country to a large extent. Natural resources involve
resources that are produced by nature either on the land or beneath the land. The resources
on land include plants, water resources and landscape.
The resources beneath the land or underground resources include oil, natural gas, metals,
non-metals, and minerals. The natural resources of a country depend on the climatic and
environmental conditions. Countries having plenty of natural resources enjoy good growth
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than countries with small amount of natural resources.
The efficient utilization or exploitation of natural resources depends on the skills and
abilities of human resource, technology used and availability of funds. A country having
skilled and educated workforce with rich natural resources takes the economy on the
growth path.
The best examples of such economies are developed countries, such as United States,
United Kingdom, Germany, and France. However, there are countries that have few natural
resources, but high per capita income, such as Saudi Arabia, therefore, their economic growth
is very high. Similarly, Japan has a small geographical area and few natural resources, but
achieves high growth rate due to its efficient human resource and advanced technology.
(c) Capital Formation/ Infrastructure:
Involves land, building, machinery, power, transportation, and medium of communication.
Producing and acquiring all these manmade products is termed as capital formation. Capital
formation increases the availability of capital per worker, which further increases capital/
labor ratio. Consequently, the productivity of labor increases, which ultimately results in
the increase in output and growth of the economy.
(d) Technological Development:
Refers to one of the important factors that affect the growth of an economy. Technology
involves application of scientific methods and production techniques. In other words,
technology can be defined as nature and type of technical instruments used by a certain
amount of labor.
Technological development helps in increasing productivity with the limited amount of
resources. Countries that have worked in the field of technological development grow
rapidly as compared to countries that have less focus on technological development. The
selection of right technology also plays a role for the growth of an economy. On the
contrary, an inappropriate technology- results in high cost of production.
(e) Social and Political Factors:
Play a crucial role in economic growth of a country. Social factors involve customs, traditions,
values and beliefs, which contribute to the growth of an economy to a considerable extent.
For example, a society with conventional beliefs and superstitions resists the adoption
of modern ways of living. In such a case, achieving becomes difficult. Apart from this,
political factors, such as participation of government in formulating and implementing
various policies, have a major part in economic growth.
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Factors limiting Economic Growth:
1.
Poor health and low levels of education
People who don’t have access to healthcare or education have lower levels of productivity. This lack of access means the labor force is not as productive as it could
be. Therefore, the economy does not reach the productivity it could otherwise.
2.
Lack of necessary infrastructure
Developing nations often suffer from inadequate infrastructures such as roads, schools,
and hospitals. This lack of infrastructure makes transportation more expensive and
slows the overall efficiency of the country.
3.
Flight of Capital
If the country is not delivering the returns expected from investors, then investors
will pull out their money. Money often flows out of the country to seek higher rates
of returns.
4.
Political Instability
Similarly, political instability in the government scares investors and hinders investment.
For example, historically, Zimbabwe had been plagued with political uncertainty and
laws favoring indigenous ownership. This instability has scared off many investors
who prefer smaller but surer returns elsewhere.
5.
Institutional Framework
Often local laws don’t adequately protect rights. Lack of an institutional framework
can severely impact progress and investment.
6.
The World Trade Organization
Many economists claim that the World Trade Organization (WTO) and other trading systems are biased against developing nations. Many developed nations adopt
protectionist strategies which don’t help liberalize trade.
Current Scenario of Indian Economy
The crisis brewing within the Indian economy has gained unanimous acceptance by now.
Even the latest annual report of the RBI for the fiscal year 2018-19 (or FY19) confirmed that
the Indian economy has indeed hit a rough patch. The GDP growth rate of the economy
has slipped to 5 per cent in the first quarter of FY20, the lowest in over six years. This is
an indication of tougher times ahead. Be it the recent collapse of the automobile sector or
the rising number of non-performing assets (NPAs),sluggish consumer demand or failing
manufacturing sector; all have a hand in this deceleration of growth rate.
The spurt in instances of job losses from automobile manufacturers to biscuit makers has
led to the general acceptance of the downturn. This is the third instance of an economic
slowdown for India in the past decade after the ones that began in June 2008 and March
2011. The technical term for the same is growth recession. A recession is defined in
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economics as three consecutive quarters of contraction in GDP. But since India is a large
developing economy, contraction is a rarity. The last instance of negative growth for India
was in 1979. A growth recession is more commonplace where the economy continues to
grow but at a slower pace than usual for a sustained period, what India has been facing
nowadays.
Reasons behind India’s economy slowdown:
1.
Collapse in Private Consumption and Investment Freeze Leading to Double Whammy:
The growth of the Indian economy had been predominated by consumption inclusive
of both -- Private Final Consumption Expenditure (PFCE) as well as the Government
Final Consumption Expenditure (GFCE), given that it forms around three-fifths of the
Indian economy. And any slowdown here is bound to affect the overall economy.
Except for perhaps retail loans given by banks, there is a contraction in all other parameters which measure consumption in different ways. Over the last five years, the
total consumption expenditure by Indian households had accelerated with an average
growth rate of 7.8 per cent compared to an average of 6.1 per cent in 2011-14. But
the recent sharp fall in PFCE in the June quarter to 3.1 per cent compared to 7.2 per
cent in the March quarter has significantly contributed to the recent slowdown.
That being said, any fall in consumption expenditure, as and when it would happen,
would escalate the crisis even more. If consumption spending falls, then output and
employment levels also fall since consumption expenditure directly impacts the other
two. As a consequence, the economy would stagnate, and prices deflate. Lower prices,
if unable to recover the costs, would halt the operations of any firm and would
initiate the layoff process. This, in turn, reduces earnings further. Hence this vicious
cycle keeps on repeating itself until the economy slips into a deeper state of shock.
In addition, another major component of India's GDP is investment, induced by both
-- private and government sectors. It has been a key driver of growth since the liberalisation of 1991. Though gross fixed capital formation (GFCF), the main constituent
of investment in the economy, increased, yet its contribution to growth fell by 6.2
percentage points in 2014-19 than in 2011-14. The slackening of investment lowers
the level of infrastructure development, causes hesitation in creating small businesses,
stop entrepreneurs from investing in research and development, and thus stagnates
technological development. Capital Investments are long-term gains that generate
profitability for many years by improving operational efficiency and boosting innovation. It goes without saying that for holistic growth of the economy and to gain
competitive edge over others, the economy must innovate.
Performances of different sectors:
Domestic car sales: During April to June 2019, car sales fell by 23.3% in comparison to the
same period in 2018. This is the biggest contraction in quarterly sales since 2004 (that’s how
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far back the quarterly data in the Centre for Monitoring Indian Economy database goes).
A slowdown in car sales negatively impacts everyone from tyre manufacturers to steel
manufacturers to steering manufacturers etc., when it comes to the backward linkages that
car manufacturers have. As far as forward linkages are concerned, many auto dealerships
are shutting down or shrinking. At the same time, the vehicle loans growth has slowed
down to 5.1%, the slowest it has been in five years.
Two-wheeler sales: These have not been as badly hit as car sales. Between April and
June 2019, two-wheeler sales contracted by 11.7%. This is the biggest fall since October
to December 2008, when two-wheeler sales had contracted by 14.8%, in the aftermath of
the start of the financial crisis. In fact, even mopeds are not selling, with their sales down
19.9% between April and June 2019 (In 2018-2019, a total of 880,000 mopeds were sold,
suggesting there is still good demand for them).
Tractor sales: A good indicator of rural demand, tractor sales during April to June 2019,
fell by 14.1%, the highest fall in nearly four years.
Domestic commercial vehicle sales: This is seen as an economic indicator of industrial
activity. Faster sales indicate a robust activity on the infrastructure and industrial front.
Commercial vehicles are used to move around finished as well as semi-finished goods.
Sales of these vehicles during April to June 2019 fell by 9.5%, the highest contraction in
five years, telling us that all is not well on the investment front. Between April to June
2018, sales had gone up by 51.6%.
Housing sales: As per Liases Foras, a real estate research company, India’s top 30 cities
had 1.28 million unsold housing units as of March 2019, a jump of 7% from March 2018,
when the number was at 1.2 million. This means that builders are building new houses
at a faster pace than people are buying them. The real estate sector has forward and
backward linkages with 250 ancillary industries. So, when the real estate sector does well,
many other sectors, right from steel and cement to furnishings, paints, etc., do well too.
This is something which isn’t happening currently. The fact that real estate prices haven’t
gone up in years makes people feel less wealthy and as a result spend less.
Bank retail loans: This data point goes against the trend. During April to June 2019, the
retail loans of banks grew by 16.6% in comparison to the same period last year. During
the same period last year, they had grown by 17.9%. There has been a marginal fall in
growth. Housing loans form more than half of the retail loans—they grew by 18.9% during
the quarter against 15.8% last year.
How does one explain the fact that housing loans are growing and so is the number of
unsold homes? A possible explanation for the fact is that people are now buying homes
from investors who had bought many homes between 2003 and 2012, instead of buying
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directly from a builder. To that extent these are not new homes and hence, cannot create
the kind of economic activity that the building of a new home can.
Other than home loans, credit card outstanding grew by 27.6% between April and June
2019, against 31.3% in April to June 2018. Again, a marginal fall at best. This also explains,
why every time you tell someone there is a slowdown, they reply, but the malls and
restaurants are packed. Credit cards are used by a certain section of the population and
at least, when it comes to them, they haven’t slowed down on spending on small ticket
items.
FMCG companies: The volume growth or the number packs sold, of fast-moving consumer
goods (FMCG) companies has slowed down over the last one year. If we look at Hindustan
Unilever Ltd, the volume growth between April and June 2019 was at 5%. It was 12%
during the same period last year. There are other examples as well. Dabur India posted
a volume growth of 6% during April and June 2019, against 21% last year. Britannia was
down to 6% against 13% last year. Indeed, this is worrying, given that people seem to
be going slow on making everyday purchases.
Non-oil non-gold non-silver imports: This is a good indicator of consumer demand as it
indicates when people buy more imported goods. During April to June 2019, these imports
fell by 5.3%, the biggest contraction in three years. They had risen by 6.3% during the
same period last year.
Investment insight:Fresh investments are very important for the GDP of any economy to
keep growing, for the simple reason that they create new jobs, which in turn leads to
higher incomes and higher spending, creating economic growth. Unfortunately, things are
not looking good on the investment front. Consider:
Bank lending to industry: This crucial indicator had remained almost flat for a couple
of years, and it has improved in the recent past. For April to June 2019, it went up by
6.5% against 0.9% between April to June 2018. This was largely on account of lending to
large industries, which grew by 7.6%, against 0.8% last year. When it comes to lending
to micro and small industries, the growth was almost flat at 0.6% against 0.7% last year.
While lending to big industry is important, it is the micro and small industries which
tend to create the bulk of any jobs in any economy, as they grow bigger.
Revenue-earning rail freight: The bulk of the freight operations of Indian Railways is
concentrated around moving certain commodities like coal, pig iron, cement, petroleum,
fertilizers, iron ore etc. If the Railways is moving more of these commodities around the
length and breadth of this country, it’s a good indicator of investment and industrial
activity picking up. How do things look on this front? This indicator grew by 2.7%
between April and June 2019, the slowest in nearly two and a half years. It had grown
by 6.4% between April and June 2018.
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Final consumption of finished steel: Creation of any new physical infrastructure requires
steel. Hence, a faster increase in steel consumption than in the past shows increased
investment activity than in the past. The consumption of finished steel grew by 6.6%
between April and June 2019, in comparison to the same period during the last year,
when it had grown by 8.8%. This was the slowest in two years.
New investment projects announced: The value of new projects announced during April
to June 2019 fell by 79.5% year on year. This is the highest fall since September 2004. In
absolute terms, the value of new investment projects announced during April to June 2019
stood at ₹71,337 crore, the lowest since September 2004. This is a great indicator of the
fact that businesses really do not have faith in the economic future of India, irrespective
of what they say in the public domain.
Investment projects completed: The investment projects completed fell by 48% in comparison
to the last year. This is the highest fall since September 2004. In absolute terms, the value
of the projects completed during the quarter stood at ₹69,494 crore, the lowest in nearly
five years.
Expenditure and net exports: Government expenditure tends to form around 10-11% of the
Indian economy (in current terms, without adjusting for inflation). In the last two fiscal
years, the growth in government expenditure was at 19.1% and 13.2%, the highest since
the financial crisis years of 2008-09 and 2009-10 and was instrumental in driving economic
growth to some extent. How do things look in 2019-20? To drive economic growth, the
government needs to spend more and for that the tax growth is important. During April
to June 2019, the gross tax revenue of the central government went up by just 1.4% to 4
lakh crore. During the same period last year, the gross tax revenue had jumped by 22.1%.
What this tells us very clearly is that the government is clearly feeling the heat of the
economic slowdown. In this scenario, whether it will have the ability to increase its
spending like it did over the last two years, is a question well worth asking.
Finally, net exports: This figure for April to June 2019 stood at -$46 billion. This was
almost similar to the net exports for April to June 2018 at -$46.6 billion. This is primarily
because both exports and imports during the period were at almost similar levels as last
year. Given this, there hasn’t been any increased economic activity on the exports front
either.
2.
The Effect of Demonetization:
Indeed, Demonetization can be said to have contributed too much of the slowdown
as the Double Whammy of demand collapsing, and supply bottlenecks mean that
there is a broad slowdown across the entire value chain of the demand and supply
dynamics.
Thus, what we have is a situation wherein cash has dried up leading to a slowdown
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in the economy, consumers suddenly prefer to hoard cash or keep it in the bank
instead of spending on consumer goods.
Moreover, demand has also collapsed in the rural areas as the entire rural economy
runs on cash and Demonetization led to the loss of jobs as well as incomes thereby
squeezing the rural consumer who now prefers to wait and watch as well as postpone consumption except that of essential goods and services.
Next, Demonetization has also led to small and medium businesses or the so-called
SMEs to withhold investment since they too operate on a cash basis and the cash
crunch has left them high and dry.
One must also take note of the fact that it is not only private consumption and small
enterprises causing the slowdown.
Indeed, the Big Corporates are as much to blame since they are drowning in debt
that they accumulated during the Boom Years of the first decade of the 21st century.
It is also a fact that this has contributed to a freeze on investment by industrial houses
and corporates who are now paying down the debt or postponing debt repayments
to ensure that their present cash flow is sufficient to remain in business.
3.
Too Much Debt:
Added to this is the fact that most Public Sector Banks are saddled with high NPAs
or Non-Performing Assets that have resulted in them tightening lending and instead,
seeking deposits and otherwise repairing their balance sheets by making provisions
for Bad Loans.
Indeed, absent recapitalization of such banks by the government, one might very well
see a vicious cycle wherein bad debts and demand collapse lead to no lending and
no fresh investment in addition to any consumption.
The cycle has to be broken somewhere, and this is where the Government and the
RBI or the Reserve Bank of India have to take concerted action.
4.
Rollout of GST:
Fourth, the fact that the rollout of the GST or the Goods and Services Tax on a
nationwide basis has led to the slowdown cannot be denied.
Indeed, GST has hampered the small businesses more than Demonetization by forcing
them to withhold inventory until they migrate to the GSTN or the GST Network and
become compliant with the numerous rules and regulations that are part of this tax.
It can be said that the implementation of GST is also flawed thereby exacerbating
some of the factors that have contributed to the slowdown.
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5.
Global Slowdown:
It is not these factors alone, and the most important factor is that there is also a
global economic slowdown that is happening and given the fact that India is a net
commodity exporter, there has been a slump in the volumes of exports.
Apart from that, the global slowdown has also been accompanied by a retreat of
globalization which has resulted in FDI or Foreign Direct Investment being only in
the areas of speculative finance and distressed assets purchases rather than into investments that help the Real Economy.
Thus, it can be said that ongoing global headwinds also have contributed to the
slowdown in the Indian Economy.
6.
Retreat of Globalization:
Hence, what the slowdown means for professionals and fresh graduates is that they
would be finding it harder to land jobs as well as see their salaries rise year on year
basis. In addition, the policies of the Trump Administration have contributed to a
decline in the number of students and professionals going to the United States and
added to this, Brexit uncertainties have compounded the situation.
It looks as though that the combined effect of all these factors means that the Indian
Economy is likely to remain in the doldrums for some time to come.
7.
Ride out the Storm:
Lastly, the slowdown is also part of a longer-term structural shift wherein the Economy
is shifting gears from the high investment era to a low investment era as well as a
transition from being cash-driven economy to a digitally enabled economy.
Indeed, this can be seen most in the Real Estate Sector that has come to a grind in
recent months and hence, has also contributed to the slowdown. All in all, all the
factors have caused a Perfect Storm for the Indian Economy, and there has to be a
time lag before one can reasonably and realistically expect a turnaround.
To conclude, the best option now for all stakeholders would be to Ride out the Storm.
Almost all these economic indicators suggest that we are well into an economic slowdown,
and it can possibly get worse from here. The irony is that this slowdown seems to be
obvious to everyone except the government. The question this leaves us with is, how do
you solve a problem without acknowledging it first?
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Solutions for the current slowdown:
Rising oil prices could hold up fund-based measures:
Policymakers should approach the various crises from a different angle.
The economy has not faced in a decade — from around the 2008 global financial crisis
and its aftermath — the kind of headwinds it is confronting now. The first symptom was
visible over five years ago, when exports began to stagnate at, a time when the global
economy was pulling its weight.
More recently has come the GDP growth slowdown, just when the country’s leaders were
in a gung-ho about India becoming a $5-trillion economy. The fact that officialdom had
no foreboding of a slowdown has now been admitted by the central bank governor. So,
efforts will first have to be made to find what went wrong before devising measures to
set things right.
This exercise will be further complicated by the fact that the GDP figures themselves may
be inaccurate. You need one set of policies to boost the growth rate from 5 per cent and
a different set of policies and emphasis to address a near-crisis situation of 2-3 per cent
growth.
On top of the twin slowdowns, the serious prospects of a sharp rise in global energy
prices emerged after the attack on Saudi Arabia’s oil facilities. If things do not return to
normal soon, domestic energy prices will go up significantly (they have just been upped
already by 14-15 paise per litre).
Ease of doing business:
So, what kind of a policy regime will be needed to address these headwinds? The best
thing policymakers can do, and it is not a fund-based measure, is to look all around to
improve the ease of doing business, keeping in mind the way progress on this front was
celebrated not so long ago.
A small beginning has been made by the Finance Minister assuring urgent efforts to reduce
the turnaround time at Indian ports and airports, so that they conform to international best
practices. Otherwise, Indian exporters cannot be efficient participants in global value chains.
From looking outwards, if we turn around a full 180 degrees, we will find that the Indian
farmer can hugely benefit if instead of having to rely on government-supported prices
for his produce, he is able to sell it to whomever he chooses and thus get a better price
from the market itself. The Centre and States have to put their heads together to remove
all impediments in the way of the country becoming an integrated market for agricultural
produce, which may then be traded across the border easily. This solution may even save
the government some price support spending.
When the corporate sector sees a business opportunity for itself by, for example, looking
at the currently prevailing farm-to-fork mark-up for food, it will be ready to invest in the
supply chain by laying out the infrastructure (cold chain, godowns, etc) and owning it.
Again, there is little need for government spending and it can be a life changer for the
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farmer with a stagnating income.
Better incomes for farmers will boost demand for consumer goods and remove the cloud
currently hanging over FMCG companies, which are seeing a fall in demand for even
the cheapest biscuits. Just a small rise in demand from the 50 per cent of Indians living
off agriculture (better price realisation by farmers will lead to better farm wages) will do
much to address the slack in consumer demand.
Policy tweaks:
In boosting consumer demand, the government should go all out to make the rural
employment guarantee scheme better. To take one example, cashew-nut processing farms
are currently facing challenges from two quarters — price competition from imported nuts
mechanically processed and higher wages to be on par with the employment guarantee
scheme. If the scheme works better, it will produce enormous welfare gains (improve
the quality of spending) at only marginally higher government expenditure, in relation
to total expenditure.
Another small-ticket item which can have a large impact on the emerging water famine in
India is promoting small irrigation works like excavation of local ponds and construction
of small bandhs, which will harvest rain water and recharge groundwater. Enhanced micro
watershed management will boost the rain-fed farm sector, home to the poorest who
depend on the yearly monsoon without any backup for a drought year.
If we again turn our heads and look at the financial sector comprising banks and nonbanking finance companies (NBFCs), addressing their liquidity needs and helping individual
NBFCs avoid default will boost business across sectors which were hurt by credit drying
up post the IL&FS collapse. Recapitalisation of banks need not fully impact the fiscal
arithmetic, and more liquidity to NBFCs can come from an easier market and some easing
of rules by the monetary authorities.
The entire discussion has been focussed on ensuring that the fiscal burden does not become
onerous. Until the oil disruption, some loosening of fiscal purse strings could have been
easily considered as inflation had been low. But if oil global prices keep ruling high
leading domestic prices to be raised significantly, then there will be impact on inflation,
and the space for fiscal action will be reduced.
Growth has momentum and slowdown has inertia. The Indian GDP growth has fallen to
5 per cent in the April-June quarter, from 8 per cent. This slowdown can only be reversed
if both short-term and long-term reforms are undertaken.
The fall in GDP growth is sudden and dramatic. Till now, while only businesses were
talking about the slowdown, it is now a reality for the country. People worry about how
bad things are and is this bottom or the beginning of a slowdown.
There is concern about the speed and nature of the government and industry's response,
and will these actions turnaround things immediately, or not.
These concerns and perceptions need answers as they affect consumer confidence and
consumption. Acknowledging the problem is not a sign of weakness or acceptance of any
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blame. It's a fact that leadership in the corporate sector has failed to recognize the major
transition taking place in their sector that has affected consumer demand.
Take the auto sector, for example. It did not prepare for shifts in consumer behaviour
and market needs. They contribute almost 6 per cent to the GDP and offer employment
to 37 million people and are clamouring for stimulus on behalf of their employees.
The stimulus has to be for both employees and corporates. The sector is asking stimulus
to protect jobs, but it does not mean it will happen as they move to electric vehicles (EV).
EVs have a fraction of moving parts as compared to an internal combustion engine. The
engine and drive line are two crucial components of the internal combustion engine that
contribute 50 per cent of the auto component industries' revenues. The move to EV will
disrupt the supply chain of components at one end and maintenance and repair on the
other. This needs specific incentives to upskill employees to maintain, repair or make
electric vehicles.
Upskilling of mid-level workers is the core component of all sectoral stimulus packages.
The disruption in industries is not cyclical or because of economic slowdown. There is a
structural shift in many industries because of technology or shift in consumer preferences.
Automation is affecting jobs in both manufacturing and services, which displacement is
also affecting the consumption cycle.
The stimulus for auto companies has to promote investment. India needs an investment
of $40 billion in batteries for EVs. Auto companies can get incentives for making this
investment. They can be incentives to shift existing production lines to electric cars.
These are, however, palliative measures and will not turnaround the economy. The bigger
issue is revival of consumption demand.
The government has had discussions with several sections of business and economists
over the last few weeks. It has plucked out all the prickly issues which created a negative
perception and eroded trust. But if a tyre is losing air pressure removing nails from the
road ahead will not stop the air from leaking.
Action has to inspire confidence among consumers to spend and for industry to invest.
Removing taxation on foreign portfolio investor and other prickly issues is a hygiene factor.
It shows the government is correcting mis-steps faster. Addressing it within a week, which
the Finance Minister Nirmala Sitharaman did shows the speed of response.
This is important as it will bring back the confidence in the industry, investors and market.
But the confidence to spend or even pay EMIs has to be restored.
It is equally important to set the right expectations for a return to normalcy or a turnaround
in the growth. The massive mandate this government received shows the expectation of the
common man. Not setting the expectation right or distorting the timelines will not serve
to inspire consumer confidence. People are pragmatic and patient if they understand the
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time it will take to come out of the current situation. They know there are no shortcuts
out of slowdowns.
The current initiatives are either short-term measures or long-term reforms. The consolidation
of Public Sector Banks (PSBs) announced on August 30, falls into the latter category. It will
not turnaround the banking sector, ease the credit flow or even improve the transmission
of interest cuts -- the three most important problems contributing to the slowdown. The
consolidation will take time.
The consolidation of the PSBs is a structural reform much needed, long overdue and
may reduce the recapitalisation requirements. The governance reforms will improve the
process of supervision, hiring and compensation. It will not change the credit evaluation,
disbursement and monitoring of loans, which is the core problem in PSBs.
The culture of poor evaluation of borrowers and lack of risk mitigation has contributed to
the non-performing asset (NPA) mess in the PSBs. This culture cannot vanish overnight
as it's entrenched in processes and behaviour.
Banking leadership can use the disruption to overhaul the culture and build a new system
and processes. If they get sucked into the merger and take their eyes off credit growth,
customer retention, their merged entity will be weaker than the sum of the parts.
Both merger and governance reforms were important but are obviously not sufficient from
the slowdown point of view.
To kick-start the consumption cycle money has to go into the common man's pocket. This
can happen by reducing income tax for the lowest slab, as recommended by the Direct
Tax Code report. It can be done by making GST filing quarterly for MSMEs with less
than Rs 10 crore turnover to ensure they survive the slowdown. The GST Council can
look at reducing rate slabs and reduce the overall burden on corporates.
Immediate steps:
1. Give auto sector incentives to invest and shift to electric vehicles.
2. Incentives to auto sector employees to upskill on electric vehicles.
3. Change GST collection to quarterly for companies below Rs 1 crore.
4. Reduce the GST slab rates.
5. Adopt the Direct Tax Code, cut income tax for the bottom slab.
6. Improve credit flow to both consumer and industry.
7. Reduce real interest rates by 135 basis points as cost of capital has to come down.
8. Change the credit culture in public sector banks.
9. Stimulus should drive investment, upskilling for displaced employees.
10. Factor market reforms, including bringing the cost of land down.
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3. India-A Dangerous Country For Women
A macabre rape-murder dents Hyderabad’s image as a safe city, once again highlighting
the continuing national epidemic of sexual assault and the chronic failure of our criminal
justice system! In the later weeks after this case, we observed a familiar pattern unfoldpublic anger, media frenzy and promises of stricter laws by legislators. There was a strong
sense of déjà vu in the air, accompanied with a sinking feeling that the needle hadn’t
moved forward in all these years. Supposedly, women were more likely to report abuse
and sexual attacks after the 2012 Delhi gang-rape, but unfortunately, there has been little
or no impact on arrests and conviction rates, according to a study published in February
2019.
The national outrage over the Hyderabad incident echoes the public response after the
Nirbhaya episode of 2012, suggesting widespread concern about such crimes against
women, particularly in the cities. The National Crime Records Bureau (NCRB), which
released its 2017 data this October, says a total of 3,59,849 cases of crimes against women
were reported, a 6 per cent rise over the previous year. Of these, assault on women with
'intent to outrage her modesty' comprised 21.7 per cent and rape comprised 7 per cent.
The criminal justice delivery system is still not equipped to cope with this. The NCRB
data indicates that in 86 per cent rape cases, the police file charge-sheets but trial courts
are able to dispose of only 13 per cent of the pending cases, with the conviction rate as
low as 32 per cent. In child rape cases, the conviction rate is 34.2 per cent and pendency
82.1 per cent. Over two years to 2015, the annual average reporting of rape cases in Delhi
was 23% higher compared to the annual average over a decade to 2011. The average
annual reporting of molestation and sexual harassment during 2013-2015 was 40% higher
compared to the annual average reporting before the Nirbhaya case.
Recently, a survey conducted by the Thomson Reuters Foundation, has ranked India as
the world's most dangerous country for women, ahead of Afghanistan, Syria and Saudi
Arabia. According to the report, India is the most dangerous country for women in terms
of human trafficking, including sex slavery and domestic servitude and for customary
practices such as forced marriage, stoning and female infanticide. Debate over the state
of women in India has intensified after the survey results were presented by Thomson
Reuters Foundation.The methodology used was a survey of 548 respondents on six different
indices -healthcare, discrimination, culture traditions, sexual and non-sexual violence, and
human trafficking. However, the question arises that was it right for the Foundation to
rank the nations just on the basis of perceptions of experts without even disclosing their
names and without using any government data?
While the government has criticized the survey’s ranking, many have questioned how
countries like Saudi Arabia and Afghanistan, which grant far fewer rights to women,
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managed to perform better. The country's National Commission for Women rejected it
outright, saying that countries where women could not speak out, had done better. They
have also pointed out that rape, harassment and other forms of violence against women
have risen in India because more cases are being reported, driven by public outrage.
Additionally, an interesting data says that Thomson Reuters Foundation declares female
genital mutilation (FGM) as one the parameters in cultural traditions where India has been
ranked the worst. But, according to a report of WHO, India is not even mentioned in the
list of 29 countries where female genital mutilation is prevalent. This data itself reflects
the validity of the new survey.
However, many women welcomed this survey as well. RoopRekhaVerma, a college professor
and social activist said, “A better methodology, rooted in intensive data and empirical
work, could have been used of course, but if more than 500 gender specialists view it
like this, it has to be taken seriously. These aren't perceptions from people on the streets
- these are well-informed experts”. Though the government has been quick to question
the Reuters survey, but India has no reason to gloat - a look at the official crime statistics
shows a woman is raped every 13 minutes; six women are gang-raped every day; a bride
is murdered for dowry every 69 minutes; and 19 women are attacked with acid every
month. Adding to that, there are thousands of reported cases of sexual harassment, stalking,
voyeurism and domestic violence. Actually, this ranking does matter - because it shows
that India has lost the battle of perceptions. And sometimes, perceptions do matter. So,
instead of being a scapegoat, India should do some soul-searching to see how things can
be improved from the grass root level for the women. India has to convince the world
that it's not a hostile territory for the female gender and gets off from lists like these.
Apart from all these surveys and rankings, there is one question that is dwelling in people’s
mind- Is India safe for women? The most shocking thing is that most of the Indian women
who came across the news that India has been ranked the most dangerous country for
women by a Thomson Reuters survey, was not filled with shock. The reality is women
in India grow up, very aware of their position – inside the home and outside it. Even
if a few of them are lucky enough to be given some freedom, they are immediately told
that they are privileged – something not many Indian women or girls are given. Every
day, horrendous news of rapes, assaults and violence against women make them furious,
anguished and enraged. It makes them question humanity, the law, government, security
forces, and the whole existence of mankind. Why do the 49% of the country’s population,
who are identified as women, have to fight for a basic right like the right to safety? The
successful veterinarian from Hyderabad, who was mercilessly gang-raped and murdered,
or the minor girl in Unnao, Uttar Pradesh did not deserve such a horrific fate. However,
these are the cases, which have been reported and covered by the media. We cannot even
imagine the life stories of endless such girls whose tragedies remain untold.
But, it’s unbelievable how the government have turned a blind eye towards the pain and
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suffering of the women of the country. Forget taking action, some still remain mum about
the ongoing situation of the country, believing that the outcry would eventually fade with
time. Anything and everything that is critical about the country is being dealt with this
exact attitude—denial and name calling. And if there is something more outrageous than
the above denial about data, it is about ‘personal experiences’.So, since no one has tried
to molest a particular person, India should be declared as the safest nation in the world.
Ironically, it is like I just had food, so world hunger is cured. While every party is keen
to include women in their agendas, they are not going beneath the surface. There are
so many unresolved issues within the sphere of gender in India. For any government,
women’s rights have always been a game; after all, women constitute an important votebank. The problems of women exist not only in the rural areas of the country but also
in the urban setup. Infact, the urban setup is a monster of a different sort. For every
Kathua and Unnao case, there’s a Nirbhaya to go with it.
While we do see efforts being made to make society a safer place for women, we don’t
see any results. The reason is that this toxic culture is so deep-rooted that mere encounters
or death sentences cannot eradicate the violence against women. We have grown up
hearing tales of women as powerful goddesses. But, what we are witnessing is a totally
different tale. Our personal experiences have built in us a fear of the Indian society. It’s
so brutal that women often become oppressors of other women.The current situation in
India portrays that the number of crimes and the extent of cruelty against women is on
a constant rise. Let’s not forget that if the valor, courage, and esteem of women like
SushmaSwaraj, SwaraBhaskar, RanaAayub, Sonia Gandhi etc. can be reduced to grime, what
safety can the average Indian women expect? So, irrespective of the rankings, right now,
women’s safety in India and also across the world is like a cure for Cancer—WHICH
DOESN’T EXIST!
As it wasn’t until every radio channel, advertisement, banner and speech talked about the
Swachh Bharat Abhiyan that we gained consciousness of the importance of keeping our
country clean. What if that same voice declares a national emergency and tells the people
to clean their minds now? Isn’t it time that after Swachh Bharat, the nation should go on
its revolutionary path towards a Surakshit Bharat (Safe India)? So, instead of relying on
the government, let the change begin from within us!!
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4. Agricultural Crisis in India - The Root Cause and
Consequences
A study by a premier social sciences research institute reinforces what policymakers and
media have been talking about the past few years - that India is going through a deep
agrarian crisis. The Centre for Study of Developing Societies (CSDS), based in Delhi, found
that given an option majority of farmers in the country would prefer to take up some other
work. Poor income, bleak future and stress are the main reasons why they want to give
up farming. Around 18 per cent of respondents surveyed said it was because of family
pressure that they are continuing with farming. Why they want to give up farming. The
survey of 5,000 farm households across 18 states says that 76 per cent farmers would prefer
to do some work other than farming. Sixty-one per cent of these farmers would prefer to
be employed in cities because of better education, health and employment avenues there.
A high percentage of farmers complained of repeated losses; 70 per cent of respondents
said their crops were destroyed because of unseasonal rains, drought, floods and pest
attack. Is agriculture no longer a viable occupation? Let us look at some facts:
•
Extreme distress in Rural India in the farm sector has resulted in an average 10,000
to 12,000 farmer suicides every year. In the recent months, the rural distress has also
led to widespread protests in certain states. Farmers across India also mobilized in
New Delhi to protest against the policies (or the lack of) of the government.
•
A large number of farmers are living below the poverty line and incidents of suicides
are frequent.
•
In May 2017, the Centre informed the Supreme Court that despite a multi-pronged
approach to improve income and social security of farmers, over 12,000 suicides have
been reported in agricultural sector since 2013.
•
20 lakh hectares of cultivable land is understood to have been acquired for non- agricultural purposes. Further, 42% of farmers are ready to quit agriculture as occupation,
even as almost 70 crore of our population is dependent on agriculture. Agriculture
sector absorbs too many people. It is oversaturated with workers and farmers who
are depending on ever smaller returns from it.
What is Agrarian Crisis?
Starting in the 1990s, agriculture in India - particularly in rural India - has declined at
a devastating rate. This has had a calamitous impact on the livelihoods associated with
agriculture. A symptom of this agrarian distress, unprecedented in post-Independent
India, is a high rate of suicides amongst farmers. The crisis is characterized by low
institutionalized credit to small farmers. Between 1995 and 2014 -: 296,438 farmers have
committed suicide in India. On Starting in the 1990s, agriculture in India - particularly in
rural India - has declined at a devastating rate. This has had a calamitous impact on the
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livelihoods associated with agriculture. According to P. Sainath, a leading Indian journalist
who reports on the rural India and its unprecedented economic crisis, for the first time
as per 2011 Census of India urban India added more to its population than rural India.
This implies that millions of people earlier engaged in agriculture are roaming around
the India in "footloose migration" search for daily wages. This points to the destruction
of livelihoods in the predominantly agrarian rural India. Another evidence for a major
agrarian crisis in India is the very high rate in which people are leaving occupations
associated with farming.
Why has the situation become so bad?
1.
Poor Growth and falling farm incomes - The verge annual growth rate of agriculture has remained very low at 1.5% or even below that. This is abysmally low as
compared to the growth rate of GDP. So, farm incomes have grown slower than the
rate of inflation. This has resulted in an overallfall in standard of living for smallas
well as marginalfarmersand they have been pushed below the poverty line.
2.
Climate change impacting the monsoon - In the new millennium, Indian economy
has been experiencing tremendous fluctuations in monsoon. The frequency of drought
years and excess rainfall years has increased. For example, 2002 was the year of
drought. 2003 had normal rainfall. 2005 and 2006 were years of excess rainfall. 2009
was characterized by drought followed by 2010, which had excess rainfall. 2014 and
2015 were the years of drought and 2016 and 2017 were the years of excess rainfall.
Also, there are seasonal variations. Areas such as Assam and coastal areas receive
excess rainfall whereas the plains receive less rainfall.
3.
Flawed targets - The governments have insisted on 4% s the growth target for agriculture sector to ensure food security, inclusive growth and also to reduce the income
inequality that exists between ruralandurbanareas. However, with the growth in Indi's
population and rapid urbanization, this target is highly unrealistic and underestimated.
4.
No policy innovation - Governments after governments have been carrying out old
policies to revive agriculture without taking into consideration the challenges posed
by changing environmental, strategic and technological considerations. Rather than
ensuring the steady growth in farm income, governments have been resorting to
populist measures such as loan waivers.
5.
Farm Size - Over the years, the per capita agricultural land holding is on a decline
in India. In 2010-11, the farm size per capita was 1.6 hectares as compared to 2.26
hectares in 1970-71. Number of farm holdings has gone up but average size has
drastically reduced. This has resulted in decline in per farm output as like any other
industry, agriculture also gets benefitted by scale. In case of small farmers, their output
is reduced but number of dependents on farm has gone up, resulting in reduction
in marketable surplus (output that can be sold in the market) and they have become
subsistence agriculturists (producing sufficient only for their own survival).
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6.
Lack of institutionalized credit - One of the major reasons of nationalization of banks
in 1969 was the reluctance of banks to set up branches in ruralareas. After that,
rural branches have gone up but still the credit availability is not as it should be.
Also, banks are reluctant to extend credit to farmers because of the low probability
of loan repayment. Due to political influences and credit norms by the RBI, agricultural credit creation gets hampered. Due to all these factors, farmers have to borrow
from moneylenders and other non-institutional players who take advantage of their
predicament and chargeusurious rates of interest, resulting in farmers getting into
debt traps.
7.
Rapid and mindless urbanization - India, owing to the growth since liberalization of
economy since 1991, is one of the fast urbanizing countries in the World. However,
this urbanization process is often unplanned and mindless, resulting in indiscriminate
setting up of industrial clusters, factories, workshops and so on. This has resulted in
water resources such as rivers and ponds getting polluted and thereby affectingwateravailability for agriculture. It has also resulted in rapidtransformation of land for
agricultural to non-agricultural.
8.
Middlemen - Supply chain of agriculture in India has given a lot of power in the
hands of the middlemen such as arhatiys, brokers and agents. The ends of the supply
chain - producers i.e. farmers and consumers - both get exploited by the middlemen.
They purchase the output of farmers at lower price and sell it to consumers after
adding a hefty margin. So, neither the farmers get compensated for their efforts, nor
the consumers can buy food at a reasonable price.
Where is the problem?
Major States in Indiaare suffering from agrarian crisis:
1.
Maharashtra - The state of Maharashtra is also one of the most industrialized and
urbanized states of Indiaand as such, the speed of transformation of land from agricultural to non-agricultural is also very fast. Vidarbhaand Marathwada regions of
Maharashtra have seen rise in farmer suicides over the years.
2.
Andhra Pradesh and Telangana -The chief reasons for agrarian crisis here are - lack
of access to institutional credit, and high input costs and rapid urbanization. Telangana, which wasa region in the state at that time suffered from it the most, owing
to its proximity to Hyderabad, the IT hub. It was further fuelled by unscrupulous
methods used by microfinance organizations which had extended credit to farmers.
3.
Uttar Pradesh - The consecutive droughts of 2015 and 2016 created unprecedented
problems for farmers in Uttar Pradesh. Over the period of times, a lot of farmers
have switched from traditional crops like wheat, rice, millets and pulses to cash crops
such as sugarcane. These farmers were the worst affected by the droughts. Besides,
indiscriminate urbanization has resulted in widespread contamination of water resources, including large rivers such as Gangaand Yamuna.
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4.
Punjab and Haryana - Punjab was at the forefront of the famous Green Revolution
in 1960s. However, over the period of time, due to excess use of pesticides, fertilizers, high-yield seeds and ground water, agricultural productivity in Punjab is on a
steady decline.
Farm loan waivers - Do they solve the problem?
In November 2017, thousands of farmers gathered at the Ramlila Maidan in New Delhi.
Banners and flags of different organisations were waved, but what brought them together
was a common demand - a one-time complete waiver of farmer loans and fair prices
for their produce. Under a common umbrella of All India Kisan Sangharsh Coordination
Committee (AIKSCC) around 184 farmer groups from across states such as Tamil Nadu,
Maharashtra, Madhya Pradesh, Uttar Pradesh, Punjab, and Telangana participated in the
protest walk. Yogendra Yadav, the national president of Swaraj India political party and
a member of the Swaraj Abhiyan, spearheaded the march from the Ramlila Maidan till
Parliament Street for the 'Kisan Mukti Sansad'. Waivers from farm loans have become a
politically contentious issue. For gaining political mileage, practically every political party
promises these waivers in its manifesto.
There are 2 very important questions that should be asked regarding farm loan waivers –
1.
Are they really going to be helpful to farmers and
2.
How long are the governments going to give them?
Since agriculture is a state topic and therefore decisions regarding agriculture are to be
taken by the states. Union Finance Minister has categorically stated that if the states are
willing to give farm loan waivers to the farmers, then the resources have to be generated
by the states themselves and they cannot expect the central government to provide them
with resources. However, experts across Indiaas well as the World have cautioned the
state governments that farm loan waivers cannot be a permanent solution and therefore,
should be used sparingly. They are definitely going to put strains on the finances of the
states as the states will have to repay the loans to lending institutions.
Problems associated with Farm Loan Waivers:
1.
These waivers are typically helpful to only those farmers who have borrowed from
lending institutions like banks. However, a large class of farmers remain beyond the
measures as they have not borrowed from these banks, and majority of these farmers
are small and marginal farmers, who are the most vulnerable to the crisis and need
waivers the most. In other words, those who need the waivers re the ones deprived
of them.
2.
Using farm loan waivers is similar to using bandages when the patient is suffering
from a terminal disease. The major problem afflicting Indian agriculture is that it's
extremely crowded. More than 50% of the population is directly dependent on it for
its livelihood whereas its contribution to the country's GDP is barely 15%. This situation is not sustainable and farm loan waivers do not address this malaise at all.
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3.
Farm loan waivers put considerable strains on the states' resources. Due to them,
fiscal deficit rises and the states cannot undertake capital expenditure as there is a
resource crunch.
4.
Repeated waivers create an incentive for default and encourage reckless behavior
from the borrowers.
5.
Waivers affect the flow of credit to agricultural sector in the long run as lending
institutions will be naturally apprehensive to extend credit. It also affects innovations
and research and development in this sector.
Swaminathan Committee recommendations –
The government of India constituted the National Commission on Farmers (NCF) on
November 18, 2004. The NCF was chaired by Professor M.S. Swaminathan. It submitted
five reports to the government. The first was submitted in December 2004 and the fifth
and final report was submitted on October 4, 2006. NCF's Swaminathan Commission
Report aimed at working out a system for food and nutrition security, sustainability in
the farming system, enhancing quality and cost competitiveness of farm commodities and
also to recommend measures for credit and other marketing related steps. Dr. Swaminathan
had requested the government to implement the recommendations given in the report so
that it could provide minimum support price for grains, safeguard the interest of small
farmers and addressing the issue of increasing risk overtaking agriculture as a profession.
What were the Commission's observations?
The Commission observed that farmers needed to have an assured access to and control
over rightful basic resources-land, water, bio resources, credit and insurance, technology and
knowledge management, and markets. It observed that agriculture must be implemented
in the concurrent list from the state list.
What are the Commission's key recommendations?
One of the key reforms was, of course, land reforms. It was aimed to address the issue
of access to and for both crops and livestock. The commission said that the inequality
in landholdings in shown starkly in land ownership. It said that in 1991-92, the share of
the bottom 50 per cent of the rural households in the country's total land ownership was
only three per cent. The top 10 per cent owned as much as 54 per cent.
1.
Land Reforms: Distribution of ceiling-surplus and waste lands; prevention of diversion of prime agricultural land and forest to corporate sector for non-agricultural use;
to ensure grazing rights are provided and seasonal access is allowed in forests to
tribals and pastoralists. It recommended access to common property resources. One
main case was establishing a National Land Use Advisory Service. The purpose of
this service would be to connect land usage decisions with ecological meteorological
and marketing factors.
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2.
Irrigation Reforms: It recommended framing a set of reforms to provide farmers with
"sustained and equitable" access to water for irrigation. Ensuring boost in water supply by rainwater harvesting, water level recharging by mandatory aquifers; Million
Wells Recharge programme to be initiated targeted at private wells. To target increase
in investment in irrigation sector under 11th five year plan.
3.
Productivity Growth: NCF said that with the objective of achieving higher productivity growth, it recommended "Substantial increase in public investment in agriculturerelated infrastructure particularly in irrigation, drainage, land development, water
conservation, research development and road connectivity etc." It also recommended
a national network of advanced soil testing labs with an aim to test areas for apt
micronutrient levels.
4.
Credit and Insurance: Expand outreach of formal credit system; reduce crop loan
interest rates to 4%; provide moratorium on debt recovery; agricultural risk fund;
kisan credit cards for women farmers; integrated credit-cum-crop-livestock human
health insurance package; crop insurance across country for all crops with reduced
premiums; sustainable livelihoods for the poor, investment in human development;
institutional development services etc.
5.
Food Security: The commission recommended Implementation of a universal public
distribution system; reorganising delivery of nutrition support programmes on a
life-cycle basis with panchayat participation and that of local bodies; elimination of
micronutrient deficiency induced hunger and food cum fortification; community food
and water banks to be operated by women self-help groups; help small and marginal
farmers; formulate national food guarantee act with features as food for work and
employment guarantee programmes.
6.
Prevention of Farmer Suicides: Providing affordable health insurance at primary
healthcare centers in villages; national rural health mission to be extended to suicide
hotspots on priority basis; state level farmers' commissions with representatives of
farmers, restructuring of microfinance policies that may serve as a sort of livelihood
finance; covering all crops by crop insurance; village to be the assessor and not the
block, social security net that gives old age support with health insurance and aquifer
recharge and rain water conservation; plans for decentralized water usage etc.
Conclusion: The tens of thousands of farmers who protested in Delhi said that the
Swaminathan Committee had recommended some measures that the central government
needs to take to avert the agrarian crisis in India. However, after many years since the
recommendations were tabled, nothing has been done. It thus raises a question: If the
government’s attitude towards farming is not serious can it (farming) be a viable occupation
for the people of the country?
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5. Sabarimala Issue: Tradition vs. Women’s Democratic Rights
By allowing women of all ages to enter the Sabarimala Temple, the Supreme Court has set
a positive precedent regarding questions of religious equality. It is a significant milestone in,
• Unconditional respect for the equality of women and men
• Respect for the Constitution and the institutions the constitution has created
• Respect for the rights of religious adherents to follow their beliefs and practices, so
long as they do no harm to others; and the rule of law.
What is unusual about Sabarimala is that it offers the first example of these invaluable
and seemingly unchallengeable principles clashing with each other. Constitutionalistsand
liberalsand democrats can easily uphold the above principles.
The problem is that the some of these admirable values are diametrically opposed to each
other on Sabarimala.
The Temple:
Sabarimala is a prominent Hindu temple in Kerala. The temple is dedicated to Ayyappa
or the God of growth. The temple attracts pilgrims from Kerala, Tamil Nadu, Karnataka
and Andhra Pradesh and from various parts of the country and the world. The temple
is open for worship only in the first five days of each Malayalam month; during specials
occasions during November-December, then on January 14 and again on April 14. It is
an ancient temple mostly unreachable till it was rediscovered in 12th century.
The
pilgrims of Sabarimala have to reach the temple through difficult treks in the forest as
the vehicles cannot reach there. The pilgrims have to observe celibacy for 41 days before
going to Sabarimala. They are also required to strictly follow a lacto-vegetarian diet,
refrain from alcohol, not use any profanity and allow the hair and nails to grow without
cutting. They are expected to bath twice in a day and visit the local temples regularly.
They wear black or blue clothes, do not shave until the completion of the pilgrimage,
and smear sandal paste on their forehead.
Controversy over women entry:
The ban on women entering the temple premises is being practised for centuries, as
devotees consider Lord Ayappa, the presiding deity of the temple, to be celibate.
History: 1991 Photograph
A plea was filed in Kerala High Court in 1991 after a photograph showing a rice-feeding
ceremony at the Sabarimala temple was published in a newspaper. The photograph was
from the first rice-feeding ceremony of the grand-daughter of an ex- commissioner of the
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temple board. The photo showed women relatives present at the function in the temple.
In 1991, the Kerala High Court restricted entry of women above the age of 10 and below
the age of 50 from Sabarimala temple as they were of the menstruating age.
27 years later on September 28, 2018, the Supreme Court lifted the ban, saying that
discrimination against women on any grounds, even religious is unconstitutional, which
kick started the current controversy.
The protests took a political turn after BJP ally Shiv Sena warned of "mass suicides" if
women set foot inside the Sabarimala temple. The protests intensified as the date of opening
neared. On October 17, when the doors to Sabarimala opened, the protesters camped at
the base of the trek and at the last stretch of the trek (at Pamba) to stop women from
entering the temple.
In favor of Women’s Rights:
4:1 Verdict – SC ruled that not allowing women was in violation of the Constitution.
(Justice InduMalhotra dissented)
•
Patriarchy of religion cannot be permitted to triumph over faith
•
Dualistic approach against women degrades the status of women.
•
The right guaranteed under article 25 has nothing to do with gender or physiological
factors.
•
Devotees of Ayyappa do not constitute a separate religious denomination.
Articles 25 to 28 of Indian Constitution guarantee the right to freedom of religion to all
citizens within the territorial boundaries of the country.
1.
Freedom of conscience and free profession of religion (Article 25)
2.
Freedom to manage religious affairs. (Article 26)
3.
Freedom from payment of taxes for promotion of any particular religion. (Article 27)
4.
Freedom to attend religious instructions. (Article 28)
•
Rules disallowing women in Sabarimala are unconstitutional and violative of Article
21
(Article 21 of the Indian Constitution guarantees life and personal liberty. No person shall be deprived of his life or personal liberty except according to procedures
established by law.)
•
The fact that women have physiological feature to menstruate has nothing to do with
her right to pray.
•
To treat women as children of lesser god is to blink at the constitution.
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For centuries, women were not allowed to enter the Sabarimala shrine based on the
biological ground of menstruation. The Rule of the Kerala Hindu Places of Public Worship
states that “Women at such time during which they are not by custom and usage allowed
to enter a place of worship” was the basis of the practice of excluding women of the
age group of 10 through to 50 years to enter the temple. The KHC had further held that
only the chief priest was empowered to decide on traditions.
There is a practice of exclusion of menstruating women from social and religious functions.
At times, it takes the form of untouchability. In rural Nepal, religious Hindus believe that
menstruating women are unclean and should be banished from the family home – many
women have died. This is despite the Nepalese government passing a law and making it
illegal. Such notions of purity and pollution, which stigmatise women in what is essentially
a biological process, are anathema to human rights.
Such a practice has certainly no place in our constitutional order. When we, the people of
India, gave ourselves the Constitution of India, we sought to break the onerous shackles
of inequities, injustice, and social hierarchies and entrenched structures that perpetuate
discrimination and prejudice. It is indeed shocking that we had to wait 70 years after
independence to provide equity to half the population of the country.
In favor of tradition:
•
Issues of deep religious sentiment should not be interfered in by the court.
•
Notion of rationality should not be seen in matters of religion.
•
Worshippers of Sabarimala have attributes of religious denomination.
Judges should not impose their personal views, morality or rationality with respect to
the form of worship of a deity. A pluralistic society and secular polity would reflect
that the followers of various sects have the freedom to practise their faith in accordance
with the tenets of their religion. It is irrelevant whether the practice is rational or logical.
Notions of rationality cannot be invoked in matters of religion by courts. Ayyappa is in
the form of a NaishtikBrahmachari. The belief in a deity, and the form in which he has
manifested himself is a fundamental right protected by Article 25(1) of the Constitution.
The prohibition in vogue for time immemorial qualified to be an “essential practice”. A
religion can lay down a code of ethics, and also prescribe rituals, observances, ceremonies
and modes of worship. Imposing the court’s morality on a religion would negate the
freedom to practise one’s religion according to one’s faith and beliefs. It would amount
to rationalising religion, faith and beliefs, which is outside the ken of courts. India is a
country comprising diverse religions, creeds, sects each of which have their faiths, beliefs
and distinctive practices. Constitutional morality in a secular polity would comprehend
the freedom of every individual, group, sect, or denomination to practise their religion in
accordance with their beliefs and practices.
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Equality is not the problem in Sabarimala. Instead, it is an issue concerning the holiness and
the rituals of the temple. In Kanyakumari, there is a temple where men are not allowed
to enter. Nobody has gone to court saying that they want to enter the temple. There
are other Ayyappa temples for women, for those who want to pray to him. Eeveryone
should respect the speciality of Sabarimala. Democracy, one must respect religious beliefs,
the Constitution, the law and so on. Balancing all of this is what democracy is all about.
Sabarimala has now become a police camp. How can anyone pray peacefully there.
The notifications issued by the Travancore Devaswom Board in 1955 and 1956, which refer
to the devotees as “Ayyappans”. The worshippers of Lord Ayyappa together constitute a
religious denomination, or sect thereof, as the case maybe, follow a common faith, and
have common beliefs and practices. They are designated by a distinctive name wherein
all male devotees are called “Ayyappans”; all female devotees below the age of 10 and
above the age of 50 are called “Malikapurams”. A pilgrim on his maiden trip is called
a “KanniAyyappan”. The devotees are referred to as “Ayyappa Swamis”. A devotee has
to observe the “vratham” and follow a code of conduct, before embarking upon the
“PathinettuPadikal” to enter the temple. Thus, Ayyappa devotees are a separate religious
denomination and their rights need to be protected and not interfered with.
Popular sentiment and political conflict
The state government’s decision to implement the Supreme Court verdict has given
opportunist politicians the chance to fish in troubled waters.
The BJP seeks to reassert anew its role as the self-appointed custodian of Hindu sensitivities,
creating outrage and violence by leading an agitation to prevent women from accessing the
temple. Congress is playing the soft hindutva. Meanwhile, the ruling party CPI-M blows
hot and cold, saying one day that it will implement the Court order by escorting women
to the shrine, then ordering its police not to do so and indeed to escort them back if they
attempt it. They have converted a sacred spot into an unseemly stage of political theatre.
The reactions in Kerala have demonstrated that abstract notions of constitutional principle
also have to pass the test of societal acceptance — all the more so when they are applied
to matters of faith. Judges are, of course, rational beings applying legal principles and
precedents. Worshippers have no such constraints. The overwhelming majority of Kerala
Hindus, including a significant majority of women, have now demonstrated that their faith
is offended by the Supreme Court verdict. Informal surveys suggest that opposition to
the court judgment among Kerala Hindus is above 75 per cent and perhaps as high as
90 per cent. The intensity of emotions on display have surprised many liberals, not least
because so many women seem outraged that other women might be allowed to go into
the Sabarimala temple and disturb its sanctity.
It is all very well to say that religions must adhere to the normal rules of liberal democracy,
but the truth is they don’t. Gender equality is a vital principle in civic society and in
political democracy, but it is by no means universally observed in the religious world.
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Muslim mosques don’t allow men and women to pray together in the same space. The
Catholic Church does not permit female priests. Some Shinto monasteries are off-limits
to women altogether. There are Hindu temples which do not allow men to enter during
specified periods, and the Kumari Amman temple situated in Kanyakumari does not permit
them at all. The law does not interfere in such matters.
In implementing the Supreme Court verdict, politicians should have sought to reconcile
the principles upheld by the Court with the believers’ sense of the sanctity of their faith.
There is a need for mutual engagement between the liberals and the traditionalists on
what their convictions and doctrines mean in a changing world.
Conclusion:
With its Sabarimala verdict, the SC underlines the Constitution’s transformative power. The
Constitution protects religious freedom. The legal challenge to the exclusion of women in
the 10-50 age group from the Sabarimala temple in Kerala represented a conflict between
the group rights of the temple authorities in enforcing the presiding deity’s strict celibate
status and the individual rights of women to offer worship there. The decision reaffirms
the Constitution’s transformative character and derives strength from the centrality it
accords to fundamental rights. Liberals are thus torn between their basic respect for
gender equality and their democratic duty to respect the beliefs and wishes of the people.
In religious matters, beliefs must prevail; in a pluralistic democracy, legal principles and
cultural autonomy must both be respected.
40 Odd review petitions have been filed against the September 2018 ruling in which Justice
Malhotra famously used the diversity logic to dissent against the majority verdict on the
ground that courts should not sit in judgement over religious practices unless these are
as abhorrent as sati.In February 2019, the court reserved its judgment on pleas seeking
a review of its September 2018 verdict. In November 2019, The Supreme Court referred
review pleas to a larger seven-member bench.
The larger bench is also expected to hear issues relating to other communities’ right to
practise, profess and follow their own religious fundamental rights, guaranteed under Articles
25 and 26 of the Constitution. “The debate about the constitutional validity of practices
entailing… restriction of entry of women generally in the place of worship is not limited
to this case, but also arises in respect of entry of Muslim women in a Durgah/Mosque
as also in relation to Parsi women married to a non-Parsi into the holy fire place of an
Agyari,” the judgment said. “There is yet another seminal issue pending for consideration
in this court regarding the powers of the constitutional courts to tread on (the) question
as to whether a particular practice is essential to religion or is an integral (part) of the
religion, in respect of female genital mutilation in DawoodiBohra community.”
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The judgment suggested that a decision by a larger bench would “instill public confidence”
and “put at rest recurring issues touching upon the rights flowing from Articles 25 and 26”.
On December 13, 2019, the Supreme Court declined to pass any order on pleas by two
women activists seeking a direction to the Kerala government to ensure safe entry of
women in the Sabarimala temple under police protection.The top court said the issue was
"very emotive" and it did not want the situation to become "explosive".A bench, headed
by Chief Justice S A Bobde, said the "balance of convenience" required that no orders
are passed in the mater today as the issue had already been referred to a 7-judge bench.
The apex court said it would endeavour to constitute the larger bench at the earliest to
hear the matter.
Further Reading:
https://thewire.in/law/watch-sabarimala-verdict-what-the-judges-said
https://thewire.in/women/sabarimala-women-entry-supreme-court-judgement-kerala
https://www.hindustantimes.com/india-news/ban-on-entry-of-women-facts-controversiesabout-kerala-s-sabarimala-temple/story-K4Xi6GKMacPDmQO2jAmjNO.html
https://timesofindia.indiatimes.com/india/what-is-sabarimala-case/articleshow/66054724.cms
https://www.firstpost.com/india/why-women-are-barred-from-sabarimala-its-not-becausethey-are-unclean-2583694.html
https://www.thehindu.com/opinion/editorial/keep-the-peace/article25265690.ece
https://www.hindustantimes.com/india-news/why-the-sabarimala-verdict-allowing-womens-entry-is-not-against-mass-opinion/story-TbhvfuhI8myB0SW3qoAxeM.html
https://www.financialexpress.com/india-news/the-constitutional-and-legal-bases-of-thesabarimala-verdict-october-17-2018/1352605/
https://www.telegraphindia.com/india/sabarimala-to-bigger-bench/cid/1719399
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6. How Can We Handle and Prevent Online Harassment
The Internet is not short of people who instead of winning arguments based on reason,
resort to abuse, threats, insults and bullying, to prove their point. You must have come
across such people everywhere, especially while browsing through social media. Trolls
are individuals who post abusive and controversial remarks or comments on social media
platforms to bother other people, with the sole malicious intention to hurt the sentiments
and feelings of others and provoke an angry reaction. Their messages are such that they
can shift everyone’s attention from the subject matter.
Trolling is the new generation cybercrime and trolls are the new generation of criminals
on the internet who derive sadistic pleasure in spreading abuse and hate. One should not
ignore the trolls, but should fight against them.
Is trolling punishable? We do not have a specific law that directly addresses this growing
concern, but we do have a few sections in different laws such as Indian Penal Code (IPC)
and Information Technology (Amendment) Act (IT Act) which make trolling a criminal act.
These are some of the specific actions that one can take in different situations:
•
Violation of Privacy – If any person takes your photograph, makes your videos,
records and publishes your private pictures or sends them electronically to anyone
without your consent, then you can take legal action against them. Any violation of
privacy is punishable by a prison term of three years.
•
Publishing Sexually Offensive Material on the Internet – Nowadays, we can see large
amounts of improper and offensive content on the Internet which, no doubt, attracts a
lot of attention. If any person publishes any offensive sexual content on the internet,
he or she can be jailed for up to seven years.
•
Sexual Harassment – If any person tries to make physical contact or sexual advances
with you, or demand for sexual favours from you, or shows pornography, or makes
sexual comments about you, then you can take legal action against them by filing a
complaint. Posting sexually offensive comments against other people on social media
and other platforms also makes a person liable for sexual harassment.
•
Defamation – If any person who intentionally uses any words, signs or visible representations, or publishes anything only to harm your reputation, they can be punished
for defamation. Acts such as defaming a woman online, commenting on social media
platforms, posting obscene remarks or images or videos are all covered under the
offence of defamation.
•
Criminal intimidation by anonymous communication – If a person conceals his/her
identity to threaten another, they can be jailed for up to two years. This is very
helpful and effective in dealing with online trolls.
•
Insulting the Modesty of a Woman – If you are a woman and any person insults
or outrages your modesty, uses any word, makes any sound or gesture, or displays
any object which can violate your privacy, then you can sue him. Posting sexually
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offensive comments or pictures or videos on social media or other platforms are also
covered under the offence of trolling.
•
Voyeurism – If you are a woman and any person watches or captures an image of
you when you are engaged in a private act, under circumstances where you would
not expect anyone to watch you and if such person publishes those images, then you
can take legal action against them.
•
Stalking – If you are a woman, and bothered by a man who follows you and contacts
or attempts to contact you to make personal relations despite your lack of interest;
or keeps an eye on your activities on the internet or any other form of electronic
communication, then you can take action against them by filing a case under the IPC
with the help of a lawyer.
•
Monitoring social media exchanges so that they stay within defined limits: Trolling
has real and dangerous consequences for those who do face it. They live with the
fear of actually having to face the violence suggested online. They feel incapable of
expressing themselves freely. Hence, the government should have laws in place that
are specific about what kinds of trolling can face legal action. The threat of legal
action will stop or at least instil fear as a deterrent.
•
Trolls are often people who cannot tolerate dissent from their own opinions. Their
abuse and threats to those they troll should be taken seriously as they may act on
their threats. Even their verbal abuse causes fear in someone expressing an honest
opinion.
•
Non-abusive and politely expressed disagreements are not something most people
are capable of - they will have to be coerced to learn it by strict and punitive laws
that restrain their loosely directed anger.
•
Trolling took on international proportion religious s with the story of how Russian
operatives secretly manipulated Facebook, Twitter, Google, and other social-media
platforms during the 2016 US election. Recently executives from Twitter; Alphabet, Inc.,
which runs Google, and Facebook- were grilled about alarming new reports-including
a series of revelations from inside Russia itself-about Moscow's covert purchase of
political ads, use of countless Internet bots and trolls, and creation of fake American
users, all as part of an effort to instigate racial and conflict and spread conspiracy
theories during election campaign and beyond. It compelled the biggest social-media
platforms to archive and maintain a public file of all political ads for buyers who
spend more than $500 and require them to "make all reasonable efforts to ensure
that foreign individuals and entities are not purchasing political advertisements in
order to influence the American electorate.
•
"It's only going to expand. We have to muster a self-defense, just as we would from
a military or a cyberattack." – Senator Richard Blumenthal.
It seems clear now that, at the very least, one consequence of Russiagate will be a
whole new set of rules and regulations for the corporate giants of the online world,
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who until now have coasted along in a mostly regulation-free Wild, Wild West.
•
Union Minister for Women & Child Development, Maneka Gandhi has decided to
take action against troll-abuse on social media, particularly against women. She has
requested the Union Home Ministry as well as the I&B ministry to take possible
steps to control the abusive trolling community. She has also asked social networking
platforms like Twitter, Facebook and other social media platforms for their assistance
in tackling this troll menace. Maneka Gandhi became proactive following complaints
by troll victims.
In any society freedom is never absolute. Freedom always comes with a rider. You
have freedom to speak/express. But, at the same time, you must take care of the fact
that your exercising of the right to freedom must not abuse anybody, must not hurt
anybody's sentiments, must not be provocative and finally it must not be indecent. The
SC rightly scrapped the law relating to 66A as it was difficult to implement. But then,
the Supreme Court never said that acts shouldn't be there to control such violations. The
SC, on numerous occasions has said that the right to freedom is not absolute. We should
consider the introduction of a "report abuse" tab on social networking sites like many
newspaper websites provide. If the abuse tab is hit beyond the threshold number (set as
per assessment), the account could be blocked by the social media administrator and an
inquiry by the police initiated. One may not be booked at that moment, but an inquiry
can name and shame the trolling person and that would be enough for many to control
their language on social media. For repeat offenders, a 24-hour detention in a police station
would be sufficient because all such trollers probably do not understand what spending
a night at a police station means.
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7. Are Streaming Platforms (Netflix etc.) a Threat to
Conventional TV ?
In the 1980s, TV was the centerpiece of almost every living room around the world. In India,
owning a TV also had the tag of affluence attached to it, and there were ad campaigns,
such as the Onida ad with a tagline that said, “Neighbour’s envy, Owner’s pride”. The
square box back then was the biggest source of entertainment and information. With
the launch of Star TV and ZeeTV in India in the 1990s India witnessed a sharp rise in
demand for cable TV. However, in the 90s and in 2000s no one could imagine that there
would be a time not too far off in the future when cable TV could become redundant
and would be on the verge of being replaced by something even better. And that iswhat
happened with the advent of Netflix, Hotstar and Amazon Prime. In India, we are seeing
a major boom in the number of streaming subscribers, and among these include three
big and popular players—Netflix, Hotstar and Amazon Prime. Video streaming services
have made us realise that we don’t need a dish or a cable connection to enjoy great TV
content. They deliver content on multiple platforms. So we can enjoy watching our TV
shows whenever we want and wherever we want.Primarily the reason for a surge in
streaming services was connected with the sharp fall in mobile data price in India with
Reliance Jio spearheading this price war in 2016 as it began to offer bulk of data at no
charge to customers for a certain period of time.
Popularity of Streaming Services
The streaming services allow the consumer to watch a full season of their favourite show
and that has given rise to binge watching or marathon watching. Releasing all the shows
at once grants freedom to viewers to watch their favourite series as per their convenience.
Consumers are free to press pause and take a break from their show whenever they want.
They can also refer to previous plot-points if they’re lost. Another very important point
is that the streaming services is subscription-based, thus it removes the annoyance of adbreaks and does not ruin the viewing experience by preventing any form of disturbances
and manipulative ad-breaks to break the narrative.
To understand the popularity of these three streaming services we need to dig deeper into
the facts and services that they are providing. Hotstar owns the streaming rights to the
vast majority of cricket tournaments played in India and by the Indian cricket team in
different parts of the world, and this is a great lead for Hotstar considering the popularity
of cricket amongst Indians. Apart from this, Hotstar also distributes popular TV shows
like Game of Thrones andHow I Met Your Mother. It has a regional movie collection of
around 600 Hindi, 200 Bengali, 400 Telugu, 850 Malayalam, 100 Tamil, and 400 Kannada
movies. Now coming to Netflix and Amazon, both have a wide range of series to offer and
have interesting exclusive series to offer such as The Man in the High Castle is Amazon
exclusive andpopular shows such as Stranger Things and Orange is the New Black are
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exclusives to Netflix. Apart from that Netflix has partnered with some Indian production
houses to get popular titles and has started looking at original regional content. Sacred
Games, Netflix’s breakout series in India is one such example. Coming toAmazon Prime,
they are rolling out not just Hindi movies and few Hindi TV shows, but also catering to
Tamil, Telugu, Marathi and Bengali audience. At the moment the movie titles are limited
across the dialects but Amazon plans to invest heavily on its service for the Indian market,
thus one can expect a lot more premium content from Amazon in the recent future.
Price Points
Let’s talk about the price points, although both Amazon Prime and Netflix has hit shows
like The Man in the High Castle and Goliath on Amazon, and House of Cards and Sacred
Games on Netflix, if you compare the pricing of the two services, Prime scores a point here
because it is cheaper than Netflix. At present the annual Prime subscription in India costs
Rs 999 and Rs 129 per month. Now, Netflix has finally launched the cheapest subscription
plan in India at Rs 199 for a month. The catch for the low-price is that the streaming is
limited to mobile and tablet only. And, this new plan allows the users to stream only on
one screen. Netflix also offersa basic plan at Rs 499; standard plan at 649 and the premium
plan at 799. The yearly cost of Netflix is higher than that of Prime. In India for many
consumers, Amazon Prime comes free for a year because of bundled offer they get with
their post-paid mobile plan. But Netflix has its pluses as it has more quality international
contents and more originals; it is a more user friendly app and has a separate button
on the set top box. But if you are a huge sports fan then nothing is better thanHotstar.
The Hotstar premium membership grants you access to all their premium titles which are
currently available on the platform. In addition to premium titles, you also get access to
all Live Sports, including Cricket, Premier League and so on. You can get all this for a
yearly plan of Rs 999 or a monthly plan for Rs 299.
End of the road for TV?
With video streaming services consumers all over the world have realised that they don’t
need a dish or cable connection to enjoy good quality entertainment.Netflix, Amazon and
other streaming services have changed the way a person watches TV. With the success of
these streaming services, we can easily deduce that the consumer is ready to experience
something different and is a clear indication that these services can put the cable companies
out of business. The successful and award winning television shows and movies created
and produced by the streaming companies are most watched on the planet. The cable
companies are trying hard to create the same magic as the streaming companies but are
not successful yet. Streaming companies are transforming the entertainment industry and
there is no doubt that both Netflix and Amazon Prime Video will lead the way to the
next development in entertainment. The subscribers of the Netflix and Amazon Prime
Video enjoy shows and movies that would never make it to the standard cable networks
or the traditional commercial broadcast networks. While large broadcast companies are
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restricted to conventional plotlines and characters for most of their shows, Netflix and
Amazon Prime Video create content based on different themes and plotlines to cater to
the large masses, so now there is something for everyone.
The TV business is basically based on two factors: advertising and subscription. Premium
channels, such as, HBO is able to thrive on subscription models alone.However, most of
the other channels work on a hybrid model, so they sell advertising and receive fees from
cable providers in return for allowing them to carry programming. Till the recent past,
cable companies held a lot of leverage because, unlike broadcasters, they had a direct
financial relationship with the consumer. With streaming television, this business model
needs a major overhaul. Viewers are increasingly moving away from cable and satellite
TV. So, what is the future of Broadcast TV and Cable? It still reaches vast numbers of
consumers but the question is how will the advertisers that are paying for the cost of
producing content reach the young and the affluent viewers? Advertisers are therefore
trying to find ways of reaching consumers digitally. Cable box is now something of a
redundant item from the past as smart TVs, tablets, mobile phones and a host of other
streaming devices can act as your source of entertainment. The consumer has indeed become
King with the streaming services. Although the future of entertainment looks extremely
exciting, it looks like the future of cable business is not so bright. So, in a nutshell yes,
TVas we know it might be a thing of the past.
To conclude, it won’t be surprising if all televisions become smart TVs within the next
ten years. We might expect these devices to transform into another medium to stream
videos, music and so on, and thus becoming an integral part of virtual reality and future
programming.
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8. Globalization is Dead and We Need to Invent a New World
Order
Globalization is defined as the increasing interaction of people, states, or countries. This
interaction is often enabled through the growth of the international flow of money, ideas,
and culture. Globalization is primarily a process of integration that has social and cultural
aspects. On the other hand, Isolationism is defined as a policy or doctrine of trying to
isolate one’s country from the affairs of other nations. This is achieved by not entering
multilateral alliances, foreign economic commitments or international agreements, and
generally attempting to make one’s economy self-reliant. At various points in history,
countries such as Bhutan, Japan and China have adopted a stance that would be called
as isolationist. For the past many years, North Korea, with its policy of Juche, has tried
to achieve sustainability through agricultural independence and a lack of dependency on
other countries. However, recent global events as Donald Trump’s policies, the UK’s exit
from the EU, and the increased strength of the European Right in countries like France,
the Netherlands and Germany has given thrust to the idea that Globalization has had
its day. In the light of these developments, is it fair to assume that globalization is on
the way out? If there appears to be a widespread discontentment with globalization, is
isolationism the answer to that?
No, Isolationism is Not the Answer:
•
Countries have always traded with one another, because natural resources are not
equally distributed round the world. As Adam Smith has pointed out in his book
“The Wealth Of Nations”, “Would it be a reasonable law, to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy
in Scotland?” Historically, absolute advantage – a country importing what it cannot
produce itself, or can only produce at inordinate cost – has always been the main
motive for trade.
•
Opening up to international trade has helped many countries grow far more quickly
than they would otherwise have done. International trade helps economic development
when a country’s exports drive its economic growth. Export-led growth has been the
centrepiece of the industrial policy that has enriched parts of Asia and Africa.
•
The world is undergoing profound changes brought about by globalization. The rapid
advancement of science and technology, continued expansion of international trade
and investment, and economic restructuring have brought new opportunities to the
development of all countries and regions. However, these changes likewise bring in
some amount of uncertainty. Rejecting globalization, rather than resolving those uncertainties, would be akin to burning one’s agricultural field to resolve the problems
of weed growth or unwanted grazing animals!
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•
Before India embarked on a policy of economic reform and globalization, there was
a massive socioeconomic problem. Globalization’s dramatic success in India consisted
of lifting hundreds of thousands of people out of poverty. However, with it and
automation, many workers were no longer required. This made some of proponents
of Isolationism to argue that Globalization was nothing but a type of colonization.
However, it is now widely believed that it is was the inability of developing countries
like India to skill and protect their workers - and not Globalization - that caused this
distress.
•
Globalization’s benefits have brought many countries food security, fiscal stability
and energy independence. However, this has also brought about immense social
changes such as immigration. Add to that the global financial slowdown, and many
people across countries believe that globalization is detrimental to their own and the
country’s economic well-being. There is a belief that Isolationism will help in curbing
any social ills. However, proponents of isolationism do not state how withdrawing
from the global arena will solve these problems. At best, an isolationist stance is a
chimera that has not delivered any solutions as yet.
•
Also, governments are motivated to limit and alter market outcomes for political or
social ends. While governments can limit the rise in prices of some products, they
cannot control how much people want to buy or how much firms are willing to sell.
The laws of demand and supply still hold.
•
Furthermore, Isolationism may temporarily create jobs for domestic workers. The
protection of tariffs, quotas or subsidies allows domestic companies to hire locally,
but again, if a company in a protectionist state wants to expand, they won’t be able
to. In the long term, trade protectionism weakens the industry. Without competition,
companies within the industry have no need to innovate. Eventually, the domestic
product will decline in quality. It will be lower quality and more expensive than
what foreign competitors produce.
•
One example that is often propagated is that China has gained from an Isolationist
policy. It is said that modern day China originated from one of the oldest civilizations
in mankind and has kept its power and solitude by isolating themselves. However, it
is often forgotten that the huge growth in economy was prompted by restructurings
initiated in the 90s by Zhu Rongji, fifth Premier of China, who advocated market
reforms, open economy and increased intermingling with the global community. This
lead to double-digit growth of the Chinese economy and its increased assertiveness
in international affairs. Thus, advocates of Isolationism often ignore the benefits of
Globalization and clamor for chopping off the branch that bore the fruits of financial
stability in the first place.
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Yes, Isolationism is the Answer:
•
The backlash against globalization draws its force not only from the perceived damage done to developing countries by global market forces but also from the inequities in the global trading system. Many developing countries, including Venezuela,
Zimbabwe and Greece, have been assisted by multilateral organizations to help them
adjust to crises and imbalances. Unfortunately, this has had a cascading effect which
led to more hunger, discontent and riots in many countries. Even when results were
not so dire and there was some growth for a while - such as in the cases of Haiti,
African countries, Sri Lanka and Pakistan, all of whom benefited with Chinese and
American help - often the benefits went disproportionately to the elite, with those at
the bottom sometimes facing even greater poverty.
•
In his book ‘Globalization and its Discontents’, noted author Joseph E Stiglitz observes
that, “riots and protests against the policies of and actions by institutions of globalization are hardly new. For decades, people in the developing world have rioted when
the austerity programs imposed on their countries proved to be too harsh, but their
protests were largely unheard in the West. What is new is the wave of protests in
the developed countries”. From this, it is clear that even people in developed countries - the very same which were the torch-bearers of globalization - are agitating
against globalization and pinning for an isolationist stance. In that case, what moral
authority do the developed countries have to carry on with globalization with a
zealous approach? “ Let us view the example of the erstwhile Soviet Union. Globalization and the introduction of a market economy have not produced the promised
results in Russia and most of the other economies that were making the transition
from communism to the market. These countries were told that the new economic
system would bring them unprecedented prosperity. Instead, it brought unprecedented
poverty. For most of the people, the market economy proved even worse than their
Communist leaders. Today, many of these countries are wary on getting entangled in
multilateral treaties and like to pursue a balanced approach that does not encroach
on their financial sovereignty.
•
Offshoring is a deliberate policy of multinational corporations to weaken domestic
labor and boost profits. The ability of companies to allocate jobs globally changes the
nature of the discussion about the “gains from trade.” In fact, there are no longer
guaranteed “gains,” even in the long run, to those countries that export technology
and jobs. If countries like China combine Western technology with lower labor costs,
trade with them will depress Western wages. Citizens of the West will have cheaper
goods, but being able to purchase groceries 20% cheaper does not necessarily make
up for wage losses.
•
Between 1991 and 2013, China’s share of global manufacturing exports increased
from 2.3% to 18.8%. Some categories of US manufacturing production were wiped
out. The United States might gain “eventually.” But the gains might take “decades”
to be realized, and would not be equally shared.
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•
Between 1991 and 2013, China’s share of global manufacturing exports increased
from 2.3% to 18.8%. Some categories of US manufacturing production were wiped
out. The United States might gain “eventually.” But the gains might take “decades”
to be realized, and would not be equally shared.
•
The election of Donald Trump and his effort to withdraw the United States from the
world stage is another example of the decline of a global order. Since getting elected,
Trump and his secretaries of state have systematically decoupled American leadership
abroad from global problems in the quest of achieving an ‘America First’ vision. . The
United States has been credited with laying the foundations of globalization, but it
is now attempting to dismantle essential elements of that infrastructure, particularly
in trade and defense!
Thus, globalization and isolationism hold many different characteristics. Although both of
them are very different, both have greatly affected many aspects of society such as trade,
employment rate, and diversification within the economy. In conclusion, globalization may
not be what it once stood for but each nation and its people must evaluate its pros and
cons to arrive at the right mix of policies that is suitable for their growth and development.
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9. Does India Need a Bullet Train ?
In India, the history of High Speed Rail (HSR) started with an announcement made in the
Rail Budget of 2000-2001 about high speed railways, which resulted in a general feasibility
study done by Rail India Technical and Economic Service (RITES). The signing of a pact
for the Mumbai-Ahmedabad High-speed rail corridor - a massive project involving a cost
of 98000 crore rupees - created news in the mainstream media. Both India and Japan have
invested time, energy and diplomatic resources in this showpiece project for which the
Japanese are committed to advancing a loan of 8 billion dollars. India has inched closer
to getting a bullet train after Prime Minister Narendra Modi and Shinzo Abe laid the
foundation for the high-speed train network. It will cost Rs. 1.1 lakh crore to see this
ambitious project through. Indian Railways, with help from Japan government, is now set
to begin work to set up a 500-km route for high-speed trains between Ahmedabad and
Mumbai. Railways Minister Piyush Goyal had indicated that the bullet train project will
be completed by August 15, 2022, one year before the official deadline of December 2023.
Japan has offered to lend India a soft loan of Rs. 88,000 crore at an interest of 0.1 per
cent. The loan will have to be paid in the course of 50 years, with a moratorium of 15
years. Although, the bullet train project brings with it several promising prospects, there
also exist hurdles which might hinder them.
The BJP was in power in both Maharashtra and Gujarat states when work began on
project in 2017. Maharashtra is giving a major chunk of money for the project, when most
of the track is in Gujarat. The train will run from Mumbai to Ahmedabad, the main city
in Gujarat state, a distance of 508 kilometres (315 miles). But it has run into obstacles
acquiring land amid opposition from fruit farmers. Moreover, the new state government
of Maharashtra does not appear to be in favour of the project. Any delay of the project
is likely to undermine investor confidence, at a time when growth has slowed to its
weakest pace in years.
Critics say India does not need the high-speed train and investment should go instead to
improve the existing network. "We are not against development or infrastructure projects,
but at the same time farmers' interests can't be ignored. We will rethink about projects
that farmers are opposing," said a senior leader of Nationalist Congress Party, which is a
part of the coalition government. The authorities have acquired 548 hectares land out of
the total requirement 1,380 hectares and the project was targeted to be operational by 2023
, the government told parliament in July. Protests against land acquisitions are common
in India, where tens of millions of farmers till small holdings.
Points in favour of bullet trains:
•
High-speed connectivity - The bullet train running between Ahmedabad and Mumbai
will cover the distance of 508 km within two to three hours. The project is supposed
to connect bustling economic corridors in the states of Gujarat and Maharashtra. This
will facilitate economic growth.
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•
Convenience and Comfort – The Shinkansen high-speed trains (colloquially called as
bullet trains for their appearance and speed) would provide comfortable journey within
just a few hours. The conventional Indian Railways lag considerably on the comfort
level of train journeys and the introduction of bullet trains would be a great development in this factor. The train will have wheelchair-friendly toilets, feeding rooms
for new-borns, and other features for comfort and safety. Also, the bullet train has
several advantages over air transport, including scheduling frequency and flexibility,
punctual operation, comfortable seats, and convenient city-centre terminals.
•
Safety - Safety has been one of the major concerns of Indian Railways. The record
of bullet trains in the field of safety has been impeccable. The Shinkansen trains of
Japan, started in 1964, have reported zero fatalities till date.
•
Employment - The bullet train project will create employment. The project is expected
to create 4,000 direct job opportunities, along with 20,000 indirect jobs. 20,000 construction workers will also be employed during the set up period.
•
Urban expansion - New bullet train stations set to come up along the route will attract urban growth and lessen the burden of settlement and migration in major cities.
•
Open new avenues - When completed, the Ahmedabad-Mumbai bullet train project
will present as a favourable destination for high-speed train technologies.
•
The purpose of creating an HSR Corridor is not to simply showcase speedy travel.
The main takeaway is stringing in 10 other cities and ushering in development along
the way.
•
Once operational in 2023, the high-speed service will cut travel time between the cities to two hours from the current eight hours. The other advantages include safety,
comfort and reduction in commuting time, addressing issues of regional imbalance
and reducing pressure on growing urban areas.
•
Proponents of high speed rail argue that the lines will reduce traffic burdens, provide
an environmental benefit, and create jobs. If people come to favour the high speed
rail lines over transit by car, especially over longer distances, there will be a positive
effect for the environment, as far less pollution will be created overall. In addition,
this will reduce traffic congestion, leaving far less people on the roads.
•
The act of the creation of the rail line will in itself provide a benefit - many workers
will be needed to work on the project, providing economic stimulus. In addition, if the
high speed rail does indeed make travel easier and cheaper, many who would have
previously been unable to may be able to get jobs further away from their homes.
Supporters of high speed rail say that the benefit to the community, the environment,
and the economy far outweighs any costs.
Points against bullet trains:
•
Land acquisition - Acquiring new land pieces for laying down the tracks for bullet
trains and constructing new stations might face legal hindrances, delaying the process.
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•
Stoppages - With limited stoppages (only two in Vadodra and Surat), the Ahmedabad- Mumbai bullet train will complete its journey in 2 hours, where increasing the
stoppages will increase the journey time up to three hours.
•
Profitability - The origin stations - Ahmedabad and Mumbai - have airports and passengers from these cities could consider taking a flight instead of boarding the bullet
train..
•
A total of 80 per cent of the funds for the project will come from Japan, and will
have to be returned after a period of 15 years. The profits this project make will
decide how easy or difficult it will be for India to pay this loan back.
•
India is seeking loans to build the HSR but is ambivalent in the approach to acquiring technology and indigenous manufacture of high-end components in the traction
chain. Essentially, India's Ministry of Railways projects the image of a buyer of rolling
stock rather than that of a technology seeker.
•
The infrastructure projects required for HSR are meant for the elite and not the
middle- class passengers.
•
The cost of laying a bullet-train corridor is estimated to cost up to Rs 100 crore a
kilometre. After summing up the costs of signals, rolling stock, etc, the cost can rise
up to Rs 115 crore a km. thus, one of the major disadvantages includes high capital
cost, operation and maintenance cost, and need to change alignment. Another important dissuading factor is that planning and implementation could take a long time,
while change of government could upset the project.
•
The high speed rail program will just eat the budget and reap no real rewards. Critics argue that very few people will take the trains, opting instead for the freedom
offered by personal automobiles and/or airlines. Some also claim the prices for high
speed rail tickets might be too expensive for many people to take the trains regularly.
•
This lack of riders will render the supposed benefits of the high speed rail network
moot. Given the amount of government funding that is being used on the project
and the doubter's lack of belief in its success, they argue that the funding should be
instead used for improving the current transportation infrastructure.
•
Proposed systems and technologies like Maglev & Hyperloop might make investing
a humongous capital on bullet train seem obsolete.
•
Noise pollution - Noise pollution concerns make it difficult to increase the speed of
these trains. In Mumbai & Ahmedabad, the population density is high leading to
limits on noise levels in residential areas. Thus, it would be necessary to reduce operational noise, particularly the tunnel boom phenomenon caused when trains transit
tunnels at high speed.
Conclusion:
The future of high speed rail is rapidly approaching, with many lines planned and some
already constructed, but whether this future will be a good one is in question. There's no
way of telling at this juncture whether the project is a boon to the country or an albatross
that will weigh the country down.
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10. Will Insolvency and Bankruptcy Code Fix the Bank NPA
Issue ?
What is the IBC?
The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which
seeks to consolidate the existing framework by creating a single law for insolvency and
bankruptcy.Certain provisions of the Act have come into force from 5th August and 19th
August 2016. The bankruptcy code is intended to be a one stop solution for resolving
insolvencies which previously was a long process and did not offer an economically
viable arrangement. A strong insolvency framework where the cost and the time incurred
is minimised in attaining liquidation has been long overdue in India. The code is intended
to be able to protect the interests of small investors and make the process of doing
business less cumbersome.
Why the need for the IBC?
India did not have a single bankruptcy code. What we had were age-old laws that were
in conflict with each other. Lack of an insolvency and bankruptcy code had proved costly
for the creditors (mainly banks) in many cases like the recent Kingfisher Airlines and the
Nirav Modi case. The Insolvency and Bankruptcy Code seeks to create a unified framework
to resolve insolvency and bankruptcy in India.
1.
Such a unified code was essential because the issue of insolvency was being handled
under at least 13 different laws. This code was designed to replace the Presidency
Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920. In addition, it sought
to amend 11 laws, including the Companies Act, 2013, Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and Sick Industrial Companies (Special
Provisions) Repeal Act, 2003, among others.
2.
Earlier, if a company defaulted, there were at least four different legal routes available to the debtors and creditors. This could lead to multiple negotiations, multiple
penalties etc. for the debtor, compounding his plight.
3.
Such parallel proceedings had also given rise to numerous instances of conflict between the laws. Four different agencies, the high courts, the Company Law Board,
the Board for Industrial and Financial Reconstruction (BIFR), and the Debt Recovery
Tribunals (DRTs) had overlapping jurisdiction, which gave rise to the potential of
systemic delays and complexities in the process. This new bill has tried to addresses
these issues, by bringing in a new uniform Code.
4.
Prior to the implementation of the IBC, insolvency proceedings used to take years.
This delay would acutely devalue the assets involved, thus making the insolvency
negotiations redundant.
5.
The previous disposition involved the institution of official liquidator, which was
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prone to red-tapeism, chronic corruption, and nepotism. The IBC seeks to keep the
role of the adjudicator to the minimum.
6.
Prior to the implementation of the IBC, only an average 25% of the asset value was
recovered by the creditors even after the liquidation process.
7.
All these compounded to the pitiable position our Public Sector Banks find themselves in. Rising NPAs and mounting Stressed Assets have also eroded their profits.
The easing of liquidation process can help the banks recover a lot of bad debts.
8.
India still fares quite poorly in the Ease of Doing Business index of World Bank.
Easiness of Exit is an important parameter in this index. The previous morass of laws
did not help in easing the exit of trouble-prone entities.
9.
According to World Bank data, it takes more than four years to wind up an ailing
company in India, almost twice as long as it does in China.
10.
Just like the US Bankruptcy Code that provides for fairly quick liquidation or reorganisation of business, India too needed a new code that would prevent the economy
from tumbling southwards
Key Players & Processes of the IBC
The Insolvency and Bankruptcy Board of India(IBBI): The Code establishes the Insolvency
and Bankruptcy Board of India, to oversee the insolvency proceedings in the country
and regulate the entities registered under it. The Board will have 10 members, including
representatives from the Ministries of Finance and Law, and the Reserve Bank of India.
The IBBI was established on 1st October, 2016 under the Insolvency and Bankruptcy Code,
2016 (Code).
Bankruptcy and Insolvency Adjudicator: The Code proposes separate tribunals to oversee
the process of insolvency resolution, for individuals and companies: (i) the National
Company Law Tribunal (NCLT) for Companies and Limited Liability Partnership firms;
(ii) the Debt Recovery Tribunal (DRT) for individuals and partnerships and (iii) National
Company Law Appellate Tribunal (NCLAT) which acts as the Appellate Authority
Insolvency Professionals: Insolvency professionals are licensed professionals, who are
registered with the Insolvency and Bankruptcy Board of India and are enrolled with an
insolvency professional agency. This professional is appointed as an insolvency resolution
professional to manage the resolution process and as a liquidator to conduct liquidation
of a corporate debtor. He or she is appointed by the Adjudicating Authority and is given
the power by the Adjudicating Authority to effectively run and manage the entity as a
going concern, and assets of the entity at all times during the process of resolution. Being
a new legislation, the Code is evolving with every passing day and so are the rights and
duties of the insolvency professionals as interim resolution professionals ("IRP") or resolution
professionals ("RP") as the case may be. The Code provides that the Adjudicating Authority
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shall appoint an IRP within fourteen days from the insolvency commencement date
Corporate Insolvency Resolution Process (CIRP): The Code outlines separate insolvency
resolution processes for individuals, companies and partnership firms. The process may
be initiated by either the debtor or the creditors. Recently the maximum time limit, for
completion of the insolvency resolution process, has been amended.Prior to the Amendment,
the Code required that the CIRP should be concluded within a maximum period of 180 days
(with a maximum one-time extension of 90 days) from the insolvency commencement date
(the Code denotes this to be the date of appointment of interim resolution professional).
However, many CIRPs were exceeding this overall 270-day limit on account of legal
proceedings initiated either against the corporate debtor, the CoC or the Amendment
provides that the CIRP must mandatorily be completed within an overall timeline of 330
days from the insolvency commencement date (including all or any extensions granted as
well as any litigations and related legal proceedings). Additionally, for an on-going CIRP,
in case the 330-day overall timeline has already been breached at the time the Amendment
comes into force, the Amendment provides for an additional relaxation of 90 days as a
transitionary measure. The minimum default amount to initiate the CIRP is Rs 1 lakh.
Committee of Creditors - “Committee of Creditors” is a committee consisting of the
financial creditors of the Corporate Debtor. This Committee eventually forms the decision
making body of the various routine tasks involved in Corporate Insolvency Resolution
Process (CIRP), responsible for giving approval to the IRP to carry out actions that might
affect the CIRP.
Corporate Debtor
An individual or corporate (proprietary, partnership or limited firm) that has borrowed
money is referred to as a Corporate Debtor under the IBC. For the purpose of IBC, a
corporate debtor is an entity (individual or corporate) that defaults on the debt repayment
in whole or any part of the instalment of the amount of the debt that has become due.
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The Process to be followed in IBC
Progress of Cases under IBC
Since the coming into force of the provisions of CIRP with effect from 1 December 2016,
2542 CIRPs have commenced by 30th September 2019. Of these, 186 have been closed
on appeal or review or settled; 116 have been withdrawn; 587 have ended in orders for
liquidation and 156 have ended in approval of resolution plans. Resolution of twelve
large accounts was initiated by the banks as directed by the RBI. Together they had an
outstanding claim of Rs. 3.45 lakh crores as against a liquidation value of Rs. 73,220.23
crores.Out of the 12 large accounts ,the seven cases resolved include Bhushan Steel, Essar
Steel and Bhushan Power and Steel. Together these seven cases accounted for Rs 2.14 lakh
crore of outstanding claims. The resolution of these cases helped in the creditors recovering
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a total of Rs 1.02 lakh crore, or a recovery rate of 48 per cent, slightly better than the
average recovery rate of close to 42 per cent across 156 cases resolved till 30 September
2019 (as on November 15th , the amount recovered from the Essar Steel account increased
from 30030 crores to around 42000 crores making the total amount recovered about
1.14 lakh crores out of 2.14 lakh crores from these 7 cases making the total percentage
recovery around 53% for these 7 cases) .However, the recovery of these loans ranges
between a low of 17 per cent for Alok Industries and 85 per cent for Essar Steel.
Is IBC the solution to India's NPA problem ?
Arguments against- Resolution under IBC has not been significant so far
The numbers put out by the Insolvency and Bankruptcy Board of India (IBBI) as indicated
above paint a not-so-rosy picture on the progress of cases under IBC.Since the IBC is still
evolving and testing waters, there have been challenges at various stages — right from
admission of the case, expression of interest from parties, to submission of plans and final
approval by the NCLT. It has certainly delivered, but it could have delivered much more
. A similar set of issues, have been experienced in the past as we do right now, when the
Debt Recovery Tribunals were set up: lack of infrastructure, lack of presiding officers,
lack of sensitization of other stakeholders, undue delays in litigations etc. Some of the
issues faced in the implementation of the IBC are:
Significant delays in the resolution process
IBC has been widely acknowledged as a beacon of hope for creditors who have, for
years, been waiting for justice. However, in most of the cases the previous threshold of
270 days has been breached because of procedural inefficiencies, lack of infrastructure
and other frivolous matters. When the first attempt was made to dilute the previous
180/270 day timeline (currently timeline has been extended to a strict deadline of 330
days), it should have been nipped in the bud. The slow pace of resolution under the IBC,
even three years after its implementation, is a growing cause for concern. After all it was
the inefficacy of the Debt Recovery Tribunals (DRTs) that had prevented lenders from
expediting recoveries under the earlier regimes. One of the crucial aspects of the IBC was
time-bound resolution Not only does this jeopardise the basic premise of resolution within
a stipulated time period but also results in notional loss of interest income for lenders
with every day of delay. While there is no denying that steady modifications in the Code
have been made, undue delays in litigations is impacting the efficacy of the IBC process.
Lack of Infrastructure & Resources
As per Bankruptcy experts, an expansion of infrastructure is a must to keep the process
running smoothly. One of the concerns for the IBC law is that there are too many
cases and lack of sufficient number of resources in terms of IRPs, benches, judicial
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members, technical members at NCLT .Expanding judicial capacity in the NCLT and
NCLAT is critical for the success of the IBC.There are over 2,787 registered insolvency
resolution professionals (IRPs) as on 30th September 2019 .However ,it is not known as
to how many of these individuals are equipped to manage affairs of the business, cash
flows, labour disputes etc. . Some of the IRPs work for the large audit and accountancy
firms, while others are at smaller firms or work as independent professionals. They are
certified by the Insolvency and Bankruptcy Board of India. However ,there is a wide
variation in quality and experience, and legal experts demand more consistency .
Lack of Sensitization & Education
Implementation of IBC has continued with the same old mindset, that ‘things will get taken
care of with a new law’. Laws don’t solve problems, it is how those laws get implemented
– which includes education and sensitization – that has been lacking. One critical mistake
in the implementation of the IBC was of choosing the National Company Law Tribunal
(NCLT) as the forum. The NCLT was anyway burdened with other matters, and then IBC
just added to it. Dedicated benches should have been set up for the same. Also, it is not
known how many people in the NCLT actually have an understanding in economics
or finance? The IBC is a law which is hugely driven by finance and economics, so you
can’t do justice to the implementation of this law if people who are responsible for its
implementation don’t have a connect with finance and economics
Lack of momentum from the investor community
The M&A activity in the stressed assets space has not been complemented by the much
spoken enthusiasm of investors and a conducive investment landscape. Many investors
are waiting on the side-lines to gauge the outcome of the settlement of big cases and
evolution of IBC before investing.There are concerns on too little time being allowed to
bidders to do their due diligence. Absence of virtual datarooms, is keeping foreign funds
away from the process as is the relatively small window to conduct due diligence on the
numbers .Furthermore, modifications to IBC have not put to rest certain looming issues,
which are of concern to investors relating to operations of plants in India following transfer
of assets under the IBC, period of commitment towards the units and expected timelines
to close the allocation process. Certain sector-specific concerns with companies under the
IBC may require intervention from the Government.
Arguments for: IBC –Definitely a Game Changer
As per data available till 30thSeptember 2019, realisation by FCs under resolution plans
in comparison to liquidation value is 184%, while the realisation by them in comparison
to their claims is 42% (compared with 26.5% through earlier mechanisms). Further, the
average resolution timeline for cases resolved through IBC which is in the range of 325
-350 days, is also much better compared with 4.3 years earlier.
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IBC has also resulted in a slower accretion of new non-performing assets (NPAs) in the
Indian banking system. CRISIL estimates the banking sector’s gross NPA (aggregate) has
declined to 10% in end-March 2019 from 11.5% the year before on the same date.
In the period of time that the insolvency code has been in force, both the NCLT and the
NCLAT have attempted to adapt to new legal concepts and strict procedural timelines.
This must continue, of course, as an efficient judicial process is also critical in protecting
the going concern value of distressed companies.
Some of the steps taken by the government in the implementation of the IBC are:
Development of Infrastructure to support the implementation of IBC
In less than a year of its enactment, new networks of the National Company Law
Tribunal (NCLT), the new regulator ‘Insolvency and Bankruptcy Board of India’ (IBBI),
new stream of professionals ‘Insolvency Professionals’ (IPs), new stream of Information
‘Information Utilities’ (IUs) and Insolvency Professional Agencies (IPAs) were established
to control and monitor the IPs’ registrations and proceedings. The IBBI charted the course
of its implementation under the guidance of the Ministry of Corporate Affairs (MCA),
Government of India.
Fine tuning the IBC
Constant improvements and updates to IBC have followed in response to the feedback
received and practical experience of processes under execution. To its credit, the Government
has been willing to hear out suggestions.
The introduction of the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019
("Bill"), by the Government, is one such step that will help overcome 'critical gaps in
the corporate insolvency framework'. With these recent changes ,the government has rightly
enhanced the focus on ensuring sustenance and recovery of businesses from bankruptcy,
which is essential to sustain the economy and drive growth as it would definitely widen
options in terms of interested bidders and encourage more resolution applicants to come
forward to bid for stressed assets, without the Damocles sword of attachment of assets/
criminal proceedings swinging over their heads
Some of the salient features of the recent changes are as follows:
1.
Greater emphasis on the need for time-bound disposal at application stage.
A strict deadline has been set for completion of CIRP within an overall limit of 330
days, including litigation and other judicial processes. Cases will have to be admitted
speedily and concluded in 330 days.
2.
Minimum threshold for initiating the resolution process: Under the Code, a financial
creditor (either by itself or jointly with other financial creditors) may file an applica-
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tion before the National Company Law Tribunal (NCLT) for initiating the insolvency
resolution process. In 2018, home-buyers were categorised as financial creditors for
the purpose of IBC. Since then, developers have claimed that this provision has hampered successful completion of various projects as construction was getting stalled
due to filing of insolvency applications by home buyers.As per the Insolvency and
Bankruptcy Board of India (IBBI) data, since the 2018 amendments till September 2019,
1,821 cases were filed under the IBC by home buyers and in almost all cases, by a
single home buyer. The Bill amends this to provide minimum thresholds for certain
class of financial creditors to initiate the insolvency resolution process.For example,
in case of real estate projects, if an allottee (person to whom a plot, apartment, or
building has been allotted or sold) wants to initiate resolution, the application should
be filed jointly by at least 100 allottees of the same real estate project, or 10% of the
total allottees under that project, whichever is less.
3.
Liability for prior offences: The Bill provides that corporate debtors will have immunity against offences committed by them prior to the commencement of the resolution
process. In addition, the Bill provides immunity from any action against the property
(such as attachment, seizure, or confiscation) of the corporate debtor in relation to
such offences. Such immunity will be granted if the resolution plan approved by the
NCLT results in the change of promoters, or management of the corporate debtor.
The rationale behind the amendment is that the successful bidder should not have
the risk of a corporate debtor being made an accused by any enforcement agency.The
amendments would remove bottlenecks, streamline the corporate insolvency resolution
process and boost investment in financially-distressed sectors.
4.
Extending the scope of Moratorium: To help keep the corporate debtor a ‘going
concern’, the Bill extends the scope of moratorium to prohibitsuspension or termination of arrangements that involve conferment of rights by any government authority
on the ‘grounds of insolvency’, or any arrangements relating to supply of goods and
services that the resolution professional considers critical to protect the value of the
corporate debtor,so long as there is no default in the payment of current dues arising out of use of such benefits during the moratorium period
Conclusion: IBC – A Step in the right direction
The Code has started an interesting journey and is a step in right direction. Earlier, bankers
had little ability to threaten promoters. Debarring wilful defaulters from the IBC process
has also led to a sea-change in the credit behaviour of borrowers. The IBC has shifted
the balance of power to the creditor from the borrower. It has instilled a significantly
better sense of credit discipline. Today, there is a sense of urgency and seriousness among
defaulting borrowers because losing their asset is very much a possibility if the resolution
process fails.
It further appears that the intention of the legislature has been to not burden a stressed
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company with tax levies, while it is undergoing reorganisation for survival.
There are various issues/questions being faced by corporates/ investors who embark on
acquisition of these assets. These could go a long way in providing certainty to the acquirer
and support the overall intention of timely, faster and efficient resolution of NPAs in India
It also true that there will still be some promoters that try to game the system, and hence
steady streamlining of the process is imperative (which if not done can otherwise lead to
delay in the resolution process).
Even so, the following steps can be taken to avoid excessive delays.
1.
It is hence essential that the new resolution period of 330 days is strictly adhered
to. Courts must avoid intervening routinely, unless key points of law need clarification. There are a few big-ticket accounts for which resolution has not been finalised
for over 400 days.
2.
Lack of sufficient and qualified resources in terms of IPs, benches, judicial members,
technical members at NCLT — needs to be addressed. Currently, there are thousands
of cases admitted by the NCLT under IBC and over 2,000 registered insolvency professionals (IPs). But how many of these individuals are equipped to manage affairs
of the business, cash flows, labour disputes etc, is critical.
All in all, avoiding undue delays in the process, and limiting judicial overreach is imperative,
if IBC is to serve its intended purpose.
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11. Is Artificial Intelligence “the worst event in the history of
civilization”?
Physicist Stephen Hawking said the emergence of artificial intelligence could be the “worst event
in the history of our civilization.”
“The emergence of artificial intelligence (AI) could be the worst event in the history of our
civilization unless society finds a way to control its development”: late Stephen Hawking.
Hawking in 2017 talked about the potential of AI to help undo damage done to the natural
world, or eradicate poverty and disease, with every aspect of society being “transformed.”But
he admitted the future was uncertain.
“Success in creating effective AI could be the biggest event in the history of our civilization.
Or the worst. We just don’t know. So we cannot know if we will be infinitely helped by
AI, or ignored by it and side-lined, or conceivably destroyed by it,” Hawking had said
during the speech.
“Unless we learn how to prepare for, and avoid, the potential risks, AI could be the
worst event in the history of our civilization. It brings dangers, like powerful autonomous
weapons, or new ways for the few to oppress the many. It could bring great disruption
to our economy”.
How it helps:
“Wouldn’t it be nice if you can just tell your phone - ‘Uber ride Crowne Plaza San
Francisco’ - and then the Uber app just gives you the car?” - said Dekang Lin, Naturali’s
co-founder and chief technology officer.
This is possible through bots which either classifies or predicts what’s going to happen.
It has been popularly termed as Artificial Intelligence.
There has been a significant development in the technology sector, which is a consequence of
the substantial improvement in the lifestyle of humans. The concept of artificial intelligence,
termed earlier as fiction, has now become a reality in our lives.
Artificial intelligence is a broad branch of computer science which are designed and
programmed in such a manner that they can think and act like a human. The goal of
artificial intelligence is to create systems that can function intelligently and independently.
Ithas reduced human effort in many ways, and its role can be observed significantly in
our daily life.
In our day-to-day life, we come across different sets of data in different types of organisations.
For example, if you have lots of data for sales versus advertising spend, you can plot
the data to see some pattern.
If the machine can learn this pattern, then it can make predictions based on what it has
learnt. Machines can learn in many more dimensions – like hundreds or even thousands.
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That is why machines can look of high dimensional data and can determine the patterns.
Once it learns these patterns it can make predictions, that human cannot even come
close to. You can use all these machine learning techniques to do one of two things –
classification or prediction.
Machine learningaccompanied with neural networksmimics the actual processes of the real
neurons, which allows machines to process complex data and provide accurate information
through artificial intelligence.
Understanding the scope of artificial intelligence, you can observe that artificial intelligence
has penetrated into our daily life. Nowadays in many organisations, humans are using
this technology to speed up the process of completing the work with a greater level of
accuracy. The technique of artificial intelligence has brought out the idea of error-free
world, with reduced human effort and faster results.
Following are some of the domains where artificial intelligence is having the greatest of
impacts:
•
Automated Transport System
Technological advancement termed artificial intelligence has helped the transport
system to automate the running of vehicles, popularly known as ‘self-driving cars’.
The technology enables the car to navigate cross-roads and avoid colliding with other
vehicles. It has significantly helped in reducing the number of accidents. In most cases,
accidents are attributed to several factors which include theinfluence of alcohol and
drugs, over-speeding, and ignorance of road signs, which can be reduced through
self-driving cars. According to the Atlantic, researchers estimate that self-driving cars
could save 29,447 lives a year (taking numberof fatalities in 2013 as the baseline).
For further reading on automated transport system, follow the following links:
•
•
https://interestingengineering.com/the-25-ways-ai-can-revolutionize-transportationfrom-driverless-trains-to-smart-tracks
•
https://www.lanner-america.com/blog/examples-artificial-intelligence-applicationstransportation/
Bank and Financial System
Banks are using artificial intelligence in the field of financial operations, investment
in stocks,manage and organise statistical data, and finally help customers with quick
solutions.
AI will help in detection of fraud, risk management, digitization and wealth management. Follow the links for further reading and expanding knowledge of how AI is
helping the banking industry (and the leading AI companies):
•
https://www.analyticsvidhya.com/blog/2017/04/5-ai-applications-in-banking-tolook-out-for-in-next-5-years/
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•
•
https://www.livemint.com/AI/v0Nd6Xkv0nINDG4wQ2JOvK/Artificial-Intelligence-in-Indian-banking-Challenges-and-op.html
•
https://www.proschoolonline.com/blog/artificial-intelligence-changing-bankingsector/
Medical Science or Healthcare
Artificial intelligence has changed the face of medical science by providing solutions
to the diagnosis of complex neurological disorders. From being a virtual healthcare
assistant to schedule appointment in hospitals, artificial intelligence has made sure
that there is twenty-four or seven assistance to both the doctors and patients.
For further reading, follow the links:
•
•
https://novatiosolutions.com/10-common-applications-artificial-intelligencehealthcare/
•
https://www.cabotsolutions.com/how-artificial-intelligence-is-changing-thehealthcare-industry
Product Industries and Organisations
The manufacturing companies are using artificial intelligence in the development of
machines that perform human activities.It has been in the production units, to have
a consistent rate of production with maximum efficiency and effectiveness. Artificial
intelligence has brought about increased production, since they can work consistently
without tiring and also due to the different roles they can be employed in. Additionally, it has also been used to keep employees’ records, extract data which helps
in decision making, and thus has become part of the management system of the
industries.
Hence, artificial intelligence has not only helped in enabling the processes of production industries to complete their tasks in good time, but also has helped in enhancing
business development.
Follow the links for further reading:
•
•
https://www.themanufacturer.com/articles/power-artificial-intelligence-manufacturing/
•
https://cis-india.org/internet-governance/files/AIManufacturingandServices_Report_02.pdf
Professionals in hazardous environment
Artificial intelligence has developed an ecosystem where it has taken over some of the
dangerous jobs currently in the world such as defusing of bombs. In coming years,
it will also provide benefit to the labourers or professionals working under intense
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heat and noise. Thus, implementation of artificial intelligence has helped considerably
to provide protection and offer safety measures to humans.
Thus, we see that artificial intelligence impacts our day-to-day life ranging from healthcare
system to banks, from transport system to applications in jobs. It also has a wide area of
applications in gaming, air-transport systems, and computerised methods.
Application of Global positioning system (GPS) during travel; prediction of what we are
going to type and correcting it when wrongly-typed; identify and tag a person on social
media;execution of tasks through digital assistants like Cortana, Siri, Alexa; all form essential
components of application of artificial intelligence.
The development and invention of artificial intelligence have made a considerable impact
on the humans. Consequently, the advent of the next era of artificial intelligence also
plays a partin war prediction and hence eradication, proper means of fighting diseases
and thusdeveloping appropriate preventive measures against it. It is predicted to help in
fighting against poverty, which would be one of the significant roles of artificial intelligence
to be played in the coming days.
In conclusion, artificial intelligence has substantially improved and impacted people’s lives
in different ways, and the world is not the same as before. It has played an essential role
in time-saving and done wonders in the automation process. Evidently, artificial intelligence
has dramatically influenced and contributed to the people’s lives and industries. Saying that
it may be the worst event in the history of our civilization may not hold true at present!
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12. The impact of Brexit on the Politics and Policies of the
European Union
Decoding Brexit
Brexit: (an abbreviation for the term “British exit”), explained simply as Great Britain
leaving the European Union (EU) as it was earlier part of the EU.
What is the European Union (EU)
The European Union is a club of 28 European Countries. Each of these countries pays
to be a member and in return, they get access to special ways of working together. This
includes being part of a “single market”, which means that countries can trade with one
another and people can move around freely – as if we were all living together in one
big country.
The EU has its own parliament, laws and currency (the euro – although the UK doesn’t
use this and retained its currency). The EU was set up after World War 2 with the idea
that if countries work together, they are unlikely to go to war again.
Note: Britain had always maintained some distance from the EU. It joined the European
Economic Community (EEC) in 1973 and hence the EU in the 1990s. But Britain never
fully accepted the legitimacy of European control over British institutions in a way that
other EU members did. It refused to join the Schengen Area, which eliminates internal
border controls and opted out of the common currency Euro.
The referendum
A referendum was held in the UK on June 23rd 2016. Contrary to what the economists
were predicting (and hoping), the United Kingdom (UK) voted to leave the European
Union (EU) by 52% to 48%. ‘Leave’ won the majority of votes in England and Wales,
while every council in Scotland voted to remain in the EU
Possible reasons for Britons deciding to leave EU:
●
Financial: Each member nation of the EU pays an amount to the EU annually to
continue their membership. As regards the UK, the amount is around $12 billion dollars (£9 billion). This big annual commitment was one possible reason for a ‘leave’
vote where the money can be spent for domestic purposes
●
Immigration: One of the many principles laid out while forming the EU was that
of being free members where people can freely move and live in another EU nation
without the hurdles of getting a visa. It is believed that almost 1 million people have
moved to the UK due to the free labour laws. Britain also gives child benefits and it
is believed that many of these migrants are transferring that money to their children
who aren’t living in the UK.
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●
Control & Autonomy: the European Parliament decides on many rules and standards
that EU countries have to follow and critics felt that UK was losing control of our
own affairs and laws.
In essence, it was about autonomy, monetary benefits, & immigration that got 52% of the
Britons voting to leave the EU.
Immediate impact in 2016:
The referendum results did not mean Britain’s exit by default. This marked the beginning
of the end of Britain’s membership of the EU. In the coming months, British and European
leaders negotiated the terms of Britain's departure. The EU got itself one more crisis to
deal with. As if the Greek crisis, the mass migration and the slow economic growth were
not enough.
2017 was in the news for the two kinds of Brexits:a ‘hard Brexit’ or a ‘soft Brexit’.
Two options were floated since the Brexit referendum - a ‘hard Brexit’ or a ‘soft Brexit’.
The two different terms essentially refer to the kind of relationship and level of participation
the country will have with the EU’s Single Market – the free movement of people, goods
and services – and the Customs Union – the bloc’s trade and tax agreement.
A soft Brexitis generally more favoured by Remain supporters – second to no Brexit, of
course – and a hard Brexit is typically more likely to be supported by those who voted
Leave.
Key elements of a soft Brexit:
It would keep the UK closely aligned with the EU. The UK could gain special access to
the single market but might have to, in return, compromise on immigration agreements. It
aims to minimise the impact on trade and businesses by essentially staying in the customs
union. The result would be that the UK would still be bound by some of the rules of
the bloc, but it would have less of a say in how the rules are made. And it would be
harder for the UK to sign its own new trade deals.
Key elements of a hard Brexit:
It essentially means taking the UK completely out of the EU – including both the single
market and the customs union, so it is free from its regulations and tariffs. It would give
the UK more control over its borders and immigration. It would mean leaving both the
single market and the customs union and accepting the (possibly) short-term disruption
that would cause in order to have the freedom to operate independently. It could cause
more economic damage to both the UK and the EU but supporters think this would be
worth it for the country to be able to then draw up its independent trade agreements.
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Ground Already Covered till 2018: The vote was just the start.The discussions have been
mainly over the "divorce" deal, which sets out exactly how the UK leaves - not what
will happen afterwards.
This deal is known as the withdrawal agreement which covers some of these key points:
●
How much money the UK will have to pay the EU in order to break the partnership
●
What will happen to UK citizens living elsewhere in the EU, and equally, what will
happen to EU citizens living in the UK
●
How to avoid the return of a physical border between Northern Ireland and the
Republic of Ireland when it becomes the frontier between the UK and the EU
●
A length of time, called the transition period, has been agreed to allow the UK and
EU to make a trade deal and to give businesses the time to adjust
What happens next afterBoris Johnson's re-election in 2019?
Boris Johnson's got re-elected on the slogan of "get Brexit done".
His victory in the 2019 general election means we the UK is likely to be officially out of
the EU at the end of January 2020.
Boris Johnson plans to ratify his withdrawal agreement through Parliament to make sure
that the UK leaves the EU by January 31, 2020.
MPs will be carrying out detailed scrutiny of the Withdrawal Agreement Bill - the legal
mechanism for translating the Prime Minister's Brexit deal into law.They need to go through
a committee stage, 'third reading' and the House of Lords before it receives Royal Assent
before January 31, 2020.
Is 1 February 2020 the end?
That is because the deal contains a hard deadline of just 11 months, 31 December 2020,
to secure a Free Trade Agreement with the EU.
Most experts including EU chief Michel Barnier say that is simply not possible.
If that deadline is not extended, UK could be facing a no-deal Brexit on 1 January 2021
when the 'transition period' ends.
What is a no-deal Brexit?
In a no-deal scenario, the UK would immediately leave the European Union (EU) with
no agreement about the "divorce" process.
Overnight, the UK would leave the single market and customs union - arrangements
designed to help trade between EU members by eliminating checks and tariffs (taxes on
imports).
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‘No deal’ also means immediately leaving EU institutions such as the European Court of
Justice and Europol, its law enforcement body.Membership of dozens of EU bodies that
govern rules on everything from medicines to trade marks would end.And the UK would
no longer contribute to the EU budget - currently about £9bn a year.
In conclusion, Boris Johnson's majority may have bought him some time, but the potential
nightmare of a no-deal Brexit still looms.
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13. Umbrella Revolution in Hong Kong
“I tried to purchase umbrellas and I just can’t” on those platforms, said Kelvin Yeung, a 22-yearold university student who has participated in about half of the marches this summer. “I cannot
put it into my basket if the destination is Hong Kong.”
The story:
Hong Kong, one of the world’s most important financial hubs, has exploded into protest.
The so-called “umbrella revolution” has turned the city’s gleaming central business district
into a virtual conflict zone, replete with shouting mobs, police in riot gear, and clouds
of tear gas. Tens of thousands of Hong Kong residents – young and old, rich and poor
– have peacefully occupied major thoroughfares across the city, shuttering businesses and
bringing traffic to a halt. They claim that Beijing reneged on an agreement to grant them
open elections by 2017, and demand “true universal suffrage”. Neither side seems prepared
to back off, and nobody knows how the standoff will end.
“Free Hong Kong! Democracy Now!” they chanted.
History:
Demonstrators brought Hong Kong to a virtual standstill in 2014 when they demanded
the right for the territory to pick its own leaders.
For many years, Hong Kong was run by the UK as a part of the former British Empire.
That was until 1997, when control of the city was handed over to China.
But a special agreement with China - called “one country, two systems” - was created to
make sure that Hong Kong had some independence from China.
The protests started in reaction to a decision made by China that it would allow elections
in Hong Kong in 2017, but only from a list of candidates pre-approved by the Chinese
government.
Tens of thousands of people, of whom many were students, camped in the streets and
demanded the right to fully free leadership elections.
It was called “the Umbrella Movement” because protesters used umbrellas to protect
themselves from the tear gas used by police.
“The umbrella has been a symbol since the 2014 Umbrella Movement, and we use it to protect
ourselves. But it gives us power. We stand at the back, but we can donate it to the front. We
pass the power to them.” - Elsa Chan, 30, retail marketing
How this happened
Hong Kong, a former British colony of 7 million people, has been governed under a
“one country, two systems” framework since it was handed back to Chinese control in
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1997. The principle is simple in theory — Beijing is responsible for the city’s defence and
foreign affairs; Hong Kong enjoys limited self-governance and civil liberties, including an
independent judiciary and unrestricted press.
Its top political post – that of chief executive – is chosen by a “nominating committee” of
1,200 people, most of them from pro-Beijing elites. Yet when Beijing regained control over
the city, it promised that the region would be able to elect its top leader by universal
suffrage by 2017. The group guiding the current protests threatened to paralyse the city’s
central business district if Beijing broke its word.
Nobody knew when, or if, the protest would occur, but in August Beijing passed a reform
framework to stipulate universal suffrage on its own terms – only two or three committeevetted candidates who “love the country” would be allowed to run. Activists considered
this the last straw. Students began a class boycott and, galvanised by a city-wide surge
in support, staged a large-scale protest outside of the city government headquarters.
Current Protests
In June 2019 new protests were sparked in Hong Kong against a law that could have
seen its citizens tried, or taken to court, for political crimes in China.
Although the law was scrapped the protests continued over issues like democracy and
human rights in Hong Kong.
Benny Tai, a leading activist who was put in prison for his role in the Umbrella movement,
says the campaign switched young people on to protest.
Though the original Umbrella protests died down the action inspired many people in Hong
Kong to take to the streets to protest in ways we have seen once again in recent months.
Call for Democracy
Three months of million-strong peaceful marches and violent clashes with police finally
forced the government to withdraw the legislation recently.
Yet, the fight rages on for an independent inquiry into alleged police brutality in
suppressing the protests, a blanket amnesty for all those charged with offences stemming
from participating in demonstrations, and a retraction of a police claim that protesters are
guilty of rioting - a charge that carries a heavy prison sentence.
Most important of all, the protesters are pressing for a full democracy, as they did during
the Umbrella Movement.
While that movement’s lifeblood was predominantly university students, who stood their
ground, literally, in thousands of tents for months, the current campaign has been more
agile and diffuse. Instead of choking downtown, it has spread to many neighbourhoods
all over the city.
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“The Umbrella Movement has taught them many lessons, including the importance of solidarity
and how to keep the society vibrant by allowing a wide spectrum of people to participate,”
Dixon Ming Sing, an associate professor at the University of Science and Technology, who
investigates comparative political culture, told Al Jazeera.
Frequent skirmishes between the police and the protesters have also exposed the failings
of Hong Kong’s leaders, who remain in power solely on Beijing’s blessing rather than
the people’s consent.
Moreover, widespread outrage against police brutality and sympathy for the mostly peaceful
protesters has helped sustain - and even broaden - public support for the current fight.
Michelle Tsang, 52, wiped off tears as she talked about how young protesters are being
smeared by the authorities as rioters.
“I didn’t know any better back then,” said Tsang. “But this fight is worth fighting.”
The future of ‘One Country, Two Systems’
The Chinese president, Xi Jinping, urged Taiwan to “reunite” with mainland China under
a Hong Kong-style “one country, two systems” framework. His words left many analysts
scratching their heads. Why invoke the system’s virtues when it’s supposed beneficiaries
are in the middle of an unprecedented revolt? Taiwan’s democratic leadership rejected Xi’s
comments, saying that “our government has no way of accepting them”.
This week’s protests may be the most chaotic scenes Hong Kong has experienced since
a violent, anti-British riot racked the city in 1967 – and many residents are taking it as
evidence that the “one country, two systems” framework is fundamentally flawed, a recipe
for political gridlock and social unrest. Regardless of the protest’s outcome, Beijing has
almost certainly already lost one of its most valuable assets in the southern city: the trust
of its residents.
“The umbrella is very useful in those protests, protecting the people behind you, and absolutely,
it’s a symbol.” —K, 24
Reference Links:
https://www.theguardian.com/world/2014/sep/30/-sp-hong-kong-umbrella-revolution-prodemocracy-protests
https://www.aljazeera.com/news/2019/12/modi-summons-ministers-india-protests-deathtoll-increases-191221063611978.html
https://www.bloomberg.com/graphics/2019-hong-kong-protesters-umbrellas/
https://www.bbc.co.uk/newsround/49862757
https://www.diggitmagazine.com/papers/social-movements-digital-age
https://en.wikipedia.org/wiki/2019_Hong_Kong_protests
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14. Demonetisation and GST: What India Gained and Lost
The Goods and Services Tax or GST came into effect on the 1st of July 2017. The aim of
introducing the tax was to replace all the existing indirect taxes with a single comprehensive
tax. Through GST, all indirect taxes such as central excise tax, service tax, VAT and
entertainment tax were consolidated. This major step has helped the citizens of India to
file their taxes easily without the hassles they faced earlier.
What is GST? - Goods and Services Tax is levied on the manufacturing and sales of goods
and services across the country. The tax is charged at every stage of the manufacturing
process. GST is applicable for both the customer and the manufacturer. It is a destinationbased tax. This means that GST is to be collected at the point of consumption. So, if a
product is manufactured in Bihar and is sold in Bhopal, the tax will be levied in Bhopal.
Moreover, at every stage of the manufacturing process where value is added to the
product, GST is collected.
The types of GST are as follows:
CGST (Central Goods and Services Tax): The tax is collected by the central government on
the intrastate sale of goods and services. SGST (State Goods and Services Tax): The state
government collects this tax based on the intrastate supply of services and products.IGST
(Integrated Goods and Services Tax): The tax is charged on the supply of products and
services between two states. The taxes are shared between the central and state governments.
Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs
whenever there is a change of national currency: the current form or forms of money is
pulled from circulation and retired, often to be replaced with new notes or coins.
On 8th November 2016, the Government of India announced the demonetisation of all ₹500
and ₹1000 banknotes of the Mahatma Gandhi Series. These notes accounted for 86 per cent
of the total value of the currency with the public. It also announced the issuance of new
₹500 and ₹2000 banknotes in exchange for the demonetised banknotes.
The objectives behind demonetization are:
–
–
–
–
to
to
to
to
destroy fake currency and fight tax evasion
do away with black money and thus reduce corruption
reduce the excess cash circulation outside the formal economic system
reduce Inflation and to promote a cashless economy
Three years after the country was wiped out of old currency, the effects of Narendra
Modi’s demonetization can still be felt in the economy. Some of the pros and cons of
both demonetisation and GST are as follows:
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Effects of Demonetisation and GST
•
Effects of demonetisation:
1.
Demonetization and Personal Finance: Piggybanks have been transformed to savings
accounts as people turn towards increasing bank balances instead of stashing emergency cash in different corners of the house. People finally began to trust the digital
payment systems; because that was the only option they were left with. Demonetization proved that Indians can strive and adapt to any changes and made people
financially aware about the different spending options. The government’s efforts to
revamp the currency system provided people with a boost to use the cash that was
lying around and invest it in a more productive way. The more native and conservative people also opened up towards the era of plastic cash and made several Indians
tech friendly.
2.
Demonetization and Black Money: One of the most important points that pushed
peopleto support demonetization was its associating with bringing an end to the black
money problem in India. However, almost 99% of the money was deposited back to
RBI. The statistics revealed that either the hoarders found a way to legitimize their
black money or did not hold them in the form of cash. But this was known by many
before the RBI reports as well. Black money hoarders do not hold the money in cash
according to several finance experts and when this point was highlighted time and
again, other important effects of demonetization were publicized by the government,
like the role of demonetization on curbing terrorism.
3.
Demonetization and Terror Funding: The second reason to support demonetization
was its role in curbing terrorism by increasing the obstacles in terror funding. Terrorist organization were known to use fake Indian currency notes for funding their
projects and the government believed that this could be contained with the help of
demonetization. The Income Tax department seized Rs. 474.37 crore in new and old
currency from November 9, 2016 to January 4, 2017 (the demonetization period).
However, there are no reports if the money seized had any association with terror
funding. In spite of these numbers, there is no doubting that the cash reserves of
several terror groups were severely hit in the early days of demonetization.
4.
Digitisation: The government pushed for a less-cash society by increasing infrastructure
to allow digital payments. In most of the tier-II and tier-III towns, digital payments
had doubled since demonetisation. From global tech giants such as Google, WhatsApp, to few of the country's biggest mobile wallets, including Paytm, MobiKwik
all adopted the digital payments system around the time demonetisation took place.
Till December 2018, UPI managed transactions of more than Rs 1.02 trillion. National
electronic funds transfer (NEFT) transactions saw an upsurge from Rs 9.88 trillion.
Mobile banking payments also saw a spike since September 2015. All the digital
transactions collectively registered an increase of 440 per cent since demonetisation.
5.
Demonetization and Tax Payments: Pushing Indians to deposit and account the cash
lying in their house also meant a rise in the tax payments for the country. According to government reports the income tax payers saw a record increase in the post
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demonetization era. 9.1 million New taxpayers were added to the slab which was an
80% rise over the typical yearly rise. This increase in the number of taxpayingcitizens
in the country has been credited to demonetization. This increase was also resonated
in IT returns filing and advance tax payment.
6.
Demonetization and GDP: The ban on old notes is being cited as one of the key
contributors to the economic slowdown. With the gross domestic product (GDP) for
the April-June quarter slipping to 5.7%, the reality of the economic slowdown could
not be ignored. The World Bank has reduced the India GDP growth forecast to 7%
for 2017-18 owing to demonetization and GST (Goods and Service tax). The slowdown
is being cited as a delayed consequence of demonetization by the World Bank and
while there are various other reasons at play, the steep decline has been credited to
be an effect of demonetization.
7.
Demonetization and MSMEs: Demonetization had a lasting effect on Indians MSMEs
(Medium, Small and Micro Enterprises). Various medium and small enterprises turned
towards digitalization, however, the micro industries were affected by the worst of
its wrath. The micro industry owners were not a part of the black economy and
they were clearly unprepared for the effects of demonetization. Many micro industry
workers returned back to villages and the growth rate of these companies went as
low as 1%. The MSME sector has been recovering from the drastic changes and its
impact on the revenue, but demonetization forced the MSME sector to be friendlier
and more accommodating towards the digital arenas and made them more accommodating towards change.
While these are some of the effects of demonetization on the national and economic front,
demonetization gave individuals several lessons that have changed the way we look at
managing finances. Demonetization made sure that we monetize our earnings to get the
best returns possible whether it is by turning to monthly investment schemes to save
better or by turning our safe cash pile into an easy withdrawal FD (fixed deposit). The
government’s revenue will see an increase because of demonetization and its initial effects
are already prevalent in the income tax filings post note ban. Demonetization has played
a crucial role in bringing digitalization and financial planning into the forefront for many.
India has withstood the immediate chaotic impacts of demonetization and it is evident
that the returns of the hardships will begin to show in the coming months.
•
Effect of GST on the Indian economy: The implementation of GST has significantly
affected the Indian economy in the following ways:
1.
Simplification of the tax structure: GST has simplified the taxation system of the
country. As GST is a single tax, calculating taxes at the multiple stages of the supply chain has become easier. Through this, both customers and manufacturers get a
clear idea of the amount of tax they are charged and its basis. Further, hassles of
handling tax officials and authorities can also be avoided.
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2.
Fostering production: As per the
around 30% of the product cost.
down. So, the end consumer has
has enhanced the production and
Indian retail industry, the total tax component is
Due to the impact of GST, the taxes have gone
to pay lesser taxes. The reduced burden of taxes
growth of the retail and other industries.
3.
SME support: Small and medium enterprises can now register under the Composition
Scheme introduced by GST. Through this scheme, they pay taxes according to their
annual turnover. Therefore, businesses having an annual turnover of Rs. 1.5 crores
only have to pay 1% GST. Moreover, other enterprises having a turnover of Rs. 50
lakh are required to pay 6% as GST.
4.
Enhanced pan India operations: Companies can now avoid taxation roadblocks, such
as toll plazas and check posts. Earlier, these created problems, including damage to
unpreserved products while transporting them. So, manufacturers had to keep buffer
stock to make up for the damages. These overhead costs of storing and warehousing
hampered their profit. A single taxation system has reduced these problems. They can
now transport their goods easily across India. This has resulted in the improvement
of their pan India operations.
5.
Increase in exports: GST has reduced the customs duty on exporting goods. The cost
of production in the local markets has also decreased due to GST. All these factors
have increased the rate of exports in the country. Companies have become more
competitive when it comes to expanding their businesses globally.
The introduction of GST has helped merge the taxes of the state and central governments. This has helped remove the cascading effect of multiple taxes. Therefore, the
burden of taxes has reduced for companies and customers. Not just this, taxpayers
have increased in number and hence, the tax revenues have also increased significantly. The overall taxation system is now easier to administer. Moreover, small- and
medium-sized enterprises are able to enhance their businesses. It is expected that
GST will help more Indian organisations to establish themselves in the international
markets.
Demonetisation and GST impacted the Indian Economy adversely.
Demonetization has been one of the most criticized moves by PM Modi and everyone
from former Prime Minister Manmohan Singh to former RBI Governor Raghuram Rajan
has condemned this move and its effects on the Indian economy. From slowing down
the economic growth in various sectors to giving people nightmares of the long queues
and the inability to spend liquid cash freely, the hullabaloo created by demonetization is
remembered by one and all. Demonetization was initiated with a wide array of motives
like stripping the Indian economy of its black money, push people to pay taxes for the
unaccounted pile of cash, curb terrorism, promote the digital India movement and make
India a cashless economy.
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In the months that followed, even as reports suggested that the government had not come
any close to achieving its stated objectives, the government was seen patting itself on
the back for the country’s move towards becoming a ‘cashless’ economy, or, as the PM
said, a ‘less-cash’ economy. Many called this an act of ‘moving goal posts’ and rushed to
label demonetisation as an economic nightmare.Three years later, we have enough data
to analyse and gauge the impact of the note-ban exercise on various important sectors
of the economy.
1.
Jobs: According to Labour Bureau's Sixth Annual Employment-Unemployment Survey,
the unemployment rate rose to a four-year high in 2016-17, when the government
demonetised old currency notes. In 2017-18, the country's unemployment rate stood
at a 45-year-high of 6.1 per cent, according to the National Sample Survey Office's
(NSSO's) periodic labour force survey (PLFS).Moreover, demonetisation caused a
2-3-percentage-point reduction in jobs and national economic activity in November and
December 2016, according to a research.Between 2016 and 2018, five million people
lost their jobs and the labour force participation started declining suddenly between
September and December 2016 for both urban and rural men. The rate of decline
slowed down by the second half of 2017, but the general trend had continued and
there had been no recovery.
2.
Income taxpayers: As many as 8.80 million taxpayers did not file tax returns in the
financial year 2016-17 - the year Modi government demonetised high-value currency
notes. Records accessed by The Indian Express reveal a massive spike in the number of “stop filers” in the same year, reversing a four-year trend. In 2016-17, the
number of stop filers jumped 10-fold to 8.80 million from 856,000 in 2015-16, the
highest increase since 2000-2001. During 2017-18, there was some positive impact of
demonetisation on the widening of the tax base. The Income Tax department said
it added 1.07 crore new taxpayers while the number of dropped filers' came down
to 25.22 lakh.The Central Board Of Direct Taxes (CBDT) said 6.87 crore Income Tax
Returns (ITRs) were filed during FY 2017-18 as compared to 5.48 crore ITRs filed
during FY 2016-17, translating into a growth of 25 per cent. Also, during FY 2017-18,
the number of new ITR filers increased to 1.07 crore as compared to 86.16 lakh new
ITR filers added during FY 2016-17.
3.
Real Estate: The total number of developers in the top nine Indian cities shrunk by
over 50 per cent by 2017-18. While Gurugram witnessed a decline of 76.8 per cent
in the number of developers from 82 in 2011-12 to 19 in 2017-18, Noida registered a
plunge of 73.2 per cent – from 41 to 11.Financial distress of small developers, lack
of execution capability and over-supply of inventory played a key role in the downturn.According to analysts, a large number of fly-by-night developers were forced to
leave the market after demonetisation. All major cities with significant potential for
real estate development – Mumbai, Pune, Thane, Kolkata, Bengaluru and Hyderabad
– saw a decline in the number of developers.
4.
Farm income and wages: Both farmers’ incomes from crop cultivation as well as
wages of farm labourers contracted in 2016-17 despite the above-normal monsoon
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season. On the positive side in agriculture as a whole, output from fishing and
livestock grew the fastest in 2016-17. The growth was nearly 10 per cent over the
previous year.In a period of low supply of cash, input suppliers demanded higher
prices. Demonetisation was carried out briefly after the harvest of the kharif season
entered the markets, and when the entire rabi output was yet on the fields. On the
other hand, agriculture had grown (gross value added) the fastest since 2012 in the
demonetisation year due to a bumper crop.
5.
Factory investment: In the year when the demonetisation was implemented, investment
in the country’s factories contracted 10.3 per cent over 2016-17, showing their worst
performance since 2002-03. In the year immediately after the note ban exercise, even
as factories in the organised sector witnessed job growth and wage rise consistent
with previous years, their ability to channel funds in productive capital was severely
dented in 2017-18.
6.
Spending on milk and milk products: In 2017-18, the amount spent on milk and milk
products (M&MP) dropped 10 per cent. Households, hotels, and halwai shops spent
Rs 6 trillion on M&MP in 2016-17, consumption expenditure reduced to Rs 5.4 trillion in 2017-18, the data released by the National Statistical Office (NSO) showed.
7.
Digitisation: Pushing India towards becoming a cashless economy was another reason
that demonetization was publicized for. People turned towards digital transactions
for everything from buying groceries from a road side vendor to paying utility bills
during the time of demonetization. However, as the flow of cash into the economy
began to increase, the use of these apps and digital wallets saw a slide once again.
8.
Has growth been impacted by de-monetisation? Yes. By any measure, the PM's decision was incomprehensible and, in view of its adverse effects revealed subsequently
by the Economic Survey 2016-17, the annual report of the Reserve Bank and other
reliable sources, demonetisation turned out to be a monumental failure. The PM had
three objectives in mind: flushing out fake currency, attacking terrorism and, most
importantly, flooding out black money. None of these was fulfilled. For instance, as
the RBI revealed, fake currency worth only Rs 41 crore was found out. This was
contradictory to the estimates of about Rs 4-5 lakh crore given by MukulRohatgi,
the then Attorney General, in the Supreme Court on November 23, 2016.Terrorist
activities are far from controlled, let alone eliminated.
9.
Demonetisation did not hit illicit wealth held as real estate, shares, gold, silver and
foreign currency. In addition to this, there have been allegations that the information
had been leaked to BJP units and ‘friends of BJP’ prior to its public announcement.
10.
The hardships caused by a shortage of new legal tender, and the rush to deposit old
500 and 1,000 rupee (Rs 15.28 lakh crore)notes in bank accounts before the Dec. 31
deadline, took a heavy toll. More than 100 people died in bank and ATM queues,
although it's impossible to confirm if the deaths from heart failure or exhaustion were
directly a result of demonetization.This chaos continued for six to seven months. But
soon the people were to be disillusioned.
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11.
When 86 per cent of the total value of cash was withdrawn from circulation, the
economy was bound to suffer. Of the three main functions of money, the "transaction"
function (others being "precautionary" and "speculative") keeps the economy moving
and growing, mainly through the exchange of goods and services. The government
issued Rs 2,000 currency notes. As per RBI data, on March 17, of the total 10,029.3
crore currency notes, Rs 2,000 currency notes constituted only 3.3 per cent but they
accounted for 52.2 per cent of the total value. These high denomination notes lacked
transaction value, which paralysed the mainly cash-dependent informal economy. Demonetisation brought economic transaction and exchange to a standstill. This affected
growth.
12.
The RBI spent close to Rs 13,000 crore over the next two years to remonetise Indian
money market in post-demonetisation phase. New notes of Rs 500 and Rs 2,000 were
introduced. The designs were markedly different from the recalled ones. This escalated
the cost of printing as it had several new features.
13.
About 80% of the informal economy - mainly comprising micro, small and a large
part of medium enterprises, small and medium traders, and through that, low-paid,
contract workers - was badly hit. This significantly affected employment. During
January-April 2017, about 15 lakh jobs were lost mainly due to demonetisation. The
latest Economic Survey shows that in North India demand for MGNREGA (Mahatma
Gandhi National Rural Employment Guarantee Act, 2005) increased by 30%. The
government's promise of creating two crore jobs annually has withered away.
14.
There is a clear impact on the services sector from the latest numbers. The services
sector grew by 6.8%, the slowest rate in 11 quarters. In terms of specific sub-segments
within services, 'Finance, insurance, real estate and professional services' grew by a
particularly low rate of 3.1%, the lowest growth rate seen in this sub-segment since
the start of the new series growth rates in 2012-13.
15.
Is de-monetisation the only factor playing on growth? It is the counterbalancing factors that have kept the growth relatively buoyed. These are: (i) A strong agriculture
season and (ii) Festive season demand. Further, the growth in the government spending
has also been quite substantial, in fact, the highest ever at 19.9% in the new series,
which explains the support to overall growth. So, demonetisation would have had a
worse impact were it not for these factors.
16.
In March 2017, the RBI revealed that currency notes worth Rs 15.28 lakh crore or 99%
of the total 15.44 lakh crore was deposited in banks. Thus, the objective of attacking
black money fell on its face. In fact, as experts argue, black money constitutes about
25% of India's national income (GDP). If this ratio is applied to the cash deposited
in the banks (Rs 15.28 lakh crore), then, it turns out to be about Rs 3.82 lakh crore.
Thus, far from attacking black money, one may argue that demonetisation allowed
the culprits to convert Rs 3.82 lakh crore into "white" money.
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The GST has been more positively viewed and the few negatives associated with it
include:
1.
Proposed GST Rate Is higher than VAT:The rate of GST is proposed to be larger
than the current VAT rate in India. Although VAT implies decreasing the prices in
the long run, it will be of no help in cutting down prices of commodities.
2.
Dual Control: A business will be indirectly controlled by both the Centre and the
State in all tax-related cases. The State will lose autonomy to replace the tax rate
which will be regulated by the GST Council.
3.
Certain Sectors Will Face a Negative Impact: Sectors that are currently enjoying no
excise duty or have enjoyed a lot of tax benefits will have to bear the brunt of a
higher tax. These include Textile, Media, Pharma, Dairy Products, IT/ITeS, and Telecom. The same goes for products. It is supposed that the prices of the following
commodities will increase – jewellery, mobile phones and credit cards.
4.
Loss Incurred by the Manufacturing States: Since GST is commonly related to the
manufacturing segment, most manufacturing states may incur losses.
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15. Citizenship Amendment Act – What is at Stake?
Various parts of India have recently broken out in protest, ironically some for and some
against the CAA. There have been reports of violent clashes: protestors against the police;
and social media is full of debates concerning this act which has become the talk of the
town. So what is this CAA and why is it being opposed by a section and supported by
a section of society at the same time??
The Citizenship amendment bill was firstly introduced in the LokSabha on 19th July 2016
as the Citizenship Bill, 2016. On 12 August 2016, It was referred to the Joint Parliamentary
Committee which submitted its report on 7 January 2019. It was passed in the LokSabha
on 8th January 2019 but it lapsed with the dissolution of the 16th LokSabha. The bill was
re-introduced in the Parliament as Citizenship (Amendment) Bill, 2019. On 9 December
2019, Amit shah introduced the Bill in the LokSabha and it was passed on 10th December
2019. At least 125 lawmakers voted in favour of the bill and 99 against it. After a long
hardship, the bill finally got the assent of President Ram Nath Kovind on December 12,
2019 and it became the Citizenship Amendment Act 2019.
The CAA 2019 amends the Citizenship Act of 1995, which grants Indian Citizenship to
persecuted minorities such as Hindus, Sikhs, Parsis, Jains, Buddhists and Christian fleeing
from Pakistan, Bangladesh and Afghanistan. According to the previous act, any person who
doesn’t have proper documents would be termed as an illegal immigrant. But according to
the new act, people of the following religions from three countries will not be treated as an
illegal immigrant: Hindus, Sikhs, Buddhists, Jains, Parsis and Christians from Afghanistan,
Bangladesh and Pakistan. The previous act had provisions for people living in India to
receive citizenship through naturalization. According to the previous act a person must
have lived in the country for 11 years preceding the application submission of citizenship.
This bill reduces that to 6 years. This act also states that registration of OCI (Overseas
Citizen of India) cardholders will be canceled if they violate any law.
The point to note is that Muslims are conspicuously not listed in this act till date, which
has, in part been a major reason for widespread protests against this act. People feel that
the BJP is trying to push its Hindutva agenda by isolating the Muslims and by trying
to favour only refugees from other religions, whereas the BJP has strongly defended
its intentions by stating that Afghanistan, Bangladesh and Pakistan are already Muslim
majority countries and that the scope of persecution of Muslims itself in these countries is
negligible. This is one open weakness of the act that the government has not successfully
managed to defend as its logic is not consistent – the bill does not protect all religious
minorities, nor does it apply to all neighbours. The Ahmedia Muslim sect and even
Shias face discrimination in Pakistan. Rohingya Muslims and Hindus face persecution
in neighbouring Burma, and Hindu and Christian Tamils in neighbouring Sri Lanka but
all have been ignored against any benefits by this bill. But also in its defense it can be
noted that there has been a considerable reduction in the non Muslim population of the
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GD-WAT Bible
aforementioned Islamic majority countries and that the bill is mainly aimed at aiding those
who are persecuted the most there.
The Northeast has been protesting for a slightly different reason as illegal immigration
has been a major issue here right from the beginning and the region has witnessed
many agitations against illegal immigrants for decades now. But, the biggest concern of
people in Northeast is that the bill undermines the effect of the Assam Accord signed in
1985 according to which, any person who can’t prove their ancestor’s presence in India
before March 24 1971 will be deemed as an illegal immigrant. The Assam Accord didn’t
discriminate on the basis of religion and it ended the 6-year long agitation against illegal
immigration in the state of Assam. However, the Citizenship Amendment Bill has tried
to change the definition of illegal immigrants and excluded religious minorities from the
illegal immigrant list and hence the majority of the northeast fears that its region will
become a dumping ground for foreign immigrants and threatens its language and culture.
This fear is justified to an extent but it is unfair on the part of the Northeasteners to
refuse to accept immigrants solely on the basis of such logic as many of them too have
immigrated to all parts of India in search of better education and job prospects.
On the whole this cannot be seen just as a fulfillment of a poll agenda by the BJP, as
the persecution of minorities in India’s neighboring countries is an often ignored facet of
reality which has to be addressed immediately. But given the various logical gaps and
loopholes the act contains in its current form, it is up to the ruling party to either offer
a plausible explanation for the formulation of the act the way it is, or bring changes to
inclusively benefit the aggrieved as a whole without a strong undertone of discrimination,
purportedly going against the values of India.
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