The decision of the conservative Christian Democratic Union (CDU) and the Social Democratic Party (SPD) to form new coalition government is no surprise. Since the emergence of the CDU’s Angela Merkel as German Chancellor in 2005, both have cohabited in a coalition for eight years. After the two parties registered their worst showing in the September 2017 general elections, they lost whatever little appetite remained to rule together. The SPD had declared it would stay in the opposition, rebuild the weak organisation and re-establish its core left-wing identity. The latest arrangement is a result of political pragmatism and a willingness to accord primacy to the national interest, despite ideological differences. Germany had come close to calling another election after the conservatives failed to reach an understanding with the greens and the liberals late last year. That meant a minority government was the only alternative, one that did not appeal either to Ms. Merkel or her party. Inexorably, there was a rethink. The process was helped by a common concern within the CDU and the SPD, namely, the risk of ceding space to the deeply eurosceptic, anti-immigrant and extreme-right Alternative for Germany (AfD), which surprised everyone by winning almost 13% of the vote.
The wider implications for the European Union of the political stasis in Germany had also begun to weigh on the continent’s leaders. Some voiced the wisdom of revisiting the grand coalition proposal. The alliance now being stitched up is cause for at least some cheer, if not celebration
But there is disillusionment in both party camps that far too much has been conceded to the other party in the recent talks. The SPD has bagged six ministries, including finance. This has annoyed fiscal hawks among the conservatives, who are against Berlin loosening its purse strings to prop up ‘profligate’ eurozone member-states. The coalition’s agreement on greater spending on schools, pensions and infrastructure draws heavily upon SPD programmes. This is likely to find public favour, given Germany’s huge budget surplus and the need to boost domestic consumption. But there is a flip side to the pragmatic compromise the parties have struck to safeguard the political middle-ground. This is the risk that voices of dissent could veer to the extremes. Surveys indicate that the AfD’s vote share in September had less to do with its political appeal than with dissatisfaction with the state of affairs. In any case, the coalition is not yet a done deal. The joint programme must first be approved by SPD delegates in a party referendum. The divisions within the party over SPD leader Martin Schulz’s possible induction as Foreign Minister may forebode a turbulent time ahead.
BY THE HINDU
In inflation’s shadow: on RBI holding repo rates at 6%
The Reserve Bank of India’s decision to keep the repo rate unchanged was no surprise given the focus with which the Monetary Policy Committee has approached its mandate: of keeping inflation in check. With the relevant measure of price gains, the Consumer Price Index, reflecting an acceleration in inflation for a sixth straight month in December, and that at the fastest pace in 17 months, the bank’s rate-setting panel must have had little difficulty in choosing to remain on hold. This was probably best exemplified by the reversal in stance of the six-member panel’s hitherto most dovish member, Ravindra H. Dholakia, to vote to stand pat on interest rates. This the MPC did while retaining a ‘neutral stance’, which gives it the flexibility to change gears in either direction. The RBI’s nominee, Michael Debabrata Patra, in fact voted to head off incipient price pressures by raising the policy rate by 25 basis points. Laying out the factors informing its decision, the RBI once again spotlighted the less than reassuring outlook for price stability. For starters, “an unusual pick-up in food prices in November”, combined with a “less than usual” softening in the winter seasonal food price moderation, meant headline inflation averaged 4.6% in the third quarter. The RBI had in December made a projection for inflation in the range of 4.3-4.7% in the six months through March 2018. With pump prices of petrol and diesel having risen sharply in January, the RBI has now been forced to raise its estimate for retail price gains in the fourth quarter to 5.1%.
Extending the time horizon beyond the current fiscal, the inflation scenario gets even more worrying. Clouding the outlook are multiple uncertainties. These include the staggered impact of HRA increases by various State governments that may induce second order effects on prices; the pick-up in global growth, a factor the RBI also cites as a positive for the economy, that may push up crude oil and commodity prices worldwide; the Budget’s proposed changes to the minimum support price norms for crops as well as the proposals to increase customs duty on a range of goods; and the fiscal slippage, which could not only fan inflation but also risks increasing borrowing costs. The normalisation of monetary policy by advanced economies could spell a decisive end to global ‘easy money’ conditions and may trigger some flight of capital from emerging markets including India. The upshot is that the RBI sees CPI inflation hovering in the 5.1-5.6% range in the first six months of the new fiscal before moderating to 4.5-4.6% in the second half, subject to a big assumption: a normal monsoon in 2018. Under the looming shadow of inflationary risks, the RBI has again reasserted the need for unwavering vigilance on the price stability front.
BY THE HINDU
Winter cheer: on politics around the 2018 Winter Olympics
The Russian doping scandal continues to cast a long shadow over international sport as the 2018 winter Olympics begin in PyeongChang, South Korea, on February 9. In December, the International Olympic Committee banned Russia from competing in the Games following investigation into an alleged state-sponsored doping programme at the 2014 Winter Olympics in Sochi, Russia. The decision to ban Russia came after the IOC’s Disciplinary Commission, headed by former president of the Swiss Confederation Samuel Schmid, confirmed “systemic manipulation of the anti-doping rules and system in Russia”. The IOC had stated, however, that clean Russian athletes would be allowed to compete as neutrals and last month invited 169 of them — each to be known as Olympic Athlete from Russia (OAR) — to participate in the PyeongChang Games. The announcement did not go down well outside Russia, even though the IOC declared that “more than 80%” of those athletes had not competed in Sochi and had been carefully vetted. That the OAR will form one of the largest contingents at the Games, although there will be no place for the Russian flag and anthem, makes the ‘ban’ seem a bit of a farce. Further, Russian athletes could be allowed to march under their own flag at the closing ceremony if they comply with the IOC’s conditions during the Games. There is a sense that the IOC is not able to punish a sporting superpower like Russia.
Last week, there was more outrage after the Court of Arbitration for Sport overturned lifetime bans on 28 Russian athletes sanctioned by the IOC following the investigation into Sochi 2014. The IOC expressed its own frustration at the decision, noting that it “may have a serious impact on the future fight against doping”. Proceedings in PyeongChang over the next fortnight will be watched keenly also for other reasons. The little-known host city, which sits some 80 km from the border with North Korea, will bear witness to on-field displays of bonhomie between the neighbours. The two nations will march together at the opening ceremony under a flag representing a unified Korea, and will field a combined women’s ice hockey team. The joint team lost to Sweden in a practice game this week and there are questions over how the two sets of players will get along, but with supporters of both countries cheering their side on together in a time of escalating political tensions, scorecards seem immaterial. North Korea has agreed to field 22 athletes in three sports and five disciplines and is expected to send hundreds of delegates and cheerleaders across the border. India, meanwhile, will be represented by luger Shiva Keshavan, competing in his sixth and probably last Olympics, and skier Jagdish Singh, taking part in his first. Keshavan has been the torch-bearer for winter sports in India for a long time; he will hope for a happy Olympic swansong.
BY THE HINDU
Limited succour: Budget 2018 and senior citizens
Finance Minister Arun Jaitley stressed in his Budget speech last week that “to care for those who cared for us is one of the highest honours”, underscoring the importance the Centre attaches to providing economic support for India’s growing population of senior citizens He then announced several tax and related incentives to ease the financial burden on people aged 60 and above, all of which are very welcome given that the elderly face steeply escalating health-care costs on declining real interest and pension incomes. From affording a five-fold increase in the exemption limit on interest income from savings, fixed and recurring deposits held with banks and post offices to ₹50,000, and doing away with the requirement for tax to be deducted at source on such income, the Budget offers much-needed relief. This it does by leaving a little more money in the hands of elderly savers who are heavily dependent on interest income to meet their living expenses. Another useful tax change is the proposal to raise the annual income tax deduction limit for health insurance premium and/or medical reimbursement to ₹50,000 for all seniors. And a crucially allied step is the move to set the ceiling for deduction in lieu of expenses incurred on certain critical illnesses to ₹1 lakh, irrespective of the age of the senior citizen.
Separately, Mr. Jaitley also proposed extending the Pradhan Mantri Vaya Vandana Yojana by two years, up to March 2020, and doubled the cap on investment in the scheme to ₹15 lakh. This annuity-cum-insurance scheme entitles the senior citizen policyholder to a guaranteed pension that equates to an annual return of 8% on investment. This pension plan, unlike the entirely government-funded Indira Gandhi National Old Age Pension Scheme for the elderly who live below the poverty line, is contributory and is run by the Life Insurance Corporation of India. While all these Budget measures are laudable insofar as they recognise that the right to a life with dignity doesn’t retire with the crossing of a chronological threshold, much more needs to be done to address the needs of this rapidly growing demographic cohort. With more than 70% of the 104 million elderly living in the rural hinterland, any serious initiative to improve the lot of senior citizens must incorporate adequate budgetary support for social welfare spending on the relevant programmes. While the Budget provisions ₹6,565 crore for the pension scheme for the elderly poor, its outlay for the Ministry of Social Justice and Empowerment’s assistance to voluntary organisations for programmes relating to the ‘aged’ at ₹60 crore is starkly inadequate. With the number of the elderly in India set to surge by 2050 to almost 300 million, or about a fifth of the population, governments need to make more comprehensive efforts to address the nation’s greying demographic
BY THE HINDU
Desert defeat: on Congress victory in Rajasthan
ction of the political wind, even when they are held close to a general election. A host of local factors are often at play, and selection of candidates and civic grievances exercise as much influence on the voter’s mind as do livelihood concerns and governance issues. Even so, the results of the Rajasthan byelection would have jolted the ruling BJP. The Congress not only won the two Lok Sabha seats and the lone Assembly seat, but it did so with impressive margins. In the 2014 Lok Sabha election the BJP made a complete sweep of Rajasthan, winning all 25 seats. The Congress’s recovery of some of the lost ground reflects a general dissatisfaction with the Vasundhara Raje government. Ms. Raje seems to have paid the price for an imperious attitude that alienated large sections within her own party. True, Rajasthan voters have not given either the BJP or the Congress two consecutive terms since the BJP returned to power in 1993. But the Modi wave of 2014 was supposed to have changed the political narrative, with the BJP emerging as a pan-Indian party and the natural party of government. The BJP has lost some Assembly elections since 2014. However, Bihar 2015 was arguably a mere blip, more on account of a coming together of a motley mix of opposition parties than on account of any erosion in its base. Punjab 2017 was written off as the Akali Dal’s loss rather than the BJP’s own. But in Rajasthan, as in Gujarat where the BJP scraped through in late-2017, the two national parties will be in a straight contest. A defeat can mean only one thing: the BJP is slipping in approval ratings in the run-up to 2019.
A negative vote it may have been, but the verdict is also a vindication of the Congress tactic of letting a young Sachin Pilot be its public face. Many in the party blamed the inability to close the gap with the BJP in Gujarat on the failure to identify a youthful leader, and instead relying entirely on borrowed leaders such as Alpesh Thakor, Hardik Patel and Jignesh Mevani to free it of a jaded look. If it wants to beat the BJP, the Congress has to find a way to counter its strategy of turning every election into a presidential contest between Prime Minister Modi and Congress president Rahul Gandhi. The byelection results suggest the key to doing so lies in encouraging a youthful regional leadership to emerge in each State. But if the BJP is slipping in Rajasthan it is gaining in West Bengal: the party finished second behind the Trinamool Congress in the Uluberia Lok Sabha and Noapara Assembly constituencies. With the collapse of the Left Front vote bank, it is the BJP that is emerging as a challenger. But a second-place finish in West Bengal is poor compensation. The BJP’s setback in Rajasthan has given the Congress a ray of electoral hope, as the State goes to the polls later this year.
BY THE HINDU
For a clean judiciary: the importance of in-house mechanisms
With an in house committee concluding that a judge of the Allahabad High Court had committed judicial impropriety serious enough to warrant his removal, the subject of corruption in the higher judiciary is in the news. Justice Shri Narayan Shukla had come under adverse notice before a Supreme Court Bench headed by Chief Justice of India Dipak Misra last year. The Bench had found he had violated a restraining order from the apex court by allowing the GCRG Memorial Trust, Lucknow, to admit students. The Supreme Court observed that the Bench headed by Justice Shukla had violated judicial propriety. The CJI formed a three-member committee, comprising Chief Justices Indira Banerjee of the Madras High Court and S.K. Agnihotri of the Sikkim High Court and Justice P.K. Jaiswal of the Madhya Pradesh High Court, to examine his conduct. The committee has now found substance in the allegations and that the judge had deviated from the “values of judicial life”. It is unfortunate that Justice Shukla has not tendered his resignation or sought retirement, the options available to him to avoid the ignominy of impeachment in Parliament. His position has paved the way for the CJI to recommend his removal.
The allegations against him appear to correspond to the claims in a first information report registered by the CBI against another medical college trust and alleged middlemen, including a retired judge of the Orissa High Court, that there was a plot to influence public servants to obtain favourable orders. The allegation had set off a storm in the judiciary, as some orders related to medical colleges in Uttar Pradesh were also passed by Supreme Court Benches headed by Chief Justice Misra himself. The climactic event was the unprecedented press conference at which four senior-most judges alleged the CJI had departed from convention while using his power to draw up the roster. It is important for the institution that the charges against Justice Shukla are properly investigated. It may have a sobering effect on those who desire that the institution be cleansed as well as those who feel there is an unwarranted onslaught on it. The process of removing a judge is too elaborate and somewhat cumbersome. However, an in-house finding may help hasten it in flagrant cases. The possibility of getting a motion passed in Parliament is brighter, and the charge of the process being misused for partisan ends is reduced. The removal of a serving judge is undoubtedly a sad development, but one that the institution should not fight shy of in appropriate cases. That internal mechanisms work with due regard for institutional integrity is something that should be welcomed.
BY THE HINDU
A wider net: on the expanding tax base
The demonetisation of high-value currency notes and the advent of the goods and services tax regime have triggered a surge in the number of those filing taxes in the country. The Economic survey argues that the large gains on the indirect and direct tax fronts indicate that the primary intentions behind the two big-bang economic strides — of formalising the economy and bringing more income into the tax net — have been met to some extent. From about 59 million individuals who filed income tax returns or whose tax was deducted at source in 2015-16, the number of tax-filers rose by 10.1 million since the note ban. Stripped of statistical adjustments to avoid a bias in findings, the Survey assesses that roughly 1.8 million, or 3% of the existing compliers, started paying up. Many of them are reporting incomes close to the ₹2.5-lakh threshold for personal income tax, so this may not swell the exchequer much. But it holds potential for growth as the new taxpayers progress in their vocations. Personal income tax collections are expected to rise to a historic high of 2.3% of GDP in 2017-18, compared to 2% between 2013-14 and 2015-16. This may seem glacial progress but could be considered a tipping point in a country where just 4% of adults pay personal income tax, though the government reckons that number should be 23%.
The Survey finds a 50% increase in unique indirect taxpayersin the first six months of GST, with around 10 million registered taxpayers now compared to an estimated 6.5 million pre-GST. The GST regime, despite the initial chinks, could end up boosting India’s macro-economic stability by breaking what the Survey terms ‘inertia’ of the tax-GDP ratio. This ratio for the Centre has remained at the same level since the 1980s, though the economy grew at an annual average of about 6.5%. The Survey has noted that both of India’s underlying macro weaknesses — the fiscal and current account deficits — tend to get exacerbated when oil prices move up. A wider tax base could at least help tackle the former. Fixing exporters’ GST woes and continuing to ease the transition pains under its new features, such as e-way bills to deter evasion, would be critical to attain the 7%-7.5% growth projected for the coming year. At the same time, the government needs a road map to expand the direct tax pie by pruning blanket exemptions for vocations such as farming and using a more proactive Big Data-driven approach to target evaders. The government must reward this tax base expansion by offering the ‘compliant’ some relief in the Budget, even if it means slashing high duties on petroleum products. After all, high indirect taxes pinch the poorest the most.
BY THE HINDU
Economic Survey: Cautious optimism
The economic survey for 2017-18
paints the picture of an economy that gives reason for both optimism and caution. It projects that GDP growth could accelerate to 7-7.5% in 2018-19
from 6.75% in the current fiscal, reinstating India as the world’s fastest-growing major economy. According to Chief Economic Adviser Arvind Subramanian, the key factors contributing to the positive prognosis are the reform measures: the July 1 implementation of the Goods and Services Tax and the steps taken to address the twin balance sheet problem in the banking sector. The latter includes the push to use the Insolvency and Bankruptcy Code for debt resolution and the initiative to recapitalise public sector banks. Adding to these domestic enablers are the fair winds of a global recovery that have already lent a lift to overseas demand for India’s goods and services. But capitalising on these favourable factors while remaining vigilant to other macroeconomic threats, including a key risk in the form of persistently high oil prices, would require exemplary economic stewardship. Among the concerns the CEA has flagged is one relating to what the Survey calls “a classic emerging market ‘sudden stall’ induced by sharp corrections to elevated stock prices.” With Indian stock indices continuing to soar to new highs on an almost daily basis, the Survey warns against “sanguineness about its sustainability”. A correction in the stock market, besides triggering capital outflows, could force policymakers to raise interest rates, choking off the nascent recovery.
On the fiscal front, the survey contends that the Centre needs to reappraise its priorities. The onus, it argues, has to be squarely placed on establishing and maintaining policy credibility. To this end, it argues against “setting overly ambitious targets for consolidation, especially in a pre-election year” that are based on optimistic and unrealistic assumptions. Instead, it recommends a “modest consolidation” that would signal a return to the path of calibrated deficit reductions. In doing so, it appears that the Survey is signalling that the government may have to retain the elbow room to stabilise the GST, complete the recapitalisation exercise and, most crucially, support agriculture. Devoting an entire chapter to ‘Climate, Climate Change and Agriculture’, the CEA and his team have stressed on the dangers climate change poses to the outlook for farm growth. With the potential to reduce annual agricultural incomes — by as much as 20-25% for unirrigated areas — the Survey calls for a range of mitigation measures including extensive provision of efficient irrigation technologies and a wholesale review of the cereal-centric approach to policy. Citing job creation and education as key priorities, the Survey sets out a plan for rapid economic expansion by recommending that policymakers keep their sights trained on strengthening “the only two truly sustainable engines — private investment and exports.”
BY THE HINDU
Retail therapy: on the IPL 2018 auction
The Indian Premier League player auction is a parallel cricketing universe with a distinct dynamic. Over the weekend at a Bengaluru hotel, the IPL’s top brass congregated with a wish-list that had no space for nostalgia. Lasith Malinga foundes no takes TAKERS while Chris Gayle, perhaps the most explosive batsman in the history of Twenty20, was rejected twice before he got third-time lucky when Kings XI Punjab snapped up the opener at his base price of ₹2 crore. There was no respect either for doughty batting performances in Tests. South Africa’s Hashim Amla, who played his part in the recent match at Johannesburg’s Wanderers, was ignored, and Cheteshwar Pujara found no suitors in the IPL. In Twenty20’s roller-coaster ride, the attributes of patience and grit, so mandatory in Tests, have comparatively little value. The accent is on explosive batting, miserly bowling, athletic fielding and, above all, the ability to remain iceberg-cool when the fires of a nerve-racking last over are raging. The all-rounder, cricket’s version of a miracle-dispenser, remains mighty expensive. It was no surprise when England’s Ben Stokes, despite the legal issues trailing him back home following an assault incident, got the highest bid at ₹12.5 crore from Rajasthan Royals.
Royals and Chennai Super Kings, both coming back after a two-year suspension following spot fixing and betting allegations, struck to their usual methods. Royals remained alert to building a strong core. CSK continued its patented approach of nurturing its nucleus, as was evident in the way it retained M.S. Dhoni, Suresh Raina and Ravindra Jadeja prior to the auction, and when auctioneer Richard Madley punched his gavel, IPL’s most consistent outfit exercised its right-to-match card and snapped up another regular Dwayne Bravo. CSK was also aware of its cost dynamics and didn’t pursue R. Ashwin once he crossed the ₹4 crore mark but instead nailed Harbhajan Singh at ₹2 crore. True to its trope of bucking trends, the auction witnessed massive money chasing a left-arm fast bowler, and jaydev unadkat became the most expensive indian with a ₹11.5 crore price tag from Royals. As in previous years, the latest auction gifted a bonanza to the unsung first-class cricketer. Krunal Pandya got ₹8.8 crore from Mumbai Indians, and he is yet to play for India unlike his famous sibling Hardik. Among the overseas players, it was heartening to see the price that Afghan players like Rashid Khan commanded, while Sandeep Lamichhane, picked by Delhi Daredevils, became the first neapl cricketer to join the ipl bandwagon. The eight IPL squads have taken shape afresh and the players are laughing all the way to the bank. Whether that would translate into ideal performance will be known once the league’s eleventh edition starts in April.
BY THE HINDU
No extra year for Maithripala Sirisena
The Sri Lanka supreme court's ruling that president mathripal sirisena's term will end when he completes fiver years in office comes as no surprise. What was surprising was how such a doubt had arisen in the first place. Mr. Sirisena, who was elected President in January 2015, had wanted the court to clarify whether he would have a six-year term as the law stood on election day or whether it would be five years in accordance with the 19th constitutional amendment adopted in April 2015. That the Sri Lankan President could suddenly harbour such a doubt is inexplicable given his frequent assertions that he was that rare head of state who had voluntarily agreed to a shortening of his tenure. It is the National Unity government that he heads along with Prime Minister Ranil Wickremesinghe that brought in the amendment containing provisions that considerably dilute the powers of the executive presidency. Second, the amendment has a clear, unambiguous transitional provision that the incumbent President and Prime Minister will continue to hold their respective offices “subject to the provisions of the Constitution as amended by this Act”. There appears to be an unfortunate trend in Sri Lanka of presidents using constitutional provisions for political ends. Mr. Sirisena’s predecessor, Mahinda Rajapaksa, had sought the court’s opinion on whether there was any impediment to his contesting a third term. Another former president, Chandrika Kumaratunga, had a ‘secret’ swearing-in one year into her second term, but the court denied her bid for an extra year in office.
Even though Mr. Sirisena’s supporters say he was exercising his right to approach the Supreme Court for a clarification based on a valid doubt, the rationale behind his reference could only have been political. He was obviously looking for a loophole that would give him another year in office. If he had an extra year, his term would go on till early 2021, and he would still be president at the time of the next parliamentary election, due in 2020. Mr. Sirisena possibly thought he needed more time to consolidate his position in the power-sharing arrangement between his Sri Lanka
Freedom Party and Mr. Wickremesinghe’s United National Party, as well as with respect to the joint opposition that backs Mr. Rajapaksa. The developments come at a time when there are signs of a strain in the coalition. The SLFP and UNP are set to contest next month’s local government polls separately. The President recently unveiled the findings of an inquiry into a bond scam that has indicted a UNP minister as well as the Central Bank governor, an appointee of Mr. Wickremesinghe. Far from strengthening his position, Mr. Sirisena has ended up looking desperate to remain in office. He could have done without this setback to his image.
All gore: jallikattu in Tamil Nadu
With animal rights activists at the head of the campaign against jallikattu, more attention seems to have been paid to cruelty to the bulls than the inherently dangerous nature of the bull-taming event, that puts both spectators and participants at risk. Two onlookers have died in the space of two days in the jallikattu events in palamedu and avaaarangadu in Tamil Nadu as the barricades separating the spectators from the arena were inadequate. Two others were killed in the manjuvirattu (a variant of jallikattu) at siravayal when the bulls were unleashed outside the earmarked arena, a violation of due procedure. Clearly, the safety arrangements monitored by the district administration at these annual events in the Pongal season failed to prevent death and injury. With some of the events inducting more than 400 bulls and almost twice as many tamers, jallikattu has become a disorderly spectacle, making a mockery of even well-laid-out plans. The Animal Welfare Board of India, which was earlier in the forefront of documenting instances of mismanagement in the organising of jallikattu events, seems to have shifted its stance with a change of office-bearers. Other than spotting some “small mistakes” and “human errors”, the AWBI team’s convener, S.K. Mittal, found little amiss in the Palamedu event. The concern, instead, was on preserving “native breeds” of bulls. After last year’s protests against the Supreme Court ban on jallikattu, when thousands of people gathered in public places in Tamil Nadu demanding a revival of the sport, the authorities have been wary of condemning bull-taming during Pongal. They now speak the language of custom and tradition, one that is similar to that of the jallikattu enthusiasts.
When the Supreme Court banned jallikattu on the basis of submissions made by the AWBI, which recorded instances of cruelty to animals in regulated events, it did so on the ground that regulations were not working. Following public protests and political pressure, and on the strength of hurriedly drafted legislation, jallikattu is now back on the Pongal calendar. But nothing much has changed on the ground. Of course, participants and bulls are screened before being allowed into the arena. But the bulls do not heed the barricades that are meant to fence off spectators from the arena. Also, there is the risk of hyper-excited miscreants releasing the bulls outside the arena: this is what happened in Siravayal. District authorities have so far failed to find better ways to regulate the events, but more than the size of an event, the scale is the challenge. In short, there are too many events in too many places within a period of a few days, making regulation next to impossible. It is one thing to have well-regulated jallikattu. But we are far from staging it in a manner that leaves nothing to chance and that is insured against damage wreaked by a rampaging bull.
BY THE HINDU
Problem of plenty: on devising a sound agricultural policy
There appears to be no end in sight to the cycle of boom and bust in the prices of agricultural goods. Over the last few weeks, across India the price of potatoes has fallen sharply after a year of bumper production. With the price of a kilogram of potato dropping as low as under a rupee in certain wholesale markets, many distressed farmers have left their to rot on the roads
and in cold storage facilities. Curiously, potato prices were many times higher just months ago amid scarce supply. Last year, the price of other produce like red chilli, tur dal and tomato witnessed a similar trend of steep falls compared to the previous season. The sharp swing in prices has been explained by the Cobweb phenomenon. Farmers tend to increase the production of certain crops in response to their high prices during the previous season, which in turn leads to a supply glut that causes prices to crash. The cycle repeats each passing year, with the lag between price and production causing a huge mismatch between supply and demand. The present fall in potato prices comes against the backdrop of a slowdown in the rural economy. According to advance GDP estimates released by the government last week, farm growth is expected to drop from 4.9% in 2016-17 to 2.1% in 2017-18.
Given the humanitarian and political costs of agricultural distress, particularly in a year when many big States go to the polls, local governments could turn towards populism to satisfy their rural voter base. This could come in the form of fiscal measures such as farm loan waivers, a higher minimum support price for farm produce, or some combination of the two. The next Union budget may well be focussed on the rural economy through fiscal measures. Such relief measures that temporarily ease the pain on farmers, however, will fail to make a significant difference to their lives in the long run. Any permanent solution to the problem of agricultural distress will have to deal with the challenge of price fluctuations. The boom-and-bust cycle is the result of a broken supply chain that is over-regulated. In the absence of a robust market for buying and selling forward-looking contracts, farmers are left to fend for themselves against severe fluctuations. In addition, the domination of the wholesale market by cartels prevents farmers from receiving a fair price even when their produce is sold at much higher rates to consumers. The government must resolve to address these structural issues, and not limit itself to ad hoc policy measures in firefighting mode. There is a need to give farmers not just a better, but also more stable, return on their crops.
BY THE HINDU
Four Supreme Court judges attend court
Four senior-most Supreme Court judges, who had held an unprecedented press conference and raised issue of assignment of cases, today attended court and took up routine work.
The four judges — Justices J. Chelameswar, Ranjan Gogoi, Madan B. Lokur and Kurian Joseph — have taken up their respective business on the first working day of the top court after the January 12 press conference.
In the presser, these judges had flagged some problems,including the assigning of cases in the apex court, and said there were certain issues afflicting the country’s highest court.
On Sunday, Chief Justice of India Dipak Misra had met a seven-member delegation of the Bar Council of India and Supreme Court Bar Association President Vikas Singh and had assured them that the crisis would be sorted out soon and congeniality would prevail.
BY THE HINDU
Trump asks allies to ‘fix’ Iran n-deal
U.S. President Donald Trump gave the Iran nuclear deal a final reprieve on Friday but warned European allies and Congress that they had to work with him to fix “the disastrous flaws in the pact or face a U.S. exit”.
The ultimatum puts pressure on Europeans — key backers and parties to the 2015 international agreement to curb Iran’s nuclear programme — to satisfy Mr. Trump, who wants the pact strengthened with a separate agreement within 120 days.
“Despite my strong inclination, I have not yet withdrawn the United States from the Iran nuclear deal,” Mr. Trump said in a statement. “Instead, I have outlined two possible paths forward: either fix the deals disastrous flaws, or the United States will withdraw.”
Iranian Foreign Minister Mohammad Javad Zarif responded on Twitter that the deal was not renegotiable and that Mr. Trump’s stance “amounts to desperate attempts to undermine a solid multilateral agreement”.
The EU said in a statement it had taken note of Mr. Trump’s decision and would assess its implications.
Underscoring the difficulty now facing Europeans, a European diplomat said: “It’s going to be complicated to save the deal after this.”
While Mr. Trump approved the sanctions waiver, the Treasury Department announced new, targeted sanctions against 14 entities and people, including the head of Iran’s judiciary, Sadeq Amoli Larijani, a close ally of Iran’s Supreme Leader Ayatollah Ali Khamenei.
Mr. Trump now will work with European partners on a follow-on agreement that enshrines certain triggers that the Iranian regime cannot exceed related to ballistic missiles, said senior administration officials who briefed reporters on the decision.
One senior administration official said Mr. Trump would be open to remaining in a modified deal if it were made permanent.
“I hereby call on key European countries to join with the United States in fixing significant flaws in the deal, countering Iranian aggression, and supporting the Iranian people,” Mr. Trump said in the statement.
Republican Senator Bob Corker said “significant progress” had been made on bipartisan congressional legislation to “address the flaws in the agreement without violating U.S. commitments”.
end to sunset provisions
Mr. Trump laid out several conditions to keep the United States in the deal. Iran must allow “immediate inspections at all sites requested by international inspectors”, he said, and “sunset” provisions imposing limits on Iran’s nuclear programme must not expire. Mr. Trump said U.S. law must tie long-range missile and nuclear weapons programmes together, making any missile testing by Iran subject to “severe sanctions”.
The President wants Congress to modify a law that reviews U.S. participation in the nuclear deal to include “trigger points” that, if violated, would lead to the United States reimposing its sanctions, the official said.
This would not entail negotiations with Iran, the official said, but rather would be the result of talks between the United States and its European allies. Work already has begun on this front, the official said. Two EU diplomats said EU Foreign Ministers will discuss what to do now at their next regular meeting, scheduled for January 22 in Brussels.
BY THE HINDU
Towards stability in Nepal
month after the Left Alliance secured a decisive victory in Nepal’s parliamentary elections, a government is yet to be formed in Kathmandu. The Alliance was forged just before the elections between the Communist Party of NEPAL (Unified Marxist-Leninist) and the Communist Party of Nepal (Maoist Centre). The transfer of power from the Nepali Congress to the UML-led coalition was delayed initially due to procedural issues. The Upper House, or the National Assembly, needed to be indirectly elected by the provincial assemblies. The parties had disagreed on the means of this indirect election, with the NC advocating a proportional representation-single transferable vote system, and the UML seeking a majority vote. After President Bidhya Devi Bhandari ratified a long-pending ordinance that allowed elections based on the single transferable vote in late December 2017, this issue appeared to have been resolved. But there are other procedural issues to be sorted out. In consultation with the Left Alliance, the caretaker government has to first appoint governors to the seven provinces. Then, the process of choosing their capitals, in order to convene the Assemblies, can be completed. Tentative proposals on new capitals had given rise to protests in several towns, and the main political parties are unwilling to take a clear position on the issue. The caretaker NC government does not seem to be particularly keen on resolving this, and a proposal has been floated to allow the provincial assemblies to convene in Kathmandu first. In the absence of a consensus, this may be best.
The clear and decisive choice by the electorate in the polls has put the responsibility of operationalising the intricate provincial model on the Left Alliance. Once the process of nominations to the National Assembly is complete — with 33% of the overall representation in Parliament reserved for women — the election of the Prime Minister will follow. It is a foregone conclusion that UML leader K.P. Oli will be elected: the party got close to the majority mark on its own in the first-past-the-post seats. Ten years since the end of the civil war and the convening of the Constituent Assembly, the promise of economic development has been belied. This is one of the reasons behind agitations called by democratic and republican forces seeking a new CA. Nepal’s economy continues to be highly dependent on remittances from Nepali migrants as the agrarian sector and industrial growth, especially in the hydro-energy sector, have stagnated. For too long, political posturing and the game of thrones involving the major parties, the UML, the NC and the Maoists, in Kathmandu have become pursuits in themselves. With the Left Alliance promising a greater degree of cohesion and winning a clear victory, the sooner the process of election of a new Prime Minister is accomplished, the faster Nepal can get on with the business of governance.
BY THE HINDU
On Section 377: Question of equality
The time has come to undo the judicial wrong done to homosexual indivual in 2013, when the Supreme Court upheld the validity of Section 377 of the Indian Penal Code, which criminalises gay sex. A reconsideration of the flawed verdict in Suresh Kumar Koushal is now in prospect. A three-judge bench has opened up and oppurtinity to reconsider that verdict, which came to the disturbing conclusion that the LGBT community was just a “minuscule fraction” of the population and also ruled that those having sexual intercourse “against the order of nature” constituted a separate class on which the law could validly impose penal sanctions. Although the matter is already before a Constitution Bench by way of a curative petition against the earlier judgment, the latest order is on a fresh petition challenging Section 377. It draws from the observations in the nine-judge Bench judgment in the ‘right to privacy’ case. The majority observed in JusticeK.S. Puttaswamy v. Union of India that “equality demands that the sexual orientation of each individual in society must be protected on an even platform. The right to privacy and the protection of sexual orientation lie at the core of the fundamental rights guaranteed by Articles 14, 15 and 21 of the Constitution.” The Bench has rightly observed that social morality changes from age to age, that “the morality that public perceives, the Constitution may not conceive of,” and that what is “natural to one may not be natural to another”.
thus there is fresh hope that the delhi high court judgement of 2009, which read down Section 377 to decriminalise consensual sex between adults, may be restored. Ever since the court, in National Legal Services Authority v. Union of India (2014), concerning the rights of transgender persons, questioned the Koushal reasoning, there has been a body of jurisprudence that sees gender identity and sexual orientation as an aspect of privacy, personal freedom and dignity. It is not yet clear if the present petition and the curative petition will be heard together. A curative petition is normally allowed only on the limited grounds of violation of principles of natural justice and circumstances suggesting possible bias on the part of judges. In contrast, the latest petition has paved the way for a comprehensive hearing on all dimensions of the right of individuals to affirm their sexual orientation. In this, the court must not confine itself to the issue of privacy, but also address the discrimination inherent in Section 377 on the basis of sexual orientation. The formulation in Koushal that constitutional protection is not available to a tiny fraction of the population can be overturned only on the touchstone of Article
BY THE HINDU
On H-1B visa rules: Visa heartache
The United States’ H-1B visa has for decades been a source of nail-biting tension in India. The latest case in point was a scare that President Donald Trump’s administration was toying with the idea of new regulations that would restrict extension of the visa by those awaiting a green card. Leaving aside technical reasons why such regulations may not take off, the contentious history of the H-1B visa should have given pause to alarmist claims between 500,000 and 750,000 Indians in the U.S. would have to “self-deport”. The majority of the 65,000 H-1B regular-cap visas and 20,000 H-1B advanced-degree visas made available each year are scooped up by Indian nationals, many assimilated into the backbone of the U.S. tech industry. Nevertheless, given the number of times that protectionist rhetoric has identified this visa category as a soft target, and the relatively high frequency of spikes in political pressure to protect American jobs, one would expect a more nuanced reaction than unbridled panic. In the past, even during the Obama administration, the bipartisan Comprehensive Immigration Reform plan called for the tightening of qualifying conditions for the H-1B visa. As recently as 2017, four bills were tabled in the U.S. Congress mooting new proposals to CLAMP DOWN ON H- 1B VISA None came to fruition. The last salvo was Mr. Trump’s executive order in April, which was accompanied by much fist-banging but ultimately only called for modest changes, mainly a multi-agency study on what reforms are required.
The apparently endless cycles of heartache over the H-1B visa stem from a fundamental reality: that the visa itself is designed to be a non-immigrant entry ticket into the U.S. economy, but over time it has metamorphosed into a virtual pathway to permanent residency and citizenship, particularly in the case of Indian nationals. The most important reason for this is that most of these “speciality occupation” workers — primarily experts in fields such as IT, finance, accounting, and STEM subjects — fill a real void in the U.S. labour force. It is not only Indian tech firms whose employees get awarded H-1B visas, but it is to a great extent a visa that Silicon Valley giants such as Microsoft, Intel, Amazon, Facebook and Qualcomm rely on for their staffing needs. Thus, there is a self-limiting dimension to any reform that purports to slash H-1B allocations, so that no President or lawmaker would want to be seen as causing economic pain to the companies on whose coat-tails the U.S.’s reputation as a global tech leader rides. Indian policymakers, who appear to be aware of this subtle truth, should focus their efforts on quiet back-channel lobbying, and eschew knee-jerk reactions every time the “Buy American, Hire American” rhetoric echoes in Washington.
BY THE HINDU
Theatre of the absurd: on Donald Trump’s response to 'Fire and Fury
The office of the President of the United States took on the air of a Shakespearean farce as Fire and Fury, a tell-all, insider account of dysfunction, bitterness and chaos within the White House, was shot-gunned across the Internet. Although the book was released on Friday, its author, Michael Wolff, and publishers, Henry Holt & Co., were perhaps taking no chances in disseminating it thus, given that Donald Trump had reacted furiously on Twitter to its impending release, and his lawyers reportedly sent them a cease-and-desist notice. Mr. Trump’s anger was evident when he earlier said that former White House strategist Steve Bannon, who allegedly provided much of the inputs used in the book, had “lost his mind” and had been “dumped like a dog”. Mr. Trump had uncharitable words for mr.wolf
as well. It is relevant to ask what the book is and what it is not. In the view of most White House analysts, it is a collection of statements that amount to gossip by members of Mr. Trump’s inner coterie. It is not, according to many who cover the White House, a work of journalistic merit, or a rigorous factual account backed by catalogued evidence. Yet, even if one discounts many of the claims made in Fire and Fury, it paints an unmistakable picture of profound instability in Mr. Trump’s office.
Consequently, the debate has circled back to the question of his mental health and his ability to discharge the duties of his office. If he is found wanting in this regard, his Cabinet and Congress may, under the provisions of the U.S. Constitution’s 25th Amendment, remove him from office. Twenty-seven psychiatrists, including those from top universities, have described Mr. Trump’s mental state as “dangerous”; some have called for an emergency evaluation of his mental capacity. Mr. Trump’s weekend tweet that he was “a very stable genius” indicates that he is conscious of the growing clamour around the mental health question. Beyond this, however, what the embattled state — as described by the book — of White House functioning indicates is that Mr. Trump may not have expected to win the presidency at all. And that he only joined in the race for the mind-boggling publicity — and by extension commercial gain — that it could bring him and the Trump Organization. This theory would indeed explain certain broad trends witnessed since his inauguration, including a shortage of broad, programmatic or ideological approaches to policy issues and sudden policy shifts — particularly in the realm of foreign policy — which do not seem to factor in knock-on effects. Whatever the truth, this was the leader that the American electorate chose. The world must now live with the consequences of the decision.
DATA THEFT : ON UIDAI
Undercover investigations or so-called sting operations occupy a complex and problematical ethical space in journalism, but it is impossible to fault The Tribune’s expose, published after accessing Aadhar's Database of name, number and addresses. To begin with, the public interest — which lay in showing how easily the database could be breached and drawing attention to the existence of an organised racket to facilitate this — far outweighed, or more than compensated for, the act of unauthorised access, in this case secured on payment of a few hundred rupees. The investigation was written up in the best journalistic tradition — it focussed on how the data were being mined for money, it did not leak any Aadhaar numbers or other details to establish this, and it sought and received a response from shocked officials of the Unique Identification Authority of India before going to print. So it would have been a travesty of justice if The Tribune and the reporter who broke the story were treated as accused in the case where the charges include cheating under impersonation. It would have amounted to more than shooting the messenger. It would have constituted a direct attack on free public-spirited journalism and dissuaded attempts to hold public authorities and institutions accountable for shortcomings and promises.
As for the fire filed against the journalist, the UIDAI has clarified it needed to provide the full details of the incident to the police and that this did not mean “everyone mentioned in the FIR is a culprit…” In response to widespread disapproval of the prospect of a case being registered against the journalist, the Delhi police have belatedly clarified that they would focus on tracing those who sold the passwords to enable access to the information. Given the noisy hubbub and the misinformation about what was breached, it is perhaps important to stress that the encrypted Aadhaar biometric database has not been compromised. The UIDAI is correct in stating that mere information such as phone numbers and addresses (much of which is already available to telemarketers and others from other databases) cannot be misused without biometric data. The suggestion that the entire Aadhaar project has been compromised is therefore richly embroidered. But even so, it is obligatory for those who collect such information — whether it is the government or a private player such as a mobile company — ought to see that it is secure and not used for purposes other than that for which it was collected. In this digital age, a growing pool of personal information that can be easily shared has become available to government and private entities. India does not have a legal definition of what constitutes personal information and lacks a robust and comprehensive data protection law. We need to have both quickly in place if the Supreme Court’s judgment according privacy the status of a fundamental right is to have any meaning.
By The Hindu
ON TRIPLE TALAQ BILL : RE-EXAMINE THW BILL
The winter session of parliament
saw more political positioning than appraisal of a legislation to make instant triple talaq a criminal offence. With the Muslim women( protection of rights on marriage) Bill pending in the Rajya Sabha, the
best option would be to refer it to a select committee to help bring about a consensus on how to address the problem of talaq-e-biddat, as there is no serious opposition to the principle that it is morally abhorrent and legally impermissible. The core question is whether resorting to an illegal and arbitrary form of divorce should necessarily lead to a prison term for the offending husband. A three-year prison term, besides a fine, also raises the issue of proportionality. The Opposition has raised three concerns: whether a civil wrong, mainly a breach of a marriage contract in an arbitrary manner, ought to be treated as a crime; whether it is not a contradiction of sorts for the law to jail a husband for pronouncing instant talaq and also mandate that he pay a subsistence allowance to the wife; and whether making it a cognizable and non-bailable offence would lead to it being misused against Muslim men. Further, some see an internal contradiction in the way the law is sought to be framed. On the one hand it says instant triple talaq in any form is void, thereby declaring that the marriage continues to subsist; but it also talks of issues such as the custody of children and maintenance, which would arise only after a divorce. These are valid concerns and cannot be dismissed by the BJP as arguments aimed to sabotage the Bill.
The Bill is now in the Rajya Sabha, where the BJP and its allies do not have a majority. Some of its key allies, such as the AIADMK, the Telugu Desam Party and the Biju Janata Dal, are against the penal provision. The Congress, the main Opposition party, let the Bill sail through in the Lok Sabha, but has taken the position that referring it to a parliamentary committee may help remove some lacunae. Initially the party appeared to question the prescription of a jail term, but it has raised a new question. It wants to know whether the government would take care of the sustenance of the woman concerned if her husband is jailed for uttering triple talaq. The dilemma before the Congress is that it cannot be seen as reprising the role it had played over 30 years ago in the Shah bano episode, when it brought in legislation to scupper a Supreme Court verdict in favour of a Muslim woman’s claim for maintenance. However, hasty legislation passed in the commotion of a divided House may not help the cause. A sound legal framework to deal with all issues arising from instant talaq ought to be crafted after deeper consideration.
By The Hindu
ENABLING A LAW : RIGHTS OF THE DISABLED
The supreme court has struck a blow for the rights of the disable with a direction to the Central and State governments to provide full access to public facilities, such as buildings and transport, within stipulated deadlines. People with a disability form 2.21% of India’s population according to the 2011 Census. They have had a law for two decades to enable their full participation in society, but successive governments have done little to realise those guarantees. Now, in response to a public interest petition filed by a visually handicapped activist, the court has issued a series of orders: that all government buildings should be made accessible by June 2019; half of all government buildings in the capital cities should meet accessibility norms by December this year; the Railways should present a report in three months from December 15 on implementing station facilities; 10% of government public transport must be fully accessible by March 2018; and advisory boards should be formed by the States and Union Territories in three months. The court’s directions should be welcomed by the government and service providers as an opportunity to steer policy and practice towards a universal and humane system. For too long, planners and designers have built infrastructure for use only by able-bodied individuals, ignoring the aspirations of those with disabilities, and the letter of the law.
A transformation requires governments to also harness the power of newer technologies. Geolocation is one, and it enables targeted provision of services. It is eminently feasible, for instance, to aggregate the travel requirements of disabled people with the help of information technology and smartphones, and provide affordable shared transport using accessible vehicles. Given the emphasis on smart cities and upgraded urban facilities, such schemes should be given the highest priority and start-up ideas roped in. Railway stations and access to train carriages continue to pose hurdles for not just the disabled, but even elderly travellers. The Railways should embark on an urgent programme to retrofit all stations, and try simple solutions such as portable step ladders to help board and exit trains, since level boarding is not possible in most places. Cost is not the barrier to improving facilities; what is in short supply is the political will to change the design of public facilities and stick to professional codes. The Supreme Court said in a 1998 order on a petition seeking air travel concession, that while cost was a consideration, the true spirit and purpose of the law could not be ignored. Today India, which is richer than it was then, and has passed a new law in 2016 to strengthen the rights of the disabled, should demonstrate the will to implement it.
By The Hindu
GAME FOR TALKS: ON THE RESUMPTION OF DIALOGUE BETWEEN THE TWO KOREAS
The prospect of a thaw in relation between the two Koreas ,which resume talks after two years, hold out the hope of denuclearisation on the Peninsula. Lending the move diplomatic heft is the U.S.’s consent to South Korean President Moon Jae-in’s proposal to delay the controversial joint military exercises between the two allies. These annual operations have traditionally caused consternation in Pyongyang. The significance of the U.S. decision can also be seen in the context of Beijing’s suggestion for a freeze on joint military exercises between Washington and Seoul in exchange for a halt to Pyongyang’s nuclear programme. The demand acquired added impetus ever since Seoul launched the U.S.-backed Terminal High Altitude Area Defence (THAAD) system, raising fears that its radars could snoop on Chinese security infrastructure. But the idea never received serious consideration from the U.S., as forcing Kim Jong-un, the North Korean autocrat, to completely give up the programme was the singular focus of President Donald Trump’s approach. As for Mr. Kim, he sees recognition of his country as a nuclear power as a vantage point from where he could negotiate a roll-back of crippling international sanctions and a possible reconciliation with Washington.
The immediate trigger to the revival of dialogue is the Winter Olympics in PyeongChang in South Korea next month. North Korea’s latest ballistic missile launches and nuclear explosions have raised global alarm over the region’s safety for travel and tourism, not to mention security during the Games. Memories of the downing by North Korea of a civilian aircraft ahead of the 1988 Seoul Olympics have prompted understandable caution by the host nation. Seoul has apparently determined that the most effective means of allaying those apprehensions is to confirm the participation of North Korean athletes.
The deferment of the joint military exercises with the U.S. lends further credibility to Mr. Moon’s overtures to the North, as much as it assuages Chinese concerns. Beijing had imposed an unofficial blockade on South Korean trade, tourism and entertainment following the THAAD missile installation last year. But it was quick to appreciate the needless economic and diplomatic cost of that approach, even if it did not alter its stance on the missile programme. Cumulatively, these developments should boost public patronage in the entire region for the Winter Olympics. Mr. Moon, a former human rights lawyer, has been a staunch advocate of a negotiated resolution of the North Korean nuclear stand-off. A votary of reunification on the Peninsula, he may be expected to seize the momentum generated by these events to foster cooperation with the North. There will no doubt be many obstacles on that ambitious path. But a détente between neighbours is a possibility few leaders can ignore.
By The Hindu
ON A HIGH : THE US FEDERAL RESERVE
Global stock kicked off the new year by rallying to reach new lifetime highs. Major indices across the U.S., Europe, and Asia witnessed significant gains in the year’s first two trading days; the Indian bourses were slower to gain traction. The strong start suggests that stocks may be all set to carry on their momentum from 2017, which saw major indices offering solid double-digit returns to investors. A significant feature of the present bull market in stocks has been its broad-based participation, with both developed and emerging markets benefiting from it. The S&P Global Broad Market Index, for instance, rose by an impressive 22% during the year. Indian stocks are among the biggest winners of the rally. Macroeconomic tailwinds such as improving economic growth in the U.S., Europe and emerging markets, better corporate earnings, and tax reforms passed by the Trump administration could explain some of the euphoria. But the extreme broad-based nature of the rally adds to fears that it may be driven primarily by excess fund flow into stocks rather than a secular improvement in economic fundamentals. The weakening of the U.S. dollar during 2017, along with the strengthening of emerging market currencies like the Indian rupee, raises further suspicion that the global stock rally may be about nothing more than excess liquidity. Investors starved of yield have been happy to bid up stocks in countries like India and China.
The major risk facing the present bull market, of course, is the prospect of a quicker end to the accommodative monetary policy adopted by the U.S. Federal Reserve. After all, the dovish monetary policy since the global financial crisis of 2008 has clearly played a major part in fuelling the second-longest bull run in U.S. market history. With the return of higher economic growth in the U.S., inflation is bound to spike up and force the next Fed chair to raise rates at a faster pace. Apart from deflating the rally in domestic U.S. stocks, this is also likely to improve the yield on American assets and cause capital to flow out of emerging markets. In addition, any repatriation of dollars by U.S. corporations, which are incentivised by the new corporate tax policy, is likely to exert pressure on non-dollar currencies. Meanwhile, the price of gold — a safe haven asset — rallied 14% last year, which is the metal’s best performance since 2010. This suggests that investors in at least some corners of the market believe the end may be near for loose monetary policy. The ‘taper tantrum’ of 2013 had served as a timely warning to emerging markets about the fickle and disruptive nature of global capital. While predicting market trends is a fool’s errand, it seems the end to this bull market might be sooner than later.
By The Hindu
MONEY TALKS : ON U.S.- PAKISTAN TIES
That the U.S. will continue to withhold $255 million in foreign military financing to Pakistan this year suggests it is prepared to downgrade its ties with Pakistan further in an effort to hold it to account on terrorism. U.S. Ambassador to the UN Nikki Haley cited Pakistan’s “double game” of cooperating with the U.S. and harbouring terrorists who attack its troops in Afghanistan. Mr. Trump’s own tweet, a day earlier, on January 1, was less temperate in its wording
He accused Pakistan of "lies and deceit"and of treating the U.S.
leadership as “fools”. Pakistan has reacted, but without the same heat in its words. After a National Security Council meeting of top generals and ministers convened by Prime Minister Shahid Khaqan Abbasi, it issued a statement expressing “disappointment” over the U.S. statements, and referring to Pakistan’s record in fighting terrorism and providing support to the U.S. effort in Afghanistan. One reason is that the U.S. decision to hold back the $255 million was not unexpected. In May last year, the Trump administration had decided to cut the annual outlay for 2018 from $255 million to $100 million. In August, it notified Congress it would withhold the current tranche due for 2016 as well, while a decision on 2017 was still pending. Second, while the overall downslide in ties with the U.S. will be a major worry for Pakistan, the cancellation of funds may not be that alarming. American assistance to Pakistan is at its lowest levels since 2001. Third, Pakistan’s confidence that it has an alternative in China has grown, with Beijing’s pledge of more than $100 billion in loans for the China-Pakistan Economic Corridor infrastructure, power projects, and so on. The question, then, is whether the U.S. will consider stronger measures, such as stopping all funding, sanctions, or cancelling Pakistan’s ‘major non-NATO ally’ status.
From India’s point of view, any attempt to hold Pakistan’s feet to the fire on its support to terror groups is a positive development. It is particularly important that the U.S. follow through on its ultimatums in this respect. However, all American statements so far focus on Pakistan’s support to terror groups that threaten Afghanistan, and more particularly, the U.S. troops in Afghanistan. Therefore, action against the groups that threaten India is unlikely to be an immediate priority. New Delhi must also be mindful of the impact of a more fractured U.S. - Pakistan relationship on regional security. Above all, the U.S.-Pakistan relationship, like that between India and the U.S. and India and Pakistan, is a long-standing bilateral one. While welcoming all moves to address India’s core concerns on terror, New Delhi must ensure it doesn’t get ensnared or triangulated in the equation between Washington and Islamabad.
By the Hindu
ON THE LEDGER: ON FISCAL CONSOLIDATION
Eight months into the financial year, or until end November, the Union government’s fiscal deficit — the amount by which its expenditure exceeds revenue- had already overshot the year's budget target by a significant Rs. 65573 crore. and as
in everything with numbers, there are several interesting insights to be had, some fairly straightforward and self-explanatory and others less obvious and disconcerting. One of the biggest contributors to the wider fiscal slippage has clearly been the faster pace at which total expenditure has grown. While the government had in the Union Budget provided for overall spending to increase by a modest 6.6% over the revised estimates for the previous fiscal, data for April-November released by the Controller General of Accounts show a 14.9% jump year-on-year. A look at the individual ministries and how they have front-loaded their spending shows wide variability with several ministries still significantly underutilising their budget allocations over the first eight months. (One of the government’s aims when it advanced the budget presentation by a month to February 1 was to ensure that government departments had adequate time to spend the funds apportioned to them in an optimal manner.) Similarly, revenue receipts for the eight-month period have shown an underwhelming 1.1% year-on-year increase while the budget projection was for 6.5% growth. Even if some of the sluggishness in revenue receipts can be explained by the fact that the current year has been a one-off, transitional period given that the GST regime was implemented from July 1, there are other pressure points that policymakers need to square up with. Non-tax revenue at 36.5% of budget estimates compares unfavourably with the 54.2% garnered in the corresponding period of the previous year.
There is also the issue of how the government is likely to account the additional capital it has announced as part of the recapitalisation effort to bolster the financial health of public sector banks. There is the additional ₹50,000 crore in market borrowing that the government has planned for the fourth quarter — a move it has said will not significantly impact the fiscal calculus since it simultaneously plans to scale back collections from treasury bills. The fiscal gap has widened in spite of a healthy jump in non-debt capital receipts, which include the ₹17,357 crore the government received from the public listing of state-run insurance companies, and steady improvements in corporate and personal income tax collections. That the figures revealing the fiscal slippage have come less than two months after Moody’s upgraded India’s sovereign credit rating serves as a reminder that there is little room for complacency. With monetary authorities at the RBI having reiterated the inflationary risks that a worsening fiscal gap would pose, and private investment still struggling to gain traction, policymakers would do well to try and regain their footing on the crucial path of fiscal consolidation.
By The Hindu
THE MONETARY TRAIL: ON THE NEED FOR INVESTOR AWARENESS ON CRYPTOCURRENCIS
The fiance ministry's warning to potentialInvestors in Bitcoin and other cryptocurrencishas come at a time when a new seemingly attractive investment area has opened up that few have enough information about the price of Bitcoin, the most popular of all cryptocurrencis,not only shot up by well over 1000% over the course of the last year but also fluctuated wildly. One of the main reasons for this volatility is speculation and the entry into the market of a large number of people lured by the prospect of quick and easy profits. The government’s caution comes on top of three warnings issued by the Reserve Bank of India since 2013. Investment in bitcoin and other cryptocurrencies increased tremendously in India over the past year, but most new users know close to nothing of the technology, or how to verify the genuineness of a particular cryptocurrency. A number of investors, daunted by the high price of bitcoin, have put their money into less well-established and often spurious cryptocurrencies, only to lose it all. Even some private cryptocurrency operators in India have gone on record saying that as many as 90% of the currencies are scams.
The use value of cryptocurrencies — both as a medium of exchange and as a store of value — is still being explored. Global tech firms such as IBM are developing their own cryptocurrency platforms to speed up cross-border transactions in a secure and transparent manner. At the same time, countries like South Korea and the U.S. are intensifying regulatory scrutiny of the market. South Korea, where bitcoin became something of a craze, recently proposed legislation to either heavily regulate exchanges or ban them. In the U.S., in November, a court ordered a popular cryptocurrency platform to hand over information related to 14,000 accounts to the Internal Revenue Service, undermining the anonymity the digital currencies offer. In all this, India must be careful to differentiate between cryptocurrencies and the blockchain technology they are based on. Cryptocurrencies may or may not emerge as a useful tool, especially since the government may not want to encourage the proliferation of anonymous, non-fiat currencies as its anti-black money fight intensifies. But blockchains, basically digital ledgers of financial transactions that are immutable and instantly updated across the world, are worth looking at as aids to ease doing business. They have the potential to greatly streamline payment mechanisms and make them transparent. As Ajay Tyagi, Chairman of the Securities and Exchange Board of India, said, blockchain technology is useful and should not as yet have regulatory oversight. The inter-ministerial panel on cryptocurrencies will take a call on their future. Meanwhile, the government is correct in underscoring the ‘caveat’ in caveat emptor.
By The Hindu
BY THE EVIDENCE ALONE : ON THE 2008 MALEGAON BLAST TRIAL
There are occasions when not only the accused but the criminal justice system itself is on trial
The case relating to the Malegaon blast of
2008 is one such.By
overruling the National Investigation Agency’s finding that key members of a Hindu right-wing group called Abhinav Bharat were not involved in the explosion that killed at least six persons and wounded over a hundred in the Maharashtra town, the Special Court in Mumbai has chosen to let the evidence decide their guilt or innocence. It has framed charges against them for conspiracy, murder and other offences, including under the provisions of the Unlawful Activities (Prevention) Act. The Anti-Terrorism Squad of the Maharashtra police and the NIA have come to varying conclusions on the culpability of Abhinav Bharat members. The ATS chargesheet claims it was primarily a conspiracy hatched by Sadhvi Pragya Singh Thakur and Lt. Col. Prasad Purohit, among others. In a supplementary chargesheet, the NIA concluded there was either no or insufficient evidence to proceed against some of them. Special Judge S.D. Tekale has chosen to steer clear of pronouncing his decision on which of the two he would go by. Where two conflicting reports are on record, he ruled it is better to go through the trial and consider the evidence it brings. His decision is the right one and it rises above the competing narratives of the two agencies.
What made this case politically sensitive was the debate over whether ‘Hindu’ or ‘saffron’ terror had come into being given the alleged role of an organisation with the objective of establishing ‘Hindu Rashtra’ in the country. Initially, an Islamist group was accused of being behind the blasts that took place in September 2006 at Malegaon, killing 37 people, but a later chargesheet said the perpetrators belonged to a group of Hindu activists. It took nearly ten years for those initially arrested to be discharged, for want of evidence. These factors cast an unfortunate shadow on the trial related to the 2008 case. Allegations surfaced that the NIA prosecutor was under pressure to dilute the charges against Pragya and others. Against this backdrop, it is better that the evidence, whether substantive or dodgy, is assessed at a trial, lest it be said later that there was any miscarriage of justice. Based on preliminary material, the judge has thrown out charges under the Maharashtra Control of Organised Crime Act. He has discharged three persons for want of evidence, and sent two to regular courts to be tried under the Arms Act. The rest will face trial. This decision augurs well for the integrity of the process, as it is the best way to put at rest suspicion that one agency tried to frame the suspects, while another was deliberately soft. It is important that this trial, although agonisingly delayed, is nothing but fair.
By The Hindu
A COMPLEX RESULT: ON THE CATALAN ELECTION
Last week's snap election in catalonia
in Spain saw pro-independence parties win an absolute majority in the region’s parliament, but challenges remain for them to form a government given the fractured mandate. The three main pro-independence parties, Together for Catalonia (JxCat), Republican Left of Catalonia (ERC), and the left-wing Popular Unity Candidacy (CUP), which secured 70 of 135 seats and 48% of the popular vote collectively, could form a government if they can band together — an outcome that is not a given. The Ciudadanos (Citizens) party, which wants Catalonia to be semi-autonomous, emerged as the single largest party with 37 seats and 25% of the vote, a large jump from its previous vote share of 7.6% two years ago. The fact that JxCat leaders Carles puigdemount the former president of the region and the driving force behind the independence referendum, is in exile, and former vice-president Oriol Junqueras, who leads the ERC, is in prison makes the formation of a pro-independence coalition tricky. Mr. Puigdemont will have to return to Barcelona if he wants to lead a government but he faces arrest upon return. Even if he does return, it remains to be seen if the pro-independence parties can find alignment. Mr. Junqueras has suggested he is open to reconciliation with Madrid while also pursuing independence, a softer approach than Mr. Puigdemont’s.
Meanwhile, Prime Minister Mariano Rajoy has indicated that the winner of the elections, in his reckoning, is the 36-year-old rising star of the Citizens party, Inés Arrimadas, who ran a campaign — not unlike others seen recently in Europe — focussing on the economic consequences of Catalonia leaving Spain. While it is true that Ms. Arrimadas’s party is the biggest winner, it still does not have a majority of seats; forming a coalition of anti-independence parties will be difficult. It is not surprising that Mr. Rajoy looks favourably on the Citizens party, which supports his centre-right People’s Party (PP) at the national level, enabling them to form a minority government in Madrid. This is especially significant in light of the dismal results of the PP in the Catalonian elections. The party won just three seats, down from 11 in the previous parliament. It behoves Mr. Rajoy, in his capacity as Prime Minister, to opt for the path of dialogue and understanding. This will likely involve, as a first step, facilitating the return of Mr. Puigdemont and the release of Mr. Junqueras and those who were jailed with him, potentially facing 30 years in prison for non-violent political acts. While giving in to expediency may be tempting, it will be costly for Catalonia and Spain in the longer term. Dialogue is crucial, given the complex and divisive issue of independence.
By The Hindu
TESTING TIMES : ON THE BAD LOANS MENACE
The Central government has been working hard to address India’s twin balance sheet problem, but it hasn’t had much to show in the form of results. The Financial Stability Report released by the Reserve Bank of India, for one, suggests that India is still far away from solving the troubles ailing its banks and large business corporations. According to the report released last week, gross non-performing assets (NPAs) in the banking system as a whole rose to 10.2% at the end of September, from 9.6% at the end of March. This, according to a research report released by CARE Ratings, puts India fifth among significant economies with the most NPAs. The RBI stated further that it expects NPAs to continue to rise to as high as 11.1% of total outstanding loans by September 2018, so the end to the bad loans mess seems nowhere near. The bad loans problem has also not spared private sector banks – these lenders have seen their asset quality deteriorate at a faster pace than public sector banks. Private bank NPAs increased by almost 41%, as compared to 17% in the case of public sector banks at the end of September. Non-banking financial companies that compete against banks also saw a jump in NPAs. There are, however, some signs of hope as credit growth has begun to turn the corner and shown faster growth on a year-on-year basis when compared to March.
Reforms undertaken until now though may not be good enough to tackle the problem. The resolution of bankruptcy cases, particularly against large borrowers that contribute a major share of bank NPAs, under the new Insolvency and Bankruptcy Code should help bring the NPA situation under some control. In fact, despite its many imperfections and the slow pace of resolutions by the National Company Law Tribunal, the Code can be helpful in cleaning up bank books in future credit cycles. The recapitalisation of public sector banks too can help increase the capital cushion of banks and induce them to lend more and boost economic activity. But bad debt resolution and recapitalisation are only part of the solution as they, by themselves, can do very little to rein in reckless lending that has pushed the Indian banking system to its current sorry state. Unless there are systemic reforms that address the problem of unsustainable lending, future credit cycles will continue to stress the banking system. In this regard, the government will do well to consider the recent advice of the International Monetary Fund to reduce its ownership stake in banks and give greater powers to the RBI to regulate public sector banks efficiently. Structural reforms are the only long-term solution.
After the sanction: on North Korea
The fresh round of economic sanction imposed unanimously by the un security council on North Korea is a predictable response to mounting international frustration over the nuclear stand-off. The measures come days after the U.S., echoing suspicions in other countries, charged the North Korean government with the world-wide ‘WannaCry’ cyberattacks in May. The sanctions include an 89% curb on refined petroleum imports into North Korea, stringent inspections of ships transferring fuel to the country, and the expulsion of thousands of North Koreans in other countries (who send home crucial hard currency) within two years. Despite the crippling nature of the curbs, there is some good news on this imbroglio. As on previous occasions, Beijing and Moscow were able to impress upon the Security Council the potentially destabilising and hence counterproductive impact of extreme measures. This is significant given the intercontinental ballistic missile that Pyongyang launched in November. It was described by U.S. Defence Secretary Jim Mattis as technically more sophisticated than anything witnessed previously, and the North Korean regime’s claim that it could deliver nuclear warheads anywhere in North America has been viewed with concern. However, even as China and Russia approved the latest measures, they continued to state their preference for diplomatic engagement. It remains to be seen how much more pressure Beijing can exert upon Pyongyang.
The stated aim of the sanctions regime has been to force North Korea
to halt its nuclear programme and start disarmament negotiations. In September, North Korea detonated its sixth underground nuclear device, which it claimed was a hydrogen bomb. That assertion remains unverified, but experts believe the explosion was many times more powerful than previous detonations. The development has served as a reminder to the U.S. that the scope for military options may be increasingly narrowing. Against this backdrop, a revival of stalled peace negotiations between the P-5 nations and North Korea may be the only realistic alternative on the horizon. The successful conclusion of the 2015 civilian nuclear agreement between the P-5 plus Germany and Iran affords a constructive template to move ahead with North Korea. Certainly, U.S. President Donald Trump has delivered a scathing blow to the Iran deal, even as he stopped short of scrapping it. Iran’s continued compliance with the inspections of the International Atomic Energy Agency may not mean much to Mr. Trump, given his overall distrust of multilateral institutions. But that is no reason why other big powers should not pursue the diplomatic effort with redoubled energy. Countries that backed the recently adopted UN nuclear weapons abolition pact should likewise lobby Pyongyang.
By the hindu
Title - On the line : on India - China boundaryTalks
The meeting between the special representative of India and china
National security adviser Ajit Doval and state councillor yang jiechi on the boundary question on December 22, the 20th so far, was unique for a number of reasons. The talks came more than 20 months after the last round, reflecting a period of extreme strain in India-China ties, including the 70-day troop stand-off at Doklam this year. Previous meetings had followed each other within a year. Also, at the recent Communist Party Congress, Mr. Yang was elevated to the Political Bureau, and this is the first time the Chinese side has been represented by an SR of such seniority. As a result, the two sides were best poised to move ahead in the three-step process that was part of the Agreement on ‘Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question’ in 2005 — that is, defining the guidelines for the settlement of border disputes, formulating a framework agreement on the implementation of the guidelines, and completing border demarcation. The SRs w ere given an extended mandate after meetings between Prime Minister Narendra Modi and President Xi Jinping this year, and thus went well beyond the remit of discussing the resolution of boundary issues. Above all, they were guided by the Modi-Xi agreements of 2017, including the ‘Astana consensus’ that “differences must not be allowed to become disputes”, and the understanding at Xiamen that India-China relations “are a factor of stability” in an increasingly unstable world By the hindu