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Open Forum
Opposition Is Coming Alive, By Inder Jit, 11 January 2024 |
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REWIND
New Delhi, 11 January 2024
Opposition
Is Coming Alive
By Inder
Jit
(Released
on 21 October 1980)
New aspects of our national life have caused thinking democrats
greater concern in recent months than the state of the Opposition. Mrs Gandhi,
many have felt over the months, was lucky in getting a massive majority in the
Lok Sabha on a minority mandate. But she has been luckier having on
Opposition which is not only divided and in disarray, but to quote a veteran
observer, is “stupid and impotent”. Happily for these democrats, the situation
is beginning to change and look up. It is no longer as hopeless. After months
of distressing inactivity and despair, the Opposition is showing signs of
coming alive again. Moves are afoot for joint action against the Congress (I)
“misrule and abuse of power”--- and Mrs Gandhi’s failure to provide a
Government that works. Simultaneously, efforts are on both openly and behind
the scenes for forging some understanding among the Opposition parties. Unlike
in the past, no one talks these days of Opposition unity or alliances. The
emphasis is now on realism and pragmatism --- at least in talk.
Mrs Gandhi showed between March 1977 and the end of 1979 how an
Opposition leader and party could function. The 1977 poll cast her in the
dumps. She was written off by almost all the party leaders, political analysts
including myself, and the people at large. Even prominent Congress (I) men
quietly went along with the assessment. But Mrs Gandhi determinedly rode back
to power with a bang. Many were bitterly critical when following her defeat she
turned up unannounced at an Arab national day reception in response to an
invitation sent as a matter of courtesy. In retrospect, however, the message
she put across was clear --- a message which eventually helped her to win back
the support of the Muslims at home. (Remember, the banquet hosted in honour of
Mrs Gandhi by the Saudi Ambassador in New Delhi on the eve of the Lok Sabha
poll.) Not a few ridiculed her visit to Belchi atop an elephant and her efforts
to woo the Harijans. Here again she proved right and the others wrong.
Many scoffed at Mrs Gandhi’s decision to split the Congress early in
1979 and felt that this would hasten her end politically. But here, too, her
strategy yielded rich rewards. Few then saw the real purpose behind her
surprise move. It, no doubt, cut her strength in the Lok Sabha to less than
half and ended her party’s pre-eminence as the official Opposition. But it gave
her a well-knit and committed task force. (“What counts in a fight ultimately”,
analysed a Congress (I) leader, “is the strength of the stick, not its length”.)
Thereafter, she utilized every opportunity in Parliament to hit at the Janata
Government. Mr C.M. Stephen’s disenchantment with the Congress (U) was
exploited to get for her group one of the Lok Sabha’s most effective Opposition
leaders ignoring the fact that he had strongly supported her expulsion from the
party. Much else followed and Mrs Gandhi shrewdly got a great deal of mileage
out of both the Kanti affair (thanks to the tactless Morarji-Charan Singh
correspondence) and her expulsion from the Lok Sabha -- and imprisonment.
The Opposition has of late started planning popular campaigns to
assert its identity --- individually or collectively. A six-party front has
been formed at the national level comprising CPM, CPI, Forward Bloc, RSP, Lok
Dal and Congress (U) for united action on three specific issues initially ---
rising prices, communalism and civil liberties. The state units have been left
free to formulate their own programmes and also to choose the participants in
the light of local compulsions. The Front has, for instance, persuaded the
Janata Party to join hands with it in Maharashtra even though it has chosen to
keep aloof at the national level. More than one lakh persons have courted
arrest in Maharashtra and Tamil Nadu to protest against rising prices. The
Bharatiya Janata Party has, meanwhile, launched on its own a movement against
the National Security Ordinance all over the country.
Simultaneously, efforts are on among erstwhile constituents of the
Janata to revive the old party as an alternative to the Congress (I). (Contrary
to a popular impression, the six parties constituting the Left Democratic Front
have not come together. “We are not a front or an alliance for fighting the
elections or forming a government”, EMS told me. “Haste, as the Janata
experience shows, can become counter-productive. We, therefore, prefer to move
slowly.”) A convention of four middle-of-the-road democratic parties ---
Congress (U), Lok Dal, Janata Party and the Janata(S) was held in Patna on
October 7 for evolving a national alternative. An eight-man committee was
formed to sound the respective party High Commands on the desirability of their
merger. Significantly, it warned the four High Commands that if they failed to
bring about a merger by December 31, another state level convention would be
held in January to take a concrete decision.
The outcome of the move is anybody’s guess. But it should not be
dismissed out of hand simply because the initiative has been taken at the state
level. Important persons, who enjoy status in their respective parties, are
actively involved in the new exercise. They include Mr S.N. Sinha (Janata), Mr
S.N. Mishra (Lok Dal), Mr Abdul Ghafoor (Congress-U) and Mr Bhola Prasad Singh
Janata(S). Furthermore, the exercise is not isolated. Exploratory talks in the
same direction have taken place in Uttar Pradesh, Maharashtra, West Bengal,
Rajasthan and Karnataka. Similar conventions are proposed to be held in the
other states. True, a section of the leaders in all the four parties is opposed
to the move. Some even tried to sabotage it at the start. (Mr Madhu Limaye, for
instance, got Mr Karpoori Thakur to stay away from the Patna convention. Mr
S.N. Mishra and a few others, however, went ahead.) But the second-line
leadership, by and large, is not averse to the idea.
Most of the younger leaders in the four parties appear agreed on the
broad diagnosis of the disease. The Janata, they argue, collapsed because of
the clash of personal ambitions between Mr Morarji Desai, Mr Charan Singh and Mr
Jagjivan Ram. Several others played the game of the three leaders in the hope
of promoting their respective interests. (Most ministerial plums in free India
have gone to people on the basis of who is with whom and not strictly on the
basis of merit or who can handle which job.) Things, it is said, may not have
come to the tragic pass they did in 1979 if only an interesting suggestion
informally made by the President, Mr Sanjiva Reddy, to the three top leaders
had been accepted by them. Mr Reddy, I now learn, proposed at one stage that
all the three might hold the office of Prime Minister for equal periods in turn
as had been done in Japan among the members of the ruling alliance on
occasions.
What of the remedy? Opinions vary. The younger leaders in the Lok Dal,
Congress (U) and Janata (S) feel there should be no difficulty in their coming
together with the Janata, thanks mainly to the common Congress culture,
provided the “oldies” are willing to call it a day. But the latter is easier
said than done. There is little likelihood of either Mr. Charan Singh or Mr.
Jagjivan Ram and other top Congress (I) leaders retiring. Mr Morarji Desai
alone has indicated his decision not to accept any office. This has enabled the
Janata to be one up on the others and to think and plan in terms of offering
itself as an alternative to the Congress (I). As a Janata leader summed up: “We
have the potential, even if we lack the inherent strength today. We offer a
young, collective leadership. We have a clean image. And, we are working hard
to build up an organisation from the grassroots. We shall be glad to welcome
back old friends and seek the cooperation of new ones on a selective
basis.”
Ultimately, however, the battle of the alternative, so to say, will
not be won by any fresh unity or the creation of an alliance or front. The
outcome will depend upon the ability of the Janata with or without the other
parties, the BJP, which has homogeneity and dedicated cadres, and the Left
Front representing the Communist culture to win back credibility among the
masses and to function effectively as the Opposition. Parliament offers a
powerful forum for exposing the Government and influencing the people. Mrs
Gandhi used it to great advantage. But the Opposition has not been able to push
the Government into the dock even where overwhelming facts, as against
allegations, have been laid bare in various scandals. Issue after issue is
raised each succeeding day by the Opposition in the two Houses. But nothing is
done to pick on one or two and follow them up effectively. Not enough is being
done outside either. Coming alive is fine for the Opposition and welcome.
But this by itself will not do. The Opposition must plan its strategy and
tactics. It has still much to learn and unlearn. ---INFA
(Copyright, India News & Feature
Alliance)
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Of Poverty & Inequality: POLL PROMISES DON’T USHER CHANGE, By Dr. S.S. Chhina, 11 January 2024 |
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Spotlight
New Delhi, 11 January 2024
Of Poverty
& Inequality
POLL PROMISES
DON’T USHER CHANGE
By Dr. S.S. Chhina
(Senior Fellow,
Institute of Social Sciences, New Delhi)
The New Year demands
introspection by the ruling dispensation whether the world’s largest democracy
has made the progress in the right direction. Since 1952, when the first
general election was held in India, the process to make promises got started.
All the political parties made a number of these, mainly concerned with removing
unemployment and creating social and economic equality in the society. But
inequality, poverty and unemployment went on thriving, similar to the surge in
poll promises. Actually, inequality of income is itself an impediment for
development and prosperity. The impression is given in every election that
there would be perfect equality, full employment, and prosperity after these
are done. But the situation has sadly remained more or less the same as it was
seven decades earlier.
Income inequality,
unemployment and poverty -- all the three factors are closely related with each
other, wherever there is unemployment there is poverty and this unemployment is
based on income and wealth inequality. When there are very rich, which are few
on one side and large number of poor on the other, the level of effective
demand is low. The rich people save much, but whatever is not spent it does not
become the income of the others. The gap between total income and total
expenditure went on thriving.
When the previous goods and
services do not sell, there is no need to prepare for the new ones, no need of
more employment, rather there is retrenchment among the existing employed people.
It leads to the vicious cycle of poverty. People are poor as they do not have
employment. As the income is declining, the demand is declining, surplus
production leads to unemployment. This vicious cycle is required to be broken for
sustainable development, but it’s possible only if there is equality of income
and wealth.
The countries having
equality of income are prosperous, there would be full employment, social
security and higher rate of development along with sustainable development. But
the countries having inequality are suffering from stagnation, unemployment and
poverty along with other economic and social evils. In 1929, when the world was
facing big depression, its cause was diagnosed as the lack of effective demand
and the remedies suggested were aimed to raise the demand either through
credit, instalments and generation of jobs in public works, because private
entrepreneurs were not coming forward because of the declining demand. The then
Soviet Union was the only socialist country at that time, but the great
depression had no impact on its economy and it was developing with a
satisfactory rate of growth.
After Independence, measures
were introduced to create equality of income and wealth. The Constitution
prescribes establishing the socialistic pattern of society in its directive
principles of State policy. Public sector enterprises were started. But inequality
went on rising. According to a report in 1939-40, 1% of the population was
holding 20.7% of the wealth. But at present because of the surge in inequality,
1% of the rich population is holding 58.4% of the wealth. 10% of rich
population is holding 80.7% wealth of the country. In 2017, the 73% of wealth
rose for only 1% of population, whereas 67 million that includes 50% more poor
population, realised only 1% hike in their wealth.
At the time of independence
75% population of India was engaged in the profession of agriculture but there
was the ‘Zamidari’ system. There were landlords holding thousands of
acres of land on the one side and the land-less tenants on the other side. The Zamindari system was abolished and the
ceiling on the upper limit of land holding was imposed ostensibly with two
objectives, one to create social equality and second to make the best use of
land. But was equality in respect of ownership of land created? No, the
situation presented by Punjab shows that the objective of equality could not be
realised by this act and similar is the situation in other States.
Punjab is the dominant farm
state. In all 33% of the holdings possess less than five acres of land, but
this number of holdings are having only 2.36% area of the State. On the other
side there are only 5.28% of the holdings which have their farms above 25 acres
of land but they possess 21.68% area of the State. The aspect of inequality of
wealth is palpable in the ownership of the land holdings. The large holdings do
not belong to the peasants but with the
persons who are engaged in other professions than farming. It also vindicated
the concept that imposing of ceiling on land could not yield the desired
results.
When the upper ceiling on
land holding was imposed, it was suggested by many social reformers that
ceiling on urban property should too be imposed, but this suggestion could not
be approved on the plea that it would adversely affect the industrial growth,
where India was already lagging much behind.
But this yielded another
form of inequality in the country. Some of the residential houses are sprawling
in acres, whereas there are four/five families living in 100-yard plots. There
are 80 million people in the country that do not have any house, and are
spending their lives in huts on the roadside. They have no reach to purchase
the land and the prices of these plots are thriving because of the fact of
inequality in income and wealth.
The situation explained
above makes it clear that entrepreneurship in Indian population has its
constraints because of inequality. Everybody can not venture to start his
enterprise even if he/she is capable with his/her abilities. Inequality in
income, minus the large number of able entrepreneurs to contribute for the
development of the country and welfare of society. The entrepreneur is mainly
interested in securing his interest and protect himself from any financial risk,
where regular sale of his product is the most crucial factor. But the low
effective demand discourages new entrepreneurs. Number of times the concessions
for the foreign investment are announced, but it had been observed that the
response of the foreign investors is dismal only because of the low demand for
number of products which are beyond the purchasing power of the large number of
consumers of the country.
As inequality of income
hampers the employment opportunities it generates the number of social problems
also like drug addiction, child labour, exploitation of women, cheating and
theft and snatching. All such evils are stalemates in the interest of the new
entrepreneurs. Child labour is a big menace in the country. There are about 30
million child labourers and the number is further thriving. Unemployment ,
poverty, debt, illness of the parents are the causes for this menace. Thus,
child labour cannot be called employment, rather it is a crime. Nowhere in the
developed countries such child labour is visible, as it’s due to equality in
income. There is a need of statesmanship, to galvanise a proper economic system
that may assure the alleviation of inequality. Only then will the other reforms
follow automatically. Promises are only hollow. ---INFA
(Copyright, India News &
Feature Alliance)
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Economic Concerns 2024: FOOD PRICES, POOR PVT INVESTMENT, By Dhurjati Mukherjee, 10 January 2024 |
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Open Forum
New
Delhi, 10 January 2024
Economic Concerns 2024
FOOD PRICES, POOR PVT INVESTMENT
By Dhurjati Mukherjee
The
economy is always a matter of debate and the new year has started with concerns
expressed by members of Reserve Bank of India’s monetary policy committee about
volatile food prices. The vegetable price inflation has been manifesting
since November and this is expected to continue in the months ahead. As Michael
Patra, RBI Deputy Governor rightly pointed out that food prices in India “are
the underlying component of inflation” and this is expected to continue in
2024. Moreover, climate will remain a key influence on food production and
inflation as El Nino conditions are expected to continue.
Another
important factor is that debt has been increasing fast and the International Monetary
Fund stated that it may reach “100% of debt to GDP ratio” by the year 2028.
However, the Finance Ministry clarified that the roll-over risk is low for
domestic debt and the exposure to volatility in exchanged rates tend to be on
the lower side. Reports indicate that the government will have to either trim
expenditure or target higher revenue for the current fiscal as the nominal GDP
is estimated to grow slower. Moreover, the fiscal deficit may reach 6% of GDP.
Also, high interest rates, fiscal consolidation and slowing global growth are
not quite favourable.
Recently,
Trinamool Congress leader, Derek O’Brien, stated that “from 2014 to 2023, the
price of rice has gone by 56%, wheat by 59%, milk by 61% and tur dal by 120%”.
According to him, 21 lakh workers from West Bengal have not received wages for
the last two year under the MGNREGA. Around 150 farmers are committing suicide
every day and India has 28 crore poor people, ‘the highest for any country’.
In spite
of all this, optimistically speaking the overall economic signs are quite
encouraging with the year-to-year data rise in the stock market estimated at
over 18% while the increase from October may be around 14-15% and the growth
momentum maintained. Forecasts have been quite positive with the IMF prediction
that India is expected to grow above 6% over the next five years, driven by
strong investment, strong economic fundamentals, digitalisation-driven
productivity gains despite widespread global uncertainty. The IMF, in its article
IV consultation report observed a robust public capex agenda, which will
support India’s wide-ranging infrastructure needs, is expected to boost growth
while crowding-in private investment and growth is projected at 6.3% in both
FY24 and FY 25.
“Noting
that India is one of the fastest growing economies globally, the directors
called for continued appropriate policies to sustain economic stability and for
further progress in key structural reforms to unleash India’s significant
potential”, as per the report. Further it pointed out that India’s economy
showed robust growth over the past year though headline inflation has, on
average, moderated although it remains volatile. But what is surprising is that
whether high GDP growth can be considered the index of true development though
urban-based economists are always found to glorify the high rates of growth?
An
important point that needs to be mentioned here is the lack of private
investment and the economic strength is manifest only from public sector
investment. It is intriguing that in spite of various incentives given by the
present government, private investment has not picked up to the desired scales
and is much lower compared to the other emerging economies of the world.
This
apart, assessing economic growth is just not the incomes generated but the job
potential of the investment made. In this connection, one may refer to the
central bank’s December round of consumer confidence which reveals that
consumers lowered their expectations of employment and prices as they expected
a change in the scenario. It is difficult to foresee or forecast any
perceptible change unless there is a surge in investment by the private sector
in 2024. There is also need to give a renewed thrust on manufacturing though a number
of initiatives have been undertaken by the present government.
It
cannot be denied that while attempts to strengthen the economy are in full
swing, there is a need to analyse whether the benefits are reaching all
segments of society. The moot question at this juncture is whether convictions
along with the positive settings will encourage businesses to take risk and
come out with substantial investments. It is well-known that the long-term
weakness in India has largely been due to the shyness of the private sector,
specially in manufacturing, though we see enough investments in safe sectors
such as health and education. Even after the pandemic, investment by the
private sector has not picked up to the desired extent. Moreover, employment-oriented
industries are more or less ignored by the corporate sector.
To
attract private investment, one may suggest that areas in backward regions
should be earmarked for private entities with `necessary infrastructure to
facilitate setting up of employment-oriented factories, which could not just
open up job opportunities for the skilled youth but also help change the
complexion of the area. This is indeed crucial for overall economic growth
because unless the youth are gainfully employed, the concept of true
development is lost.
The
disturbing fact is that the focus of the economy is on the urban sector which,
directly or indirectly, is benefiting the rich and the middle class. This
resulted in consumption increase but most economists believe consumption demand
has indeed been problematic with the top 40% of households going for excessive
expenditure. This points to the fact that the lower 20% of the population is facing
financial crisis due to stagnant income and is not in a position to increase even
its basic consumption, that is, of healthy food for themselves and their
family. This can be viewed from the fact that agriculture grew at a mere 1.2%
in the second quarter and full fiscal growth is likely to remain subdued as
kharif food production is estimated to fall and rabi crop faces stress.
In fact,
an economic analysis of per capita allocation of resources would reveal that
the rural sector, specially the backward regions, inhabited by scheduled tribes
and lower castes has been grossly neglected. As suggested earlier, some of
these areas could be transformed into industrial hubs for small-scale
manufacturing or even tourist attraction centres. There needs to be a plan
which should be prepared at the panchayat level and sent to the Centre via the
state government for infrastructural support. Both objectives of backward area
development and employment generation could be achieved through these
initiatives. A fresh look is required. ---INFA
(Copyright, India News & Feature Alliance)
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Der Hai Andher Nahi: BILKIS GETS JUSTICE, By Poonam I Kaushish, 9 January 2024 |
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Political Diary
New Delhi, 9 January
2024
Der Hai Andher Nahi
BILKIS GETS JUSTICE
By Poonam I Kaushish
Courts have
to dispense justice and not see that justice is dispensed with, this lexicon
comes to mind when one is faced with a heartbreaking and brutal account of Circa 27 February 2002: Three days
mayhem of rioting and killing which began after Muslims reportedly set fire to a
bogey of Sabarmati Express near Godhra, Gujarat carrying 60 kar sevaks returning from Ayodhya, sparking
revenge attacks by Hindu groups resulting in 1044 dead, of which 740 were
Muslims and 254 Hindus, 233 missing and 2500 injured.
Circa 3 March 2002: Witnessed
the worst horror when 21 years old and five months pregnant Bilkis Bano was
gang raped and her three-year old daughter among 14 family members killed while
fleeing the horror of communal riots. In November police state her case true,
but culprits not found. Next year April Bilkis approaches Supreme Court seeking
CBI investigation which is granted.
Circa April 2004:
Charge-sheet is filed against 20 people and Supreme Court transfers case to
Mumbai. In 2008 11 are convicted to life imprisonment for murder, 7 acquitted
and two abated due to death.
Circa May 2022: A
convict appeals Supreme Court against a July 2019 Gujarat High Court order
which ruled Maharashtra “appropriate Government to decide his plea for
remission on grounds that he had completed 15 years and four months of his life
term.” The Court allows the 11 convicts to appeal Gujarat Government for their
early remission which cedes their request and they are released 15 August
2022.
Shockingly, the convicts are given a hero’s welcome with band-baaja, garlands and sweets and seen
sharing the stage with a BJP MP, which receives nation-wide criticism and condemnation.
Given, a convict is a convict, and he cannot be felicitated on his release.
Sic.
Circa September 2022: A distraught Bilkis challenges remission
in Supreme Court and yesterday 8 January 2024 Court quashes Gujarat
Government’s order granting 11 convicts remission and orders the accused to
report back to jail in two weeks. Rapping the State Government for not having “any
jurisdiction to entertain application for remission or pass orders as it was
not the appropriate Government.”
Noting, “The Government abused
its discretion, usurped power of Maharashtra and is on ‘thin ice.’ The
incident took place in Gujarat but trial was shifted to Mumbai where a
special court convicted the accused in 2008. The appropriate Government to
decide on remission is the State where convicts were sentenced --- not where
the offence was committed or the accused were imprisoned.” Hence, Maharashtra Government
is the competent Government in this matter, it ruled.
More. It took Gujarat Government to task by avering convicts
came with “unclean hands and got the order through fraudulent means by basing
its order on an obsolete 1992 remission policy which was superseded in 2014
that bars convicts release in cases of capital offence. The State acted in
tandem and was complicit with what convicts
were seeking from Supreme Court.
“This is exactly what this Court had apprehended at
previous stages of this case and had intervened on three earlier occasions in
the interest of truth and justice by transferring investigation of the case to
CBI and trial to a Mumbai Special Court.” Ordering status quo ante, it reasoned that for convicts to apply for
remission again they have to be back in prison first.
Not a few argue, why should they be sent back to prison as they had
served 14 years of their sentence before their release? besides, they have good
sanskar so should not their liberty
be protected? Others opine: Should perpetrators of heinous crimes against women
get remission? A big No.
Questionably, it is
not only a question of Bilkis and violence but a much wider and larger national
problem --- of increasing anger. This has resulted in a total breakdown of
institutions, society, culture and ethical values. Replacing moral rules with
naked force, hypocrisy and fraud.
Killing yet another
signpost of an increasingly enfeebled system. Symptomatic of complete
lawlessness that has gripped the country. A new cult establishing an order of
hatred and rage. An eerie stillness filling the senses with smell of death,
mayhem and brutal carnage held hostage by rampant goondagardi.
Undeniably,
what happened to Bilkis is not only abhorrent but also unacceptable in
civilized society. A Government cannot be perceived to give patronage to
criminals. How can our jan sevaks condone
and bless convicts? As compassion and sympathy has no place before rule of law
which is dispassionate, objective to be preserved. If Rule of Law is violated,
the rod of law should descend to punish. The Rule of Law is the antithesis of
arbitrariness. It would be a transgression of it as the Rule does not mean protection
of a fortunate few.
The truth is that even
as we have achieved political and economic freedom we still remain hostage to
errant elements of society. Nothing justifies bloodshed or the call to commit
violence in direct contravention of the law. If anyone has angst against
authorities or person they should take up legal battle against them. Unless the
larger network fuelling such anger and intolerance is brought to justice it
will continue unabated.
Plainly rooting out
malignancy of violence and immorality requires major surgery but India’s
tragedy is that no one wants to rid itself of this rot gorging on our body
forgetting that violence does not achieve
anything. No matter what the provocation Rule of Law cannot be made to go for a
toss. Nothing justifies violence or the call for dangerous descent into anarchy.
Importantly, India is
at the moral crossroads. True, rules of the game have changed recklessly
without a thought for the future yet in our present all pervasive decadence,
interspersed with growing public distaste, cynicism and despair there comes a
moment of truth and reckoning. Clearly, it is high time we, the people realize that we are putting a premium
on violence and immorality.
Remember, a democracy
is only as good as the refinement of its people’s moral sensibility. Our moral
angst cannot be selective but should be just, honourable and equal.
The judgment holds the
mirror that time to end this senseless grudges and violence that our lives are
getting drenched in has come. It is distracting us from seeing or worrying
about real pressing issues: rising poverty, unemployment, health and bettering
lives. It should make people realize anyone
indulging in irrational brutality or looking to settle a score should think
twice, be it a Muslim or Ram bhakt.
We need to realise
India is a big country with enough room for all to live in peace and goodwill. The
aim should be to raise the bar, not lower it any more. Neither Lord Ram nor Allah
will forgive us for playing havoc in its name. Can a nation be bare and bereft
of all sense of shame and morality? And, for how long? After all, we are a
civilized country and cannot destroy it as we shape New India. What gives?
(Copyright, India News & Feature Alliance)
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SEBI Overturns Hindenburg: US CONCURS WITH ADANI GROUP, By Shivaji Sarkar, 8 January 2024 |
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Economic Highlights
New
Delhi, 8 January 2024
SEBI Overturns Hindenburg
US CONCURS WITH ADANI GROUP
By Shivaji Sarkar
The
Supreme Court decision denying a special investigation team (SIT) probe into the
Hindenburg report on Adani group of companies has not come as a surprise. The
Securities and Exchange Board of India (SEBI), stock market watchdog, stand
helped the process.
On
January 3, the SEBI leveraged the Supreme Court verdict to its advantage. On January
5, it addressed the primary concern raised by the Hindenburg report regarding
short selling, deeming it a non-issue. It has allowed short selling of share as
institutional and made disclosure of such trade’s mandatory. It justifies any
activity of such proportions any time. The Adani Group or anyone else for that
matter is now free to do it. The legal acceptance of short selling shares,
which led to Parliament logjams, widens the canvas.
More
interestingly only a month back on December 5, 2023, the US government said,
“short-seller Hindenburg Research’s allegations of corporate fraud against
billionaire and Adani Group Chairman Gautam Adani weren’t relevant and did not
impact the US decision to grant $553 million for a Sri Lankan port terminal”. The
US would not invest if it was not sure of its investments being safe. In fact,
the US has never given importance to the Hindenburg report.
Shortly
after the report came out on January 30, 2023, the Adani Group damned the allegations,
terming it “nothing but a lie” and said it was a “calculated attack” on
India. After the top court’s verdict, the group says the report was driven by
“an ulterior motive” to “create a false market to allow the US firm to make
financial gains”.
The
similarity of the approach of the US government, the Adani group, silence or no
surprise over the official system in India, and all attributing the fault to the
Hindenburg researcher may not be a coincidence. Except vague charges, nothing
concrete has been told about the researcher. The SC has not differed from its
observation of May 20, 2023, when its appointed panel said, “Prima facie there’s
no manipulation by the Adani group”.
Hindenburg
released a comprehensive report accusing the Adani Group of long-standing
malpractices ranging from stock valuations to offshore shell entities. The exposé came just before the Adani Group
was to launch $100 billion stocks. The gravity of the allegations spurred
various regulatory bodies to take notice of it. The SC acknowledged the
seriousness and initiated an investigation.
The SEBI
started its probe into market manipulation and fraudulent activities. The opposition
parties seized the opportunity to raise questions and demanded answers leading
to many logjams and sharp barbs in both Houses of Parliament. Citing the
magnitude of the allegations, the Opposition called for a thorough
investigation to ensure accountability.
It led
to suspension of Congress leader Rahul Gandhi and later Trinamool firebrand
leader Mohua Moitra. On these and host of other issues, even the December
winter session of Parliament witnessed uproarious scenes, resulting in
unprecedented suspension of 146 MPs. However, despite the top court’s ruling, it
remains a raging political issue, which may become volatile in the ensuing 2024
election battle.
The
Hindenburg Report had shaken the Adani stocks. The report said that its
two-year investigations reveal that “Rs 17.8 trillion ($ 218 billion)
conglomerate engaged in a brazen stock manipulation and accounting frauds over
the decades”. It disclosed that it held short positions in Adani company
through US-traded bonds and non-Indian-traded derivatives. It alleged Adani
improperly using tax havens and expressed concerns about its high debt levels.
This sparked a $150 billion meltdown in shares of Adani’s publicly listed
companies last year. The shares are still reported to be down by about $47
billion.
Within a
week of the 32000-word report, the Bombay Stock Exchange had deep scars.
Investors lost Rs11.8 lakh crore at BSE and Nifty. Bank stocks suffered the
worst collateral damage. Ripples continued through the year though now Adani
Group claims it made up the losses. The Adani group released a 413-page
response to clarify its position and lambasted Hindenburg for using the company
reports itself to malign it through short selling “to book massive financial
gain through wrongful means at the countless investors”.
Hindenburg
retorted short selling was a part of its research methodology to unravel the
manipulations. A short sell is defined as a trading strategy where an investor
borrows shares of a stock they believe will decrease in value, sells them, and
then hopes to repurchase the shares at a lower price to make a profit. It is
not illegal either in the US or in India.
In May,
a Supreme Court-appointed committee in an interim report said it saw, “no
evident pattern of manipulation” in the Adani group of companies and there was
“non regulatory failure”. Simultaneously, it cited many amendments the
SEBI made between 2014 and 2019. These constrained the SEBI’s ability to
investigate. The panel also said that its probe into alleged violation of money
flows from offshore entities had “drawn a blank”. Regulators are known to
modify rules to widen their ambit. In this case, just the contrary happens.
Newspapers
went to town with many stories. While rejecting the demand for a SIT to go into
the allegations, the SC also maintained that the reliance on newspaper articles
or reports by third party organisations as the basis for questioning
investigation by a specialised regulator does not make sense. It also rejected
reports by the Financial Times and the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists
with staff on six continents, in August. This is reminiscent of the 1950 SC rulings
on freedom of Press and expression. It was implied that newspapers are not
frivolous publication and editors were supreme in editorial decisions.
Independent
petitioners questioned the amendments by SEBI on foreign portfolio investors
(FPI), diluting the requirements of disclosure of beneficial owners. The court
on the contrary held that the amendments tightened the regulatory framework. On
the 2014 probe by Directorate of Revenue Intelligence (DRI) into stock
manipulation by Adani group, through overvaluation of power equipment purchased
from a UAE subsidiary, the SC noted the issue had already been settled in
favour of the Adani group.
Senior
lawyer Mahesh Jethmalani alleged that a group was filing cases with a political
motive at the behest of foreign forces. No judicious system could function with
such premise. Judgments apart, there could be different interpretations. It may
be a reprieve to a company but socially and financially stock manipulations are
grave and sensitive. It raises questions on issues of ethics, morality, and
securityof the investors.
Stock
manipulations are not new. These brazenly came to the fore in 1992 and there
have since been many shady activities during the last 30 years. The present
incident exhibits proliferation of sophisticated operations shaking confidence
in opaque manoeuvrings. ---INFA
(Copyright, India News & Feature Alliance)
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