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)

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)

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)

Round The States

New Delhi, 6 January 2024

Rally, Protests, Merger

SOUTH INDIA GEARING UP

By Insaf 

Ensuing general election and consecration of Ram temple has kicked up a lot of heat and dust in southern States. Protests, a rally and a merger hit headlines. In Congress-ruled Karnataka, the arrest of a kar sevak in a 1992 case related to Babri Masjid demolition violence in the state, triggered violent protests by BJP. It also launched a campaign ‘I’m also a Karsevak, Arrest Me Too’ on Thursday, accusing the government of indulging in “anti-Ram and anti-Hindu policies.” Chief Minister Siddaramaiah rubbished it saying the kar sevak is a ‘social miscreant and criminal suspect in multiple cases’ and warned ‘BJP leaders need to understand that assigning caste and religious labels to criminals is extremely dangerous.’ His colleague, MLC B K Hariprasad went a step further: ‘There’s absolute possibility of a similar (Godhra-like) situation created here also…All arrangements should be made for those willing to go to Ayodhya so we shouldn’t see another Godhra happening in Karnataka.’ The government, he said, should be on high alert. BJP has demanded his arrest for instigating a “riot for the Lok Sabha elections”. Mixing politics with religion is getting far too toxic!     

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Kerala Rally

In Kerala, the BJP had star campaigner Prime Minister Modi launched the party’s election campaign. A mammoth rally ‘Sthree Shakthi Modikkoppam’ (Women Power with PM Modi) in Thrissur district on Wednesday last, preceded by a road show appears to have rattled the Congress. Modi launched a frontal attack against it, other than the Left parties, accusing them of delaying the women reservation bill and listed the schemes his government had rolled out these past 10 years. Whether the ‘PM guarantee’ will woo the women voters, like it did in Rajasthan, is to be seen, the Congress had its workers stage a protest a day later near the stage from where Modi spoke, over cutting of branches of a banyan tree for his programme. They clashed with BJP workers as the tree is believed to have religious significance and is adjacent to the Vadakkumnathan Temple. In turn, the BJP accused the Congress of having its workers spray cow dung water on the venue of the rally. The police had to be deployed and protesters were detained. Will God’s own country be more accommodating to the saffron party?

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Andhra Merger

Andhra Pradesh gives some hope to Congress. On Thursday last, founder of Yuvajana Sramika Rythu (YSR) Telangana Party and sister of Chief Minister YS Jagan Mohan Reddy, Y S Sharmila not just joined the grand old party but merged hers with it. Timely alright, before ensuing Assembly polls and battle 2024. “Today, it would give him (YS Rajasekhara Reddy, former Congress Chief Minister) great joy that his daughter is following in his footsteps and is going to be a part of Congress itself,” she said and added that it was his dream to see Rahul Gandhi as PM. Sharmila had launched her party in July 2021 after differences cropped up between her and Jagan Reddy. Interestingly, brother Jagan called on former Telangana Chief Minister K. Chandrashekhar Rao at his residence in Hyderabad, the day of the merger. In recent Telangana Assembly polls, she announced support to Congress, as it ‘stood a chance of victory, and we didn’t want to break the anti-KCR vote. Congress won and I am most happy that we contributed a part to that victory.” Will this merger contribute again and revive Congress fortunes, is the question.

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Delhi’s ED Match

A cat and mouse game is being played out in national capital, Delhi. Chief Minister Arvind Kejriwal again skirted the Enforcement Directorate’s summons, the 3^rd in a row on Wednesday. He accused the ED of trying to hurt his greatest wealth, ‘honesty’ and it’s the Centre which wants to arrest him to stop him from campaigning for 2024 election! Citing reasons such as Rajya Sabha polls, R-Day preparations and ED’s ‘illegal’ summons for non-appearance, he offered to cooperate provided summons were ‘legally valid.’ Eight months back, he said, ‘I was called by CBI, and I appeared’. He insists there’s no excise policy scam and colleagues (Manish Sisodia, Sanjay Singh and Vijay Nair) are in jail ‘not because they were involved in corruption, but they didn’t join BJP’. Rubbishing it, BJP said if he ‘finds ED notices wrong, he should go to the courts, but he won’t as he knows it’s almost impossible to get relief.’ Besides, those in jail aren’t getting bail, plus every court is reprimanding them. Is a 4^th summons on its way?  

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Jharkhand Plans Ahead

Jharkhand is doing one better than Delhi. Not only has Chief Minister Hemant Soren skipped ED’s 7^th summon alleging the probe in money laundering case was ‘biased’ but is preparing for the future. On Wednesday last, he convened a meeting of JMM-led coalition ministers and MLAs at his residence to muster support and did get solidarity from 52 (JMM, Congress and RJD) of the 81. His office posted on social media: ‘latest political situation was discussed…All MLAs expressed confidence in CM. He (Soren) said he’s always with them and will continue to be so…Any kind of conspiracy against government won’t succeed…’ The meet, however, had many guessing the resignation of MLA Sarfaraz Ahmad two days ago for ‘personal reasons.’ Opposition BJP claimed he was told to resign ‘to facilitate Soren’s wife Kalpana to contest the bypoll so she takes over as CM in the wake of any eventuality.’ Soren has rubbished it, but time will tell, as ED keeps the heat on and raided premises of Sahebganj DC Ram Niwas Yadav and Soren’s press advisor Abhishek Prasad the same day.

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Blissful Lakshadweep

Lakshadweep can start hoping for a spot on the global tourist map. If so, it has Prime Minister Modi to thank. “For those who wish to embrace the adventurer in them, Lakshadweep has to be on your list. During my stay, I also tried snorkelling - what an exhilarating experience it was!” he wrote on X. Though he went to inaugurate the Kochi-Lakshadweep Islands Submarine Optical Fiber Connection, lay foundation-stone for renovation of primary healthcare facility and 5 model Anganwadi centres, among others, it’s the pictures he shared on X which made news: “And those early morning walks along the pristine beaches were also moments of pure bliss.” But trust Congress to promptly play spoilsport. It posted on X too: “The Prime Minister of India is having fun. Great photography is taking place on the seashore… Photos are being taken in different dresses. A wonderful pose is being given: Sometimes relaxing on the shore, sometimes playing with the waves of the sea.” And, “Manipur has been burning for 8 months. People are still being murdered. Indian citizens are being killed, rendered homeless, and tortured. But… Where is India’s Prime Minister?”----INFA 

(Copyright, India News & Feature Alliance)