A Blinkered Justice: (Indian Express, Editorial)
The article examines Punjab and Haryana High Court’s observations in an order in a rape case, characterising the victim as a person with a “promiscuous attitude and a voyeuristic mind”. The observation by the High court seems disturbing and disappointing.
About the case
- The case relates to a rape incident that took place in an institute of higher learning, leading to the conviction of the three accused by a lower court. The three had appealed for bail in the high court.
- The bench used language about the young victim that feeds into the tendency of victim blaming and goes against all principles of natural justice.
- The HC has said that “it was essential to balance the concerns of the victim, demands of the society and law and element of reformatory and rehabilitative justice”.
- The observations have been surprising and disappointing.
Role of courts and judgement of High Court
- In the last few years, the courts have been in the vanguard of the fight against crimes against women.
- It is thanks to the courts that India has today the Vishaka guidelines to deal with sexual harassment at the workplace.
- There have been several judgements by the Supreme Court restating the principles of justice and pointing out that rape is not just a crime against an individual but against society.
- The high court bench’s observations that the victim’s narrative, seek to suggest that the young woman enjoyed a certain comfort level with the offenders.
- But that is precisely why the rape in this case is even more horrific, because it shows a betrayal of trust and faith that the woman had reposed in the offenders.
- Rape is not about the sexuality of a woman, or about sexual intercourse; it is about non-consensual, forced sex, usually establishing a power asymmetry between the victim and the perpetrator.
- Supreme Court has, in the past, refused to accept contextualisation as grounds for mitigation of the offence.
- If there is really a “nefarious world of youngsters” out there where, as the court notes in its judgement, there is no comprehension of relationships “based on respect and understanding”, it is all the more reason to offer greater protection of law to the victim.
- The above cannot be a strong ground to sympathise with the perpetrators.
Turn the economic ship around: (The Hindu, Editorial)
Brief Overview of the article
- The article talks about the problems faced by humanity in the form of poverty, unemployment and inequality and the failure of the current economic system to find a solution to them.
- The article puts forward the idea of a new economic system known as ‘social business’ to achieve a more just and equitable society. The idea is invented by Muhammad Yunus of Bangladesh, who won a Nobel Peace Prize in 2006.
- Low-income people in the world’s richest nations suffer from the same problems the poor faced in poorer nations:
- lack of institutional services
- health care
- inadequate education
- substandard housing, and so forth.
Failure of the current economic system to tackle these problems; Crisis of Capitalism
- The present period of unparalleled prosperity has failed to solve the crisis of billions who suffer from poverty, hunger and disease.
- The establishment of the MDGs led to significant progress on several fronts in the battle against poverty, however it fell short of achieving the desired goals.
- The year 2008 will go down in history as the year of a rude awakening about the gross weaknesses in our capitalist system.
- It was the year of the food price crisis, the oil price crisis, the financial crisis, and the ever-worsening environmental crisis.
- The continuing high food prices have created tremendous pressure in the lives of poor people, for whom basic food can consume as much as two-thirds of their income.
- The central problem with capitalism as it is now practised is that the system recognises only one goal — the selfish pursuit of individual profit.
What is social business?
- Social business was defined by Nobel Peace Prize Laureate Professor Muhammad Yunus.
- Social business is a cause-driven business.
- In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point.
- Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors.
- The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business.
Economics of Social business
- Millions of people around the world are eager to pursue social goals, including the elimination of poverty, unemployment, and environmental degradation.
- All three can be dramatically reduced if we simply begin designing businesses with these goals in mind. And that is where social business plays a crucial role.
- Social business offers advantages that are available neither to profit-maximising companies nor to traditional charities.
- The freedom from profit pressures and from the demands of profit-seeking investors helps make social businesses viable even in circumstances where current capitalist markets fail.
- And because a social business is designed to generate revenues and thereby become self-sustaining, it is free from the need to constantly attract new streams of donor funding.
- Thus, the economics of social business can be simple and sustainable.
- It’s time to apply the potential of social business to solving the problems of inequality, unemployment and environmental decay.
We owe it to future generations to begin moving towards a world of three zeros: zero poverty, zero unemployment, and zero net carbon emissions. A new economic system in which social business plays an essential role can enable us to achieve this goal.
Dialling The Wrong Number: (Indian Express, Editorial)
- The Union government’s order to re-verification of cellphone subscribers
What is the issue all about?
- The government has directed the telecom operators to re-verify cellphone subscribers
- The notice threatened disconnection of cellphone connections if a user failed to link their Aadhaar prior February 28, 2018
Why is the order being criticized?
- Recently, the Supreme Court of India declared privacy as a fundamental right
- The order is creating anxiety, irritation among users
- Some of the users still may not have enrolled for Aadhaar
- The count told that Aadhaar programme should be restricted to voluntary and specific services
- The court nowhere uses the phrase “direction” which is a term of art contained in court orders to impart a binding force.
- Misinterpretation of the court’s opinion may damage the institutional credibility of the Court
- The Supreme Court has indicated that the pending litigation on Aadhaar will be finally heard in November.
What is the existing procedure for cellular subscribers?
- Since the Union government is the custodian of the airwaves, it issues licenses to private companies to provide mobile voice and data services.
- Telecom operators are governed by regulations including those for subscriber verification by the Department of Telecommunications (DOT)
- Pre-existing norms required cellular users to furnish a valid government identification for availing mobile services and some form of additional verification.
Afghan overture: (The Hindu, Editorial)
Recently india has decided to expand security assistance to afghanistan which gave nuanced political message to various countries
Assistance india is providing to Afghanistan
- India’s plans to expand its security assistance to Afghanistan by training police officers in India as part of a UNDP project.
- By training police officers and hundreds of army cadets and officers, India is taking an important role in capacity building for Afghan security.
- India has also announced this month 116 smaller “new development projects” across Afghanistan, and police forces will be crucial in protecting irrigation, housing and school projects from the Taliban and other terror groups.
GEOPOLITICAL MESSAGE of India for various countries
- For afghanistan — india’s commitment towards its stability.
- To pakistan and other countries dealing with taliban — India will not be deterred from assisting Afghanistan for its security. It also negated recent statement of pakistan PM that india has zero political and military role in afg
- To USA and NATO — India will play a part in putting Afghanistan back on its feet in India’s own way and not necessarily, as the U.S. may prefer, with ‘boots on the ground’ or by sending large numbers of trainers into Afghanistan, where they would become marked targets.
- The Union government is open to the idea of giving operations of railway lines to private players for enhancing competition.
What is the proposition?
- Doing so will allow to generate competition in the process and improve customer satisfaction.
- Mr. Goyal, the Railway Ministry is studying various models for attracting more private players.
What are the changes?
- Mr Goyal is willing to spend unlimited funds on safety, he said clearing the backlog for track renewal would be the focus, and a zero accident rate would be an aspiration.
- There is no budget for safety. Whatever fund is required we will spend,” Mr. Goyal said.
- Mr. Goyal is also re-tuning policy to attract private companies for modernizing railway stations.
- To begin with, the Railways have decided to do away with the ‘Swiss Challenge’ model of awarding railway stations to private players and taken a slew of measures to lease out at least 100 stations.
- At the fourth Northeast Connectivity Summit in Kohima from September 22 to 23, a representative of the Embassy of Japan said Tokyo would invest in the region’s infrastructure, education and people-to-people sectors.
Why northeastern region?
- The northeastern region is located at a strategically and economically important juncture between India and Southeast Asia as well as within the Bimstec (Bay of Bengal) community.
- Therefore, Japan has placed a particular importance on the cooperation in the northeastern region.
The new road connectivity
- The northeast, Japan had undertaken works on road connectivity, energy projects, water supply and sanitation, forest resources management, Japanese language education and post-war reconciliation, which aimed to build a deeper understanding of the actions of Japanese forces in the region during the Second World War.
- Tokyo Is committed to undertakE two major road and infrastructure building projects in Mizoram and Meghalaya. But the event in Kohima provided a broader portrait of Japan’s interest in the northeast.
The next Connectivity Summit
- The next Connectivity Summit in Tawang is expected to take Japan’s representation into the strategically located region that borders China.
- It was noteworthy that during Mr. Abe’s visit, Japanese officials had declined to spell out if Tokyo would be interested in acquiring projects in Arunachal Pradesh.
- The summit also indicated Myanmar’s interest in the potential of the region.
- Nagaland’s Chief Secretary Pankaj Kumar urged improved connectivity with Myanmar for unlocking the regional trade potential.
The Department of Science and Technology (DST) is looking to link the programme with a research project at the Indian Institute of Technology Bombay that uses sophisticated imaging techniques and can picture the nutrient balance of a patch of land without necessarily collecting soil sample.
Hyper spectral imaging
- means analysing extremely detailed images of an object to the scale of nanometres and then reconstructing its constituent elements.
- Using custom-developed algorithms, satellite-images, or those taken from low flying planes or drones, can be used to calculate the proportion of nitrogen, potassium and phosphorous, the three most vital nutrients as well as other minerals in the soil and be used to gauge its health.
- Currently no Indian satellite has the capability to take nano-scale resolution pictures,
- The DST should talks with the Ministry of Agriculture and State departments to evolve a programme and apply this technology for the government’s mission.
- More State officials come on board to discuss its application.
- State and centre should collaborate with ISRO to built such satellite.
Portal handled 1.3 lakh tax return filings and payments per hour on last day.
- Efficiency in Goods and Services Tax Network (GSTN)
What is GSTN?
- A private company which manages the IT infrastructure of the new tax regime – GST
What is the news all about?
- GSTN has handled robust return filing.
- It has handled about 35 lakh filing till September 23
- GSTN had faced glitches during the GSTR filing for July which had forced the government to extend the due date for filing of returns
- The GST Council had constituted the group of ministers to sort out the issues faced by businesses while filing returns and paying taxes on GSTN portal.
What is the impact of GSTN?
- Increased in tax collection; Rs. 95,000 crore were collected in the maiden month of the roll-out.
The Goods and Services Tax (GST) is all set to enhance the competitiveness of the almost five crore Micro, Small and Medium Enterprises (MSMEs) that account for 25% of employment, 40% of industrial output and 45% of exports of the country.
Banks share in the new credit have fell in FY1. Corporate bond issuances have rose 56% and NBFCs have lent more.
Abou RBI’s annual report
- The banks are busy chipping away at their mountain of bad loans and operating on precarious levels of capital.
- Reserve Bank of India’s recently released annual report for 2016-17 that shows that many new sources of finance are springing up.
- Domestic businesses are increasingly turning to the bond markets, Non-Banking Finance Companies (NBFCs) and foreign direct investors to meet their funding needs.
- RBI’s compilation on the ‘Flow of financial resources to the commercial sector’ shows that FY17 marked a watershed year for Indian banks’ share in commercial credit.
- In the four years ending FY17, domestic businesses have soaked up between 12 lakh crore and 15 lakh crore, per year in credit funding. Until FY16, the banking system met 50% or more of this requirement.
- But in FY17, banks’ share in new credit slumped to 35%, while non-bank sources met 65% of the financing requirement.
- Non-bank sources lent as much as Rs. 9 lakh crore to businesses, dwarfing bank credit flow of Rs. 5 lakh crore.
Improvement in Bond market buoyancy
- The bond market has seen a remarkable pickup in the last three years.
- In FY17, public issues and private placements of corporate bonds (including commercial paper) raised Rs. 3.16 lakh crore for firms, a 56% jump from the Rs. 2.03 lakh crore in FY16.
- This took care of 22% of the total funding requirements of commercial enterprises.
- This number has almost doubled from Rs. 1.65 lakh crore in FY14.
- This data only includes the bonds directly floated by commercial enterprises, and not the money raised by finance companies for on-lending.
What has prompted the sudden takeoff of Public issues and private placements of corporate bonds?
- On the borrowing side, firms have taken to bond issues to source more of their requirements because bond markets have transmitted the recent fall in interest rates much more quickly and effectively than banks. In the last couple of years, it has been much cheaper for high-quality corporate borrowers to tap bond markets.
- On the lending side, retail savings flooding into mutual funds, insurance firms and pension funds have helped stoke the domestic institutional investors’ demand for bonds.
- These trends, taken with active efforts by the RBI, suggest that bond markets may continue to remain a leading source of credit to businesses, offering stiff competition to banks.
- The only caveat is that the bond market route is more accessible to large enterprises with good credit ratings, than SMEs or borrowers with low ratings.
Scale-up by NBFC
- Non Banking Finance Companies (NBFCs) have emerged as key financiers to businesses, especially MSMEs.
- NBFC lending jumped 28% over FY16.
- For long, it was a sore point with entrepreneurs that the large corporate borrowers ended up cornering the lion’s share of bank credit, with lending procedures effectively keeping out Micro Small and Medium Enterprises.
- In the last three years though, wholesale NBFCs have aggressively stepped into the breach.
- Leveraging their deep regional reach, closer relationships with customers and alternative credit appraisal systems, NBFCs have driven a manifold expansion in loans against property and unsecured business loans to MSMEs.
Factors that led NBFCs to expand
- A Crisil study in 2016 noted that NBFCs had gained a 3 percentage point share of overall credit pie from banks in the last three years as a result of their mortgage and MSME lending push, and would continue to gain share over the next three years.
- Housing finance NBFCs have emerged as a major source of funds for real estate developers too, with financial institutions such as LIC, SIDBI, National Housing Bank and NABARD playing a complimentary role in funding other businesses.
- Two factors have helped NBFCs expand their lending activities at the cost of banks – their comfortable capital adequacy ratios and their ability to borrow at lower costs due to falling interest rates.
- In the last couple of years, NBFCs have been even more aggressive than corporates in tapping the bond markets for capital.
- They have also augmented their resources by borrowing from banks and institutional investors through securitisation deals.
- Lately, there is worry the sluggish property market will force NBFCs to tread more cautiously on loans against property.
- It is important that rather than External Commercial Borrowings or short-term credit, it is the more durable FDI money that is meeting this need.
- It is essential to recognise that these cannot completely substitute for bank lending.
- The other useful takeaway from the analysis is that one can no longer assume a one-to-one correlation between bank credit growth and the GDP growth numbers.
- To really measure credit expansion in the economy, we need data on both bank and non-bank lending.
- SEBI introduced the measure to keep a check on securities that witness an abnormal price rise that is not commensurate with financial health and fundamentals of the company such as earnings, book value, price to earnings ratio among others.
Why did SEBI bring in the measure?
- The primary principle behind the graded surveillance framework is to alert and protect investors trading in a security, which is seeing abnormal price movements.
- SEBI may put shares of companies under the measure for suspected price rigging or under the ambit of ‘shell companies’.
- The measure would provide a heads up to market participants that they need to be extra cautious and diligent while dealing in such securities put under surveillance.
How the Graded Surveillance Measure works?
- Once a firm is acknowledged for surveillance it goes through six stages with corresponding surveillance actions and the restrictions on trading in those securities gets higher progressively.
- In the first stage, the securities are placed in the trade-to-trade segment, meaning no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.
- A maximum of 5% movement in share price is allowed.
- In the second stage, the buyer of the security has to put 100% of trade value as additional surveillance deposit.
- The deposit would be retained by the exchanges for a period of five months and refunded in a phased manner.
- In the third stage, trading is permitted only once a week i.e, every Monday, apart from the buyer putting 100% of the trade value as additional surveillance deposit.
- In the fourth stage, trading would be allowed once a week and the surveillance deposit increases to 200% of the trade value.
- In the fifth stage, trading would be permitted only once a month (first Monday of the month) with additional deposit of 200%.
- In the sixth and final stage, there are maximum restrictions.
- Trading is permitted only once a month at this stage, with no upward movement allowed in price. Also, the additional surveillance deposit would be 200%.
Will securities remain permanently in the Graded Surveillance list?
- Only a quarterly review of securities is done. Based on criteria, the securities would be moved from a higher stage to a lower stage in a sequential manner.
What are the points small investors should keep in mind about the Graded Surveillance Measure?
- With security getting shifted to various levels of surveillance, it is publicly announced on a daily basis on BSE and NSE websites as well as through circulars to the stock brokers.
- Moreover, the exchanges can also appoint independent auditors to audit the books of accounts of these companies and do forensic audit, wherever needed.
- It is also an indication that the sudden rise in either the volumes traded or the price increase are not commensurate with the fundamentals of the said companies and hence small / retail investors are protected from getting stuck in such stocks inadvertently on some wrong advice.
What are the challenges?
- The only challenge for the small investors is that these announcements are often made at very short notice and implemented from the next day itself thus giving those who have already entered the stock less than adequate time to exit it.
- Of course, there is also potentially another risk. For example, even if time is given, the stock might crash next day on the news, triggering the lower price circuit and leaving no exit opportunity.
The faltering economy: (The Hindu, Editorial)
Last week, the current account deficit (CAD) widened to a four-year high. A set of weak economic numbers has left the Central government scrambling to do something to set things in order. Finance Minister Arun Jaitley last week promised appropriate action to revive the economy.
A set of weak economic numbers
The expansion in gross domestic product slowed to a multi-year low of 5.7% in the first quarter of 2017-18,
Industrial output growth dropped to 1.2% in July, compared to 4.5% a year earlier.
In addition, retail price inflation jumped to a five-month high of 3.36% in August from 2.36% in July, further dimming the prospects of a monetary stimulus from the Reserve Bank of India to help boost the economy.
To complicate matters, we have a widening Current Account Deficit.
A number of factors could be responsible for this:
Merchandise exports: One of the major reasons for the current deficit is the greater increase in merchandise imports than exports
Increase import of Gold:Imports increased because of a rise in demand for gold(almost threefold) due to the upcoming festive season and tweaks in trade pacts with countries such as South Korea
Services -Fall in exports of Services due to domestic industry issues and increased protectionism worldwide.
Lower farm growth and government expenditure.
The prolonged effect of demonetisation
The consequences of new tax regime(Introduction of GST)
What could be done to revive the economy?
There is talk that increased fiscal spending to the tune of Rs. 50,000 crore or more may be approved by the government to make up for lack of private investment.
A fiscal stimulus would revive spending in the short term and will not address any of the production bottlenecks in the economy
In addition, the imports of Gold need to be checked. Tweaks in FTA’s with foreign countries should be corrected to check illegal trade from third parties. The example of in the current scenario is that of the Illegal imports from South Korea that is not even amongst the world’s major producers or exporters of gold and related products.
The various rigidities in the market for land and labour have been holding back the economy for decades now, stopping investors from risking their capital on large-scale projects needed to boost growth. This needs to be addressed to find a viable solution to the problems.
Further, the overall unease involved in doing business in the country and the even larger uncertainty looming around the rules that govern the conduct of business have seriously held back growth.
Effects of new tax regime should be carefully watched.
Incentives to exporters and increase in budget expenditure to their interest.
India should be prepared for the impending tightening of monetary policy regime in U.S. and other countries as India has survived the current deficit on account of a strong capital account surplus.
Also, India should seek to resolve the impending issues with other countries and organisations such as EU(regarding IPR regime and others) so that the India-EU FTA process could be hastened which could prove to be a major boon for services sector. Similarly, India’s push for a Services pact alongwith a goods pact in RCEP is a atep in the right direction.
The Navy’s urgent priorities include helicopters and minesweepers, while India continue discussions with Japan for buying the US-2 amphibious aircraft.
- A preliminary investigation has found faulty ammunition to be the cause of the accident involving an M777 ultra-light Howitzer during firing trials early this month.
What was the cause?
- A preliminary inquiry has found that the explosion took place due to faulty ammunition supplied by the Ordnance Factory Board (OFB).
- On September 2, the gun manufactured by BAE Systems of the U.S. was undergoing field firing for compilation of range tables when the accident occurred.
- The ammunition exiting the barrel broke into multiple pieces damaging it.
- Any such failure is attributable to a complex phenomenon pertaining to internal ballistics as the shell moves at a very high speed inside the barrel.
The $737 million deal with U.S
- Last November, India signed a deal with the U.S. government under the Foreign Military Sales Program for 145 M777 guns at a cost of $737 million.
- As part of the agreement, two guns arrived in India in April for calibrating range tables and three more would arrive in September 2018 for training.
- Deliveries were slated to commence from March 2019 to be completed by mid-2021.