If borrowers get interest relief during the moratorium period, bank investors and depositors would stand to lose unless compensated by the Govt, like it happens in farm loan waivers
Responding to the pandemic, the Reserve Bank of India (RBI) had “permitted” banks to grant moratorium on payment of instalments of term loans due after March 1 up to August 31. A similar dispensation was “allowed” on recovery of interest on working capital. The moratorium was initially permitted up to the end of April and 55.1 per cent of customers of Scheduled Commercial Banks (SCBs), accounting for 50 per cent of outstanding credit, had availed this facility. In Public Sector Banks (PSBs), 80.3 per cent of all individual customers, accounting for 80 per cent of total outstanding individual loans, opted for the moratorium. A whopping 74 per cent of Micro, Small and Medium Enterprise (MSME) borrowers and 28.8 per cent of corporate borrowers, covering 81.5 per cent and 58 per cent (by outstanding amount in category loans), availed the facility.
For private banks, 41.8 per cent of individual customers, accounting for 80 per cent of outstanding individual loans, and 20.9 per cent of all MSME customers opted for moratoriums, comprising 42.5 per cent of outstanding loans to MSMEs. About 21.6 per cent of corporate borrowers, covering 19.6 per cent of total outstanding corporate loans, had availed the facility.
The Supreme Court has extended the moratorium and the Central Government has appointed an expert panel to look into the issue. Exactly how many loans accounts and what loan amount is under moratorium are not known. Some borrowers may have decided against seeking the moratorium facility due to uncertainty about relief on interest. Had the interest relief been announced upfront, almost all borrowers would have instantly opted for the moratorium, except possibly for borrowers too proud of their financial standing to seek any relief.
Since the verdict of the apex court was not available by August 31, it was the borrowers’ call to take a wager on the verdict and decide whether to opt for a moratorium or not. It is unclear if the relief, if and when granted, would be available only to those availing of the moratorium. Overall, the system lacks incentives for those remaining fully compliant while the non-compliant people may hope to get some relief. Had the interest relief been a matter of legal right under the Banking Regulation or Disaster Management Acts, it would have been through by now. The Disaster Management Act (DMA), empowering the Government to take immediate relief and rescue measures, cannot be over-read to give it unfettered powers to deal with the full economic fallout of the disaster. It certainly does not empower the Government to alter terms of private contracts on jobs, rentals, sales, lending and so on. That explains why the tone and tenor of parts of the “orders” issued under the DMA is not peremptory, prescriptive, definitive but indicative, persuasive and advisory in nature. Hence, legally binding orders regarding timely payment of full salaries, non-recovery of rent and school fees and so on could not be issued for this reason. Appeals to good conscience is a different matter.
Likewise, the Banking Regulation Act (BR Act) would by itself not confer any rights on the RBI to mandate any alteration in individual contracts entered into by the banks unless supplemented with legal remedies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) or the Insolvency and Bankruptcy Code (IBC). Appropriately, the RBI has “permitted” grants of moratorium while extending regulatory forbearance on recognition of the non-performing asset (NPA). The BR Act does not empower the RBI to mandate changing loan terms already contracted. Loan contracts can be changed only on the orders of insolvency courts. Mandatory moratorium requires more than the BR Act.
There are no free lunches in economics except those paid for by others. If borrowers get interest relief during the moratorium period, bank investors and depositors would stand to lose unless compensated by the Government, like it happens in farm loan waivers. Charity at others’ expense is systemic. Relief to borrowers at the expense of depositors is akin to relief to consumers ending up suppressing remunerative market prices for farmers.The bank depositors are also adversely impacted by the pandemic-induced fall in interest rates that stand to benefit new borrowers as well as the borrowers who are able to refinance high-cost old loans. The post-outbreak rate cuts and liquidity infusion by the RBI, aided by rising foreign exchange reserves, has caused a precipitous fall in interest rates. Some are offering record-low home loan interest rates under seven per cent per annum with new products of repo-linked home loans on offer. Low interest rates bring cheer to borrowers but gloom to depositors.
There are no fiscal guarantees to depositors on minimum interest rates and the IBC haircuts have been too costly in some cases. When corporate borrowers get a tax reduction bonanza, they don’t share the booty with lenders as they are not obliged to. When farm loans are waived, Governments provide fiscal support to banks but at present the Centre does not seem able and willing to compensate the banks for interest relief.
In the absence of fully disaggregated data on different types of loans under moratorium, a back-of-the-envelope quantification of the impact of interest relief can be Rs 1 lakh crore per month, assuming interest relief to be about one per cent per month on total pre-pandemic outstanding credit of about Rs 100 lakh crore. Even direct fiscal relief to the general population is not of this magnitude.
Financial stakes on the Supreme Court’s verdict are very high. The interest relief has been sought from the highest court of justice precisely because it is not a legal right. The golden balance of justice is being watched by distressed borrowers and anxious depositors. All borrowers are not equally distressed by the pandemic. Some differentiating criterion based on quantum of liability outstanding on March 1 and purpose of loan (whether educational; for first home/car or second one, for the Economically Weaker Section or affordable housing, past credit history) and proven impact of the contagion on income can be evolved to give relief to a truly needy class of borrowers. The relief even to this subset should not be entirely a burden on bank depositors. Ideally such relief is best provided by governments under fiscal stimulus paid by taxpayers, current or future.
The need to maintain the health of banks can hardly be overemphasised. Deep-rooted socio-cultural beliefs stigmatising indebtedness (indebted person embarrassed and lenders reviled ) continue to change worldwide.
Post World War, the wheels of growth are lubricated by the continuous supply of credit. India joined the borrow/spend bandwagon in the 80s. Lending by Scheduled Commercial Banks rose from Rs 8,64,300 crore (30 per cent of the Gross Domestic Product [GDP]) at the end of March 2004 to Rs 67,35,200 crore at the end of March 2014 (60 per cent of the GDP). At present, bank lending is only about 50 per cent of the GDP.
As on July 31, the total deposits of SCBs were Rs 141,61,689 crore (Rs 127,44,583 crore a year ago); outstanding credit was Rs 102,65,888 crore (Rs 97,29,002 crore a year ago) and investments were Rs 42,78,294 crore (Rs 35,57,063 crore a year ago). The combined effect of risk aversion of banks to lend and predominantly domestic financing of fiscal deficit is that only about two-third of deposits get lent to non-Government entities.
We have made great strides in terms of expanding the reach of banking services and financialisation of savings but high-profile delinquencies by those who can afford to pay continue to eclipse these achievements.
The gross NPA of SCBs that had peaked to 11.2 per cent in 2017-18 has been brought down to 8.5 per cent by March. This achievement is at great cost to bank investors/depositors on account of hefty haircuts following not-so-competitive slump sales of distressed companies under the conventional, single round bidding system being followed under the IBC. The RBI has assessed that the gross NPA of all SCBs may increase from 8.5 per cent in March to 12.5 per cent by March 2021 and even to 14.7 per cent if the adverse economic impact of the pandemic is very severe. Seeing the plight of forecasting tools, the economic fallout of the contagion is hard to predict and measure.
Since bank lending is only about 50 per cent of the GDP and post-pandemic recovery would require a heavy dose of credit, it is imperative to maintain incentives for financial savings.
Erosion of bank profitability runs the risk of dire consequences of de-finacialisation or informalisation of savings, derailing the hard-won recovery. The banking system needs calibrated support to prevent relapse into transmitted sickness.
(The writer is a retired IAAS officer and former Special Secretary, Ministry of Commerce and Industry.)
Events of 2020 have hugely accelerated the human civilisation’s race towards finding an alternative to its own organic intelligent brain
Now that most of us are becoming video-conferencing experts, innovating on every call with a new virtual background, while also ordering groceries online and keeping an eye on the latest news updates popping up on our phone and computer screen, will it be too early to crystal gaze into a not-so-distant future, say 2021? Yes, it may be too early to call 2020 a “gap year”, specially when each new day has its own set of surprises. But there is no harm in peeping a little into next year’s trends. First, there is no escaping the fact that technology will tremendously impact the way we live, work, exercise, eat or buy next year, too. If the pandemic has thrown us into an ocean of uncertainties, if we look around carefully, it is an ocean of data. Those that learn to swim through pretty quickly and get a raft or something to latch on to will soon realise the potential of this ocean of opportunities. It has already started happening but a new technology called Artificial Intelligence (AI) will take over most of what is today relegated to a digital world.
To start with, algorithms would be put to use for early detection or even prediction of pandemics, assessment and even solutions for traffic patterns in a city, incremental/severe weather forecasts, healthcare, care for the most vulnerable and so on. But soon, like everything else, it will be all-pervasive in every little life decision. I am not sticking my neck out to say it will happen by next year but events of 2020 have hugely accelerated the human civilisation’s race towards finding an alternative to its own organic intelligent brains. The world is already flush with examples on how AI will have multiples of applications from that which is already available across the web. In short, we are on the verge of entering a new technological era which is predictive, sophisticated and has an eerie inorganic intelligence almost running into infinity (it is not enough to cut the cord and think that an AI system has switched off; remember there are thousands of machines crunching data points from multiple sources to predict simple buying behaviour). This will definitely have a deep impact on the human race.
Next will come an age of extreme speeds of data access over the air or 5G. The world would have already been piloting cutting- edge 5G or fifth-generation mobile technology across large geographies and would have been near phase-wise national rollouts, had the pandemic not hit. India definitely has lost a year in the 5G race. However, the protocols and network vendor partner solutions may have been made more secure as a result of the delay.
In fact, 5G is likely to see the first level of deployment in urban areas (where the revenues are) and besides helping you download (at say five times the speeds of your current streaming action) social media videos/your favourite films and cricket matches, will also prove to be a great tool for remote and risky jobs. If some of the arterial sewer lines in a city are fitted with 5G chips, there could be a possibility of completely eradicating the need for human intervention in maintenance of a city’s drainage system. If the data coming in and also fed into the chips are analysed at the back-end by smart machines (think AI), who, then takes decisions to deploy little machine worms into the sludge to clean a choke or fix a leakage or even defuse a toxic gas emission, it would mean saving a few thousand precious lives each year. Together with this will come the ultra-smart homes (the protocols for which are already in advanced stages of negotiation by big tech companies) where perhaps your cooking burner will decide the menu and your bar may order itself a few of your favorite wines in case you aren’t stocked for the weekend. While robotic surgeries performed over the network specially for remote terrains (read rural) are already happening outside India, a self-driving car in Chandni Chowk may be further away.
Now that the all-pervasive technology has started to co-exist with us in our altered carbon realities, the threats to humanity will also increase. These threats would be increasingly cyber and 2021 will likely see more cyber security attacks (small, big, macro) than all of these years of digital revolution put together. The tell-tale volumes of these cyber security attacks (think SIM cloning, phishing attacks, stealing of bank passwords and OTPs) are already giving consumers and lawmakers a nightmare with increased adoption of the digital world during these work from home times. Think of the manifold increase of these forces as the technology world starts getting more complex with evolving protocols and appendages. You are more likely to hear the word cyber security in almost every important public forum and ministerial dialogues than you have ever heard in your life. Along with these, and one can only wish, multilateral solutions to tackling emerging threats will also emerge, which prevent anti-State forces from manipulating users of emerging technology. There will be new policy regimes, language and grammar for embracing these brave new islands we are heading towards, but let’s keep those for a later piece.
(The writer is a policy analyst)
Instead of thinking of security as a prevention tool, firms must incorporate it into product design from the start so that the architect systems are impenetrable
In the new digital era, where data is growing at an unprecedented rate by the second and where organisations are quickly becoming data-first, one thing has become crystal clear. That the “this is good enough” approach by businesses, across the globe and in India, is no more acceptable when it comes to safeguarding the most precious capital, i.e. data, from an external intrusion. Ever since businesses have become increasingly dependent on their data to fuel innovation, drive new revenue streams and so on, Information Technology decision-makers have not just been evaluating their current data protection preparedness but have also been ramping up their investments in this regard.
However, over the past few months, since organisations have been fixated on quickly transitioning towards remote working due to the Coronavirus pandemic, they might have missed out on something vital that they should have been focussing on and that is the threats that come along with this work culture. As a result, the world and India with it, has been witnessing a steady uptick in the instances of cyber attacks.
For example, as per a recent report, India witnessed a 37 per cent increase in cyber attacks in the first quarter of this year as compared to the last quarter of 2019. The data also show that India now ranks 27th globally in the number of web-threats detected in the first quarter of this year as compared to when it ranked on the 32nd position globally in the fourth quarter of 2019. India also ranks 11th worldwide in the number of attacks caused by servers that were hosted in the country, which accounts for 22,99,682 incidents in the first quarter of this year as compared to 8,54,782 incidents detected in the fourth quarter of 2019, says the Kaspersky Security Network report.
Another report claims that data of over 21,000 Indian students, including their Aadhaar cards, photos and so on, have been put on sale on the Dark Web. Another instance of data being leaked on the Dark Web came to light in June, with a massive data packet — nearly 100 gigabytes in size — being put up for sale. The data comprises scanned identity documents of over one lakh Indians, including passports, PAN cards, Aadhaar cards, voter IDs and driver’s licences. Thus, given the rising data security concerns and incidents, chief technology officers (CTOs) need to look for a holistic approach towards data protection and management. Now, they need to be cognisant about how to respond, recover and learn in case a cyber intrusion occurs. Here are a few tips for CTOs that will help them redefine their data protection strategy.
Drift away from security to resilience: With the evolving nature of cyber attacks, it’s time for businesses to stop reacting and start anticipating. Loss of critical data has the power to not just cripple a company in no time but also damage its reputation for the long-term. Hence, instead of relying on traditional methods of data security i.e. identify, protect, detect, respond and then recover, organisations must imbibe state-of-the-art resilience strategies i.e. learn, respond, monitor and anticipate.
Adopt a security strategy ingrained in product mindset: Businesses must not only think about making security intrinsic to technology infrastructure but also aim at enabling security professionals become intrinsic to future product development. They need to transform into a data-first and product-first mindset organisation in order to be able to remain competitive in the future. Thus, instead of thinking of security as a prevention tool, the need of the hour is to incorporate it into the product design from the beginning so that it will make the architect systems and processes impenetrable.
The key to a winning strike is the right digital partner: In the past, businesses have been using a hit and trial method with regard to choosing their digital partner and this approach has brought in more vulnerability to their sensitive data assets. As per a report by Vanson Bourne, organisations in the Asia Pacific and Japan, which were relying on more than one data protection solution provider, were almost four times more vulnerable to a cyber incident that prevents access to their data. Hence, in order to combat the external threats, businesses must choose a single technology partner that delivers multi-platform security.
While it is critical to invest in the right technologies, it has also become utmost important for businesses to ramp up their education and awareness levels to stay abreast with new security threats. Therefore, to end the constant tussle between finding the right data protection architecture and keeping up with the modern security approaches, CTOs must focus on strategies that redefine their data protection ecosystems from time to time.
(The writer is Director and General Manager, Data Protection Solutions, Dell Technologies)
The Govt should shed its current protectionism. Instead, it should go for an open trade policy by slashing import duties and eliminating non-tariff barriers
While presenting the Union Budget for 2020-21, Finance Minister Nirmala Sitharaman had renewed the commitment of the Modi Government to “Make in India.” She saw this as the most crucial component of the strategy to make India a $5 trillion economy by 2024-25. To achieve this, she targetted doubling of exports from the current over $500 billion to $1 trillion (that includes an increase in farm exports from $40 billion to $100 billion). Faced with a whopping contraction in the Gross Domestic Product (GDP) by close to 25 per cent during the first quarter, a continuing slide during the second quarter and projected decline for the whole of the current year by 10 per cent-14.5 per cent, the $5 trillion target may have lost much of its sheen for now. Nonetheless, the Government has other compelling reasons to pursue “Make in India” vigorously. First, the devastating impact of the Corona pandemic on economies worldwide in particular and the steep decline in the economy of China (which accounts for a big chunk of imports by India. For instance, of the technical material that is used for making end-use agrochemical products, 50 per cent comes from China) have led to the disruption of global supply chains. This has created pressure on India to go full blast for increasing its domestic production and achieve self-sufficiency.
Second, the frequent changes in rules by the Chinese Government, specifically targeting the US, Europe and Japan-based multinational companies (MNCs) and China’s deteriorating trade and investment relationship with those countries, have prompted hundreds of MNCs to exit. The Modi Government wants to seize the opportunity, make all-out efforts to lure them here and make India a manufacturing hub. How to make it happen?
A clue is available from this year’s Independence Day address by the Prime Minister, in which Aatmanirbhar Bharat reverberated all through. Modi exhorted “our policies, our processes, our products, everything should be the best.” Put simply, Indian industries should endeavour to manufacture products which can compete in terms of the price as well as quality, both in the domestic and international market. Broadly, two sets of factors are relevant here: (A) Those which are internal to a firm and (B) those which are external.
Factor A includes the ability of the firm to innovate products, which meet diverse demands of consumers in a manner that offers the latter quality, safety and convenience, putting in place manufacturing practices, which deliver best products on all these counts and optimising all factors of production viz. capital, labour, land and technology to ensure that the cost of supply is kept to the bare minimum. All these factors are within the control of the firm.
Factor B includes the availability of raw materials and other inputs at a competitive price, hassle-free logistics and transportation at low cost, availability of funds from credit institutions such as banks at low interest rate and a taxation structure that lowers the incidence of tax on products. Most of these factors are beyond the control of the firm. These depend on the macro-economic environment which, in turn, is influenced largely by Government policies. Look at petrol, diesel and Aviation Turbine Fuel (ATF) whose price impacts the cost of almost every product and service — cutting across all sectors of the economy. De jure, these petroleum products are deregulated. However, since the market for these is dominated by public sector oil companies, there is an upward bias in their prices which gets aggravated due to high taxes. At present, these items are out of GST (Goods and Services Tax) which means they continue to attract central excise duty (CED) and value added tax (VAT) at a high rate. No wonder, the tax component alone is nearly two-third of the retail price.
Power is another major input that impacts production cost. More than 90 per cent of the electricity is supplied by power distribution companies (discoms) at tariffs determined under cost plus mechanism. These rates subsume inflated cost allowed to power generators, pass-through of ever-increasing fuel cost, electricity tax and other levies, cost imposed on the system due to supplies to farmers and poor households at subsidised price (call it cross-subsidy), large-scale theft and so on. All of this result in exorbitant charges from industries.
The businesses also face a high cost of transportation and logistics thanks to high rail freight on movement of goods having to subsidise low fare on passenger traffic, high cost of movement by road due to escalating diesel price and high toll tax charged by concessionaires on highways (courtesy, inflated capital expenses on building roads and high cost of land acquisition). Wherever exports and imports are involved, high port handling charges add to the cost. Finally, they have to pay high interest rate on both long-term and short-term funds borrowed from banks, non-bank finance companies (NBFCs) and other financial institutions (FIs). Though interest rates are deregulated and the Reserve Bank of India (RBI) also keeps prodding banks/FIs to lower the lending rate (in the last 18 months or so, it has reduced the policy rate i.e. the interest rate it charges on money lent to banks, by 2.5 per cent to help them), borrowers have not got much relief thanks to the high non-performing assets (NPAs) of banks.
Most enterprises are hamstrung by these external factors, which many a time offset the inherent competitive advantage of firms by virtue of being strong on the internal front. Ideally, the Government should focus on removing these external bottlenecks. If the costs of fuel, transport, power, interest rate and so on are brought down from their present high to a reasonable level, this will automatically sharpen the competitive edge of Indian firms and move us closer to the goal of making India a manufacturing hub.
Instead, the Government is moving in a direction that does not augur well for its “Make in India” mission. It is increasing customs duties (during 2014-2019, it raised import duty on 3,500 items; electronic items, especially mobile phones and automobiles attract high levies), raising non-tariff barriers e.g. requiring dairy and poultry products to meet certain specifications, controls on the price of medical equipment viz. stents, knee implants and so on and now even implementing a licence regime for certain imports (import of TV sets).
In certain sectors, such as agrochemical, it is micro-managing things to a point of barring import of certain products for which indigenous facilities exist. Import of fertilisers such as urea is permitted only on residual basis i.e. only to the extent that domestic production fails to meet the demand. Moreover, only agencies authorised by the Centre such as the State Trading Corporation (STC), Minerals and Metals Trading Corporation (MMTC) can import it. With this overly-protectionist mindset, on November 4, 2019, Modi announced India’s decision not to join the Regional Comprehensive Economic Partnership (RCEP), a conglomeration of 10 members of the Association of South East Asian Nations (ASEAN) viz. Malaysia, Indonesia, Thailand, Vietnam, Singapore, the Philippines, Myanmar, Brunei, Laos and Cambodia plus six others like Australia, New Zealand, Japan, South Korea, China (besides India) covering 50 per cent of the global population and nearly 40 per cent of the world GDP.
From the same prism, it is reviewing existing Free Trade Agreements (FTAs) with ASEAN and its member countries. This approach has stymied chances of India signing a limited deal with the US (this is largely about goods and market access), forget concluding a comprehensive FTA, which also covers intellectual property rights (IPRs), investment and services, issues related to visas and manpower movement. For the same reason, talks for the FTA with European Union (EU) countries are not progressing at the desired pace.
The logic behind the Government’s current policy actions is an underlying belief that our domestic market should be reserved exclusively for “Made in India” products. Using the same argument, what if other countries also decide to reserve their local market for indigenously-made products? In that scenario, our exports are bound to take a hit; the goal of doubling Indian exports to $1 trillion will look like daydreaming. India can’t have the cake and eat it too. A scenario in which our products have uninhibited entry into the market of other countries (needed for scaling up exports) even as the products made in those countries face entry barriers on the Indian turf is neither practical nor sustainable. The Government should shed its current protectionist policy stance. Instead, it should go for an open trade policy by slashing import duties and eliminating non-tariff barriers. It should sign FTAs with groups such as RCEP, EU and so on as also with individual countries. As for perceived threats, there is ample scope for improving the competitiveness of India made products by addressing key bottlenecks under the “external factor” category — as brought out above.
(The writer is a New Delhi-based policy analyst)
Is the information society selling a justifiable hope for liberation and empowerment to the marginalised in post-truth India?
Information and Communication Technologies (ICTs) are providing an enormous platform to re-arrange societal contours, by abandoning the primitive, time and space-driven edifices of epistemology to develop some new sets of normative standards, for citizens in the information age. Citizenship assumes geography, which is later underlined as a nation-State. This understanding, however, becomes inept in times of a new digital citizenship under the sovereign ruling of ICT. This has paved the way for the subaltern’s voice. For ages, socially-acceptable and prestigious spaces/institutions were devoid of subordinate voices. Digital social media platforms via the internet have considerably enabled them to mature a first-hand collective consciousness to authorise a distinctive, shared philosophy (through Facebook, WhatApps, Twitter and so on) deeply interwoven in democratic traditions.
Digital windows have arguably helped diverse online communities to materialise their life-world experiences and advance a fresh alternative and corresponding model of living. Information society theorist Manuel Castells recognises the liberating outcomes of ICT. Subalterns are taking epistemic responsibilities in socio-technical processes of the information society, conditioned on epistemic justification to rectify injustice done to them.
ICT and empowerment: Subalterns have utilised digital platforms more suitably to reveal their experiences, ideas, concerns and aspirations and explore unsung heroes, weave stories and preserve oral traditions. These include their life experiences, cultures, traditions, beliefs, languages and ethics, despite the anxieties from the existing dominating political entities. Information technology enabled subalterns with the required information, without much obstruction, to get closer to the pursuit of truth and justice. Information/knowledge systems of a large section of the Indian population possibly would have been isolated by the mainstream content drivers to sustain dominant conceptual accounts and discourses/narratives. Meanwhile, cyberspace is offering sizeable avenues to freely communicate with local and globalised communities.
The rise of multiple online news outlets, individual content providers and senior journalists devoted to maintaining the integrity of their profession, and their incessantly digitally-widening audience, attests to the fact that subalterns and ordinary citizens receive more reliable information from them than from mainstream news outlets. In the present scenario, formal education is less required to produce creative content. On the contrary, industrial society is engrossed in ownership of talent. The information age does not need a bulky investment of academicians for information; rather it independently cultivates a new digital forum. It is also not purely social-capital caste driven. In this way, the creator of information will enhance balance in society. The embryonic subaltern epistemology adheres to different ideas and figures, which might be in stark contrast to some widely-considered knowledge structures. This will actually induce those, who remained at the helm of social and political affairs/narratives, to incorporate burgeoning criticism and demands of subordinates to enable the substantial democratisation of ICT.
Subaltern news outlets: Subaltern presence is notable in online news portals, though not adequately enough. Some channels like Dalit Dastak, National Dastak, Bahujan TV, National India News, The Shudra and Dalit Camera: Through UnTouchable Eyes have started generating content. They have subscribers/viewers in millions from various social groups. Notably, subalterns have utilised digital media to constructively choose relevant, valuable and meaningful information, more than ever to educate themselves.
ICT and subaltern causes: With collective struggle, subalterns are reaching at the centre of democratic knowledge production and content generation, challenging the discriminatory and hegemonic patterns of the State. The April 2, 2018 mobilisation of Dalits and Adivasis across the country, against the dilution of the provisions of the SCs/STs (Prevention of Atrocities) Act, is a unique testament to a better and purposeful utilisation of internet technology by subalterns in India to assert their rights. Leaders became irrelevant and, despite that, it could become the largest unprecedented movement of this scale, in recent years, by subalterns.
Why is information society more liberating to subalterns? In agricultural societies, they could not acquire the land. On the contrary, in the information society, they could secure key positions from content generators to content managers and owners. However, the lack of financial resources limits them from projecting their accounts as general mainstream opinions. At the epistemological front, they have had considerable accomplishments by acquiring digital space but do not possess materialistic resources to take the ownership of big mainstream media. The information society, further, has been converted into a revered room that furnishes more substance of respect and dignity to an ordinary subaltern. Fundamentally, the information society is based on ideals of inclusivity, mutual collaboration, open and free access to reliable data. The subaltern people’s reliance is diminishing on mainstream news channels. This will further translate into the development of community-owned and driven online media outlets, leading to active involvement and participation of outcasts and subordinates. More so to democratise the media space in the information society.
Subaltern hyper self: In an information society, people use the new social channels (Facebook, WhatsApp, Twitter, Instagram, YouTube and so on) to self-broadcast (uploading pictures and locations), reveal preferences (likes and dislikes), and share personal information (relationship status). This way they are developing informational selves, covering various aspects of human life.
Anonymous social identities and the idea of self could be reformulated on a digital platform to generate meaning and accomplish freedom of speech in society. Thai philosopher Soraj Hongladarom in his seminal work, The Online Self, maintains “viewing the self as made up of information makes it easier to account for the self in the online world.” The online self allows this unique opportunity, to conceal and change your identity to put your message across. The physical self, which is socially neglected, might form a new online identity (or social self) to legitimise itself socially, without revealing the original identity. The new online structure changes the forms of earlier social structures.
Futurist Jason Ohler argues, “Our ability to hide our real life identities by using obscure user presences — from chat room names to avatars who look nothing like us — allows us to literally reconceptualise ourselves.” It testifies the departure from the earlier mode of existential self to the digital self, which is attributing more meaning to a digital subaltern self.
Indian and Western digital self: Culturally, individuality is not suppressed largely in the West due to an individualistic understanding of the self, rooted in the Cartesian self. In India, desires, fantasies and aspirations are peculiarly anchored by external factors other than an individual. People will, therefore, often go and create digital selves and put fake/distorted/misinformation about their identities to cherish what they always wanted to be without revealing much about themselves. It has given them more freedom to express, which has resulted in the online social selves dominating the real ones. Sometimes, the social self overpowers the real existential self. In general terms, humans are living in a world of “double social self.” The former springs from physical social space, the latter is caused by ICT and made compulsory due to economic and political compulsions. Novel digital subaltern metaphysics has yet to be thoroughly comprehended in India. It could empirically be concluded that the information society sells a justifiable hope of liberation and empowerment to subalterns in India.
(The writer is Assistant Professor, Department of Philosophy, Indraprastha College for Women, University of Delhi)
Should the Competition Commission take a look at the comings and goings in the retail space?
First, Reliance Retail bought out the retail assets of Kishore Biyani’s Future Group. Now it emerges that the company is offering a 40 per cent stake in its operations to American e-commerce giant Amazon for $20 billion (an estimated Rs 30,000 crore), which will give the retail division of India’s one-time crude-to-chemicals giant a massive opportunity in that dedicated space. Reliance was already a big player, not just in the low-margin grocery retail with Reliance Fresh but in electronics with Reliance Digital apart from holding the India franchise for several major high-street brands such as Hamley’s for toys, Marks & Spencer and several other clothing outlets. With the Future Group purchase, Reliance would have acquired a huge space in most premium malls with Shoppers Stop and Pantaloons. If the Amazon tie-up does go through, it would not only give Amazon an automatic path to its mandatory sourcing requirements in India, it would also give Reliance Retail a leg-up in its weakest areas, warehousing and online sales. It has tried hard but found attempts at integrating its telecom and retail play between Reliance-Jio and Reliance Retail to be quite tepid.
That said, if a deal between Reliance Retail and Amazon happens, this should be a valid case for the Competition Commission of India (CCI) to explore. Nobody is saying that either party has done anything illegal. However, it is contingent upon the CCI to prevent any monopoly in any sector in India. And a monopoly does not only mean that there is one player, it means that there is one “dominant” player and domination can often come with only a one-third share in such a fragmented industry as retail. A dominant player can dictate terms to suppliers and can starve out supplies to rivals as well as prevent them from getting good space in malls and many other practices. This needs the constant supervision of the CCI for whom defending consumer choice should be the ultimate priority and not just defending affordability. Unfortunately, many regulators believe that the latter is more important than the former which has led to the disaster called television news in India as the race for eyeballs has meant targeting the lowest common denominator for news rather than high-quality paid services. In retail, telecom and aviation among other sectors, particularly in the aftermath of the Coronavirus lockdown, as many companies find themselves in a tough spot, the CCI should be a defender of competition, consumer choice and thus, the overall economy.
With a major push to road networks, the vision of development of backward areas like LWE-hit Gadchiroli can become a reality
Inaugurating and laying foundation stones for road projects and bridges is a routine activity for politicians. However, when Union Minister Nitin Gadkari inaugurated and laid foundation stones for various road projects in Gadchiroli district recently, it had a special significance.
Located in the eastern-most corner of Maharashtra, Gadchiroli has seen little development even after 73 years of Independence. Over 90 per cent of the district is a designated forest area and almost 40 per cent of the population is tribal. Inaccessible terrain and infrastructure deficiencies have hindered Government welfare programmes for the masses. Decades on, Naxalism has flourished because it touches the emotional chord of socio-political and economic wrongs. It’s ironical that in the name of revolution, Naxals are collecting money and blocking development and Government funds meant for tribal and rural development remain unspent or fall into the wrong hands.
The lack of connectivity within the State and with other States has turned Gadchiroli into a hotbed of Naxal activities. Along with it, the adjoining districts of Chandrapur, Gondia, Yavatmal, Bhandara and Nanded have also become prone to Naxalism. These districts are situated in the Left Wing Extremism (LWE)-affected belt, stretching across Telangana, Maharashtra, Chhattisgarh and Madhya Pradesh.
Gadchiroli is one of the least developed districts where people live amid extreme violence and abject poverty. Dense forests and large perennial rivers criss-crossing the district have posed a major challenge to connectivity. This, in turn, affects literacy, healthcare and mobility of the people. But things have begun to change now.
In the last six years, the Ministry of Road Transport and Highways (MoRTH) has put development of road networks and enhancement of connectivity in Naxal, tribal and backward areas on the fast track. With the vision of connecting every district with National Highways (NHs) and special emphasis on Naxalism-hit areas, the MoRTH has launched a special programme for LWE affected districts.
In Maharashtra, a LWE scheme connectivity programme of 495 km length was announced with an investment of over Rs 920 crore. This programme comprises development of road networks and bridges on Pranhita, Indravati and Godavari, the major rivers of Gadchiroli. For the first time, the district is seeing infrastructure projects of high magnitude being taken up and completed within a span of five years. Till recently, the NH-63, with a total length of 56 km passing through Sironcha, was the only NH in the district. The network has since been enhanced to 647 km after declaration of four new NHs of 591 km length. In all, MoRTH has approved 44 road projects of 541 km with an outlay of Rs 1,740 crore for Gadchiroli district. The major infrastructure initiatives in Gadchiroli include a 855-metre major bridge across the Pranahita River on the Nizamabad-Jagdalpur Road (NH 63) at a cost of Rs 168 crore. Then there is the 630-metre, high-level bridge across the Indravati River near Patagudam on the Nizamabad-Jagdalpur Road (NH 63) at a cost of Rs 248 crore; a 30-metre bridge near Lankachen on the Bejurpalli-Aheri Road; the improvement of Bejurpalli-Aheri Road (SH 275) between Watra and Moyabinpeta and the improvement of the Garanji-Pustola Road.
These projects were inaugurated on September 6. The bridges across the Pranahita River at the Maharashtra-Telangana border and at Sironcha and the Indravati River at the Maharashtra-Chhattisgarh border near Patagudam ensure seamless inter-State connectivity to the neighbouring States. The NH-930 connects Gadchiroli to Chandrapur district and the work of improving 81 km of this road to two lanes with paved shoulder (2L+PS) standards is in progress at a cost of Rs 646 crore.
Improvement of the 39.76 km-long stretch of the Nagbhid-Armori section of the NH-353D has been completed at cost of Rs 269 crore. This road now connects Gadchiroli district with the city of Nagpur. The NH-353C, connecting Sakoli, Wadsa, Gadchiroli, Chamorshi, Alapalli and Sironcha, links the remotest part of Gadchiroli district with the old NH-6 and in turn provides connectivity with the rest of the country. The Gadchiroli-Asthi section of this road is being improved to 2L+PS standards at a cost of Rs 577 crore. Strengthening other sections of this road has also been taken up. The tribal areas of Alapalli, Hemalkasa, Bhamragarh are now connected through NH-130D. Improvement of this road section has been taken up. Construction of major bridges across Perimelli, Bandia and Paralkota, too, has been taken up at cost of Rs 194 crore. The Wainganga river, which divides Gadchiroli and Chandrapur districts, is one of the important rivers in Maharashtra. Due to the current narrow, low-level bridge, commuters face many difficulties, especially during the monsoon season. To eliminate the hardships of the people, a new 825- metre bridge will be constructed at a cost of Rs 99 crore near Asthi.
Four new major bridges on the Perimilli, Bandiya, Pearikota and Waingagana Rivers and 14 minor bridges will ensure seamless transportation in otherwise inaccessible areas of Gadchiroli. This remarkable progress of infrastructure development is not a small achievement. We must compliment the engineers and contractors who are working hard despite the constant fear of Naxal attacks. In fact, the bridge across River Indravati was completed under very trying and war-like conditions. A police station had to be set up in order to help construct the bridge. It was an excellent manifestation of commitment, political desire and coordination between various Government agencies and the security forces.
With a major push to infrastructure, the vision of development of backward areas like LWE-hit Gadchiroli can become a reality. With an abundance of natural resources like bamboo in the district, Gadchiroli can become a hub for sticks used by incense manufacturers as the import of agarbattis has been banned. More than 100 such units can be set up, which would give employment to the local people. With these initiatives, job creation in Gadchiroli will get a fillip as the Government has a target of providing employment to more than 10,000 youth within the next five years. This would be a fitting tribute of an aspirational district to the concept of Aatmanirbhar Bharat.
(The writer is Advisor, NHAI, under MoRTH, New Delhi)
India, as an industrialising nation, cannot afford to have an engineer with bookish knowledge of an engine without the skill to design it
India went into lockdown mode in March and people in almost all sections of society have been facing socio-economic difficulties since then. The almost insurmountable challenge in front of policymakers has been to balance lives and livelihoods. The uncertainties of the lockdown entwined with health and safety concerns disrupted the market that faced a supply and demand shock. These issues resulted in a historically low Gross Domestic Product (GDP) growth rate of -23.9 per cent in the first quarter of the current financial year, with industrial growth shrinking by 40 per cent. However, it is expected to pick up in the subsequent quarters as stated by the Reserve Bank of India (RBI) and the World Bank. The economic consequences of the pandemic and local lockdowns have been well-discussed and are surfacing in the GDP and industrial production numbers.
However, there is another side of the issue which is quietly creeping up and that is the social consequences arising out of the lack of skill training. Certainly, this social and educational consequence will translate into economic adversity over a period. According to the All India Survey on Higher Education (AISHE), India’s gross enrolment ratio was 27.4 per cent for 2017-18. This is not a great figure as compared to the other developing countries. This is further battered by the possible decline in enrolment this year owing to constrained access to educational institutions and infrastructure for many unprivileged students, particularly in rural India. Given the contagion, the Indian education regime had to shift gear to the online mode. Thanks to the internet that, at least, served an option for continuing education. But the question is: Is this viable on the ground? Will our students contribute to the human capital and participate in the herculean task of reviving the Indian economy? The presence of internet and digital infrastructure along with their significant (about 50 per cent) penetration in the country have come today as a boon for education and for imparting training to aspirants. In this backdrop, the Pradhan Mantri e-Vidya Programme was launched, which unifies all efforts related to digital, online and on-air education. Furthermore, top 100 universities were permitted to start online courses from May 30 without any fresh approval from education regulators. States, such as Karnataka, too, announced policies for online education.
However, there exist certain unprecedented challenges for moving towards online education, which is the need of the hour. It has not only changed the way students from KG to post-graduation learn, but also has significantly altered the methods and materials of teaching for educators and parents. The fundamental constituent to enable online education is digital infrastructure, including high-speed internet and supporting devices (desktop, laptop, tablet or mobile phone). These prerequisites of online education have further expanded the gap between the upper and middle class and urban and rural populations of the country in terms of access to education even after promulgation of the Right to Education.
Education and skill training have always been a two-way communication and feedback process that may not be done in the online mode as effectively as it can be done in classrooms and laboratories. It is difficult to imagine students learning biology, physics and chemistry without actually experimenting in laboratories. It is quite important to differentiate knowledge and skill in this context. Knowledge can be delivered and learned from literature. However, skill-imparting needs experiment and experience that may not be feasible in the online mode of learning.
India, as an industrialising nation, cannot afford to have an engineer with bookish knowledge of a combustion engine without having the skill to design and operate it. Historically, the industry-academia gap has always existed in India. A McKinsey report had flagged the issue, a decade ago, that just a quarter of engineers in India were actually employable. Now, the online education model producing graduates with lack of skills may aggravate the employability issue further. This may lead to a deteriorated human capital and underemployment in the economy due to the fact that a large pool of the present unskilled human capital coming out of the online pedagogy will join the workforce in the future, face employability challenges and take a longer period to be skillful and join the productive workforce of the nation.
Given the necessity of the online education system, at present, we must acknowledge and address these issues, challenges and the consequences associated with it. The lack of digital infrastructure in rural and unprivileged sections has posed implementation challenges on the ground, leading to social inequalities. However, the major worry lies in the outcome of this new regime of online education system in terms of skill and lack of employability of the human capital that will have the great responsibility of putting the Indian economy back on its growth trajectory with equitable development.
It is high time we think about bridging the gap between rural and urban digital infrastructure for online education and imparting employable skills. The National Education Policy (NEP) aims to reform the education system by 2030 in a push towards an Atmanirbhar Bharat. One hopes that the NEP bridges the gap between the industry and the academia in terms of employable skills and gives an equal learning and growth opportunity to all.
(The writer is a Senior Research Scholar, Department of Management Studies, IIS, Bengaluru)
The Centre and States must try to fix all void in GST implementation to achieve buoyancy in tax revenue, thereby obviating the need for continuing with the compensation mechanism
Faced with a dwindling tax revenue since the last financial year of 2019-20, the issue of “full” and “timely” compensation for the shortfall in States’ tax revenue (their own collection plus the amount received as their share in indirect tax collected by the Centre as per the Finance Commission’s devolution formula) vis-à-vis a given benchmark, has been a bone of contention between the Centre and the States. It has acquired gargantuan dimensions during the current year with the Coronavirus pandemic forcing a collapse of businesses, cutting across almost all sectors (barring essential items) and in turn, leading to a steep fall in tax collection of both the Centre and States. During 2020-21, the gap between what can be arranged from a tax pool and compensation requirement of the States is estimated to be Rs 2,35,000 crore (during 2019-20, this was Rs 70,000 crore). The compensation to States is intertwined with the Goods and Services Tax (GST) in vogue since July 1, 2017. The GST Compensation Act, 2017 provides for compensation to the States for five years (2017-18 to 2021-22) for the loss of revenue to be calculated as the difference between their actual collection (including transfer of their share in indirect tax collected by the Centre) and the amount they would have got with annual growth at 14 per cent over the 2015-16 level under the erstwhile dispensation (Central Excise Duty (CED)/service tax/sales tax/Value Added Tax (VAT) plus other local taxes).
To ensure this, the Union Government had also passed an amendment to the GST Compensation Act (2018) to levy a cess on the supply of certain goods and services. The cess is levied on demerit goods (those which fall in the highest tax slab of 28 per cent — other slabs being five per cent, 12 per cent and 18 per cent besides the exempt category) such as automobiles, tobacco, drinks and so on with a proviso to use the proceeds for compensating States. The cess was to remain in force for five years in sync with the Centre’s obligation to compensate States for that period. The rationale behind keeping these arrangements in place for five years was that at the end of this transition i.e. 2021-22, the GST dispensation would have acquired the much-needed “vitality” and “resilience” to yield sufficient resources for the States to meet their budgetary requirements within a prudential limit set under the Fiscal Responsibility and Budget Management Act (FRBM) thereby obviating the need for any extra support beyond 2021-22.
During the first two years, viz. 2017-18/2018-19, collection from the cess was higher than the shortfall in tax revenue faced by States. As a result, there was surplus of about Rs 47,000 crore in the cess pool as on March 31, 2019. This helped the Centre meet the impending challenge during 2019-20 when cess proceeds were only Rs 95,000 crore against compensation requirement of Rs 1,65,000 crore. During the current year, against compensation requirement of Rs 3,00,000 crore, cess proceeds are estimated to be about Rs 65,000 crore leading to a shortfall of Rs 2,35,000 crore. In this backdrop and with the States unwilling to relent on their claim for compensation in full, the Centre is talking of what in legal jargon is termed as force majeure (unexpected circumstances). Put simply, the latter has expressed its inability to pay invoking an event beyond control or what the Finance Minister, Nirmala Sitharaman, has described as an “act of God” (the Coronavirus).
The issue was discussed during a marathon meeting of the GST Council on August 27, 2020. Ruling out a hike in tax rates or the Centre making good the shortfall from either the Consolidated Fund of India (CFI) or borrowing against its balance sheet, Sitharaman presented two options for consideration by the States. Under option one the Centre, in consultation with the Reserve Bank of India (RBI), will provide a special window to the States to borrow Rs 97,000 crore (this is the amount attributable to implementation of the GST, while the rest is apportioned to the pandemic — as informed by the Revenue Secretary, Ajay Bhushan Pandey) at a “reasonable” rate of interest. The loan won’t be treated as debt in the books of the State Governments and will be amortised (both principal and interest) from the cess collection. An additional FRBM limit of 0.5 per cent of State Gross Domestic Product (SGDP) will be allowed.
Under option two, the States will borrow the entire GST compensation gap of Rs 2,35,000 crore (including Covid-19 impact portion) from the market. The collection from the cess will only pay for the principal amount. As regards the borrowing treatment, only an amount up to Rs 97,000 crore won’t be treated as debt. No additional FRBM limit is allowed under this option. The GST Council also decided that the above borrowing arrangement would be for the current fiscal and a review would be done at the beginning of the next financial year. By putting the above options, the Union Government has made four things abundantly clear. One, it is not legally bound to pay the compensation when there is no money in the cess pool; second, it won’t borrow on its balance sheet but is willing to help States raise a loan; third it does not want the tax pool to fully cover the cost of servicing the loan and fourth, the cess on demerit products will continue beyond 2021-22. On option one, it can’t be faulted. The two provisions in law, namely one relating to compensation and the other levy of cess (and collection thereof) have to be viewed in conjunction with each other. In other words, the discharge of the constitutional obligation to compensate States for the loss of revenue would be possible only when there are enough funds available in the cess pool. Since the pool is denuded, the Centre is under no obligation to pay (this position is even confirmed by the Attorney-General). By the same logic, there is no case for it to borrow on its balance sheet and pay to the States.
Even so, going for it will have a catastrophic impact on its budgetary position. Already, the Centre has increased its borrowing programme from the budgeted level of around Rs 8,00,000 crore by 50 per cent to Rs 12,00,000 crore. This does not include Rs 90,000 crore towards additional allocation for MGNREGA and employment schemes for migrant labourers. Now, if it has to borrow Rs 2,35,000 crore to cover deficit in the cess pool, its total borrowings will gallop to Rs 15,25,000 crore or eight per cent of the GDP — more than twice the budgeted 3.5 per cent. Apart from casting a shadow on India’s ability to protect its macro-economic fundamentals and inviting the wrath of rating agencies by way of downgrade, borrowing by the Centre on such a mammoth scale will crowd the market, harden yield and increase the cost of borrowing by States even for their normal borrowing programme (apart from making things difficult for the private sector). In this backdrop, the proposal put forward by Sitharaman to help States raise loans at reasonable rates makes sense. However, disingenuous bureaucrats in the Finance Ministry have designed the borrowing options in a manner so as to make it unviable for the States. Under option one, the loan will be available at low interest rate and there won’t be any burden of servicing on them but this covers only 40 per cent of the shortfall. So, they will be forced to think of option two.
Under this option, States can raise a loan for the full amount of the deficit i.e. Rs 2,35,000 crore but the Centre won’t facilitate this. They will have to borrow from the market at a higher rate. No additional FRBM limits for these borrowings will make them less credible, thereby adding to the cost of raising them. Adding salt to injury, States will have to bear interest cost from their own resources as the cess pool will only pay for the principal amount. The Centre should stop this skullduggery. It makes no sense to make a distinction between a shortfall arising from the GST implementation or the pandemic. Whatever may be the cause, the fact remains, there will be deficit of Rs 2,35,000 crore in the cess pool and all of it needs to be addressed. The States should get to borrow this amount from the “special window” at a low interest rate and the cost of amortising it (principal plus interest) must be funded from the cess pool. The cess on demerit products will have to continue beyond 2021-22 till such time the loan-related liabilities are fully cleared. However, this will require that States refrain from pursuing their demand — made before the 15th Finance Commission — for continuing with compensation for three more years (beyond 2021-22) as that will jeopardise the chances of servicing this loan. Meanwhile, both the Centre and States should endeavour to remove all void in GST implementation to achieve the desired buoyancy in tax revenue, thereby obviating the need for continuing with the compensation mechanism.
(The writer is a New Delhi-based policy analyst)
Bengaluru-based Ather Energy is proving that Indian cos can create world-class electric mobility solutions
Tarun Mehta and Swapnil Jain were ahead of the curve when they founded Ather Energy in 2013. The Bengaluru-based company has created a unique product and service model for electric two-wheelers and will have almost 100 new charging points across the country by the end of the year. With reports emerging that Hero Motocorp, India’s largest conventional two-wheeler company, is looking to up its stake to a majority in the start-up, it has made the news again. While the company has refuted the news, Hero already holds a large stake in Ather. With electric mobility being the flavour of the season, it may not be surprising if the Delhi-based group does eventually contemplate a larger stake as the entire business of mobility shifts to ever-lower emissions, which will create an existential crisis for conventional manufacturers going forward.
Ather’s unique model as well as the fact that it has been creating much of its technology and services in India and not blindly importing products from China is also a showcase that India can create innovation in this space. On this front, even manufacturers like Mahindra and Tata have been making several new products, although large battery-manufacturing facilities are yet to come up in India. The Government, through the public-sector owned Energy Efficiency Services Limited (EESL), has also been leasing ever larger fleets of electric-powered vehicles to replace and supplement the large fleet of official vehicles in the nation’s capital. The company also recently announced that it would lease over 100 Kona electric vehicles from Korean manufacturer Hyundai. All said and done though, this is but a drop in the ocean, with the automotive industry facing a critical challenge as the economy is tanking, taking down demand as well. Will customers look at buying electric vehicles? While there is no doubt the running costs of such vehicles, even for the luxury-brand electric vehicles such as the Mercedes-Benz EQC, are very low (as little as a rupee a kilometre, a tenth of a conventional internal combustion engine) the high initial capital expenditure can put buyers off. Despite the Delhi Government’s initiative to lower such capital expenditure costs, the Central government will have to encourage the manufacture of such vehicles and batteries in India for zero-emission vehicles to really make a mark. India’s initiatives in altering its energy mix to a greater percentage of renewables will also help in the reduction of emissions, but it would not be a bad idea for the powers that be to consider the promotion of strong hybrid technology which would bring in the benefits of lower emissions while keeping capital costs down.
Investing large amounts of money in world-class healthcare facilities will provide thousands of jobs immediately
This is usually that time of the year when many community festival organisers are in a last-minute frenzy for a long and massively busy festive season ahead. People from the western part of the country and increasingly other areas would be busy winding down the Ganpati celebrations, while those in the eastern part of India would be ramping up for Durga Puja. Yet, despite several relaxations given by the Government in successive unlocking orders regarding mobility of people and gathering for religious functions and so on, this will be an extremely muted festive season for India. This means that the V-shaped economic recovery that policymakers have been predicting, if not dictating, may remain an elusive dream for the forthcoming two quarters. The math, even if we overlook the massive crater in the Gross Domestic Product, in the April-June quarter, can be better explained by a few examples.
Last month, I got a call from a traditional drum player (also known as Dhaaki in Bengali) who lives in a remote village in West Bengal. Every year during the Durga Puja he, along with a few of his family members and friends, hop on to a bus traversing a patchy road full of potholes. The bus snakes through some of the lush green fields to reach the nearest railway station were the Dhaaki and his companions board a train to reach Delhi, Mumbai or various destinations around the country outside Bengal. He is not alone; thousands of idol makers, traditional tent decorators, artisans, artistes and so on make this annual pilgrimage to various destinations around India and the globe to perform as backroom talent for the great India festival economy.
They usually return home with a one-time bonus and upgraded skill sets from the glamorous and glittery pilgrimage they undertake. Once back on their turf, they pump back the money earned, leading to increased consumption mirroring the city-dwellers, keeping the overall economic wheels chugging. With the ongoing pandemic still raging across the country and new infections rising daily, the fear of local lockdowns (in the eventuality of a sharp increase in cases) has pushed most patrons of such festivals, along with their bandwagon of large sponsors, to keep all celebrations at bay for next year.
This talk of festivals brings to mind a tall statesman and bipartisan leader that India lost recently, Pranab Mukherjee. The former President of India, known for his long working hours would always go back to his village in another remote part of West Bengal during Durga Puja to perform all the rituals associated with the festival. The little that I have known of the late ex-President and Finance Minister, Mukherjee was not a very religious person. However, this journey to his village during the festive season he undertook without fail. This ensured great infrastructure development of the entire semi-urban or rural pocket to which he belonged. Many politicians and influential corporate leaders seek out the festival season to make a sort of constituency connect, thereby administering small doses of health boosters to the economy.
However, by any stretch of imagination, this year will not be a festive one, and if at all there are any festivities, they will be muted, both due to the need for social distancing and the economic hardships people are facing due to the pandemic. This, in turn, will lead to a massive dark cloud on the fate of lakhs of enterprises, large, medium and small et al and millions of jobs. Now, the big question is, what can the Government do at this stage to push the economy bus back on the high-growth $5 trillion highway? Many top business leaders, industry veterans and policy analysts have suggested a closer synchronisation between actions of the Central Government and the Reserve Bank of India (RBI). Their unified demand is for a sharp bank rate cut by the RBI, thus enabling more money into the system for spending. This, I am told, is being actively considered by the Central Bank.
Second, due to the global slump in exports, travel and the economy, almost the entire nation is increasingly looking at the Government to boost its spending. There is a huge demand for the Government to provide a one-time relief to the middle and lower-middle income group. After all, a set of estimates suggests that nearly 19 million salaried individuals would have lost their jobs or have had to take massive salary cuts, including many from the informal sector.
The Government may look at providing a one-time direct money transfer like an unemployment allowance to these people. Many argue that the first round of nearly Rs 20 lakh crore provided by the Government may just have been more of a “Band aid” applied to a large, deep and developing tumour of economic deceleration. The only solution to save the gasping economy is aim for long-term growth with a sharp eye on the immediate road ahead. The Government needs to get money from around the globe, including sovereign wealth funds and persuade them to invest in roads, highways and maybe even global-standard healthcare facilities. This is because the construction and manufacturing sectors consume a large chunk of the rural workforce and giving these sectors a booster shot will prevent millions from slipping back into abject poverty.
Investing large amounts of money in world-class healthcare facilities will provide thousands of jobs immediately. It will create a potential vaccine and drug research facility for future pandemics. The migration of millions of people from small towns and cities to large metropolitans is also because of the state-of-the-art healthcare facilities available in them. Even during the ongoing health crisis, one of the key challenges being faced is lack of adequate testing and diagnostic facilities in majority parts of the country. If the Government, along with the private sector, puts its mind and might behind developing world-class and affordable diagnostic facilities in every nook and corner of the country and directly links them to already running schemes like Ayushman Bharat, it could be a huge game changer. There could be a parallel construction of neighbourhood healthcare centres with assured availability of good quality doctors and specialists.These spends in public health like Swastha Bharat will create a healthier and stronger India.
(The writer is policy analyst)
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