All Newspaper editorials in one place – February 06, 2024





February 6, 2024

Honour and exception

Choice of past leaders for Bharat Ratnas is in tune with politics of the present


The Bharat Ratna, the highest civilian honour of the country, has been conferred on 50 people since 1954. Bharatiya Janata Party (BJP) leader L.K. Advani and the late socialist leader, Karpoori Thakur, are the newest recipients. The making of national heroes is equally about the recipients as it is about its function as a stimulant of a collective consciousness. It is often the collective that needs heroes to hold itself together. By placing leaders on a higher pedestal, the group seeks to reinforce ideals represented by them. Mr. Advani has been a defining figure of modern Indian history. As he reminisced, he joined the Rashtriya Swayamsevak Sangh at the age of 14. His role in the advancement of the Hindutva ideology has been the biggest by any single leader before Prime Minister Narendra Modi. He has been a mentor to Mr. Modi, with his campaign for a temple in Ayodhya definitively changing the course of Indian politics. The campaign pushed the limits of constitutional order, based on the claim that matters of faith cannot be subject to litigation. As it happens with an extraordinary assertion of popular sovereignty, the Ram Janmabhoomi movement changed the country at several levels; the Supreme Court of India, by 2019, unanimously ruled in favour of the temple that was inaugurated by Mr. Modi on January 22.


Thakur was a central figure in the social justice politics — a euphemism for the demand for better representation of intermediate castes — of Bihar and the larger Hindi belt, who challenged the Congress’s hegemony. He served two terms as the Chief Minister of Bihar in the 1970s. Social justice politics went through phases of self discovery, and scattered into numerous parties over the years. One strand is closely aligned with the BJP. There are social justice groups that are still opposed to it, but the BJP owes its current strength considerably to intermediate castes. That ongoing process is being reinforced by honouring Thakur. In 2015, A.B. Vajpayee, the first Prime Minister from the BJP, and Madan Mohan Malaviya, the founder of the Banaras Hindu University, were conferred the Bharat Ratna. In 2019, Pranab Mukherjee, Bhupendra Kumar Hazarika, and Nanaji Deshmukh were recipients. All these selections are in tune with the politics of the present — and how the history of the Bharat Ratna has always been. All India Anna Dravida Munnetra Kazhagam founder M.G. Ramachandran and B.R. Ambedkar were also conferred the award in the hope that their followers would, in turn, back the party or alliance ruling at the Centre. Mr. Advani and Thakur represent the two legs of BJP politics, namely Hindu consolidation and higher representation for intermediate castes in all fields.






February 6, 2024

First among firsts

The growth of Sinn Fein in Northern Ireland is significant in itself


The rise of the Sinn Fein’s Michelle O’Neill, as the first nationalist First Minister of Northern Ireland, is an indication of how the region’s political landscape is changing. If the Sinn Fein, which began as the political arm of the Irish Republican Army (IRA), was on the fringes for decades, it is now a powerful political force in Northern Ireland (part of the U.K.) and the Republic of Ireland (an independent country and European Union member). In the 2020 elections, the Sinn Fein won the largest share of votes. And in 2022, it emerged as the largest party, with 29% of the vote share, in elections in Northern Ireland, while the pro-U.K. Democratic Unionist Party (DUP) finished second with a 21.3% vote share. According to the 1998 Good Friday agreement, which ended three decades of sectarian violence known as the Troubles, Northern Ireland’s government should include representatives of the largest and second largest political blocs (unionists, who are largely Protestants, as well as republican nationalists, who are mostly Catholics). After the 2022 vote, Northern Ireland saw chaos with the DUP refusing to join hands with the Sinn Fein to form the government, citing its opposition to the Northern Ireland Protocol, which London had agreed on with Brussels to manage post-Brexit trade between the U.K. and the EU. The DUP alleged that the Protocol, which introduced checks on goods being transferred from Britain to the island of Ireland, weakened the union.


In a realistic assessment of the situation, the DUP decided to return to the power-sharing agreement after London agreed to reduce customs checks on the Irish border and spend some £3 billion in Northern Ireland to steady the region’s finances. The Sinn Fein, which campaigned on bread and butter issues and promised to address immediate administrative challenges, is now formidable, and delaying the power-sharing agreement will not weaken the nationalists. For the Sinn Fein, which is still committed to the unification of the two Irelands, taking over the office of the First Minister is historic. Party leader Mary Lou McDonald has said that unification is now “within touching distance”. It need not be so, as a majority of Northern Ireland’s voters still prefer being a part of the U.K. Also, the posts of First Minister and Deputy First Minister (to be held by the DUP) are technically equal. However, the symbolic value of the Sinn Fein leading the government in Northern Ireland and being the largest bloc in the Republic of Ireland amid rising economic and political discontents in the island, especially after Brexit, cannot be understated. After decades of the Troubles followed by political reconciliation, the nationalists are on the ascendant, while the unionists are on the back foot.






February 6, 2024

Payment blocked

Regulatory measures like this one must seek compliance, but should not be excessive


Last week, the Reserve Bank of India announced a series of measures against the Paytm Payments Bank. Under section 35A of the Banking Regulation Act, 1949, the central bank barred the payments bank from accepting any deposits, undertaking credit transactions in customer accounts, wallets, FASTags, and others, after February 29. Action against the payments bank has been taken with the comprehensive system audit report and subsequent validation report of external auditors revealing “persistent non-compliances and continued material supervisory concerns”. Shares of One97 Communications, which runs Paytm services and has a stake of 49 per cent in the payments bank, are down 42.35 per cent over the past five days.


This, however, is not the first time that the payments bank has found itself in the regulatory crosshairs. In March 2022, the RBI had directed the payments bank “to stop onboarding of new customers with immediate effect”. In October last year, the central bank had imposed a Rs 5.39 crore fine on it due to deficiencies in regulatory compliance, including, as reported in this paper, its failure to “identify the beneficial owner in respect of entities” that came on board its platform for providing pay out services, and delaying informing on a “cyber security incident”, among others. Following the central bank’s actions now, with issues over new customers coming on board the platform, and non-compliance with KYC norms among others, sustaining existing financial relations or building new ones is likely to prove challenging for the entity. As per a note by analysts at Macquarie, “the bigger issue is Paytm has not been on the good books of the regulator and going forward, their lending partners also could possibly re-look at the relationships in our view.”


Paytm is one of the largest fintech players in the country. As per the bank’s website, it has over 300 million wallets and 30 million bank accounts. It has around 100 million KYC customers, and is also the largest issuer of FASTags. The central bank’s actions will have an impact on both customers and merchants. On Sunday, the Confederation of All India Traders (CAIT), fearing disruptions, advised small traders, vendors, hawkers, and others, to switch to other payment modes. However, the lack of compliance, the non-adherence to KYC norms despite the issues being repeatedly pointed out, is inexplicable. All entities must ensure compliance with the regulatory architecture. At the same time, the regulatory pushback, while ensuring compliance, must not be excessive. In the past as well, some questions have been raised over interventions in the area of payments such as e-mandates. Actions must be carried out in a transparent manner, acknowledging the implications for millions of users. Considering the rapid expansion of the digital economy, and especially financial transactions, regulatory interventions, while ensuring the stability of the financial system, must take care not to throttle innovation.






February 6, 2024

A collective loss

Akhoondji Masjid demolition raises questions of due process, underscores need to strengthen conservation mechanism


The demolition of the Akhoondji mosque in Mehrauli on January 30 by Delhi Development Authority (DDA) as part of its anti-encroachment drive calls into question, yet again, the nature of due process and the lacunae that exist in cultural conservation. While its precise history remains unknown, the Akhoondji mosque, located in close proximity of the Qutub Minar, a UNESCO World Heritage site, is believed to have been between 600 and 700 years old, built during the reign of Delhi Sultanate’s Razia Sultana, and listed by the Archaeological Survey of India in 1920. The DDA has contended that it has followed due process in compliance with the directions of the Ridge Management Board — the structure’s “encroachment” on Sanjay Van in south Delhi, a city forest the edifice predates by several centuries — is said to legitimise its actions. It is an argument that does not pass muster. The Delhi High Court has sought an explanation on why the structure was razed without notice, directing DDA to maintain status quo on the land until the next hearing on February 12.


This is not the first time that the DDA’s anti-encroachment drive has come under criticism. Last year, its drive to clear unauthorised encroachments on government land housing protected ASI monuments in the villages of Mehrauli and Ladha Sarai had met with a pushback from several quarters. But the present case is particularly disquieting because it points to what a weaponisation of a rightful mandate might do to a significant part of Delhi’s cultural heritage — its Islamic past. It also underscores the need to strengthen the conservation mechanism to address such questions. In a city like Delhi, with its wealth of heritage monuments, demolitions cannot happen in an arbitrary manner. In December last year, the New Delhi Municipal Council had asked for public opinion on a proposal to demolish the 150-year-old Sunehri Bagh Masjid, a Grade-III heritage structure near the Parliament, to ease the movement of traffic. While its fate still hangs in balance, it had, rightfully, initiated a larger conversation around the proposal. The DDA could have followed its example.


Any conversation about Delhi’s history comes to rest on its storied past — the cities on whose foundation the modern metropolis rests, the rise and fall of dynasties that shaped its tryst with power. But Delhi is also a city of survivors, a city that knows how to co-exist cheek by jowl with its mandirs and masjids, jhuggis and highrises, its pasts and its present. Any attempt to change that composite culture, or to shrink it, will be a collective loss.






February 6, 2024

Music to the ears

Golden Gramophones for Shakti and As We Speak are a triumph for world music and its possibilities


When Shakti, the free-spirited Indo-jazz supergroup, came to life over 50 years ago, keeping the concept of improvisation at its heart, many jazz purists were perplexed. Mainly because they didn’t know what to make of the diverse East-meets-West sounds that were the brainchild of tabla exponent Ustad Zakir Hussain and British bassist John McLaughlin. The two had joined forces with violinist L Shankar and ghatam legend Vikku Vinayakram to find a common ground to create world music when the term hadn’t been coined and many would loosely and somewhat disdainfully call it “fusion”.


Shakti was an experiment that took time to make its mark. It slowly opened up a unique world of possibilities in an attempt to invite people to understand cross-cultural music. The music was an expression of each musician’s experience, but with restraint; they always had to accommodate the other. This was more than just music. It was a life lesson. For something to be accepted, it has to stand the test of time. And Shakti has, for more than five decades. On Monday morning, the endeavour got the prestigious Grammy stamp for its Covid album — This Moment – an eight-track album, which is only the band’s second in 50 years.


With founders Hussain and McLaughlin and new members of the band — vocalist Shankar Mahadevan, kanjira player V Selvaganesh and Vinayakram’s son and violinist Ganesh Rajagopalan, Shakti walked away with the Best Global Music Album for their dazzling interplay of sounds. This year, Hussain was at the helm of another world music album — As We Speak — with flautist Rakesh Chaurasia, American banjo virtuoso Béla Fleck and noted bassist Edgar Meyer — which won the Best Global Music Performance for the song Pashto. The quartet also won the award for Best Contemporary Instrumental Album. Hussain’s words on stage, just after Chaurasia touched his feet as a mark of respect, summed it up: “Without love, without music, without harmony, we are nothing.”.






February 6, 2024

Listen To Ladakh

Statehood demands show local angst in a super sensitive area. GOI should offer UT with legislature


Massive weekend protests in Ladakh demanding statehood warrant immediate attention from New Delhi. Having been hived off from erstwhile J&K state in 2019, following nullification of Article 370, Ladakhis now feel robbed of their democratic rights. While J&K became a Union Territory with a legislative assembly, there was also a political promise of restoring statehood for new J&K. Ladakh today is a UT without an assembly.


From joy to resentment | Initially, Ladakh welcomed UT status. There had long been a demand for treating Ladakh separately from J&K. Governance from Srinagar was resented and Ladakhis alleged discrimination in matters of services and representation. However, they now allege bureaucratic rule with Ladakh Autonomous Hill Development Councils under New Delhi’s Lieutenant-Governor.


Four demands | This has led to comparisons with the earlier situation where Ladakh had four members in J&K’s assembly and two in legislative council. Diminished representation now has led to fears that outsiders will decide for Ladakh. There are also concerns the region could see influx of large numbers of migrants. This has brought Muslim-majority Kargil and Buddhist-majority Leh on a common platformto make four demands – statehood, inclusion of Ladakh in Sixth Schedule, job reservation for locals, and a parliamentary seat each for Leh and Kargil.


Environment factor | Add to this Ladakh’s sensitive Himalayan geography. There are fears top-down industrialisation and infra development in the region could lead to environmental disasters. Climate activist Sonam Wangchuk has flagged concerns regarding mining in the glacial ecology.


Sensitive borders | That Ladakh shares borders with both China and Pakistan makes the situation even more delicate. The ongoing military standoff with Chinese PLA in eastern Ladakh and Pakistan’s perpetual goal of fomenting tensions in India’s border areas create a serious security challenge. Tackling the China-Pakistan axis requires smart infra development with local support.


Democracy and security | This is why feelings of dispossession in both J&K and Ladakh pose a security issue. Locals here need to feel empowered through participation in decision-making. Only then can they be a buffer against external disturbances. Elections to J&K assembly must be expedited, followed by restoration of statehood. For Ladakh, a middle path should be a UT with an elected legislature. New Delhi’s security strategy must include adequate democratic representation in Ladakh.





February 6, 2024

Notes On Diffusion

Grammy for fusion band Shakti speaks to not just music’s limitless variations but also its enduring power


Seventies were when music became portable, with cassette players outplaying vinyl. Fast forward many decades later, and music today is all about streaming. In the interim alongside technology, tastes have been transformed. This is why it is extraordinary for a band to have launched then and still be grabbing attention and appreciation. So what does it mean that the Indo-Western fusion band Shakti, originally formed in 1973 by jazz guitarist John McLaughlin, has won a 2024 Grammy for best global music album for This Moment?


Its latest grouping includes McLaughlin (guitar), Zakir Hussain (tabla), Shankar Mahadevan (vocals), Ganesh Rajagopalan (violin) and Selvaganesh Vinayakram (mridangam). This is indicative of the band’s World Music spirit. Fifty years ago its soulful intermingling of Eastern and Western musical traditions was on a pioneering scale. But their Grammy is not a thank you for the past. It says that their passion, innovation, conversations have not dimmed. Haven’t fallen out of fashion. McLaughlin has also gone by the moniker Mahavishnu – a name he adopted as a follower of Sri Chinmoy. According to Hussain, you can hear the veena in his guitar, really hear it.


Age needn’t wither her, nor custom stale her infinite variety, you could say of music too. And these musicians incarnate the ageless creativity that is as transcendent at sunset as at sunrise. This year’s ceremony also saw Joni Mitchell make her Grammy debut at 80. And she chose to perform Both Sides Now: “Well something’s lost, but something’s gained in living every day.” For one thing, Shakti is still bringing diverse cultures and musical traditions together. For another, its long years have only added to the warmth, humanity, and universality it gifts listeners young and old.






February 6, 2024

More Fuel for India’s Tank at This Stage

Capacity addition to oil refining shouldn’t alarm


India is rapidly raising energy consumption from fossil fuels and complementing it with renewables as its economy enters a sustained growth phase. The driving force behind this is the low per-capita energy consumption and expectations that some of its future growth will be driven by manufacturing exports, which essentially constitutes energy demand from the rest of the world. There is historical precedent to both arguments. Most economies have used an all-sources approach to energy use during their growth surge. In India’s case, the energy transition era, when cleaner sources substitute fossil fuels, is some decades away as per-capita energy use climbs up from 15% of that in OECD countries.


Capacity addition to oil refining and thermal power generation should, thus, evoke no special alarm. India has ambitious self-imposed targets for renewables and the fact that these are being outpaced by the growth of fossil fuels consumption is part of the industrialisation playbook. If India has to grow at twice or thrice the rate of developed economies, calls for premature substitution will be misguided and self-harming. Energy substitution will take place only after India’s growth stabilises. This will first have to play out in China where economic growth is slowing down but is still drawing energy from all available sources. India’s current need for reliable and affordable energy is as intense as that of its northern neighbour.


The need will be reinforced as India increases its share of global manufacturing trade. It is already the world’s second-biggest exporter of refined petroleum, and some of the capacity it is setting up is meant for rising international demand. It will also need more coal-based electricity to make domestic manufacturing competitive. The capacity coming on stream is similarly geared for an export push. At some point, India will draw attention as the world’s biggest polluter. There is no way to avoid the label if living standards are to be improved rapidly.






February 6, 2024

Test Fail, India, Get Diagnostics Right


Last week, a preliminary inquiry into a fake medical test case across Delhi’s mohalla clinics uncovered at least 65,000 tests being ‘fake or manipulated’. Many patients ‘registered’ in the system had never visited the clinic or underwent diagnostic tests. While the Delhi government has promised action against errant officers, this is a worrying development and questions the integrity of the sample testing done under the programme.


Diagnostic tests play a crucial role in disease surveillance, aiding doctors in providing optimal treatment options. They represent a key component of the National Health Mission, emphasising the need for a trustworthy system. India’s diagnostic services market, as per Polaris Market Research, stood at $16.23 billion in 2023, and is projected to reach $43.57 billion by FY32. Despite the healthy forecast, the sector faces challenges, including a shortage of skilled personnel and lax regulations, leading to the proliferation of unaccredited centres.


The future of medicine pivots on early diagnosis and targeted treatments. So, the next-gen lab will leverage the potential of AI and ML and prioritise personalised services, an expanding HNI-focused sector in India. They will integrate medical imaging with lab medicine and genomics, enabling the prediction of genetic predispositions to diseases such as cancer, heart disease and neurodegenerative conditions through genomic analysis. This will usher in an era of predictive medicine, enhancing patients’ quality of life. The future lab report would be a personal go-to guide for behavioural change rather than a data dump. To achieve this transformation, stakeholders must shift their focus and investment to training people, robust processes and advanced products.




February 6, 2024

Staying the course

Rail Budget’s capex should deliver results later


The ‘interim’ Budget of the Railways, like the just-presented Budget, also marks an occasion to assess the decadal journey of the Railways — in terms of its financial health in particular. There can be no denying the recent efforts to improve the infrastructure of the Railways, with the gross budgetary support for the behemoth, used for capital expenditure, rising from below ₹30,000 crore in FY15 to about nine times that sum.


Still more remarkable is the sharp drop in reliance on borrowings, which accounted for 60 per cent of the GBS for the Railways till as recently in FY22 but has fallen to 7 per cent this fiscal and projected at about 4 per cent in FY25. Of a sum of over ₹2.5-lakh crore set aside for capex next fiscal, just ₹10,000 crore will be driven by borrowings. This will keep down interest costs of the Railways in the future. The present infrastructure push could yield returns after some years, as it is to be noted that the sharp increase in this respect took place only from FY19, when GBS was a fifth of current levels. Yet, it is a trifle disappointing that freight revenues in FY24 were just 4.3 per cent over FY23 actuals, as against the projected increase of 10.4 per cent. It is counter-intuitive that freight growth should be less than the growth of the economy. The outlays in recent years have gone towards new lines, track renewals and rolling stock. The government has rightly envisaged raising the inter-modal transport share of the Railways in carrying freight from 27 per cent to 45 per cent by 2030, by weaning away freight from energy-inefficient road transport which is estimated to carry 71 per cent of freight in India.


The interim Budget spells out an operating ratio of 98.65 for this fiscal and a projection of 98.22 in FY25. The Railways must meet its operational expenses — notwithstanding its sunk costs as well as the spin-offs it generates for other sectors. While the reduced reliance on borrowings will curtail operational costs, the absence of a long-term bond market to raise funds viably should also be looked into. There should be some periodic appraisal of whether the money invested is being well spent, as it accounts for nearly a quarter of the Centre’s infrastructure outlay.


Capex outlay must also improve passenger experience. The installation of the anti-collision equipment, Kavach, has been proceeding slowly. Railway Minister Ashwini Vaishnaw recently said in Parliament that only 40 per cent of the Budgetary allocation of ₹800 crore for FY24 had been spent. Kavach has been deployed in 1,465 km and 139 locomotives, against a rail network of about 70,000 km. Even as the cost of installing kavach is about ₹1.2 crore per km, it should be installed in at least half the route length. A preventive approach to accidents could take precedence over transforming old coaches. Passenger comfort too should be given more attention. These steps will make rail travel hold its own against road and air.






February 6, 2024

Bilateral agreements

India must align its treaties with best global practices


Union Finance Minister Nirmala Sitharaman’s Interim Budget statement that the government was negotiating bilateral investment treaties (BITs) with several countries should be good news at a time when foreign direct investment (FDI) has been slowing. By setting out a reciprocal framework of investment rules, including the settlement of arbitration disputes, BITs protect the rights of both inbound and outbound investors. Ms Sitharaman went on to explain that the BITs were being negotiated in the spirit of “first develop India”, an alternative expansion of FDI. Experience suggests that this stance as a negotiating position could be a serious sticking point, since mutual benefits are implicit in all BITs. Indeed, the fact that India has been able to sign few significant BITs since it unilaterally cancelled 77 of its 84 treaties from 2015 onwards and came up with a “Model BITs” framework points to the deficiencies in approach.


The Model BITs framework was a response to a slew of unfavourable arbitration rulings — including Vodafone, Cairn, and Devas — with damages running into millions of dollars. The unusual aspect was that India declined to accept some of the adverse verdicts, resulting in at least two companies, Devas and Cairn, moving to seize the overseas assets of Air India (then government-owned) to give effect to the awards. Rather than focusing on policies to make the investment environment conducive and predictable, the Model BITs framework appeared to draw the opposite lesson. It focused on buttressing sovereign interest. Among its key measures are the requirement that foreign investors must pursue local remedies for at least five years before going for arbitration against India; the exclusion of any taxation measures imposed by India; and an exclusion of the Most Favoured Nation (MFN) clause.


Three aspects of various moves on the BIT front show that the gains for India have been negative. First, all existing BITs have sunset clauses, which give investors the right to invoke the treaties for 10 to 15 years after the treaty lapses. This leaves the Indian government vulnerable to further action by investors under the revoked BITs. Second, the absence of BITs with significant countries impacts Indian investors seeking opportunities abroad, such as the Tata group’s $5 billion electric car battery factory in the UK. Third, given the glacial pace at which the Indian justice system moves, it is no surprise that the country signed only four BITs in the past nine years, though it is negotiating with 37 others. Of the four agreements — with Brazil, Kyrgyzstan, Taiwan, and Belarus — the first two are not yet in force.


In 2021, the Standing Committee on External Affairs noted: “The number of BITs/Investment Agreements signed post-2015 and the number under negotiations is inadequate [and] not commensurate with the growth of India’s interest in this domain and [her] rising stature in global affairs.” Among other things, the committee suggested that the Model BIT adopt best global practices by advanced countries, including developing an international arbitration centre. The fact that the BIT being negotiated with the UK is reported to “vary significantly” from the 2015 Model suggests that the government may have understood this weakness. India would do well to adopt a more flexible position that will enhance investor confidence and invite significantly higher levels of foreign investment over time.






February 6, 2024

Status update

Meta has real world problems


On February 4, 2004, a little website was set up by a group of friends at Harvard University. Its premise was simple: Students at the university could create a brief and basic profile and upload their photographs. They could then message one another publicly (on a “wall”) or privately. Within a few years, Facebook became a globe-spanning social network; and, another few years later, it turned capable of shaking governments and distorting election campaigns. Twenty years on, from the first profile photograph being uploaded to what was then “”, Facebook has become “Meta”, with a stable of products that includes WhatsApp and Instagram. Extraordinarily, it had never returned money to its shareholders through a dividend; but last week it, for the first time, authorised a payment of 50 cents per share to its investors. This came alongside news that revenue in the fourth quarter of 2023 rose by 25 per cent, to over $40 billion, tripling its net income to $14 billion. At the end of 2023, it was sitting on over $65 billion of cash.


Facebook, in other words, has reached the age of maturity. It is no longer exciting and new; it is not where new social media narratives are created or stars are born. But it certainly remains the basic underpinning of much social media narrative management by politicians, by companies, and by extremists of all stripes. A network built for the hothouse environment of an Ivy League university has struggled, over the past decade in particular, to manage the real world. Shortly before his company announced its unexpectedly positive results, Meta Chief Executive Officer Mark Zuckerberg had to face a grilling — his eighth — from politicians in his own country, the United States. The highlight was certainly his awkward apology to parents who had lost their children to sexual exploitation or bullying through social media. In Facebook’s decades-long march to maturity, it appears quite clear that many individual casualties have been left by the wayside.


Later this year, the United States will endure a presidential election that is likely to be a festival of misinformation. Since at least 2016 — the year of the Brexit referendum and of Donald Trump’s first presidential campaign — it has been obvious that all social media, but perhaps particularly Facebook, is dangerously amenable to manipulation. And that such manipulation is capable of altering the path of history. But Big Tech’s response to this knowledge has been oddly weak. Some platforms like Twitter — now known as “X” — seem to have essentially embraced revenue-generating possibilities of misinformation, with its new owner firing practically the entire content moderation team and ending the system of reliable, verified accounts. Others, like Facebook, retain moderation teams — but have visibly understaffed those teams that deal with vernacular languages or foreign countries, often places where Facebook is also by far the most influential news source. The retail damage that social media can do, meanwhile, is visible also on Instagram, which, some fear, is sparking a mental health crisis among young people; and on WhatsApp, which has become a fake news force multiplier. Meta is today a successful, cash-rich company — but one with few friends in politics or regulation. Its next 20 years may be even more eventful.





February 6, 2024

Who drives growth?

Budget still gives a window for pvt investors to pull up their socks


After the interim Budget last week, the headlines talked about a moderation in the Centre’s budgetary capital expenditure from FY24 to FY25, and the limits being approached by it in sustaining the (high) growth in taxpayer-driven public investments. However, “public capex” is not merely the spending on asset creation via the Centre’s Budget. It also includes spending by public sector undertakings out of their profits and loans contracted, and capital expenditure via state Budgets, from the resources other than those received by them from the Centre or already counted in the latter’s capex. An analysis of such “public capex” would show that both these perceptions—that government investments grew at an unprecedented pace after the pandemic and that it has now been curbed substantially for the next fiscal—are less real and more optics.


The Centre’s Budget spending on asset creation had been less than the central PSEs’ or states’ capex until the pandemic altered the composition in favour of the Centre. Capital expenditure by states, CPSEs and the Centre was roughly in the 5.5:5:3.5 ratio until the shift occurred. To be sure, in the aggregate sum of Centre-CPSE capex, the CPSEs had a share of 55.2% in FY20, but it declined sharply to 20.4% in FY24 (RE) and is projected to fall further to just 18.4% in FY25. States, which stepped up welfare spend during the pandemic, cut back on their capex, forcing the Centre to raise its borrowings and extend long-term soft capex loans to them, partially offsetting the decline in their share in gross tax revenue on account of the spike in central cesses. Though the states paused to generate the capacity to spend the loan monies from the Centre, a chunk of which is reforms-linked, the process has got much faster in the current fiscal, and may gather more momentum in FY25.


As such, as noted by Crisil, if revenue grants to states for creation of capital assets are included, the annual growth of Centre’s Budget capex while moderating from 21.5% (FY24RE) to 17.7% (FY25BE), would still creep up as fraction of GDP from 4.3% to 4.6%. Including CPSE capex, the growth is from 5.4% of the GDP in FY24RE to 5.6% in FY25BE. In FY17-FY20, this mix was 5.7% of GDP. So, what is afoot now is a gradual correction of the public capex composition, after the Centre sharply raised its share in it, rather than its slowing. Overall public capex pace, contrary to the dominant narrative, hasn’t risen above trend either. The sharp rise in investment rate from 31.1% in FY21 to 34.9% in FY24 (advance estimate) is driven by a quickening of investment pace by the states and the CPSEs, besides the accumulation caused by consistently solid Budget spend by the Centre.


Credit offtake by corporate India has improved in recent months, and a few sectors are witnessing fresh investments. The government’s support to private investors includes fiscal consolidation, PLI and viability gap funding for green energy and affordable housing. However, as L&T CFO R Shankar Raman told this newspaper, private companies don’t invest to get subsidies, but to earn returns, and it’s finally the demand scenario that would matter. The past year saw a spurt in both the government’s and private companies’ interest burden on account of external debt, and investors may wait for lower interest rates too. What the Budget envisages is a prudent trade-off—short-term marginal compromise on growth, for long-term macroeconomic soundness. In the process, it still leaves a window for the private sector to design their investment plans.


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