Editorials of all Newspapers February 09, 2024

All Newspaper editorials in one place – February 09, 2024

THE HINDU – Towards uniformity
THE HINDU – Prosecuting Trump
THE INDIAN EXPRESS – Grand bargain 2.0
THE INDIAN EXPRESS – Holding the line
THE INDIAN EXPRESS – Connect, disconnect
THE TIMES OF INDIA – Disrupt, Play By Rules
THE TIMES OF INDIA – Putin It Simply
THE ECONOMIC TIMES – Nadella Nugget: Hook India to Yippee-AI
THE ECONOMIC TIMES – Demo Dividend Only When Cheating Stops
THE HINDU BUSINESSLINE – Hawkish still
BUSINESS STANDARD – An extended pause
BUSINESS STANDARD – Equal rights
FINANCIAL EXPRESS – Time for a reset

THE HINDU

February 9, 2024

Towards uniformity

The concept of justice is paramount; uniformity is an offshoot of equality

A Uniform Civil Code (UCC) is a desirable and progressive goal for a secular country. However, mere uniformity without making reasonable allowances for diverse cultural and social practices among different social groups may not be ideal. The UCC adopted by the Uttarakhand Assembly aims to consolidate the laws relating to marriage, divorce and succession among all communities. The State has become the first since pre-Independence Goa to adopt a uniform code for civil matters. What is particularly violative of the Constitution is the bizarre portion in this UCC aiming to formalise live-in relationships through registration. This unwanted incursion into citizens’ personal life is worsened by the prescription of a three-month prison term for non-registration. It will expose citizens to intrusive inquiries, social hostility and pointless deprivation of liberty. While it contains positive features such as conferring legitimacy on children born of live-in relations and mandating maintenance in the event of desertion, the very idea that people living together should submit themselves to registration and verification is repugnant to individual rights.

When the Constitution makers made the adoption of a UCC one of the directive principles, opinion was divided on whether a UCC will undermine minority rights or promote equal status for women in all religions. B.R. Ambedkar felt the UCC, if enacted, should be voluntary in the initial stages. The previous Law Commission had said a UCC is neither desirable nor necessary, and, instead, suggested that each body of personal law be reformed to eliminate discrimination or regressive practices. However, the present Law Commission has revived the idea and has started gathering views from the public. Much of the Uttarakhand Code seems to have been borrowed from existing laws on marriage and succession, but with significant omissions. For instance, the Code is the only avenue for dissolving a marriage and there is no waiting period to remarry after a divorce; nor is there any need for a woman to marry another person before she can re-marry her former husband. These provisions, which eliminate the concepts of iddat, talaq and nikah halala, are all progressive and further individual rights. Interestingly, it preserves the existing provision allowing custom and usage as an exception to the bar on marriage within prohibited degrees of relationship, but adds a rider that such custom cannot be against public policy or morality. An unfortunate fallout of all this is a polarising discourse taking shape in the run-up to the general election. The concept of justice should not be lost in the search for uniformity, which should be no more than an incidental consequence of equality.

THE HINDU

February 9, 2024

Prosecuting Trump

Whether he wins or loses, his politics will shape the U.S.

The U.S. Court of Appeals for the District of Columbia Circuit has ruled that former U.S. President Donald Trump does not enjoy immunity from prosecution for crimes that he might have committed during his term in office, in the context of charges against him relating to undermining the constitutional democracy of the country. The ruling by the court’s federal appeals panel implies that Mr. Trump can be tried in the case against him relating to a conspiracy to overturn the results of the 2020 presidential election, in which he faces four counts including conspiring to defraud the U.S. and to obstruct an official proceeding. However, because a month has passed since the time that the court heard arguments on immunity and issued the latest ruling, a high-pressure situation has emerged in terms of scheduling and carrying out the conspiracy trial before the date of this year’s election, November 5. The prosecuting team, led by Special Counsel Jack Smith, is concerned that if Mr. Trump appeals the immunity decision and uses other stalling tactics in the conspiracy case, the trial might extend past the election date. In such a scenario, there might be a real risk that should Mr. Trump win the presidency again, he could use his position as a sitting president to either get the case against himself dismissed or potentially issue a self-pardon.

While the Circuit Court has given Mr. Trump until February 12 to appeal its decision in the U.S. Supreme Court, it is unclear whether the Supreme Court justices will take on such a highly charged political case as the present one. Even if they do, it might well be weeks or months before a decision is made. Already, the Supreme Court is set to hear arguments on whether, under the Constitution’s 14th Amendment, Mr. Trump’s name can be deleted from State ballots — as States such as Colorado have sought to do — under its “insurrection clause”. The bottom line is this: Mr. Trump will continue battling legal cases throughout this lopsided election season and will potentially continue doing so after the election too. What remains to be seen is whether his legal battles affect his reputation among voters, positively or negatively. In the former case, the scenario of a convicted President, even one who governs from prison, cannot be ruled out under the U.S. Constitution. If the cases diminish his overall popularity and he falls short of securing the presidency, his political career may be at an end, but Trumpism as a movement reflecting broad voter frustration with the policies and values of traditional Republican and Democratic politics will continue to shape the destiny of the United States.

THE INDIAN EXPRESS

February 9, 2024

Grand bargain 2.0

Protests by Karnataka and Kerala are driven by politics — they also point to concerns of fiscal federalism that need addressing

One state’s chief minister hit the national capital’s streets, along with his cabinet colleagues, against the Centre’s alleged discrimination in devolution of tax revenues and non-release of drought relief funds. Another state’s CM followed suit, having already moved the Supreme Court against the Centre imposing limits on its borrowing powers. The fact that both of them, Karnataka and Kerala, are Opposition-ruled and the timing of the protests, ahead of Lok Sabha elections, may make these seem purely political in nature. Nor have these states’ own fiscally irresponsible actions helped. The ruling Congress in Karnataka should have thought twice before announcing its five assembly poll “guarantee” schemes, which are costing the state exchequer an additional Rs 52,000 crore per year. The Kerala government has, likewise, sought to circumvent its normal net borrowing ceiling, of 3 per cent of GDP fixed by the Centre, by resorting to off-budget loans raised by two state-owned entities.

The political motivations notwithstanding, there are genuine concerns with regard to both the letter and spirit of fiscal federalism that need addressing. To start with, the Centre accounts for more than 60 per cent of the gross tax revenues collected together with the states. On the other hand, the states have well over a 60 per cent share when it comes to total government spending. The disparity between revenue generation capacities and expenditure responsibilities imparts an inherent vertical fiscal imbalance. That imbalance would only have widened with the implementation of the goods and services tax (GST), which has replaced the value added tax and a host of other levies that were major sources of revenue for the states earlier. But the states accepted the apparent loss of fiscal sovereignty through a grand bargain that was a result of consensus building and addressing apprehensions of revenue loss, if any, from the new nationwide non-cascading indirect tax regime. The high point was the setting up of the GST Council, comprising the finance ministers of the Centre and all states, to decide on tax rates, exemptions and any regulatory changes.

A similar compact is required today in matters of tax devolution and other resource transfers, both vertical (Centre to states) and horizontal (among states). Karnataka, for instance, is justified in asking why its share in the divisible tax pool was reduced from 4.713 to 3.647 per cent between the 14th and 15th Finance Commission awards. The next commission should frame clear and transparent rules for distribution of the Centre’s tax proceeds and grants-in aid. As part of a Grand Bargain 2.0, the Centre must desist from levying non-sharable cesses and surcharges on taxes, just as states should be made to strictly adhere to deficit targets and borrowing limits.

THE INDIAN EXPRESS

February 9, 2024

Holding the line

RBI keeps interest rates unchanged. If inflation evolves along expected lines, it could open up space for rate cuts

In line with expectations, the Monetary Policy Committee of the Reserve Bank of India voted in its February meeting to keep interest rates unchanged. The repo rate stands at 6.5 per cent. The committee also decided to remain focused on the withdrawal of accommodation. In his policy statement, RBI Governor Shaktikanta Das noted that “the job is not yet finished” and that policy must “continue to be actively disinflationary to align inflation to the target of 4 per cent on a durable basis”.

In December, retail inflation, as measured by the consumer price index, had edged upwards to 5.69 per cent, up from 5.55 per cent the month before. However, this rise in inflation, driven by rising food prices, was not unexpected. On the other hand, core inflation, which excludes the more volatile food and fuel components, had dipped lower to 3.8 per cent in December. The central bank now expects inflation to trend lower to 5 per cent in the fourth quarter (January-March). For the next financial year (2024-25), assuming a normal monsoon, it expects inflation to moderate further to 4.5 per cent. However, the outlook is uncertain. As the RBI also notes, adverse weather events which could impact food prices, and geopolitical tensions and conflicts which could lead to supply chain disruptions, could heavily influence the trajectory of inflation. Governor Das also sounded a note of caution, saying that policy needs to be “vigilant about new supply shocks that may undo the progress made so far.” On growth, the RBI Governor sounds optimistic, expecting the economic momentum to continue in the coming financial year (2024-25) as well. Das points to industrial activity “gaining steam”, while the services sector “is expected to remain resilient”. He sees rural demand continuing to gather pace, even as urban consumption remains strong, with investment activity also “gaining steam” on the back of a sustained push in government spending. Based on these trends, the central bank expects the Indian economy to grow at 7 per cent in 2024-25.

The monetary policy committee’s decisions were, however, not unanimous. MPC member Jayanth Varma disagreed with other members of the committee on both interest rates and the policy stance. Varma, in fact, voted for reducing the repo rate by 25 basis points and for changing the policy stance from remaining focused on the withdrawal of accommodation to neutral. In the past as well, Varma has argued that monetary policy should be less restrictive. However, hostilities in the Red Sea and uncertainty regarding the trajectory of food prices are likely to have an outsized influence in the immediate term. If inflation evolves along expected lines over the coming months, it could open up space for the committee to change its policy stance and cut rates.

THE INDIAN EXPRESS

February 9, 2024

Connect, disconnect

Australia’s new law prevents bosses from emailing and calling workers beyond working hours. It opens up possibilities

The curious thing about words is that they can change the very thing they are supposed to explain. Take “gig worker”. The term conjures up a young millennial, or even an old Gen-Z chap, sitting in an artisanal (read over-priced) coffee shop engaged in a white-collar well-paying semi-creative profession — coding, designing, etc. This creature’s time is her own. Now, take “unorganised sector labourer”. A very different picture comes up — this person is the picture of, and often euphemism for, the exploited. The Closing Loopholes Bill, passed earlier this week by the Australian Parliament, makes it clear that the gig worker, like the labourer, needs protection.

Among the slew of provisions in the Bill, the ones around the right to disconnect and the path to formalisation for gig workers have received the most attention. The former allows workers not to take calls or answer emails on holidays or outside working hours. The logic is simple — being constantly “connected” and “on-call” is, in essence, unpaid overtime. Whether in office or not, work is work. The path to formalisation is a bit more complex. On the one hand, it ensures benefits and long-term security, and on the other, the flexibility that many people now prize may become a more scarce phenomenon. Australia’s proposed law, if and when implemented, will put it in the company of countries in Europe that have allowed the right to disconnect. Beyond the nitty-gritty of the economics of the law, though, is the waning halo around the idea of the gig worker.

Yes, there is a minority, the so-called “digital nomads”, who can use flexible work hours to their advantage. For many, if not most, though, the blurred line between work and non-work has meant the former creeps its way into the latter — without overtime pay. As more countries recognise that gig workers need protection, perhaps the 70-hour work-week will not be considered a virtue. In a disconnected utopia, workers won’t check their emails. Just Instagram.

THE TIMES OF INDIA

February 9, 2024

Disrupt, Play By Rules

Some fintech firms’ argument that RBI action against Paytm bank hurts innovation is plain wrong

RBI yesterday gave more information on its regulatory action against Paytm Payments Bank. It said the root cause of action was the bank’s non-compliance with regulatory norms. The action came only after bilateral talks between the bank and RBI didn’t produce results.

No special dispensation | Digital technology has disrupted the financial sector in a big way. It’s introduced a whole new way of doing business and even traditional banks have been forced to adapt. But one aspect that hasn’t changed, and rightly so, is the need for disruptors to operate within boundaries set by regulators.

Misplaced fears | Regulatory action on Paytm Payments Bank was followed by some fintech firms asking RBI to reconsider its action as it could have a chilling effect on innovation and investment in a fast growing area. That’s a baseless argument. On the contrary, a Wild West environment could undermine investment. RBI’s action was on account of non-compliance. If there’s no deterrent, why should any firm want to follow rules?

Why invoke innovation | Fintech’s fast expansion owes everything to innovation. Lobbying to change a regulator’s decision would make sense if it chokes innovation. That, however, isn’t the case here. Asking for regulatory forbearance using innovation as defence is at best misplaced. Nothing prevents fintech firms from innovating in future. Let’s not mix issues.

Communication is key | Where RBI could have done better is anticipating the fallout among mobile wallet users about the way its regulatory action would be perceived. Umbrella brand names may cover multiple businesses with independent regulatory requirements. It’s unreasonable to expect mobile wallet users to be aware of the distinction between different businesses under a brand name. Anecdotal evidence indicates that regulatory action against the bank had a negative fallout on wallet users.

Complementary roles | To an extent, all countries experience a tussle between regulators whose job it is to examine risks in detail and innovators who race ahead. But that engagement is not inherently adversarial. It’s about different perspectives.

In India, GOI across political formations has provided fintech a big boost through Aadhaar. It’s allowed fintech to take off by carrying out digital verification of data to meet KYC needs. That’s the prime example of complementarity between govt and tech. Fintech firms should innovate – and play by rules.

THE TIMES OF INDIA

February 9, 2024

Putin It Simply

American journo interviews a Russian, other Americans lose it, cancel culture is nuts

A journalist of one country interviewed the big boss of another country, which started a war that’s grinding on two years later. What’s the problem? Guys in news should be interviewed. Yet many Americans got outraged at a politically rightwing journo, Tucker Carlson, who interviewed Putin – even before the interview aired! Cancel culture means different things to different people. But this is its core silliness and danger, to seek to shut down a disliked voice. To try to have it kicked out of common spaces and screens.

Joke poke | “Man, I love being cancelled,” comedian Dave Chappelle has crowed. Because after taking heat for some jokes, his shows made millions. SRK likely did the same after #boycottPathaan proved counter-effective. Munawar Faruqui’s stand-up career is soaring as well, having seemingly made peace with all his legal harassment. But for every such success story there are countless tragedies of employment lost, reputation destroyed, psychological trauma.

Lazy daisy | People need to dust off forgotten lessons in classical liberalism. Healthy coexistence of individualism and diversity needs you to meet speech with speech, instead of shouting, ‘Shut up!’ It’s not only unfair but also lazy that if you don’t like the trailer of a song or movie or book or interview, you jump to asking for it to be banned. How about actually engaging with it? Although be warned, it is quite brain-consuming to build a logical case for one’s disagreement.

Hurt spurt | Hyper intolerant sensitivity is also the worst treatment for social tensions. Consider the way in which speakers are getting cancelled left and right on campuses continents away from Israel-Gaza for their supposed blinkers on this war. ‘You are either with us, or against us.’ There is nothing uglier than pretending that people with different beliefs cannot have a conversation.

THE ECONOMIC TIMES

February 9, 2024

Nadella Nugget: Hook India to Yippee-AI

Harness talent to raise productivity all across

Satya Nadella sees India as a key market for diffusing AI, a view shared by Microsoft’s rivals developing the technology, as well as the Indian infotech industry that has ramped up skilling its 5 million code writers. Nadella’s company intends to provide AI skills to 2 million Indians, as it expects $500 billion of India’s eventual $5 trillion economy will be based on productivity enhancements the technology will facilitate. The premise is that chatbots such as ChatGPT will substantially widen software development — much in the way word processors and spreadsheets brought computing into offices and factories — with even people unskilled in writing code being able to create computer applications. Nadella, who’s visiting India, sees this as Microsoft’s moment and he needs Indian developers to help make AI ubiquitous.

It could be India’s moment, too, if it can harness one of the world’s largest developer communities to raise productivity across the economy. India is on a mission to accelerate the growth in living standards before its demographic dividend dissipates. It has been a mediocre performer in terms of per-capita income among emerging economies. The lure of a transformative technology that can speed up the process will be hard to resist. More so if it risks being left behind as other countries push the boundaries harder in the AI race. Nadella’s suggestion of New Delhi harmonising its AI regulation with Washington in order to smoothen technology transfer carries conviction.

India is yet to embark on regulating AI and has two broad choices available. One, it could, like the EU, centre its rules on protecting consumers. Or, it could, like the US, build a regulatory scaffolding through dialogue with technology creators. The EU approach has faced criticism over not providing adequate encouragement to innovation. And the continent’s contribution to the development of AI bears this out. Given its critical role in technology diffusion, India’s choices in making AI responsible have become even more limited.

THE ECONOMIC TIMES

February 9, 2024

Demo Dividend Only When Cheating Stops

A decade ago, we saw the iconic (sic) photo of an exam centre in Bihar with young men standing on the windowsill of a school building while another set stood outside the campus. The two groups were ‘helping’ students inside ‘crack’ the exam — by cheating. This was hardly an anomaly. Cheating is a bane in India, where competition for university spots and public sector jobs can be fierce. In 2021, Rajasthan was actually forced to shut down the internet to prevent fraud during teacher eligibility exams.

While Assam, Jharkhand, Uttarakhand and Karnataka have passed laws to combat this, India lacks a national statute. On Monday, GoI introduced the Public Examinations (Prevention of Unfair Means) Bill. It seeks to punish those leaking exam papers for school, college or government job applications. Offenders face up to 10 years in jail and a ₹1 crore fine. This is a serious and welcome deterrent. All offences are cognisable, non-bailable and non-compoundable.

The Bill is welcome, and states that don’t have cheating laws must start working towards one. Cheating not only upends the level playing field among candidates but can also lead to wrong kind of recruitment that can seriously affect — and may well have already affected — governance quality and capability. If India is serious about reaping its much-repeated demographic dividend, this gash in the system must be sown. However, along with a law, stakeholders must try to answer what forces candidates to cheat. Answer: an educational/recruitment system that fails to respond to myriad learning needs of students, lack of an alternate structure that can help them skill-up, and a society that puts enormous, irrational importance on marks and degrees. This mindset needs to also change.

THE HINDU BUSINESSLINE

February 9, 2024

Hawkish still

MPC is right in focusing on its inflation mandate

Financial markets have a habit of running ahead of events. Therefore, it was not surprising that the Monetary Policy Committee (MPC) didn’t deliver to expectations of a dovish slant in its latest review. Amid tight fiscal deficit targets set in the Budget and rising bets for US rate cuts, it is good that MPC kept an Arjuna’s eye trained on its inflation control mandate. The December CPI inflation print at 5.7 per cent was far above RBI’s comfort level of 4 per cent.

Inflation continues to be a worry due to fresh global supply chain disruptions at the Red Sea, the troubling domestic reservoir situation and a still active El Nino. Therefore, the decision to keep the repo rate unchanged at 6.5 per cent makes sense. While the global debate has shifted away from runaway inflation to the likely pace of disinflation, the RBI still appears to be wary of this about-turn. In his statement, the Governor noted that the last mile of disinflation tended to be challenging and could be disrupted by food price shocks. The statement also pointed to the considerable volatility in India’s CPI, with its readings swinging between 4.3 per cent and 7.4 per cent in the current fiscal. Emphasising that it would like to see CPI inflation decline to 4 per cent on a ‘durable basis’, the RBI projected inflation for FY25 at 4.5 per cent, with the prints for the four quarters at 5 per cent, 4 per cent, 4.6 per cent and 4.7 per cent.

The central bank also seems to be quite sanguine about the economy doing well without a helping hand from rate cuts. Real GDP growth forecast for FY25 has been revised upwards to 7 per cent, despite a high base. All this suggests that the RBI is not necessarily pencilling in rate cuts in the second half of FY25 as markets expect and will remain data-dependent to make this call. However, it is possible that a sharp decline in market interest rates which is already underway since the Budget, and rate cuts in the Western world, will force its hand on this.

Apart from signals on rate cuts, market participants were expecting the MPC to change its stance on liquidity from ‘withdrawal of accommodation’ to ‘neutral’. Tight liquidity conditions prevailing in the money market have led to banks grappling with high credit-deposit ratios and AAA-rated companies borrowing short-term money at rates approaching 8 per cent. This had led them to hope that the RBI would ease up on liquidity which has been in short supply since September. But the central bank did not oblige on this score, with the Governor making it clear that the policy stance on liquidity has to be in sync with that on rates. But then, if the lack of visibility on rate cuts is negative for banks and borrowers, it is good news for savers and depositors who can hope to enjoy higher returns for some more time, after the privations of the Covid years.

BUSINESS STANDARD

February 9, 2024

An extended pause

More clarity is needed on the Paytm issue

The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI), unsurprisingly, kept the policy repo rate and stance unchanged in the first meeting this calendar year. The policy repo rate thus remains at 6.5 per cent. The rationale for maintaining the status quo is clear. The MPC intends to bring the consumer price index-based inflation rate closer to the legally mandated target of 4 per cent on a durable basis. The rate has been above target for a considerable period. For instance, after moderating to 4.9 per cent in October 2023, it again increased to 5.7 per cent in December. While the core inflation rate came down to a four-year low of 3.8 per cent in December, it’s the volatility in food prices that has kept the headline rate above target.

The MPC expects the headline inflation rate to average 5.4 per cent this financial year. It, however, expects the rate to moderate, on average, to 4.5 per cent in 2024-25, which will be close to the target. The risk to the projection can emerge from at least two sources. The first is, of course, food prices. Although rabi sowing has improved, potential adverse weather shocks and lower reservoir levels could affect output in the near term. Second, the ongoing disruption in the Red Sea area and geopolitical tensions in West Asia could affect supply chains and increase price pressures. Aside from some of these risks, the central bank seems comfortably placed. The cumulative rate increase of 250 basis points in the current cycle is still working through the system, which should help bring down the inflation rate. The RBI is also actively managing liquidity conditions to attain monetary policy goals.

Strong growth in the Indian economy gives the central bank policy space to focus on inflation management. Gross domestic product is expected to grow 7.3 per cent this financial year, and the MPC expects the Indian economy to grow at 7 per cent in 2024-25. The risks on the external account are also muted at this stage. Inflation in advanced economies has come down considerably. While the financial markets are speculating when the US Federal Reserve will start cutting interest rates, the possibility of more rate increases is certainly off the table. Given the expected capital flow, the management of external accounts should not be difficult in the foreseeable future.

In view of the clarity on the monetary policy path, the top management of the RBI did well to answer questions related to Paytm Payments Bank Ltd (PPBL) in the post-policy press conference. The RBI had disallowed PPBL from taking on board new customers because of alleged non-compliance with regulatory requirements in March 2022. It has now also stopped PPBL from taking deposits or other credit transactions in various instruments after February 29. Although there have been reports in the media, not much is still known about the exact nature of compliance issues at PPBL. The top leadership of the RBI explained that the supervisory action had been taken after persistent non-compliance and such actions are taken following comprehensive bilateral engagement with regulated entities. It thus appears that PPBL failed to meet regulatory requirements for a considerable period, forcing the regulator to take action. While the future of PPBL hangs in the balance, the RBI must ensure that customer inconvenience is minimised. Next week the regulator will come out with an FAQ, which should give more clarity on the issue.

BUSINESS STANDARD

February 9, 2024

Equal rights

Uttarakhand’s UCC needed more thought

The state of Uttarakhand has offered an indication of the sort of civil society the Bharatiya Janata Party visualises with the passage of its Uniform Civil Code on Wednesday. The state became the first since Independence to pass a common law on marriage, divorce, property inheritance, and live-in relationships, cutting across religious personal laws (although Scheduled Tribes are exempt). In intent, the new law cannot be faulted in strengthening the rights of women. For instance, it has standardised the minimum marriageable age for women, outlawed divorce and remarriage of divorced spouses through extra-judicial modes (including such practices as nikah halala), prohibited polygamy, and aims to provide equal inheritance rights for both sexes. Its weaknesses lie in confusion over its applicability vis-à-vis national laws that already exist on the subject, such as the Hindu Marriage Act, succession laws, and so on, disregard for the rights of the states’ LGBTQIA+ citizens and, most egregiously, intrusive impositions on live-in relationships.

Leaders of the Muslim community have protested over the precedence of the UCC over personal law and the Hindu community may seek clarity on the concept of coparcenary laws. Under the traditional joint family system this law enables male and female lineal descendants up to the third generation to co-own ancestral property that cannot be sold or willed by any single coparcener. The state’s new law does not distinguish between ancestral or self-acquired property for Hindus and applies the same Western-style succession laws to all the state’s citizens. It also does not mention the concept of the Hindu Undivided Family (HUF), which is treated as a separate entity under the Income Tax Act.

These issues may become clearer once the rules are gazetted. But the provision that is likely to attract serious legal challenges concerns the compulsory registration of live-in relationships (that too, only between a man and woman). Under the new law, live-in couples have to submit a statement to a registrar, who must conduct an enquiry within 30 days, forward the statement to the local police, and inform the parents if the couple concerned are under 21 years. The registrar can decline to register the statement for specified reasons (such as one of the applicants being married or a minor). Failure to submit a statement within a month can attract a fine of up to ~10,000 and/or three months’ imprisonment. The progressive element of this provision is that it seeks to protect women in such relationships against domestic violence and enables a child of live-in partners to inherit property. These provisions exist under federal laws including the Domestic Violence Act, however. This law, then, amounts to unwarranted intrusion into the privacy and liberty of citizens, more so when the Supreme Court has ruled that live-in relationships are neither a crime nor a sin. It has urged Parliament to pass laws to protect such unions. In this respect, it is a pity that Uttarakhand did not draw on Goa’s liberal pre-Independence civil code.

In fact, the criminalisation of various violations is another notable element of this law, contradicting the spirit of the Centre’s recent move to decriminalise legislation. Apart from failure to register live-in relationships, the law criminalises extra-judicial divorce and remarriage with imprisonment, fines, or both. The new law surely needed more thought.

FINANCIAL EXPRESS

February 9, 2024

Time for a reset

While RBI’s stance is understandable, higher rates for longer may be counter-productive

It is a sweet spot for India with growth trending up, inflation going down, and the government planning to borrow less next year. As such, there is no real urgency for the Reserve Bank of India (RBI) to move away from a tight monetary policy or alter its stance from the current ‘withdrawal of accommodation”. If the bond markets were anticipating the central bank’s tone would turn dovish, they were being unduly optimistic. The fact is that, having come this far, the RBI is unwilling to risk any big uptick in price movements. This is a prudent approach given how the world has been overrun by a series of geopolitical events over the past two years that have resulted in prices of various goods and services spiking. India is vulnerable to price hikes in both crude and edible oil, not to mention shipping freight.

Even though inflation forecasts are down to 4.5% in FY25, the central bank is staying put on policy rates. At the same time, it has reassured the markets it will infuse and suck out liquidity as and when needed while attempting to keep the overnight call rate as close to the repo as possible. To be sure, as Governor Shaktikanta Das observed, systemic liquidity is in a surplus after adjusting for government cash balances. However, the fact is that the deficits have been huge and, on some days, it has exceeded Rs 2 trillion. This is clearly intentional and rate increase by stealth. Much of the impact has been felt at the shorter end of the yield curve; short-term borrowings via commercial papers and certificates of deposits have become costlier. That is one reason interest rates on shorter term fixed deposits have gone up. There has been relatively less disruption at the longer end of the curve, with the benchmark yield coming down after the government announced last week it would borrow less from the markets in FY25. Unless there is some serious disinflation in the coming months, there appears to be no provocation to cut policy rates until inflationary pressures are fully or nearly fully reined in.

The big worry, however, is that the economy is being driven much more by investments rather than consumption. Private final consumption expenditure (PFCE), the biggest chunk of the economy, has shown poor growth in the last several quarters with the first advance estimate for FY24 pegging the growth at just 4.4%—the growth in Q2FY24 was only 3.1%. Also, real rural wages have contracted in 21 of the 23 months to October 2023 even though inflation tapered off. This, together with commentary from consumer companies, suggests demand is far from exciting.

Again, while the government may continue to do the heavy lifting on capex for some more time, private sector capex must kick in at some point. For private sector capex to pick up steam, visibility on demand needs to be better and the cost of money needs to come down. But going by the RBI’s commentary, the chances of rate cuts coming in later than expected rather than sooner are increasing. High loan rates—the RBI believes transmission of policy rates is as yet incomplete—cannot spur demand for credit either from companies or individuals. On the contrary, if loan rates were to go up, it would defeat the objective of ‘crowding in’ that the government is attempting via smaller market borrowings. This is something the RBI must think about.

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