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Asserting that India’s economy is showing “very positive signs” and getting “more robust”, Union Finance Minister Nirmala Sitharaman that there is “no question” of the country “getting into recession or stagflation”.
Replying to a discussion on price rise in Lok Sabha, Sitharaman hit out at the Opposition for comparing the country’s economic conditions with that of neighbouring countries like Sri Lanka, and said India is in a far better position as its “macroeconomic fundamentals are perfect”.
If we talk about India’s economy, then we are the fastest growing despite all the challenges — global challenges and domestic challenges.
Sitharaman also quoted former RBI governor Raghuram Rajan and said that the Reserve Bank of India has done a “very good job in increasing the foreign exchange reserves in India, insulating (it) from problems being faced by neighbouring countries, such as Pakistan and Sri Lanka”.
The Opposition, however, took on the Government, blaming it for widening inequality with rising prices and failing to provide jobs.
The Congress accused the Government of having failed in the fundamentals of economy. The TMC said the Government’s policies had left people without money to even buy LPG cylinders. Not satisfied with Sitharaman’s reply, Congress and DMK MPs walked out of the House.
Earlier, responding to Congress leader Adhir Ranjan Chowdhury, who sought to know whether India is heading towards stagflation, Sitharaman said, “There is no question of India getting into recession or stagflation.”
Observing that banks and their health are equally important for looking at the economy, Sitharaman said, “In India, the gross Non-Performing Assets of scheduled commercial banks is on a six-year low at 5.9 per cent in FY-22. So, in China 4,000 banks are on the verge of going bankrupt and our NPAs are improving.”
Govt. and Politics
Jaishankar meets visiting Maldives President: Neighbourhood first (Page no 5)
(GS Paper 2, International Relation)
External Affairs Minister S Jaishankar on Monday met the visiting President of Maldives Ibrahim Mohamed Solih and said India’s ‘Neighbourhood First’ policy and the Maldives’ ‘India First’ policy are “complementary” and the two policies take the special partnership forward.
Solih arrived in New Delhi on Monday, and he will meet Prime Minister Narendra Modi. Solih’s visit to India from August 1 to 4 comes amid his widening political rift with Mohammed Nasheed, former President of the island nation and the current parliament speaker. Both Solih and Nasheed are senior leaders of the Maldivian Democratic Party.
Earlier, the president, accompanied by a high-level delegation, was welcomed at the Delhi airport by Union Minister Sanjeev Balyan. Solih is also scheduled to meet President Droupadi Murmu.
A warm welcome to a close friend and maritime neighbour! President @ibusolih of Maldives arrives in New Delhi for an official visit. An opportunity to nurture the unwavering friendship between our two countries and lend further momentum to the multi-faceted partnership.
In Parliament
WMD Bill passed by voice vote in Rajya Sabha; Opposition says request for division ignored (Page no 6)
(GS Paper 2, International Relation)
The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Amendment Bill, 2022, was passed in Rajya Sabha on Monday amid sloganeering by Opposition MPs to protest the arrest of Shiv Sena MP Sanjay Raut.
The Bill, introduced by External Affairs Minister S Jaishankar, seeks to ban funding of weapons of mass destruction (WMDs) and gives the Centre the power to freeze, seize or attach financial assets of persons involved in such activities.
The Bill, passed by Lok Sabha in the previous session, was passed by a voice vote in the Upper House, a move challenged by several Opposition MPs, who alleged that it had been passed even as the House remained disrupted.
Later in the afternoon, the Indian Antarctic Bill, 2022, which seeks to extend domestic laws to Indian research stations in Antarctica and introduces a permit system for expeditions to Antarctica, was also passed through voice vote.
On the “unanimous support” for WMD Bill, Jaishankar said, “All members have recognised that terrorism is a serious threat, that weapons of mass destruction are a serious threat, that there is a gap in the law.
Currently, the law covers only trading; it does not cover financing. This gap needs to be filled because Recommendation 7 of the Financial Action Task Force requires all countries, including us, to ensure that financing for WMD-related activities is prohibited.”
Earlier, Opposition protests started with the commencement of the House at 2 pm, with TMC’s Derek O’Brien raising a point of order. “In the last six years, not even one issue under Rule 267 that the Opposition raised has been accepted.
Not even one. Today, we are raising (one) on ED. Today, we are raising the issue of our colleague, Sanjay Raut,” O’Brien said.
Express Network
ISRO to undertake maiden flight of SSLV on August 7 (Page no 8)
(GS Paper 3, Science and Tech)
The Indian Space Research Organisation (ISRO) will undertake the maiden flight of its newly developed Small Satellite Launch Vehicle (SSLV) on August 7, ahead of Independence Day celebration.
The launch of the SSLV-D1/EOS-02 Mission is scheduled, August 7, 2022, from Satish Dhawan Space Centre (SDSC), Sriharikota.
This is significant given that India was set to celebrate 75th Independence Day with the first human spaceflight, as per the deadline set by Prime Minister Narendra Modi in his speech from the ramparts of the Red Fort on Independence day, 2018.
The work on Gaganyaan mission, country’s first manned flight to space, was delayed due to the pandemic, with the first abort test scheduled for later this year, to demonstrate the crew escape system to be used in case of an emergency mid-flight.
The SSLV mission too was delayed by a couple of years due to the pandemic. Experts believed that this could hamper the economic prospects of the space agency in the global space market as the new launch vehicle has been designed keeping in mind commercial launches of small satellites with a quick turn-around time for the missions.
On its first flight, the SSLV will carry one of India’s Earth Observation Satellites – EOS-2 – that will have applications in mapping and developing various GIS applications.
It will carry a mid-wavelength infrared camera and a long-wavelength infrared camera with a resolution of 6 metres. The satellite, weighing 142 kg, will have a mission life of ten months.
The SSLV launch was long overdue. It will shift the burden of commercial launches from Polar Satellite Launch Vehicles (PSLV). And, will likely offer cheap, quick launch for small satellites.
ISRO should have the wherewithal to do that, especially now that space startups are being encouraged,” said Ajey Lele, senior fellow at Manohar Parrikar Institute for Defence Studies and Analyses.
The Editorial Page
D Sivanandhan writes: The powerful and ubiquitous ED (Page no 8)
(GS Paper 2, Indian Polity)
There was a time, not too long ago, when city and state police forces across the country had a healthy competition with each other to be seen as the best police force. They were involved in solving and investigating some of the most sensational cases in the country.
Mumbai Police and its crime branch, Delhi Police and its special cell, Gujarat Police and its Anti-Terrorism Squad (ATS), Bengaluru Police, Hyderabad Police, were in the news for solving high-profile cases.
Cases from the underworld, involving terrorism, human trafficking, narcotics etc were cracked by these police forces.
Healthy competition would sometimes turn into ugly fights. Rivalry between the Mumbai Crime Branch and Delhi Special Cell was well-known.
Today, these once high-profile police forces have become a pale shadow of themselves and central agencies have taken over the investigation of sensational cases.
In the past few years, there has been a significant shift in the way cases, especially the high-profile ones, are being investigated across the country.
At the drop of a hat, cases are taken away from the state and city police and handed over to central agencies. There have been many such cases, including the suicide case of actor Sushant Singh Rajput, the Antilia case, among others.
Now, only the Enforcement Directorate (ED), National Investigation Agency (NIA), Central Bureau of Investigation (CBI), Narcotics Control Bureau (NCB), are in the limelight.
Livia Leu writes: India and Switzerland’s deepening partnership (Page no 10)
(GS Paper 2, Indian Polity)
Today I am in India for Foreign Office consultations between our two countries. This is my third official visit to New Delhi, this time as State Secretary in charge of Switzerland’s Foreign Policy.
It is a privilege to be back here during this month, which marks 75 years of India’s Independence. I extend my congratulations to the Indian people on this historic occasion.
I am also pleased that our two countries will commemorate next year the 75th anniversary of the signing in New Delhi of the 1948 Treaty of Friendship. We can be proud that our friendship has withstood the test of time and has remained firm in the face of shifting geopolitical sands.
India is a priority for Switzerland. This is emphasised in Switzerland’s foreign policy strategy that seeks to further advance ties with India.
Switzerland and Indian partners are collaborating on digital transformation, sustainability, health, life sciences, medtech, infrastructure, cleantech, fintech, blockchain, AI and robotics.
Innovation and investment continue to be the primary drivers of our bilateral relations. Going forward, Switzerland intends to further deepen its innovation cooperation with India. With over 330 Swiss companies, Switzerland is the 12th largest investor in India.
About 100 Swiss companies manufacture locally and support the Make in India initiative. As a former delegate for trade agreements and head of bilateral economic relations for the Swiss government, I am well aware of our enormous bilateral economic potential.
Trade talks between Switzerland (European Free Trade Association EFTA) and India are high on the priority list. After a productive exchange at the World Economic Forum in Davos in May, our two commerce ministers are expected to meet again in New Delhi in the beginning of October.
The Idea Page
Radha Kumar writes: India’s response to Sri Lanka and Myanmar crises is a study in contrast. It shouldn’t be (Page no 11)
(GS Paper 2, International Relation)
August 1 marked 18 months of the military coup in Myanmar. According to UN human rights monitors, over 2,000 people have been killed, around 14,000 are in prison, including 90 lawmakers, over 7,00,000 are refugees and half a million internally displaced. Humanitarian aid to coup opponents is blocked. The economy is in free fall.
Yet we in India appear to have resigned ourselves to the suffering in that country, along with the rest of the world. Even the Tatmadaw’s recent execution of four democracy activists received only a pro forma expression of “deep concern” from the Ministry of External Affairs.
The contrast between the Indian response to the crisis in Sri Lanka and the dawning civil war in Myanmar could not be starker. For Sri Lanka, the Modi administration extended $3.5 billion in credits and supplied essential fuel.
When it came to Myanmar, Home Minister Shah ordered that refugees be refused entry. Mizoram’s Chief Minister Zoramthanga was brave enough to refuse, and the state hosts several thousand democracy activists who were forced to flee.
But there is no support from the Union administration for Mizoram’s aid effort, and apparently there is no Indian policy vis a vis the coup either, apart from an anodyne statement of support for democracy that is clearly meaningless in the current conditions.
True, it is ASEAN which shouldered the responsibility to mediate in Myanmar, whereas India took the initiative with Sri Lanka.
But ASEAN has been largely unsuccessful. The five-point consensus that the junta agreed on with the regional grouping included an immediate end to violence and resumption of negotiations between the ousted administration and the Tatmadaw. The latter immediately postponed implementation of the agreement, and has since consistently violated it.
The World
Pelosi to visit Taiwan (Page no 12)
(GS Paper 2, International Relation)
US House of Representatives Speaker Nancy Pelosi was set to visit Taiwan, two people briefed on the matter said, as China warned that its military would never “sit idly by” if she visited the self-ruled island claimed by Beijing.
Pelosi, who began an Asia trip earlier in Singapore, was due to spend in Taiwan. Taiwan’s foreign ministry said it had no comment on reports of Pelosi’s travel plans.
Amid widespread speculation over whether she would make a stop in Taiwan, Pelosi’s office said she was leading a congressional delegation to the region that would include visits to Singapore, Malaysia, South Korea and Japan.
It did not mention Taiwan. One source told Reuters that the US had informed some allies about Pelosi’s visit to Taiwan.
Another source said Pelosi was scheduled to meet activists who are out spoken on China rights issues during her stay in Taiwan.
Chinese foreign ministry spokesman Zhao Lijian said earlier on Monday that it would be “a gross interference in China’s
Internal affairs” if Pelosi visits Taiwan, and warned that it would lead to “very serious developments and consequences.”
“We would like to tell the US again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong counter measures to defend its sovereignty and territorial integrity,” Zhao said.
The White House dismissed China’s rhetoric as ground less and in appropriate. “It is not uncommon for congressional leaders to travel to Taiwan,” National Security Council spokesman John Kirby said to CNN. “We shouldn’t be intimidated by that rhetoric. We're going to do whatever we can to support her.”
Explained
Explained: Civil code and govt stance (Page no 13)
(GS Paper 2, Governance)
The government’s stance on a uniform civil code (UCC) has evolved from one regime to the next, especially in the last eight years.
This was reflected in the recent stand of the Ministry of Law and Justice, which is learnt to have conveyed to a parliamentary committee that review of personal laws — as in Goa where a 155-year-old Portuguese-era law is still in force — can be undertaken when a “sizeable majority” of the population seek amendment of the existing laws or a new law is enacted.
The shift in stance can be seen in the government’s written replies in Parliament since 1991. Previous regimes would underline a “consistent policy” — “not to interfere in the personal laws of the minority community”.
This later evolved to “wide stakeholder consultation would be required” and then to “committed to honour” the constitutional mandate enshrined in the Article 44 of the Constitution.
From over two dozen occasions in the last 31 years, a look at the government’s replies to questions raised by at least 58 MPs (including half from the BJP; 9 from Congress; 7 from Shiv Sena; 2 each from Trinamool Congress, BJD, CPI, AIADMK and TDP; 1 each from BSP, CPM and IUML; and an independent).
On July 19, 1991, the late P R Kumaramangalam of the Congress, Law Minister in the P V Narashimha Rao government, said in reply to a question from Shiv Sena’s Ashok Deshmukh: “Introduction of Uniform Civil Code for all citizens will necessarily involve changes in the personal laws of minority communities.
The consistent policy of the Government has been not to interfere on its own in the personal laws of the minority communities unless initiative for the change comes from such communities.”
The Atal Bihari Vajpayee-led NDA government followed the same stance. On August 17, 2000, the late Arun Jaitley, then Law Minister, said in reply to a question from his BJP colleague Yogi Adityanath in Lok Sabha:
It has been the consistent policy of the Central Government not to interfere in the personal laws of the minority communities unless the necessary initiative comes from the concerned communities themselves. Hence, it is not possible to lay down any time frame in this regard.
3 reasons why GST collections continue to surge (Page no 13)
(GS Paper 3, Indian Economy)
The gross Goods and Services Tax (GST) collections have risen 28 per cent year-on-year to Rs 1,48,995 crore for July (for sales in June), the second highest level since the July 2017 rollout of the indirect tax regime, data released by the Finance Ministry Monday showed. High inflation rate, buoyancy in consumption patterns triggered by the economic recovery, alongside greater enforcement actions against anti-evasion activities have contributed to the rise in GST collections.
The Finance Ministry said in a statement Monday that the 28 per cent increase in GST revenue displays a “very high buoyancy”.
This is a clear impact of various measures taken by the Council in the past to ensure better compliance. Better reporting coupled with economic recovery has been having a positive impact on the GST revenues on a consistent basis.
The trend that was being talked about, we are now reversing that and showing that the GST revenues remain above Rs 1.40 lakh crore. So, Rs 1.40 lakh crore is the rough bottom line, we are not going below that. We will remain above that,” she had said.
Experts say that action against tax evaders, including steps being taken by state authorities, have resulted in better compliance and helped push the growth in GST collections along with economic recovery and higher inflation rate. It will help boost the government’s GST collections beyond the budgeted figures.
GST collections reported a healthy trend, rising for the second month in a row, with the 28% YoY rise being a function of the economic recovery, better compliance as well as elevated inflation.
With the headline GST collection in July 2022 exceeding our monthly average forecast of Rs 1.45 trillion for this year, we foresee an upside of Rs 1.15 trillion relative to the FY 2023 for CGST collections.
After the end of the compensation regime for states in June 2022, the higher GST revenue growth is expected to ease the revenue concerns for some states going ahead.
However, states with a heavy dependence on compensation may find FY 2023 to be a challenging year, with some even resorting to higher enforcement actions to shore up revenue.
Under GST, as per the Goods and Services Tax (Compensation to States) Act, 2017, the states were guaranteed compensation at the compounded rate of 14 per cent from the base year 2015-16 for losses arising due to implementation of the taxation regime for five years since its rollout.
This came to an end on June 30. The GST Council meeting held in June did not take any decision to extend the compensation mechanism despite at least a dozen states making a demand for the same.
Economy
Sustainability push: Govt asks RRBs to step up digitisation, lending to MSMEs (Page no 13)
(GS Paper 3, Indian Economy)
As part of reforms to make Regional Rural Banks (RRBs) financially sustainable, the government has asked them to move towards digitisation, including offering internet banking services to its customers, and expand their credit base further through increased lending to the Micro, Small and Medium Enterprises (MSME) sector.
The cost of operations of RRBs were much lower as compared to scheduled commercial banks but that has increased now and the government wants them to work towards increasing their earnings,” said an official source in the know adding that these are part of the government’s plan to reform RRBs.
This was discussed in a meeting that was convened by Finance Minister Nirmala Sitharaman in July and attended by heads of sponsor banks and RRBs.
One of the key reasons for RRBs incurring losses is the fact that many of these branches do not have enough business as they focus mainly on offering government’s schemes like direct benefit transfer in the rural areas of the country.
The source added that almost all these rural banks are under Core Banking Solutions (CBS) meaning their branches are connected with each other. “Offering internet services to customers is the next step for these banks.
According to a government release post the meeting last month, the Finance Minister urged the sponsor banks “to formulate a clear roadmap in a time-bound manner to further strengthen the RRBs and support the post-pandemic economic recovery and also suggested to conduct a workshop of RRBs and share the best practices with each other.
This would not be the first time that the government is working to reform RRBs. After a set of reforms in the ’90s, the government had, in 2005-06, initiated a consolidation programme that resulted in the number of RRBs declining from 196 in 2005 to 43 in FY21. The aim was to improve their operational viability and to take advantage of economies of scale.