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Setting the stage for a further rise in lending and deposit rates, the Reserve Bank of India’s Monetary Policy Committee (MPC) hiked the repo rate — the rate at which the RBI lends money to banks to meet their short-term funding needs — by 35 basis points (bps) to 6.25 per cent to rein in retail inflation.
The six-member committee, headed by RBI Governor Shaktikanta Das, also lowered the GDP forecast for the financial year 2022-23 to 6.8 per cent from an estimate of 7 per cent earlier as risks continue to emanate from protracted geopolitical tensions, global slowdown and tightening of global financial conditions. Das also signalled that the battle against inflation is far from over.
In a majority 4:2 decision, the MPC also retained the stance on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. Varma and Ashima Goyal voted against this proposal.
With this, the RBI has increased the repo rate by a cumulative 225 bps since May this year. The MPC hiked the repo rate by 40 bps in May and then by 50 bps in each of the three successive meetings. A basis point is one hundredth of a percentage point.
The RBI had in November written to the government explaining the reasons for its failure to bring down inflation below the upper tolerance band of 6 per cent for three quarters in a row.
The retail inflation based on the consumer price index (CPI) eased to a three-month low of 6.77 per cent in October from 7.41 per cent in September, aiding the central bank to go for a smaller rate hike of 35 bps.
Inflation has ruled at or above the upper tolerance band of 6 per cent since January 2022 and core inflation continues to persist around 6 per cent.
Headline inflation is expected to remain above or close to the upper threshold in the third and fourth quarters of 2022-23.
GDP growth in India remains resilient and inflation is expected to moderate; but the battle against inflation is not over. Pressure points from high and sticky core inflation and exposure of food inflation to international factors and weather-related events do remain.
Retail inflation is expected to be at 6.6 per cent in the October-December quarter and at 5.9 per cent in the fourth quarter of this fiscal. For Q1 of 2023-24, inflation is projected at 5 per cent and at 5.4 per cent in Q2.
Dhankhar begins winter session turning NJAC heat on SC again (Page no. 3)
(GS Paper 2, Polity and Governance)
Presiding over Rajya Sabha for the first time as Chairman on the opening day of the winter session of Parliament, Vice-President Jagdeep Dhankhar sent a strong message Wednesday to the Supreme Court, referring to its 2015 judgement striking down the National Judicial Appointments Commission (NJAC) Act and calling it a “glaring instance” of “severe compromise” of parliamentary sovereignty and disregard of the “mandate of the people”.
Dhankhar also said it was time for “all constitutional institutions to reflect and give quietus to public display of adversarially challenging stance/trading or exchange of advisories emanating from these platforms.
The Opposition is planning to seek a discussion on alleged government interference in the functioning of constitutional bodies including the faceoff with the judiciary.
The Vice-President’s remarks are a reiteration of what he said last week. Referring to the striking down of the NJAC Act, Dhankhar, while sharing the dais with Chief Justice of India D Y Chandrachud at the 8th Dr L M Singhvi Memorial Lecture in New Delhi on December 2, said it was “never too late to reflect”.
He underlined the “primacy of the will of the people” and said “that power was undone” and “the world does not know of any such instance”.
Last month, Union Law Minister Kiren Rijiju had said that the Collegium system of appointing judges was “opaque” and “not accountable” and “alien” to the Constitution. His remarks attracted the displeasure of the Supreme Court.
In the House, the Vice-President pointed out that “democracy blossoms and flourishes when its three facets, the Legislature, the Judiciary and the Executive, scrupulously adhere to their respective domains”.
“Any incursion by one, however subtle, in the domain of the other, has the potential to upset the governance apple cart. We are indeed faced with this grim reality of frequent incursions,” he said.
Express Network
Wildlife protection amendment Bill introduced in Rajya Sabha (Page no. 4)
(GS Paper 3, Environment)
Environment and Forest Minister Bhupender Yadav on Wednesday introduced in the Rajya Sabha a Bill to amend the Wild Life (Protection) Act, 1972 to strengthen protection for endangered species and enhance punishment for illegal trade in wildlife.
While moving the Wild Life (Protection) Amendment, 2022, which was passed by the Lok Sabha, Yadav said India was a signatory to the Convention on International Trade in Endangered Species (CITES) that required certain legislative actions. He said the UPA government had given assurances, but had not fulfilled them.
During the discussion on the Bill, Congress MP Vivek Tankha said the government had left out some aspects while drafting the amendment.
He said the amendment allowed the transfer and transportation of elephants for religious “or any other purpose”, which was not defined. This, he said, was vague and would lead to problems in the future.
MPs from Kerala raised concerns over the potential conflicts between humans and wildlife, given the issue of wild boar attacks in the state.
CPI(M) MP John Brittas pointed out that 88 people had been killed by wild boars in Kerala in a single year, while Jose K Mani of Kerala Congress (M) said the Bill had “totally ignored” the human-wildlife conflict.
Ayodhya Rami Reddy Alla of the YSRCP said the amendment empowered the Central government to declare any species as “vermin”, which would then not be protected under the Act and could become subject to hunting or culling.
This specific change is projected to impact 41 species of mammals, 864 birds, 17 reptiles and amphibians and 58 insects as they may be declared vermin and will be subject to hunting and killing.
Thus, a more scientific approach should be taken in declaring an animal as vermin. The discussion on the Bill would continue.
In Parliament
RS welcomes Dhankhar, its new Chairman (Page no. 9)
(GS Paper 2, Polity and Governance)
Rajya Sabha welcomed its new Chairman, Jagdeep Dhankhar, with Prime Minister Narendra Modi taking the lead in expressing confidence that the Upper House under his leadership would “scale new heights” with serious debates and democratic discussions.
Opposition members urged him to give more time for discussions, ensure that the Opposition’s voice is heard in the House, allocate more time for smaller parties and see to it that legislations are not passed in a hurry and are sent to parliamentary panels for scrutiny.
Welcoming Dhankhar, Modi said the Vice President comes from a normal family and that his journey is an inspiration for many people of the country. Modi also called him Kithane ki laal (Kithana is the birthplace of Dhankhar).
Taking the lead is the real definition of leadership. This becomes more important in the context of the Rajya Sabha, because this House has the responsibility of furthering the democratic decisions in a more refined manner. Therefore, when this House gets a down to earth leader like you, I consider it a privilege for every member of the House.
Modi said Dhankhar has become the Chairman at a time when India has assumed the presidency of G20 and has entered a period of Amrit Kaal — a term he first used in his Independence Day speech in 2021 when he said that India would transform itself to newer heights in the next 25 years.
Arguing that the Rajya Sabha has been a carrier of the great democratic heritage of the country, he said a “huge responsibility rests upon all of us to maintain and enhance the dignity of this House” and added that he was sure that under Dhankhar’s guidance, the “House will take forward its legacy and dignity and will scale new heights.
Govt& Politics
Govt presents co-op Bill in Lok Sabha to ease their merger; Send it to house panel,says opp (Page no. 10)
(GS Paper 2, Polity and Governance)
The government introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022, which proposes merger of “any cooperative society” into an existing multi-state cooperative society.
The Centre has proposed this amendment through Section 6 of the Bill, introduced in Lok Sabha by Minister of State for Cooperation B L Verma. As per the present law, enacted 20 years ago, only multi-state cooperative societies can amalgamate themselves and form a new multi-state cooperative society.
But now, “any cooperative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-state co-operative society: Provided that such resolution shall be subject to provisions of the respective State Cooperative Societies Act for the time being in force, under which such cooperative society is registered,” states the proposed sub-section (10) to be added in Section 17 of the 2002 law.
The Bill also seeks to establish a “cooperative election authority” to bring “electoral reforms” in the cooperative sector. For this, the government has proposed to substitute Section 45 of the 2002 Act.
per the proposed amendment, the authority will consist of a chairperson, a vice-chairperson and a maximum of three members to be appointed by the Centre.
In Lok Sabha, Opposition members, including RSP’s N K Premachandran and Congress’s Manish Tewari and Adhir Ranjan Chowdhury opposed introduction of the Bill. Demanding that the Bill be sent to the Standing Committee, they argued that it “impinges” on the rights of the States and is against India’s federal structure.
The Editorial Page
The case for affirmative consent (Page no. 12)
(GS Paper 2, Polity and Governance)
Exploring the contours of consent is complicated. It weighs on your mind. It pricks at your consciousness. It’s a latent hum you carry around all day without knowing its tune.
Ordinarily, we would all agree that consent given under fear, force or duress is also not free or volitional consent. Consent is not parochial.
It hinges on an active and conscious exercise of freedom and the ability to make a choice that is bereft of coercion. It is not a blanket immunity given to a series of acts but a form of reassurance given by you to your partner for each of the acts.
The Law Commission of India’s 84th report sheds light on why want of consent is a crucial determining factor in all prosecutions of rape.
It elaborates how consent is the antithesis of rape and nuances of consent are unavoidable aspects that need to be explored in cases of rape and sexual assault.
The substantivity of consent must, therefore, not be vitiated by circumstances that erode the freedom of choice. The report recommended substitution of the expression “free and voluntary consent” with an opaque “consent” as the law now holds. This would have helped in distinguishing consent from an assumption implied by silence.
In a setback to the discourse surrounding consent, the Delhi High Court, in the Mahmood Farooqui rape case held that a “feeble no” may mean a “yes”.
When the Supreme Court upheld the Farooqui acquittal, the judgment banked on the presumption of consent because the victim faked an orgasm to bring an end to the sexual act.
Immanuel Kant founded a theory called Kingdom of Ends wherein he argued that rational beings should never be treated merely as means to ends but as ends in themselves.
Kant says human beings are rational and their actions based on moral deliberation have reasoned motives that must be respected. From this, consent can be regarded as an act of reasoned deliberation weighing the good with the bad. Having said all that, we are still viewing a universal problem in the microcosm of India.
India is not the only nation struggling to come to terms with it with the help of a statutory definition. The United Nations Committee on the Elimination of Discrimination against Women (CEDAW), in Vertido v. The Philippines, recommended that the definition of rape in domestic legislation be amended to make lack of consent a central requirement of the law.
A higher peak (Page no. 12)
(GS Paper 3, Economy)
In line with analysts’ expectations, the Monetary Policy Committee (MPC) voted by a majority 5-1 to increase the policy repo rate by 35 basis points to 6.25 per cent.
This marks a shift from the earlier frontloaded rate hikes of 50 bps. The policy stance was retained as remaining “focused on withdrawal of accommodation”, indicating that members continue to attach primacy to moderating inflation.
This policy review was keenly watched for the syntax and the tone of the statement for signals on the extent of further tightening. A terminal (peak) rate of 6.5 per cent for this cycle has been widely expected.
The first is the split among the members regarding the policy action. One, Jayanth Varma, voted “against the repo rate hike”, seeming to imply that he favours holding the rate.
At the end-September review, recall that Ashima Goyal had voted for a 35 bps hike as against the majority’s inclination for a 50 bps increase. Now, both Varma and Goyal have voted against the retention of the policy stance, whereas in September, only Varma had voted against it. Hence, the scope of the dissent has slightly broadened.
Second is the important signals embedded in the economic forecasts. The average 2022-23 inflation forecast has been retained at 6.7 per cent, with risks evenly balanced.
The growth forecast has been brought down to 6.8 per cent (from 7 per cent earlier) after the second quarter growth print of 6.3 per cent.
Third, and importantly, the language and tone of the statement suggests that further rate actions might be required to get inflation, particularly the sticky core component, durably down to the “tolerance band” (below 6 per cent), even if not the target 4 per cent in the next year.
Overall, despite the dissent, the likely implicit thinking of the MPC majority remained more hawkish than expected. For instance, the MPC now adds, to their earlier view of policy tightening required to “keep inflation expectations anchored … and contain second round effects”, the intent to “break core inflation persistence”.
The Ideas Page
The good job lag (Page no. 13)
(GS Paper 3, Economy)
Several agencies, including the IMF and the World Bank have projected lower growth rates for the Indian economy in FY23, than the 7.2 per cent estimated by the RBI in April.
The Central bank has now lowered its forecast to 6.8 per cent. Given the current situation, with the Q2 FY 2023 GDP growth clocking in at 6.3 per cent, the economy is likely to grow at 6.5-7.0 per cent in this fiscal year.
It is difficult to arrive at a precise estimate for growth this year with unprecedented economic uncertainty worldwide, including high global inflation, synchronised monetary tightening, and the impact of the Ukraine war.
On medium-term growth prospects, there are some positive signs in the Indian economy. Company and bank balance sheets are healthier, credit growth is rising, and capacity utilisation has increased, all of which augur well for investment activity.
The waning of Covid-19 should hopefully have a positive impact on travel, transport and tourism. Construction activity should pick up further with the reduction in housing inventory and almost stable prices over the last decade.
Our biggest concern relates to employment, an issue that has persisted over the last two decades. In brief, we have not generated enough good jobs to match the scale at which the economy has grown, especially in the organised sector.
As a result, we have very high under-employment and poor-quality employment, which have hampered a much-needed move away from agriculture.
Job growth is crucial if we are to reduce the still high levels of poverty in the country. We do not have a precise estimate of the current levels of poverty, as there has been no household consumption survey since 2011-12, and the 2017-18 survey was abandoned due to technical issues.
But there is reasonable consensus that poverty could be around 10 per cent of the country’s population: A low number compared to the past, but as many as 140 million people could still be living in poverty.
The rising demand for the MGNREGA, and the importance of food distribution schemes and other welfare programmes for the poor are indicators of the lack of non-agriculture jobs being generated.
All’s in the name (Page no. 13)
(GS Paper 2, Polity and Governance)
The Vidhi Centre for Legal Policy is known for its research and advocacy on law-related issues. It has just brought out a slim book, “From Rule by law to the Rule of Law”, with a sub-title “25 Reforms to Decolonise India’s Legal System”.
The colonial brush still tinges several of our policies and procedures, not just in the domain of law, narrowly-defined. Thus, one of the 25 reforms flagged by Vidhi is the role of the district collector.
The 15th report of the Second Administrative Reforms Commission (ARC) had a section on district administration. It ducked the problem a bit.
With the constitutionally mandated establishment of panchayati raj institutions and municipal bodies, it has become necessary to re-examine and re-define the role of the district administration.
It is imperative that the devolution of decision-making to local levels should face no impediments. It is equally imperative that the unique administrative experience, expertise and credibility of the office of the district collector built up over a period of two hundred years is properly utilised.
What does a DC or DM do? The list, from the 15th report, is the following. One, head of land and revenue administration; two, district head of the executive magistracy and overall supervision of law and order and security and some say, police matters; three, licensing and Regulatory Authority (such as Arms Act); four, the conduct of elections; fifth, disaster management; sixth, public service delivery; and seventh, Chief Information and Grievance Redressal Officer.
Article 50 of the Constitution states: “The State shall take steps to separate the judiciary from the executive in the public services of the State.”
Accordingly, DMs don’t try criminal cases, as CrPC makes abundantly clear. The magisterial function is limited to the preventive and there is no longer any direct control over the police.
Explained
Reading monetary policy (Page no. 15)
(GS Paper 3, Economy)
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unveiled its latest review of the monetary policy. In it, the RBI cut India’s GDP (gross domestic product) growth forecast for the current financial year, maintained the inflation forecast, and raised the repo rate by 35 basis points.
Even though the raising of the repo rate by 35 basis points is in line with market expectations, most observers saw the latest policy statement as “hawkish”.
In India, the RBI is entrusted with the responsibility of devising monetary policy “with the primary objective of maintaining price stability while keeping in mind the objective of growth”.
The central bank is supposed to target a 4% retail inflation level, although the RBI has the leeway of inflation going up to 6% or falling to 2% in any particular month. Retail inflation is the inflation (or rise in the general price level) that everyday consumers face.
Typically when an economy experiences fast economic growth — that is, there is a lot of demand in the economy — prices rise.
Some degree of inflation is desirable as it promotes economic activity.
Think of the reverse: if everyone thought things will be cheaper tomorrow or next month, they would defer their purchases and the economic activity (read the GDP) would contract.
When inflation runs high, RBI raises the repo rate — the interest rate it charges banks when it lends them money. Doing this incentivises savings and disincentives expenditure, thus curtailing overall demand and GDP. That, in turn, reduces the inflation rate.
In times of weak economic activity, RBI cuts the repo rate and by the reverse logic, boosts demand and economic output.All these critical decisions about the repo rate are taken by the MPC, which meets once every two months to assess inflation and growth outlook.
Indian policymakers are facing an odd quandary. Over the past couple of years, India has had to deal with a scenario where inflation has been high even as economic output struggles to grow.
Global South (Page no. 15)
(GS Paper 2, International Relations)
As India assumed the presidency of the G20 group of countries for 2022 to 2023, Indian External Affairs Minister S Jaishankar said on December 1 that the country would be the “voice of the Global South that is otherwise under-represented in such forums”.
The term has since been used multiple times, such as when Jaishankar said of ongoing global conflicts, “polarisation may occur elsewhere, the people who suffer most are the Global South”.
‘Global North’ refers loosely to countries like the US, Canada, Europe, Russia, Australia and New Zealand, while ‘Global South’ includes countries in Asia, Africa and South America. We explain what these terms mean, and the shifts in global politics indicated by their usage.
For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people, and Eastern countries considered as being in the process of that transition.
Another similar categorisation is of First World, Second World and Third World countries, referring to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
He said there are three major zones of production: core, peripheral and semi-peripheral. The core zones reap profits, being the owners of cutting-edge technologies – countries like the US or Japan.
Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive. In the middle are countries like India and Brazil.
In the post-Cold War world, the First World/Third World classification was no longer feasible, because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US – the only remaining global superpower.
ChatGPT: bot that promises AI revolution (Page no. 15)
(GS Paper 3, Science and Technology)
Last week, OpenAI, the company best known for Dall-E — the AI-based text-to-image generator — introduced a new chatbot called ChatGPT. ChatGPT is a ‘conversational’ AI and will answer queries just like a human would– well, at least that’s the promise and premise.
So one can ask ChatGPT for anything; tips on how to set up a birthday party, write an essay on why parliamentary democracy is better, and even a fictional meeting between two well-known personalities.
The reason ChatGPT has gone viral is because of the kind of responses it gives, being seen as a replacement for much of the daily mundane writing, from an email to even college-style essays.
OpenAI has created ChatGPT, a start-up focused on artificial intelligence and its potential use cases. OpenAI’s notable investors include Microsoft, Khosla Ventures and Reid Hoffman’s charitable foundation.
Greg Brockman is the company’s chairman and president, while Sam Altman is the CEO. Ilya Sutskever is Open AI’s chief scientist.
According to OpenAI’s description, ChatGPT can answer “follow-up questions”, and can also “admit its mistakes, challenge incorrect premises, and reject inappropriate requests.”
It is based on the company’s GPT 3.5 series of language learning models (LLM). GPT stands for Generative Pre-trained Transformer 3 and this is a kind of computer language model that relies on deep learning techniques to produce human-like text based on inputs.
The model is trained to predict what will come next, and that’s why one can technically have a ‘conversation’ with ChatGPT. According to OpenAI’s blog post about ChatGPT, the chatbot was also trained using “Reinforcement Learning from Human Feedback (RLHF).