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Citing elevated levels of inflation, which remains above RBI’s upper target band of 6 per cent, the Monetary Policy Committee decided unanimously to increase the repo rate — the rate at which the RBI lends funds to commercial banks — by 50 basis points to 5.4 per cent with immediate effect.
As it raised the rate for the third time this financial year — an aggregate of 140 basis points in three months — the RBI is set to further increase lending rates in the economy and EMIs of existing home loan customers.
RBI Governor Shaktikanta Das told reporters that the MPC has decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
While he said there are signs at this point of time that “CPI inflation has peaked and is expected to moderate going into the fourth quarter of this year and first quarter of next year,” providing the rationale behind the 50 basis point hike, Das underlined, “Inflation still remains at uncomfortably and unacceptably high level and the monetary policy has to act. There are several uncertainties that are clouding the outlook and so the monetary policy has to act and, therefore, the action of 50 basis points.”
In its statement, the RBI said that with inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term.
The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects. Accordingly, the MPC decided to increase the policy repo rate by 50 basis points to 5.4 per cent.
Despite the 50 basis point hike – the second such hike in two months and an aggregate of 140 basis point hike in three months — stock markets stood strong and the benchmark Sensex at the BSE closed the day at 58,387, a gain of 89 points.
In Parliament
No immunity from arrest in criminal cases for MPs during session: Venkaiah (Page no. 6)
(GS Paper 2, Polity and Governance)
Rajya Sabha Chairman M Venkaiah Naidu said in the Upper House on Friday that MPs did not have immunity from being arrested in criminal cases — when the House is in session or otherwise. He said MPs could not avoid summons from law enforcement agencies.
Rajya Sabha proceedings were adjourned for almost half an hour, until 11.30 am, as Congress members created an uproar alleging misuse of investigating agencies by the government.
Going by what has happened in the last few days, I want to clarify one thing that there is a wrong notion among members that they have privilege from action by agencies while the session is on.
I have given it serious thought. I examined all the precedents and I remember my own ruling given earlier,” Naidu said when the House reassembled after the adjournment.
He emphasised that under Article 105 of the Constitution, MPs enjoy “certain privileges so that they can perform their parliamentary duties without let or hindrance”.
One of the privileges is that a Member of Parliament cannot be arrested in a civil case 40 days before the commencement of the session or committee meeting, and 40 days thereafter. This privilege is already incorporated under Section 135A of the Civil Procedure Code, 1908.
However, in connection with criminal matters, he said MPs “are not on a different footing than a common citizen”. It means that a Member of Parliament does not enjoy any immunity from being arrested in a criminal case during the session or otherwise. There have been a number of rulings by Presiding Officers.
He specifically referred to one ruling given in 1966 by Dr Zakir Hussain, who was then Rajya Sabha Chairman. “It was said: ‘Members of Parliament do enjoy certain privileges so that they can perform their duties.
One such privilege is freedom from arrest when the Parliament is in session. This privilege of freedom from arrest is limited only to civil cases and has not been allowed to interfere in the administration of criminal proceedings.
Govt. and Politics
Below par spending initially due to lack of awareness, says ministry (Page no. 8)
(GS Paper 2, Polity and Governance)
The Ministry of Women and Child Development has informed the Parliamentary Committee on Empowerment of Women that the funds under the ‘Beti Bachao, Beti Padhao’ scheme were underutilised in the early years of the scheme due to “lack of awareness and information” regarding the scheme.
In its 5th report on the women empowerment submitted in Lok Sabha in the Winter session last year, the committee had raised concerns over the underutilisation of funds as well as larger spendings on advertising, instead of on the health and education of girls.
The ministry’s replies to the concerns raised by the committee was submitted as a part of the action-taken report in the 6th part, tabled in the Lok Sabha.
“The committee found that out of Rs 446.72 crore released during 2016-2019, a whopping 78.91% was spent on media advocacy. Though the committee understands the necessity to undertake media campaign to spread the message of BBBP (Beti Bachao, Beti Padhao) among the people, they feel that it is equally important to balance the objectives of the scheme.
Now, it is time to focus on other verticals by making ample financial provisions to help achieve measurable outcomes related to education and health envisaged under the scheme,’’ the committee had said in its previous report.
In its reply to the committee’s concerns, the WCD Ministry said that the BBBP scheme works in synergy with other line ministries and schemes.
As a result, the BBBP objective is often pursued in programmes funded under other schemes. While there has been savings under BBBP, it is not indicative of inaction/failure of the programme.
The advertisement expense should be viewed in correlation with the expenditure budget of other women-centric schemes on education, health, nutrition, safety and security, skilling etc.
70 lakh ration beneficiaries are suspect, states asked to verify: Govt (Page no. 8)
(GS Paper 3, Economy)
The Union government has found that 70 lakh beneficiaries under the National Food Security Act are “suspect” and has shared their data with states for “ground verification”.
4.74 crore ration cards have been deleted or cancelled by states between 2013 and 2021. Very recently, a similar exercise has been done and around 70 lakh beneficiaries have been found to be suspected and now that data has been again pushed to respective states to do the ground verification.
If out of those 70 [lakh] even 50 or 60 per cent are actually found to be not genuine, that space could also be created. So, it’s a continuous exercise.
About 4.74 crore ration cards, which would translate to around 19 crore beneficiaries, have been “deleted” and new beneficiaries have been added in place of those.
Creation of space is an ongoing process. Today, a person may be entitled, tomorrow because of his economic wellbeing he may not be entitled. His economic status improves, he may not be entitled. He may get deleted; another person will come.
As per data shared by the Food Ministry, of the 4.74 crore ration cards deleted or cancelled by states and Union Territories in the last nine years, 4.28 crore have been deleted/cancelled between 2014 and 2021.
The data show that 84.26 lakh ration cards were deleted/cancelled in 2016. This is the highest number during the last nine years for which figures are available.
Data also show that 46 lakh ration cards were deleted/cancelled during the two Covid years (2020 and 2021).
A state-wise analysis of the data shows that of the 4.74 crore ration cards deleted/cancelled, the highest of 1.73 crore was in Uttar Pradesh. UP was followed by West Bengal (68.62 lakh deleted/cancelled ration cards), Maharashtra (42.66 lakh), Karnataka (30.09 lakh) and Rajasthan (22.66 lakh).
Under the National Food Security Act (NFSA) of 2013, 81.35 crore people can be covered across the country. As per Food Ministry data, the current NFSA coverage stands at 79.74 crore.
The web-based facility will initially be piloted in 11 states and Union Territories — Assam, Goa, Lakshadweep, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Tripura and Uttrakhand.
Express Network
Three years on J&K parties slam Centre, say restore Article 370 (Page no. 9)
(GS Paper 2, Polity and Governance)
Calling August 5 a black day, activists of the People’s Democratic Party, led by its president Mehbooba Mufti, staged a protest at the city centre in Srinagar to mark the third anniversary of the revocation of special status to Jammu and Kashmir.
Speaking at the protest, Mehbooba said: “August 5 (2019) is a black day for the entire country. Police have disrupted our protest. Our constitution and our flag were taken from us unconstitutionally and illegally. This has harmed not just J&K, but also the entire country.”
Cautioning the people of the country, she said: “I would like to tell you that in the coming days, BJP will erode the Constitution based on secularism and democracy.
That Constitution will be replaced with a religious state. The Tiranga (Tricolour) that you hoist with pride will be replaced with a saffron flag.
Stating that what was done in Kashmir “will be repeated across the country”, Mehbooba said: “We will take back our flag and our constitution and also continue the fight to resolve the Kashmir issue.”
Meanwhile, former J&K CM and National Conference vice-president Omar Abdullah reiterated the party’s resolve to continue the struggle to challenge the abrogation of Article 370 and Article 35A.
Post August 5, 2019, the so called NC-PDP alliance and the BJP government at the Centre have miserably failed to keep their commitments.
While former has endorsed further decline by their deceptive conduct in the political identity of J&K, the latter is continuing to disempower masses of the erstwhile state of J&K,” the PC said.
The party also highlighted “lack of political representation” in the UT over the last three years, despite assurances from the Centre.
As an eyewash, senior leaders of the government had assured the nation on the floor of the House that our rights will be restored to heal the wounds inflicted on the people of J&K. However, three years have passed, but they have failed to give us even the basic right to have a representative government.
Editorial Page
The rise of Kashmir (Page no. 12)
(GS Paper 2, Polity and Governance)
Ideas and actions rarely get wind together to end decades-old social inequities. Visions can become virtues if they are accompanied by a determination to create an equitable society. Three years ago, Prime Minister Narendra Modi decided to offload the past that was holding back the 1.3 crore citizens of Jammu and Kashmir from realising their potential.
He rolled out the process to build a new and vibrant Union Territory. He urged people not to lose even a single moment in the new journey of challenges and opportunities and promised to reach out to the last person in the last row.
Jammu and Kashmir, since then, is walking the PM’s talk and has travelled quite a distance to re-arrange priorities of development, initiate deep reforms in governance, curb corruption, neutralise a well-fed terror ecosystem and realise the dreams of youth.
Jammu and Kashmir can no longer be seen as a land of misconceived ambitions. In this Amrit Kaal, we are the new destination, not just for tourists but for businesses as well.
A series of targeted efforts to tide over governance bottlenecks, financial indiscipline and lack of monitoring has yielded results in the form of developmental projects. In 2018-19, only 9,229 projects were completed in a year.
This has increased to 50,627 in the financial year 2021-22. Our effort is to ensure that Jammu and Kashmir is at par with the other states and UTs in most of the indicators.
Rs 1 lakh crore is being spent to improve road connectivity and build tunnels, and we are determined to fill the resource gap in the creation of new infrastructure.
Social sector spending has increased by 43.83 per cent and the economic sector by 45.60 per cent in the last three years. It shows the importance the Centre has attached to the overall development of Jammu and Kashmir.
We have taken a slew of measures for improving the delivery of public services and prudent financial management. Implementation of the Janbhagidari Empowerment portal demonstrates the administration’s will to empower people through an initiative that enables them to oversee the works being executed and money spent in their area.
It encourages them to become a partner in the development process. We have harnessed the power of information technology to eliminate red tape and enhance transparency.
A critical challenge (Page no. 12)
(GS Paper 2, International Relation)
Anew and ambitious economic alliance, formalised in June, is reportedly causing unease amongst policymakers in New Delhi. Intended to reduce the dependence of the member nations on China for supplies of cobalt, nickel, lithium and the 17 rare earth minerals, the US-led group, Minerals Security Partnership, includes Canada, Australia, Finland, Germany, France, Japan, South Korea, Sweden, the UK and the European Commission.
The Union Finance Ministry has reportedly sought the Ministry of External Affairs’ help to find a place for India in the new alliance. The government’s concern isn’t misplaced.
Critical minerals are essential components of several modern-day appliances, including smartphones and computers. They are building blocks of green technologies like solar panels and wind turbines and are indispensable for the transition to electric battery-driven cars.
The International Energy Agency expects the demand for some of these minerals, such as lithium, to grow more than 40 times in the next two decades. This is likely to intensify the competition in the field.
China doesn’t just dominate supplies, it also has a head start of close to 25 years over other countries in developing the skills required for exploring and processing critical minerals. In recent times, Europe has woken up to the need to train mining engineering talent and taken steps to address skill gaps.
In February, the Budapest-headquartered European Institute of Innovation and Technology launched a Battery Alliance Academy that will train 8 lakh workers by 2025 for the EU’s battery industry.
Japanese corporations have made some headway in developing processing technologies. Policymakers in other countries have begun conversations to address the needs of the new knowledge economy.
Last month, the Australian Resources and Energy Employer Association published a report estimating the industry’s workforce deficit. In several countries, including the US, there is talk of short-term collaborations with China — the new alliance notwithstanding.
India has, by and large, remained an outlier to such initiatives. The country’s skill development programme has nothing by way of building expertise in this emerging field. Industry watchers believe this deficit is an important reason for the country’s exclusion from the US-led partnership.
The Idea Page
Ladakh after 370 (Page no. 13)
(GS Paper 2, Polity and Governance)
Since the removal of Article 370, Ladakh has been through a range of emotions — from the initial euphoria to anxiety about its new status as Union Territory and the diplomatic and security challenges that followed.
Attempts by Pakistan and China at internationalising Ladakh at the UN were blunted. However, China accused India of “undermining its territorial sovereignty” by amending its domestic laws; Beijing announced that it “does not recognise the new status”.
Ladakh is being used as a pretext to backtrack on key border agreements — China even resorted to military hostility along the LAC and has refused to commit to the pre-2020 status quo.
For New Delhi, severing Ladakh from Kashmir was necessary to prevent it from getting engulfed in the vortex of instability that plagued the region, and to forestall any prospect of it falling in the list of international concerns.
Be that as it may, the Ladakh problem was left behind by the British to protect India from the Russian, rather than Chinese, threat. The British did accept the extent of its boundary with Russia at Karakoram Pass in 1873.
China too erected a pole at the Pass in 1892. Attempts to define a line east of the Karakoram and Kunlun ranges varied from the “forward” one proposed by William Johnson and John Ardagh to include Aksai Chin and Karakash River in India to a more “moderate” claim line endorsed by Lord Elgin in 1898.
London approved George Macartney’s suggestion of dividing Aksai Chin between Britain and China along the Laktsang range, leaving Aksai Chin to China and Lingzi Thang to India.
It was proposed to Beijing in 1899 by Claude MacDonald, but China did not reply to the proposal. London adhered to it till the end of the Qing Empire in 1911.
But in view of Russia’s advance in Xinjiang, the British, in 1927, adopted a forward strategy of favouring a boundary from Afghanistan to the Karakoram Pass running along the crest of the mountain range. The Johnson-Ardagh line once again became handy.
Explained
How India plans to step up energy saving game (Page no. 15)
(GS Paper 3, Environment)
In order to facilitate the achievement of more ambitious climate change targets and ensure a faster transition to a low-carbon economy, the government is seeking to strengthen a 20-year law, called the Energy Conservation Act of 2001, which has powered the first phase of India’s shift to a more energy-efficient future.
The Bill to amend the Energy Conservation Act, 2001, which was introduced in Parliament, has two main objectives.
First, it seeks to make it compulsory for a select group of industrial, commercial and even residential consumers to use green energy.
A prescribed minimum proportion of the energy they use must come from renewable or non-fossil fuel sources. And second, it seeks to establish a domestic carbon market and facilitate trade in carbon credits.
Importantly, the amendment Bill seeks to widen the scope of energy conservation to include large residential buildings as well. Till now, the energy conservation rules applied mainly on industrial and commercial complexes.
The 2001 law defined standards for energy conservation and efficiency to be followed by a select group of industries and commercial complexes.
Efficiency standards were also prescribed for equipment and appliances like air conditioners or refrigerators. This law set up the Bureau of Energy Efficiency (BEE) to promote the use of more efficient processes and equipment in order to save energy.
The star ratings on various household appliances and the largescale shift to LED bulbs were some of the successful initiatives of BEE that have resulted in massive energy savings over a period of time.
The overall objective has been to improve energy efficiency across sectors, so that much more productivity can be obtained from the same amount of energy. Over the years, India’s energy intensity, or the amount of energy consumption per unit of GDP, has declined significantly.
India’s higher climate targets (Page no. 15)
(GS Paper 3, Environment)
Nine months after Prime Minister Narendra Modi made a few headline-grabbing promises at the climate change conference in Glasgow last year, the government, converted two of those into official targets, which would now be part of India’s international climate commitments for 2030.
India’s NDC, or nationally determined commitments, have been updated with these two promises, both of which are enhancements of existing targets, and would be submitted to the UN climate body.
The 2015 Paris Agreement requires every country to set self-determined climate targets which have to be progressively updated with more ambitious goals every few years. India’s first NDC was submitted in 2015, just before the Paris Agreement was finalised.
India’s original NDC contained three main targets for 2030:
* A 33 to 35 per cent reduction in emissions intensity (or emissions per unit of GDP) from 2005 levels
* At least 40 per cent of total electricity generation to come from non-fossil renewable sources
* An increase in forest cover to create an additional carbon sink of 2.5 to 3 billion tonnes of carbon dioxide equivalent
At the Glasgow meeting last year, Modi promised to strengthen India’s climate commitments. He made five promises, and called it the ‘Panchamrit’, the nectar that Indians prepare using five ingredients.
Two of these were upward revision of existing targets, the ones that have been made official and put in the updated NDC.
Accordingly,
* India will now reduce its emission intensity by at least 45 per cent, instead of just 33 to 35 per cent, from 2005 levels by 2030.
* Also, it would now ensure that at least 50 per cent of its total electricity generation, not just 40 per cent, would come from renewable sources by 2030.
Economy
Higher capacity utilisation signals investment revival (Page no. 17)
(GS Paper 3, Economy)
In what brightens the prospects for fresh investments by companies, the capacity utilisation in the manufacturing sector has picked up over the last three quarters to 75.3 per cent by March-end compared with the long-term average of 73.7 per cent.
The higher capacity utilisation is being seen as a sign of return of growth impetus, which in some way has provided the headroom for the Reserve Bank of India to frontload the quantum of rate hike.
But going forward, tighter monetary policy conditions and uncertain demand conditions – both global and domestic – may weigh on the investment sentiment.
Across sectors, the signals are mixed. While steel and cement are witnessing an uptick, capacity utilisation in auto and consumer goods continue to lag.
Capacity utilisation is the ratio of actual output to the potential output that can be produced under normal conditions. Higher capacity utilisation, accompanied by order book growth, signals robust demand conditions in the economy.
Capacity utilisation in the manufacturing sector is now above its long-run average, signalling the need for fresh investment activity in additional capacity creation.
According to RBI’s survey, manufacturing firms expect sustained improvement in production volumes and new orders in July-September 2022, which is likely to sustain through January-March 2023.
The capacity utilisation has picked up pace from 68.3 per cent in Q2, 2021-22, to 72.4 per cent in Q3, and 75.3 per cent in Q4, as per the RBI’s Order Books, Inventories and Capacity Utilisation Survey, a quarterly quantitative survey, which collects information on product-wise utilised production capacity at the firm level to derive aggregate level capacity utilisation.