📰 Privacy is a fundamental right, declares SC
While saying it is intrinsic to life and liberty, the court also said that it is not an absolute right
•In a unanimous verdict, a nine-judge Constitution Bench of the Supreme Court on Thursday declared that privacy is intrinsic to life and liberty and an inherent part of the fundamental rights enshrined in the Constitution.
•The court held that privacy is a natural right that inheres in human beings because they are human. The state does not bestow natural rights on citizens. Natural rights like privacy exist equally in all individuals, irrespective of class, strata, gender or orientation.
‘Core of human dignity’
•“Privacy is the constitutional core of human dignity. Privacy ensures the fulfilment of dignity,” Justice D.Y. Chandrachud wrote.
•The Centre had argued against the recognition of privacy as a fundamental right. It had assured the court that privacy would be protected through parliamentary statutes.
•But the court retorted that statutory laws “can be made and also unmade by a simple parliamentary majority.”
•“The ruling party can, at will, do away with any or all of the protections contained in the statutes. Fundamental rights are rights citizens may enjoy despite the governments they elect,” Justice Rohinton F. Nariman explained in his separate judgment.
•The court chided the Centre for describing right to privacy as an “elitist construct.” Attorney-General K.K. Venugopal had argued that privacy was the concern of a few, while schemes like Aadhaar, which require citizens to part with their biometric details to the state, reduce corruption and benefit millions of poor.
Essential provision
•“The refrain that the poor need no civil and political rights and are concerned only with economic well-being has been utilised through history to wreak the most egregious violations of human rights. It is privacy, as an intrinsic and core feature of life and personal liberty, which enables individuals to stand up against a programme of forced sterilisation. It is the right to question, scrutinise, dissent which enables an informed citizenry to scrutinise the actions of government,” Justice Chandrachud said, addressing Mr. Venugopal's arguments.
•However, the court held that privacy is not an absolute right. The government can introduce a law which “intrudes” into privacy for public and legitimate state reasons. But a person can challenge this law in any of the constitutional courts of the land — the Supreme Court or the State High Courts — for violation of his fundamental right to privacy.
📰 SC overrules Emergency-era habeas corpus verdict
‘Judgments rendered by all the four judges constituting the majority in ADM Jabalpur case are seriously flawed’
•Over 40 years after the Supreme Court’s darkest hour when it said citizens had no right to life and liberty during the Emergency period, a nine-judge Bench condemned the decision in the infamous ADM Jabalpur case, better known as the habeas corpus case, as “seriously flawed.”
•The habeas corpus judgment in 1976 upheld the Congress government’s move to unlawfully detain citizens, including political rivals, during the Emergency years.
Cost of dissent
•Of the five judges on that Bench, only Justice H.R. Khanna dissented with the majority opinion of then Chief Justice of India A.N. Ray, Justices M.H. Beg, Y.V. Chandrachud and P.N. Bhagwati. Justice Khanna's dissent cost him the chief justiceship. He was superceded by Justice Beg, following which he resigned.
•On Thursday, for the first time in Supreme Court's history, a nine-judge Bench, led by Chief Justice of India J.S. Khehar, officially condemned the Supreme Court’s majority opinion in the habeas corpus case.
•The judgment, authored by Justice D.Y. Chandrachud, who, incidentally, is the son of Justice Y.V. Chandrachud, “expressly overruled” the 1976 majority judgment and removed a long-pending taint on the court's history as a people's champion.
•Justice Chandrachud, writing for himself, Chief Justice Khehar, Justices R.K. Agrawal and S. Abdul Nazeer, held that “the judgments rendered by all the four judges constituting the majority in ADM Jabalpur are seriously flawed. Life and personal liberty are inalienable to human existence”.
•“No civilized state can contemplate an encroachment upon life and personal liberty without the authority of law. Neither life nor liberty are bounties conferred by the state nor does the Constitution create these rights. The right to life has existed even before the advent of the Constitution,” Justice Chandrachud wrote.
•Hailing Justice Khanna for standing up to the government even at a personal cost, Justice Chandrachud said the majority judgments in the Jabalpur “should never have been”.
•Justice Rohinton Fali Nariman, in his seprate judgment, described Justice Khanna's dissent as one of the “three great dissents” in the Supreme Court's history.
•He calls the dissenting judgment of Justice Fazl Ali, who he describes as a "great judge", in the A.K. Gopalan case on preventive detention that fundamental rights in the Constitution are not watertight compartments as “a cry in the wilderness” and said that it took the Supreme Court 20 years to correct its view. Justice Nariman said the judgment took “his breath away”. The second great dissent was by Justice Subba Rao, who upheld the individual's right to privacy.
•He pointed to the introduction of the National Human Rights Commission law, which recognises right to life as a human right and observed that “developments after this judgment (ADM Jabalpur) have also made it clear that the majority judgments are no longer good law and that Khanna, J.’s dissent is the correct version of the law”.
•In his separate judgment, Justice Sanjay Kishan Kaul termed the ADM Jabalpur case as “an aberration in the constitutional jurisprudence of our country.”
📰 China agrees to tackle trade imbalance
Beijing does not want Doklam standoff to hurt trade; to send team to New Delhi by December
•China has agreed to send a high-level official team led by Commerce Minister Zhong Shan by December-end to address the issue of growing trade imbalance with India. The development could be termed a breakthrough for India which faces a ballooning goods trade deficit with its neighbour.
•China — which was earlier dilly-dallying on a bilateral meeting on the issue despite India’s repeated requests — has now relented, official sources said. This assumes significance as it comes amid reports of the possibility of the ongoing Doklam stand-off hurting bilateral trade ties.
•The sources said China is keen to ensure that trade with India is not adversely affected by the prevailing military tension. In case of a full-fledged ‘trade war,’ China will have much to lose with its goods exports to India in 2016-17 valued at a whopping $61.3 billion against India’s shipments worth just $10.2 billion to that country.
•On several occasions, New Delhi had pointed out to Beijing that many Indian products, including from agricultural and pharmaceutical sectors, were facing difficulties in getting access to the Chinese market and that this was among the main factors widening India’s goods trade deficit with China at a rapid pace — from just $1.1 billion in 2003-04 to a massive $51.1 billion in the last fiscal.
•The trade deficit was $52.7 billion in 2015-16.
•The sources said Beijing had agreed to address India’s concerns regarding China’s ‘Sanitary and Phytosanitary measures’ (regarding ‘application of food safety, and animal and plant health norms’) hurting Indian farm products exports to that country. Chinese authorities have also decided to look into India’s request to remove the ‘curbs’ on Indian pharmaceutical companies/products — especially those having the approval of American, European and Japanese regulators. Besides, Beijing would also soon take a call on removing the difficulties faced by the Indian IT/business process management sector in getting greater market access in China.
•Meanwhile, RSS-affiliate Swadeshi Jagran Manch (SJM) said it will intensify efforts for a “people’s movement” to ‘boycott’ Chinese goods imports. Deepak Sharma, national spokesperson, SJM, told The Hindu that “the SJM will conclude its ongoing ‘nation-wide campaign’ against ‘Chinese items and investment’ on October 29 at a planned massive rally in Delhi that is likely to be attended by about two lakh people.” He said “the movement had received the backing of about 1.1 crore people so far.” Mr. Sharma said “the Indian Government should impose anti-dumping duties on all unfairly low-priced imports from China and take all measures allowed within the World Trade Organisation-framework against China.”
Anti-dumping duty
•Commerce Minister Nirmala Sitharaman told Rajya Sabha on August 9 that: “Anti-dumping duty is in force on 93 products concerning imports from China, covering products in broad groups of chemicals and petrochemicals, products of steel and other metals, fibres and yarn, machinery items, rubber or plastic products, electric and electronic items and consumer goods. “In addition, 40 cases concerning imports from China have been initiated by Directorate General of Anti-Dumping and Allied Duties.”
•On August 22, Indian Embassy in Beijing said the decision to impose anti-dumping duties on the 93 products “were taken over a course of previous five years.”
📰 Worried SC calls for robust data protection regime
Capacity of non-state actors to invade the home and privacy has also been enhanced, says nine-judge Bench
•The Supreme Court on Thursday urged the government to put in place a robust mechanism for data protection.
•Noting that “informational privacy is a facet of the right to privacy”, a nine-judge Bench, led by Chief Justice of India J.S. Khehar, said dangers to personal data originate not only from the government but also from private players.
•“The dangers to privacy in an age of information can originate not only from the state but from non-state actors as well. We commend to the Union Government the need to examine and put into place a robust regime for data protection,” Justice D.Y. Chandrachud wrote.
Legitimate aims of state
•The court observed that the creation of a regime requires careful and sensitive balance between individual interest and legitimate concerns of the state. “The legitimate aims of the state would include for instance protecting national security, preventing and investigating crime, encouraging innovation and the spread of knowledge and preventing the dissipation of social welfare benefits,” the apex court observed.
•The court said the introduction of a “carefully structured” data protection regime and its contours were matters policy matters to be considered by the Centre.
•The court also took note of the Centre's move to constitute a committee of experts led by former Supreme Court judge, Justice B.N. Srikrishna, on July 31, 2017 to identify “key data protection issues” and suggest a draft Data Protection Bill.
•The Office Memorandum of the Justice Srikrishna Committee notes that the “government is cognisant of the growing importance of data protection in India. The need to ensure growth of the digital economy while keeping personal data of citizens secure and protected is of utmost importance”.
Panel report
•The Centre has undertaken in the court that the Ministry of Electronics and Information Technology would work with the panel and hand over all necessary information to it within the next eight weeks, after which the latter will start its deliberations. The Committee is expected to submit its report expeditiously.
•The government has already indicated in the court that the committee would be framing a data protection Bill similar to the “technology-neutral” draft Privacy Bill submitted by an earlier expert committee led by former Delhi High Court Chief Justice A.P. Shah to the Planning Commission of India in 2012. No steps were taken on the recommendations of the Justice Shah Committee.
📰 ‘Indians tend to borrow later in life’
Households’ finance landscape shows near total absence of pension wealth
•Indian households tend to borrow later in life and are more likely to reach retirement age with positive debt balances, which is a source of risk given that they are no longer earning income during these years, a report of the Household Finance Committee observed.
•The committee was formed following discussions at the Financial Stability and Development Council headed by Tarun Ramadorai, professor of financial economics, Imperial college London. It had representation from all the financial sector regulators.
•“Despite the high holdings of real estate, mortgage penetration is low early in life, and subsequently rises as households age. This is also at variance with Indian households’ counterparts in other countries,” the report said.
•The report further notes that the Indian household finance landscape is distinctive through the near total absence of pension wealth. “Pension accounts and investment-linked life insurance products exist, but they are only used frequently by households located in a small group of states, while in most other states, the contribution of pensions wealth to household wealth is negligible,” it said.
Unsecured debt
•The report observes high levels of unsecured debt, taken mostly from non-institutional sources such as moneylenders. As such debt generates high costs for Indian households, it is likely to lead to households becoming trapped in a long cycle of interest repayments, it said.
•The report notes a large fraction of the wealth of Indian households is in the form of physical assets — in particular, gold and real estate. But, it said they can benefit greatly by re-allocating assets towards financial markets and away from gold.
📰 Govt. tweaks norms to boost UDAN
Increases funding for helicopters
•The Civil Aviation Ministry on Thursday announced increasing viability gap funding for helicopter operators, diluting exclusivity clause and relaxed other norms to facilitate more participation in its regional connectivity scheme, UDAN. The government announced that all 13 passenger seats for helicopters will be considered for subsidy under the scheme.
•States including, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, North Eastern region, Andaman and Nicobar and Lakshadweep islands have been designated as priority areas. Airline operators flying from these priority areas will be allowed to operate 14 weekly departures as against the limit for seven weekly flights for other routes.
•The Ministry also abolished the 150-km minimum distance required between two airports to be qualified for operations under the scheme. It said airline operators may issue no-objection certificates to other airlines willing to operate on the same route.
📰 How the numbers compute
Making sense of the Supreme Court’s split verdict on triple talaq
•Tasked with determining if instant triple talaq is gender discriminatory under the Constitution, a terse order at the end of Tuesday’s Supreme Court verdict summarises the results of its labours: “By a majority of 3:2 the practice of ‘talaq-e-biddat’ – triple talaq is set aside”. Score-sheet summaries of this kind have been deprecated ever since the Supreme Court’s decision in Kesavananda Bharati(1973). From a careful reading of the three separate judgments that make up the court’s decision in the instant case, it is not at all entirely clear that triple talaq was in fact “set aside” by a majority of 3:2.
The three judgments
•In one common judgment, two of the five judges (Rohinton F. Nariman and U.U. Lalit) held that triple talaq was an element of statutory law — the Muslim Personal Law (Shariat) Application Act, 1937 — and, being arbitrary, was unconstitutional. They declined to express an opinion on the more general question of whether religious personal laws were immune from constitutional scrutiny under Article 25, which guarantees all citizens the right to freely practise their religion. (The Shariat Act of 1937 contained no reference to triple talaq and merely declared that the Shariat would be applicable uniformly to all Muslims in India in determining issues such as marriage, divorce, etc. Before the passage of this Act, Hindu inheritance laws were applied to certain Muslim communities in the North-Western Provinces, Punjab and Gujarat. This had a particularly pernicious effect on the rights of Muslim women which were relatively better secured under the Shariat.)
•In a second common judgment, Chief Justice J.S. Khehar and Justice S. Abdul Nazeer held that the practice of triple talaq, being a component of personal law, was protected by Article 25 of the Constitution and could not be interfered with by the court. In the same breath they directed that this practice be abrogated by Parliament through legislation.
•Matters standing thus evenly divided, the entire weight of the decision shifted to the opinion of the fifth judge, Justice Kurian Joseph. From the summary, we would expect him to have concurred with Justices Nariman and Lalit on the unconstitutionality of triple talaq. Astonishingly, his decision (a meagre 27 pages in a 397-page judgment) goes neither way. Justice Joseph holds triple talaq to be inoperative not because it violates fundamental rights, but because it is, on his reading, “Anti-Quran” and hence violative of the Shariat. Tellingly, he disagrees with Justices Nariman and Lalit on whether “the 1937 Act is a legislation regulating triple talaq and hence, [would be subject to the test] of Article 14”. This is a central pillar holding Justice Nariman and Justice Lalit’s argument together, and on no reasonable view can Justice Joseph’s judgment be understood as ‘concurring’ with theirs.
A cosmetic unity
•What we are left with is two judges who uphold the constitutional immunity of triple talaq, two who strike it down as unconstitutional, and one who does not think it is even law.
•In light of this radical discord between Justice Joseph and Justices Nariman and Lalit, what are we to make of the misleading “3:2” majority by which triple talaq was allegedly set aside as unconstitutional?
•Whatever else one might read into the decision, it is clear that three judges of the Shayara Bano v. Union of India case did not come to the determination that triple talaq is gender discriminatory and hence unconstitutional — the very question that they were tasked with answering.
•It is possible to cosmetically unite the three ‘majority’ judges at the level of an abstract intention, evinced in their judgments, that triple talaq is an undesirable practice and ought not to remain law. Such an indulgent interpretation however would reduce the complex task of judgment to the arbitrary, whimsical exercise of signing a summary — hardly worth the serious judicial time that this case has consumed. Undoubtedly, over time, this decision will come to be misdescribed in textbooks and judgments as one that ‘declared triple talaq unconstitutional’. In this process, 27 pages of Justice Joseph’s writings will probably be rendered mute in order to furnish the decision with an identifiable ratio .
•As officers of the highest court in the land, judges of the Supreme Court ought to be held accountable to high standards in their task of clarifying the law. They need reminding that the analytical rigour, clarity and consistency that their judgments lack will not somehow assemble in the minds of subordinate judges and students of the law, and that achieving a mathematical result (3:2) is no substitute for a reasoned decision.
•Despite a 397-page judgment from the highest court in the land, ‘somehow’ is the best answer we have to the question of why triple talaq is no longer law.
📰 Citizen vs State
The unanimous verdict on privacy is a restatement of core constitutional principles
•In a rare unanimous verdict pronounced by nine judges, the Supreme Court has ruled that privacy is a fundamental right that requires constitutional protection. It was always known or assumed to be a common law right. Occasionally, and somewhat grudgingly, it was recognised in some verdicts as a fundamental right. In concluding that “the right to be left alone” is an inalienable part of being human, the court has restated a fundamental principle, namely that some rights are natural and inherent; constitutions only recognise them and make them explicit. This restatement of first principles became necessary mainly due to a strange and perverse argument by the Union government in the course of the hearings on the validity of its Aadhaar-based unique identity scheme that privacy is not a fundamental right. The fact that all the judges unanimously came down on this argument shows how much the government misunderstood the constitutional underpinnings of privacy as a value in itself and as an ineluctable facet of human dignity. The government argued that privacy is “so amorphous as to defy description”, that it is needless to call it a fundamental right as it is one in common law, and that it has been given statutory protection in different forms. There was even a suggestion that privacy is an imported value and that it is elitist. All these arguments fell by the wayside.
•The outcome was not entirely unexpected. Not many would have seriously believed a constitutional court would rule that privacy is not a cherished right in a democracy. What implications the ruling would have on state policy and citizens’ rights will be the core issues in future. A welcome aspect of the judgment is that it makes it clear that sexual orientation is part of privacy and constitutionally protected, and that the 2014 verdict upholding Section 377 of the Indian Penal Code is flawed. This opens up the case for a much-needed reconsideration. As for Aadhaar, it is pertinent to note that the judges have referred to the restrictions and limitations that privacy would be subject to. The test to decide the validity of any such restriction is that it is reasonable, based on fair procedure and free from arbitrariness or selective targeting or profiling. It can also be based on compelling state interest. This is where a cautionary note is in order. Courts exercising writ jurisdiction should be cautious about the nature of the relief they grant based on wide and open-ended claims of breach of privacy. The verdict has advanced and revivified core constitutional principles in an era in which privacy is pitted against state interest. Somehow, privacy as a value finds itself at loggerheads with notions of national security, the needs of a knowledge society and even socio-economic policy. Hopefully, this judgment will set many such concerns at rest and bring about a more equitable relationship between citizen and state.
📰 Endgame for Section 377?
The argument against it must be premised on the idea of the right to equality before the law, not just privacy
•The guillotine has fallen on the right of men to unilateral divorce by mere pronouncement in one go. It is a reflection of the failure of politics in India, and the pusillanimity of the political class that is its custodian, that the practice had the long life that it enjoyed in a secular republic. And even though it is disappointing that none of the judges came to the conclusion of the unconstitutionality of triple talaq via the path of equal rights — in this case of India’s women — it is yet the case that the highest court of the land has pronounced a negative verdict on the practice. Rulings by the Supreme Court can have significant spread effects.
Far-reaching rulings
•Even when rulings in one case may not directly impact those in other areas, they have the potential to change behaviour across society. Thus, activists see the ruling against triple talaq as generally empowering women among India’s Muslims. Similarly, the ruling that has closely followed it in time, namely the one upholding privacy as a fundamental right of the citizen under the Constitution, is believed to have major implications for the lives of Indians. We can see immediately that it stalls the incipient rise of the surveillance state. But it has been suggested that it has the potential to impact the Indian state’s regulation of sexual relations. In particular, it has been suggested that the ruling has a bearing on the constitutional validity of Section 377 of the Indian Penal Code (IPC) which criminalises acts “against the order of nature”. In the first instance, this immediately devalues by association the homosexual condition, a historical peeve of European Christianity. It should be recognised that even though all religions drawing upon West Asian culture have strictures against homosexuality, it was the West that justified sexual persecution on aesthetic grounds. Under Hitler homosexuals were to be exterminated so that Germany would be populated by the perfect race. It needs to be acknowledged at the same time that it is the Christian West that has taken the lead in reversing the historical prejudice against homosexuality and that members of its political class have played a leading role in this. But we live in India and must perforce address its realities.
•Within minutes of the Supreme Court’s ruling on the primacy of privacy, commentators pointed out that it has implications for Section 377 as no longer can sex acts in private be overseen by law. While this may at first blush appear to be a tenable interpretation, it is not an argument that is made by activists for gay rights. Incidentally, it must be said that this group includes a large number of Indians who are not in any way circumscribed by Section 377 as the fight for sexual equality is not spearheaded by gay men. So why is the argument against Section 377 not to be based on the right to privacy but to be premised instead on the idea of the right to equality before the law? While privacy is of paramount importance, in itself it cannot be the clinching argument in the context. After all, do individuals have the right to violence in the privacy of their homes? We may well agree with a man that his home is his castle, and therefore beyond the invasive remit of the state, but we are unlikely to agree with his right to domestic violence. He has no right to subjugate his spouse through violence, not even in the privacy of his home. The case against Section 377 must be based on the argument that it is arbitrary in proscribing all but the ‘missionary position’ in intercourse. What the Indian law as it stands does is to violate the right to non-discriminatory treatment of the LGBT community who invariably reject this position.
•So are we witnessing the endgame of Section 377? Hardly, it would be seem, though we should not give up all hope to seeing a civilised India in our lifetime. Why so? At least, the arguments of some of the judges of the Supreme Court are not a cause for optimism. The swing judge, so to speak, in the talaq ruling thought of the practice as bad in religion and therefore not “good in law”. This has a direct bearing on the path of LGBT rights in India as homosexuality is proscribed in some religions. Is this to be interpreted as suggesting that India’s gay Muslims and Christians should remain criminalised for all time? Not if we are to go by the court’s earlier rulings. The NALSA judgment of 2014 is a landmark one in that it upheld the right to choose one’s sexual orientation. However, it did not go far enough to call for a repeal of Section 377. In some ways, however high-minded the judges in that case may have been, they did not allow their minds to soar enough to recognise sexual rights as legitimately redeemable through practice.
The political argument
•While the courts may get away without addressing the sexual rights of Indians constrained by Section 377, the political class cannot any longer credibly do so. The Bharatiya Janata Party (BJP) and the Congress cry themselves hoarse with their slogans ‘sabka saath, sabka vikas(together with everyone, everyone’s progress)’ and ‘inclusion’, respectively. If the populace are to see these as meant to no more than stimulate a self-induced rapture, the political parties have their task cut out. The Congress must recognise that the provisions of this law are exclusionary in that it leaves out a section of Indians. The BJP on its part had better get to finally see that ‘vikas’ is all about flourishing lives and not just making goods in India for sale abroad. If the Kinsey report on sexuality based on the United States experience is to be taken as a benchmark, we would have to heed its finding that around 10% of men are homosexual.
•This is larger than some of India’s religious groups. It appears that for the main political parties of India,sabka vikasamounts to privileging religion, even when it is exclusionary. But if they would only dare to see the full logic of their pronouncements, they cannot shrink from devoting their energies to empowering the LGBT community in India. Among India’s political parties, the CPI(M) alone has frontally sought repeal of Section 377, even though this may have something to do with the intelligence of its JNU-educated leadership rather than their MPs, not to mention the rank and file of the party. The Congress did include Section 377 in its manifesto in 2014, but somewhat limply under the section on governance, betraying its timidity. After all, its clan-based allies from Uttar Pradesh and Bihar, on whom it increasingly relies, seem unable to see beyond their families and their biradari, showing little concern for women, linguistic minorities or civil liberties in general.
Fighting with pride
•Having tasted the sweetness of power, the BJP has begun to choose its words more carefully. As soon as the ruling on triple talaq was announced, the entire leadership was all agog with tweets and statements. The Minister for Law and Justice spoke of the judgment having upheld “gender justice, dignity and equality”. He couldn’t have been more precise. Could he not have noticed that that is exactly what repeal of Section 377 of the IPC will achieve on the sexual plane, we wonder. But while legislation for its repeal may be some way off, the LGBT movement of India is here to stay. Chances are that in a city near you preparations are on right now for the next annual ‘Pride’ march. It would be a party with a difference as all parties are welcomed. You could even walk your talk.
📰 Don’t fear trade deficit
Irrational fears over trade with China or any other country must be put to rest
•Amidst rising political tensions between India and China, trade relations between the two countries have come under some pressure recently. India’s trade deficit with China, which stands at over $50 billion, has been projected by many on the Indian side as an economic evil that needs to be curbed by all means. To this end, they have demanded heavy tariffs and bans on Chinese imports. The trade deficit with China, in effect, is seen as a loss to India and a gain to the Chinese economy. So, naturally, steps to curb it are seen as justified.
Balance of trade
•Union Commerce and Industry Minister Nirmala Sitharaman, for instance, held talks with her Chinese counterpart earlier this month demanding greater access for Indian goods to the Chinese market. While the idea of unrestricted cross-border trade sounds great, the focus of her talks was on trimming the trade deficit rather than promoting free trade. Such fear of the trade deficit, however, makes very little economic sense. This is because, contrary to popular belief, the prevalence of a trade deficit, or a trade surplus for that matter, says nothing about whether a country benefits or loses out from trade. In fact, since free trade between countries happens on a voluntary basis, where individuals try to improve their lives, it is always beneficial to all sides. This is also the fundamental logic behind the overwhelming support for free trade among economists.
•To make things simple, the balance of trade reflects how an economy earns its foreign exchange, and how it decides to spend it subsequently. Take the case of India’s trade deficit with China. India earns Chinese yuans primarily from Chinese investors who seek to invest in assets in the country. At the same time, India uses these yuans that it receives from Chinese investors mostly to purchase Chinese goods, rather than to invest them in Chinese assets. This preference among Indians for Chinese goods rather than assets, combined with Chinese preference for Indian assets rather than goods, is what causes India to suffer a trade deficit. If Indians had a greater preference for Chinese assets, and the Chinese had a greater preference for Indian goods, the situation would reverse and India would enjoy a trade surplus instead. The trade deficit is thus a mirror image of a capital surplus, which is formed by the relatively larger inflow of Chinese capital into India than vice versa.
•As one can see, quite obviously, there is very little that is wrong with this state of affairs. A man who sells his assets to his fellow countrymen to purchase goods from them, for instance, would suffer a trade deficit and a capital surplus with the rest of the country. Very few would argue that the man suffers a loss from the trade, while the rest of the country gains from it. The same logic holds true when it comes to trade between countries as well. It is high time irrational fears over trade with China, or any other country, are put to rest once and for all.
