📰 The gag on free speech
Recent actions by the Indian judiciary suggest a trend of creeping censorship
•On Wednesday, a special Central Bureau of Investigation (CBI) Court, hearing the Sohrabuddin Sheikh and Tulsiram Prajapati fake encounter cases, issued a gag order prohibiting the press from reporting on the court proceedings. This order, allegedly issued at the behest of the lawyers for the defence has come only a few days after the Allahabad High Court gagged the media from reporting on an ongoing case concerning an alleged instance of hate speech by the Chief Minister of Uttar Pradesh, Yogi Adityanath, in 2007, who was then a Bharatiya Janata Party parliamentarian from Gorakhpur, Uttar Pradesh.
A growing trend
•These two instances, which are not isolated, are representative of an alarming trend of creeping judicial censorship, increasingly across large domains. The Indian judiciary has had a historically ambivalent relationship with free speech, from upholding the constitutionality of sedition in 1962, to endorsing the law of criminal defamation in 2016. Recently, however, it has begun to go further than simply rejecting constitutional challenges to the state’s speech-restrictive laws. Traversing well beyond the bounds of the Constitution, it has begun to actively censor or compel speech of its own accord, without even the existence of a parliamentary law on the subject. Recent, notorious examples include the Bombay High Court constituting a “committee” to recommend cuts to the satirical film, “Jolly LLB 2”, the Madras High Court telling condom manufacturers to have the illustrations on their packets cleared by the Advertising Standards Council of India, and the Supreme Court directing cinema halls to play the national anthem before the screening of every movie.
•However, the CBI Court and the Allahabad High Court’s gag orders, are significantly more serious because they strike at the heart of our system of democratic governance. The task of courts under the Constitution is to deliver justice, and a functional democracy is defined by a justice system that is open, transparent, and, above all, public. The authority of judges and courts, we must always remember, stems not from popular consent and periodic elections, but from their fidelity to the laws and the Constitution, and the strength and quality of their legal reasoning. For these reasons, “secret justice” — bringing to mind the infamous trials of the Star Chamber in medieval England — is a paradox in terms. As the great British judge, Lord Diplock, noted, “if the way that courts behave cannot be hidden from the public ear and eye, this provides a safeguard against judicial arbitrariness or idiosyncrasy and maintains the public confidence in the administration of justice.”
Tracing the line
•Unfortunately, however, the judicial gag orders, by the CBI Court and the Allahabad High Court, were enabled, at least in part, by the Supreme Court itself (although it is questionable whether the CBI Court had even the power to pass a gag order, let us assume, for the purpose of argument, that it did). In 2012, the Supreme Court held that in certain circumstances, courts could pass “postponement orders” barring coverage of specific judicial proceedings. The court framed the issue as requiring a balancing of two competing rights: the right to free speech, and the right to a fair trial. Observing that sometimes excessive publicity could jeopardise a fair trial, the court held that to the extent it was reasonable and proportionate, “prior restraints” on court reporting could be imposed.
•There are, however, two problems with this. First, the idea that “media trials” might distort the outcomes of cases makes sense in a jury system, where guilt or innocence is decided by a jury of twelve men and women who do not possess specialised legal training, and need to be immunised from undue forms of influence. In India, however, we abolished jury trials more than 40 years ago, and it is judges now who decide cases on their own. Judges, by definition, are not only supposed to apply the law but also have to have the relevant training and temperament to apply the law regardless of whatever public outcry that might exist outside the courtroom. The argument for fair trial, therefore, betrays a startling lack of faith in the judiciary’s own ability to decide controversial cases objectively.
•Second, and more importantly, the 2012 Supreme Court judgment failed to adequately limit the kinds of cases in which these exceptional “postponement orders” could be passed; it failed to limit the duration for which they could be passed. In fact, by using subjective words such as “reasonable” and “proportionate”, it left the door wide open for future courts to issue sweeping gag orders, insulating themselves from public reporting and, thereby, public criticism. As media and civil rights lawyer Apar Gupta noted at the time, the judgment was so “open to interpretation and probable abuse” that, in the course of the years, it could well transform itself into a “gag writ.” The recent orders of the CBI Court and the Allahabad High Court indicate that this is precisely what has happened.
Handling misreporting
•It is often argued that the media reports court proceedings inaccurately; judicial observations are published out of context just to provide good headline copy, and sometimes, there is outright misquotation. In fact, this was precisely the reason cited by the Allahabad High Court to justify the gag order, although the court did not provide any examples of “misquotation”. There are, however, laws to deal with inaccurate reporting, especially the Contempt of Courts Act, which the judiciary has never shied away from invoking. Perhaps more importantly, however, there is a more straightforward way of dealing with the spectre of misreporting: to make written transcripts and audio or video recordings of court proceedings available to the public. Until that happens, to ban reporting of court proceedings by invoking “misquotation” is to invoke a bogey at worst, and to throw the baby out with the bathwater at best.
•Of course, there might be situations where inaccurate reporting could cause imminent damage. Imagine, for example, the cross-examination of the principal accused in a communal riot, in an already charged atmosphere. There might also be situations where a case involves arguments pertaining to national security, which cannot at that time be made public. In these situations, a temporary halt on reporting could be justifiable, but it is in the very nature of these situations that the bar would be limited to a single hearing, and only in the most exceptional of situations. The CBI Court and the Allahabad High Court’s sweeping gag orders do not even come close to satisfying that condition.
•Ultimately, the trial courts and the High Courts take their cue from the Supreme Court, which is the ultimate driver of jurisprudence. And unfortunately, earlier this year, the Supreme Court passed a sweeping gag order of its own. While convicting (the now retired) Justice Karnan of contempt of court, a bench comprising the seven senior-most judges of the Supreme Court ordered that “no further statements issued by Shri Justice C.S. Karnan would be publicized”. Whatever the special circumstances of that case, there is little doubt that such a command sends a clear message about the appropriateness of sweeping gag orders, should a court feel that they are necessary.
•The CBI Court and the Allahabad High Court’s gag orders demonstrate an urgent need for some conscious course-correction by the judiciary. They come with a democratic cost that is simply too high to pay: sunlight, they say, is the best disinfectant. Often, it is the only disinfectant.
📰 Capturing crime — on the NCRB data for 2016
The increase in crimes against women must prompt better policing and all-round reform
•The National Crime Records Bureau data for 2016 on two important aspects, violent crime and crime against women, should prompt State governments to make a serious study of the underlying causes. Not all States are equally affected; Uttar Pradesh and Bihar record the maximum number of murders. The national tally on crimes against women, which includes rape, abduction, assault and cruelty by husband and relatives, is up by 2.9% over that of 2015. Going by the data, there is a distinct urban geography as well for violence against women, with Delhi and Mumbai appearing the least safe: Delhi recorded a rate of crime that is more than twice the national average. As several studies have shown over the years, the annual data is useful in reviewing trends of extreme events, such as murder, but less so in the case of other offences that tend to be underreported. Viewed in perspective, the murder rate today has declined to the level prevailing in the 1950s, which was 2.7 per 1,00,000 people, after touching a peak of 4.62 in 1992. But that macro figure conceals regional variations, witnessed in U.P. and Bihar, where 4,889 and 2,581 murder incidents took place during 2016, respectively, while it was 305 in densely populated Kerala. One question that needs to be analysed is, how much does social development influence a reduction in crime?
•In the years since the Delhi gang rape case of 2012 that shook the country, the definition of the heinous offence has been broadened, police forces have been directed to record the crime with greater sensitivity, and some measures initiated to make public places safer for women. This approach could lead to a reduction in violent crime over time. A focussed programme to universalise education and skills training would potentially keep juveniles from coming into conflict with the law. Last year’s data indicate that there is a rise in the number of cases involving juveniles. There are also basic issues that need urgent reform, such as modernising the police, recruiting the right candidates and teaching them to uphold human rights. The orders of the Supreme Court on police reforms issued in 2006 have not been implemented in letter and spirit by all States. With genuine measures, Ministerial superintendence over the police would become more transparent and socially accountable, eliminating political interference in its working. This would lead to a reduction in crimes committed with impunity and raise public confidence in the criminal justice delivery system. As a measure of data improvement, it should be mandatory to record not just the principal offence in a case, as the NCRB does, and list all cognisable offences separately. Rather than view the available data passively, governments would do well to launch serious studies that result in policies and measures for freedom from violence.
📰 A misleading hunger index
In its calculations, the Global Hunger Index assigns a disproportionate value to child undernourishment
•Per capita food production in India has increased by 26% (2004-05 to 2013-14), while it has doubled in the last 50 years. While this kind of growth rate in food production is expected to reduce hunger significantly over time, the Global Hunger Index (GHI) prepared by the International Food Policy Research Institute (IFPRI), shows India’s hunger level in very poor light.
A closer look
•The 2017 GHI score has India ranked 100 out of the 119 countries listed. While a casual reading would create the impression of India being among the worst performers and underachievers in addressing food and nutrition security, closer scrutiny shows that it should not be taken at face value as it is neither appropriate nor representative of hunger prevalent in a country. However, despite improvements, India still faces a problem of undernourishment and poor child health.
•The GHI for 2017 is calculated as a weighted average of four standardised indicators, i.e. the percentage of population that is undernourished; percentage of children under five years who suffer from wasting; percentage of children under five who suffer from stunting, and child mortality. Undernourishment and child mortality each make up a third of the GHI score, while child stunting and child wasting make up a sixth of the score, and together make up a third of the score. Three of the four indicators, refer only to children below five who constitute only 11.5% of India’s population. Further, the percentage of the undernourished population is inclusive of undernutrition among children. This way, the GHI assigns 70.5% weightage to children below five who constitute only a minor population share and 29.5% weightage to the population above five, which constitutes 81.5% of the total population. Therefore, the term “Hunger Index” is highly biased towards undernutrition of children rather than representing the status of hunger in the overall population. It would be more appropriate to term the conceptualisation and composition of this composite index as a “Global Hunger and Child Health Index” than as a “Global Hunger Index”.
•Evidence shows that weight and height of children are not solely determined by food intake but are an outcome of a complex interaction of factors related to genetics, the environment, sanitation and utilisation of food intake. The IFPRI acknowledges that only 45% of child mortality is due to hunger or undernutrition.
•Without undermining the need for improvement in reducing wasting, stunting and mortality of children, our calculations show that if child health indicators are not included in the GHI, India will move to the 77th spot. India’s ranking in terms of child mortality, child stunting and child wasting is 80, 106 and 117, respectively.
Calculating hunger
•The incidence of hunger is taken as the proportion of the population whose food intake provides less than its minimum energy requirements. The figure of the incidence of hunger depends on energy norms and the methodological approach used in its estimation.
•There is still inconclusive debate on the cut-off for minimum energy requirement calculation. At a global level, the Food and Agriculture Organisation of the United Nations (FAO) has an average norm of 1,800 kcal, while the Indian Council of Medical Research-National Institute of Nutrition (ICMR-NIN) specified average norm of 2,400 kcal for rural areas and 2,100 kcal for urban areas in India, varies across age, gender and activity-level. There is a strong case to revise the ICMR-NIN norms as the actual requirement of energy is decreasing due to a shift towards mechanisation and more congenial work conditions and environment.
•There is a large difference in the incidence of undernourishment (hunger) reported by the FAO and estimates prepared by various experts. It follows from the large variation in the choice of norm and methodology and data used for such an estimation. The unit-level National Sample Survey Office (NSSO) data on Household Consumption Expenditure for the latest year (2011-12) indicate that 72% of India’s population consumed less food than required to meet the calorie norm specified by ICMR-NIN. Applying the ICMR-NIN norm, a significant percentage of the population even in rich income households is undernourished. This shows that either the ICMR-NIN norm is on the higher side or these people voluntarily chose to eat less than what the ICMR-NIN considers normative. If we apply the FAO norm to the household consumption data of the NSSO, the proportion of the population with calorific deficit was 37.32% in 2004-05 and 29.55% in 2011-12. On the other hand, the FAO’s State of Food Security and Nutrition in the World report has placed the incidence of undernourishment in India at 20.9% for 2004-06 and 17.5% for 2010-12. The much lower estimate here is because it overestimates the proportion of food crops used as food and underestimates the share going for non-food uses such as feed and industrial use. The FAO approach underestimates hunger and undernutrition in those countries where exact and up-to-date estimates of food output diverted to non-food uses are not available.
•The FAO norm applied to NSSO data on Household Consumer Expenditure indicates that in 2011-12, about 30% of India was undernourished or suffered from hunger, as per the UN definition of hunger.
•To avoid confusion about the status of hunger and undernourishment, India should regularly prepare and publish official estimates of hunger, like that of poverty. It will also help in tackling hunger.
📰 Disability rights over time
A quick recap of how legislation for disabled persons has evolved
•In 1992, the United Nations announced that December 3 would be observed every year as International Day of Persons with Disabilities. While disabled persons continue to struggle to secure employment and navigate their way around with poor infrastruture, and are still treated as “others”, it is worth recalling the advances in legislation on disability over the years.
•The disability rights movement gained momentum in the 1970s when disability was started to be seen as a human rights issue. This is when the UN General Assembly proclaimed in 1976 that 1981 would be the International Year of Disabled Persons. Later, 1983-1992 was marked as the United Nations Decade of Disabled Persons. The UN Convention on the Rights of Persons with Disabilities (UNCRPD), 2006 was a big step towards viewing persons as “subjects with rights” and not “objects of charity”. (India is a signatory to the UNCRPD and ratified it in 2007.) Further, the 2030 Agenda for Sustainable Development pledges to “leave no one behind”. It states that persons with disabilities must be both “beneficiaries and agents of change”. However, attitudinal, institutional, and infrastructural barriers remain, with the World Bank stating that 15% of the world’s population experience some form of disability and that they “on average, as a group, are more likely to experience adverse socioeconomic outcomes than persons without disabilities”.
•In 2011, the World Health Organisation came up with a world report on disability for the first time. Its introduction showed how disabled persons aren’t “other people”, but that all of us at some point will be “temporarily or permanently impaired” and those “who survive to old age will experience increasing difficulties in functioning.”
•In India, according to the 2011 Census, 2.21% of the population has one or multiple types of disabilities, making the country home to one of the largest disabled populations in the world. World Bank data suggest that the numbers are nearly four-five times higher. Legislation moved forward last year in India when the Rights of Persons with Disabilities Act was passed, replacing the Persons with Disabilities Act, 1995. The 2016 Act recognises 21 kinds of disabilities compared to the previous seven, including dwarfism, speech and language disability, and three blood disorders.
•The new Act also increased the quota for disability reservation in higher educational institutions from 3% to 5% and in government jobs from 3% to 4%, for a more inclusive society. However, legislation alone is not enough; implementation remains abysmal. For instance, data from the National Centre for Promotion of Employment for Disabled People show that 84% of seats for persons with disabilities lie vacant in top universities. While we have a long way to go in implementing these laws, we must also keep in mind that a one-size-fits-all approach is unhelpful for disabled persons. Levels and types of disabilities differ and so do needs.
📰 ‘Resolve Rohingya refugee crisis through diplomacy’
Experts say issue should not be linked to problems regarding the stateless people
•Even though the crisis concerning Rohingya refugees in India seems to have subsided, veteran experts on statelessness and refugees have called for resolving the issue through diplomacy.
•Pointing out that the Rohingyas form a category distinct from stateless people in the country, K.M. Parivelan, associate professor and chairperson of the Centre for Statelessness and Refugee Studies at the School of Law, Rights and Constitutional Governance (SLRCG) Tata Institute of Social Sciences (TISS), says the Rohingya issue need not be linked to problems regarding the stateless people.
•According to an estimate, there are 40,000 Rohingyas living in different States of India.
•He elaborates that India, using its goodwill with Myanmar, can convince the latter of the need for resolving the problem in a ‘humane way’ and providing to the affected people rights on a par with citizens of the south-east Asian country.
•V. Suryanarayan, former Head of Department of South and South Asian Studies, University of Madras, says the Indian government should persuade Bangladesh to “look after them, after all they came through that country.” The problem with Bangladesh is that it “does not provide job opportunities,” as a result of which Rohingyas migrate to other countries.
‘Central govt. to blame’
•Talking of the problem of stateless people in India, Dr. Parivelan finds fault with the Central government, which, he says, “has no clue about who stateless people are.” Pointing out that there are different categories of stateless people, he says many States in the country have such people, whose case is different from each other. He cites the examples of “illegal migrants” from Bangladesh; Sri Lankan refugees in Tamil Nadu whose ancestors were taken to the neighbouring country during the British Raj and refugees in Jammu and Kashmir who came from Pakistan.
•Emphasising the need for proper identification of stateless people across the country, the academician suggests that legal reforms, taking a cue from the 1954 UN Convention on the Status of Stateless Persons and the 1961 Convention on Reduction of Statelessness, be made.
•Prof.Suryanarayan says the problem of statelessness will never end in the south Asian region as countries in and around India are making policies based on religions and languages of the majority.
•“Ethnic conflict in these countries will continue,” he says, adding that those affected by such policies can hope to get Indian citizenship in future in the event of the 2016 Citizenship Bill getting passed. The legislation has sought to reduce the number of years for getting citizenship by naturalisation from 11 years to six years.
•Inaugurating a two-day conference on statelessness organised by the Centre for Statelessness and Refugee Studies, United Nations High Commissioner for Refugees (UNHCR) and the Statelessness Network Asia-Pacific on Thursday here, Yasuko Shimizu, Chief of Mission, UNHCR India, referred to the examples of Sri Lanka, Bangladesh and Vietnam in sorting out issues concerning statelessness.
📰 The Brahmaputra conundrum
Indian strategists should prepare for a possible river diversion by China
•The news that China is planning to divert the waters of the Yarlung Tsangpo (the upper stream of India’s Brahmaputra) to its water-starved Xinjiang province is hardly surprising. It has been a long-standing part of the grand South-North Water Transfer project conceptualised as early as in the 1950s by Mao Zedong and somewhat grandly restated in Li Ling’s 2005 book Tibet’s Water will Save China.
•Indian and Bangladeshi water experts have, understandably, raised alarm bells over the plan for the adverse impacts it would have on downstream areas. For India, national security implications also follow as the Yarlung Tsangpo also flows into a disputed border region with China. Thus far, China has denied all claims of going ahead with the proposal on account of engineering difficulties and high-cost implications. However, as per the latest development, despite denials from the Chinese authorities, there is strong speculation that plans for a 1000 km-long tunnel are being tested in order to transfer water from the Yarlung Tsangpo in Tibet to Xinjiang. Given this mix of Chinese denial and Indian apprehension, how should Indian strategists react?
History of water interaction
•Understanding the Chinese psyche vis-à-vis its transboundary rivers and political relations is a prerequisite to informing the Indian response. There are four critical points that emerge from the history of interactions over water between China and India. One, the Brahmaputra agreement between China and India is a suboptimal arrangement within broader bilateral relations. As per the current agreement, China has thus far agreed to share hydrological data on the Yarlung Tsangpo/Brahmaputra (YTB) during the monsoon season. Why did China agree to cooperate in the first place when it has clearly resisted doing so for years, and with other riparian countries through which the Mekong flows? One of the explanations could be that this gesture of cooperation aligns well with China’s broader political strategy of portraying an image of a ‘responsible neighbour’. Despite two decades of negotiation, further cooperation on water, however, is in a state of a deadlock. The agreement, at best, is a piecemeal discount offered by China.
•Two, discussions over the YTB have often been overshadowed by the border dispute. Sino-Indian history is replete with examples wherein despite tense bilateral relations, cooperation over transboundary rivers has occurred. For instance, despite border incursion by the Chinese army in the Depsang Valley in Ladakh in 2013, China and India went ahead to sign the extension of the 2002 Memorandum of Understanding on data sharing on the Brahmaputra river. However, there has been no progress in discussing more pressing issues of who has the right to how much water and the impact of dams and diversions on the upper reaches of the river. In the past couple of years, instances of border incursions before ministerial-level meetings between India and China have often been witnessed.
•Three, departing from the past, China’s approach to transboundary water sharing is shifting towards multilateral arrangements. In 2015, China signed the Lancang-Mekong Cooperation (LMC) framework along with five other countries through which the Mekong flows. This China-led multilateral agreement is an alternative to the Asian Development Bank-led Mekong River Commission, which China never signed. The LMC aligns with China’s Belt and Road Initiative and focuses on land and water connectivity, besides river management. In South Asia, China has been insistent in establishing greater ties with Bangladesh on flood forecasting, water technologies, and water management. In 2016, a mainstream Chinese newspaper highlighted China’s willingness towards multilateral cooperation on the YTB. India, on the other hand, prefers bilateral relations, as it has with Pakistan, Nepal, Bhutan, and Bangladesh. India and Bangladesh already have a stressed relationship over Teesta river sharing, whereas China is cooperating more with Bangladesh on water issues. China charges approximately $125,000 for the data it provides to India; at the same time, it sends similar data to Bangladesh for free. By way of improving relationship with Bangladesh, China could well be aiming to encircle India to reach a deal on the sharing of YTB that favours China’s objective of economic expansionism.
•Four, the Indian approach to the YTB issue is influenced by developmental imperatives and domestic politics. The Brahmaputra is an important resource for India’s own water diversion plans – the national river interlinking project – and is considered a powerhouse to meet India’s energy demands in the future. India tends to play the lower riparian card to gain sympathy from its domestic political constituencies, especially of Assam and Arunachal Pradesh. Bangladesh and Pakistan have criticised India for being hypocritical in its approach with China, as India has been seen as an ‘alleged bully’ in sharing waters with them. While the concerns regarding Chinese diversion plans may be genuine, India also maintains the ‘China threat’ to a certain extent to veil its own administrative lapses and justify dam-building activities to its domestic audience.
What India needs to do
•A decade ago, India started planning multiple hydropower projects on the Brahmaputra as a reactive strategy against Chinese dam-building activities on the upper reaches of the river. This strategy is informed by the international law of ‘prior appropriation’, which states that the first user gets the rights to continue using that quantity of water.
•India will need to be more adept in responding to Brahmaputra river-related issues. First, it needs to clearly envision the desired end goal and strategic outcomes for dealing with impending water conflicts. Second, it needs to de-emphasise China’s role for the time being and restrengthen its relationship with Bangladesh. It needs to push the impending Teesta river agreement and restore its image as a responsible upper riparian. Third, India needs to mirror its strength and firmness in negotiations with China on water rights, as it did in the case of the Doklam stand-off and in opposing the Belt and Road Initiative, rather than projecting itself as a victim.
📰 GST effect: shaky Budget in offing?
‘With no clear number for targeted GST collections, is the Centre raking in as much as it should?’
•Revenue uncertainty due to the implementation of the Goods and Services Tax could pose very real problems for the government when the time comes for it to prepare the Budget for financial year 2018-19, according to tax analysts and government officials alike.
•The GST Council, in its latest meeting on November 10, announced several moves to ease the compliance burden on businesses, including deferring return filing deadlines for both small and large businesses, allowing small businesses to file quarterly returns, removing the need to file the GSTR-2 and GSTR-3 forms, and expanding the Composition Scheme to include more businesses.
•The Council also drastically reduced the tax rate on more than 200 goods, including most of the items in the highest 28% tax bracket.
‘Revenue unclear’
•“In the absence of a clear revenue number in the Budget for targeted GST collections, it is unclear whether the recent monthly collections in the range of ₹90,000 crore-plus will be adequate from a revenue neutrality perspective,” M.S. Mani, partner, GST, Deloitte India, said.
•“Revenue numbers for December, the first full month after the recent rate reductions, would be keenly watched.” The uncertainty caused by incomplete revenue data has already been felt, with the Chief Statistician of India TCA Anant highlighting the issue when he presented the GDP growth numbers for the second quarter of this fiscal.
•“In a normal year, businesses are conversant with the tax processes, and so know their tax liability, so the collections are usually in line with what is anticipated,” he said. “However, this year, the uncertainty surrounding GST procedures and the leeway the government has given in terms of extended deadlines has meant that the indirect tax collections for the particular period are still being updated.” This means the GDP growth figure stands to change considerably in the next revision when the final GST collection data comes in, he explained. While this has meant uncertainty surrounding the growth rate in a single quarter, the bigger issue is the uncertainty could pose a problem for the government in estimating the potential GST collections for the entire 2018-19 financial year as it doesn’t have a trend to base its projections.
‘Huge effect’
•“It [the effect on the Budget] is going to be huge,” Pronab Sen, country director, IGC’s India Central Programme, and former Chief Statistician of India, said. “Now that we have advanced the Budget-making date to actually November — by the middle of November they must start the process, so that it’s complete by the middle of December — you will have only four months’ data of GST, and even that data will not be complete. This is a problem. You don’t have complete data, you haven’t verified your input tax credit claims, so you really don’t know what the net effect is going to be. So, I suspect that a lot of this is going to be sheer guesswork.” The view among tax analysts is that easing compliance cannot come at the cost of certainty about revenue collections.
•“Simplification should not actually mean the government cannot rely on what it is collecting,” Archit Gupta, founder and CEO of Cleartax said.
•“Changes in rules have been numerous, which is good and bad, since it does show that the government is flexible, but it also has meant that there has been great uncertainty in how and when to file the returns.”
•Another issue is the Budget-making process will not be able to incorporate the recent and drastic rate reductions, since they came into effect on November 15. So, a full month’s data with the new rates will be available too late to incorporate in the Budget. “The government has been coming out with its revenue numbers in the last week of the month,” a tax analyst said on condition of anonymity due to the sensitive nature of the insights. “So, the numbers for December..., will come only in the last week of January. But February 1 is when they will present the Budget.”
•The challenge lies here, as “the Budget-making process will largely take place in December,” the analyst said. At the time, “they will have only July, August, September, October numbers. But October numbers will be a little deceptive primarily because it was a festival month. It will be very difficult to extrapolate using that month’s data.”
•“The frequent changes in rates have made determination of ‘ideal’ revenue from GST even more difficult,” Mr. Mani added. “While expansion of the tax base and improved compliance would lead to increased revenues in the long run, short-term revenue concerns in light of recent sweeping rate reductions would be an area of focus for the government inthe budget-making process.”
•The government will not have the benefit of using last year’s Budget Estimates of indirect tax revenue to gauge collections in the next year, either. “When revenue projections for the current year were made, those did not factor in GST at all,” the tax analyst said. “They talked of excise duty, customs, services tax, etc. No GST projections were made.” So, “the government will have to talk of what level of GST has replaced excise and service tax. Right now, we have no comparison for the GST collections.”
‘Targets missed’
•A back-of-the-envelope calculation shows revenue foregone by major taxes subsumed by GST (excise duty, service tax, countervailing duty, special additional duty, VAT, entertainment tax and luxury tax) amounts to about ₹12 lakh crore a year.
•In other words, if the government collects roughly ₹1 lakh crore per month, it should be in a revenue neutral position compared with the pre-GST scenario.
•It has, however, been consistently missing that target. While it collected between ₹92,000-95,000 crore a month in the first three months of GST, it collected slightly more than ₹83,000 crore in October, and this didn’t even take into account the subsequent rate reductions. Analysts expect the November and December collections to be even lower.
•The final GST-related problem the government is likely to face come Budget time is on compensation payable to the States for any losses they incur due to GST. So far, the government has not estimated how much this would be.
•According to tax analysts, the inability to project the total amount needed to compensate States also means it becomes very difficult to estimate whether collections so far from the compensation cess are enough.
•“Whether the compensation cess collections are adequate can be known only if there is an idea of what they are trying to achieve,” said the tax analyst.
📰 What’s behind the bitcoin boom?
While it has delivered stellar returns over the years, the volatile nature of the trade is not for the feeble-hearted
•As the price of the bitcoin leapt past $10,000 this week, marking a tenfold gain in 2017, many investors seemed to nurse a ‘missed-out’ feeling. The financial press ran ‘how-to-invest-in-bitcoin’ tutorials right alongside unflattering comparisons of the bitcoin boom to the Tulip mania. If you are among the Indian investors who are rueing their decision to skip bitcoins in favour of the stock market, here are some bitcoin facts that may make you feel better.
Scarcity premium
•In the financial markets, asset bubbles are spotted by comparing the traded price of an asset to its fair value. For stocks, the valuation metric may be the price-to-earnings or book value multiple. For oil or gold, there’s the cost of producing each barrel or ounce. The rupee is assessed on real effective exchange rate. But it’s hard to say if there’s a bubble brewing in bitcoins because it has no such valuation measure. Its price is therefore decided mainly by demand-supply dynamics.
•No one knows yet, if Bitcoin’s pseudonymous inventor Satoshi Nakamoto was a computer engineer, academic or Silicon Valley geek. But one subject that Nakamoto certainly understood was economics. He knew that when unlimited demand chases finite supply, the result is sky-rocketing prices.
•So, while creating the original algorithm to ‘mine’ blocks of bitcoins (new bitcoins are created when you use computers to solve complex mathematical problems set by the system), he set a finite limit on the bitcoins that could be mined for all time to come. He also ensured that the algorithm got more complex over time and that the bitcoin yield shrank in geometric proportion with each new block.
•This has effectively set a hard limit of 21 million on total bitcoin supply, of which an estimated 16.7 million (80 per cent) has already been mined. Mining new blocks now entails gigawatts of electricity and computing power.
•To make things interesting, there’s uncertainty about the existing bitcoin supply as well. About a million bitcoins are said to have been spirited away by Nakamoto himself, a few million have gone missing due to lost hard disks and forgotten passwords, and a good number are out of circulation because they’re stockpiled by investors.
•This scarcity factor and the lack of a fair value measure makes the bitcoin a great playground for speculators, but a very uncomfortable one for long-term investors.
High on volatility
•Looking back today, bitcoin returns for the last five years are drool-worthy. The rupee-equivalent price of a bitcoin has zoomed from under ₹600 in November 2012 to more than ₹6.8 lakh by November 2017, a cool 300% annualised return. In the same period, the BSE Sensex has produced a staid 11.5% despite a bull market.
•If this is making you regret choosing stocks over bitcoins, do note that you would have needed nerves of steel to stay invested in bitcoins. While delivering stellar returns, the bitcoin has subjected its investors to an extremely rocky ride.
•Over the last five years, the maximum loss made by the BSE Sensex on any given day was 5.93%. Its biggest single-day gain was 3.8%. The rupee, with which the bitcoin competes as a virtual currency, saw a biggest single-day depreciation (against the dollar) of 3.6% and gained 3.4% on its best day.
•But the bitcoin, on its bad days, has proved five times as volatile as the Sensex. On its worst day in the last five years, its price tanked by 28% in dollar terms. At its most euphoric, it shot up by 41% in a single session. Also, 10% single-day losses were not unusual for the bitcoin, with 36 such occasions in the last five years.
•The short history of the bitcoin has been punctuated by quite a few stomach-roiling events too. In 2014, thousands of bitcoins were stolen from the leading exchange Mt Gox which had to be shuttered. The event saw a two-year lull in the bitcoin bull market. In August, a breakaway faction Bitcoin Cash, ‘forked’ off from the main bitcoin blockchain. This week, global bitcoin exchanges reported outages and flash crashes unable to handle the sharp surge in traffic.Due to such volatility, though it has proved a blockbuster investment, the bitcoin hasn’t really made headway as a global alternative to conventional money.
Regulatory approval
•When originally introduced, virtual currencies, backed by the ultra-democratic blockchain technology, were expected to offer a border-less alternative to fiat currencies, which were being systematically debased by governments in the developed world. There was clamour for a globally-accepted medium of exchange that was free of political hegemony.
•But trading volumes in cryptocurrencies have tended to become quite concentrated in a few regions lately. They’ve also proved quite sensitive to governmental actions. After galloping fivefold between January and September 2017, bitcoins suffered a 30% blip this September after the Chinese government, wary of capital flight, ordered the shut-down of leading bitcoin exchanges. In April, markets cheered Japan’s decision to officially recognise bitcoins as legal tender and license 11 exchanges.
•Trading volumes have also flown from one region to another depending on how favourably disposed regulators have been towards bitcoins. Chinese exchanges dominated bitcoin trading a couple of years ago with a more than 80% volume share. But after the clampdown, Japanese and U.S. exchanges now control over two-thirds of volumes.
•In India, the RBI is still undecided on the issue of how and if at all it will regulate virtual currencies. Meanwhile, it has issued disclaimers that it hasn’t authorised bitcoins as a medium of exchange, warning investors of potential ‘financial, operational, legal, customer protection and security-related risks’ if they dabble in them.
📰 Watch out for ransomware in 2018: report
The McAfee Labs 2018 Threats Predictions Report also warns individual home users that greater inter-connected home devices will surrender consumer privacy to corporates.
•Ransomware attacks in the cyberspace are likely to increase and become more sophisticated in 2018 targeting high net worth individuals and corporates, McAfee Inc. warned in its latest prediction report. The report also warns individual home users that greater inter-connected home devices will surrender consumer privacy to corporates.
•“The profitability of traditional ransomware campaigns will continue to decline as vendor defenses, user education, and industry strategies improve to counter them. Attackers will adjust to target less traditional, more profitable ransomware targets, including high net-worth individuals, connected devices, and businesses,” the McAfee Labs 2018 Threats Predictions Report stated.
•The report which identified five key trends to watch in the next year stated that the pivot from the traditional will see ransomware technologies applied beyond the objective of extortion of individuals, to cyber sabotage and disruption of organizations.
•This year saw major explosion in ransomware attacks in which attackers limit a user’s access their own system till a certain ransom is paid to unlock it.
•“The evolution of ransomware in 2017 should remind us of how aggressively a threat can reinvent itself as attackers dramatically innovate and adjust to the successful efforts of defenders,” said Steve Grobman, Chief Technology Officer for McAfee in a statement.
•In this race, Mr. Grobman said there is an ‘arms race’ between attackers and defenders and “human intelligence amplified by technology will be the winning factor.”
Compromising consumer privacy
•As consumers increasingly network their homes, the report warns that connected home device manufacturers and service providers will seek to overcome “thin profit margins by gathering more of our personal data—with or without our agreement—turning the home into a corporate store front.”
•“Corporate marketers will have powerful incentives to observe consumer behavior in order to understand the buying needs and preferences of the device owners. Because customers rarely read privacy agreements, corporations will be tempted to frequently change them after the devices and services are deployed to capture more information and revenue,” the report said.
•There will be regulatory consequences for corporations that make the calculation to break existing laws, pay fines, and continue such practices, thinking they can do so profitably, McAfee added.
📰 BSF doubles down on Rohingya
Pushing back refugees with more men after identifying 167 points along Bangladesh border
•In mid-October, after the Supreme Court put on hold the Centre’s plan to deport the Rohingya, security agencies convened a high-level meeting to enhance deployment on the eastern border to stop the refugees from crossing over to India.
•A total of 167 vulnerable points were identified along the Bangladesh border, and additional forces deployed to detect and push back the Rohingya.
•The Border Security Force, manning the 4096.7-km border, has asked the Union Home Ministry to sanction recruitment of 5,000 more men so as to identify and stop the Rohingya. The BSF said most Rohingya had entered India through three points: South 24 Parganas and Hili in Dakshin Dinajpur of West Bengal and Karimganj in Assam.
•A senior official of the Union Home Ministry said: “The border-guarding forces have been asked to supplement human surveillance with technological tools. We have increased the boots on the ground so that no Rohingya can escape to India...; it is difficult to distinguish them from the Bangladeshis.”
•Last week, BSF Director-General K.K. Sharma told a press conference that it was difficult to distinguish between the Rohingya and the Bangladeshis as they had similar facial features, and BSF soldiers were not equipped to differentiate between the two on the basis of their dialect. He said that so far, none of the Rohingya apprehended on the border carried arms, ammunition or any objectionable item. This year, the BSF apprehended 87 Rohingya along the Bangladesh border and 76 were “sent back to Bangladesh”.
•The Supreme Court is hearing a petition by two Rohingya — Mohammad Shamiullah and Mohammad Shaqir — against the Centre’s plan to deport the illegal immigrants. The next date of hearing is December 5.
40,000 already in
•By the Home Ministry’s estimate, there are around 40,000 Rohingya in India, including 5,700 in Jammu. Only 16,000 of them are said to have registered themselves with the United Nations High Commissioner for Refugees. Rohingya came to India in large numbers during 2012-13.
•On August 9, the Home Ministry asked all the States, through a circular, to identify undocumented immigrants and deport them as per procedure.
