📰 L-G bound by ‘aid and advice’ of Delhi govt., says Constitution Bench
Disputes should be referred to President: SC
•A five-judge Constitution Bench of the Supreme Court unanimously held on Wednesday that Lieutenant-Governor Anil Baijal is bound by the “aid and advice” of the Arvind Kejriwal government.
•In case of difference of opinion, the L-G should straightaway refer the dispute to the President for a final decision without sitting over it or stultifying the gov- ernance in the National Capital, the Bench said. It concluded that the governance of Delhi cannot rest upon the whims of one functionary — the Lieutenant-Governor.
•“The Lieutenant-Governor has not been entrusted with any independent decision-making power. He has to either act on the ‘aid and advice’ of the Council of Ministers or he is bound to implement the decision taken by the President on a reference being made by him,” Chief Justice of India Dipak Misra held in his opinion, shared by Justices A.K. Sikri and A.M. Khanwilkar.
•Chief Justice Misra, along with Justices D.Y. Chandrachud and Ashok Bhushan in their separate but concurring opinions, cautioned the L-G against sending every “trivial” dispute with the government to the President.
•The judgment came on appeals filed by the NCT government against an August 4, 2016, verdict of the Delhi High Court, which had declared that the L-G has “complete control of all matters regarding the National Capital Territory of Delhi, and nothing will happen without the concurrence of the L-G.”
•Chief Justice Misra said the “L-G must work harmoniously with his Ministers”.
📰 ‘Delhi as capital belongs to the nation as a whole’
CJI quotes from the 1987 Balakrishnan report to conclude that Delhi is not a State‘Control of the Union over Delhiis vital in the national interest’‘Lieutenant-Governor has free hand in judicial, quasi-judicial functions’‘Administrator has to be more active than the Governor of a State’
•The Supreme Court on Wednesday followed the 1987 Balakrishnan report to conclude that Delhi is not a State.
•The report had envisaged that Delhi could not have a situation in which the national capital had “two governments run by different political parties. Such conflicts may, at times, prejudice the national interest.”
•Chief Justice Dipak Misra, in his leading opinion for the Bench, reproduced excerpts from the report, which said, “Delhi as the national capital belongs to the nation as a whole.”
•The report foresaw that if Delhi becomes a full-fledged State, there would be a constitutional division of sovereign, legislative and executive powers between the Union and the State of Delhi. Parliament would have limited legislative access and that too only in special and emergency situations. The Union would be unable to discharge its “special responsibilities in relation to the national capital as well as to the nation itself”.
•The report said the control of the Union over Delhi was vital in the national interest.
•It dealt extensively with the modifications in the aid and advice given by the Council of Ministers to the L-G as the Administrator of Delhi.
‘Aid and advice’ concept
•It pointed out that the “aid and advice” concept cannot apply to the exercise by the administrator of any judicial or quasi-judicial functions. The L-G is bound by the aid and advice of the Delhi Cabinet only in matters where the Assembly has the powers to make laws.
•The report said the L-G’s role was not that of a Constitutional figurehead, though the ultimate responsibility for good administration of Delhi was vested in the President acting through the Administrator.
•However, the Administrator had to take a somewhat more active part in the administration than the Governor of a State.
•Hence, differences of opinion would arise between the L-G and the elected government.
•The report had recommended that the “best way” of doing this is to let the L-G refer such differences of opinion to the President for a final decision.
📰 L-G should not be an obstructionist: SC
Says a freeze on government decisions by him negates the very concept of collective responsibility
•The Lieutenant-Governor should act as a “facilitator” for good governance in the national capital and not as an “obstructionist”, a five-judge Constitution Bench of the Supreme Court unanimously held on Wednesday.
•It trimmed the Lieutenant-Governor’s authority, saying he cannot exercise his discretion in “each and every matter” of daily governance. His discretionary powers are in fact limited to only matters in the State List — public order, police and land — over which the legislative power of the Delhi Legislative Assembly stand excluded under Article 239AA.
•Moreover, the NCT government need only to inform the L-G of its “well-deliberated” decisions. The government need not obtain his “concurrence” on every issue of day-to-day governance. The court said its nine-judge Bench judgment in the NDMC versus State of Punjab of 1996 makes it “clear as noon” that Delhi was not a “State”. In fact, the Union still has the power to make laws on issues coming within the legislative domain of the Delhi Assembly.
•And for this reason again, the court said, the L-G cannot be given the status of a “State Governor”. In fact, he is nothing but an ‘Administrator’, that too, in a limited sense. “The status of NCT of Delhi is sui generis , a class apart,” Chief Justice Misra observed.
•The court held that the elected government could make policies on laws enacted by its own Assembly. The executive power of the NCT government was co-extensive with its legislative powers, Chief Justice Misra clarified.
•“The exercise of establishing a democratic and representative form of government for the NCT of Delhi would turn futile if the government of Delhi, that enjoys the confidence of the people of Delhi, is not able to usher in policies and laws over which the Delhi Legislative Assembly has power to legislate,” he wrote.
Prolonged spat
•Referring to the prolonged spat between the L-G and the Arvind Kejriwal government on various issues, including a freeze on appointments of bureaucrats to mohalla clinic staff and schoolteachers, the Chief Justice said the spirit of collective responsibility in the Constitution should not be lost in drama. Constitutional discord should be avoided. There is a need for real discipline and wisdom, he said. A freeze on government decisions by the L-G negates the very concept of “collective responsibility”. The governance of the national capital demands a “meaningful orchestration of democracy” and a “collaborative federal architecture.”
📰 Legal experts welcome verdict
•Legal experts have hailed the Supreme Court’s judgment on Delhi government, saying it has unfolded the objective of election and the power of the elected representatives.
•While former Attorney-General Soli Sorabjee rued that daily squabbles between the Lieutenant-Governor and the Chief Minister were not good for democracy, senior advocate Rakesh Dwivedi hailed the verdict saying it unfolded the objective of election that governance should be carried out through people’s representatives.
•“It’s a good verdict by the Supreme Court. The L-G and the Delhi Government have to work harmoniously. They can’t always have confrontation. Daily squabbles are not good for democracy. I welcome the decision,” Mr. Sorabjee said.
•KTS Tulsi, senior lawyer and Rajya Sabha member of the Congress, termed the verdict the strongest indictment of the Union government, and hoped it would end the “sad chapter of confrontation” between the Delhi government and the Lieutenant-Governor that had led to a situation where the city dispensation was not allowed to perform.
•“Strongest indictment of the Central government being not having permitted the State to function, the government of Delhi to function even in areas which are not reserved. The L-G was entirely wrong in not abiding by the decisions of the Cabinet even in areas other than the reserved subjects,” he said.
📰 Union Cabinet clears DNA profiling Bill
Will help in forensic investigation
•The Union Cabinet has cleared a Bill that allows law enforcement agencies to collect DNA samples, create “DNA profiles” and special databanks for forensic-criminal investigations.
•The DNA Technology (Use and Application) Regulation Bill, 2018, is the latest version of a Bill that originated as a DNA “profiling” Bill, framed by the Department of Biotechnology. The aim of that draft legislation was to set in place an institutional mechanism to collect and deploy DNA technologies to identify persons based on samples collected from crime scenes or for identifying missing persons. However there was opposition, in that some activists argued that the manner in which DNA information was to be collected and the way they were to be stored by forensic laboratories constituted a violation of privacy.
•A senior official familiar with the Bill said that several clauses of the Bill were tightened to make it stronger and immune to data abuse. “This doesn’t aim to create a database of DNA profiles…The databanks can only store information related to criminal investigations and the DNA details of suspects will be deleted,” said Renu Swarup, Secretary, Department of Biotechnology. The Bill creates a DNA Profiling Board that would be the final authority that would authorise the creation of State-level DNA databanks, approve the methods of collection and analysis of DNA-technologies.
📰 HEFA to allot Rs. 1 lakh crore for education
The funding will also be available to government-run schools
•The Union Cabinet on Wednesday permitted the Higher Education Funding Agency (HEFA) to mobilise Rs. 1 lakh crore to fund research and academic infrastructure in higher educational institutions by 2022. The funding will also be available to government-run schools Kendriya Vidyalayas and Jawahar Navodaya Vidyalayas.
•“This will help build speedier infrastructure of new Kendriya Vidyalayas and Jawahar Navodaya Vidyalayas,” Minister of Human Resource Development Prakash Javadekar tweeted. “Indian Institutes of Technology, National Institutes of Technology, Indian Institutes of Science Education and Research, other Central universities and medical colleges will also get funds from the agency.”
•HEFA was set up last year as a non-banking financing company for mobilising extra-budgetary resources.
📰 Opening up to the world
More needs to be done to internationalise higher education
•Since Independence, the challenges of building a mass higher education system with inadequate government funding has meant poor quality, increasing privatisation and politicisation. Excellence is possible, as the IITs and IIMs show, although it is limited to a tiny segment of a system that enrols 35 million students. In the past several years, there are indications that things are changing, at least at the Central government level and at the top of the higher education system.
Towards innovation
•The National Institutional Ranking Framework (NIRF), implemented in 2016, is India’s first government-supported ranking of colleges and universities. It may in the future guide government financial support for higher education. It also provides the basis for differentiating among colleges and universities, and forces participating institutions to submit data on critical areas, permitting government to make key decisions. Unsurprisingly, there are allegations that a few private institutions manipulate the process.
•Two additional initiatives build on the idea of creating elite, globally competitive world-class universities in India: the Institutions of Eminence (IoE) project and the Graded Autonomy project. The IoE project will recognise 20 universities, 10 public and 10 private, and provide significant government funds to the public institutions (no extra money to the privates) and give enhanced autonomy for them. It is similar to many of the “excellence initiatives” common worldwide in providing extra funding in return for innovative ideas to the winners. The Graded Autonomy programme provides considerable freedom for academic, financial and administrative innovation to the colleges and universities participating. Given the often stifling bureaucracy of higher education, it will be a significant stimulus for innovation. Both public and private institutions are involved.
•Traditionally, colleges and universities have been restricted from deep international collaboration, and there has been little emphasis on attracting international students — only 47,575 international students study in India compared to the almost 400,000 in China. The Graded Autonomy programme makes it easier to hire international faculty, traditionally very difficult to do. The new Study in India initiative seeks to attract international students mainly from a group of African and Asian countries, and is aimed at doubling India’s tiny share of global student mobility from 1% to 2%. India is moving towards signing a pact on mutual recognition of academic qualifications with 30 countries. Recently a government-to-government MoU was signed between India and France to mutually recognise academic qualifications, a historic development.
Challenges
•As always, the devil is in the detail. Upgrading 20 or more Indian universities to world-class quality will be complex. It will also take time and consistent funding, probably at a scale beyond what is envisaged in current plans. Further, greatly increased autonomy will be needed — and freedom from the bureaucratic shackles of government is not easy to attain. Just as important as autonomy are innovative ideas from the top universities themselves, of which there has been little evidence. Releasing the imagination of Indian professors is necessary. Ensuring that universities have imaginative leadership is also a key necessity. Carefully studying what has worked abroad may also provide useful ideas. India has shown academic innovations over the years, but on a limited scale and never in the comprehensive universities.
•The national ranking initiative needs to be extended throughout the higher education system and requires simplification. Overly complex arrangements must not get in the way of practical solutions.
•Internationalisation is central to academic success in the 21st century — and India has been notably weak. The inability in recent years to pass legislation relating to foreign branch campuses and other relationships with overseas universities is an indication of the problem. The Study in India initiative and proposals relating to relationships between Indian and foreign institutions are useful beginnings. But more thinking must go into these ideas. For example, it is not enough to focus on Asia and Africa and full degree programmes. Students and post-docs from Western countries for shorter-term study are necessary to provide new ideas — such students will not be attracted for degree study, but can be lured for other arrangements. India has the advantage of using English as the main language of higher education.
•Are Indian universities finally awakening to the challenges of the 21st century? At least several innovative programmes, backed by government, are in the works. Implementing them effectively remains the key challenge.
📰 How to rule Delhi
The SC clarifies an elected government cannotbe undermined by an unelected administrator
•In ruling that the Lieutenant Governor of Delhi has no independent decision-making power, and has to act mainly on the aid and advice of the Council of Ministers, the Supreme Court has restored the primary role played by the “representative government” in the National Capital Territory. Though seen as a Union Territory, Delhi was created as a separate category, with an elected Assembly with powers to enact laws in all matters falling under the State and Concurrent lists, with the exception of public order, police and land. This gave it a status higher than other UTs. The demand for full statehood has been around for many years now, but after the Aam Aadmi Party came to power the constitutional tussle between the two tiers of government has become an acrimonious battle between AAP and the BJP at the Centre. Until now, the situation was tilted in favour of the Centre because of the Lt. Governor’s claim that he had the authority to refer any matter to the President. The proviso that allowed him to make such a reference was used to block major decisions of the AAP regime. The Delhi High Court agreed with this two years ago, giving the impression that administrative decisions needed the Lt. Governor’s concurrence.
•In a judgment that essentially reaffirms the constitutional position, the Supreme Court has ruled that the Lt. Governor has to ordinarily act on the aid and advice of the Council of Ministers. At the same time, it has retained the Lt. Governor’s powers to refer matters to the President for a decision. However — and this is the nub of the judgment — it has significantly circumscribed this power. The power to refer “any matter” to the President no longer means “every matter”. Further, there is no requirement of the Lt. Governor’s concurrence for any proposal. The ‘reference’ clause may give rise to conflict even now. However, the court has significantly limited its potential for mischief. It has not given an exhaustive list of matters that can be referred, but Justice D.Y. Chandrachud, in a separate but concurring opinion, has indicated that it could “encompass substantial issues of finance and policy which impact upon the status of the national capital or implicate vital interests of the Union.” Every trivial difference of opinion will not fall under the proviso. Overall, the verdict is an appeal to a sense of constitutional morality and constitutional trust among high functionaries. It has ruled out Mr. Kejriwal’s demand of full statehood, and the critical powers — over police, land and public order — still remain vested with the Centre. However, the court having stressed that the elected government is the main authority in Delhi’s administration, the controversies over the arbitrary withholding of Cabinet decisions may end, or at least diminish. The basic message is that an elected government cannot be undermined by an unelected administrator. The larger one is that the Union and its units should embrace a collaborative federal architecture for co-existence and inter-dependence.
📰 NRC: 1.5 lakh names to be omitted
Second and final draft to be published on July 30
•About 1.5 lakh people, whose names figured in the first draft of National Register of Citizens (NRC) published on December 31 last year, would not be included in the second and final draft scheduled to be published on July 30.
Extended by a month
•The second draft was to have been published on June 30. But the Supreme Court, which is monitoring the NRC updating exercise, extended it by a month because of floods that affected work in three southern Assam districts.
•“Names of 65,694 people, which appeared in the first draft, were found to be inadmissible during the family tree verification, as were names of 48,456 married women who submitted panchayat certificates as linkage. Names of another 19,783 people were found to be inadmissible during quality control checks,” Prateek Hajela, NRC coordinator, told newspersons on Wednesday.
•More inadmissible names may come up during the final quality control checks, but those likely to miss out would get an opportunity to file claims after the final draft is published, Mr. Hajela said.
Verification done
•He also said that the process of verification has been completed and data entry work is being done. According to the schedule he had submitted to the Supreme Court on June 29, the data entry work is expected to be completed by July 10 and quality checks by July 20.
•The consolidation of the central database and generation of PDF would be over by July 26 and printouts would be taken by July 29 to ensure publication of the final NRC draft on July 30.
Hit by floods
•The NRC coordinator’s report to the apex court also said 89 of the 303 NRC seva kendras in Cachar, Hailakandi and Karimganj districts were affected by floods for 8-10 days, thereby slowing down the updating process.
•“Our efforts are to make the NRC as error-free as possible,” Mr. Hajela said.
•Former Assam Chief Minister Tarun Gogoi doubted the possibility of the exercise being error-free. “If it were, how did the 1.5 lakh names come to be included in the first draft,” he asked.
📰 India braces for more U.S. pressure
New Delhi yet to take a decision on cutting oil imports from Iran as demanded by Washington
•The government is bracing for more “pressure” from the U.S. on Iran sanctions in the upcoming weeks, but hopes that there may be an exception made for its dealings on the Chabahar port, as officials meet with a U.S. delegation in the next few weeks.
•However, sources said the government had yet to take any decision on cutting oil import from Iran, as the U.S. had demanded, when its U.N. envoy Nikki Haley visited India last week.
•“We heard very clearly what Nikki Haley said and we are in no doubt the U.S. will use pressure, not just on us but around the world. Question is what do we see as our national interest and how we respond to [the pressure], and how do we make our case to the U.S.,” a source said, adding that U.S. officials have given “informal indications” that they understand India’s reasoning for progressing on its Chabahar port and railway project. The U.S. team is expected to travel to India in July to hold talks with Indian officials.
‘Important neighbour’
•According to the source, Iran remains an “important near neighbour” for India, and a major oil supplier, and the government hoped to have discussions with the U.S. to understand the options it has on dealing with Iran given the sanctions proposed to kick in by November 4. India is second only to China when it comes to the import of oil from Iran, and in February, after President Hassan Rouhani’s meeting with Prime Minister Narendra Modi in Delhi, India had committed to increase that intake by 25% this year.
•However the U.S.’s decision to walk out of the multilateral nuclear agreement with Iran and re-imposition of sanctions by November has cast a shadow on future engagement. This week, the U.S. State Department reiterated its intention to get tough with all countries engaging with Iran for trade, energy and infrastructure projects.
•“We are not looking to grant licences or waivers because doing so would substantially reduce pressure on Iran and this is a campaign of imposing pressure on Iran … We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licences,” said Brian Hook, Director of Policy Planning at the U.S. State Department, on Monday, when asked specifically about concessions for India.
•The discussions on Iran sanctions, as well as on impending sanctions under the new American CAATSA law that imposes strictures on trade with Russian and Iranian entities, were expected to have been taken up during the “2+2” meeting between External Affairs Minister Sushma Swaraj, Defence Minister Nirmala Sitharaman and their counterparts in Washington this week, but the talks were cancelled by the U.S., owing to another meeting in North Korea for nuclear talks.
•Government officials called speculation over the cancellation “unfounded” and said the two sides were working to reschedule the 2+2 engagement soon.
📰 Freedom from being ‘India-locked’: on Nepal-India relations
After his visit to China, Nepali Prime Minister Oli continues to ride a populist wave
•In Nepal, after Prime Minister K.P. Sharma Oli returned from China last month, his second trip — but also his first as a leader of a coalition that commands a two-thirds majority in Parliament and has governments in six out of seven provinces — the visit was hailed as a great success. With so many media houses affiliated to the current ruling coalition, no stone was left unturned to broadcast it.
Towards China 2.0
•This visit had much significance as Mr. Oli had made his first visit as Prime Minister to China in March 2016, as Nepal was just recovering from the Indian blockade that had paralysed lives. Whipping up anti-India sentiments as Nepali nationalism has been common since the Shah Kings and Rana rulers, but the blockade of 2015 was different. Nepalis, who had been hit by a major earthquake in April 2015, were still recovering. And India’s blockade, coming against the backdrop of Indian reservations about the constitution Nepal was adopting, changed the course of bilateral relations. An entire generation of young Nepalis, who were already alienated from India due to the opening of newer education destinations, saw the blockade as a move against a neighbour which had not got its act right.
•Nepal has historically remained ‘India-locked’, rather than being termed landlocked, as it is dependent on India for transit to the seas. Being landlocked is not much of an issue as one can get sea-locked, like the Maldives, but to be completely dependent on a single country for transit rights now became an issue to resolve. During his visit to China in 2016, Mr. Oli, for the first time, managed to push the agenda of a trade and transit agreement with China on the lines with special agreements with India. This trip was to consolidate the moves made two years ago.
•With the U.S. receding into its own cocoon, globalisation on the world stage was captured well by China in 2017. It became the enabler of connectivity, world trade and dependency as it pushed its Belt and Road Initiative (BRI) in a hurry. Many analysts say that if it were not for the U.S., the BRI would not have been introduced so early. With Southeast Asia well covered and inroads made in Pakistan, Sri Lanka and Bangladesh, for China, Nepal is the obvious next country for engagement. With India opting out of the BRI, Nepal continues to remain the best conduit for Indian markets for China. Mr. Oli understands this well and has played his cards accordingly.
•Therefore, Nepal will be connected with China through a railway network in addition to roads. While optical fibre cables already connect Nepal and China, transmission lines will connect the two countries, providing Nepal a much needed alternative to sell excess power. Rail and road networks will also provide Nepal an alternative for petroleum products that continue to remain the highest imported product.
Nurturing the alternative
•When one is tired of bad service at a restaurant, it is obvious that one will start looking for alternatives. For Nepal, nurturing the relationship with China is a similar case. It is more out of compulsion than choice. China has continuously maintained and maintains that Nepal’s economic connectivity issues with India are more cost effective than with China and has advised Nepal to work with India. We are yet to see this stance change dramatically.
•Therefore, now the onus is on India to rethink on a long-term basis how to recalibrate its relationship with Nepal. Nepal is a place of opportunity for people from the border towns of India. The impact of the Nepal blockade in Indian border towns was so intense that it forced Indian traders to tap their own channels to end it. The perspective has to change in New Delhi to factor in Nepal’s concerns on the open border.
•India needs to also realise the new reality that its monopoly over geopolitics in Nepal is over, and there is another relationship that Nepal is nurturing. This comes at a time when there is a sense of hope among the Nepali people, who are experiencing a semblance of political stability after years of insurgency and then of political transition. It is time for India to be proactive and redefine its engagement rather than continue to be reactive. The way India has been flexible with the Eminent Persons Group (EPG) meetings is a good signal. India needs to continue to understand that there is another opportunity to rewrite bilateral and geopolitical history. It should not be squandered.
📰 EC launches Braille-enabled Voter IDs
•The Election Commission on Wednesday launched voter identity cards with Braille label to ensure greater participation of persons with visual impairment in the electoral process.
•The Commission also unveiled a strategic framework on “Accessible Elections” on conclusion of a two-day national level consultation with representatives of the Central government, political parties, NGOs and experts on disabilities.
•Chief Election Commissioner O.P. Rawat announced a series of measures for Persons with Disabilities (PwDs) in the electoral process, which includes printing of photo-identity cards with Braille, accessible communication awareness materials, a mobile phone application to motivate and educate the voters and appointment of Disability Coordinates at the Assembly constituency, district and State level.
Free transport facility
•The EC plans to impart cascaded training on accessibility to poll officials, set up auxiliary polling stations, provide accessible photo voter slips, sign-language window in all the audio visual training and advertisement content material for the convenience of deaf persons and free transport facility to PwDs and their Assistants.
•A new Accessible Division in the India International Institute of Democracy and Electoral Management will also be set up.
•Election Commissioner Sunil Arora said: “We should go far beyond the bureaucratic measures to overcome the barriers. Technology has the capability to fill the gaps and it shall be explored to its fullest potential.”
📰 Cosmic rays from star system may reach earth
Eta Carinae is accelerating particles to high energies
•Eta Carinae — the most luminous and massive stellar system within 10,000 light-years — is accelerating particles to high energies, some of which may reach the earth as cosmic rays, a study using data from a NASA telescope has found.
•“We know the blast waves of exploded stars can accelerate cosmic ray particles to speeds comparable to that of light, an incredible energy boost,” said Kenji Hamaguchi, an astrophysicist at NASA’s Goddard Space Flight Center in the U.S.
•“Similar processes must occur in other extreme environments. Our analysis indicates Eta Carinae is one of them,” said Mr. Hamaguchi, lead author of the study published in the journal Nature Astronomy .
•Astronomers know that cosmic rays with energies greater than one billion electron volts (eV) come to us from beyond our solar system. However, because these particles — electrons, protons and atomic nuclei, all carry an electrical charge — they veer off course whenever they encounter magnetic fields. This scrambles their paths and masks their origins.
•Eta Carinae, located about 7,500 light-years away in the southern constellation of Carina, is famous for a 19th century outburst that briefly made it the second-brightest star in the sky.
•This event also ejected a massive hourglass-shaped nebula, but the cause of the eruption remains poorly understood.
•The system contains a pair of massive stars whose eccentric orbits bring them unusually close every 5.5 years. The stars contain 90 and 30 times the mass of our Sun and pass 225 million km apart at their closest approach — about the average distance separating Mars and the Sun. “Both stars drive powerful outflows called stellar winds,” said Michael Corcoran, also from Goddard.
•“Where these winds clash changes during the orbital cycle, which produces a periodic signal in low-energy X-rays,” said Mr. Corcoran.
📰 Moody’s survey shows oil prices as the main risk to India’s economy
Interest rates, politics too seen as risks
•Oil prices, pace of banks’ balance sheet clean-up and investment remain the key credit risks in India, according to an investor survey by Moody’s Investors Service.
•While market participants in Singapore and Mumbai were unanimous in pegging high crude price as the main risk to India’s economy, views varied on the second biggest risk, according to the ratings agency.
•“When asked about the top risks facing the Indian economy, most of the respondents highlighted high oil prices as the top risk, while 30.3% of those in Singapore picked rising interest rates as the next top risk, and 23.1% of those in Mumbai picked domestic political risks as the second top risk,” Joy Rankothge, a vice president and senior analyst at Moody’s, said in a press release.
•Participants at Moody’s 4th Annual India Credit Conference, conducted by the credit ratings agency along with its Indian affiliate ICRA Ltd. in Mumbai and Singapore in June 2018, were polled on some of the most pressing credit issues facing India.
•Almost 175 people representing more than 100 local and international financial institutions attended the conference, Moody’s said.
Fiscal slippage seen
•Most attendees at both locations opined that India would not meet the central government’s fiscal deficit target of 3.3% of GDP for the financial year ending in March 2019, according to the release.
•Further, only 23.3% of the respondents in Singapore and 13.6% in Mumbai thought that the fiscal targets would be achieved, with 84.7% in Mumbai and 76.7% in Singapore expecting some fiscal slippage.
•Those polled in both Singapore (85.7%) and Mumbai (93.6%) were of the opinion that the government’s bank recapitalisation package was mostly insufficient to resolve solvency challenges.
‘Capital insufficient’
•“Although we expect the recapitalisation package to be sufficient to meet the minimum regulatory capital needs, we think it will be insufficient to support credit growth,” Moody’s said in a report. “Banks have not been able to raise new capital from the equity markets as planned under the government’s recapitalisation measures,” it said.
•Incidentally, while 59.6% of the attendees in Mumbai thought that banks would be unable to raise capital from the markets as planned, only 32.1% of those polled in Singapore held that view, Moody’s said.
