📰 Soon, read Supreme Court judgments in your language
A software application will help users read Supreme Court's English judgments in their own respective regional tongues.
•In a novel measure, the Supreme Court will translate its judgments into all vernacular languages for the benefit of the public and litigants across the length and breadth of the country.
•The software application is intended to be launched by mid-July.
•The app, similar to Google's text translation, is likely to be launched in a single phase and cover “all vernacular languages,” a source said.
•The court was taking the help of the High Courts in making the move a success. Most likely, the new app would be launched in the inaugural function of the Supreme Court's new office buildings at Appu Ghar. President Ramnath Kovind is expected to preside over it, the source said.
•The move is the brainchild of Chief Justice of India Ranjan Gogoi.
•The CJI, in an informal interaction with Supreme Court journalists in November last, where he was accompanied by the court's number two judge Justice S.A. Bobde, mooted the idea of translating the court's judgments into regional languages.
•The CJI had said the project included not only translating the apex court judgments into Hindi and other vernacular languages but also to provide summaries of the apex court's verdicts. This, he had said, was to benefit litigants, who after fighting their cases for years, were left unable to read the judgments in their own cases for the sole reason that they did not know English.
•In the Constitution Day function last year, President Kovind took the opportunity to laud Chief Justice Gogoi for proposing the initiative to provide certified copies of judgments, translated from English to regional languages, to litigants.
Affidavit submitted in reply to petition claiming current law is gender-specific
•Defending India’s gender-specific rape law under which the perpetrator of the offence can only be a ‘man’, the Centre has told the Delhi High Court that “the existing definition of rape under Section 375 (rape) should be left untouched”.
•In an affidavit filed before the High Court, the Ministry of Home Affairs (MHA) stated: “These sections have been enacted to protect and keep a check on the rising level of sexual offences against women in the country”.
•The MHA’s affidavit came in response to a public interest petition claiming that the existing law pertaining to rape was gender specific and protects only females.
•The High Court had previously asked the Centre to clarify its stand on the issue, particularly in view of the recommendation of the Law Commission of India, to make rape laws “gender neutral”.
•The MHA admitted that the law panel, in its 172th report, had recommended changes for widening the scope of rape law to make it gender neutral, by substituting the definition of ‘rape’ with that of ‘sexual assault’.
Nirbhaya case
•The Centre said that a process was initiated in 2012 to make rape law gender neutral through the Criminal Law (Amendment) Bill.
•However, after the December 16, 2012, Delhi gang rape case, the process was suspended.
•Subsequently, the Criminal Law (Amendment) Act, 2013, was enacted, which widened the definition of sexual offences and enhanced punishment, but did not go into the issue of making rape law gender neutral.
•“After due deliberations at various levels, including various stakeholders and women groups, it was decided that Section 375 of the IPC would be kept gender specific qua the perpetrator of the offence and the perpetrator is said to be a man”.
•It added that the existing definition of rape under Section 375 should be left untouched as the “ambit of the Protection of Children from Sexual Offences (POCSO) Act, which covers all forms of sexual offences against minors, and Section 377 of the IPC were adequate to cover all sexual offences”.
•The petition filed by social activist Sanjjiiv Kkumaar has challenged the constitutionality of Sections 375 and 376 of the IPC as they were not “gender neutral”.
Protects only females
•“Gender neutrality is a simple recognition of reality — men sometimes fall victim to the same, or at least very similar, acts to those suffered by women,” the petition contended.
•“Male rape is far too prevalent to be termed an anomaly or freak incident. By not having gender-neutral rape laws, we are denying a lot more men justice than is commonly thought,” the petition added.
No legal recourse
•The plea further stated that in India, sexual crimes against boys under 18 years are covered under the POCSO Act, but once they become adults they do not have any legal recourse.
📰 Rajya Sabha debates poll reforms
Prasad counters Opposition charges on misuse of media and electoral bonds
•Law Minister Ravi Shankar Prasad told the Rajya Sabha on Wednesday that the government would not allow the abuse of Indian data by foreign powers or foreign companies and it would bring a data protection law soon.
•Mr. Prasad made the remark while responding to a debate on electoral reforms in the Rajya Sabha.
•Participating in the debate, Kapil Sibal of the Congress raised the misuse of social media, and said the BJP was the top spender on Google and it paid ₹18.3 crore for advertisements during the elections.
•Mr. Sibal said, “A certain political party used Google, Facebook and other social media platforms to target particular voters and the money spent” was something to be worried about.
•“BJP officially spent ₹1.32 crore on Facebook but (through) unofficial FB pages namely Bharat ke Mann ki Baat, Nation with Namo, My First Vote for Modi… cumulatively ₹4.5 crore was spent. Both the BJP and the Prime Minister enjoyed complete media hegemony. If you want free and fair polls, it cannot happen like this. The social media, billboards, newspapers were flooded with the PM’s pictures,” Mr. Sibal said.
•Raising doubts on the EVMs, Mr, Sibal said, “Our objection to EVM is principled, the voting machine has become a counting machine. We don’t know the source code, what programme is loaded on it… the ballot paper (in an electronic form) is loaded in the EVM unit two-three days before the elections, it is an engineer who puts it… this is not done by the EC, it is outsourced …no one knows what goes on there.”
•Mr. Prasad said that Cambridge Analytica, accused of harvesting data of Indian users from Facebook, was sent two notices, but the firm did not respond, following which a CBI inquiry was initiated in 2018.
•Mr. Prasad accused the Opposition of adopting double standards on the issue of EVM, saying leaders from their parties had become Chief Ministers and Prime Ministers through the same voting process.
•“This hypocrisy and double standards impinges upon the credibility and polity of the country,” Mr. Prasad said.
•He also pitched for the idea of “one nation, one poll”, and urged the Opposition to consider the proposal with an open mind.
•The Minister said the government would write to the Election Commission to have a single voter list for Lok Sabha, Assembly and panchayat elections in the country.
•Replying to a short-duration debate on electoral reforms, Mr. Prasad countered Opposition charges related to misuse of media, social media and electoral bonds during the recently-concluded general elections.
•He said certain gaps needed to be plugged in electoral funding and corporates had been asked to give donation only through cheques.
📰 27% of children with disabilities have never been to school: UNESCO
There are fewer girls with disabilities in school than boys, says report
•More than one in four children with disabilities between ages 5 and 19 in India have never attended any educational institution, while three-fourths of five-year-olds with disabilities are not in school.
•A report by UNESCO and the Tata Institute of Social Sciences released on Wednesday recommends structural, funding and attitudinal changes to ensure that no child is left out of the right to education.
Census data
•Citing 2011 census data, the report showed that there are more than 78 lakh children with disabilities in the country between 5-19 years. Only 61% of them were attending an educational institution. About 12% had dropped out, while 27% had never been to school at all.
•“The number of children [with disabilities] enrolled in school drops significantly with each successive level of schooling. There are fewer girls with disabilities in school than boys,” says the report. In 2014-15, there were more than 15 lakh children with disabilities in primary school. Two years later, enrolment had dropped by more than two lakh, data shows. At the higher secondary school level, there were less than 63,000 such children in 2016-17.
•Differences remain among various types of disabilities. Only 20% of children with visual and hearing impairments had never been in school. However, among children with multiple disabilities or mental illness, that figure rose to more than 50%.
Home-based education
•Experts say the situation is worse than what the statistics show as the government data on enrolment includes home-based education, which often exists only on paper for children with disabilities. “In many parts of rural India, if a parent opts for home-based education, the child may not be getting an education at all. The Sarva Shiksha Abhiyan teacher is supposed to visit and check, but how often does that happen? The number of excluded children is much higher than government data shows,” said Arman Ali, executive director of the National Centre for Promotion of Employment for Disabled People, who was part of the editorial board overseeing the report.
•“The Right to Education Act mandates enrolment, but not the provision of resources needed for the actual education of a child with disabilities,” pointed out Susheela Jeliya, a disabilities specialist with World Vision India.
•Amendments to the RTE Act, 2009 to make it align with the Right of Persons With Disabilities Act, 2016 are among the major recommendations of the report.
📰 Centre has no plans to scrap sedition law, Minister tells Rajya Sabha
“There is no proposal to scrap the provision under the IPC dealing with the offence of sedition,” Union Minister of State for Home Nityanand Rai said in a written reply in the Rajya Sabha
•The Union government has no plans to repeal sedition law as it is needed to effectively combat anti-national, secessionist and terrorist elements, Union Minister of State for Home Nityanand Rai told Rajya Sabha on July 3.
•The Minister made the statement in reply to a written question by Telangana Rashtra Samithi (TRS) MP Banda Prakash who had asked if the government was mulling to scrap sedition law “which is a colonial-era law applicable on free citizens of the Republic”.
•“There is no proposal to scrap the provision under the IPC dealing with the offence of sedition. There is a need to retain the provision to effectively combat anti-national, secessionist and terrorist elements,” said Mr. Rai.
•The Congress, in its manifesto released before the Lok Sabha polls, had promised to remove the law on sedition from the statute, if voted to power.
•“Omit Section 124A of the Indian Penal Code [that defines the offence of ‘sedition’] that has been misused and, in any event, has become redundant because of subsequent laws,” the manifesto had said.
📰 A scheme for farmers that has not reached most farmers
PM-Kisan is limited in both scope and implementation
•The Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), a cash transfer programme that draws on major initiatives by two State governments, has a long way to go in terms of both its implementation and scope of coverage. Even as the cropping season is under way, the scheme’s support has not reached farmers in most of the country’s regions.
•Launched by the Centre at the end of its previous tenure and made effective retrospectively from December 1, 2018, the measure is a necessary state response to assuage agrarian unrest. The scheme’s original objective, to “supplement financial needs” of the country’s Small and Marginal Farmers (SMFs) and to “augment” farm incomes, has now been broadened to include all categories of agricultural landowners. This expansion would benefit an additional 10% of rural landed households.
•PM-Kisan offers ₹6,000 a year per household in three instalments. Broadly speaking, this amounts to only about a tenth of the production cost per hectare or consumption expenditure for a poor household. Hence, though what the programme offers is meagre, it promises some relief to poor farmers by partially supplementing their input costs or consumption needs.
Not linked to land size
•The cash transfer is not linked to the size of the farmer’s land, unlike Telangana’s Rythu Bandhu scheme, under which farmers receive ₹8,000 per annum for every acre owned. While landless tenants have been left out in both the schemes, the link with land size makes the support provided by the Telangana scheme more substantial. PM-Kisan also falls short of Odisha’s Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme, which includes even poor rural households that do not own land.
•Though the first quarterly instalment, for the December 2018-March 2019 period, was to be provided in the last financial year, the benefits of PM-Kisan have not reached farmers in most parts of the country. With kharif cultivation activity under way already, the scheme’s potential to deliver is contingent on its immediate implementation.
•There are 125 million farming households owning small and marginal holdings of land in the country, who constitute the scheme’s original intended beneficiaries. However, at present, the list of beneficiaries includes only 32% (40.27 million) of these households.
•Further, a majority of the intended beneficiary households are yet to receive even their first instalment of ₹2,000. Only 27% (33.99 million) received the first instalment, and only 24% (29.76 million) received the second. In budgetary terms, only 17% of the estimated ₹75,000 crore expenditure has been spent. Moreover, implementation in certain States has been prioritised. U.P., for instance, accounts for one-third of total beneficiary households — 33% (11.16 million) in the first instalment and 36% (10.84 million) in the second. About half of the State’s SMF households have been covered. Only two other States — Gujarat and Andhra Pradesh — have gained a prominent share. A total of 17 States have received a negligible share of the first instalment, accounting for less than 9%.
Larger structural issues
•For the scheme to be effective, PM-Kisan needs to be uniformly implemented across regions. However, one needs to be mindful that it is not a fix for larger structural issues. Cash transfers will cease to be effective if the state withdraws from its other long-term budgetary commitments in agricultural markets and areas of infrastructure such as irrigation. Subsidies for inputs, extension services, and procurement assurances provide a semblance of stability to agricultural production. Food security through the National Food Security Act is also closely linked to government interventions in grain markets. If the budgetary allocations shift decisively in favour of cash transfers, they will be a cause for great concern. Further, the scheme recognises only landowners as farmers. Tenants, who constitute 13.7% of farm households and incur the additional input cost of land rent, don’t stand to gain anything if no part of the cultivated land is owned. Hence, there is a strong case to include landless tenants and other poor families.
•Moreover, though the scheme is conceptualised to supplement agricultural inputs, it ceases to be so without the necessary link with scale of production (farm size) built into it. It becomes, in effect, an income supplement to landowning households. If income support is indeed the objective, the most deserving need to be given precedence.
📰 Marginal hike in MSP for 14 kharif crops
•The Centre has hiked the minimum support price (MSP) for paddy by less than 4% to ₹1,815 per quintal for the 2019-20 season. The ₹65 per quintal increase is much lower than last year’s hike of ₹200 per quintal, but will ensure that the MSP remains exactly 50% above the cost of production, not including land costs.
•The decision was taken by the Cabinet Committee on Economic Affairs on Tuesday. MSPs were hiked for 14 major crops of the kharif or summer season, to ensure they remain at a level that is 1.5 times the cost of production.
Lower returns
•The only commodities with MSP that will ensure a higher than 50% return over input costs are bajra (85%), urad (64%) and tur dal (60%). However, even for these crops, returns are lower than last year.
•The MSP is the rate at which the Centre procures these crops from farmers. However, there is no guaranteed procurement mechanism for most crops. Just over a third of the paddy harvest is bought by the Food Corporation of India for use in the public distribution system.
•Farmers groups pointed out that MSPs do not actually help the farmer unless procurement can be increased.
•Badri Narayan Chaudhary, general secretary of the Bharatiya Kisan Sangh, a farmers’ group affiliated to the ruling BJP, welcomed the increase in MSPs, but said it was now up to the government to ensure that farmers get the full benefit on the ground.
•“What is the rationale of symbolically increasing prices when paddy is being sold at 40% lower rates in the mandi?” asked V.M. Singh, convenor of the All India Kisan Sangharsh Coordination Committee, a platform of more than 200 farmers groups. He noted that paddy was sold at ₹1,100-1,200 per quintal in Uttar Pradesh and Bihar last year when the official MSP was ₹1,750 per quintal.
•“The government must guarantee buyback at that rate so that the benefits reach 100% of farmers, or it is useless,” Mr Singh said, adding that production costs should have been calculated including land costs, as recommended by the M.S. Swaminathan Commission.
•“Whatever the government has announced may cover costs, but is available to so few farmers that it is almost a ritual,” said Avik Saha, convenor of the Jai Kisan Andolan. He urged the Centre to ensure the implementation of the PM-AASHA scheme announced last year to increase procurement. “It has the ingredients of a good scheme, and now that the electoral rush is over, it must be implemented,” he said.
📰 Improper planning, lack of monitoring defeating aim of green power, says CAG
•An audit report by the Comptroller and Auditor General (CAG) on setting up small hydro projects on public-private partnership (PPP) basis said due to improper planning and inadequate monitoring, the objective of harnessing the green power with the help of private sector was largely defeated.
•The report that was presented in the Assembly on Tuesday said as against the estimated installed capacity of 417.85 MW, only 36.85 MW installed capacity was achieved.
•The report on implementation of small hydro projects on PPP basis covering the period 2013-18 revealed that of the 121 sites identified by the water resources department, the feasibility study of 61 sites (installed capacity: 266.87 MW) had not been completed at the time of identification of sites and 27 sites (installed capacity:78.65 MW) were dropped being financially non-feasible.
•In respect of six selected commissioned projects, only one project was commissioned within the scheduled time and five projects were commissioned after delays ranging from 17 months to 63 months.
•“There was time overrun ranging from 39 to 53 months in respect of two ongoing projects due to non-completion of dam and land handed over to developer was not in the name of the department. The projected annual power generation was not achieved, among other things, due to release of lesser volume of water,” the report said.
•“Had the planning and monitoring been better, the outcome could have been different,” it said.
•The CAG has recommended that the feasibility study in respect of listed projects be completed in a time-bound manner. “The government may address the issue of less release of water so as to have fair terms for PPP projects. There is a need to focus on the issues at hand and work out a solution to take the project forward or short-close the same if a feasible solution is possible,” it said.
📰 RBI sets up panel to review CICs
•The Reserve Bank of India (RBI) has set up a working group to review the regulatory and supervisory framework for core investment companies (CIC).
•The group will be headed by Tapan Ray, non-executive chairman, Central Bank of India and former Secretary in the Ministry of Corporate Affairs.
•“Over the years, corporate group structures have become more complex, involving multiple layering and leveraging, which has led to greater inter-connectedness with the financial system through their access to public funds,” the RBI said regarding the objective behind forming the panel. “Further, in the light of recent developments, there is a need to strengthen the corporate governance framework of CICs,” itthe RBI said. Troubled financial conglomerate Infrastructure Leasing and Financial Services is registered with the RBI as a CIC.
•According to the terms of reference, for the panel will examine the current regulatory framework for CICs in terms of adequacy, efficacy and effectiveness and suggest changes.
•The panel will also suggest, among others, measures to strengthen corporate governance and disclosure requirements for CICs and measures to enhance the RBI’s off-sight surveillance and on-site supervision over CICs.
📰 NCCR’s idea of using ‘plastic rocks’ to grow corals draws flak
Scientists involved in marine research say it will turn reefs into graveyards
•The National Centre for Coastal Research’s (NCCR) proposal of dropping ‘melted plastic rocks or slabs’ on the seabed for growing coral reefs and address the problem of disposal of plastic waste drew flak from the Gulf of Mannar Marine National Park, which has been implementing coral rehabilitation programme since 2002.
•Officials and scientists involved in marine research expressed apprehensions that the NCCR’s ‘innovative idea’ for the growth of marine organisms like algae for coral reefs building would destroy the existing coral reef colonies, and opposed use of the GoM region for field tests.
•The NCCR had also suggested that plastic waste materials could simply be wound around as hard substrates as a way of disposing of them and help build coral colonies. The research institute preferred the GoM region, one of the four coral reef areas in the country, for field testing the ideas.
•Scientists, preferring anonymity, said worn out tyres were tried as artificial reefs in Florida and Costa Rica, but they turned out to be disastrous. The clustered old tyres initially attracted many marine organisms but they later collapsed and littered beaches.
•Corals in the GoM were already stressed and bleached under climate change and the NCCR’s idea would turn the reefs into graveyards. The structures might support proliferation of algae in the beginning, but would destroy corals eventually, the scientists said.
•Officials in the GoM Marine National Park said they had not received any communication from the NCCR for field tests. Any test, study or research would be allowed only with the permission of the Principal Chief Conservator of Forests, they said.
•T. Shanmugaraj, Scientist at NCCR’s Field Research Centre in Mandapam, which was monitoring the health of corals in the GoM region, said the idea was at the nascent stage and the NCCR would proceed only after consulting experts in the Central Institute of Plastics and Engineering and Technology. “The NCCR has no immediate plan for field tests in the GoM region,” he added
📰 Wage Code Bill gets Cabinet nod
•The Union Cabinet on Wednesday approved the Code on Wages Bill, which subsumes existing laws regarding minimum wages and other salary issues.
•I&B Minister Prakash Javadekar said the Cabinet had approved Bills on arbitration, wage code and surrogacy, but details could not be shared since Parliament was in session.
📰 Paramilitary forces to get Group ‘A’ benefits
•A long-pending demand of the officers of the Central Armed Police Forces (CAPFs) seeking the same benefit of non-functional financial upgradation that IAS and IPS officers get was cleared by the Union Cabinet on Wednesday. Under it, if there is a lack of vacancies at a certain level and an officer of a particular batch is promoted, then others of that batch will also get financial upgradation without actually being promoted.
📰 NASA tests launch-abort system for its moon mission
It aims at evacuation of astronauts under real-life conditions
•NASA carried out a successful test on Tuesday of a launch-abort system for the Orion capsule designed to take U.S. astronauts to the Moon.
•The three-minute exercise at Cape Canaveral in Florida aimed to test in almost real-life conditions the evacuation of astronauts from the capsule in the event of an explosion or rocket booster failure.
•In the test, an unmanned Orion capsule was launched by a mini-rocket — a repurposed first stage of an intercontinental ballistic missile. Fifty-five seconds after the launch, at an altitude of 9,500 m, a rocket-powered tower on top of the crew module ignited its engines to quickly pull the Orion away from a hypothetical rocket experiencing problems.
•In just 15 seconds, the capsule gained two miles of altitude. Then the tower reoriented the capsule to prepare it for descent and disengagement from the tower.
•In real-life conditions, parachutes would open to ease the manned capsule's fall toward the Atlantic Ocean.
📰 Budget 2019 needs to give the economy a much needed stimulus
The economy needs a stimulus and the Budget has to push for growth while ensuring fiscal responsibility
•Faltering GDP growth, a consumption slowdown, a truant monsoon that has already hit kharif sowing, global trade tensions and a freeze in the credit market that has set alarm bells ringing across the financial system. This is the backdrop to the maiden Budget of the Finance Minister, Nirmala Sitharaman.
Walking a tightrope
•The Minister has had less than a month to work on this crucial Budget which is expected to work its magic on the economy. Ms. Sitharaman’s position is unenviable. She has to push for growth, which means stimulus measures, but also stay fiscally responsible, which means sticking to the fiscal deficit glide path. This balance is almost impossible to achieve in an environment where tax revenues do not offer enough support for a stimulus package.
•The questions before Ms. Sitharaman are simple: Should she opt to stimulate consumption in the economy even if it means putting the fiscal deficit glide path in temporary cold storage? If yes, what is the best way to do that?
•Following from the above are subsidiary questions such as these: Will the resultant higher borrowings crowd out the private sector borrowers and push up market interest rates at a time when the monetary authority is driving rates down? What will be the impact on inflation? Should the stimulus be in the form of cutting taxes and putting more money in the hands of the consumer? Or should it be in the form of even higher spending on infrastructure that will have definite fiscal spin-offs? And what about welfare spending? The government has already announced an expansion of the Pradhan Mantri Kisan Samman Nidhi Yojana that will take away ₹87,500 crore this fiscal. And there are many other pet schemes of this government that need to be funded.
Ground realities
•To be sure, the answers are not easy. But just consider these. GDP growth fell to 5.8% in the fourth quarter of 2018-19, with important industry segments reporting a fall in growth. Sales of automobiles, the bellwether for the larger economy, has been sliding since October last year and in the first quarter of this fiscal, sales volumes are down by about 18%. Fast moving consumer goods, two-wheeler and consumer durables manufacturers are all reporting dull rural sales.
•Real estate and construction, one of the biggest job creators in the economy, have been in stupor for several months and are a direct cause of the credit freeze in the markets now. It is clear that the bottom has fallen off consumption demand, something reflected in the annual results of a host of companies in the consumer sector.
•Given these, there is little doubt that the economy needs a stimulus. The downside to the government embarking on this path is clear. Direct tax revenue growth failed to meet budgeted levels in 2018-19, falling short by ₹82,000 crore from the target of ₹12 lakh crore. Goods and Services tax collections, though rising, are still not stabilising at the required level of between ₹1,00,000 and ₹1,10,000 crore a month.
•It will be next to impossible for the government to meet its over-ambitious tax estimates in the interim Budget for 2019-20. And then there are the bills to pay from last year to the Food Corporation of India and a couple of other public sector undertakings which helped the government ‘achieve’ the fiscal deficit target last year.
Pros and cons of options
•There are a few options that the government can consider for off-balance sheet financing. First, go big on asset sales. The interim Budget had earmarked ₹90,000 crore from disinvestment but if the government is able to successfully pull off the Air India sale, it would be almost half-way there. There are a host of other government companies that can be sold off to raise the targeted proceeds.
•Second, a one-time transfer from the Reserve Bank of India’s reserves, which is under the consideration of the Bimal Jalan Committee. However, if reports of the committee’s deliberations are to be believed, it may be futile for the government to hope for a major windfall here. The committee will anyway submit its report well after the Budget is presented.
•Third, 5G spectrum auctions. While there is reason to hope for some support here, it is unlikely that it would materialise this fiscal. The telecom companies are still licking their wounds from the combined effect of past excesses and bruising competition in the market. Their appetite, as it is, is poor for any more spectrum. So pushing through a 5G auction now would be disastrous.
•That leaves us with just one option — that of increasing borrowings which will, of course, mean curtains for the fiscal deficit target of 3.4% this fiscal. Higher government borrowings may elbow the private sector borrowers out.
•Increased borrowings by the government will have the unintended negative consequence of pushing up market rates which is something that the government would not desire. And then, of course, there will be questions to answer from Standard & Poors and Moody’s which are certain to take a dim view of the fiscal indiscretion.
•But then there is some good news too. Thanks to the recent directive of the stock market regulator, the Securities and Exchange Board of India directing mutual funds to put away 20% of their liquid scheme investments in government securities, a new market opens up for the government. Whether it is deep enough to absorb the increased borrowings is a matter of detail but it can certainly cushion the market to some extent.
•Second, yields on government securities are at around 6.82% currently. So even a 10 or 20 basis point rise due to higher borrowings may not cause much dissonance. The market is aware of the difficult circumstances now and should be able to take this in its stride.
•As for the ratings agencies, the government needs to be in dialogue with them, reiterate its commitment to fiscal discipline and reassure them that this is a temporary aberration.
On stimulus
•So, once the decision is made to be accommodative, Ms. Sitharaman’s problem will be to identify the best way to impart stimulus. There are two choices — either to cut taxes and let consumers to go out and spend the excess. Or just borrow and spend on asset creation in infrastructure. Given that there is a serious slowdown in consumer-facing sectors, the better option may be to put more money in the hands of consumers.
•A good option to consider would be adjusting income tax slabs and increasing deductions under Section 80C which is a measly ₹2 lakh now. Better still would be to increase the interest deduction for housing loans which would also give a boost to the real estate market. These measures would run counter to the reform objective of easing out all exemptions and lowering rates. But then that is under examination by the Direct Tax Code (DTC) panel; the concessions given now will automatically become a temporary measure assuming that the DTC is soon implemented.
•The fall in tax revenues from the concessions will be eventually made up downstream from indirect taxes if consumers spend the extra money in their hands. The choice to borrow and spend is indeed a difficult one but in the current circumstances this may be inevitable. Fiscal conservatives are bound to frown at this and there would be dire warnings of the consequences of not adhering to the fiscal deficit commitment. The best answer is that this government now has five years to make up for the indulgence. Will Ms. Sitharaman go the whole way?
