📰 India to invite Imran Khan for Shanghai Council meet
Move comes hours after the UNSC discusses the situation in Kashmir
•Pakistan Prime Minister Imran Khan will be invited to participate in the Heads of Government Council meeting of the Shanghai Cooperation Organisation (SCO) that will be hosted in India this year, the Ministry of External Affairs said on Thursday. The invite move came hours after the UN Security Council discussed the situation in Kashmir.
•“As per the established practice and procedure within SCO, all eight members of the SCO, four observer states, and other international dialogue partners will be invited to attend the meeting,” said Official Spokesperson Raveesh Kumar in response to a question on whether Mr. Khan will be invited for the summit.
•Since becoming full-time member of the SCO in 2017, both India and Pakistan have participated in multiple meetings of SCO and the Regional Anti-Terrorist Structure (RATS) despite hostilities and tension in Kashmir. The Heads of Government Council meeting is attended by the Prime Minister-level leaders of the member states that deliberate on the regional body’s economic and other pressing issues. The meeting also firms up SCO’s annual budget.
•Prime Minister Khan who assumed office in 2018 has been a tough critic of India’s continued lockdown of Kashmir. He has also taken up the Citizenship (Amendment) Act 2019 and the National Register of Citizens both domestically and on global platforms.
•Though his predecessor Nawaz Sharif had visited India in May 2014 for the “mini-SAARC summit”, Mr. Khan has not been invited to India till now. On Thursday, the Pakistani leader welcomed the discussion on Kashmir held at the UN Security Council in New York, saying that the meeting “reflects a recognition of the seriousness of the prevailing situation (in Kashmir).”
•Wednesday’s meeting on Kashmir was the second such China-backed one on “The India-Pakistan Question” at the UNSC since India ended the special status of the erstwhile State of Jammu and Kashmir on August 5, 2019.
•Reflecting on the discussion of Kashmir, Mr. Kumar said it is a “bilateral matter” and Pakistan “through a member of the UNSC” is misusing the high table of UN-level diplomacy.
•He argued that there is an international consensus favouring India’s position on Kashmir.
•“The overwhelming majority of the UNSC members were of the view that UNSC was not the right forum for such issues...the informal closed-door meeting, therefore, concluded without any outcome. We sincerely hope that the message has gone across loud and clear to Pakistan that if at all there is any matter between India and Pakistan that needs to be discussed, it should be discussed bilaterally,” said Mr. Kumar.
•He urged China to take note of support for India’s position and said Beijing should “draw the proper lessons and refrain from taking such action in future.”
Move could pave way to a peace deal that would eventually allow the U.S. to withdraw its troops
•The Taliban have offered a brief ceasefire to the U.S., two insurgent sources said on Thursday, a move which could allow for the resumption of talks seeking a deal for Washington to withdraw troops from Afghanistan.
•Washington has for weeks been calling on the militants to reduce violence, posing it as a condition for resuming formal negotiations on an agreement that would see U.S. troops begin to leave the country in return for security guarantees, after a near two-decade fight.
•“It is an offer for a ceasefire either for seven or 10 days,” a senior Taliban official who requested anonymity told AFP, adding that the offer was made to U.S. negotiators in Doha. “It has been finalised and given to the Americans. It is going to pave the way for an agreement.”
•A second insurgent source, based in Pakistan, confirmed that the offer had been handed to the U.S.
•The Taliban have yet to release an official statement, and Washington has not said whether it has received any offer from the insurgents or what its response will be.
•The Taliban and the U.S. had been negotiating the deal for a year, and were on the brink of an announcement in September 2019 when President Donald Trump abruptly declared the process “dead”, citing Taliban violence.
•Talks were later restarted between the two sides in December in Qatar, but were paused again following an attack near the Bagram military base in Afghanistan, which is run by the U.S.
•On Saturday, two Americans were killed in a Taliban-claimed bomb blast targeting a U.S. forces vehicle in southern Kandahar.
‘Positive signal’
•The insurgents' offer, if accepted by the Americans, could see the negotiations begin again.
•Graeme Smith, a senior consultant with International Crisis Group, called the reports of a temporary ceasefire a “positive signal”, saying a recent reduction of attacks in urban centres has added weight to the process.
•“The Taliban have been sending an even bigger message with their actions in recent months. Two months have passed with no major Taliban attacks in any urban zone. That pause in attacks on cities is unprecedented over the last dozen years,” said Mr. Smith.
📰 Preventing mob lynching
The Centre should specify penal action against officials and doctors accused of dereliction of duty
•The spate of incidents of lynching over the past few years has led to a heightened sense of insecurity among the marginalised communities. Though no data has been compiled by the NCRB of the number of cases of lynching in the country since 2015 for reasons unknown, the figures reported by various sections of the media are troubling.
•In 2018, the Supreme Court described lynching as a “horrendous act of mobocracy”. The Court exhorted the Centre and State governments to frame laws specifically to deal with the crime of lynching and laid down certain guidelines to be incorporated in these laws including fast-track trials, compensation to victims, and disciplinary action against lax law-enforcers.
State laws
•In this backdrop, the Manipur government came up first with its Bill against lynching in 2018, incorporating some logical and relevant clauses. The Bill specified that there would be nodal officers in each district to control such crimes. Police officers who fail to prevent the crime of lynching in their jurisdiction are liable to be imprisoned for a term that may extend from one to three years with a fine limit of ₹50,000. Additionally, no concurrence of the State government is required to prosecute them for dereliction of duty.
•It devolves upon the State to protect victims of mob violence and witnesses from any inducement or coercion apart from initiating schemes for rehabilitation and setting up relief camps where a community is displaced. The law provides for adequate monetary compensation to the victims or their immediate kin.
•The Rajasthan government passed a bill against lynching in August 2019, not a moment too soon, given that according to Parliamentary Affairs Minister Shanti Dhariwal, “After 2014, 86% cases of mob lynching reported in the country happened in Rajasthan.” However, not only has the government accepted only a few guidelines issued by the apex court, but is also silent on any action to be initiated against police officers who may be accused of dereliction of duty.
•West Bengal came up with a more stringent Bill against lynching. Punishment for lynching to death is punishable with the death penalty or life imprisonment and a fine of up to ₹5 lakh. West Bengal Governor Jagdeep Dhankhar has invited the Chief Minister and leaders of all legislature parties for a meeting this month to discuss the Bill. Most other guidelines of the Supreme Court have been adopted by the State.
What the Centre can do
•While adopting the guidelines, the Centre would do well to incorporate sections in the law for penal action against doctors who stand accused of dereliction of duty, for delay in attending to victims of lynching, or submitting false reports without carrying out a proper and thorough medical examination of the victims, either under coercion by the police or due to their own prejudice against the community or religion of the victims. Under the compensation scheme for the victims, the amount to be paid to the victims should be recovered from the perpetrators of the crime or collective fines be imposed on the villagers where the lynching takes place.
•While framing the laws, the Centre could even provide for punitive action against political leaders found guilty of inciting mobs. Until a zero-tolerance attitude is adopted in dealing with mob lynching, this crime will continue to show a rising trend. Punitive action to be taken against police officers accused of dereliction of duty, as incorporated in the law enacted by Manipur government, could be replicated in the Central law too as it would deter police officials acting in a partisan manner in favour of the lynch mob.
📰 34,000 Bru refugees to be settled in Tripura
MHA signs quadripartite agreement
•Union Home Minister Amit Shah on Thursday presided over the signing of a quadripartite pact of the MHA with the State governments of Tripura, Mizoram and leaders of Bru community to permanently settle around 34,000 internally displaced Bru people in Tripura.
•Reangs or Brus are the second largest ethnic group in Mizoram. Their exodus in 1997 was spurred by violent clashes in Mamith subdivision, a Reang-dominated area, when they demanded creation of an autonomous council that was vehemently opposed by Mizo groups.
•The Centre has sanctioned around Rs. 600 crore as a settlement package, Mr. Shah said on Thursday.
•“Due to ethnic tensions in Mizoram, around 34,000 people were forced to live in sub-human conditions in tents in Tripura. No solution could be reached all these years.
•“In 2018, an agreement was signed and a package was sanctioned, but many people did not want to go back to Mizoram. Only 328 families moved back. Due to the initiative by Prime Minister Narendra Modi, negotiations were started afresh. The displaced people will be settled in Tripura permanently,” Mr. Shah said in the presence of Tripura Chief Minister Biplab Kumar Deb and Mizoram CM Zoramthanga.
•After the signing of the pact, the Tripura CM said: “You cannot be refugees in your own country.”
•Tripura’s erstwhile royal Pradyot Deb Barman, who is one of the signatories, said he would donate 35 acres of land for the purpose.
•North East Democratic Alliance convener Himanta Biswa Sarma said the Brus would get voting rights and tribal status in Tripura. He said the Brus who settled in Mizoram would not have an option to come back. Around 30,000 Brus returned to Mizoram in batches.
•Mr. Shah said the community members would also get a one-time assistance of Rs. 4 lakh as fixed deposit. “A 40/30 feet plot of land, an aid of Rs. 5,000/month for the next two years, free ration and Rs. 1.5 lakh to build houses will be given to them. The Tripura government has identified land to settle them,” Mr. Shah said.
•A rehabilitation package signed in 2018 could not materialise.
•Mr. Sarma said the government was aware of the paucity of land in Tripura but efforts were being made to settle the Brus in clusters.
•He said the funds to buy land would be jointly shared by the Centre and the State government.
•“There were many Bengali families who were also affected due to the displacement of the Brus. Since the Brus came and settled in Tripura, the Bengalis had to vacate the areas. The agreement will also help them,” said Mr. Sarma.
📰 The perils of RBI’s fixation on inflation
The central bank’s shift of focus from financial stability to inflation targeting could have led to regulatory infirmity
•Inflation is back in the news and attention has willy-nilly turned on the Reserve Bank of India (RBI). This would lead us to recognise what the central bank is mandated to do and assess how much of its objective it actually achieves.
•The establishment of some of the world’s oldest central banks was inspired by the goal of maintaining financial stability. It was recognised that when private commercial banks fail, whether due to malfeasance or misjudgment, they not only harm their trusting depositors, they can also take down with them the rest of the financial system. The latter can take place when banks have lent to one another, which is not uncommon. In the crisis that ensues, there is a collapse of credit which, in turn, leads to a downturn in economic activity. To avoid this, the central bank was conceived of as the lender of last resort, one that could pre-empt a run on banks and give them time to put their books back in order. However, this was to be accompanied by the adoption of a tough regulatory stance, whereby the central bank would stay hawk-eyed towards the activities of banks, particularly risky lending. This was necessary as the knowledge that they could always rely on the lender-of-last-resort facility may leave banks less than diligent or even make them indulge in plain dishonesty. However, with the rise of neoliberalism, the central tenet of which is that markets should be given free play, the regulatory role of central banks took a back seat. They came to be primarily mandated with inflation control. It is hardly the case that central banks were unconcerned with inflation earlier, but they were at the same time concerned with financial stability and the level of economic activity.
Moving the goal post
•In India, the RBI had earlier pursued a ‘multiple indicators approach’, implying concern for outcomes other than inflation, including even the balance of payments. But, developments in economic theory discouraged such catholicity by arguing that having economic activity as an objective of monetary policy leads to higher inflation. It should be noted that this argument privileged low inflation over low unemployment, favouring owners of financial wealth over workers. But, not to be left behind in the race to adopt the architecture of the West, the Indian government also instituted inflation targeting as the sole objective of monetary policy. The RBI was permitted to exceed or fall short of a targeted inflation rate of 4% by a margin of 2 percentage points. This was hailed by the government as the adoption of the ‘modern monetary policy framework’ by India, and came into effect from the year 2016-17.
•The late Arun Jaitley as Finance Minister projected the attainment of macroeconomic stability, represented by slow inflation, as a major achievement of his tenure. Adherence to fiscal discipline and inflation targeting were taken to be the instruments. Throughout Mr. Jaitley’s tenure, inflation remained within the range envisaged under the inflation targeting regime agreed to between the government and the RBI. But have all the objectives of the RBI’s original mandate as a central bank been met as a result? I believe not.
•In 2018, within three years of the adoption of inflation targeting goal, a crisis engulfed IL&FS, a non-banking financial company in the infrastructure space. It defaulted on several of its obligations, including repayment of bank loans and the redemption of commercial paper. The IL&FS was not just another ‘shadow bank’; it operated over 100 subsidiaries and was sitting on debt of ₹94,000 crore. Given this, its default had a chilling effect on the investors, banks and mutual funds associated with it both directly or indirectly. Since then, in 2019, a run on the Punjab and Maharashtra Co-operative Bank had to be averted by imposing withdrawal limits. It was discovered that fictitious accounts, reportedly over 21,000 of them, had been created so that the books would tally, even as deposits were siphoned off as loans to the promoters. While in the case of IL&FS, some part of the problem may have been caused by a slowing economy, outright fraud underlay the crisis at PMC Bank. And now, in early 2020, curbs have had to be placed on withdrawals from the Bengaluru-based Sri Guru Raghavendra Sahakara Bank. Even if it is too early to declare that financial instability prevails in India, it is not too early to ask if the RBI’s responsibility to regulate the financial sector may have taken a back seat after adoption of inflation targeting as the main objective. Has a fixation with inflation rate made the RBI take its eyes off the loan books of the banks?
Rise in inflation
•Further, even apart from regulatory infirmity, it is not as if the RBI is doing spectacularly on the inflation targeting front either. At over 7%, the inflation rate in December is the highest in five years. This may not be reason to panic, for the price rise could be seasonal and may well abate, but it does raise a question on the efficacy of inflation targeting as a means of inflation control. Inflation led by rising prices of food stuff cannot quickly or easily be contained by the mode of control underlying inflation targeting. It requires enhancing supplies which, in turn, would mean raising imports in the short run. Be that as it may, the extent of failure of inflation targeting right now is substantial indeed; the inflation rate has exceeded the permissible range of error by 65%. This must give pause as to how much the shift to the ‘modern monetary policy framework’ has delivered. If the inflation rate was within the intended range so far, that may have been due to both declining food prices and, for a phase, oil prices.
•Finally, we come to what the ordinary Indian considers the RBI’s principal mandate, the management of the currency so that trade is facilitated. The central bank has the monopoly on the issue of notes. Why then is there is an absolute shortage of small denomination notes in the bazaars of India? ‘Bazaar’ is here only a word for a site of commerce; from the north to the south of the country, from airports to village stores, trade and production is held up due to the absence of notes and coins of the denomination appropriate to the transaction.
•The RBI and the government showed themselves to be entirely out of touch with reality when, in 2016, the 1,000-rupee note was replaced with a 2,000-rupee note. It is anybody’s guess whether the daily wage for a labourer is more than ₹500 in much of India. Small denomination notes are mostly unavailable, or, if available at all, are of so shabby an appearance that it makes you wonder whether those responsible for the management of our economy take any pride in discharging their tasks. In this department, India’s central bank has failed substantially.
