📰 Reimagining and reinventing the Indian economy
‘India needs to minimise the damage caused by the pandemic while rebooting the country by exploiting new opportunities unleashed by evolving business scenarios’
•The COVID-19 pandemic has disrupted the global economy and India is no different. The significant reduction in domestic demand caused by the nationwide lockdown has pushed the economy towards contraction in the first quarter of 2020-21, and the impact is likely to be felt in subsequent months as well.
•In this regard, Honourable Prime Minister Shri Narendra Modi has taken decisive and commendable action to mitigate the impact of the virus outbreak, from both a health and an economic perspective.
•On May 12, 2020, Mr. Modi unveiled a mammoth stimulus package totalling Rs. 20 lakh crore, which works out to about 10% of GDP, making it one of the most substantial relief plans in the world.
•The stimulus package can help revive businesses, which are finding it difficult to operate without adequate availability of credit. This is especially true for India’s 60,000-odd start-ups, which are facing an acute liquidity crunch. The situation presents an opportunity to take bold action to promote investments, protect existing jobs and create new jobs.
•A lot more needs to be done, however, to resuscitate the country’s growth engine.
•At this juncture, what India needs is a two-pronged strategy to successfully navigate the current crisis. First, minimise the damage caused by the COVID-19 and clear a path to recovery and second, rebooting and reimagining India by promptly exploiting new opportunities unleashed by evolving business scenarios. The three mantras should be bigger, bolder and faster execution of this strategy.
Key strategies
The strategy should address four major economic cylinders: a) Big Business Houses which are a major contributor to GDP and large employment generators. b) MSMEs which are the lifeline of the country, generating wealth for the middle class. c) Start-ups, which bring innovation and transformation to our country’s economy. d) Our Indian brothers and sisters living abroad, the NRIs and OCIs — they not only serve as unofficial ambassadors of India, but their heart beats for India and through their contacts, can bring huge investments into India.
1. Big business houses should be supported by the government to reopen their operations by way of tax incentives or ease of procurement of raw materials or other goods and services on credit as this will energise consumer demand and boost the functioning of vendor or ancillary industry in the MSME sector (which has potential for job creation).
2. The RBI should consider single one-time window for restructuring business loans, as required, by all banks. There is a high probability that non-performing assets are likely to rise once the prevailing moratorium is lifted by RBI. The government and RBI also urgently need to assure banks, that their business decisions will not be questioned, to encourage credit flows.
3. The Centre can prepare a five-year plan on getting at least 60% of those companies, desiring to move manufacturing out of China to India.
4. Making India a global trading hub — devise an incentive regime for companies setting up global trading operations from India.
5. The States should think of establishing self-contained “industrial cities” that earmark space for manufacturing, commercial, educational, residential and social infrastructure.
6. The 10 sectors identified by the government fit into the Make in India campaign — electrical, pharmaceuticals, medical devices, automotive, mining, electronics, heavy engineering, renewable energy, food processing, chemicals and textiles. Japan, the U.S. and South Korea have already shown interest.
Sunrise sectors
7. It should also encourage sunrise sectors as part of re-imagining Indian economy such as battery manufacturing (storage systems)/ solar panel manufacturing. The government can also consider giving impetus to “Deep Tech”-leveraged businesses — blockchain, robotics, AI, machine learning, augmented reality, big data analytics, cyber security, etc.
8. India is amongst the top start-up ecosystems globally. Several of them are in pre-Angel or Angel-Funding stages and are under significant pressure to stay afloat in view of a lack of adequate liquidity. Start-ups not only help drive innovation, but also create jobs. The government needs to provide support to the start-up ecosystem.
9. The auto industry which contributes significantly to GDP (nearly 9%) deserves special treatment. In addition to reducing GST rate, old vehicle scrap policy with tax incentives for creating a demand for new vehicles may be formulated. There is need to recognise Auto Sales Industry channel partners as MSMEs
10. Plug-and-Play model: Maharashtra has created a turnkey ‘plug-and-play’ model for foreign investors. Similarly, other States must get their act together, be it on land acquisition, labour laws and providing social, environment and other infrastructure. Land should be made available for projects with all necessary pre-clearances — at Centre’s level (including Environmental), State’s and Municipal dispensations.
11. Reforms in labour laws do not only mean permission to hire and fire. Leeway should be given to strictly enforce discipline within the factory premises and demand higher productivity. The moves by U.P., M.P. and Gujarat are welcome signals. The government should provide health insurance for migrant labourers as experimented by certain States.
12. Investments of NRIs and OCIs in India should be treated on par with those of Resident Indians as regards interest and dividend repatriation and management control of Indian companies. It may be mentioned that the Chinese government had called on rich overseas Chinese to invest in China with minimum government control, and massive investments followed. This has contributed to China’s prosperity and economic rise. A similar investment boom can take place in India through NRIs and OCIs.
Indian diaspora’s direct investment should be incentivised, perhaps in terms of a plug-and-play model to ensure that they do not end up spending lots of time in getting approvals to start a business.
One-time repatriation of foreign earning: The proposition is to reduce the current rate of 15% on a gross basis on dividends from foreign subsidiaries to 5%. This would lead to more influx of funds and thereby be expected to support local projects.
Tax exemptions
The government may also consider providing tax exemption on passive income like dividends, interest on bank deposits, income from mutual funds earned by NRIs from India, if such income is reinvested back in India. Also, capital gains should be taxed at 50% of applicable rates for next 3 years.
Incentives for attracting new investments: We need to reconsider the approach to taxing interest, dividends and royalty paid to overseas investors. For instance, though interest on several forms of debt qualifies for a concessional 5% tax rate, this is limited by fairly stringent thin capitalization norms. The government could consider a 3 to 5-year moratorium on the applicability of thin capitalization norms to ensure that businesses are able to leverage on low cost borrowings from group entities abroad.
The government may consider relaxation of norms pertaining to issue of shares to resident entities owned by NRIs. Further, relaxation should be provided for any funds received from NRIs, subject to production of simple documents such as Bank Foreign Inward Remittance Certificate (FIRC) /KYC documents.
13. An off-shore investment centre like Singapore can be opened in Mumbai, where Indian domestic laws and taxation will not be applicable. MNCs may route their investments into India through the centre. Foreign legal firms and banks along with domestic institutions can be invited to have a presence in the centre.
Earlier in May, Ecowrap had estimated Q1 GDP contraction at over 20% and now pegs it lower
•State Bank of India’s research report Ecowrap expects GDP to contract by 16.5% in the first quarter of the current fiscal.
•Earlier in May, Ecowrap had estimated Q1 GDP contraction at over 20% and now pegs it lower, “though with the relevant caveats in the current uncertain scenario”, as per the report released on Monday.
•Degrowth in corporate GVA had been significantly better than revenue degrowth in Q1 as far as the results of listed companies were concerned, it said.
•The results indicate a more than 25% slump in topline. However, the drop in corporate gross value added (GVA) was only 14.1%, the research team wrote.
📰 What is criticism and what is contempt?
Whether a comment constitutes criminal contempt would necessarily be decided on the facts of each case
•A recent order of the Supreme Court found advocate Prashant Bhushan guilty of contempt for two tweets — one relating to the Chief Justice of India astride an expensive motorcycle and the other a comment that the Supreme Court, in his opinion, played a role in the destruction of democracy in India over the last six years.
Criminal contempt
•For the purpose of the topic at hand we are concerned only with criminal contempt and not those wilfully disobedient litigants who ignore the orders of the courts. Section 2(c) of the Contempt of Courts Act, 1971 defines criminal contempt as the publication of any matter or the doing of any other act which scandalises or lowers the authority of any court; or prejudices or interferes with the due course of any judicial proceeding; or obstructs the administration of justice.
•Does this mean that one can never voice any criticism of the judiciary? No. What the law permits you to say regarding the functioning of Indian courts forms the basis of this particular article, i.e., there is a thin line separating criticism and contempt.
•Freedom of speech is a fundamental right guaranteed to every Indian citizen under Article 19(1)(a) of the Constitution, albeit subject to reasonable restrictions under Article 19(2). In C.K. Daphtary v. O.P. Gupta (1971), the Supreme Court held that the existing law of criminal contempt is one such reasonable restriction. That does not mean that one cannot express one’s ire against the judiciary for fear of contempt.
•As long back as in 1968, Lord Denning M.R. set out guidelines in matters of contempt of court. He stated that contempt is not the means to uphold the court’s dignity. He said its jurisdiction is to be exercised sparingly and that protection of freedom of speech is paramount. While welcoming criticism, Lord Denning only requested that it be fair since judges, owing to their status, are not in a position to refute the comments so levelled against them.
•What does the Indian judiciary deem permissible and impermissible? The Supreme Court has held that if a comment is made against the functioning of a judge, it would have to be seen whether the comment is fair or malicious. If the comment is made against the judge as an individual, the Court would consider whether the comment seeks to interfere with the judge’s administration or is simply in the nature of libel or defamation. The Court would have to determine whether the statement is fair, bona fide , defamatory or contemptuous.
•A statement would not constitute criminal contempt if it is only against the judge in his or her individual capacity and not in discharge of his or her judicial function. Criminal contempt does not seek to afford protection to judges from statements which they may be exposed to as individuals. Such statements would only leave the individual liable for defamation. Statements which affect the administration of justice or functioning of courts amount to criminal contempt since public perception of the judiciary plays a vital role in the rule of law. An attack on a judge in his or her official capacity denigrates the judiciary as a whole and the law of criminal contempt would come down upon such a person unless it is a fair critique of a judgment.
Various examples
•Sections 4 and 5 of the Contempt of Courts Act are akin to a defense a person may take in a case of defamation i.e., fair comment. In Re: S.Mugolkar v. Unknown (1978), the Supreme Court held that the judiciary cannot be immune from fair criticism, and contempt action is to be used only when an obvious misstatement with malicious intent seeks to bring down public confidence in the courts or seeks to influence the courts. In this judgment, Chief Justice M.H. Beg opined that at times the judiciary adopts a “magnanimously charitable attitude even when utterly uncharitable and unfair criticism of its operations is made out of bona fide concern for improvement.”
•The same Justice Beg remarked post-retirement that Justice H.R. Khanna’s famous dissent in the ADM Jabalpur case (1976) made no contribution to law but only to his popularity. The Allahabad High Court citing Brahma Prakash Sharma (1953) did not find Justice Beg guilty of contempt.
•Former Law Minister of India, P. Shiv Shankar, referring to landmark judgments of the Supreme Court, said once: “Mahadhipatis like Keshavananda and Zamindars like Golaknath evoked a sympathetic chord nowhere in the whole country except the Supreme Court of India. And the bank magnates... got higher compensation by the intervention of the Supreme Court in Cooper’s case.” He also said: “Antisocial elements i.e. FERA violators, bride burners and a whole horde of reactionaries have found their heaven in the Supreme Court.”
•Speaking for the Supreme Court in 1988, Justice Sabyasachi Mukherjee found that these statements did not impair the administration of justice. He only opined that the language could have been milder given the Minister’s own legal background. He also said: “If antisocial elements and criminals have benefited by decisions of the Supreme Court, the fault rests with the laws and the loopholes in the legislation. The Courts are not deterred by such criticisms.”
•Truth is also a defence in matters of criminal contempt if it is bona fide and made in public interest, as held by the Supreme Court in Indirect Tax Practitioners’ Association v. R.K. Jain (2010).
•However, all these precedents did not come to the aid of activist Arundhati Roy when the Supreme Court found her guilty of contempt. A petition was filed against Ms. Roy, which was dismissed by the apex court. However, it was Ms. Roy’s reply to the petition which was held to be in contempt. In that, Ms. Roy had admonished the Supreme Court for acting with undue haste in a frivolous petition and attributed it to her strong critique of the apex court’s decision in the Sardar Sarovar Dam case. The Supreme Court held that a statement that the Court willingly issued notice on an unsubstantiated petition affected the reputation and credibility of the Court before the public and therefore found Ms. Roy guilty of contempt.
•The above cases would show that whether a comment would constitute criminal contempt or not depends entirely on the facts and circumstances of each case. In conclusion, tweets or remarks by conscientious citizens certainly do not affect the dignity of the Indian judiciary, to quote Lord Denning “that must rest on surer foundations”.
