📰 New defence office complex opened
Prime Minister inaugurates the facilities built at a cost of Rs. 775 crore
•In the 75th year of Independence, an important step had been taken towards developing the capital of the country according to the needs and aspirations of a new India, Prime Minister Narendra Modi said on Thursday after inaugurating the Ministry of Defence’s (MoD) two new office complexes, constructed as a part of the Central Vista redevelopment project at a cost of Rs. 775 crore.
•The modern offices, built at Kasturba Gandhi Marg and Africa Avenue, would go a long way in effectively carrying out all the work related to the security of the nation. “This is a big step towards the creation of a modern defence enclave in the capital,” Mr. Modi observed at a formal ceremony of the new complex on Africa Avenue. “This new Defence Office Complex is going to further strengthen our efforts to make the work of our forces more convenient and more effective,” he noted.
•Over 7,000 officers and staff belonging to 27 different organisations — attached offices of the MoD, service headquarters and other subordinate offices — will move to the new complexes soon.
•“When we talk about the capital, it is not just a city, and the capital of any country is a symbol of the thinking, determination, strength and culture of that country. India is the mother of democracy. Therefore, the capital of India should be such, people and public in the centre,” Mr. Modi asserted.
•The construction of the complexes was to be completed in 24 months but it was done in a record time of 12 months despite challenges during the pandemic, he said. The new buildings were eco-friendly with all amenities, Mr. Modi added
•Technology had a big role in the speed of construction now. There was also a multi-level car parking for over 1,500 cars at both locations, Mr. Modi said.
•Speaking at the event, Minister for Housing and Urban Affairs Hardeep Singh Puri said the next Republic Day parade would be held at the new Central Vista and the work related to it would be completed in the next few months.
The Indo-Pacific would be better served by broader strategic cooperation initiatives
•The U.S. has joined with the U.K. and Australia to announce a new trilateral security partnership, the AUKUS, that aims to ensure that there will be enduring freedom and openness in the Indo-Pacific region, particularly to “address both the current strategic environment in the region and how it may evolve”, according to President Joe Biden. Two dimensions are significant: first, that it complements several pre-existing similar arrangements for the region, including the Five Eyes intelligence cooperation initiative, ASEAN and the Quad, the last including India; and second, that it proposes to transfer technology to build a fleet of nuclear-powered submarines for Australia within 18 months. Australia has ratified the nuclear NPT and has vowed to abide by its tenets, notwithstanding the highly sensitive technology transfer implied in the latest proposal. Mr. Biden went to lengths to assure the world that AUKUS was “not talking about nuclear-armed submarines. These are conventionally armed submarines that are powered by nuclear reactors. This technology is proven.” Australia will become only the second nation, after the U.K., that the U.S. has ever shared its nuclear submarine technology with. The announcement of the partnership led to a minor kerfuffle with New Zealand, whose Prime Minister Jacinda Ardern said that under her country’s 1984 nuclear-free zone policy, Australia’s nuclear-powered submarines would not be allowed into the former’s territorial waters. It also appeared to upset the political leadership in France, with whom Australia had struck a deal — now cancelled — for $90 billion worth of conventional submarines.
•The broader strategic question that the creation of AUKUS begs relates to the unstated challenge that the group poses to the regional hegemonic ambitions of China, particularly regarding how far the U.S., the U.K. and Australia, along with other regional powers, will go, to preserve a free and open Indo-Pacific, including the South China Sea. Will the operationalisation of this security partnership lead to closer coordination among the nations concerned in terms of joint military presence, war games and more in the region, signalling a new, “latticed” posture to Beijing? After all, undersea capabilities including the ability to patrol may be vital to deterring Chinese military coercion in the region. Although no explicit mention was made of China in any of the AUKUS announcements, it is clear, as one official later said to media, that the transfer of nuclear propulsion technology to an ally in this context was intended to “send a message of reassurance to countries in Asia”. Whether or not the purpose of AUKUS is to contain China’s aggressive territorial ambitions, the imperatives of the Indo-Pacific would be better served by broadening strategic cooperation initiatives of this sort to include other powers that are deeply invested in the region, including India, Japan, and South Korea.
📰 Government sets up ‘bad bank’ to clear the NPA mess
Cabinet approves ₹30,600 crore guarantee programme.
•Paving the way for a major clean-up of bad loans in the banking system, the Cabinet on Wednesday cleared a ₹30,600-crore guarantee programme for securities to be issued by the newly incorporated ‘bad bank’ for taking over and resolving non-performing assets (NPAs) amounting to ₹2 lakh crore.
•The Reserve Bank of India is in the process of granting a licence for the National Asset Reconstruction Company Limited (NARCL), following which toxic assets worth ₹90,000 crore that banks have already fully provided for, will move to the NARCL, Financial Services Secretary Debashish Panda said.
•Finance Minister Nirmala Sitharaman said the Cabinet’s decision to extend a five-year guarantee for NARCL-issued security receipts to banks completed the entire cycle of cleaning up India’s banking system that began with the recognition of the extent of bad loans in 2015.
•Under the proposed mechanism, the NARCL will acquire assets by making an offer to the lead bank. Private sector asset reconstruction (ARCs) firms may also be allowed to outbid the NARCL. Separately, public and private lenders will combine forces to set up an India Debt Resolution Company (IDRC) that will manage these assets and try to raise their value for final resolution.
‘Back-stop arrangement’
•“A 15% cash payment would be made to the banks based on some valuation and the rest will be given as security receipts. For those to hold on and have their value intact, there is a need for the government to give a back-stop arrangement and that is why this ₹30,600 crore has been cleared by the Cabinet,” Ms. Sitharaman said.
•Once the NARCL and the IDRC have finally resolved the asset, preferably as a going concern and not through liquidation proceedings, the Minister said the balance 85% held as security receipts would be given to the banks.
•“The government back-stop will come in only as much as to pay the gap between the realised value and the face value of those receipts and this will hold good for only five years,” she explained.
•While there are 28 ARCs in the private sector, she said they did not take up big ticket resolutions, so a need was felt for government-backed security receipts.
‘Growth capital’
•“The whole idea is to ensure that these assets for which this whole set-up is being created, and the value that is locked in the assets is realised and comes back to the banks; they use it as a growth capital and the banking system becomes more robust,” Mr. Panda said.
•“In all probability, some assets may have an upside, [and] by using the guarantee as a backstop, the entire upside will also come to the banks rather than getting retained by the NARCL,” the Financial Services Secretary said. The five-year limit on the guarantee, with an increase in the fees charged for the guarantee every year, is an incentive for the resolution process to be completed at the earliest, he added.
•“We have addressed the issues facing the banking system in totality that in 2015 was a major challenge for the economy. The twin balance sheet problem which caused a lot of stress … today, we have resolved this in a holistic way. Within those five years, all these [NPAs] will have to be resolved,” Ms. Sitharaman emphasised.
‘Positive step’
•The government guarantee for the proposed security receipts is a positive stepping stone for unlocking stressed assets’ value, said ICRA vice-president in charge of financial sector ratings Anil Gupta.
•“The upfront cash payment by the NARCL to banks will immediately be accretive for the profitability and capital of the banks, however the ability of the NARCL to resolve these assets in a time-bound manner will be critical for future provision writeback by banks,” he noted.
•J. Sagar Associates’ partner Anish Mashruwala said the bad bank’s success would depend on the implementation and management of the transferred NPAs and it was likely that the government would keep a close eye on the management of the IDRC.
•Public sector banks will have a 51% ownership in the NARCL, while their shareholding along with that of public sector financial institutions will be capped at 49% for the IDRC, with private lenders bringing in the rest of the equity capital. Mr. Panda said that about 16 banks, including private players, would put up about ₹6,000 crore as equity for the NARCL.
📰 Delaying the inevitable: On relief to telcos
The Centre’s relief to telcos can only be the first step in efforts to boost the stressed sector
•The Union Cabinet’s approval on Wednesday of a relief-cum-reforms package for the financially stressed telecom sector, though verily a step in the right direction, is at best only likely to delay the inevitable. In a tacit acknowledgment of the extent of stress in the sector as well as the far-reaching economic consequences of protracted distress in the industry, the Government decided to offer telecom service providers the option of a four-year moratorium on the payment of outstanding AGR and spectrum purchase dues. This one measure alone is expected to ease the immediate financial pressure on the telcos, especially at Vodafone Idea and Bharti Airtel. The venture created by the merger of the Indian unit of the U.K.-based Vodafone Group Plc and billionaire Kumar Mangalam Birla’s erstwhile Idea Cellular Ltd. had deferred spectrum payment obligations and AGR liabilities that exceeded ₹1.68-lakh crore as of June 30. The Government’s moratorium offer should, at least for now, relieve the burden of finding the funds to service these liabilities at the loss-making telco, giving it the space to focus on continuing to provide vital telecom services to about 27 crore wireless subscribers still with it. However, the woes at Vodafone Idea are deeper and symptomatic of the broader industry-wide maladies that have pared the once more-than-dozen-strong field to just three private players and one struggling state-owned company.
•The entry of a deep-pocketed newcomer five years ago and its ‘take-no-prisoners approach’ to tariffs triggered a price war that depressed average revenue per user and bled most legacy telcos operationally into the red. The after-effects of the bruising competitive plunge in call and data tariffs are still being felt by the surviving operators and the issue of a floor price is one among many that the latest reforms completely skirt. To be sure, the Government has sought to address several anomalies in the policy regime including the definition of AGR that had led to the large build-up of dues and protracted and ultimately pointless litigation. Non-telecom revenue will hereafter be excluded from the AGR, a long-standing demand from the telcos. The telcos would also not have to pay any spectrum usage charge for airwaves acquired in future auctions, could share spectrum without incurring any additional cost, and hold the airwaves acquired at an auction for 30 years instead of 20. Several procedural norms have also been simplified. Still, the prospects of the sector diminishing to a duopoly remain high. With Vodafone Group CEO Nick Read categorically telling analysts in July that the firm would not be investing any additional equity into India and Mr. Birla throwing in the towel last month, the Centre’s relief may be too little, too late.
📰 E-Shram needs some hard work to get going
The nuances of the unorganised workers’ identity are complex which portal registration may not be able to capture
•On August 26, 2021, the Ministry of Labour and Employment (MOLE) launched the E-Shram, the web portal for creating a National Database of Unorganized Workers (NDUW), which will be seeded with Aadhaar. It seeks to register an estimated 398-400 million unorganised workers and to issue an E-Shram card. However, it has come into existence more than a decade after the passage of the Unorganised Workers’ Social Security Act in 2008; and if we consider inter-State migrant workers, the portal is a little more than four decades late. It has come about even after repeated nudging by the Supreme Court of India. Had the Central and the State governments begun these legally mandated processes on time, much of the distress of lakhs of vulnerable workers would have been avoided. It is the result of state apathy. No government — either the United Progressive Alliance or the National Democratic Alliance — can stake claim for this legally mandated measure. In fact, the political class owe an ‘apology’ to informal workers.
A long process
•Given the gigantic nature of registering each worker, it will be a long-drawn process. It is natural that in the initial stages, the pace of registrations will be slower; at the time of writing this article, 0.61 million workers have been registered. Considering the estimated 380 million workers as the universe of registration — debatable as the novel coronavirus pandemic has pushed lakhs of workers into informality and the estimate also depends on the assumptions used for estimation — 6.33 million workers have to be registered for completion of registration in 60 days, and 4.2 million workers for 90 days. The Government has not mentioned a gestation period to assess its strategy and efficiency.
•Workers stand to gain by registration in the medium to long run. But the instant benefit of accident insurance upto ₹0.2 million to registered workers is surely not an attractive carrot. The main point of attraction is the benefits they stand to gain during normal and crisis-ridden periods such as the novel coronavirus pandemic now which the Government needs to disseminate properly.
Data security, other issues
•There is also another issue: why should small employers be incentivised to ask or require their workers to register even though the government reportedly requires them mandatorily to register their workers. While the Government can appeal to them, any penal measure will hurt the ease of doing business. The apparent productivity gains arising out of social security assurances to these workers is a moot point. One of the vital concerns of e-portals is data security, including its potential abuse especially when it is a mega-sized database. The central government would have to share data with State governments whose data security capacities vary. There are also media reports pointing out the absence of a national architecture relating to data security.
•There are several issues concerning the eligibility of persons to register as well as the definitional issues. By excluding workers covered by EPF and ESI, lakhs of contract and fixed-term contract workers will be excluded from the universe of UW. Under the Social Security Code (SSC), hazardous establishments employing even a single worker will have to be covered under the ESI, which means these workers also will be excluded. The NDUW excludes millions of workers aged over 59 from its ambit, which constitutes age discrimination. Given the frugal or no social security for them, their exclusion will hurt their welfare.
•As such, SSC is exclusionary as ESC and EPF benefits will be applicable only to those employed in establishments employing 10 or 20 workers, respectively. Thresholds in labour laws segment the labour market. Many workers will not have an Aadhaar-seeded mobile or even a smartphone. Aadhaar-seeding is a controversial issue with political overtones, especially in the North-eastern regions. But it is necessary and the Government is right in insisting on it. The extent of definitional and systemic exclusions is vast and there may be other categories of exclusion due to possible procedural deficits.
Complex identities
•The very identity of unorganised workers presents problems thanks to its complexity and ever-changing identities. Many are circular migrant workers and they quickly, even unpredictably, move from one trade to another. Many others perform formal and informal work as some during non-office hours may belong to the gig economy, for example as an Uber taxi or a Swiggy employee. They straddle formal and informal sectors.
•The nuances of the unorganised workers’ identity are so complex that one wonders whether the mechanical and assumptions-based portal registration will be able to capture the complexities and dynamics involved regarding them. Even though MOLE has included gig workers in this process, it is legally unclear whether the gig/platform worker can be classified first as a worker at all (the other three Labour Codes do not include these workers), and second as organised or unorganised workers — the definition of an “unorganised worker” in the Social Security Code (vide. S.2(86)) does not specifically include them, unless they are declared ‘self-employed’ or ‘wage workers’. In fact, the NCO family code does not specifically include ‘gig/platform worker’ even though they may be registered under several categories of ‘drivers’ which will hide their unique identity. Of course, there is an all-inclusive miscellaneous category that will have to be intelligently used to expand the occupational categories.
Other impediments
•The central government will have to depend on the State governments for this project to be successful. The main trouble points arise at the regional level for two primary reasons. It has been reported that in some States such as Maharashtra, the server was down for a few days. The incentive for multiple attempts on the part of registering workers will be weak. The helping stakeholders must make suitable interventions in these cases.
•In many States, the social dialogue with the stakeholders especially is rather weak or non-existent. The success of the project depends on the involvement of a variety of stakeholders apart from trade unions, massive and innovative dissemination exercises involving multiple media outlets of various languages, the holding of camps on demand by the stakeholders and on their own by the Government, efficiency of the resolution of grievance redress mechanisms, micro-level operations, etc. There is also the concern of corruption as middle-service agencies such as Internet providers might charge exorbitant charges to register and print the E-Shram cards. Therefore, the involvement of surveillance agencies is crucial. More importantly, the Government must publish statistics at the national and the regional levels of the registrations to assess the registration system’s efficiency.
•E-Shram is a vital system to provide hitherto invisible workers much-needed visibility. It will provide the Labour Market Citizenship Document to them. I would go one step further to argue for triple linkage for efficient and leakage-less delivery of all kinds of benefits and voices to workers/citizens, viz. One-Nation-One-Ration Card (ONOR), E-Shram Card (especially bank account seeded) and the Election Commission Card. Last but not least, registrations cannot be a source of exclusion of a person from receiving social assistance and benefits.
📰 Two democracies and their vigilante problem
While in India, the word spells bad news, in the U.S., as seen in Texas, the citizen arrester seems hardly diminished
•In the world’s largest democracy, the word ‘vigilante’ evokes unsavoury images of goons stopping cattle trucks and lynching drivers, or video filming themselves assaulting men accused of love jihad, or beating up couples celebrating Valentine’s Day. A vigilante in India is both bad news and a bad word. Vigilantes are anti-democratic. They lack the values of a constitutional democracy. A consensus has emerged in India to demand that the law-and-order machinery comes down heavily on such vigilante behaviour.
A respectable garb in the U.S.
•So, imagine my shock when I discovered that in the world’s oldest democracy, the word ‘vigilante’ receives only half the opprobrium that we heap on it in India. The other half is suppressed by a law that makes vigilantism respectable. One form of the vigilante, in the United States, is the ‘citizen arrester’ who enjoys legal status and whose actions are protected by a law that permits him or her to pursue and arrest a person accused of breaking the law. Drawing on a legal convention that comes from the Common Law tradition in England, dating from the 12th Century, a citizen arrester can physically arrest a person, on behalf of the Monarch (now State) who is regarded by them as breaking or evading the law. There are procedures to be followed, and risks involved for wrongful arrest, but assuming that these are adhered to the citizen arrester is regarded as aiding the consolidation of a political system based on the rule of law. Because of its potential for abuse, in legal circles in the U.S., there is a debate on the need to circumscribe the scope, and eligibility, of who can be a citizen arrester.
The ‘Heartbeat Bill’
•But rather than diminish the place of the citizen arrester, the recent decisions of the Texas legislature are in fact encouraging the practice. Two cases are particularly noteworthy. The first is the latest innovation introduced in Senate Bill 8 (SB8) in Texas, known as the ‘Heartbeat Bill’, signed into law by the Texas Governor Greg Abbott in May 2021, that seeks to ban abortions after six weeks when the foetus registers a heartbeat. The passage of this law has produced an active debate in the U.S., between pro-abortion and pro-life groups, drawing on medical science, law, bioethics, and women’s rights, to refine the different elements of the Roe vs Wade judgment of 1973.
•There are five aspects worthy of attention. The first is it deprives women of the right over their own bodies by making abortion illegal after six weeks when many women do not even know that they are pregnant. This in effect means that abortions, when needed, are unavailable. The second is to include, in the applicability of the law, even women who are victims of rape and incest. Victims are thereby subjected to a second victimisation since now they will be compelled to carry the pregnancy to full term or seek termination in the dark alleys beyond the law. The third is to make culpable anyone associated with an abortion after six weeks and this could include the Uber driver who takes the pregnant woman to the clinic, the receptionist, the nurse and the doctor. The fourth is the declining, by the Supreme Court of the USA, in a five versus four vote, to hear the injunction challenging the Texas Anti-Abortion Law.
•In her dissenting note, Justice Sonia Sotomayor wrote: ‘Presented with an application to enjoin a flagrantly unconstitutional law engineered to prohibit women exercising their constitutional rights and evade judicial scrutiny, a majority of justices have opted to bury their heads in the sand… The Court should not be so content to ignore its constitutional obligations to protect not only the rights of women, but also the sanctity of its precedents and of the rule of law.’
•This sandy terrain to which the court retired is, unfortunately, very familiar to us in India. And the fifth, on which I wish to comment here, is the legal device that blocks State officials from enforcing the law but outsources the enforcement to private citizens who can sue abortion providers from performing abortions and are entitled to collect $10,000 as a civil payout in addition to their legal fees. Such a person can even be someone from outside the state who can show any connection to the abortion. Enter the ‘bounty hunter’ or ‘citizen arrester’.
•While each of the five aspects raises important ethical and legal issues I wish to highlight only the fifth since Republicans in Texas have used the legal device — call it a cunning innovation — of empowering and encouraging citizen arresters to perform the job of state officials who are thereby protected from being sued. The effect of this innovation is to deny women the rights given by Roe vs Wade. The case shows the length to which partisan groups in a democracy, even in one as mature as the U.S., will go to overturn settled law and redesign both the public discourse and the institutional order to make it consistent with their religious ideology. Linda Greenhouse commenting on the legislation in her article in The New York Times (September 9, 2021) asked in exasperation: ‘Who let God into the legislative chamber?’ This is the same question we often ask in India.
Voting ‘reforms’
•The second case in Texas concerns the Reforms to the Voting Law in Texas which seek to reverse the gains of earlier years. SB1, the Bill recently signed by the governor, bans drive through voting, 24 hour voting, and distribution of mail-in applications. It requires new ID requirements for voting by mail, creates new rules for voter assistance, establishes monthly checks, etc. To block the passage of the Bill, the minority Democrats who felt the changes amounted to voter suppression and would disadvantage minority voters, flew out of the State to Washington DC so that the house could not convene for want of a quorum. The Republicans responded by relying on the law to compel voting and thus Speaker Dade Phelan signed warrants authorising the Sergeant-at-Arms to arrest and produce the missing representatives. The length to which the Speaker went is shocking to our democratic sensibilities. Some representatives stated that they were less worried of being arrested by officials and more by citizen arresters.
•In an overview article titled ‘Vilifying the Vigilante: A Narrowed Scope of Citizen’s Arrest’, Professor Ira P. Robbins discusses its historical origins, pitfalls, good application and reform. He argues for the scope of citizen arresters to be restricted to only a small category of people, such as shopkeepers, out-of-jurisdiction police, and private police forces, and being abolished in all other cases. The trend, unfortunately, as shown by Texan laws, SB1 and SB8, is moving in the other way. Because of the opprobrium we have heaped on vigilantes in India, I hesitated to equate them with the citizen arrester till I read the phrase in a letter on SB8, by the Chairman of the U.S. House Judiciary Committee, Jerrold Nadler, to the Attorney General, Merrick B. Garland, to prosecute ‘would be vigilantes attempting to use the private right of action established by that blatantly unconstitutional law’. The oldest and the largest democracies, it seems, both have a vigilante problem today.
📰 Building a resilient economy
Resilience at the national level can only be delivered through public investment
•Amidst the hopes of a V-shaped recovery of the Indian economy, the National Statistical Office (NSO) had recently estimated that India’s economic growth has surged to 20.1% in the April-June quarter, despite a devastating second wave of COVID-19, while the gross domestic product (GDP) had contracted by 24.4% in the April-June quarter of 2020-21. Supporting these estimates, in its recently launched Trade and Development Report 2021, UNCTAD has estimated global growth to hit 5.3% in 2021 and growth in India to hit 7.2%.
Growth prospects
•According to the report, India showed a strong quarterly growth of 1.9% in the first quarter of 2021, on the back of the momentum of the second half of 2020 and supported by government spending in goods and services. Meanwhile, a severe and broadly unanticipated second wave of the pandemic hit the country in the second quarter, on top of rising food and general price inflation, forcing widespread lockdowns and drastic consumption and investment adjustments. Given the inherent fragilities, India’s growth in 2021 as a whole is estimated at 7.2%, which is one of the fastest compared to most countries in the analysis, but is still not sufficient to regain the pre-COVID-19 income level.
•However, going forward, the economy is likely to experience a deceleration of growth to 6.7% growth in 2022. Beyond that, and even assuming the pandemic is fully under control, the situation is looking increasingly precarious for many emerging economies. To revive and sustain growth, action is needed both at the international and national levels.
•The report strongly supports India’s proposed temporary suspension of the World Trade Organization TRIPS waiver, which is considered as a necessary step to enable the local manufacture of vaccines in developing countries but is being resisted by some advanced economies. The need for the waiver increases in the face of the inability of COVAX and C-TAP schemes to mobilise the requisite resources from Northern governments and corporations.
•Building resilient growth also requires a global strategy that mitigates the threat of global warming whilst simultaneously addressing the inequities and fragilities of a financialised world. Given the existing constraints on developing countries, new sources of finance are required, including a significant scaling up of support from the international community in line with its commitment to common but differentiated responsibilities.
•At the national level, efforts are required to build resilience, which can only be delivered through public investment. COVID-19 has reinforced the idea that resilience is a public good and responsibility of the state. It has to be delivered through a robust public sector with the resources to make the necessary investments, provide the complementary services and coordinate the multiple activities that building resilience involves.
•Revisiting a theme that the report, now in its 40th year, has long been promoting, the challenge of mobilising financial resources for sustained growth is seen as too important to be left solely to market forces. A financial system that accords a more significant role to public banks, breaks up and guards against the emergence of megabanks, and exercises stronger regulatory oversight is less likely to generate speculative excesses and more likely to deliver a healthier investment climate.
•The report also warns against cutting wages to boost competitiveness. Wages are a critical source of demand and their growth can stimulate productivity and underpin a strong social contract. Minimum wages and related labour legislation are needed for appropriate protection against abusive practices. Policies targeting informality are of particular importance, especially for a country like India with a large informal economy.
•It is important to build a healthy, diversified economy. For this, a strong industrial policy focusing on building digital capacities is needed. A resilient economy goes beyond offering a residual category of safety nets designed to stop those left behind from falling further.
