📰 Inflation conundrum
High price rise trends could continue in 2022, compounding the challenge for policy makers
•While North Block mandarins seek to conjure up policy levers in the upcoming Budget to spur India’s fragmented economic recovery along, the latest official data suggest industrial output is stuttering with a meagre 1.4% growth in November. More worryingly, inflation is re-emerging as a threat — retail prices surged to a five-month high of 5.6% in December from 4.9% in November. While urban India continued to record a higher incidence of price rise at over 5.8%, inflation faced by rural consumers was at 5.36% — the steepest pace since July 2021. A dozen States clocked higher inflation than the headline 5.6% level, with half of them recording well over India’s stated inflation tolerance threshold of 6%, led by Haryana and Tamil Nadu with an over 6.6% print. While the CPI cooled month on month by about 0.35%, this was offset by low base effects that pushed up inflation in food and beverages, and higher clothing and footwear prices. The deferral of a higher GST on textiles, and softening food and vegetable prices this month, may help rein in some of these pressures, but there are other headwinds. Fuel prices moderated after excise duty cuts in November, but this may not sustain for long as average prices for India’s crude oil basket are now at around $84. For now, retail fuel prices have remained static, but this may have more to do with the unstated tendency of not effecting such hikes in the poll season. By Monday, yields on government bonds had hit a two-year high which could upset the fiscal math over time.
•Inflation in wholesale prices offered little comfort in December even as it came off a record high of 14.2% in November to touch 13.6%, staying above double digits for the ninth successive month. Economists believe that the persistent gap between wholesale and retail inflation, now at eight percentage points, does not augur well for price stability ahead. Producers coping with high commodity prices and input costs will have to find ways to pass them on to consumers, feeding into retail inflation and squeezing household budgets further. For industry, inflation is as critical an obstacle to higher consumption and growth impulses as the new virus mutations and the third wave — which by itself is expected to further stoke retail prices. Consistently high inflation, as witnessed since the pandemic onset, constitutes not just a tax on the poor and the middle classes, but is also a potentially permanent wrecking ball for future spending capacity (and growth) amid a damaged job market. The Government, through its statement of intent in the Budget, and the RBI, which has noted that the waning of inflation spiralling across geographies may ‘take longer’ than expected and will review its monetary policy stance next month, need to communicate their inflation game plan to soothe expectations.
It is imperative that international legal protections against genocide are incorporated in domestic legislation
•In the last few weeks, incendiary speeches by Yati Narsinghanand at a religious assembly have reignited discussion regarding hate speech, and the limits of the law. The speeches made include calls for the genocide of Muslims in India and can be seen as part of an ongoing pattern of targeting minorities. In discussions regarding the applicable law, a fundamental point must not be missed – the international legal obligations that are incumbent upon India, by virtue of the Convention on the Prevention and Punishment of the Crime of Genocide of 1948, which India has signed and ratified.
Objective of the Convention
•Raphael Lemkin is credited with the use of the term ‘genocide’ and campaigned relentlessly for it to become an international treaty. In 1946, Cuba, India and Panama co-sponsored General Assembly Resolution 96(I), which affirmed genocide as a ‘crime under international law’. As a result of this resolution, a convention on the prohibition of genocide was drafted, which was passed by the General Assembly in 1948 and came into effect in 1951, with more than 150 states party to the convention presently. The Genocide Convention has as its objective the prevention of genocide as well as the punishment of the crime. Legal obligations on states that are party to the convention include the obligation not to commit genocide, to prevent genocide, and to punish genocide(Article I), to enact legislation to give effect to the provisions of the convention (Article V); to provide for effective penalties for those found guilty of criminal conduct (Article V); and the obligation to try those charged with genocide in a competent tribunal (Article VI).
•It is no small irony that India was an early and key sponsor of the General Assembly resolution condemning genocide and confirming its status as an international crime. However, since signing the Genocide Convention and ratifying it, to date India has not enacted any legislation in accordance with Article VI of the Genocide Convention. At the outset, India is in violation of its international obligation to criminalise genocide within its domestic law per Articles V, VI and VII, and to take all means to ensure the prevention of genocide.
•An examination of Indian domestic law shows that there are no comparable provisions for the prosecution of any mass crimes, least of all genocide. Indian Penal Code provisions relating to rioting, unlawful assembly and ‘promoting enmity between different groups’ do not embody the basic elements of the crime of genocide, which is against a collectivity or a group, with the specific intent to cause its destruction. These also do not pertain to another key aspect of the Genocide Convention – that of prevention, and creating the conditions in which such hate speech and other associated acts are not allowed to flourish, which may facilitate the commission of genocide.
Significant legal development
•It is also worth noting a significant and recent international legal development relating to the Genocide Convention. The Gambia has initiated proceedings before the International Court of Justice (ICJ) against Myanmar on the basis of the Convention. While the case is still in the early stages, it is noteworthy for a key point – that the court seems to have, in its first ruling, taken note of a key argument of The Gambia – that the Genocide Convention embodies such a key concern that even a state that may not be specially affected can still raise a legal claim on the basis of being part of the community of states. This is a significant legal development and will have implications for the future. The ICJ, relying on a previous case of Belgium v. Senegal, stated, “It follows that any State party to the Genocide Convention, and not only a specially affected State, may invoke the responsibility of another State party with a view to ascertaining the alleged failure to comply with its obligations erga omnes partes, and to bring that failure to an end.”
•The ICJ previously addressed the question of violation of the Genocide Convention in the Case Concerning the Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro). In its final judgment in 2007 the court found a failure to prevent genocide by Serbia. The breaches of the Genocide Convention related to the obligations to prevent and the lack of cooperation, but not for the commission of genocide.
•In the overall analysis, it is more imperative than ever that international legal protections against genocide are incorporated in domestic legislation. Furthermore, the fact that India has international legal obligations under the Genocide Convention which it is not adhering to must be rectified.
📰 The SilverLine project is anti-development
It poses a threat to Kerala’s ecological security, and could end up as a white elephant
•Six months after I first proposed in these pages that the Kerala government review its SilverLine rail project, critical voices have only grown in strength. The Chief Minister, however, has publicly affirmed his intention to proceed with it nevertheless, alleging that its opponents are against ‘development’. This response is no different from that of the Narendra Modi government when its economic policies are queried, and which nurtures its own vanity project, a superfast train between Mumbai and Ahmedabad. The stance is hardly credible though.
Concerned voices
•Dissenters on the SilverLine project include ecologists, engineers, lawyers and activists to reckon with. Madhav Gadgil, E. Sreedharan, Prashant Bhushan and Medha Patkar are perhaps the best known among them but the list also has on it concerned citizens, who all want the best for their country. It also includes the Kerala Sasthra Sahithya Parishad, which is significant, as the body is perceived as a fellow-traveller of the Left parties now in power. Recently, Mr. Sreedharan, perhaps India’s most famous railway engineer, has described the proposed project as an invitation to environmental disaster, mainly through flooding. He had also expressed surprise that the Government has not yet made public the detailed project report, a standard practice, which brings transparency to large-scale public infrastructure projects. (Since then the Kerala government has hurriedly uploaded a related document on a restricted site), Professor Gadgil, India’s pre-eminent ecologist, has spoken of SilverLine being against the interests of the people of the State, on grounds of the ecological damage it is likely to cause. Based on his unmatched knowledge of Kerala’s topography, he has both explained how this could happen and pointed to the experience with the railways elsewhere in India, suggesting that the prediction is not mere speculation.
A distant government
•The response of the Pinarayi Vijayan government to calls to reason on SilverLine has been disappointing. By stonewalling the concern expressed by citizens, a government shows itself to be distant and authoritarian. The dissenters are, after all, equal stakeholders in Kerala as anyone else, with the moral right to be heard on a matter with a bearing upon the ecological future of the State. In a democracy, the government must be guided by public opinion rather than attempting to manufacture consent on its schemes, as Kerala’s present government is doing. There are several instances of the state in India changing its mind when public opinion is arrayed against some grand project of its, but one stands out. In the 1970s, Indira Gandhi, a charismatic and strong leader, responding to a long-drawn agitation against a hydel project in Palakkad district, declared that the Silent Valley threatened by it will be protected. It took a little longer for the project proposal to be dropped altogether, but it finally was.
A high cost
•While it is the threat to ecological security from it that has been flagged by our scientists and engineers, there is also the concern that the SilverLine project may end up as a white elephant. It is always difficult to figure out how much people are willing to pay for a new service to be publicly provided, in this case faster transportation. Even if a survey were to be conducted, the truthfulness of the stated willingness to pay would remain moot, undermining the reliability of the numbers in any project report. It is perhaps for this reason that light rail projects in many parts of the world have ended up making a loss. Even if break-even does materialise, the rate of return could end up being lower than anticipated. This often happens due to the cost overrun observed in such projects. A reason for this is that rather than padding costs, governments, determined to have their high visibility, technological marvels, manage to somehow ensure that the project cost is pitched unreasonably low.
•In the case of SilverLine, it has been hinted that the cost of the complementary infrastructure, such as underpasses, may not have been incorporated, and that they may be substantial. It is for this reason that independent external scrutiny of the detailed project report is essential. Global accountancy giants have in the past proved to be unreliable as a source of disinterested advice when high fees are at stake, but we are fortunate that there is available in India financial expertise of the highest class. It is hoped that advice from this source is sought, with the Kerala government having shown a surprising dependence on international management consultancy firms for advice in the past. With a public sector that still receives budgetary support, a State already strapped with high per capita public debt cannot afford to be saddled with another white elephant. Yet, financial viability cannot be taken as the sole criterion in investment planning. There is no universally accepted method for imputing a monetary value to the environmental threat posed by a project with so great a geographic reach as SilverLine, spanning as it will do the entire length of the State. It is essential that our judgment be deployed in this case.
What Kerala does need
•When a proposed project meets pushback, its purveyors often respond with the challenge “So, what is the alternative?” In the present case, though, this would only beg a deeper question, which is whether Kerala needs another railway line at all. As the two extremities of the State are already connected by road and rail, a light rail built at an astronomical cost is hardly necessary, even when it promises to save some travel time. The State already has the highest road density in the country. It is odd, then, that the Government sees a second railway as the priority for the State today.
•On the other hand, there are several projects deserving of public investment. Among them would be the transition to a steady power supply based on green energy, the provision of safe drinking water and urban sewerage, and building infrastructure for the scientific disposal of waste. These projects would address our most pressing needs today, yield high social returns and contain progressive environmental degradation in the State. They are the ‘alternative’.
