ED Claims 96% Strike Rate, But Has Closed Only 0.42% Cases; SVB Crash is the Long Tail of 2008 Financial Loosening, Ripples Will Be Global Again
Adityanath govt talks up ‘encountering’, J&K parties seek polls, Twitter has no free speech protection in India, rural India more connected than urban, Campa Cola relaunch triggers war of tiny bottles
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Snapshot of the day
March 17, 2022
Pratik Kanjilal
The Civicus Monitor lists India among the world’s 50 ‘repressed’ countries, along with neighbour Pakistan. It had managed to be marked ‘obstructed’ in 2018, but now it’s the R-word. The lowest category, ‘closed’, contains neighbours China and Myanmar. Civicus Monitor is a research tool tracking civic freedoms almost in real time across 196 countries.
Opposition leaders yesterday formed a human chain in the Parliament House precinct to demand a JPC probe into the Adani Group. Carrying placards and raising slogans, Opposition lawmakers including Congress president Mallikarjun Kharge, DMK leader TR Baalu, Samajwadi Party leader Ram Gopal Yadav, National Conference patron Farooq Abdullah, Shiv Sena (Thackeray faction) leaders Priyanka Chaturvedi and Arvind Sawant also protested the BJP government’s “diversionary tactics”.
In an official press release, the Adityanath government in UP has proudly owned up to killing people in police encounters. It says that “as soon as Chief Minister Yogi Adityanath took over the reins of the state, improving the law and order situation became his priority. According to the available statistics, there have been 10,713 encounters since 2017 of which the highest ― 3,152 encounters ― were by Meerut Police, in which 63 criminals were killed and 1,708 arrested. It is followed by Agra Police, which carried out 1,844 encounters in which 14 dreaded criminals were killed, 4,654 were arrested while 55 police personnel were injured.”
Twitter, a foreign entity, cannot claim fundamental rights in India, Additional Solicitor General R Sanakaranarayanan said while arguing for the central government. The platform does not have any legal remedy against the government’s decision to block certain Twitter accounts and cannot invoke Article 19(a), which guarantees freedom of speech to citizens under the Constitution, he said. Twitter has relied on blocking rules under the IT Act to maintain the confidentiality of users and rejected government requests to disclose their names, Sanakaranarayanan complained.
In a significant move that at least acknowledges that press freedoms matter and it is a crime to criminalise journalistic activity, the Press Council of India has taken suo motu cognizance of the arrest of journalist Sanjay Rana in Uttar Pradesh, for asking UP minister Gulab Devi questions at a public event in Sambhal. The notice it issued says that as the arrest involves “curtailment of press freedom and the statute mandates the Press Council of India (PCI) to preserve the freedom of the press, the honourable chairperson, PCI, has viewed the aforesaid action with concern and has taken suo motu cognizance of the matter under Regulation 13 of the Press Council (Procedure for Inquiry) Regulations, 1979.” The PCI stand is especially significant because Rana is a journalist who works for a YouTube new channel and not a registered newspaper.
Delhi Police has issued a notice to Rahul Gandhi for saying that “women are still being sexually assaulted”. Cops have sent a questionnaire and asked him “to give details about women who approached him regarding sexual harassment”, reports The Telegraph.
After the furore about Digi Yatra being run by a private body and not bound by transparency norms via RTI, the Union government has said, “In the Digi Yatra process, there is no central storage of passenger's Personally Identifiable Information (PII) data. All the passengers’ data is encrypted and stored in the wallet of their smartphone. It is shared only between the passenger and the airport of travel origin, where the passenger’s Digi Yatra ID needs to be validated.”
Deep factions are emerging in the Karnataka BJP. Amid high drama, the BJP’s Vijaya Sankalpa Yatre in Karnataka’s Mudigere was cancelled yesterday, compelling BS Yediyurappa to go back. The procession started at a temple and the designated stretch was decorated with saffron bunting and BJP flags. But at 11 am, a group opposing MLA MP Kumaraswamy gathered at the spot and urged not to give him a ticket from the party to contest in the elections.
The Ministry of External Affairs has once again claimed that it attaches “high priority” to the issue of eight former Indian Navy personnel detained in Qatar since last August and is making efforts for their early return. The eight men, who were working for a private firm owned by an Oman Air Force officer that provides training to Qatar’s armed forces, have been detained on unspecified charges. Their bail pleas have been rejected eight times and their detention ― in solitary ― was recently extended by another month. There has been no official statement from India or Qatar on why eight former naval officers, some of them highly decorated and have commanded major warships, are in custody.
The Tibet Region in China has announced that it will invest $1.99 billion to improve the wellbeing of local residents in 2023. This investment is primarily aimed at improving the conditions of villages situated along the LAC on the border with India.
Why some states get more, and the rest get angry: The Hindu explains the problem with distributing revenue mainly according to population ― it rewards states which have failed to control their population, creating friction between states and the Centre.
“I’m struggling to think about what I want to own in India, relative to what I can find in other markets,” said Adrian Mowat, Chief Asian and Emerging Markets Equity Strategist, JP Morgan. “Within the major markets, my preference would be Korea, Taiwan and China over India at this point in time.” China is attractive after abandoning its zero-Covid policy, he said. In valuation, it is much cheaper than other emerging market peers, and this has brought it foreign money. “In Korea and Taiwan, you’ve got some deep-value tech. In Korea, you’ve got quite a good exposure to the EV (electric vehicle) supply chain. So, those markets have better opportunities at this point in time,” said Mowat.
‘India Internet Report 2023’ finds that nearly half of rural India is on the internet, almost 44% more than urban India, with growth projected of 30%.
Coca-Cola has reduced prices of its 200 ml bottles from Rs 15 to Rs 10 in key states Telangana, Madhya Pradesh, and Maharashtra. The trigger is not the early onset of summer but the reintroduction of iconic brand Campa Cola by Reliance Consumer Products, which is priced at Rs 10. The crate deposit that retailers paid to store glass bottles in the past has been waived. Crate deposits usually cost Rs 50-100. While PET bottles go straight into the refrigerator, crates improve the visibility of the beverage in stores, since they are usually stacked up in front.
Staff at the toll plaza on the Bengaluru-Mysuru 10-lane Express Highway conducted a puja and cracked coconuts before they began collecting toll from motorists at 8 am on Monday. But the puja did not help them escape the fury of motorists using the Rs 9,000 crore highway that PM Narendra Modi inaugurated in Mandya on Sunday and showed off as a product of the government’s “double-engine” development model. People were angry because the National Highways Authority of India started levying a toll even before construction was completed and wayside amenities ready.
Punjabi farmers are being duped by rackets that offer them new a life in Europe, but use them as slave labour to pick zucchini and tomatoes in the Pontine Marshes near Rome where, in the Thirties, Mussolini had launched his campaign to free Italy from dependence on imported food.
Taha Siddiqui barely escaped Pakistan with his life after angering its powerful military with his journalism. Now, his story is now a graphic novel.
13 J&K parties seek statehood, Assembly polls
National Conference president Farooq Abdullah met leaders of Opposition parties in New Delhi on Thursday and submitted a memorandum to the Election Commission of India to press for early polls in Jammu and Kashmir. “People of 13 parties met here today and agreed that the statehood of J&K should be restored. We are together on the issue of why elections are not being held in J&K when the situation has normalised,” Dr Abdullah said after the all-party meeting.
The memorandum submitted to the Election Commission was signed by Congress president Mallikarjun Kharge, Communist Party of India (Marxist) general secretary Sitaram Yechury and Nationalist Congress Party (NCP) chief Sharad Pawar. Several regional parties from J&K, including the People’s Democratic Party, Awani National Conference, National Panthers Party and J&K Shiv Sena, also supported it. Other signatories included TR Baalu of the DMK, Manoj Kumar Jha of the RJD, Ram Gopal Yadav of the Samajwadi Party and Sanjay Singh of the Aam Aadmi Party. It said that local body polls are not a substitute for Assembly elections.
MEA denies that India recognised Taliban by offering online course
After Taliban officials in Kabul participated in an online course in India under the Indian Technical and Economic Cooperation (ITEC) programme, the Ministry of External Affairs yesterday clarified that there has been no change in the government’s position on the Taliban setup in Afghanistan, which it does not recognise. The Taliban authorities had referred to a note verbale or unsigned diplomatic correspondence from the Indian embassy in Kabul regarding the course, but MEA spokesperson Arindam Bagchi dismissed the possibility: “Our position on how we see developments in Afghanistan has not changed. I do not think anything should be read into ITEC courses vis-a-vis that. We certainly would not be issuing note verbales, which are intergovernmental notes, to entities that are not recognised.” India reopened its Kabul embassy in June 2022. A small contingent of diplomats, known as a “technical team”, is posted in Kabul.
ED claims 96% strike rate, but has closed only 0.42% cases
The Enforcement Directorate yesterday rejected BRS leader K Kavitha’s plea to defer proceedings against her until the Supreme Court rules on her petition seeking protection from arrest and summons. It issued a fresh notice to her for questioning on March 20 in the Delhi excise policy money laundering case.
The Telangana MLC sent an “authorised representative” with a six-page petition to the investigating officer of the case in Delhi, stating she was ignoring the March 16 summons as it did not explicitly require her to appear in person: “I humbly beseech your good self that the proceedings before the Supreme Court being sacred and sacrosanct, the outcome thereof must be awaited before any further proceedings.”
Meanwhile, the Enforcement Directorate is playing the numbers, and losing. It has registered 5,906 cases since 2005, it says, and disposed of only of 25, a mere 0.42%. But the agency claims a 96% conviction rate, since it has secured convictions in 24 of the 25 cases. But the fact that in 17 years, the agency has managed to close only 25 cases, tells us something embarrassing about how the state machinery and the judiciary work.
Army flyers killed in Cheetah crash
An Army Aviation Cheetah helicopter flying an operational sortie near Mandala, West of Bomdila in Arunachal Pradesh, crashed yesterday morning, killing pilots Lt Col VVB Reddy and Maj A Jayanth. The helicopter lost contact with the ATC at 09:15 AM. “Five search parties of the Indian Army, Sashastra Seema Bal and Indo-Tibetan Border Police were immediately launched. The wreckage of the aircraft was found near Village Banglajaap East of Mandala,” the Army said in a statement. “With regret we inform that the pilot and the co-pilot of the helicopter lost their lives in the accident.” A Court of Inquiry is being ordered to ascertain the cause of the accident.
The Long Cable
SVB crash is the long tail of 2008 financial loosening, and ripples will again spread globally
MK Venu
The US banking crisis triggered by the collapse of Silicon Valley Bank (SVB) has its origins in the unprecedented monetary loosening by the Federal Reserve and other OECD central banks after the 2008 global financial meltdown, which intensified in 2020 after the Covid outbreak.
The Fed’s balance sheet expanded from $800 billion to $4.5 trillion in the decade after the 2008 crisis. Post Covid the Fed balance sheet expanded further from $4.5 trillion to $ 8.5 trillion. Have you ever wondered where this flood of freshly minted US dollars backed by the Federal Reserve might have gone? Large chunks, available at virtually zero interest, were going into financial assets like stocks, real estate, commodities and most importantly, safe US government securities of short and long tenures. It is well-known that large Wall Street banks used the Fed’s big bailout in 2008 to buy US government securities, because the prospects of real lending for growth were always limited due to growth impulses generally weakening in the US and EU over the longer term.
This is also reflected in the Silicon Valley Bank’s balance sheet profile. According to the Economist, “SVB’s deposits more than quadrupled — from $44bn at the end of 2017 to $189bn at the end of 2021 — while its loan book grew only from $23bn to $66bn.” Clearly, a very unusually large chunk (over $120 billion) of SVB deposits were invested in government securities.
So when the low interest rate cycle reversed dramatically over the last one year, with the Fed upping the benchmark rate from virtually zero to 5%, the banks found a gaping hole in their investment portfolio. The irony is they are suffering for investing in ‘safe’ government securities. A sudden rise in interest rates eroded the value of older US government securities on their books, which bore a very low interest coupon. When SVB found its balance sheet in tatters, it tried to repair the damage by raising additional capital. But the market had read the writing on the wall and there was a massive run on the bank, which ceased only after the Fed extended its guarantee to all depositors of SVB. Following SVB’s collapse, other mid-size banks in the US, like Signature and First Republic, also discovered big holes in their balance sheets. Big US banks like JP Morgan Chase, Morgan Stanley and others are proposing to infuse $30 billion to rescue First Republic Bank.
According to Forbes magazine, other banks worried about liquidity took out a combined $164.8 billion in loans from the Federal Reserve over the past week, topping a record set in 2008. The KBW stock index for US banks has fallen more than 25% in a week, which has happened only twice before in recent decades, after the 2008 global financial crisis and the Covid-19 outbreak. Today, the KBW bank index is where it was in March 1998! That’s how much US bank stocks have lost. No wonder bigger US banks are trying to rescue midsize banks to stop the contagion spreading!
Some macroeconomists say that the US Fed should not have reversed the benchmark interest rates so sharply, so soon, to attack high inflation. Many US analysts feel that the Fed may now go slow on its interest rate hike path. Next week, it will review monetary policy options.
In India, meanwhile, the business community is suggesting the RBI should go slow on hiking benchmark rates. So far, the banking crises in the US has had limited impact here. According to tech entrepreneur Sanjeev Bhikchandani, only about 14% of India-based VC funds had any deposits in SVB.
But bank stocks in India also saw downward pressure last week, on account of sentiment. If the US slows its interest rate hikes, there might be some breathing space for the financial system at large, which had gotten too complacent over a decade and a half with interest rates near zero.
But the deeper malaise represented by the multiple asset bubbles created over nearly 20 years with ultra-cheap money flowing from the US central bank will come back to haunt us from time to time. It is nearly impossible to predict which asset bubble will be pricked. Today, US government securities in bank balance sheets are falling. Tomorrow, it could be commodities, stocks or real estate, which are always vulnerable.
India was relatively insulated in 2008 but it did not escape the global fallout that followed. Any big crisis in the west is bound to reach India via a general decline in growth impulses. Remember the banking sector crisis after 2010 was caused partly by the excessive investment optimism of corporates, who assumed GDP growth over 8%. That never materialised, resulting in the well-documented “twin balance sheet” ( banks and corporates) problem. Socialisation of losses is a reflexive tendency seen during such periods of crises, whether in the developed or developing world. This , of course, continues unabated.
Reportedly
After setting a record by being acting DGP of UP for more than nine months, Anand Kumar is to retire in March. Kumar is also director general of the Vigilance and Intelligence Department of the state. On his watch, Umesh Pal, witness of the Raju Pal murder and two armed policemen were killed in broad daylight in Prayagraj. Will Adityanath now appoint a real DGP, or continue with the acting?
Prime Number: 1.25 lakh
Gujarat’s BJP government has told the state Assembly that more than 1.25 lakh children in the state are malnourished and it is taking steps to improve the situation.
Deep Dive
Yash Chopra’s heroines “were dreamy — they were also pliant.” A look at his leading women characters.
Opeds you don’t want to miss
Seldom has cricket in India looked more like a vehicle for the self-aggrandisement of a political and mercantile elite. Like none of us knew what to expect on the first morning of the Ahmedabad test, in hindsight there was a sickening, tawdry inevitability to it, writes Gideon Haigh.
Aakar Patel writes that New India reflects in many ways the Pakistan of the 1980s, with the state’s intense focus on majoritarianism and its propensity to believe that it is the victim of foreign conspiracies.
“They were certainly not practising Hinduism in the Harappan culture (which includes Mohenjo Daro and other sites). There was no notion of Hinduism then,” says Rudrangshu Mukherjee.
The actions of the Chairman of the Rajya Sabha, Jagdeep Dhankhar could impede the independent functioning of parliamentary committees, writes Bharat Bhushan.
RSS Chief Mohan Bhagwat’s new formulation on the origins of caste is old wine in a new bottle, writes Ram Puniyani.
A good harvest is no longer good for farmers. It benefits traders, hoarders, middlemen and corporations more. Without government safeguards through MSP and public procurement, the free market system is rigged against farmers, writes Indra Shekhar Singh
In the New York Review of Books, Karan Mahajan writes that of the South Asian authors of his generation, none has staked a bolder claim to being a “world writer” than the Pakistani novelist Mohsin Hamid. “Starting with his second novel, The Reluctant Fundamentalist (2007), his books have unhesitatingly tackled think-tank-worthy international subjects such as September 11, economic growth and the migrant crisis, using his home country as a backdrop rather than a subject in itself.”
Sai Adhitya writes on how Mandira Bedi and Chak De! India sowed the seeds of the Women’s Premier League years ago.
Listen up
The author Manil Suri is also professor of mathematics at the University of Maryland. In his latest book, The Big Bang of Numbers, he writes about creating the universe in seven days using only maths. In this episode, he joins Sandip Roy to talk about the book, how maths helped save his life, why it is hard to teach it, and the time he danced to ‘Piya tu ab toh aaja’.
Watch out
The Nobel Prize Committee’s Deputy Leader Asle Toje clears the air. First, fake news was put out that he had thought Narendra Modi fit for the Peace Prize. Then, as intrepid fact-checker Mohd Zubair put it,
1. “Times Now first misreports on Asle Toje, then:
2. Gets fact-checked by Asle Toje.
3. Misreport is shared by BJP leaders.
4. Times Now later updates the headline.
5. BJP leader later deletes his tweet.”
Over and out
SpiceJet has grounded two pilots for allegedly having coffee and sweets inside the cockpit of a flight in midair. The incident came to light when a photo of an open cup placed on the control panel of a SpiceJet aircraft went viral earlier this week. The picture was taken at 37,000 feet.
The Carpenters put Oscar winner MM Keeravani “on top of the world” once again when Richard Carpenter — one half of his favourite band — belted out the 1970s chartbuster to congratulate him for his Oscar for ‘Naatu Naatu’. Keeravani was so moved when Carpenter put out a video of him singing out his congratulations to the tune of the ‘Top of the World’ — much like the Andhra Pradesh-born composer had done on the Oscar stage.
That’s it for today. We’ll be back with you on Monday, on a device near you. If The India Cable was forwarded to you by a friend (perhaps a common friend!) book your own copy by SUBSCRIBING HERE.