Leading VPN Firm May Pull Out of India; RBI Scrambles to Shield Rupee as Marginal Utility of Blaming Nehru Falls
Punjab-Delhi police standoff over BJP spox arrest, PM seeks foundation stones to lay before 2024, Pawar says left is an ideology while right is a tactic, Kanchenjunga sees new feats and a tragedy
A newsletter from The Wire & Galileo Ideas | Contributors: MK Venu, Seema Chishti, Siddharth Varadarajan, Sidharth Bhatia, Sushant Singh and Tanweer Alam | Editor: Pratik Kanjilal
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Snapshot of the day
May 6, 2022
Pratik Kanjilal
The Prime Minister’s Office has asked the Union Housing and Urban Affairs Ministry to furnish details of projects that will be ready for foundation stone laying and inauguration by PM Narendra Modi over the next two years, according to an official document. The 2024 parliamentary elections are about two years away. Ruling parties traditionally use ribbon cutting occasions to make the case for themselves, misusing government events for partisan electoral politics. But few before have turned them into an elaborate political planning exercise.
A high stakes standoff between the Aam Aadmi Party-controlled Punjab Police and the BJP-controlled Delhi Police over the former’s attempt to arrest BJP spokesperson Tejinder Bagga on Friday has now ended up in the Punjab and Haryana High Court.
Privacy industry leader NordVPN, which commits not to store server logs for bulletproof users’ privacy, may pull its servers out of India if the government forces it to comply with new requirements to share user data, effective from June. Apart from increasing privacy, VPNs defeat censorship: Russian censors banned Chess.com, the most popular site for online players, after it expressed support for Ukraine, but Russian players using VPNs are still in the game.
Union minister Raosaheb Danve said at a public event that he wishes to see a Brahmin chief minister of Maharashtra. He made the comment on Tuesday night in Jalna, which he represents as BJP MP, while addressing a rally organised by Brahmin organisations on Parshuram Jayanti.
The RBI’s surprise rate hike yesterday was prompted by the government’s refusal to cut excise duty on petrol and diesel and take other supply-side measures to tame runaway inflation, reports PTI. There has been a record Rs 10 per litre increase in petrol and diesel prices in the 16 days from March 22, which has driven up already high commodity prices. The RBI, which is mandated to keep inflation under 6%, increased the repo rate by 0.4% to check prices.
The Centre is planning to cut taxes on some edible oils to cool the domestic market after Indonesia’s ban on palm oil exports sent prices skyrocketing, reports Bloomberg. India, the world’s top importer of vegetable oils, imposes an agriculture infrastructure and development cess of 5% on crude palm oil imports. The base import duty on crude palm oil has already been scrapped.
Gujarat MLA and Dalit leader Jignesh Mevani may have made bail in the trumped up cases the Assam police filed against him recently but he has now been sentenced to three months in jail by a Gujarat court, and fined Rs 1,000 in a criminal case registered in 2017 for taking out a rally without police permission. On Thursday, Chief Judicial Magistrate JA Parmar held Mevani and nine others guilty under Section 143 of the Indian Penal Code for unlawful assembly on July 12, 2017 in Mehsana. Unfazed, Mevani said: “The government is not going after murderers, rapists and scamsters but in a minor case of whether there was permission for the rally or not, the government is determined to destroy Jignesh Mevani. The way the BJP government is after me shows how scared they are of an independent MLA who has newly joined a party.” With elections around the corner, the decision will knock a key opposition face out of the campaign just when momentum is building.
The failure of the Allahabad High Court to deliver its verdict in a pending bail application by Samajwadi leader Azam Khan 137 days after reserving judgment was described by the Supreme Court on Friday as a “travesty of justice”. The Adityanath government booked Khan in 87 cases and he has got bail in all but one of them, hence his continuing incarceration.
The Supreme Court Collegium headed by Chief Justice of India N.V. Ramana has recommended the names of Chief Justice of Gauhati high court Justice Sudhanshu Dhulia and Gujarat high court judge Justice Jamshed B. Pardiwala for elevation to the apex court.
From October 1, the Delhi government will subsidise electricity only to consumers who opt in, Chief Minister Arvind Kejriwal said yesterday. Delhi consumers now get zero power bills up to 200 units and a subsidy of Rs 800 on consuming 201 to 400 units of power per month.
Retail auto sales in April 2022 are still 6.39% lower than April 2019 pre-Covid sales. According to dealers’ body FADA, 16,27,975 units were sold in April 2022 as against 17,39,124 units in April 2019. Two-wheelers, three-wheelers and commercial vehicles were down 11%, 13% and 0.5% respectively.
Adani Power’s profit margin rose from Rs 13.3 crore to Rs 4,500 crore in one year ― growing 3,400%.
Dabur India and Marico Ltd faced weak rural demand in the March quarter as inflation-ridden consumers seek cheaper packs and brands of toothpaste, hair oil and shampoos.
The Supreme Court was told by the Centre that the judiciary is independent of the sovereign assurance given by then Union Home Minister LK Advani to Portugal for the extradition of gangster Abu Salem in 2002, and it can pass orders freely. Advani had assured Portugal that if extradited for trial in India, Salem would not face the death penalty or imprisonment beyond 25 years. Justices Sanjay Kishan Kaul and MM Sundresh reserved their verdict on Salem’s plea challenging his life imprisonment in the 1993 Mumbai blasts case.
Social media company Meta Platforms Inc has told the Delhi High Court that rights under Article 19 (free speech) of the Constitution cannot be invoked against it by a user, since it is a private entity which does not discharge a public function. In its affidavit filed in response to a writ petition against the disabling of an Instagram account, the US-based company said, “Instagram service is a free and voluntary platform” governed by a private contract, and the petitioner user “has no fundamental right to use it”.
Aeroflot will resume flights to India today. Scheduled international routes were suspended on March 8 as aircraft lessors in Western countries recalled their planes after Russia began its war against Ukraine.
In UP’s Shahjahanpur, the police parked two bulldozers outside an accused’s house, threatening to mow it down if he didn’t surrender in 24 hours.
Union Minister for Information and Broadcasting Anurag Thakur faced protests from students at the Film and Television Institute of India, Pune yesterday. They accused him of fanning “communal hatred”, referring to his hate speech delivered days before riots in Delhi in February 2020.
The Left is an ideology, while the right takes advantage of the fault lines of religion and caste to spread hatred and divide society, Nationalist Congress Party chief Sharad Pawar told the Koregaon Bhima inquiry commission yesterday. He said that Section 124A of the Indian Penal Code, pertaining to sedition, was being misused to “suppress liberty” of people.
And a panel constituted by the BJP-led government in Assam has recently proposed issuing ID cards for Assamese Muslims.
India tops world in Covid death count
WHO estimates released yesterday suggest that India experienced 4.7 million excess deaths in 2020 and 2021, as compared to the country’s official Covid-19 toll of 481,000 for the period. India has rejected the findings, the sole exception among WHO’s 194 member states. By the WHO’s estimates, India experienced the world’s largest absolute excess mortality numbers, over four times the excess mortality of the next most affected countries, the Russian Federation and Indonesia. Despite the WHO beginning this process in February 2021, the Indian government did not share data on mortality from all causes for 2020 and 2021.
However, proportionate to population, Peru had the highest excess mortality for the 24-month period, WHO estimates show, with Russia in fifth place. Relative to population, India was 33rd among countries in terms of excess mortality, with 171 excess deaths for every 100,000 people during the two-year period. Excess mortality includes deaths directly due to Covid-19, as well as from the pandemic’s impact on access to health and support. Lowered road deaths and lower pollution with the cessation of economic activity bring it down.
CRS data released by India on Tuesday shows 8.1 million deaths registered in all in 2020, an increase of 470,000 deaths over 2019. The CRS data (for 2020 only; 2021 data will be available next year) however does not estimate deaths in 2020, but only looks at registered deaths. There are many dimensions to it. India’s Sample Registration System produces estimates of actual deaths, though it cannot shed light on the accuracy of the stated cause of deaths. However, the SRS for 2020 was not conducted.
Despite measures, power crisis unabated
Days after the Centre said it would not cancel any more trains to prioritise coal supply, the Ministry of Railways yesterday scrapped more passenger train trips as the power crisis across the country shows few signs of improvement. Northern Railway and South East Central Railway have cancelled 1,081 trips. Last week, the government cancelled 753 trips of 42 trains ― 499 mail/express trips and 582 passenger special trips.
But the National Power Portal shows that at 165 power units, the stock is 32% of the norm. On average, there is coal for 7.6 days, down from 7.7 last week. The critical level is seven days. More than 11 states and Union Territories face a severe power crisis, with state governments already resorting to power cuts. In an emergency move, the Union has invoked Section 11 of the Indian Electricity Act, and requires all plants using imported coal to run at full capacity.
Azim Premji’s harasser apologises
A welter of frivolous cases against Azim Premji and others was recently closed by the Supreme Court. R Subramanian, who had filed them between April 2016 and December 2020, has issued a public apology for “harassing” the ex-Wipro chairman. Subramanian and his associate, representatives of India Awake for Transparency, were convicted for contempt of court by the Karnataka High Court.
The “unconditional and unreserved apology” by Subramanian, former head of retail chain Subhiksha, was published in most national dailies. “I categorically admit that all these proceedings/ complaints/ representations, and the allegations contained therein were founded on incorrect understanding of facts and legal provisions and the same should never have been made at all,” it states. Subramanian has sworn an undertaking to the Supreme Court not to sue Premji and others any more.
Mar Thoma church celebrated Ramzan
For the past 20 years, Mohammed Kausal has served as the cook of Joseph Mar Barnabas Suffragan Metropolitan of the Mar Thoma Church. Ramzan saw a rare display of religious harmony in an Iftar feast held at the Mar Thoma Bishop House, Mannanthala, on Monday with a grand spread.
For years, the Metropolitan and his aide have celebrated every Islamic tradition. Religious harmony is seen every day at the Bishop House, where Kausal joins in the prayers at the chapel, using the sacred space for offering his namaz. “Unity in diversity,” says Joseph Mar Barnabas.
The Long Cable
RBI scrambles to shield rupee as marginal utility of blaming Nehru falls
MK Venu
Recently in Parliament, PM Narendra Modi took a dig at Nehru for blaming the 1953 Korean War for inflation in India. Ironically, his own government would very soon have to start grappling with inflation and blame the Ukraine war for it. The finance minister is making noises about the effects of the Ukraine war on the economy. The RBI governor is blaming it for transmitting to India “seismic waves” of inflation in commodities and oil. The truth is that the seismic waves were building up even before the invasion, but in total denial, the RBI was asserting that India was largely insulated from it. One doesn’t know if this was informed by Modi’s characteristic hubris that he would never find himself in Nehru’s predicament!
But in weeks, things changed dramatically at the RBI. Everyone is still wondering why the central bank made an unscheduled announcement this week, raising the benchmark interest rate and withdrawing substantial liquidity from the banking system. The move stunned the market because only 25 days ago, in its scheduled monetary policy statement, the RBI had decided to continue its “accommodative” policy to support growth by keeping the benchmark repo rate unchanged at 4%. However, within a month the RBI chose to reverse its stand and came down with a sledgehammer to not only raise the repo rate by 40 basis points but also withdraw about Rs 87,500 crore immediately from the banking system by raising the Cash Reserve Ratio (cash banks have to mandatorily keep with RBI ) by half a percent. The twin moves were totally unexpected and briefly sent stock markets into a tailspin.
The question is, why did the RBI change its position so quickly? Simple: the central bank had miscalculated the extent of inflation. The RBI projected consumer price inflation at 5.7% for 2022-23 in its early April statement. However, sources say the monthly inflation number for April due to be announced next week is likely to be 7.5-8%. This is a huge underestimation by the RBI. For 2022-23, the RBI is projecting inflation at 6.3% in Q1, 5.8% in Q2, 5.4% in Q3 and 5.1% in Q4. All these numbers may have to be revised in its scheduled statement early next month.
Till a few months ago, the RBI maintained that its hierarchy of concerns was growth, inflation and financial stability, in that order. Now, it’s reversed. Inflation is the primary problem, and financial stability is somewhat shaky.
Some experts believe that the RBI hurried to raise the repo rate because US bond yields were rising dramatically and were perilously narrowing the gap with Indian government security yields. This could have resulted in a big flight of capital from the Indian market to the relatively safe and high-yielding US bonds, putting the rupee under more pressure. In fact, the RBI has already spent over $25 billion from its reserves to defend the rupee. But for its intervention, the exchange rate may have been near Rs 80 to a dollar. The BJP is known to attach a robust masculinity to a strong rupee, and this attitude goes against rational market principles in times like this.
It will be interesting to see how far PM Modi allows the RBI to defend the rupee by expending forex reserves, which are already down over $40 billion from its October 2019 peak of $640 billion. Reserves may go down further as India’s growing current account deficit may not be covered by fresh capital flows. Many economists forecast a negative balance of payments for 2022-23. Some say the desperation to push the LIC IPO could be because the government hopes the infusion of fresh foreign capital will help its depleting forex reserves.
The differential between US and Indian government bond yields remains critical. US bond yields of various tenures have nearly doubled. The RBI is feeling the heat and is compelled to raise rates in tandem. The sudden repo rate hike may have been in anticipation of the big 50 basis points increase in the benchmark interest rate by the Federal Reserve the next day. It is said to have given the rupee some breathing room. More anticipated hikes of 50 basis points by the Fed are certain to test the RBI and cause further volatility in the rupee’s exchange rate.
India’s inflation story is still unfolding as the domestic effect of energy prices has not been fully felt. Meanwhile, wheat and edible oil prices are on fire. Wheat procurement was expected to be 44 million tonnes but may be halved, according to experts. The private sector has bought off much of the stock from farmers at prices above MSP. This will certainly lead to higher wheat prices. So food inflation will have to be watched very carefully, and will eat into GDP growth.
Overall, the quarters ahead are likely to have inflation at 7-8% and GDP growth of 4-4.5% for all of 2022-23, barring the first quarter, which gets distorted by the low base of economic activity in April-June 2021 caused by the severe second wave of Covid. The way things are unfolding in the political economy, Modi may have to give Nehru some much-needed rest and start looking within.
Reportedly
A year after it formed a committee of 21 panna pramukhs in every Delhi polling booth to connect with voters every week, the BJP has now found that it “can’t connect” with 30% of the committee members. Because they don’t exist. That should not surprise the party, which uses social media bots for amplification, and claimed to be the world’s largest party but won fewer votes than its count of members, based on missed call enrolment. This is just another missed call!
Prime number: 600 branches
The Central Bank of India plans to shut 13% of its branches across the country. The bank is looking to reduce the number of branches by 600 by either shutting them down or merging loss-making branches by the end of March 2023.
Deep Dive
Adra Manasi on how a Dalit garment worker’s murder sparked a movement that got H&M to address gender violence. The global fashion giant signed an agreement in April on making workspaces safer for women staffers after a sustained campaign led by a union of Dalit women.
Op-Eds you don’t want to miss
It is alleged that the Constitutional Conduct Group is spreading mistrust to grab international attention. Nothing could be more ridiculous, avers Julio Ribeiro.
Krishna Kumar writes that Karnataka has emerged as the crucible of educational orthodoxy and control. The school uniform has mutated into a new political tool, a means of curtailing the already limited autonomy of principals and teachers.
India’s lack of official poverty data has impaired policy formulation and hurt the economy, writes Himanshu.
Swara Bhaskar writes that at the heart of the refusal to marry outside one’s community is latent bigotry and conservatism that a majority of Indians (of all communities) nurse casually. For decades, we have paid lip service to the constitutional principle of secularism and fraternity.
More than any former Goa CM, Pramod Sawant has demonstrated a willingness to follow Nagpur and New Delhi’s new agenda for the state. His statements have set the tone for divisive hardline communal polarisation, writes Pamela D’Mello.
Ashutosh Bhardwaj says that Hindi cannot, the same as any other language, be the national language of multilingual India.
Eight years after Modi promised military transformation, “reliable sources” have dutifully given out details of numerous standalone reforms in the offing, but nothing has fructified, writes Lt Gen HS Panag (retd).
Vivek Chadha writes that Modi’s decision to create a Chief of Defence Staff has created significant change and generated debates within the military. One of the more consequential debates pertains to the precise role of the post.
Sakshi Ranjan writes on “Indian Military, Iftar, Tweet et al.”
Can streaming really sustain itself? So far, the answer has been elusive even in developed countries with more pricing power than India, writes Parry Ravindranath.
Vir Sanghvi writes that as the ramifications of the Hindi debate sink in, the BJP will have to give the issue a quiet burial.
Sarah Thanawala says that there is a lack of judicial clarity about live-in relationships and courts must recognize the fundamental right of individuals to choose to cohabit.
The large amount of write-offs, healthy tax collections and handsome corporate profits of the last quarter should not make us complacent about hidden and growing bank NPAs, writes Ajit Ranade.
Shabana Azmi writes on Shaukat Kaifi: An honest mother, a committed professional, and a great hostess.
Listen Up
Jan Breman and Ghanshyam Shah speak on the history of communal politics in India, its evolution, Gujarat’s role in its expansion, and whether it is changing what it means to be Indian.
Watch Out
A panel discussion on two years of the Ladakh border crisis featuring Ashok Kantha, Gautam Bambawale, PLA Senior Colonel Bo Zhou (retd), Lt Gen DS Hooda (retd) and Sushant Singh (a contributor to The India Cable).
Over and Out
Priyanka Mohite from Satara, who climbed Kanchenjunga yesterday, is the first Indian woman to scale five peaks above 8,000 metres. Pakistani mountaineer Shehroze Kashif also made the peak of the world’s third highest mountain. Sadly, this morning, climber Narayan Iyer died on Kanchenjunga.
Two trends mark the Great North Indian Wedding, and they’ve created a minor epidemic of crime headlines. Read on fiftytwo.in
India through the eyes of the first cyclist to circumnavigate the world. The American Thomas Stevens pedalled down the Grand Trunk Road in the 1880s on a ‘penny farthing’, en route to Nagasaki.
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
>> RBI scrambles to shield rupee as marginal utility of blaming Nehru falls.
Jeez. That got me. 😂