Rupee Breaks 82 Per Dollar Barrier; With Inflation & National Debt High, Taxing the Rich the Only Way
Adani-shaped U-turn on beach mining ban, CSR reporting requirements trimmed, Gujarat dargah demolished as poll nears, BJP’s Sunny Deol ‘missing’ from constituency, trafficked camels vanish in Varanasi
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
October 7, 2022
In May, the Modi government indicated that it would reconsider the ban on beach sand mining for private entities. In April, the Adani group had floated two companies for beach sand mining. Sounds like the Rafale defence contract being preceded by the Anil Ambani group quickly forming a company? In February 2019, the Narendra Modi government had cited ‘national security’ to keep private players out of the extraction of minerals from beach sand, which are used to produce atomic energy. The total ban on beach sand mining and export by private companies was hailed as a visionary step toward national security. Sand mining has been beset with corruption allegations too. The News Minute reports on the A-shaped U-turn.
Abstention is becoming a key foreign policy manoeuvre of the government. After abstaining from the Sri Lanka vote on human rights concerns at the UN in Geneva, India has abstained at the UN Human Rights Council vote to decide on holding a debate on a report on human rights abuses in China’s Xinjiang. India gave no explanation. The motion was defeated 19-17. In a major relief for China, Xinjiang will not be debated in the UN. India was among 11 abstainers. Nepal and Pakistan voted against the motion. Even Ukraine did not vote with the Western countries and abstained. India has also abstained on a resolution – which passed – appointing a special rapporteur to monitor the human rights situation in Russia.
The 2022 Nobel Peace Prize has been awarded to human rights advocate Ales Bialiatski from Belarus, the Russian human rights organisation Memorial and the Ukrainian human rights organisation Center for Civil Liberties. Among the Indians nominated were Harsh Mander and the founders of Alt News, the fact-checking website.
President Draupadi Murmu and PM Modi sent congratulatory messages to President Xi Jinping and Premier Li Keqiang respectively on the 73rd Anniversary of the Founding of the People’s Republic of China, according to the Chinese embassy.
China is moving towards being one of the top 10 countries in terms of foreign portfolio investor (FPI) inflows into India. Quarterly data since the beginning of the pandemic shows it held up during the early days of 2020, when talk of restrictions due to the border crisis was doing the rounds. It has since increased and was at Rs 80,684 crore in June, according to SEBI data. In April 2020, the government had restricted FPI from “an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country.” Increased scrutiny of FPI flows followed. FDI is investment through capital instruments in an unlisted Indian company, or in 10% or more of paid-up equity capital on a fully diluted basis of a listed Indian company. Less than that is considered to be FPI, according to a 2020 note from the Department for Promotion of Industry and Internal Trade.
India’s services sector stuttered in September as new business and output grew at the slowest pace since March 2022, as per the S&P Global India Services Purchase Managers’ Index (PMI), which dropped to 54.3 from August’s robust 57.2. This dampened job creation after August, when services had reported the most new jobs in 14 years. With the manufacturing PMI also moderating in September, S&P Global said overall private sector output growth lost momentum and its Composite PMI Output Index slipped to the lowest level since March at 55.1.
The rupee plunged 32 paise to close at an all-time low of 81.94 (provisional) against the US dollar yesterday. Today it sank to another historic low of 82.33 against the dollar.
Hundreds of ASHAs in Delhi have been paid irregularly for five to six months, reports The Hindu. The activists — who are appointed on a contractual basis and paid incentives depending upon the service they provide — are now worried that their Deepavali will be ruined. A “technical glitch” arose when the Health Department of the Delhi government initiated a process to change its bank account. Jayati Ghosh, professor of Economics at the University of Massachusetts Amherst, said the Delhi government has not shown the best employment practices.
A Corporate Affairs Ministry notification has limited the information companies must disclose on corporate social responsibility (CSR) spends in annual reports. The new rules exclude details of the companies’ expenditure toward CSR projects. Experts say it’s vital for firms with high CSR budgets to disclose spends to shareholders.
In J&K, Home Minister Amit Shah said a lot. His sweeping assertions have been challenged by the National Conference, which furnished a long list of the work done under several National Conference governments over the years. Sattar saal mein kuchh nahi hua is boring now. But one of this claims – militance is waning – is belied by visible undercurrents.
RSS chief Mohan Bhagwat’s misinformed call for population control clashes with not just the facts but also the Modi government’s affidavit in the Supreme Court, which says there must be no coercion. Read a detailed account of the differences.
“The available data and my RTI replies clearly indicate that [cow or beef-related] violence increased after 2014, especially in BJP-ruled states. The violence is based on mere perception without any data, so it is deliberate and pre-planned. There is a definite ideology, literature, infrastructure and volunteers involved in violence. The support system includes police and politicians. Even the targets are constantly monitored and chosen. And culprits of this violence are not punished. There is a huge support system that works to run this agenda at various levels. Nothing is sporadic but a well-planned strategy of Hindutva forces,” Shruti Ganpatye, author of Who will Bell The Cow, tells Seema Chishti in an interview.
Seven years after Akhlaq's lynching in Dadri, just miles from Delhi, for allegedly having beef in his refrigerator, his family still waits for justice, says The Hindu. Sabrang reports that in all these years, only one of 25 witnesses testified. The trial has managed to reach the stage of assessing evidence.
Bru refugees who had lived in makeshift huts, shanties and relief camps in Tripura for years, have been resettled in different villages, but their names did not appear in the voter list. It took a High Court order to get their names added.
Thomson Reuters Foundation has an analysis on how Hindu-Muslim tensions in Leicester were fanned by fake news from India.
‘Missing’ posters of BJP MP and Bollywood actor Sunny Deol have appeared in Pathankot, Punjab. The posters titled ‘gumshuda ki talash (search for missing person)’ have been pasted on the walls of houses, the railway station and vehicles in the city, with a picture of the MP from Gurdaspur. Deol had won the 2019 general elections on a BJP ticket, and angry locals say that was the last they saw of him.
The Enforcement Directorate (ED) is again in the news for pursuing Opposition leaders. Karnataka Pradesh Congress Committee president DK Shivakumar yesterday said that ED has denied him more time to appear before it, and that this was “political harassment”. Shivakumar is in Rahul Gandhi’s Bharat Jodo Yatra, and has been summoned to appear in the money laundering case.
Deepak Nirula (70), co-founder of the Nirula’s chain, which popularised fast food in Delhi before foriegn brands entered India, has died.
A decade ago, a young French researcher and an eight-year-old Indian boy became friends. Their bond, cemented by language, has guided their lives and work.
Arun Bali, whose work spanned a wide spectrum from TV shows like Swabhimaan to 3 Idiots, Lage Raho Munnabhai and Laal Singh Chaddha, has died aged 79. His last film, Goodbye, releases today.
Maiden Pharma bluffed about WHO certification for its drugs
Gambia has urgently recalled India-made cough syrups which are being blamed for 66 child deaths. The preliminary enquiry of the Central Drugs Standard Control Organisation (CDSCO) has said four of Maiden Pharmaceutical’s cough syrups suspected as the cause of death by WHO, were exported only to Gambia. The company under investigation has finally spoken up. Director Naresh Kumar Goyal told Reuters yesterday: “We are trying to find out the situation because it cropped up only today morning… We are trying to find out with the buyer what exactly has happened. We are not selling anything in India.”
While Maiden tries to find out, public health activist Dinesh Thakur has published a long list which tells of the company’s callous and criminal attitude to public health and accountability. The company claimed on its website that it was ‘WHO compliant’, but this is not true: “This manufacturer has not been inspected nor any of its products assessed in any way by the WHO.”
Gujarat dargah demolished as poll nears
A dargah was demolished by local police in Porbandar, Gujarat. Unrest followed. The Muradsha Pir Dargah was brought down during a drive that started at 3 AM on Monday. The Gujarat police says that it was built illegally on government land, but Dargah committees said they had papers to prove it was a valid construction. The BBC says two dargahs were brought down. Assembly polls are due by November.
Aishwarya Iyer reports on ‘Garba jihad’ ― how Navratri became a communal flashpoint in Gujarat and Madhya Pradesh. “TV channels helped spread theories about a Muslim plot to infiltrate Garba pandals and lure away Hindu women.”
Playing IPL generates strategic intelligence
Playing in the IPL helps gather information on Indian cricketers which can be easily passed on for analysis for national fixtures, says South African pacer Kagiso Rabada. Currently in India for a white-ball series, he has gained a lot of popularity due to his impressive stints with Delhi Capitals and Punjab Kings in the IPL. “It is something we have prepared before going into the series. Lucky enough with leagues like the IPL, we play a lot with these players and against them as well, so information can be easily passed around,” Rabada said ahead of the first ODI. “Analysis has been done and has to be done,” he added.
Trafficked camels vanish in Varanasi
Sixteen camels travelled more than 1,000 kilometres from the Thar desert in Rajasthan to the lush banks of the Ganga in UP, and vanished. On June 27, they were found in Varanasi, trussed up like chickens in the back of a truck allegedly headed to West Bengal. The camels were lying upside down with their limbs and mouths bound. At least two have died since they were rescued. And only two have been seen grazing in Katesar village in UP’s Varanasi division.
For three months, the Varanasi administration has been trying to get the survivors shipped back to Rajasthan, but they’re nowhere to be seen. Barring the two found in Katesar and the two which died, the remaining 12 camels, who are geo-tagged, have vanished into thin air. Nobody has seen them in the last three weeks. Their way back home is lost in petitions and public interest litigations. The rumour mill is churning in Modi’s constituency and animal rights activists expect the worst.
The Long Cable
With inflation and national debt high, taxing the rich looks attractive
During the global economic boom after 2002, and a decade of sub-par growth after the 2008 financial meltdown, for policymakers in the developed world, it was as if inflation had been put to rest for ever. Since it was not an imminent threat, there was massive monetary and fiscal expansion to keep growth ticking. This psychology was further entrenched after Covid, when the developed world put their economies on heavy fiscal and monetary steroids without worrying about inflation at all. But inflation has woken up like a demon, after lying dormant for nearly two decades.
Now, the chickens are coming home to roost. For the first time in recent memory, the average inflation rate in the US and Europe is much higher than that of emerging markets like India, Indonesia, Brazil and China. Higher inflation was always associated with developing economies with less sophisticated financial institutions. Not any more.
This inversion presents a huge problem for emerging economies like India. The developed economies are rapidly rolling back monetary and fiscal stimuli to attack inflation, which is getting dangerously entrenched. The result is a severe global slowdown. Last week, UNCTAD projected global trade to grow at just 1% in 2023. Its global GDP growth forecast for 2022 is 2.5%, and even lower at 2.2% for 2023.
There is a strong correlation between global trade and the GDP growth of nations. For instance, India’s international trade volume is now 50% of its GDP. For India, UNCTAD projects GDP growth of 5.7% in 2022 and 4.5% in 2023. This is much less than RBI’s projection of 7% and 6.5% for FY23 and FY24.
The bigger challenge for India in the near term will be how to calibrate withdrawal of its monetary and fiscal stimulus over the next six months. India’s problems are different from those of the developed world. The US, UK and EU are not facing such a grave employment problem. They have relatively tight labour markets and therefore, it will be easier for them to withdraw stimuli. India faces its highest unemployment in decades and therefore, may find it much more difficult to rapidly withdraw fiscal and monetary stimuli. This present a huge problem for the Modi government.
Psychologically, global markets are expecting economies to show greater monetary and fiscal responsibility. Most central banks are increasing interest rates quite rapidly, following in the footsteps of the US Federal Reserve. This has become imperative for emerging economies like India, which has had to defend its currency against the strengthening dollar. India has seen the highest (13%) fall in its reserves this year, spent to defend the rupee. So monetary policy is substantially determined by what the Fed does.
But on the fiscal front, there is less clarity. The UK recently tried to cut its peak tax rate but the markets punished it badly ― sterling lost 5% of its value in a day, before recovering somewhat. In fact, the UK has abandoned its decision to cut the peak income tax rate of 45% for now. Australia is caught in a similar situation: the newly elected Labour government may reconsider a legislated reduction in peak income tax rate from 37% to 30% over the next two years.
The markets are perhaps indicating that a tax cut in the post-Ukraine situation could force nations to borrow more, exacerbating the already difficult national debt situation of most economies. This very sentiment has forced the Liz Truss government in the UK to reconsider its tax cut package. What can India do in such a scenario? The Modi government will present its last full budget in February 2023.
While the RBI has withdrawn much of the post-Covid monetary accommodation, the Union government will also have to chip in by appearing to be fiscally responsible. The present fiscal deficit of nearly 11% of GDP, for the Union and States together, is unsustainable. Global markets will harshly punish India if the Modi government is tempted to increase its borrowings for its large public spending programme on infrastructure and welfare. This realisation has dawned on Modi, who is expressing his concern for fiscal responsibility in a rather skewed manner by blaming only the states for handing out freebies.
Modi will also have to honestly look at his own freebies, specially designed for the 2024 elections. Finally, the Centre may have to increase taxes on corporates, from a low of 15% to 25%, to garner more revenues, instead of increasing borrowings, which would be disastrous. Corporate profits are doing very well after the Finance Ministry cut rates dramatically in 2019. The RBI helped with big interest rate reductions after Covid to strengthen balance sheets. The Centre would do well to ensure that a large number of businesses whose promoter wealth has multiplied post Covid duly contribute to society in a fair manner.
An RTI reply has exposed the lies of the AAP spokesman in Punjab, who had falsely claimed that there was an agreement to share helicopters between Punjab and Haryana. An RTI reply clarifies that there is no such agreement and the AAP government has been giving the Punjab helicopter for free to Dushyant Chautala, JJP leader and Deputy CM of the BJP-led Haryana government, for its own political gains in that state. Lying and misusing state resources can’t be traits of a party dreaming of leading the national Opposition. A six month audit of its performance so far is also not very encouraging
Prime Number: 6.5%
The World Bank has cut India’s GDP growth forecast for the current year (FY 2022-23) to 6.5% from 7.5% estimated in June and 8% in April.
A health facility for acutely malnourished children is an idea that originated decades ago in Africa. The concept was replicated in India, beginning with Madhya Pradesh in 2007. The number of facilities has fluctuated in recent years – from 800 nutrition rehabilitation centres in 2014, up to 1,151 in 2018 and down to 1,073 in 2021. The pandemic and neglect of children has had severe consequences.
Op-Eds you don’t want to miss
It has been 60 years since the Sino-Indian War in October 1962. Sushant Singh writes that the lingering standoff since 2020 reveals how little progress has been made on the border dispute.
Arundhati Roy on things that can and cannot be said: The dismantling of the world as we know it and the growing importance of solidarity.
Vivek Katju notes how foreign minister S Jaishankar spoke at the UN recently about how India still needed to ‘liberate ourselves from the colonial mindset’ after “centuries of foreign attacks and colonialism” and said that this export of the ruling party’s domestic political agenda to the diplomatic front is harming the country.
Muhammad Ghori had Lakshmi coins, Mahmud of Ghazni’s robes were worn by a Khajurao king. Our history isn’t just ‘Hindu king vs Muslim invader’. The stories we make up about medieval kings say much more about us than about them, writes Anirudh Kanisetti.
Ananth Krishnan writes that Chinese state opacity shouldn’t become an excuse for Indian media outlets to abandon basic fact-checking. The rumours about Xi Jinping in Indian media outlets weren’t covered by most organisations in the West or in Asia.
The Indian Army has shown that it is a match for the PLA, but is often held back by a timid political leadership. We must ensure that the custodians of our frontiers, whether soldiers or civilians, never have to face the Chinese from a position of disadvantage, writes Ajai Shukla.
The fact that Hindu Brahminical theories are being blindly popularised must ring alarm bells in liberal academia globally. Malignant Brahminical theories have already initiated modern conflicts and have no place in academia, write Yugeshwar Kaushal and Rajendra Singh Khangarot.
Addressing the currency and reserves challenge in a globalised world requires boosting exports. Bilateral currency trading would address issues of valuation to an extent and help trading in a relatively non-dollarized environment. But ultimately, fundamentals have to be strengthened, writes Madan Sabnavis.
Taylor C Sherman discusses her forthcoming book reassessing the Nehru years – Nehru’s India: Seven Myths. She focuses on Indian socialism as it developed under Nehru, and explains how it was shaped by the experience of colonialism and the national movement.
Juhi Chawla, Ayesha Jhulka, Soha Ali Khan, Karishma Tanna, Kritika Kamra and Shahana Goswami dive deep into the making of their crime drama Hush Hush. It’s an all-woman show.
Over and Out
Mani Ratnam’s magnum opus Ponniyin Selvan — which brings the Chola world to life — has revived the debate on whether the legendary Rajaraja I, who built the Brihadeeswarar Temple in Thanjavur, can be called a ‘Hindu emperor’. Did Hinduism exist as a religion? Film director Vetrimaaran, of Asuran and Visaranai fame, also referred to Tamil poet saint Thiruvalluvar clothed in saffron in a portrait. “It is very important to treat art in the right form. We will soon lose our identities if we don’t treat them properly. Our identities are being constantly misappropriated,” he said, implying that the Cholas were Shaivite, and that Hinduism as we know it didn’t exist in their time.
The Supreme Court finally resolved a royal family feud three decades old over the ownership of properties of Harinder Singh Brar, the last ruler of the former princely state of Faridkot in Punjab, who died in 1989.
Lyricist and former MP Javed Akhtar introduced himself as a “poet from India” and tweeted at Michelle Obama to run for President (of the US).
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.