SC's Adani Panel Stumped By Group's Opacity; Sunak Says Main Mission at G7 'to Persuade Modi to Back Ukraine'
Japan may join UPI network, Imran locked in tense stand-off with police, ‘Mann ki Baat’ goes where no event has gone before, Goldman cut exposure to Adani, India's incoherent trade policy is a mess
A newsletter from The Wire | Founded by MK Venu, Seema Chishti, Siddharth Varadarajan, Sushant Singh, Sidharth Bhatia, Tanweer Alam and Pratik Kanjilal | With inputs from Kalrav Joshi | Editor: Vinay Pandey
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Snapshot of the day
May 19, 2023
Vinay Pandey
Predictably, given its vague terms of reference, the panel appointed by the Supreme Court to look into allegations against the Adani Group in the wake of the Hindenburg report earlier this year has failed to unravel the “opaque structures” driving fund flows into various company entities. NDTV, which is owned by Adani, headlined its story, ‘Supreme Court Panel's Clean Chit To Adani Group: Prima Facie No Violation’. But parsing its report, Congress leader Jairam Ramesh said two of its findings underscored the need for a joint parliamentary committee probe.
On their part, some market players continue to believe there is ‘something black in the (Adani) lentils’. The investment arm of Goldman Sachs dramatically reduced its exposure to the Adani Group in its ESG (environmental, social and governance) portfolios in the weeks following allegations of fraud against the conglomerate by short-seller Hindenburg Research. Goldman funds registered as promoting ESG goals under European Union rules sold about 11.7 million shares in Adani companies in February, according to data compiled by Bloomberg. In March, Adani Group won a vote of confidence from a major investor after GQG Partners bought shares worth a total of $1.9 billion in four of the group’s companies. And even some ESG-registered funds – Bloomberg data identified eight in total – have added exposure to Adani since Hindenburg published its report.
Prime Minister Narendra Modi on Friday embarked on a tour of Japan, Papua New Guinea and Australia to attend three key multilateral summits including those of G7 and Quad. In the first leg of his trip, he is visiting Hiroshima, Japan, from May 19 to 21 primarily for the annual summit of the G7 advanced economies.
British Prime Minister Rishi Sunak has said his main mission at the G7 is to shore up support for Ukraine in its defence against the Russian invasion, especially among countries maintaining a broadly neutral stance, such as India. Before landing in Hiroshima, Sunak said he hoped to stress the extent of Russian war crimes to leaders from non-G7 nations, including Modi and Lula, the Brazilian president. “One thing we have to keep doing is talking to countries like India and also Brazil. That is going to be in that second part of the summit which is a good thing,” Sunak said.
Due to disagreements on several crucial tariff lines and investment protection laws, India and Britain are finding it difficult to advance their free trade talks, making a deal during Prime Minister Modi's second term, which ends next year, implausible, Reuters reports, quoting Indian sources. According to a government official with firsthand knowledge of the situation, the two countries are unable to come to an agreement on concessions on taxes imposed by India on imports of cars and alcohol.
Japan is “seriously thinking” about joining the Indian-led Unified Payments Interface (UPI) network to allow cross-border payments between Japanese residents and those in India, and other countries like Singapore and Thailand who are joining the network, according to Taro Kono, Japan’s minister of digital affairs.
Former Pakistani Prime Minister Imran Khan and the police in Lahore were locked in a tense stand-off, with Khan holed up in his residence claiming he was about to be arrested and officers barricading the surrounding roads and accusing him of harbouring “terrorists”. Since Khan was released from police custody on Friday, after his arrest in a corruption case was declared illegal, he has repeatedly expressed his fear of being re-arrested and has only left his residence once, to attend court with his wife on Monday.
The just-concluded “Mann ki Baat” jamboree has surpassed all earlier records of events linked to the “beloved leader” in its range, magnitude and scale of mobilisation, writes P Raman. There is no way of estimating how much was spent on the propaganda. The Gujarat AAP president put the figure at ₹830 crore for which he was slapped with an FIR. The preparations for the 100th episode of “Mann ki Baat” began early this year. Who says the regime is not democratic? Didn’t it invite ideas from the public on celebrating the great Modi show?
Neither curator Alka Pandey nor adviser Kiran Nadar asked artist and satirist Orijit Sen to create this poster for the ‘Mann ki Baat’ exhibition at the NGMA; however it certainly deserves its own show.
Lenders accused one of India’s hottest tech companies, Byju’s Alpha, of hiding $500 million as part of a fight between creditors and the self-proclaimed biggest edtech company in the world, Bloomberg reported on Friday. The allegation came out at a court hearing on Thursday in Delaware, US, where Byju’s Alpha faces a lawsuit over who should control the company.
Justice Prashant Kumar Mishra and senior advocate KV Viswanathan were on Friday sworn in as judges of the Supreme Court, which is now at its sanctioned strength of 34. Justice Mishra was the chief justice of the Andhra Pradesh high court; senior advocate KV Viswanathan, who was directly elevated from the bar, will become the Chief Justice of India in August 2030 and will go on to hold office for about 10 months.
The Calcutta high court has allowed the ED and CBI to question TMC’s Abhishek Banerjee in the school recruitment scam case. Banerjee had filed a petition seeking recall of an earlier court order allowing the agencies to question him, but Justice Amrita Sinha on Thursday dismissed the petition.
The Supreme Court on Wednesday ordered that the four people acquitted by the Rajasthan high court in the 2008 Jaipur bomb blasts case be released if their detention is not required in any other case. Seventy-one people had been killed and 185 injured in the blasts in 2008. The high court, in March, acquitted all the four convicts in the case, who were awarded death sentences by the trial court and upheld the acquittal of fifth accused on the ground that prosecution has not been able to establish the chain of the circumstances to prove their guilt.
The rules under the Foreign Exchange Management Act were recently amended by the finance ministry to include international credit card use under the Liberalised Remittance Scheme (LRS). As a result, purchases made with a credit card in a foreign currency will now count towards LRS’s $250,000 annual cap on individual expenditure. They will also be subject to a 20% tax collected at source. Indian startups and businesses that permit their employees to use corporate credit cards for international payments are staring at a lengthy compliance process and a potential short-term cash flow crisis.
Meanwhile, India-based entities have supplied the Myanmar military $51 million worth of weapons and related supplies since February 2021. According to a new report by the UN special rapporteur on the status of human rights in Myanmar, the Myanmar military has imported weaponry and raw materials for the manufacturing of weapons worth at least $1 billion since the February 2021 coup. The report lists the significant neworks, forms and known transfer values and countries where the networks are active. Besides Russia, China, Singapore and Thailand, India belongs to this list.
The point in contention [in Manipur] is not really about the Meiteis’ desire to get additional reservation quota, but a calibrated attempt to have access to ownership of tribal lands, which is seen as a deliberate attempt to snatch away the tribal lands of Kuki-Zomi communities, says Kham Khan Suan Hausing, professor and head of department of political science, University of Hyderabad.
“Biden has compelling reasons to thrust Harris to prominence as soon as possible. He lacks the energy for a modern campaign. Last time round, he was shielded by Covid and did it mostly on Zoom. Harris has to compensate in 2024’s more normal in-person environment by taking up some of Biden’s slack. The more exposure she is given now the better. Harris needs to be prepared to be president. Biden picked her in 2020. Now he must invest in her,” writes Edward Luce, US-based columnist of the Financial Times.
Govt mulling policy changes after cough syrup deaths
According to a document from the PMO, India is considering changing its pharmaceutical sector policy after cough syrups produced in the country were connected to the deaths of children abroad. The document indicated that “important things” regarding the industry had been “overlooked” after a brainstorming session was arranged in Hyderabad “to find out a solution to exported cough syrups that killed children.” However, the document did not mention cough syrup despite the session being attended by health minister Mansukh Mandaviya. Like the unwillingness to name the issue, the approach in tackling it remains convoluted.
SC asks Centre to consider relocating cheetahs
The Supreme Court ordered the Centre to investigate whether the nation’s recently introduced cheetahs may be relocated around the country rather than being kept in one location. A bench of Justices BR Gavai and Sanjay Karol, referring to newspaper reports regarding deaths of three cheetahs, said that Madhya Pradesh’s Kuno National Park may not be sufficient to accommodate so many cheetahs. “Kuno is not sufficient to accommodate … look for an alternative, either in Madhya Pradesh or Rajasthan. Whatever terrain is possible,” the bench observed. “Three deaths have happened … Why did you accept an animal (female) who had kidney failure?”
Even contaminated water is a luxury here
Water scarcity is a common thread running through the tribal villages of Kandhamal, Odisha. To alleviate suffering, the state government had promised tap water connections under the centrally sponsored Jal Jeevan Mission to all schools and anganwadi centres by 2022. However, that promise is yet to be fulfilled. “Come to learn, go to serve” reads the front wall of Bikapanga Upper Primary School in Tumudibandha block. Only 32 children study here from Class 1 to 8, yet those few are forced to “serve” themselves as facilities are hard to come by.
The Long Cable
India’s confused, incoherent trade policy may affect its global ambitions
Deepanshu Mohan
India’s net exports fell by over 12.7% to $34.66 billion this April. This is one of the steepest slides in the country’s export levels in the last three years and if the trend continues, it is likely to have major implications for the country’s already troubled growth story, as manufacturing sector performance and private investment growth have struggled to pick up.
The concern
Even though merchandise imports have continued to grow over the last few years and months, merchandise exports are now seeing a fall, which is distressing for major labour-intensive sectors, like textiles, leather, gems and jewellery, as well as engineering goods.
The positive trend in terms of trade is in services, where India’s service output level has outperformed that of the US, Europe and China since late 2022.
It has helped narrow India’s current account deficit (CAD), too, which was persistently expanding because of a constant rise in merchandise imports (including rise in imports from Russia and China).
It has therefore been advised that a push towards driving “service-based export” growth may, in fact, help the Indian macro-growth trajectory and also help the government in not just reducing its CAD, but also in creating more jobs (in some of the labour-intensive service sectors).
What about India’s main trade partners (those with trade exposure of almost 50%)?
The US surpassed China to become India’s top trading partner in 2021-22, reflecting a strengthening of ties between the two economic giants. India still trades more with the US than with China and exports more to the US than to any other country.
A couple of years ago, India’s trade surplus with the US was $32.8 billion. Beyond services, major export items from India to the US include petroleum, polished diamonds, pharmaceutical products, jewellery, light oils and petroleum, frozen shrimp, etc whereas major imports from the US include petroleum, rough diamonds, gold, coal, waste and scrap, etc.
It makes more sense for India to expand its economic (and trade) relationship with the US. And some would imagine the US, too, may see this “relationship” as being vital to finding an effective counterweight to China (while reducing its trade exposure to China).
However, in April, India saw a 17.6% export share contraction at $5.9 billion with the US alone. This was followed by the UAE: 22.09% decline in export share from India at $2.23 billion.
Exports to India’s key markets – the US, the UAE, China, Singapore, Bangladesh and Germany – witnessed a sharp decline of 12.69% in outbound shipments during the first month of the current financial year.
Exports to the UAE contracted despite India signing an FTA (it also raises questions on whether more FTAs can result in more trade with a given country).
On imports, India’s large dependence on China has further been complemented over the last year by an increasing import-dependence on Russia (given Russia was selling a lot of its crude oil to India, which is being processed and exported to the EU and elsewhere).
India’s failed PLI scheme for driving manufacturing exports
There are two channels or categories for which India has remained import-dependent, particularly on China.
The first is the commodity/goods-based dependence for sectors such as pharmaceuticals, electricals and Solar PV cells.
The second is country-based dependence for various categories of goods, whether it is from China for electricals, Switzerland for gold, or the US for capital goods (say, machinery).
To address the first component of import dependence, the government of India introduced its Production Linked Incentive Scheme in November 2020 to encourage the domestic production of various electronic parts that it otherwise imports.
In the Union Budget 2021-22, the finance minister announced an outlay of ₹1.97 lakh crore for the PLI schemes for 13 key sectors. This means that minimum production in India because of PLI schemes is expected to be over $500 billion in five years.
The PLI schemes have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve the cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports.
The scheme, for example, for the automobile sector, proposed financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain.
So far, the scheme has had very limited success in achieving what it had set out to do (the government has also put in a lot more money which could have otherwise been targeted towards enabling more service-based exports).
For the second category of import dependence, which is more “country-based” than goods-based, there was an effort to reduce India’s imports from China due to the burgeoning trade deficit.
Numerous efforts to delink India’s supply chain from China have resulted in India trying to import the same goods at a higher price from countries like the US, Japan and Vietnam, which has made domestic production even more costly and difficult.
Most local manufacturers, including MSMEs, have already been struggling post-pandemic with demand, debt, and credit-sourcing related issues and are more than happy to continue their dependence on cheaper Chinese imports to remain price/cost-competitive in a market where the “willingness to pay” for most consumer goods remains low as consumption demand has failed to pick up for most income groups.
The illusion of ‘Aatmanirbharta’
As argued earlier, India’s weak growth, combined with a low domestic private investment, has made its overall domestic production and productivity frontier weak over the last decade and a half.
Expansive import dependence on other nations means less scope for actualising India’s vision of ‘strategic autonomy’ in its foreign policy, and/or in negotiating better deals for trade bilaterally, plurilateral-ly, or multilaterally.
In India’s current macroeconomic scenario, beyond the reasons cited for its extensive import dependence, a poor level of trade competitiveness is because of two interplaying factors:
A weak demonstrable domestic manufacturing strength (for which schemes like PLI and Make in India were seen to be vital but yielded limited positive results)
An uncompetitive currency-pricing mechanism for the rupee (vis-a-vis other emerging export market-oriented currencies).
In fact, since the reforms of the early 1990s, India has been faced with some structural challenges in prioritising both aspects.
On the other hand, countries like Bangladesh, Vietnam, Indonesia and Thailand, to name a few, have done much better in aligning an export-oriented industrial vision with a set of policies that make their products (including their cost) more competitive at a global level.
(Deepanshu Mohan is professor of practice and director, Centre for New Economics Studies at Jindal School of Liberal Arts and Humanities, OP Jindal Global University)
Reportedly
Arjun Ram Meghwal, the new law minister, had tabled an anti-homosexuality bill in the Lok Sabha in 2012 to overrule the Delhi high court judgment of 2009 that had termed Section 377 of the Indian Penal Code “unconstitutional” and decriminalised homosexuality. After the Supreme Court re-criminalised homosexuality in 2013, Meghwal praised the top court’s decision. So, how has a person who opposed the decriminalisation of homosexuality – a fundamental human right for the LGBTQ+ community – been appointed law minister at a time when the Supreme Court is hearing petitions on legalising same-sex marriage in India. Will Meghwal toe his predecessor’s line on marriage equality, arguing “leave it to Parliament” but reaffirming the rights of queer couples to live together? Or will he double down on his past statements, making an even stronger case against LGBTQ+ rights? With the Covid pandemic over, at least we don’t have to worry about his advocacy of quack cures like ‘Bhabhiji Papad’.
Prime Number: 4
The sale and distribution of four life-saving antibiotics – Magnex, Magnex Forte, Zosyn and Magnamycin injections – has been urgently but temporarily suspended by the American pharmaceutical giant Pfizer, citing a warning on “deviation in manufacturing process”. These are among the medicines used to treat infections in critically ill patients in ICUs; several companies manufacture them under different trade names.
Deep Dive
Residents and experts in Kashmir are perplexed by the appearance of wild boars, an invasive species, that have wreaked havoc by attacking orchards and fields. Read what it means for the people and the ecosystems of Kashmir.
Opeds you don’t want to miss
Walking the tightrope seems to have paid off for India, but the multilateral challenges it faces will multiply, writes Suhasini Haidar.
Concentration of power with the Centre has compromised state governments’ ability to address their problems, says Milind Sohoni. He asks: Does the new Karnataka government have enough agency to help its people?
Will hardcore supporters push BJP more towards Hindutva? The end of policies aimed at humiliating the Muslims and excluding them from the mainstream is a frightening spectre for the BJP’s hardcore supporters, writes Jyoti Punwani.
Siddaramaiah is a rational OBC counter to Modi’s communal OBC politics, writes Kancha Ilaiah Shepherd.
The Karnataka assembly election marks the consolidation of the Congress’s ideological core, writes Devender Singh.
The history of India is complex and complicated; it cannot be neatly sanitised, writes Atreyee Majumder.
Wrestling patriarchy is a herculean task before India’s sportswomen, says Abhiruchi Ranjan.
As hate and toxicity swirl in our midst, with so much of this poison just a clickbait video or WhatsApp forward away, one realises how careful, really careful, we need to be with our own kids, write Parthanil Roy and Teesta Setalvad.
Manipur’s much-sought-after Shirui Lily Festival, scheduled to be held from May 17 to 20, had to be postponed indefinitely. The need of the hour is to use every mechanism to minimise ethnic tension, writes Sudipta Bhattacharjee.
Is Pakistan’s long history of civil-military contestation, with its outcomes generally tilted in the army’s direction, now at a new tipping point? asks TCA Raghavan.
The intimidating experience of being questioned again and again in Israel and Palestine after covering the Prime Minister’s visit, writes Stanly Johny.
MR Shamshad remembers Zafaryab Jilani, Babri masjid dispute lawyer and true community leader.
Zubeda Hamid examines whether an integrated system of medicine can work.
Atanu Biswas takes a look at whether the coin tends to fall more often on the side of the affluent.
Listen up
How can you be certain that you’re eating what you think you are eating? Food fraud often won’t get you sick, but you won’t always receive what you paid for. The BBC takes you to a laboratory in Belfast, where food products are analysed to sort out what’s real and what’s fake. It also takes you to a spice market in Delhi where vendors and shoppers tell you how they try to avoid fake products.
Watch out
In an insightful conversation with South First, Dr Parakala Prabhakar, the author of The Crooked Timber of New India, issues a dire warning that a BJP win in the 2024 Lok Sabha elections will have serious consequences for the country.
Over and out
Meet Padma Lakshmi, a trans woman from Kochi, who recently enrolled at the Bar Council of Kerala and became the first transgender lawyer from the state. In an interview, she talks about the difficulties she faced and why she dedicated her life to fighting for the rights of marginalised communities.
Dr James Esdaile, a Bengal-based Scottish physician, played an exceptional role in mesmerism, which captivated the length and breadth of India. Read about his fascinating story and how his practice in Hooghly’s Imambara hospital in the mid-1800s remains legendary in medical history.
Scroll traces the delicious journey of Kochi’s famous breudher bread, leaving behind a craving for a taste of tradition.
While Priyanka Chopra plays a spy in the recently launched thriller web series Citadel, it remains debatable whether she is a good liar in real life. In a recent interview with Vanity Fair, she took a lie-detector test in which she answered a bunch of questions about her co-stars and blurted out that her husband, Nick Jonas, is the best singer in the Jonas Brothers band.
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.