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Date: 14-10-16

Niti Aayog should aim for economy wide reform, not special zones

The Niti Aayog favours creating Shenzhen-style coastal economic zones (CEZs) in India, to host which, state governments would have to suitably reform land and labour laws, while the Centre bestows tax concessions. The goal to attract large manufacturing firms to serve the export market is laudable, but creation of special enclaves for the purpose with legal and tax regimes different from those for the rest of the country is not.

It ignores the experience of special economic zones (SEZs) and the new anti-globalisation climate in target export markets. SEZs did not take off on any large scale because they did not suit India’s political economy.

Any whiff of special exploitation, using enclave-specific rules, of already cheap labour in a poor country would turn consumers against the products of large companies that take advantage of CEZ concessions. Some tax breaks/subsidies would pass muster at the WTO, but not all. Grafting a past Chinese success story on today’s India will not deliver the same results. An operational framework is already in place for planned urbanisation, under the Delhi-Mumbai Industrial Corridor. The point is to stop dawdling on this project. Of course, fast-urbanising India needs new towns. The focus must be on innovative policies, such as the land-pooling experiment in Andhra’s new capital under construction, to release agricultural land for urbanisation without creating conflict.

SEZs are part of a dilapidated culture of milking tax breaks. There is no reason why the entire country cannot have robust infrastructure, functional and speedy administration and sensible taxation. Labour laws and land utilisation norms have to change too. The focus should shift to creating economywide competencies to raise manufacturing’s share in the economy

Date: 14-10-16

समान नागरिक संहिता पर बहस से ही उभरेगी सहमति

Date: 14-10-16

Date: 14-10-16

बढ़ी आबादी का फायदा छह राज्यों पर है जिम्मा

भारत को अगर जननांकीय लाभांश का पूरा लाभ हासिल करना है तो इसमें छह राज्यों की अहम भूमिका हो सकती है। इस संबंध में विस्तार से जानकारी दे रहे हैं शंकर आचार्य

Date: 13-10-16

Tread carefully

Personal law reform is desirable. But a consensual approach will be needed to take it forward.

The Centre filed an affidavit in the Supreme Court last week supporting Shayara Bano’s plea against the practices of talaq-e-bidat (instantaneous triple talaq), nikah halala (prohibition on remarriage with the divorced husband without consumating marriage with another man) and polygamy. It referred to constitutional principles like gender equality and secularism, and cited international covenants, religious practices and marital law prevalent in various Islamic countries to emphasise that the practices need to be re-looked at by the court. Shayara Bano’s petition challenges these practices as being violative of the fundamental rights guaranteed by the Constitution, particularly Articles 14, 15, 21 and 25, which are concerned with the right to equality, protection against discrimination on grounds of sex or religion, protection of life and personal liberty and freedom of religion respectively. A slew of progressive Muslims groups and secular bodies have also come out in support of Shayara Bano in the court.There is a strong case for reform of Muslim personal laws, but it needs to be pursued carefully and with the broad-based support of the community. In the Shayara Bano case, the Centre has held the view that the said practices are not an integral part of Islam. This could be taken to mean that they are subject to executive intervention. Yet, the way in which the debate has often been framed in the dominant narrative is disquieting, and stokes insecurity and fear in large sections of the minority community. Overlooking the vivid argument and disagreement even within Muslim groups on the subject of triple talaq, for instance, a neat opposition is painted between a conservative monolithic religion on the one hand and modern ideas of social and gender equality on the other. The conservatism espoused by sections of the clergy and the community has been held up as evidence of Muslim backwardness. The fact is, the call for reforms has periodically been raised from within the community, be it in the Shah Bano case in the 1980s or the Shayara Bano case now.Entrenched political interests tend to assume custodianship of community interests, feeding on real and imagined fears, and invite maximalist positions. Moreover, the pursuit of reform of Muslim personal laws has far too often been guided by the exigencies of electoral politics. In such a context, the onus of proving its good intentions is on the government. It needs to tread very carefully, while addressing the disquiet among sections of the Muslim community on a fraught question.

Date: 13-10-16

Double challenge

The legacy of bad loans, which the Narendra Modi government inherited when it came to office in May 2014, is now taking a toll, not just on Indian banks, especially state-owned, but also the broader economy. There can be no better indicator of this than the fact that outstanding loans of scheduled commercial banks to industry contracted by 0.2 per cent year-on-year in August — the first time in at least a decade. There is both a supply as well as demand side to this contraction. The demand for bank credit by industry has slowed mainly because not too many new projects, be it greenfield or even brownfield expansion, have taken off the ground. That, in turn, is a reflection of significant underutilised capacities across most industries in conjunction with the pressure on prices, not least from imports. Both, together, have led to companies focusing more on improving utilisation of capacities — much of them created during the investment boom, 2004 to 2012 — rather than embarking on new projects requiring funding from banks. Even in the case of initial public offers made by companies in India during the current fiscal, three-fourths of the monies raised involved cashing out by existing shareholders rather than fresh capital being issued for undertaking project expansions.

But the problem is not just related to the demand for funds. Most banks today are weighed down by huge non-performing assets or NPAs from their past loans that have gone bad. The inability to recover at least part of these — including through sale of assets built up by highly leveraged borrowers — and having to make large provisions against losses from them has made banks wary of expanding their loan books. It looks like the resolution of the bad loan crisis will take much longer than what the government or even the RBI initially thought. Gross NPAs of banks rose to 8.7 per cent of their outstanding advances as on June this year. The RBI’s latest Financial Stability Report has projected this to rise further by the end of the fiscal.

The RBI appears to be gauging both the supply and demand dimensions to the crisis. Earlier, it was focusing on the supply side, thinking that a clean-up of balance sheets by banks, while painful in the short-term, would set the stage for a resumption of lending activity. But the fact that high interest rates were also a problem, leading to lower credit demand as well as adding to the debt-servicing woes of firms, was not recognised adequately. It is now showing equal concern for growth — the latest 25 basis point cut in the repo rate is a pointer to that. That is a good sign.