An interesting endorsement of the regional security meet on Afghanistan, held in New Delhi on Wednesday, came from unexpected quarters—from the Taliban. Taliban spokesperson Zabihullah Mujahid told the media in Kabul that their “Islamic Emirate” was optimistic about the regional meeting being hosted by India. He said this even though the Taliban government was not invited for the meeting, as India and the other countries attending the meeting do not recognise the “Islamic Emirate”. It looks like that even the Taliban, at least in public, are unwilling to toe the Pakistani—and thus automatically Chinese—line that India does not matter in Afghanistan. The meeting hosted by National Security Adviser Ajit Doval saw participation from Tajikistan, Kyrgyzstan, Kazakhstan, Uzbekistan and Turkmenistan, apart from Russia and Iran. Pakistan did not participate, with its NSA, Moeed Yusuf dismissing the possibility of attending the meeting by stating “a spoiler (India) cannot be a peacemaker”, while China stayed away citing scheduling problems. Obviously, the two coordinated the move, especially since the very next day, on Thursday, China is scheduled to attend a meeting being hosted by Pakistan on Afghanistan. The meeting is also being attended by the US, Russia and a representative of the Taliban government.
In fact, information is that attempts were made by the Chinese side to dissuade Russia from participating in the meeting and thus stop Afghanistan’s Central Asian neighbours, on whom Russia has a huge hold, from visiting New Delhi. The plan was clear—to ensure that no one participated and thus India was humiliated. But the fact that Russia and the Central Asian republics, as well as Iran participated in the conference, proves that they are willing to carve a foreign policy independent of Chinese-Pakistani interests and influence. It also showed that they believe that there is no solution to the Afghanistan problem without India playing a part in bringing peace to that war-torn country.
The message from the Delhi meeting was clear: that there should be “close consultation, greater cooperation and coordination” among these countries to ensure a “peaceful, secure and stable Afghanistan”. There was strong condemnation of terrorism and consensus that Afghan territory should not be used for sheltering, training, planning or financing any terrorist activities; that there should be “collective cooperation” against “radicalisation, extremism, separatism and drug trafficking”; that any government in Afghanistan should be inclusive, with representation from “major ethno-political forces”; that the Afghan population, which is facing a humanitarian crisis, should be provided with help in an “unimpeded, direct and assured manner”.
Importantly, the joint statement emphasised on the need to have “respect for sovereignty, unity and territorial integrity and non-interference in its (Afghanistan’s) internal affairs”. It was a message to both Pakistan and China to stop treating Afghanistan as their backyard to nurture terrorists and use it for their own strategic goals. That the Taliban are in power in Kabul today is because of Pakistan, which has been quite open about the role it played in defeating the United States in Afghanistan by using the Taliban. Its role in harbouring and nurturing the Taliban on its own territory has been an open secret; or how it provided the Taliban with both men—read, terrorists—and materiel to fight the Afghan government, and later the Resistance force at Panjshir valley. In fact, post the fall of Kabul on 15 August, Pakistan went to the extent of derailing the US choice for Prime Minister, Mullah Baradar, apart from installing its pet terrorist, Sirajuddin Haqqani as the Interior Minister. Observers will not easily forget the trips that the ISI chief, Faiz Hameed, undertook to Kabul to calm things down after the clash between the followers of Baradar and Sirajuddin Haqqani, in which Baradar himself was injured; while also ensuring that Pakistan’s “proteges” get important portfolios in the Taliban government. From all accounts, the government in Kabul is controlled by the Haqqanis, and is thus under the thumb of Rawalpindi General HQ. However, there is also speculation that the Taliban are not completely trusting of Pakistan and their “overtures” to India asking Delhi to resume commercial flights to that country, apart from reinstating scholarships for Afghan students, would not have gone down well with GHQ. Whether or not India decides to have diplomatic relations with the Taliban government in the future will be a matter of discussion and debate, but at present it should try and provide humanitarian aid to the people of Afghanistan and take the lead in ensuring that the aid is distributed under international supervision. It is in this context, that the emphasis given by the NSA meeting to a United Nations role in Afghanistan assumes importance.
As for China, it is obvious that the countries that participated in the New Delhi meeting recognise that the Chinese are getting into Afghanistan to serve their own interests—to ensure that the Uyghur militants operating from the northern parts of Afghanistan do not foment trouble in Xinjiang province, home to China’s Uyghur population; and to extract the $1 trillion worth mineral reserves that Afghanistan has including possibly the world’s largest deposit of lithium, which is the most important mineral needed for batteries for IT devices. China has offered $31 million in aid to the Taliban government. It is not known how much of that aid reached the people of Afghanistan. The cash starved Taliban, who apparently do not even have fuel to run their vehicles, have been saying that China is one of their most important allies and have been largely silent about China’s ill-treatment of the Muslim Uyghur population. It is expected that the Chinese will take this opportunity to walk into Afghanistan in the name of providing aid and building the BRI, and in the process turn that country into their vassal state, whose sole reason for existence is to provide tribute to the “emperor” in Beijing.
The NSA meeting also has to be seen in the context of the meeting in Islamabad the very next day, which is one way of telling the US in particular that without Pakistan there cannot be peace in Afghanistan. It is also an attempt to send out the message that the Delhi meeting is at best a side-show, and the “big boys” will be in Islamabad. However, the Islamabad meeting may have attendance, but will it be able to chart out a road map for peace? However much the arsonist may claim to be the firefighter, it will still remain the arsonist. Left to Pakistan, and China, Afghanistan will become an even bigger security threat not only to the region, but also to the rest of the world. It is to pre-empt such a situation that New Delhi hosted the security meet and found resonance from other countries in the region.
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GHULAM NABI AZAD SENDS A STRONG SIGNAL TO CONGRESS HIGH COMMAND
Intense speculation has begun in political circles on whether veteran Congress leader, Ghulam Nabi Azad, is preparing to part company with the grand old party, to float his own regional outfit, in what was once the erstwhile state of Jammu and Kashmir. The conjecture is that like Captain Amarinder Singh before him, Azad, may similarly chalk out his future, which with the Congress, does not appear to be very bright, with Rahul Gandhi calling the shots. While Azad has denied any such move, the support he has received from virtually every top leader of Jammu and Kashmir indicates that he was weighing in the options before him. The astute and perceptive politician in him is at work, and he realizes that it was important to flex his muscles to send a strong message to the central leadership of the party, which is not seemingly receptive to the grassroots situation. Azad, is without any doubt, the senior-most organization man in the party; he has occupied almost all positions in the Congress from heading its youth wing to being general secretary in-charge of most of the states. Besides, he has served in the Union government has worked closely with all the Congress Prime Ministers from Indira Gandhi onwards.
Azad was handpicked by the late Sanjay Gandhi to head the Youth Congress and was given a Lok Sabha ticket from Washim in Maharashtra in 1980 to enable him to make his parliamentary debut. His proximity to Sanjay was such that when Azad got married in March, 1980, Sanjay not only attended the ceremony in Srinagar, but stayed there for three days. Indira Gandhi was very fond of him and later, even Rajiv became dependent on him for several things. P.V.Narasimha Rao trusted his abilities and Sitaram Kesri, who succeeded him as the party president, would always like to have him by his side. Sonia Gandhi was also conscious of his political prowess and would hold consultations with him, as and when she required. However, of late, Azad was finding himself on the political periphery of Congress politics with Rahul Gandhi and Priyanka being wary of the G-23 group within the party. This is why he has in recent interviews expressed his disappointment with the leadership which considered “suggestions made to them as a challenge’’ and that because “they were unaware of the Congress history and tradition’’.
He took everyone by surprise by stating that he did not see Congress getting 300 seats in the 2024 Parliamentary polls thus implying that the BJP was going to easily retain power. His thesis is that the weakness of the Congress was the reason why the BJP was strong and unfortunately, there was no one to pay heed to any kind of counsel from senior leaders, who were being viewed with suspicion. Azad has seen the best times with Congress and understands political machinations as much as the best in the business. He has been saying what he has to keep his relevance intact. There are many of his critics, who believe that he could be drifting towards the BJP as Captain Amarinder Singh is doing right now. The insinuation is that the BJP could make him the Vice-Presidential candidate next year or give him an important berth in the Union Cabinet to exploit his tag of former Jammu and Kashmir Chief Minister. However, Azad is no greenhorn and would play the game according to what suits his interests. The G-23 is itself disintegrating and many of those who stood by Azad, are gravitating towards the Congress High Command after being snubbed by Sonia Gandhi at the Congress Working Committee meeting some time ago. The point that needs to be understood is that Azad and others like Kapil Sibal and Manish Tewari are not opposed to the Congress High Command but like most party supporters, concerned over how the party is being run. They are simply demanding wider consultations in devising the strategy and the future blueprint. Having been in the core team, things are simply not going the way they perceive them and hence there is both disappointment and frustration. The onus of utilizing the services of experienced leaders such as Azad and others lies with the central leadership. If it still chooses to ignore them, the consequences would be serious. Therefore, in the best traditions of the party, the decision-making process should be more inclusive from every angle. Otherwise, Congress would continue to struggle in its fight against the BJP.
Eventually, Parliament passes the Dam Safety Bill
The Dam Safety Bill was passed by Parliament on Friday. Although the bill was passed by the Lok Sabha in August 2019, it was cleared by Rajya Sabha last week.
As principal draftsman of the Standing Committee of Parliament on Water Resources on the Dam Safety Bill, 2010, it’s a matter of immense satisfaction that the dam safety legislation has been eventually enacted. The Dam Safety Bill, 2021 was passed by the Rajya Sabha after extensive debate on 2nd December 2021. The Lok Sabha had passed it on 2nd August 2019. Many opposition members in both the Houses demanded that the Bill be referred to the Standing Committee but the Government rejected the demand. The stand of the Jal Shakti Minister, Gajendra Singh Shekhawat, was that the Bill of 2021 was based on the report of the Standing Committee on the Bill of 2010, which formed ‘the backbone’ of the new Bill. The Dam Safety Bill, 2019 piloted by Gajendra Singh Shekhawat during the very first session of the current Lok Sabha incorporated majority of the recommendations of the Committee contained in their 7th Report (15th LS). The Dam Safety Bill, first introduced in the 15th Lok Sabha on 30th August 2010, was referred to the Committee for examination and report. The Committee undertook study visits to some Dam sites, invited public memoranda, heard domain experts, examined official witnesses, stakeholders and finally presented a comprehensive report to Parliament in August 2011.
Dams are critical infrastructure constructed with large investment for multi-purpose uses such as irrigation, power generation, flood moderation and supply of water for drinking and industrial purposes. An unsafe dam constitutes a hazard to human life, ecology and public and private assets including crops, houses, buildings, canals and roads. Therefore, the safety of dams is a matter of great concern to the general public and becomes a national responsibility to take necessary steps to ensure the safety of dams. The Committee found many serious flaws in the Bill. Most glaring of it all, the Bill lacked penal provision, deficient definitional clauses, omission of upstream devastation caused by a Dam, structure of Dam Safety Organisation, the damage likely to be caused by the Dams including landslide or moraine located outside the national territory, etc. All these recommendations and observations have been incorporated in the new legislation and the Minister assured the Parliament that many of the observations of the members would form part of the Rules, exercising the power of delegated legislation under the Dam Safety Act.
It would be worthwhile to recall briefly the history of this much-awaited legislation. The Government of India, keeping in view the importance of the safety of dams and want of a legislative framework regulating dam safety, constituted a Committee in the year 1982 under the Chairmanship of Chairman, Central Water Commission to review the existing practices and to evolve unified procedure for the safety of dams in India. The Committee in its report dated the 10th July 1986 recommended for unified dam safety procedure for all dams in India underlining the necessity of legislation on dam safety. Initial efforts for dam safety legislation were directed towards the enactment of appropriate legislation by some State Governments. The State of Bihar enacted the Dam Safety Act, 2006. Kerala amended its Irrigation Act incorporating a dam safety provision. However, some of the States favoured a uniform dam safety central legislation. The undivided State of Andhra Pradesh and West Bengal adopted a resolution in their Assemblies for an Act of Parliament. Accordingly, the Dam Safety Bill, 2010 was introduced in Lok Sabha on the 30th of August, 2010. The Bill was referred to the parliamentary Standing Committee on Water Resources for examination and report. The Committee submitted its Report on the Dam Safety Bill, 2010, recommending wholesale amendments to the Bill. The Ministry of Water Resources, rechristened Water Power, withdrew the Bill and introduced a new Dam Safety Bill during the 16th Lok Sabha. But with the dissolution of the 16th Lok Sabha, the Dam Safety Bill, 2018 lapsed. The Government introduced the Dam Safety Bill, 2019 in the very first session of the 17th Lok Sabha which has since been passed by the Rajya Sabha also.
The Dam Safety Act, 2021, inter alia, provides for (a) constitution of the National Committee on Dam Safety to discharge functions to prevent dam failure related disasters and to maintain standards of dam safety and to evolve dam safety policies and recommend necessary regulations as may be required for the purpose; (b) establishment of the National Dam Safety Authority as a regulatory body to implement the policy, guidelines and standards for proper surveillance, inspection and maintenance of specified dams and address unresolved points of issues between the State Dam Safety Organisation of two States, or between the State Dam Safety Organisation of a State and the owner of a dam in that State, and in certain cases, such as dams extending in two or more States or dams of one State falling under the territory of another State; (c) constitution of the State Committee on Dam Safety by the State Governments to ensure proper surveillance, inspection, operation and maintenance of all specified dams in that State and ensure their safe functioning; and (d) establishment of the State Dam Safety Organisation in States having specified dams which will be manned by officers with adequate experience in the field of safety of dams. The Act makes it mandatory for every owner of a specified dam to establish operational and maintenance set up to ensure the continued safety of such dams, to earmark sufficient and specific funds for maintenance and repairs of the dams, for undertaking pre-monsoon and post-monsoon inspections and special inspections during and after floods, earthquakes, etc., to carry out risk assessment studies at such intervals as specified by the National Committee on Dam Safety. The law casts an obligation upon the concerned State Dam Safety Organisation to keep perpetual surveillance, carry out inspections and monitor the operation and maintenance of specified dams under its jurisdiction to ensure their safety; and to classify each dam under their jurisdiction as per the vulnerability and hazard classification following the regulations. The National Dam Safety Authority is required to table its Annual Report in Parliament and the State Dam Safety Organisation to submit its Annual Reports on the safety status of dams to the concerned State Legislative and State Disaster Management Authority.
The Bill witnessed lively debates in both the Houses. Some Members questioned the legislative competence of the Union Government to enact a law on ‘water’ which is a State subject under the 7th Schedule to the Constitution and also sought clarification for not incorporating a part of the Preamble of the 2010 Bill in the Bill of 2019 which read: “And whereas Parliament has no power to make laws for the States concerning any of the matters aforesaid except as provided in Articles 249 and 250 of the Constitution”. Also the reference to Resolutions passed by the Legislative Assemblies of (undivided) Andhra Pradesh and West Bengal that Dam Safety should be regulated by law made by Parliament. The Minister referred to the recommendation of the Standing Committee on Water Resources to modify the Preamble suitably, dam safety being an inter-state matter. This view was fortified by some lawyer members invoking the doctrine of pith and substance and justified the legislative competence of Parliament to enact the legislation in accord with the recommendation of the Water Resources Committee of Parliament. The Minister allayed the fear of erosion of legislative powers of the States by stating that the legislation purely deals with dam safety and matters allied and incidental without impinging upon the ownership of Dams, the water impounded, its use, or the hydropower generated by them. He also made it categorically clear that there was no question of the Union Government taking over the control, maintenance and ownership of Dams. Anyone refusing to comply with the directions issued under the Dam Safety Act will be punishable with imprisonment of up to one year, or a fine, or both. If the offence leads to the loss of lives, the imprisonment will raise to two years. Every dam owner has to provide a dam safety unit to inspect the dam before and after the monsoon session, during and after every earthquake, flood, or any other calamity or sign of distress.
India has currently 5,745 large dams, of which 393 are over 100 years old and more than 25 percent of dams are 50 years old. Aging dams and dam failures can cause colossal damage to life and property not only downstream but also upstream if sluice gates are not opened timely to prevent water impounding upstream and consequential damage. A dam may be constructed in a particular location of a State but it has consequences and safety implications for the upstream and downstream States, apart from environmental hazards. In exercise of its legislative power under Article 246 read with Entry 56 and Entry 97 of the Constitution and the dire long felt need for dam safety, Parliament has filled a long-felt void by enacting the Dam Safety legislation.
The writer is the ex-Additional Secretary, Lok Sabha, and serviced the Standing Committee on Water Resources under the Chairmanship of Dip Gogoi, 15th Lok Sabha which examined the Dam Safety Bill, 2010. Views expressed are the writer’s personal.
GOVERNMENT MUST ENSURE THAT PARLIAMENT FUNCTIONS
It is an accepted fact that it is the responsibility of the government and the treasury benches to ensure that Parliament functions smoothly. For this to happen, the ruling dispensation has to take into account the concerns of the Opposition and accommodate their views as far as possible. It has been the practice that before the commencement of any session, the government in consultation with the opposition lists out an agenda so that important matters are sorted out and the necessary Bills are passed. In the latest instance, a confrontation has built up from day one after 12 Rajya Sabha MPs were suspended for their alleged unruly conduct on the last day of the previous session. The 2 members have claimed that they were not provided any opportunity to defend themselves and explain their position and the suo-moto action against them was against all principles of natural justice. There is no doubt that the House in Parliament is supreme and can take any decision. Similarly, the presiding officers also have immense power to implement rules in the event of disruptions and unbecoming behaviour.
But equally important is that to have smooth functioning, excessive punishment is not the only answer. The charge against the government is that it was the one which was causing disruptions so that there can be no meaningful discussions on vital issues and this was a step aimed at diverting the country’s attention from burning matters like price rise, unemployment, and poor state of the economy. The Opposition has been complaining constantly that there have been procedural lapses while enacting legislative business. For instance, when the Farm Laws were passed in Rajya Sabha by voice vote, the objective was to deny the Opposition a division which was demanded to ascertain who all were for the motion and who all were against it. This right cannot be taken away under any Parliamentary procedure, especially when such an important matter is being sought to be passed. The Farm laws, therefore, lacked the legitimacy which would have been there if there had been threadbare discussion on this matter. Similarly, when the Farm Laws were annulled, again the decision was taken by a voice vote in the upper House without any discussion taking place.
The central point was that the enactment of the laws had resulted in country-wide protests and over 700 farmers lost their lives during this long agitation. Somebody had to be held accountable for the loss of these valuable lives. The official stand has been that when the Cabinet had given its concurrence to repeal the earlier legislation, where was the need for any discussion. It has also been stated that no compensation is to be given to the families of those who died and there was no record of these deaths. The issue has resulted in a deadlock and both inside Parliament and outside, many do not subscribe to the government’s stand.
The entire subject has been clumsily handled and therefore it is contributing to continuous social unrest in some states. The presiding officer of the Rajya Sabha has maintained that the suspension of 12 MPs would be revoked if they express regret which they are unwilling to. Questions are also being raised why no action was taken against Congress member Pratap Singh Bajwa, who was also seen in video clips standing on the table and hurling papers at the Chair. Was Bajwa ignored because there are elections in Punjab? There is also a technical aspect of the suspensions which were recommended by a committee set up by the House. Therefore, the action can only be rescinded by the House and not the presiding officer. There have been instances in the past when suspension or expulsion has taken place even though, Parliament is not normally the place where punishment can be handed out and it is done only in exceptional cases. During Atal Behari Vajpayee’s tenure, Sonia Gandhi was suspended following a Privilege issue and her suspension was revoked with retrospective effect when the UPA came to power. In the Janata Party era in the late 1970s, Indira Gandhi was expelled from the Lok Sabha soon after getting elected from Chickmaglur in a by-election defeating Veerendra Patil. She was charged with having scant regard for the constitution and suppressing democracy during the emergency. The latest matter needs to be resolved as early as possible since there is very little time left in this session, and if things continue the way they are, it is democracy that would bear the brunt.
GDP growth: Making of a V-shaped recovery
Recent economic indicators show that India has recovered completely from the Covid induced jolt, and this speaks volumes about Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative, that has withstood the ravages of the pandemic, without buckling in.
India’s economy continued to expand in the July-September 2021 quarter, marking the fourth consecutive quarter of growth. India’s GDP grew 8.4%, year on year (YoY) in September quarter, against a contraction of 7.4% during the same period last year. Effectively speaking, GDP at Constant (2011-12) Prices in Q2 of 2021-22 (2QFY22) is estimated at Rs 35.73 lakh crore, as against Rs 32.97 lakh crore in Q2 of 2020-21 (2QFY21) and Rs 32.38 lakh crore in the previous quarter (1QFY22). 2QFY22 real GDP growth at 8.4% was in fact, slightly ahead of consensus expectations. The higher growth among other things can be attributed to nine consecutive quarters of over 3% agriculture growth, which has had a multiplier effect on consumer spending.
A large part of the growth upside was also driven by spending on public administration, education, health, etc. Overall, the sharp turnaround from the COVID second wave was visible across all segments, making the growth broad based in the September quarter. Investment growth remained strong even when compared to 2QFY20 (pre-Covid) levels. Growth will be well supported in 3QFY22 too, on account of festive season and better performance from the Services’ sector. Momentum remains well on track for a full year GDP growth of 9.5% in 2021-22 (FY22), which is what RBI and global rating giant, S&P are projecting too.
With a new COVID variant (Omicron),starting to spread globally, uncertainty on its impact on the global economic scenario may weigh upon things a tad bit, but on the flip side this would essentially imply that rate increases globally, and will be more calibrated and not happen any time soon, assuming they happen at all to start with. No Central Bank would want to nip the greenshoots that have taken root,by raising interest rates wantonly at this stage, despite the temptations, given that headline inflation and bond yields globally have been on the rise of late. India, in fact, has done far better than global peers on the inflation front. Annualised inflation in the UK is 5 6% and 6.2% in the U.S.A— with inflation in USA the highest ever since 1990. In India, retail inflation in October 2021 was 4.48% and food inflation 0.85%,after a reading of 4.35% and 0.68% respectively, in September 2021. While the RBI would continue with an accomodative stance, it will possibly wait for some more clarity before moving decisively on rates, though a reverse repo rate hike in February 2022 cannot be completely ruled out. RBI’s excellent job in reining in bond yields at around the 6.35% levels and thereby keeping a lid on government’s borrowing costs needs a special mention. In USA, yields have gyrated wildly from a low of less than 0.5% in 2020,to a high of over 1.74% in 2021.
The Q2 GDP growth data at a healthy 8.4% apart, the nominal GDP in September quarter stood at 17.5%. While worldwide, the US is possibly into the 6th Covid wave as per experts, and Europe in last few weeks has also seen a big surge in COVID numbers. India, on the other hand, has done a commendable job on this front, with over 125 crore vaccines administered. Both daily and weekly positivity rates are less than 1% and over 64 crore COVID tests have been conducted already. Multiple levers in the economy like Infra spend, low-interest rates, rising demand in the real estate sector and growing consumer demand are going to aid the GDP growth in the coming quarters. From the GVA perspective, farm, construction and public administration & defense services (PADS) grew faster than expected. The sharp increase of 17.4% in PADS was a big surprise in the 2QFY22 numbers. Farm economy continues to display remarkable consistency, with agri growth of 4.5% in September 2021 quarter, after an equally strong 4.5% growth in the June 2021 quarter too. Importantly, the broad story remains intact. While capacity utilization levels have improved, private investment is also on the mend, as corporates and banks are gradually shedding risk aversion, despite some nagging headwinds. High commodity prices and global supply bottlenecks posed a challenge for the Manufacturing sector worldwide. Tax collections aid government finances and it is here that the Modi government has seen big support from buoyant tax realisations. Fiscal deficit was contained at 36.3% of budget estimate (BE) in first half of this financial year, even while expenditure picked up. The multi-year low, fiscal deficit ratio can be attributed to robust revenue growth, outpacing expenditure rise, during first half of the fiscal. Capital expenditure at 45.7% of the target,also showed encouraging trend in line with the government’s focus on asset creation.
The economic activity in Q2 FY22 received favorable support from recovery in Manufacturing and Construction. The gradual removal of lockdown, good monsoon year and the rapid pace of vaccinations helped boost consumer confidence. The risk arising due to the Omicron variant are unlikely to be an obstacle to growth, going forward. Continued low interest and easy liquidity policy will help sustain the tempo.
Mining, Construction and Real Estate showed considerable growth in 2QFY22,at 15.4%, 7.5% and 7.8% respectively. A good monsoon year reflected well with high agricultural output. Private consumption is likely to pick up traction, as we complete normalization. The private capex will likely catch up with government spending and aid growth even further. Gross fixed capital formation (GFCF) grew by a solid 11% in 2QFY22, after a massive 55.3% growth in 1QFY22. The data will have a positive bearing on the RBI’s MPC meeting next week. The low interest, excess liquidity policy has been paying good dividends, across most major economies. Going forward, the way countries across the globe handle rising inflation and movement of crude oil prices, will have an impact on the growth rate across the globe. India— with a bumper crop, with food production in excess of 303 million tonnes in FY2021, the highest food output ever in the last seven decades— enjoys some inherent natural advantages which most large economies don’t.
During the July-September 2021 quarter, Trade, Hotels, Transport, Communication & Services related to Broadcasting sector,grew at 8.2%.Public Administration, Defence & Other Services grew at 17.4% during the July-September quarter, against 5.8% during the previous quarter. Government Final Consumption Expenditure (GFCE) came in at Rs 3.61 lakh crore in the second quarter of the fiscal year (2QFY22), against Rs 4.21 lakh crore in the previous quarter. GDP at current prices grew 17.5%.GDP at Current Prices in Q2 2021-22 is estimated at Rs 55.54 lakh crore, as against Rs 47.26 lakh crore in Q2 2020-21, showing a growth of 17.5%, as compared to 4.4% contraction in Q2 2020-21 (2QFY21). Private final consumption expenditure grew to Rs 19.48 lakh crore in the July-September 2021 quarter, up from Rs 17.83 lakh crore in the previous quarter. Manufacturing sector grew by 5.5% in the September quarter while the Construction sector grew by 7.5%. Both the sectors posted a healthy growth, which bodes well for the economic trajectory going forward.
India’s GDP at Constant (2011-12) Prices in Q2 2021-22 (2QFY22) is estimated at Rs 35.73 lakh crore, which is higher than the Rs 35.66 lakh crore seen in the first quarter of 2019-20 (1QFY20), signalling that India has recovered completely from the COVID induced jolt, which speaks volumes about Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative,that has withstood the ravages of the pandemic,without buckling in.
A robust Construction sector, recovery in Contact-intensive services and pickup in government spending are supporting the Services’ sector, adding to the overall momentum. India’s Eight Core Sector data recorded 7.5% growth during the month of October 2021. Eight Core Sector data came in at 15.1% during the April-October period, which is again a good news.
After lagging the recovery during the initial phases, Q2 of this fiscal year, saw Services’ activity playing catch up. Relative control over new infections and a phenomenal increase in vaccination drive, helped improve Services’ activity. Indeed, while few supply shortages weighed on Manufacturing, the Services’ recovery scaled greater heights. Consumer and business optimism are improving sharply, leading to an uptick in job creation across sectors. Revenue Receipts up to October 2021 stand at 12.59 lakh crore against the budget estimate (BE) of Rs 17.88 lakh crore,which is 70.5% of BE. The fiscal Deficit for the April-October period stands at 36.3% of the budget estimate of Rs 15.07 lakh crore. Fiscal deficit during the same period last year stood at 119% of the budget estimates.
The gross value added (GVA) in Q2FY22 has grown by 8.5%, as compared to a decline of 7.3% in the same quarter last year. In Q1 of FY22, the GVA had sharply surged by 18.8%.
Private Final Consumption Expenditure (PFCE) in the July-September 2021 quarter rose by 8.61%,year on year,after a solid rise of 19.35% Q1FY22. The gap between GDP and GVA was driven by higher tax revenue collection and lower subsidy pay-outs.
The sharp 10.1% growth in Services, in 2QFY22, the biggest sector in India’s economy, is reflective of overall momentum.
In fact, Services’ PMI accelerated to a 10.5 year high in October 2021. This came about even as local companies increased prices of their final products due to costly raw materials, driven by rising input and commodity prices globally. Interestingly, unlike their Manufacturing counterparts, Services’ companies hired more hands, resulting in job generation reaching the highest level after the pre-Covid period of February 2020.
Services’ PMI index rose to 58.4 in October 2021,from 55.2 in September 2021, which clearly signals that the third quarter of the current fiscal year of 2021-22,may witness even higher GDP growth. PMI numbers, both for Manufacturing and Services, for October 2021,endorse the fast-paced,V shaped economic recovery that is underway.
GST collections of over Rs 1.3 lakh crore each, in October and November,bode well. In fact,the GST revenue in November 2021 is the 2nd highest monthly collection,ever since GST came into effect in July 2017.
According to respondents of the PMI Services’ survey, ongoing improvements in demand boosted growth in sales and subsequently in output. New work intakes increased at an accelerated rate, the strongest since July 2011.Companies linked sales growth to better underlying demand and successful marketing. Firms were able to secure a healthy intake of new work, despite charging more for their services. Output prices rose at a solid rate, again, the strongest since July 2017. Anecdotal evidence suggests that additional cost burdens were passed on to clients, reflecting the fact that purchasing power is back. Composite PMI reading in October 2021 came in at 58.7, the highest since January 2012, compared to 55.3 in September 2021.
Data by the Controller General of Accounts showed that the Central government spent 52.4% of its total expenditure target by October 2021, against 54.6% during the same period a year ago. However, the government exhausted only 36.3% of the year’s fiscal deficit target due to robust growth in revenue receipts. In effect, the Modi government has managed the growth versus inflation conundrum very effectively, without indulging in unwanted fiscal profligacy. The Dun & Bradstreet, Composite, Business Optimism Index (BOI) for ongoing quarter, stands at 94.6, up 27.4% compared to the September quarter. Data shows five out of six Optimism indices have registered an increase in ongoing quarter, as compared to September quarter. Arun Singh, Global Chief Economist at Dun & Bradstreet says, the GDP growth during the October-December quarter of 2021 (3QFY22) is likely to be much stronger, as the BOI has surged to an almost eight-year high.
The survey shows that around 79% of the respondents expect the volume of sales to increase in the December 2021 quarter, compared to 67%,in the quarter before. 62% of the respondents expect an increase in net profits in December 2021 quarter, compared to 48% in the September 2021 quarter. In fact, the business optimism levels in the ongoing quarter are at their highest ever levels since second quarter of 2014, as per Dun & Bradstreet, based on vital parameters like rate of hiring of new employees, output prices, and inventory levels. Clearly, if the 20.1% GDP growth in the June 2021 quarter was the harbinger of renewed economic momentum, the continued traction across all sectors and user segments in the September quarter cements the belief that the making of a V-shaped recovery in India, is now a full-blown one, for more reasons than one. The mega vaccination drive under the astute leadership of Prime Minister Modi, has been one of the key drivers of this “feel good” factor, that is now translating into hard numbers.
The writer is an Economist, National Spokesperson of the BJP and the Bestselling Author of ‘Truth & Dare-The Modi Dynamic’. Views expressed are the writer’s personal.
ANDHRA’S FINANCIAL STATUS QUO IS RINGING DANGER BELLS
Nowadays, the State of Andhra Pradesh has become a peculiar State, performing outside the purview of the accounting practices and even it adheres the Constitutional violations by diverting VAT on Liquor to Government incorporated Corporation instead of transfer to the Consolidated Fund by a special GO for raising additional Loans outside the FRBM limits— it is nothing but a mere window dressing of accounting practices and systems as a bad precedent for future of the country and most particularly the state itself. After careful examination of Financial Statements for the second quarter of the current financial year 2021-22, several key indicators of Andhra Pradesh financial adversity have been exposed with danger bells.
Estimated revenue collections and revenue expenditure in the budget and actuals thereof is very much vital in any Government since revenue surplus or deficit plays the crucial role for serving the capital expenditure for the future revenue-generating assets for the country or state; then it serves the interest on debts which impacts primary deficit and thereafter very much important component Fiscal Deficit arrives out of the impact of the all together above. Hence, Revenue Deficit is the root cause of all the other liking heads in the FINANCIAL Statements. Generally, revenue surplus for any State indicates a positive performance, and at least those states, which minimize the gap between revenue collections and revenue expenditure to register the shorter revenue deficit are also reasonably good.
As far as Andhra Pradesh is concerned, first indicator, Total Revenue Collections, estimated in the Budget for the Financial Year 2021-22 was Rs. 1,77,196.48 Crores and Estimated Total Revenue Expenditure was 1,82,196.54 Crores, Hence Estimated Revenue Deficit for the whole year was Rs. 5000.06 Crores. Total Revenues had registered for Rs. 64,871.99 Crores by September where the whole year estimated revenue was, it means, only 36.61% of the current financial year total revenue achieved after the lapse of 50% period in the year. But, the actual revenue deficit for the first two quarters of the current financial year has registered as Rs. 39,933.22 Crores, which means nearly 800% of the actual revenue deficit has emerged in the first six months itself when compared with the whole financial year’s revenue deficit. In these circumstances, we can predict that how worse the situation of Andhra Pradesh in the next 6 months.
Second indicator i.e the Capital Expenditure Targets are concerned, Andhra Pradesh had not achieved the target of 45% of the total Capital Expenditure estimated in the Budget for the financial year 2021-22 of Rs. 31,119.38 Crores in the second quarter of the current financial year to avail the additional loan as an incentive allowed by the Union Government based on the performance of creating future revenue-generating assets by incurring the targeted Capital Expenditure. Although, first-quarter target to incurring 15% of the Capital expenditure was achieved, it had not attained in the second quarter due to the lenient approach of the State Government in the exercise of Financial factors.
Apart from this, the State government had utilized the insurance premium, which was paid by the Women in the Self Help Groups for Rs. 2,100 Crores and LIC had openly declared in the newspaper advertisement that they were withdrawing the Agreement with Andhra Pradesh Government to pay future obligations to the beneficiaries since the State Government of Andhra Pradesh violated the terms and conditions and declared that the future obligations will be cleared by the nodal agency of the State Government Department SERP. Further, Recently the State government of Andhra Pradesh had incorporated Andhra Pradesh State Financial Services Corporation as an NBFC. Unfortunately, the State government had issued a direction to divert their bank deposits from every State Government Corporations, Departments, Boards etc., which are maintained in the Scheduled Banks to AP Financial Services Corporation forcibly— it causes the damage of independence of the respective Corporations, Departments, Boards as those funds have been diverting for unproductive expenditure which may hurt the actual system of the activity. And many experts have been questioned that Whether AP Financial Services Corporation is the reserve bank of Andhra Pradesh. There is an agitation of NTR Health University employees is going on against to transfer of Rs. 400 Crores of University-Corpus fund to the AP Financial Services Corporation from the Scheduled Bank. Ironically, State Government is expressing that Deposits in the Scheduled Banks are unsafe, whereas the people of Andhra Pradesh are in a feeling that the present approach of the State Government is not safe.
The financial destructive methods implemented by the State under the leadership of YS Jagan Mohan Reddy had cautioned by the CAG in their Report. The series of illegitimate and unconstitutional practices since the inception of YSRCP led State Government leads to Economic Nuclear explosion now. The State needs to repay 1.10 lack crores in the next seven years but the condition of the State is: it requires to raise debts even to repay the interest. As per the past expectation, the Revenue Deficit of the State should have reached zero by 2021, but the actual Revenue Deficit was registered for Rs. 36,000 Crores due to huge unproductive expenditure had been incurred. Further, the State Government was eligible to provide a guarantee on loans for Rs. 5,600 Crores only, But the same has crossed for Rs. 1.00 lack crores and the Government is trying to give guarantee for additional 1.00 lack crores where the gap in State Government Guarantees is eligible up to 90% as per norms, but State government has amended it up to 180%.
At present financial precarious condition has been emerged as Total Revenues and Debts are not serving the Budgetary Allocations other than the unproductive and illegitimate expenditure with corrupt practices. On the one hand, Total Debts had been registered for Rs. 39,914 18 by September where the whole year estimated debt was 37,029.79 Crores, it means more than 100% estimated debts for the financial year 2021-22 had crossed in the first two quarters itself without future revenue-generating productive assets through Capital expenditure and on the other hand, We can notice the Unconstitutional methods in the financial practices harm the state Brand Image, such as recent Order by the State Government to transfer the VAT on Liquor revenue to Beverage Corporation to raise debts. After analyzing the facts in the September month CAG report, danger bells of the AP State Financial Health have been ringing in all parameters and it needs remedial measures with immediate effect to put the things in order, otherwise, future financial damage to the state is unimaginable.
Controlling, addictive AI needs immediate attention
At the core of the concerns are the nature and design of algorithms that influence our choices. Online consumption, for instance, is not a free choice. Algorithms prod, poke and drive the consumer into a narrow set of choices which they may not have selected otherwise.
Can we govern the ungovernable? Should we even try to contain the advance of algorithms? These difficult questions don’t have a simple answer. However, what is clear is that the world needs a strong governance structure to shape the impact of algorithms and AI on our lives.
At the core of the concerns are the nature and design of algorithms that influence our choices. Online consumptions for instance is not a free choice. Algorithms prod, poke and drive the consumer into a narrow set of choices which they may not have selected otherwise.
“It is important to have ways to oversee the operations of these systems to ensure they are helping, not harming, humanity. The flurry of governance frameworks over the past two years has been crucial in helping leaders to better understand the issues surrounding AI, including potential for fairness and discrimination, disparate impact, and the associated issues of transparency and accountability,” says a recent report by World Economic Forum (WEF). “But much more innovation in the realm of AI governance is needed if we are to keep pace with both the advancement and application of AI-based systems,” says the report titled The AI Governance Journey published in November.
Until recently unfair market practice in the retail sector largely revolved around predatory pricing. In some cases, it involved using market muscle to prevent rivals from expanding their consumer base.
Today, unfair market practices are often baked into the business model using tech-based platforms of e-commerce companies. Anti-trust authorities in most free-market economies including India are trying to peek under the hood of the engines that run e-commerce sales.
Parts of the unfair play in digital markets are easier to see. Some e-commerce companies own a big chunk of a seller and therefore find it in their interest to promote that particular seller.
Other parts of unfair trade practice involve using algorithms that allow collusion between seemingly independent companies or manage reactive pricing which can hurt smaller sellers. The e-commerce may say that algorithms don’t choose for the consumer; consumers choose for themselves. However, the facts say otherwise.
The question now is not whether consumers choose or not. The question is what is their choice? Are the options available to the consumers open and fair? More importantly, do the sellers have equal access to the consumers in the market. Today this paradigm is often decided by the software robots who run the digital markets.
“It will be important to monitor developments in the application of machine learning and Artificial Intelligence to ensure they do not lead to anti-competitive behavior or consumer detriment, particularly in relation to vulnerable consumers,” says the Competition and Markets Authority (CMA) of the UK. There are examples where an e-commerce site has shown different prices to different customers depending on their location. A CMA paper notes, “It has been alleged that Staples’ website displayed different prices to people, depending on how close they were to a rival brick-and-mortar store belonging to OfficeMax or Office Depot.” Similar investigations are required in India and other emerging economies to ensure that algorithm-triggered personalized pricing does not become harmful.
Another type of antitrust activity takes place when online rivals decide to use the same pricing algorithm to align the prices of different products. When questioned by regulators or anti-trust authorities, e-commerce companies like to say that the decision taken by an algorithm is not their responsibility. However, authorities including the Competition Commission of India are challenging this.
At their root, anti-trust or anti-monopoly laws aim to ensure that consumers and sellers have the freedom to choose and compete on fair terms. A few sellers should not be allowed to dominate any market to the extent that other sellers are destroyed and therefore consumer choice is undermined.
Most regulators struggle to find proof of such activity as the level of sophistication is increasing constantly. Some are already unleashing their own algorithms to track and understand the pricing software of e-commerce companies. While companies collude on pricing, governments are collaborating on curbing online malpractices. The legal liability of an algorithmic decision will be interpreted as the legal liability of an entity of an individual. Anti-trust activities of algorithms should not go unchallenged in any economy.
Similar governance rules are needed for the algorithms used by social media giants. Privacy and data protection are often the key issues when debating the regulation around social media giants. However, an important dimension that needs more attention is the algorithms that decide, define, and drive online user behavior.
Even as various countries across the world battle social media giants for lack of transparency and accountability, some governments have begun to question the algorithms too.
The US Senate Judiciary Committee recently held hearings on “Algorithms and Amplification: How Social Media Platforms’ Design Choices Shape our Discourse and Our Minds.”
Like many countries, the US is concerned about the algorithms which are designed to addict. “… This advanced technology is harnessed into algorithms designed to attract our time and attention on social media, and the results can be harmful to our kids’ attention spans, to the quality of our public discourse, to our public health, and even to our democracy itself,” said Sen. Chris Coons (D-DE), chair of the Senate Judiciary’s subcommittee on privacy and tech
In the same way that India has the social media intermediary rules and laws, US has the Section 230 of the Communications Decency Act which offers some immunity for website platforms from third-party content.
The Senate hearings could lead to amendments in Section 230. Another Senator at the hearing said that the business model of “these companies is addiction.”
A legislation called ‘Don’t Push My Buttons Act’ has been introduced in the Senate with Tulsi Gabbard as the bill’s lead co-sponsor. The law would require that platforms with more than 10 million users should get user permissions before offering them content based on past behavior.
Basically, this means that companies can’t access our behavior and drive us further into similar content. This behavior is believed to be particularly harmful during Brexit conversations. Rather than allowing people to explore and stumble upon new content and alternate views on a subject, the algorithms drove users into more of the same. Effectively, it created online echo chambers and prevented people from absorbing other ideas.
The same principle can apply to consumer products or services. Algorithms can drive consumers to certain brands, categories while reducing choice and therefore hurting competition.
The laws will seek changes in Section 230 and remove the protection offered to the giants if they persist with addictive algorithms. Companies including Facebook, Google, and Twitter have testified at the Senate hearings on addictive algorithms.
While the hearings are focused on US citizens, governments in other countries should also be alert about the consequence of addictive algorithms. As the government of India is establishing the rules of play for social media giants, it will be important to scrutinize and question addictive algorithms. With an addressable market of over a billion users, the tech giants will invest a lot of resources to increase their users. The variety of languages and users in the country lend themselves to using algorithms that use personal data for greater effect.
India has to put in place legislation and rules which seek more clarity and transparency from technology companies. Domestic and global companies that use consumer behavior data to enhance addictive behavior must be scrutinized and controlled.
Currently, the intermediary guidelines focus mostly on content management and grievance redressal. However, the underlying software engines that influence online consumer behavior need oversight too.
The WEF report has made some suggestions for the future. The world needs, “Standards providing a framework for responsible AI. Standards for measuring bias, fairness and related technical details – Processes and tools for assessing AI systems.” The regulation of algorithms that define AI and thus our choices will have to be made at several levels. From Multilateral to national to local, depending on the sector, geography, and usage.
The writer is the author of ‘India Automated: How the Fourth Industrial Revolution is Transforming India’. Views expressed are the writer’s personal.
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