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The Hindu Analysis Free PDF Download

Date: 25 December 2019

  • Gloss over Is govt. right in denying NPR-NRC link?
  • Here is a fact-check on official claims about population and citizenship registers

 Claim: NPR is not the basis of NRC

  • Facts: NPR is indeed the basis for NRC or NRIC, as Section 14A of the Citizenship Act empowers the government to compulsorily register every citizen of India and issue an identity card and to maintain a ‘National Register of Indian Citizens’.
  • The citizenship register is generated out of the NPR database
  • The Citizenship (Registration of Citizens and Issue of National Identity Card) Rules, 2003, introduced the term ‘Population Register’ and said particulars collected in the population register shall be verified and scrutinized for the purpose of preparation and inclusion in the citizenship register. In other words, without NPR there can be no NRIC.

NPR will not be followed by NRC

  • It is possible for the government not to establish a citizenship register.
  • The earlier NPR exercise done during UPA regime did not result in the creation of a citizenship database.
  • The Act says the government MAY maintain a national register of Indian citizens. It is possible to argue that preparing a citizenship register out of NPR data is not mandatory.
  • However, the 2003 Rules mandate the Registrar General of India, who is also the Registrar General of Citizenship Registration, SHALL establish and maintain the national citizenship register.
  • The Centre is also mandated by the rules to carry out a house-to-house enumeration and collection of particulars related to every individual and family, including citizenship status.

No proof of details or biometrics will be collected during NPR

  • In the initial phase, details may be accepted based on self-declaration.
  • However, if a citizenship register is to be generated, scrutiny of documentary proof may become necessary. Biometrics were collected during the last NPR for some, and biometrics collected for Aadhaar were used for others.
  • As Aadhaar coverage saturation is close to 98%, it is possible to dispense with collection of biometrics during NPR for most residents NPR is being updated for efficient delivery of welfare and social benefits under government schemes
  • This was the original objective of NPR, but with Aadhaar being introduced and backed by an Act, which mandates linking of subsidies and welfare schemes to possessing an Aadhaar number, it may not be correct to argue that NPR is needed for efficient delivery of benefits any more.

Double trouble

Uneven inflation and sluggish growth present serious dilemmas for policymakers

  • Policymakers face a tricky dilemma as prices in the economy continue to rise even as economic growth has plummeted to well under 5%. Food inflation, now in double-digits, has caused significant pain. The International Monetary Fund on Monday called for “urgent” policy measures to reverse the current slowdown that has weighed down global economic growth. The warning is timely given the economy’s precarious state and the government’s lack of urgency to reverse the slowdown. However, what makes the job of policymakers a lot more complicated is the non-uniform nature of the current price rise. Even as food prices have risen rapidly — food inflation has crossed the 10% mark for the first time in many years — sectors such as manufacturing have witnessed mild deflation as demand for products drops.
  • The Reserve Bank of India (RBI) Governor, while terming the recent spike in inflation as a transient phenomenon, has called for countercyclical measures and structural reforms to help the economy. The central bank’s hands have been tied down by the recent spike in inflation, and it has halted its rate cut spree that began in February this year. However, voices continue to grow demanding that the RBI and the government ignore the rise in food inflation and try to infuse more liquidity to boost demand. After all, the rise in food prices may just be an anomaly amid widespread low inflation in the rest of the economy.
  • Still, what is really behind the wide divergence in inflation rates across various sectors is anyone’s guess. It may well be that the current food price inflation is the result of seasonal factors that have affected crop production. If so, it should certainly be a transient phenomenon that will not trouble policymakers for anything beyond a few quarters.
  • At the same time, it should be noted that various prices in the economy generally do not rise or fall in tandem. Policymakers, however, tend to view the economy as an entity with a general price level that responds in predictable ways to their policy actions. Such an assumption is likely to cause practical difficulties in implementing policy. Moreover, in an economy like India’s that has just witnessed a debt-fuelled boom followed by a sharp bust in growth rates, it is natural to expect the prices of various goods to adjust in accordance with underlying consumer desires to varying degrees. Perfectly calibrating monetary and fiscal measures in such a situation amid confusing signals sent out by various inflation numbers can be a tough ask. But there are always supply-side reforms that the government can consider to both rein in inflation and reverse the economic slowdown.

Structural or cyclical

  • Analysts debate whether the slowdown is structural or cyclical. Does the difference matter? Yes, to some extent. If it is cyclical, the expectation is that there is a chance for upturn soon. If it is purely structural, it will take time until the structural rigidities are removed. Normally, the slowdown is cyclical if it results from a weakening of demand. There is plenty of evidence on this as far as the current situation is considered.
  • Several important sectors such as automobiles, consumer durables and housing (on which data are available with high frequency) do show a slackening of demand. This is also reflected in the low capacity utilization of several industries.
  • On the structural side while the reform agenda has been carried forward, there are segments such as agricultural marketing, land and labour markets which are still waiting for reforms.
  • One sector which needs immediate reforms is the financial system — more particularly the banking system and within it the public sector segment. Even as the policy makers address the problem of non-performing assets, attention has to be paid to defining the relationship between governments and boards of public sector banks and on their respective roles in management.
  • Whether we call it a structural problem or not, one significant factor in the current scene is the steep fall in investment rate (gross fixed capital formation rate) from 34.3% in 2011-12 to 27.8% in the second quarter of 2019-20. This results in a sharp decline in the potential rate of growth by 1.6 percentage points, assuming an incremental capital-output ratio of 4.

Channels of demand

  • When we address the issue of demand, we need to look at the four-five expenditure categories of national income accounts: private final consumption expenditure, government final consumption expenditure, gross fixed capital formation private and public, and exports. Data definitely show a weakening of private consumption expenditure. But in our efforts to raise demand, it is not autonomous. It is dependent on income.
  • Therefore, the three autonomous elements that can be used as levers to raise demand are government consumption expenditure, government investment and exports. Private investment can be treated as autonomous only to a limited extent. However, private foreign investment can be an independent factor which can be leveraged.
  • Exports can help to stimulate the economy since exports are influenced by the state of the economy in the rest of the world. Unfortunately, in the current situation, the rest of the world is also not booming. However, an effort can still be made to get a better export performance. This leaves us only with raising government expenditure. This is indeed the standard prescription whenever there is deficient demand.
  • However in the present context, the emphasis should be to ensure that the entire increase in government expenditure is diverted towards capital expenditure. The old dictum of “digging holes and filling them up again” will not do. But the critical question is this: is there is any scope for increasing expenditure? What then are the actions that can be taken to stimulate the economy?

Monetary policy

  • Monetary policy has done its role by reducing the Repo rate by 135 percentage points since February 2019 to date. Banks have not followed suit fully due to the high level of nonperforming assets.
  • While the Reserve Bank of India (RBI) can play a supportive role in expanding liquidity, we must understand the limitations.
  • Monetary policy generally is more effective in controlling inflation than stimulating an economy.
  • In the present context of the banking situation, the RBI’s role that is even more important than pure monetary policy will be to quicken the resolution process of bad loans and help banks to move to a more healthy situation. The task is not that easy.

Fiscal policy

  • The counter-cyclical fiscal policy is also running into problems. Given the revenue trend, the Central Government may not find it easy to increase its capital expenditures relative to GDP.
  • In this context, one critical question that is under debate is whether the present situation warrants a breach in fiscal deficit norms. It may be recalled that against the background of the international financial crisis of 2008, the fiscal deficit of the Government of India was raised to 6.0% in 2008-09 and it went up to 6.5% in 2009-10.
  • While this extraordinary increase led to the growth rate rising immediately, it landed us in problems later on. However, a modest breach in fiscal deficit may be acceptable. This is not to ignore the concern that the fiscal deficit indicated by the Budget is always lower than the “true” or “actual” fiscal deficit. That problem might still continue.
  • A focused increase in capital expenditures of the Government and the Central public sector undertakings (PSUs) may help to apply the brakes on the slowdown. It might also help to “crowd in” private investment.
  • Reform of the Goods and Services Tax (GST) is very much needed. We need a relook at the commodities falling under various slabs. Perhaps in an effort to get the GST through, a lot more of commodities were pushed under the lower slabs. Detailed data on GST collections are not available in the public domain to be able to take a view on this. Reforms in this direction may perhaps have to wait till the economy turns around. The GST has to become more manufacturer and trader friendly.
  • Banking situation
  • The present economic situation, in a sense, has become more complicated because of the poor health of the financial system. An excessive expansion of credit in the earlier years combined with the slowdown have contributed to a rise in non-performing loans in the banking system.
  • Had the banking system been healthy, it could have been used as a lever for stimulating the economy. On the other hand, the banking system, currently, has become a burden. Quickening of the resolution process along with the recapitalization of public sector banks has to take priority. The cleansing of the financial system which also includes finding solutions to the problems of non-banking financial companies will help to push the economy up. In a sense, this is our “2008-09 crisis”.
  • It is not much solace to say that 2020 will be better than 2019. The reasonably good monsoon may lead to an improvement in agricultural production and rural demand. Exports can help a bit if there is strong effort and if the global trade environment improves. Increased government expenditure, particularly in capital expenditures, is one intervention which is very much needed. Private investment can pick up provided the growth rate begins to look up. Restoring financial institutions — banking and non-banking — to a healthy state when they can begin to lend confidently is the most essential prerequisite for faster growth.
  • For the historian of science and technology, the Narendra Modi government’s ambitious push for electric vehicles (EVs) should ring a bell. After many decades, India is witnessing once again the unseemly fraternization of high technology and authoritarian governance. On the one hand, the government has championed EV, Artificial Intelligence (AI), and packaged sundry technologies into neat acronyms. On the other, it has clipped Internet access to towns and villages when confronted with non-violent protests against the Citizenship (Amendment) Act, 2019.
  • In India’s case, history is merely repeating itself. In 1976, as India sank deep into the recesses of the Emergency, a group of bureaucrats and scientists sat down to ponder the future of technology in the country. The irony of analyzing technologies that would unshackle the Indian economy, when basic rights of its citizenry were suppressed, was lost on the establishment.
  • In fact, while the Indira Gandhi government built a surveillance state, Silicon Valley saw the birth of “public key cryptography”, used in modern-day encryption. India, it seemed, had regressed into the darkest chapter of its political history, just as the world began to use technology to preserve human rights.
  • Batting for electric vehicles
  • This dissonance did not seem to bother the high-profile group that had been brought together by the National Committee on Science and Technology (NCST). Its mandate: “study the outlook for India in 2000 A.D”. The group, set up in 1973, took seven years to submit their report, publishing an interim document during the Emergency. The Indian government’s commissioning a “futures study” was in step with the times.
  • “Futurology” — the use of computer models for forecasting scenarios — became fashionable after the Club of Rome, a group of economists and planners, published its famous “Limits to Growth” report in 1972. The report painted a doomsday scenario of acute food and water scarcity in 2000. Unsurprisingly, this period also witnessed the “new wave” of science fiction, set in dystopic lands and featuring post-apocalyptic visions. Another kind of dystopia was unfolding in India’s present — while the civil liberties of Indians were cast aside, the government was busy discussing EVs and self-driving cars.
  • It may seem straight out of the pages of a sci-fi novel, but the first official assessment of EVs in India was likely published during the Emergency. The Committee on Futurology, as it was known, analyzed long-term projections for many sectors, including transportation.
  • This sector’s problems were two-fold. To begin with, there were just not enough vehicles for the larger public in India. Three decades after Independence, India had only 1,00,000 buses on its roads. (In other words, there was one bus for every 6,500 Indians). However, the number of cars and jeeps totalled nearly 750,000. In a still-impoverished country, the wealthy and powerful elite enjoyed vastly better mobility than the majority of the population.

The shadow of the oil crisis

  • Rising fuel prices presented the second problem. The NCST deliberated in the shadow of the oil crisis of 1973, brought on by a crude embargo imposed by the Organization of the Petroleum Exporting Countries (OPEC). Faced with the problem of scarcity and costs, the committee argued India was better served in the long run by developing renewable alternatives to petrol.
  • Almost concurrently, western laboratories had begun exploring the development of lithium-ion batteries, critical to EVs. The work of John B. Goodenough, Akira Yoshino and M. Stanley Whittingham — who were jointly awarded the 2019 Nobel Prize in Chemistry for the development of these batteries — was catalyzed by the oil crisis of the 1970s.
  • The NCST appears to have been mindful of such efforts: “it is imperative that some concentrated R&D is performed in the area of high energy-high power batteries”, it declared. The Committee even predicted EVs and self-driving cars - “adaptive, automobile autopilots”, as the report termed it — would be commercially available from the early 1980s.

Much politicking

  • Is it surprising the Indian government conjured up visions of technological advancement, while suppressing democracy? Hardly. Several autocratic regimes have tread down the same path, using technology as a totem to rally disaffected populations. But while the NCST made grand claims about the future, the government was actually clamping down on technology in the present. Indira Gandhi’s government, under pressure from labour unions, viewed computers with suspicion, and discouraged PSUs from adopting them. The Futurology Committee’s view too was jaundiced by the Emergency. Not all technologies were “neutral” and useful to society, the committee declared, citing the TV as an example. Meanwhile, Doordarshan had become an instrument of state propaganda.
  • Faced with a financial crunch, the government also championed “appropriate technologies” that were small-scale — solar cookers and mechanized bullock carts — but did little to boost productivity. The left hand did not know what the right was doing: some sections of the government were trumpeting the arrival of self-driving cars, while others told the public to be wary of computers. • Despite this politicking over technology, Indians were, in fact, beginning to embrace machines. As C.R. Subramanian has noted, the import of computers tripled during the Emergency. The number of automobiles plying on Indian roads in the 1980s increased by a staggering 400% over the previous decade. The seeding of doubt against big technology by the government in the minds of citizens did little to improve prospects for scientific breakthroughs. If only Indians had the political agency to form their own views of technology, India may well have had a shot at developing EVs.
  • It is a lesson today’s government too should learn: one cannot aspire to a ‘Digital India’ if technologies are wantonly used for mass surveillance, or cut off altogether when faced with non-violent, democratic protests.

 Influx of refugees

  • From the time Tamil Nadu began witnessing an influx of refugees from August 1983 following Black July in Sri Lanka, the Indian government has maintained that these refugees should go back on their own. In other words, India has been following the principle of nonrefoulement and favouring voluntary repatriation.
  • In October 1983, Prime Minister Indira Gandhi publicly asserted that the country “cannot and will not take millions of Tamil refugees from Sri Lanka”. While making this observation, perhaps she had in mind the problems posed by the migration of refugees from Bangladesh (East Pakistan) to India in the early 1970s.
  • But despite her statement, India received thousands of refugees from Sri Lanka over the years. At one point, Tamil Nadu had 2 lakh refugees. Between 1983 and 2013, around 3.04 lakh persons came to the State. At the moment, there are 59,714 refugees living in 107 camps and 34,355 persons outside the camps. Since the end of the civil war in May 2009, nearly 14,000 refugees have returned home.
  • In May 1984, responding to a point raised by MP Jayalalithaa during a debate in the Rajya Sabha, External Affairs Minister P.V. Narasimha Rao emphasized that the refugees “belong to Sri Lanka and they have to go back to Sri Lanka. They may remain here as long as it is needed.”

Nature of repatriation

  • In the early 1990s, especially after the assassination of Prime Minister Rajiv Gandhi in May 1991, a controversy erupted over reports of sections of refugees being sent back “forcibly”.
  • Consequently, the Indian government and Prime Minister Rao agreed to allow representatives of the United Nations High Commissioner for Refugees (UNHCR) to screen refugees to ascertain the voluntary nature of the repatriation. Broadly, there has been no change in this position. The UNHCR is also involved in counselling the refugees, helping them obtain necessary documents, paying for their international travel and providing reintegration grants and post-return support.
  • On its part, the Indian government has been taking steps in its own way to facilitate voluntary repatriation. While visa fee is waived and overstay penalty is granted to non-camp refugees on a case-to-case basis, camp refugees are given this benefit as a matter of routine.
  • Also, New Delhi is conscious of the adverse demographic impact that the civil war has had on the Tamils of Sri Lanka. The numerical strength of MPs from Tamil-speaking areas has gone down over the years as Sri Lanka follows proportional representation. If the refugees go back, this will help Tamils get more representatives in the Sri Lankan Parliament.
  • The Indo-Sri Lankan Accord
  • There is one more reason why the refugees could not have been included in the scope of the Act. The 1987 Indo-Sri Lankan Accord talks of repatriation, though much water has flown under the bridge since then.
  • The 2011 report of the Lessons Learnt and Reconciliation Commission, set up by the Mahinda Rajapaksa regime in May 2010, not only called for voluntary repatriation but also stressed the need for creating a conducive environment for the refugees to return to and for initiating a formal bilateral consultation process.
  • With the Rajapaksas back in power and President Gotabaya Rajapaksa being receptive to the idea of refugees returning to Sri Lanka, India should resume negotiations with Sri Lanka to give a push to the process of voluntary repatriation. But first Colombo should create conditions that will ensure the safety and security of the refugees returning to their homeland.