THE HINDU – CURRENT NOTE 07 APRIL
Supreme Court proposes joint trial of Babri cases
25-year delay amounts to ‘evasion of justice’, says Bench
•Noting that the 25-year pendency of the dual Babri Masjid demolition case trials in Lucknow and Raebareli amounts to “evasion of justice”, the Supreme Court on Thursday indicated that it proposes to order a joint trial in a Lucknow court after reviving criminal conspiracy charges against BJP veterans L.K. Advani, Murli Manohar Joshi and other Sangh Parivar leaders in connection with the razing down of the 16th century mosque in Ayodhya on December 6, 1992 by kar sevaks.
•A Bench of Justices P.C. Ghose and Rohinton Nariman hinted that the court will invoke its extraordinary constitutional powers under Article 142 to transfer the pending trial in a Raebareli magistrate court and club it with criminal proceedings in the Lucknow CBI Court against “lakhs of unknown kar sevaks.” The court indicated that it will order the CBI court to conduct a time-bound trial and complete it in two years. So far 195 witnesses have been examined in the Lucknow case while a whopping 800 witnesses remain to testify. In Raebareli, 57 witnesses have been examined while 105 wait their turn. Mr. Advani, Dr. Joshi and six other politicians were accused in the Rae Bareilly case for giving provocative speeches.
•“Kindly notice that this is a matter of 1992. Twenty-five years have passed. Our answer is have it on a day-to-day basis and finish it off in the next two years,” Justice Ghose observed. Justice Nariman at one point orally remarked how “many of the accused are dead and some will die now.”
Charges dropped
•A Special Court had in May 2001 dropped the criminal conspiracy charges against Mr. Advani and top BJP and Sangh Parivar leaders, including Ashok Singhal, Giriraj Kishore, Murli Manohar Joshi, V.H. Dalmia, Vinay Katiyar, Uma Bharti and Sadhvi Rithambhara.
•The Allahabad HC had dismissed the CBI plea to revive the conspiracy charges in May 2010, following which the agency moved the SC in February 2011. The court reserved the appeal for judgment after a day-long hearing. “They cannot go scot-free. If Lucknow and Raebareli are pari materia, the conspiracy charge against them should revive and both cases be tried jointly,” Justice Nariman observed.
‘Use restraint in using Article 142’
Lawyer tells SC to invoke it judiciously
•The highway liquor ban imposed by the Supreme Court was raised by BJP veteran L.K. Advani’s lawyer and senior advocate K.K. Venugopal on Thursday as an instance of the Supreme Court flexing its extraordinary constitutional powers to do more harm than the good it intended.
•“Your Lordships’ use of Article 142 should be in accordance with law and due process of law as guaranteed in Article 21. Your recent order on the highway liquor ban has rendered lakhsjobless,” he submitted.
•Mr. Venugopal was reacting strongly against a proposal by a Bench of Justices P.C. Ghose and Rohinton Nariman to employ its extraordinary powers under Article 142 of the Constitution to order a joint trial of the two Babri Masjid demolition cases pending for the past 25 years.
•Article 142 empowers the SC to pass any decree or order necessary for doing “complete justice” in any matter pending before it.
‘No unlimited power’
•“Excuse me for putting it bluntly, but Article 142 is not a source of unlimited power for you to go far ahead. There should be self-restraint,” Mr. Venugopal submitted.
•The senior lawyer had objected that a joint trial now would disrupt existing trial in the two cases and the rights of the accused. He submitted how the liquor ban, ostensibly meant to protect the right to good health, has boomeranged to deprive lakhs of employees in the trade of their fundamental right to earn a living.
India, Russia seal deal on Kudankulam Unit 1
New Delhi formally takes over its full operational control
•India has taken over full operational control of Unit 1 of the Kudankulam Nuclear Power Plant (KKNPP).
•On Wednesday, India signed a joint statement with Russia on the final takeover of the unit, formally marking the full transition.
•The agreement was signed between representatives of Nuclear Power Corporation of India Ltd. and the ASE Group of Companies, a subsidiary of ROSATOM State Atomic Energy Corporation of Russia.
•With the deal, the Russian and the Indian sides have confirmed fulfilment of all warranty terms and obligations of the contractor (ASE Group of Companies) for the construction of Unit 1, Rosatom said in a statement on Thursday.
•“The warranty period run showed reliable and safe operation of Unit 1. Thus, the Indian side confirms that ASE Group of Companies, which is a general contractor, has fulfilled all its tasks in full and accurately,” said Andrei Lebedev, vice-president of ASE for projects in South Asia.
•The commercial operation and the warranty period of Unit 1 started in December 2014. The warranty is typically for one year, which ended in December 2015.
•However, the final takeover agreement was delayed to ensure the reliability of the plant and equipment as this is the first of a series of six reactors.
Technical issues
•Unit 1 had encountered technical issues and was shut down briefly after it commenced power generation.
•On March 30, 2017, the joint protocol on provisional acceptance of Unit 2 of the plant was signed, which marked the start of its commercial operation.
RBI monetary policy: Growth, with caveats
The Centre must pay heed to Governor Urjit Patel’s plainspeak
•The central bank was not expected to tinker with key policy rates in its first monetary policy review of 2017-18 unveiled on Thursday, following its decision to shift from an accommodative to a neutral monetary policy stance in February. The Monetary Policy Committee chaired by Reserve Bank of India Governor Urjit Patel has, in fact, decided to raise the rate at which the central bank borrows funds from banks (the reverse repo rate) by 25 basis points, from 5.75% to 6%, while leaving other policy rates untouched. This marginal change is aimed at sucking out from the system excess liquidity that remains a lingering concern, despite coming off its peak in the aftermath of the demonetisation exercise. The RBI has also proposed a new liquidity management tool that awaits government approval, making the draining of surplus liquidity a critical priority all through this year. The efficacy of the RBI’s liquidity management toolkit will impinge on another key concern: inflation, which is expected to climb to 5% by the second half of this fiscal. The RBI says achieving the stated target of 4% inflation even next year could be challenging, with no “lucky disinflationary forces” expected, such as benign commodity and oil prices. It has also pointed to a one-time upside risk to inflation with the implementation of the Goods and Services Tax.
•The RBI is quite optimistic about an uptick in the economy this year, projecting 7.4% growth in Gross Value-Added, compared to 6.7% in 2016-17. Along with improved prospects for the world economy a rebound in discretionary consumer spending at home is likely, in line with the “pace of remonetisation” and investment demand on account of lowered interest rates. While the government may take heart from the higher growth projection, it must pay equal heed to Mr. Patel’s plainspeak on four key issues. First, the need to urgently resolve the surge of bad loans on bank books, for which the RBI will unveil a new Prompt Corrective Action framework by the middle of this month. Without this, a virtuous cycle of healthy credit growth necessary for investment and job creation will remain elusive. Second, the RBI has reminded the government there will be “clearly more demand for capital” in the coming days. The government’s allocation of Rs.10,000 crore to recapitalise public sector banks is obviously inadequate. Third, while banks have reduced lending rates, the RBI has pointed out there is room for more cuts if rates on small savings schemes are corrected. Though a formula-based rate was adopted to set these rates last April, small savings schemes still deliver 61-95 basis points higher returns than what they should if the formula is followed, as per the RBI. Most important, the government must not ignore Mr Patel’s categorical call to eschew loan waivers of the kind just announced in Uttar Pradesh. This, he warned, would crowd out private investments and dent the nation’s balance sheet.
RBI holds policy rate, raises reverse repo rate
Reiterates resolve to attain 4% inflation target over medium term
•The Reserve Bank of India (RBI) kept the key policy rate, the repo rate, unchanged in the first bimonthly policy review of 2017-18 but narrowed the policy corridor by 25 bps by raising the reverse repo rate to 6%, from 5.75%.
•All six members of the monetary policy committee (MPC) — which decides interest rates — voted in favour of the decision.
•The central bank said the policy decision was consistent with the neutral policy stance with the objective of achieving the medium-term target for retail inflation, which is 4%.
•“The MPC saw the path of inflation in 2017-18 challenged by upside risks and unfavourable base effects towards the second half of the year,” Urjit Patel, Governor, RBI, said in the post policy press conference.
•“Accordingly, inflation developments have to be closely monitored with food price pressures can be checked so that inflation expectations can be anchored.”
•The central bank said the future course of monetary policy would largely depend on incoming data on how macroeconomic conditions are evolving.
‘Softer’ tone expected
•While the repo rate action was in line with market expectations, the Governor’s ‘hawkish’ tone disappointed bond traders who were expecting a softer tone. Yield on the 10-year benchmark bond hardened to 6.77% as compared with its previous close of 6.65%.
•RBI said the path to achieving 4% inflation would be challenging. The central bank has set its inflation projection to an average of 4.5% in the first half of 2017-18 and 5% in the second half, while keeping its GVA growth projection unchanged at 7.4% for FY18 as compared with 6.7% in FY17.
•“The move to the 4% target inflation will be challenging. There is no lucky dis-inflationary forces in the horizon that were there in the past,” RBI executive director in-charge of monetary policy, Micheal Patra said.
•The central bank said surplus liquidity in the banking system had fallen from close to ₹8 lakh crore in January to ₹4.8 lakh crore in March. It also said it had proposed a standing deposit facility to the government in November 2015, approval for which was still awaited.
•SDF is a mechanism to drain surplus cash at a rate lower than the repo rate without the need for any collateral. “We are awaiting a decision on our preferred facility, which is the standing deposit facility,” Deputy Governor Viral Acharya said. “Beyond that, we may deploy other tools if our toolkit remains constrained and contingencies that arise so demand.”
•Analysts said there were upside risks to the 4% target and there was a possibility of an increase in the cash reserve ratio, going forward.
•“We expect higher rural wage growth, a narrowing output gap and adverse base effects to push inflation closer to 5.5-6.0% in H2 FY18,” Nomura said in a report to its clients. “As inflation risks become apparent, we also expect a 100 bps CRR hike in H2 2017 to absorb surplus liquidity,” it said.
•Though RBI has not reduced the repo rate, banks still have scope to cut lending rates, the central bank said.
•It added that the small savings rates should also be lowered as it noted that these rates are 61-95 bps higher compared with the ‘what-if’ formula (which was introduced in April 2016 to calculate it).
Centre to seek parliament nod for RDA
India’s first rail regulator will initially be set up through an executive order
•The Centre will likely attempt at securing legislative backing to the Rail Development Authority (RDA) next year to give more teeth to the country’s first rail regulator that will initially be set up through an executive order.
•The Union Cabinet on Wednesday approved setting up the rail regulator responsible for recommending passenger fares, setting performance standards for rail operations and creating level playing policy for private sector participation through an executive order.
‘Dire need’
•“The idea was to make the rail regulator functional through an executive order as the Indian Railways is in dire need of reforming its tariff structure. The authority will be subsequently strengthened later this year through the legislative route,” said a senior Railway Ministry official.
•“We will also examine its functioning and structure for the first six-eight months and may move to Parliament next year to give it statutory powers,” the official said, adding that the Railways Act, 1989 will be amended to insert a new chapter related to the RDA.
•The Ministry has targeted issuing a gazette notification to set up the Rail Development Authority by April 15. Following selection of the Chairman and three members of the regulator by a committee headed by the Cabinet Secretary, the functioning of RDA is expected to begin by August this year.
•After being formed, the Authority will work within the parameters of the Railways Act, 1989, an official statement had said on Wednesday. This means, it can only recommend changes to passenger and goods fares to the Railway Ministry which will taken a final call on fixing tariff.
‘Lack autonomy’
•“It would be better if the Authority is set up through the statutory support so that its recommendations become binding on the government. The regulator may lack autonomy if it’s formed through an executive order,” said former Railway Board Chairman Vivek Sahai.
•The concept note released by the Railway Ministry early last year had stated that in cases where the government does not accept the regulator’s suggested fares, “the Indian Railways would need to be compensated” through “increased allocations in the gross budgetary support or through a suitable mechanism.”
•However, a Railway Ministry official said the proposal was dropped later as no appropriate mechanism for compensation could be developed.
•All the six regulators in the country have the sanction of Parliament and have been accorded a statutory status.
•These include: Telecom Regulatory Authority of India, Airports Economic Regulatory Authority of India, Insurance Regulatory Development Authority, Central Electricity Regulatory Commission, Tariff Authority of Major Ports and Pension Fund Regulatory and Development Authority.
