Editorial 1 : Watching the rain
Introduction: The latest inflation data points towards a continuing dilemma for the monetary policy committee. It also shows the structural problem with Indian economy.
What does the latest inflation data say?
- Retail inflation, as measured by the consumer price index, rose to 5.08 per cent in June, up from 4.8 per cent in May.
- But this increase was largely on the back of rising food prices.
- Core inflation, which excludes the volatile fuel and food components, remained subdued, indicating that the underlying price pressures in the economy are muted.
- With this reading, inflation has now averaged 4.9 per cent in the first quarter (April-June) of the ongoing financial year.
- This is in line with the RBI’s forecast that was released in the last monetary policy committee meeting.
- But an immediate policy pivot is unlikely.
How food inflation data hindering any possibility of policy rate cut?
- The disaggregated data shows that food inflation edged higher to 9.36 per cent in June, up from 8.69 per cent the month before.
- Inflation is elevated in cereals, fruits, vegetables, and pulses.
- Vegetable inflation has now, in fact, been in double digits for several months, in part reflecting the impact of the heatwave.
- As food accounts for a higher share of the consumption basket of the poor, they are impacted to a greater extent by these high prices.
- Much now depends on the rains.
- While the monsoon has picked up in July, La Nina is expected to emerge only in August.
- The spatial and temporal distribution of rainfall will have an impact on food output and prices.
- As on July 15, the area sown under kharif crops is about 10 per cent higher than last year.
The non-food inflation is manageable
- The non-food inflation remains low.
- In most of the segments such as clothing and footwear, housing, household goods and services, recreation and amusement and education, inflation is below 4 per cent, the personal care segment being the exception.
- However, there are some upside risks.
- The recent tariff hikes by the telecom operators will exert upward pressure.
- There is also uncertainty over commodity prices.
- Higher crude oil prices — the price of the Indian crude oil basket has risen to $86.09 per barrel in July, up from $82.55 in June — could also have an impact.
The dissenting voice from monetary policy committee
- In the last meeting of the monetary policy committee, two members — Jayanth Varma and Ashima Goyal — had voted to change the policy stance to neutral and to reduce the policy rate by 25 basis points.
- However, the committee chose to maintain the status quo.
MPC will remain focussed on inflation management
- Recently, RBI Governor Shaktikanta Das reiterated his position, saying that “it is too premature to talk about interest rate cuts”.
- Healthy economic growth — the central bank has projected it at 7.2 per cent this year — provides the MPC the “policy space to remain focused on inflation”.
Conclusion: As core inflation remains low, greater clarity over the monsoon and the trajectory of food prices will influence policy. RBI will face the dilemma between maintaining high policy rate or to optimise it further to boost economic activities.
Editorial 2 : Bill of wrongs
Introduction: Claiming that the existing anti-terror laws are insufficient, the Maharashtra government last week tabled the Special Public Security Bill, 2024, to tackle “urban Naxalism.”
The provisions of the controversial bill
- The Bill empowers the state to criminalise “unlawful activity” by individuals and prescribes stringent punishments against organisations it deems unlawful.
- While this is precisely the remit of the Unlawful Activities Prevention Act (UAPA), 1976, the principle anti-terror legislation, the framers of the Maharashtra Bill deem it inadequate.
- While the processes are the same as UAPA, the Bill expands its definition of unlawful activity, bringing under its ambit everything from “being a menace to public order” and “interfering with administration of law,” to “generating fear and apprehension in public” and “preaching disobedience of law.”
- These descriptions are so loosely worded and vague that they could include legitimate dissent, protest or even mere criticism of the government.
- This is why Maharashtra’s new legislation is disquieting.
The term “Urban Naxals” has political connotation
- The proposed law brings “urban Naxals,” the term that has a political provenance, and one that has been used, controversially, to target students, writers, activists, into the legal vocabulary.
- In its Statement of Objects and Reasons, the Bill says that the “menace of Naxalism is not limited to remote areas of the Naxal affected states but its presence is increasing in the urban areas.”
- Its wide provisions seek to equate it with anything that raises questions about the government.
- It is alarming that a bill that empowers the government to evict the accused from premises and seize bank accounts even before a trial can begin, does not make vital distinctions, like between an active member of an organisation and someone associated with it.
The judiciary has consistently nudged the state against these kind of laws
- The courts have consistently called for a higher bar for the state to invoke stringent laws.
- The Delhi High Court, in the 2019 Delhi riots case, said that “the more stringent a penal provision, the more strictly it must be construed”.
- “The extent and reach of terrorist activity must travel beyond the effect of an ordinary crime and must not arise merely by causing disturbance of law and order or even public order; and must be such that it travels beyond the capacity of the ordinary law enforcement agencies to deal with it under the ordinary penal law,” the HC said.
- In the 2019 Bhima Koregaon cases, the SC has in the last two years granted bail to several accused.
- The “mere possession of the literature, even if the content thereof inspires or propagates violence, by itself cannot constitute any of the offences within Chapters IV and VI of the 1967 (UAPA) Act…”, the SC said.
State must understand the healthy democracy also includes right to dissents
- The Maharashtra Bill threatens to undercut the constitutional pact between the state and the citizen that protects, not just permits, dissent and debate.
- A day after the Bill was tabled, the monsoon session of the assembly was prorogued.
- Given that the state goes to polls in November, the Bill has effectively lapsed.
- The proposed law must not be revived.
Conclusion: Maharashtra’s proposed security law has loose definitions, threatens to criminalise legitimate debate and dissent. Although the bill will not see the light of the day in the current tenure of the state government, but civil society must dissuade the state to venture into such misadventure in future.