Editorial 1: Why RBI should resist further interest rate hikes
Recent Context:
- As are estimation of RBI and Ministry of Finance the GDP growth rate of India may be between 6.8 to 7 per cent respectively for the financial year 2022-23.
- That’s almost double the so-called “Hindu rate of growth” of 3.5 per cent that Raghuram Rajan, former Governor of RBI, recently quipped about saying that “India was dangerously close to Hindu rate of growth”.
What is Hindu rate of growth and current rate of growth?
- The term “Hindu rate of growth” was coined by my teacher Raj Krishna at the Delhi School of Economics, indicating that the Indian economy moved at its own pace of about 3.5 per cent during 1947 to 1980 or so, no matter which government ruled.
- But this trajectory has changed since the beginning of economic reforms in 1991. Over the last two decades, India registered a robust growth of more than 6.5 per cent, and chances are that it will continue to grow roughly at that pace for another decade or so.
Concern over Inflation along with economic growth:
- However, on the inflation front, India is still under the influence of inflation.
- The consumer price index (CPI) inflation in February was at 6.44 per cent, a notch higher than the upper end of RBI’s tolerance band.
- It is worth noting that inflation is now widely spread out across various commodity groups, with fuel and lighting (energy) leading at 9.9 per cent, followed by clothing and footwear at 8.8 per cent, prepared meals at 8 per cent and food and beverages at 6.3 per cent.
- But, since food and beverages carry the highest weight of 45.9 per cent in overall CPI, it is important to tame it as it hurts the poor most.
- Much of our food inflation is a supply-side phenomenon and tightening monetary policy further may not succeed in taming inflation.
Analysing the food inflation which is reason for high retail inflation:
- Let us look at food inflation carefully. Cereal inflation is at 16.7 per cent and within this wheat/atta (non-PDS) inflation is 25.4 per cent.
- While this is worrying, having insulated more than 800 million people through free cereals (5kg per person per month) through PDS supplies, it is not a cause for alarm.’
- In any case, raising the repo rate will not have any impact on this. It is better to use buffer stocking and trade policies to tame food inflation.
- In the case of wheat, the Food Corporation of India (FCI) has already unloaded roughly three million metric tonnes (MMT) of wheat to beat mandi prices down from about Rs 2,700-2,800 per quintal two months ago to roughly Rs 2,200-2,300 per quintal today.
- However, there us concern over milk inflation, which is raging at 9.6 per cent and has a high weight in CPI.
- India is the largest producer of milk with 221 MMT in FY22. The value of milk is more than the value of rice, wheat, all pulses, and sugarcane, put together.
- Although some people in the milk business feel that the government’s production data of milk is not very reliable, as they also felt for wheat production last year, yet from an inflation point, I feel the preferred course of action should be through trade policy rather than monetary policy.
- Spices are another group where inflation is surging at 20 per cent, with jeera at 39 per cent and dry chillies at 33 per cent.
- The solution again will be to use trade policy and lower import duties to about 15 per cent, which today hover between 30 to 60 per cent.
Conclusion:
- RBI must also heave a sigh of relief that none of the TOP vegetables (tomatoes, onions and potatoes) is giving any trouble.
- Their inflation is in the negative zone. In fact, onion farmers are up in arms protesting against the abnormal drop in onion prices.
- I wish the government was as active in supporting farmers from dampened prices as it is to put a lid on higher prices.
- In the case of onions, the solution is to help onion farmer organisations during the time of fall in price in that situation the large quantities of onions are need to be supplied to bulk consumers like armed forces, hospitals, hostels, hotels and restaurants for better price discovery.
Editorial 2: In OROP case, CJI refuses to accept ‘sealed cover’: Why did he do so?
Recent Context:
- Recently, The Supreme Court said it would not accept a “confidential” submission from the Centre on the disbursal of arrears to retired defence personnel under the One Rank One Pension (OROP) scheme.
- A Bench led by Chief Justice of India (CJI) D Y Chandrachud turned down a sealed cover note presented by Attorney General (AG) for India R Venkatramani and asked him to share it with counsel for ex-servicemen as well.
- The Bench declined to entertain Venkatramani’s argument that the contents of the note were “confidential” and “issues of sensitivity” were involved.
- The CJI has repeatedly underlined the need for transparency in the functioning of the court, and expressed himself against secrecy in procedures unless required.
- In October last year, Justice Chandrachud (who was not CJI then) had criticised the practice of “sealed cover” jurisprudence, saying it set a “dangerous precedent” and made “the process of adjudication vague and opaque”. He had expressed similar views earlier too, as had former CJI N V Ramana.
What is “sealed cover jurisprudence”?
- It is the practice of seeking and accepting information from government agencies in sealed envelopes that can only be perused by the judges.
- It has been followed by the Supreme Court in the past, and sometimes lower courts as well.
Under what circumstances does the court seek information in a sealed cover?
- This can happen in broadly two kinds of cases:
- when the information is connected to an ongoing investigation and,
- when the information is personal or confidential in nature.
- It is understood that in the first situation, an ongoing investigation could be impeded by the disclosure and in the second situation, an individual’s privacy could be affected or there may be a breach of trust.
So, what is the problem then?
- The secrecy could end up preventing a party from having a full overview of the charges against them. Also, sealed covers are at a fundamental level incompatible with the idea of an open court and a transparent justice system.
- In its order in ‘Cdr Amit Kumar Sharma v Union of India’ delivered on October 20, 2022, the Supreme Court Bench of Justices Chandrachud and Hima Kohli said “the non-disclosure of relevant material to the affected party and its disclosure in a sealed-cover to the adjudicating authority…sets a dangerous precedent.
- The disclosure of relevant material to the adjudicating authority in a sealed cover makes the process of adjudication vague and opaque”.
Concern over perpetuates of information in a sealed cover has two problems:
- Firstly, it denies the aggrieved party their legal right to effectively challenge an order since the adjudication of issues has proceeded on the basis of unshared material provided in a sealed cover.
- “Secondly, it perpetuates a culture of opaqueness and secrecy. It bestows absolute power in the hands of the adjudicating authority.
- It also tilts the balance of power in a litigation in favour of a dominant party which has control over information.
- Most often than not this is the state. A judicial order accompanied by reasons is the hallmark of the justice system… The sealed cover procedure affects the functioning of the justice delivery system both at an individual case- to case level and at an institutional level.”
Can all information can be circulated indiscriminately?
- The Supreme Court in its judgment clarified that “this is not to say that all information must be disclosed in the public”.
- It gave the example of “sensitive information affecting the privacy of individuals such as the identity of a sexual harassment victim”.
- But it also underlined that “the measure of nondisclosure of sensitive information in exceptional circumstances must be proportionate to the purpose that the non-disclosure seeks to serve”, and that “the exceptions should not…become the norm”.
Is the position taken by the CJI something new?
- Not really. The court has expressed this view even before this week, last month, and in October last year. Some examples:
- In March 2022, in a case involving the Bihar government, a three-judge Bench headed by then CJI Ramana insisted that all arguments should be made in open court. “Please don’t give us a sealed cover, we don’t want it here,” the then CJI had told counsel for Patna High Court.
- Later that same day, Justice Chandrachud, during the hearing on an appeal against the Centre’s ban on the Malayalam TV channel MediaOne, said, “We are averse to sealed cover jurisprudence. Do you have issues if we go through the record now?”
- In December 2019, Delhi High Court argued against the sealed cover documents submitted by the Enforcement Directorate (ED)
- “It would be against the concept of fair trial if in every case the prosecution presents documents in sealed cover and the findings on the same are recorded as if the offence is committed and the same is treated as having a bearing for denial or grant of bail,”
So how did the use of sealed covers become common?
- The Supreme Court has itself encouraged the practice of seeking public-interest related information in sealed envelopes, most recently under former CJI and now Rajya Sabha member Justice Ranjan Gogoi.
- In the Rafale aircraft case, the court accepted the government’s argument that the matter pertained to the Official Secrets Act.
- In the case involving corruption allegations against former CBI director Alok Verma, the court insisted that the Central Vigilance Commission submit its report in a sealed cover, ostensibly to maintain public confidence in the agency.
Conclusion:
- Transparency in the judicial process is essential in democracy in order to generate the trust among the people for better deliverance of justice. However, information can be shared in sealed cover if the information is personal or confidential in nature.