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India's street vendors are micro-entrepreneurs, yet they struggle for freedom and rights 

SabrangIndia talks to legal and social experts to understand what impedes the full effect of the Vendors’ Act.

08 Sep 2020

Street vendors

Few people realise that India’s struggle for legal rights continues even today. It is fought along the city’s footpath where a street vendor tries to keep their stall from being towed away by the municipal vehicle.

Article 19(1)(g) of the Indian Constitution enshrines the right to practise any profession, or to carry on any occupation, trade or business, albeit limited by reasonable restrictions imposed by any law.

Yet, rights are not a sufficient condition to empower the disempowered and disposed, pointed out political scientist Gopal Guru in his article ‘Do Rights have Limits?’

Legal history of vending rights.

The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 is commended by hawkers and Unions alike for its provision of legal protection. Under this law, vendors enjoy a legal status, vending certificates, identity cards and most importantly protection from police and local authorities.

The vending certificates, that are issued after conducting a survey, are valid for 10 years after which the vendor will not be given a certificate again. However, the intention of such a clause is to give the vendor the financial independence to start his own shop or similar such business.

The law bestows upon vendors the right to carry on business and to be given a new site for doing business if relocation becomes necessary. It also gives rights against eviction until a 30-day prior notice is given. The law also seeks to protect vendors from harassment by police and local authorities.

Accordingly, the Act mandated creation of Town Vending Committees (TVCs) to address vendor grievances. They are also responsible for maintaining a data-base of vendors, and carrying out social audits.

The law also considered the representation of marginalised communities like Scheduled Castes and Scheduled Tribes and protected hawkers from eviction. Moreover, it talked about the importance of public hygiene and health prior to the coronavirus pandemic. Lastly, the Act specifies that its laws are not to be interpreted as conferring ownership rights.

Many of these provisions were adopted from the National Policy on Urban Street Vendors, 2009 that recognized street vendors as a crucial part of the urban trade and distribution system. However, unlike an Act, the policy did not carry a legal edge or ‘legal teeth’ as stated by a ‘Women in Informal Employment: Globalizing and Organizing (WIEGO)’ policy brief of 2011.

It identified street vendors as “micro-entrepreneurs” who play an integral and legitimate part in urban retail trade and distribution system. The policy was created when cities globally face urbanisation and a growing informal sector. Organisations like the National Association of Street Vendors of India (NASVI) and Self-Employed Women’s Association (SEWA) played a crucial role in the formulation of this policy.

SEWA Founder Ela Bhatt said that the country needed “a change of perception, so that businesses and planners see vendors as entrepreneurs and vending as legitimate employment.”

Similarly, the Supreme Court also made innumerable attempts to address the prejudice associated with street vending. In 1985, it made a landmark judgement that recognised hawking as a constitutionally protected activity that ought to be regulated.

Soon after in 1989, the court ruled that the right to trade or do business on street pavement cannot be denied simply because the streets are meant for walking. This judgement was monumental for its acknowledgement of the poverty prevalent in India. The verdict stated that “there is no justification to deny the citizens of their right to earn livelihood by using the public streets for the purpose of trade and business.” It essentially set the tone for the policy that was created in 2009.

Current situation

However, according to Bombay High Court advocate Manmohan Rao, these historic efforts have proved ineffective due to a severe concentration of power with local authorities.

Vendors often complain to him about illegal confiscation. As per Section 19 of the Act, even those vendors who have not received a certificate should be returned their goods within one to two days depending on the perishability of the product. However, in reality, the vendors are charged fines ranging from Rs. 1200 to Rs. 1250 and still never get their goods back.

“The police lodge FIRs against the vendors claiming obstruction of justice. This is a non-bailable offence that sends the case directly to the sessions court and not to the magistrate,” said Rao.

Rao also said that Section 33 of the Act has an overriding effect over all other laws but it is not recognised by administrative officials. Due to this, surveys to identify eligible vendors and the formation of TVCs are still pending in many cities. Local authorities like the Brihanmumbai Municipal Corporation (BMC) demand domiciles and other documents for issuance of identity cards even though the Act does not ask for such items.

Nowadays, officials claim that street-vending will increase the number of COVID-19 cases in Mumbai,” said Rao, “They can easily check the temperature of the vendors working in every ward. Even so, they insist that the vendors should be removed from all streets,” said Rao.

He added that the hawkers are still waiting for Rs. 10,000 promised by Finance Minister Nirmala Sitharaman in July to as many as 50 lakhs street vendors in the country.

Street vending and social bias

According to ‘Financial Inclusion of the Marginalised: Street Vendors in the Urban Economy’ written by economists Sharit Bhowmik and Debdulal Saha in 2013, street vending offers a means of livelihood to a huge section of the urban poor. It is an important segment of the urban informal sector that as per government estimates provides livelihood to ten million persons.  This number triples when accounting for the dependents in vendor families.

Yet in reality hawkers do not seem to enjoy the dignity of labour due to such an important clog in the urban trade machinery.

Chairperson of Labour Studies at Tata Institute of Social Science (TISS) Dr Varsha Ayyar suggested that this discord may be explained sociologically by considering two things – the will of the State and the moral understanding of society.

Street vending as a job increased significantly in Mumbai after the shutting down of mills. Vendors have always catered to the working class and middle class. They service the city, yet face discrimination.

“For a city to be inclusive, the State needs to consider this work as contribution and not encroachment,” said Ayyar.

The same goes for the civil society, she said. Welfare associations stand against vendors because they do not find them useful. They do not realise that vendors make items accessible especially for other marginalised individuals like a woman who returns from home and needs to buy food to cook dinner.

However, for marginalised communities in India, even rights assured by the law are not guaranteed to be enforced, she said.

Citing Gopal Guru, Ayyar said that enforcement has a moral underpinning. Morality, thus, becomes a hurdle in exercising one’s right just as a market prejudiced by social thinking limits the rights of a vegetable street vendor.

“Gopal Guru says that rights cannot empower one to bypass caste-based or majority-based prejudice. Economic institutions, such as the market, are not sufficient to guarantee the rights of individuals. For a right to be a reality, it has to be disentangled from the constraining circles of social relationship,” said Ayyar.

Thus, when it comes to enforcement, the onus lies on the civil society and the State to protect the livelihood of the vulnerable.

“We are the kind of society that has a middle-class narrative of viewing vendors as parasites. Yet street vendors make every person a part of the consumption process. So, the question is: How do we look at important contributing members of society and what do we owe to them?” said Ayyar.

 

Related:

Job losses mount, recession looms as India battles Covid-19

UP BJP MLA asks people not to buy vegetables from Muslim vendors

 

India's street vendors are micro-entrepreneurs, yet they struggle for freedom and rights 

SabrangIndia talks to legal and social experts to understand what impedes the full effect of the Vendors’ Act.

Street vendors

Few people realise that India’s struggle for legal rights continues even today. It is fought along the city’s footpath where a street vendor tries to keep their stall from being towed away by the municipal vehicle.

Article 19(1)(g) of the Indian Constitution enshrines the right to practise any profession, or to carry on any occupation, trade or business, albeit limited by reasonable restrictions imposed by any law.

Yet, rights are not a sufficient condition to empower the disempowered and disposed, pointed out political scientist Gopal Guru in his article ‘Do Rights have Limits?’

Legal history of vending rights.

The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 is commended by hawkers and Unions alike for its provision of legal protection. Under this law, vendors enjoy a legal status, vending certificates, identity cards and most importantly protection from police and local authorities.

The vending certificates, that are issued after conducting a survey, are valid for 10 years after which the vendor will not be given a certificate again. However, the intention of such a clause is to give the vendor the financial independence to start his own shop or similar such business.

The law bestows upon vendors the right to carry on business and to be given a new site for doing business if relocation becomes necessary. It also gives rights against eviction until a 30-day prior notice is given. The law also seeks to protect vendors from harassment by police and local authorities.

Accordingly, the Act mandated creation of Town Vending Committees (TVCs) to address vendor grievances. They are also responsible for maintaining a data-base of vendors, and carrying out social audits.

The law also considered the representation of marginalised communities like Scheduled Castes and Scheduled Tribes and protected hawkers from eviction. Moreover, it talked about the importance of public hygiene and health prior to the coronavirus pandemic. Lastly, the Act specifies that its laws are not to be interpreted as conferring ownership rights.

Many of these provisions were adopted from the National Policy on Urban Street Vendors, 2009 that recognized street vendors as a crucial part of the urban trade and distribution system. However, unlike an Act, the policy did not carry a legal edge or ‘legal teeth’ as stated by a ‘Women in Informal Employment: Globalizing and Organizing (WIEGO)’ policy brief of 2011.

It identified street vendors as “micro-entrepreneurs” who play an integral and legitimate part in urban retail trade and distribution system. The policy was created when cities globally face urbanisation and a growing informal sector. Organisations like the National Association of Street Vendors of India (NASVI) and Self-Employed Women’s Association (SEWA) played a crucial role in the formulation of this policy.

SEWA Founder Ela Bhatt said that the country needed “a change of perception, so that businesses and planners see vendors as entrepreneurs and vending as legitimate employment.”

Similarly, the Supreme Court also made innumerable attempts to address the prejudice associated with street vending. In 1985, it made a landmark judgement that recognised hawking as a constitutionally protected activity that ought to be regulated.

Soon after in 1989, the court ruled that the right to trade or do business on street pavement cannot be denied simply because the streets are meant for walking. This judgement was monumental for its acknowledgement of the poverty prevalent in India. The verdict stated that “there is no justification to deny the citizens of their right to earn livelihood by using the public streets for the purpose of trade and business.” It essentially set the tone for the policy that was created in 2009.

Current situation

However, according to Bombay High Court advocate Manmohan Rao, these historic efforts have proved ineffective due to a severe concentration of power with local authorities.

Vendors often complain to him about illegal confiscation. As per Section 19 of the Act, even those vendors who have not received a certificate should be returned their goods within one to two days depending on the perishability of the product. However, in reality, the vendors are charged fines ranging from Rs. 1200 to Rs. 1250 and still never get their goods back.

“The police lodge FIRs against the vendors claiming obstruction of justice. This is a non-bailable offence that sends the case directly to the sessions court and not to the magistrate,” said Rao.

Rao also said that Section 33 of the Act has an overriding effect over all other laws but it is not recognised by administrative officials. Due to this, surveys to identify eligible vendors and the formation of TVCs are still pending in many cities. Local authorities like the Brihanmumbai Municipal Corporation (BMC) demand domiciles and other documents for issuance of identity cards even though the Act does not ask for such items.

Nowadays, officials claim that street-vending will increase the number of COVID-19 cases in Mumbai,” said Rao, “They can easily check the temperature of the vendors working in every ward. Even so, they insist that the vendors should be removed from all streets,” said Rao.

He added that the hawkers are still waiting for Rs. 10,000 promised by Finance Minister Nirmala Sitharaman in July to as many as 50 lakhs street vendors in the country.

Street vending and social bias

According to ‘Financial Inclusion of the Marginalised: Street Vendors in the Urban Economy’ written by economists Sharit Bhowmik and Debdulal Saha in 2013, street vending offers a means of livelihood to a huge section of the urban poor. It is an important segment of the urban informal sector that as per government estimates provides livelihood to ten million persons.  This number triples when accounting for the dependents in vendor families.

Yet in reality hawkers do not seem to enjoy the dignity of labour due to such an important clog in the urban trade machinery.

Chairperson of Labour Studies at Tata Institute of Social Science (TISS) Dr Varsha Ayyar suggested that this discord may be explained sociologically by considering two things – the will of the State and the moral understanding of society.

Street vending as a job increased significantly in Mumbai after the shutting down of mills. Vendors have always catered to the working class and middle class. They service the city, yet face discrimination.

“For a city to be inclusive, the State needs to consider this work as contribution and not encroachment,” said Ayyar.

The same goes for the civil society, she said. Welfare associations stand against vendors because they do not find them useful. They do not realise that vendors make items accessible especially for other marginalised individuals like a woman who returns from home and needs to buy food to cook dinner.

However, for marginalised communities in India, even rights assured by the law are not guaranteed to be enforced, she said.

Citing Gopal Guru, Ayyar said that enforcement has a moral underpinning. Morality, thus, becomes a hurdle in exercising one’s right just as a market prejudiced by social thinking limits the rights of a vegetable street vendor.

“Gopal Guru says that rights cannot empower one to bypass caste-based or majority-based prejudice. Economic institutions, such as the market, are not sufficient to guarantee the rights of individuals. For a right to be a reality, it has to be disentangled from the constraining circles of social relationship,” said Ayyar.

Thus, when it comes to enforcement, the onus lies on the civil society and the State to protect the livelihood of the vulnerable.

“We are the kind of society that has a middle-class narrative of viewing vendors as parasites. Yet street vendors make every person a part of the consumption process. So, the question is: How do we look at important contributing members of society and what do we owe to them?” said Ayyar.

 

Related:

Job losses mount, recession looms as India battles Covid-19

UP BJP MLA asks people not to buy vegetables from Muslim vendors

 

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India needs a stimulus package to fight the COVID-19 Economic battle

A closer look at the plight of migrants and some solutions for economic recovery

08 May 2020

Migrant workersImage: PTI
 

The Government of India on March 24, 2020, announced a country wide 21-day lockdown. A total of 4 hours was awarded to those in Indian territory to prepare for the lockdown that would strictly remain enforced for three weeks. Prime Minister in his addressed called this a Mahabharata like war, which will be won in 21 days.  Immediately people rushed to stock groceries, masks, sanitizers, etc. 

Amongst other vulnerable groups, the government totally forgot to account 50 Million migrant labourers spread all over India, who rely on daily wages for their meal. With no work, scanty or no savings, and no place to stay (as majority of these workers live either at construction sites or at factories where they work), thousands of migrant labourers started their journey back to their villages on foot. The long serpentine trail of human beings, of all age, religion, region, united by their hopelessness and poverty, juxtaposed the 1947 post partition migration crisis. The visible humanitarian crisis forced the government to act, but the help arrived too late and too little. 

At the time of writing this article, we are amidst the 3rd Phase of Lockdown, that is scheduled to conclude on 17th May, and the government has allowed the stranded migrants, stranded students, tourists, etc. to return back to their homes, via government facilitated transport. This decision should have been taken much before announcing the first Lockdown, but albeit late, the decision deserves appreciation.

After the lockdown was announced, a humanitarian crisis unfolded, forcing people into starvation, joblessness, poverty, destitution, depression, etc. This is apart from the health infrastructural crisis where even doctors were not provided with Personal Protective Equipment (PPEs), but this article will stick to highlighting the issues that concern the economy. In my opinion, government’s economic response against COVID-19 is deeply inadequate and is akin to shooting at one’s own foot.

Economists all over the world are advocating the urgent need for a suitable stimulus package to revive the economy. The COVID-19 catastrophe is bound to be at least as bad as 2008 global financial crisis, if not worse. India’s current healthcare expenditure is below 1.5% of GDP, and the sector is marred with a paucity of Doctors, Primary Health Care Centres, Superspeciality Hospitals, Ventilators, Lab Technicians, Pharmacists, medical equipments etc.
 

What is the situation? 

As per the CMIE data, India’s unemployment rate has surged to 27.11% for the week ended May 3 from the level of 6.74% in the week ended March 15. The largest hit in employment is witnessed in unorganized sector and in MSMEs. Several Economists have predicted that India’s GDP Growth will be in negative territory. There is a strong link between disability, loss of employment and impoverishment. Disabilities today have quadrupled, because of destruction of long duration employment and it is now translating into rising poverty. 

India desperately needs an all-encompassing, well-structured and inclusive stimulus package. United States has announced a package of 10% of its GDP, and, close home, few Asian countries have announced a package of up to 15% of their GDP. While India certainly cannot risk spending in double digits for its stimulus package (because of inflationary risks), but a meagre Rs.1.76 Lakh Crore package, majority of which is repackaged, is woefully inadequate.
 

What the Government must do? 

A meticulous fiscal stimulus plan is needed to boost consumption demand, to cushion the shock and to help the economy revive. The fiscal package must aggressively target those in informal sector and MSMEs. MSMEs must be protected by providing it with a moratorium on loans for 3 months along with interest waiver. This will help the Bank’s balance sheet and the MSMEs will also stay afloat.

The fiscal package must include:

a)     A direct and unconditional cash transfer of Rs. 2000 per month for 3 months, to the bottom 60% of Indian population. This will create the demand in the economy, which is rapidly shrinking.

b)     RBI must devise a framework where there is no coercive action on bankers when they lend loans that later become NPAs. A balanced regulation is utmost required to unclog the impending liquidity squeeze in the financial system. Mere rate adjustments will not help. Every sector of the economy is in a dire need of credit.

c)     All State governments must immediately issue temporary Ration Cards to the bottom 40% of India’s population, and the Union government must order FCI to offload the grains and distribute it amongst the poor. The Current bumper Rabi harvest will refill the FCI godowns. 

d)     The Central government must reduce excise duties on Petrol (by Rs.20 per litre) and on Diesel (by Rs.25 per litre) and pass on the benefits of lower prices of Crude to the consumers ($23.86 a barrel currently).

e)     The government needs to incentivize the external sector of trade and commerce.


Is it fiscally doable? 

Yes, the government will have to delay certain gratifications to do that. The money can be made available if we reallocate some of the budgeted capital expenditure and rationalize expenses. We can certainly defer Central Vista Project and save Rs.20,000 Crore outright and we must stop all less important government advertisements. Beautification projects, statue building etc. must be deferred indefinitely. The Oil bonanza is helping the government have a huge windfall gain for the past six years. The Government has already suspended MPLADS, Dearness Allowances; now, it must bring in a COVID Solidarity tax and shall raise funds by issuing bonds to the public. If nothing, it can always print money. We also don’t have to worry much about the inflationary pressure right now because we have sufficient food stock, a stable foreign exchange and low fuel price. 

The government must suit up and announce a fiscal stimulus to the tune of 5-8% of GDP quickly. We have lost a lot of time already, and, we cannot afford being frugal or lackadaisical. Desperate times require desperate solutions. We need to break free from textbook fiscal norms and go beyond the standard practice.

India needs a stimulus package to fight the COVID-19 Economic battle

A closer look at the plight of migrants and some solutions for economic recovery

Migrant workersImage: PTI
 

The Government of India on March 24, 2020, announced a country wide 21-day lockdown. A total of 4 hours was awarded to those in Indian territory to prepare for the lockdown that would strictly remain enforced for three weeks. Prime Minister in his addressed called this a Mahabharata like war, which will be won in 21 days.  Immediately people rushed to stock groceries, masks, sanitizers, etc. 

Amongst other vulnerable groups, the government totally forgot to account 50 Million migrant labourers spread all over India, who rely on daily wages for their meal. With no work, scanty or no savings, and no place to stay (as majority of these workers live either at construction sites or at factories where they work), thousands of migrant labourers started their journey back to their villages on foot. The long serpentine trail of human beings, of all age, religion, region, united by their hopelessness and poverty, juxtaposed the 1947 post partition migration crisis. The visible humanitarian crisis forced the government to act, but the help arrived too late and too little. 

At the time of writing this article, we are amidst the 3rd Phase of Lockdown, that is scheduled to conclude on 17th May, and the government has allowed the stranded migrants, stranded students, tourists, etc. to return back to their homes, via government facilitated transport. This decision should have been taken much before announcing the first Lockdown, but albeit late, the decision deserves appreciation.

After the lockdown was announced, a humanitarian crisis unfolded, forcing people into starvation, joblessness, poverty, destitution, depression, etc. This is apart from the health infrastructural crisis where even doctors were not provided with Personal Protective Equipment (PPEs), but this article will stick to highlighting the issues that concern the economy. In my opinion, government’s economic response against COVID-19 is deeply inadequate and is akin to shooting at one’s own foot.

Economists all over the world are advocating the urgent need for a suitable stimulus package to revive the economy. The COVID-19 catastrophe is bound to be at least as bad as 2008 global financial crisis, if not worse. India’s current healthcare expenditure is below 1.5% of GDP, and the sector is marred with a paucity of Doctors, Primary Health Care Centres, Superspeciality Hospitals, Ventilators, Lab Technicians, Pharmacists, medical equipments etc.
 

What is the situation? 

As per the CMIE data, India’s unemployment rate has surged to 27.11% for the week ended May 3 from the level of 6.74% in the week ended March 15. The largest hit in employment is witnessed in unorganized sector and in MSMEs. Several Economists have predicted that India’s GDP Growth will be in negative territory. There is a strong link between disability, loss of employment and impoverishment. Disabilities today have quadrupled, because of destruction of long duration employment and it is now translating into rising poverty. 

India desperately needs an all-encompassing, well-structured and inclusive stimulus package. United States has announced a package of 10% of its GDP, and, close home, few Asian countries have announced a package of up to 15% of their GDP. While India certainly cannot risk spending in double digits for its stimulus package (because of inflationary risks), but a meagre Rs.1.76 Lakh Crore package, majority of which is repackaged, is woefully inadequate.
 

What the Government must do? 

A meticulous fiscal stimulus plan is needed to boost consumption demand, to cushion the shock and to help the economy revive. The fiscal package must aggressively target those in informal sector and MSMEs. MSMEs must be protected by providing it with a moratorium on loans for 3 months along with interest waiver. This will help the Bank’s balance sheet and the MSMEs will also stay afloat.

The fiscal package must include:

a)     A direct and unconditional cash transfer of Rs. 2000 per month for 3 months, to the bottom 60% of Indian population. This will create the demand in the economy, which is rapidly shrinking.

b)     RBI must devise a framework where there is no coercive action on bankers when they lend loans that later become NPAs. A balanced regulation is utmost required to unclog the impending liquidity squeeze in the financial system. Mere rate adjustments will not help. Every sector of the economy is in a dire need of credit.

c)     All State governments must immediately issue temporary Ration Cards to the bottom 40% of India’s population, and the Union government must order FCI to offload the grains and distribute it amongst the poor. The Current bumper Rabi harvest will refill the FCI godowns. 

d)     The Central government must reduce excise duties on Petrol (by Rs.20 per litre) and on Diesel (by Rs.25 per litre) and pass on the benefits of lower prices of Crude to the consumers ($23.86 a barrel currently).

e)     The government needs to incentivize the external sector of trade and commerce.


Is it fiscally doable? 

Yes, the government will have to delay certain gratifications to do that. The money can be made available if we reallocate some of the budgeted capital expenditure and rationalize expenses. We can certainly defer Central Vista Project and save Rs.20,000 Crore outright and we must stop all less important government advertisements. Beautification projects, statue building etc. must be deferred indefinitely. The Oil bonanza is helping the government have a huge windfall gain for the past six years. The Government has already suspended MPLADS, Dearness Allowances; now, it must bring in a COVID Solidarity tax and shall raise funds by issuing bonds to the public. If nothing, it can always print money. We also don’t have to worry much about the inflationary pressure right now because we have sufficient food stock, a stable foreign exchange and low fuel price. 

The government must suit up and announce a fiscal stimulus to the tune of 5-8% of GDP quickly. We have lost a lot of time already, and, we cannot afford being frugal or lackadaisical. Desperate times require desperate solutions. We need to break free from textbook fiscal norms and go beyond the standard practice.

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Spending is the easiest way to revive the economy: Abhijit Banerjee

Lockdown homeschool for Indian adults: A simple economics class from a Nobel laureate, and a lesson on conducting TV interviews from a politician.

05 May 2020

EconomyImage Courtesy:huffingtonpost.in

“It's surreal, it's frightening, not that anybody knows what is going to happen next,” Nobel laureate, economist Dr Abhijit Banerjee said what everyone across the world is thinking. These words set the mood for a calm conversation, steered by Congress leader Rahul Gandhi, who asked questions that can put some of the most well known TV News anchors to shame. The politician, often at the butt of infantile jokes from right Wing parties held a second live interview with a globally acclaimed economist (the first being former RBI governor Raghuram rajan). The two discussed the devastation caused by the sudden Covid-19 lockdown and talked about possible solutions to what is obviously a long term crisis. According to Banerjee the lockdown needs to be lifted, but only after all the factors have been studied. Both recognised that the economic crisis was massive and recovery was a long and ongoing process. 

What made viewers sit up and notice was that Banerjee has had to spell out the obvious: Cash in hand, is at the core of restarting the economy. Money needs to be given out to people, and India needs a bigger stimulus package. Banerjee said the cash needs to be given to more people, not just those who are identified as the ‘poorest of the poor’.

Similarly, food security should be extended to all those who need it. Banerjee suggested that the Public Distribution System issue ‘temporary’ ration cards to anyone who wants them, and food grains be given out. The following are the key points culled from a transcript of the interview reported by the National Herald. The entire interview is also available on Youtube.

Give money, so people can buy consumer goods 

I think spending is the easiest way to revive the economy. The bottom 60% of the population, we give them some money, nothing bad will happen in my view. If they spend it, it would have a stimulus effect. I would go beyond the poorest people.

A stimulus package 

We really haven’t decided on a large enough stimulus package. We are still talking about 1% of GDP. The United States has gone for 10% of GDP. We have done one thing that I think is wise, which is to kind of put a moratorium on debt payments I would say. We could do more than that. We could even say that the debt payments for this quarter will be canceled, and will be taken care of by the government. It’s not just a matter of rescheduling it, just permanently cancel it. 

Cash for those without Jan Dhan accounts

Especially, migrants may not have access to that, etc. We need to also think about what happens to a substantial part of the population that does not have access to these things. And probably the right answer is that we should give a bunch of money available to the State Governments to try out their own schemes, to be creative in reaching people who are excluded using NGOs. I think we have to be willing to take some amount of mistargeting, malfeasance. Some money will be stolen. But if we sit on our hands, and say that we don’t want to do anything that could go possibly wrong, then we’ll make sure it goes wrong.

Start up the demand as soon as possible

Even before this happened, I have been saying that we have a demand problem. Now we are going to have a bigger demand problem. Because it is the usual problem. I have no money, I am not buying anything because my shop is closed. But then your shop is closed because I am not buying anything from you. Give people spending power where we have shut down the entire retail sector.

Plan so that you get the money when you can go out and buy. Or you get a promise that you’ll get the money so that you stop panicking and stop completely starving yourself so that you have a little bit of savings left. If people were reassured that in 2 months or whenever the lockdown is lifted, they will have some money in their hands, they will be much less worried about (it), they will be more willing to spend it already.

But there is a caveat

I feel you must not necessarily rush into it, because there may be places where there is no production right now, no supply right now. Putting money will just burn the money, there will be inflation. You want to wait for that. With that caveat, yes, soon.

Give everyone a ration card

Temporary ration cards to anybody who wants one. In fact, put other ration cards in abeyance, just put temporary ration cards. Anybody who wants one, gets a temporary ration card. Use that as a basis for making transfers. I think we have enough stocks. I think we can keep going for a while. The Rabi crop has been good this time, so we are going to have tonnes of Wheat and Rice. I don’t know if we have enough Dal or not. But I think the government promised Dal as well. 

Migrant movement cannot be handled by a State Government

Clearly the migrant movement question cannot be handled by a State Government. It is a bit odd that it is being handled so much bilaterally. In a sense I feel like that is a problem. This is a place where you don’t want to decentralise because you want to actually aggregate the information. If this is a population of people who were very infected, you don’t want them to be moving through the whole country. I feel this is a place where we should have tested people where they are allowed to board a train or something. That is a central question and something that only a federal government can do. Tell the Government of UP that you cannot just bring your migrants home. Conversely, the question of how to serve migrants in Bombay city is the Maharashtra Government’s problem or the Bombay City Municipality’s problem. You can’t have the federal government resolving that.

I think what I would have done is announced a bunch of money available for proposing good schemes for reaching the poorest people and let’s test and innovate. And I think there are good NGOs in most States who can be brought into that process. And as you said District Magistrates often have great ideas. And we might just benefit from all of that.

Aadhaar for PDS

One of the ideas that were mooted in the last years of the UPA but also embraced by the current government was the idea that the Aadhaar would be made national and therefore would be used for PDS and other things. You would be eligible wherever you are. That would have been wonderful to have right now. 

Looking back right now, that would have sort of saved a lot of misery. Because then a lot of people would have then gone to the local ration shop and then said that this is my Aadhaar. I am eligible for PDS, I’m collecting PDS in Mumbai, even though my family resides in Malda or Darbhanga or whatever. That’s my claim. And the fact that didn’t happen means that there are a bunch of people for whom there isn’t really a system. They aren’t eligible for MGNREGA, because there is no MGNREGA in Bombay. But they are not eligible for PDS because they are not residents.

The conceptualisation of the welfare structure was based on the idea that anybody who is really not in where they are supposed to be is actually working and therefore is earning an income and you don’t have to worry about them. And that’s what has collapsed.

Question of poverty

Will the economy revive and in particular, how does one think of the possible time paths of this disease through that process. I think we should try to be optimistic about the survival of the overall economic well-being of the country. It just takes the right actions.

Unlocking the lockdown

You don’t want to take down the lockdown when a lot of people are getting sick. We have to kind of be aware of the time path of the disease.

The interview, conducted by Rahul Gandhi, via a video call on May 5 and telecast live, may or may not have gone viral, but it has illustrated an interesting political point. Rahul Gandhi, and the Congress party, sit in the Opposition benches and have no real decision making power in the government, however, this extended Covid-19 lockdown has given them a shot in the arm as far as revining their public image is concerned. 

Live interviews with leading economists, letters to the Prime Minister, highlighting economic concerns, offering aid to stranded migrant workers, and daily video press meets are all an indication that there will be new political conversations as the nation eventualy emerges from the lockdown 2020. The general elections may still be four years away, but the Congress sure seems to be seen  in active pre-campaign mode. The nation meanwhile, waits to hear from the Union Finance minister this month. The Prime Minister of course will share his Man Ki Baat as scheduled.

Spending is the easiest way to revive the economy: Abhijit Banerjee

Lockdown homeschool for Indian adults: A simple economics class from a Nobel laureate, and a lesson on conducting TV interviews from a politician.

EconomyImage Courtesy:huffingtonpost.in

“It's surreal, it's frightening, not that anybody knows what is going to happen next,” Nobel laureate, economist Dr Abhijit Banerjee said what everyone across the world is thinking. These words set the mood for a calm conversation, steered by Congress leader Rahul Gandhi, who asked questions that can put some of the most well known TV News anchors to shame. The politician, often at the butt of infantile jokes from right Wing parties held a second live interview with a globally acclaimed economist (the first being former RBI governor Raghuram rajan). The two discussed the devastation caused by the sudden Covid-19 lockdown and talked about possible solutions to what is obviously a long term crisis. According to Banerjee the lockdown needs to be lifted, but only after all the factors have been studied. Both recognised that the economic crisis was massive and recovery was a long and ongoing process. 

What made viewers sit up and notice was that Banerjee has had to spell out the obvious: Cash in hand, is at the core of restarting the economy. Money needs to be given out to people, and India needs a bigger stimulus package. Banerjee said the cash needs to be given to more people, not just those who are identified as the ‘poorest of the poor’.

Similarly, food security should be extended to all those who need it. Banerjee suggested that the Public Distribution System issue ‘temporary’ ration cards to anyone who wants them, and food grains be given out. The following are the key points culled from a transcript of the interview reported by the National Herald. The entire interview is also available on Youtube.

Give money, so people can buy consumer goods 

I think spending is the easiest way to revive the economy. The bottom 60% of the population, we give them some money, nothing bad will happen in my view. If they spend it, it would have a stimulus effect. I would go beyond the poorest people.

A stimulus package 

We really haven’t decided on a large enough stimulus package. We are still talking about 1% of GDP. The United States has gone for 10% of GDP. We have done one thing that I think is wise, which is to kind of put a moratorium on debt payments I would say. We could do more than that. We could even say that the debt payments for this quarter will be canceled, and will be taken care of by the government. It’s not just a matter of rescheduling it, just permanently cancel it. 

Cash for those without Jan Dhan accounts

Especially, migrants may not have access to that, etc. We need to also think about what happens to a substantial part of the population that does not have access to these things. And probably the right answer is that we should give a bunch of money available to the State Governments to try out their own schemes, to be creative in reaching people who are excluded using NGOs. I think we have to be willing to take some amount of mistargeting, malfeasance. Some money will be stolen. But if we sit on our hands, and say that we don’t want to do anything that could go possibly wrong, then we’ll make sure it goes wrong.

Start up the demand as soon as possible

Even before this happened, I have been saying that we have a demand problem. Now we are going to have a bigger demand problem. Because it is the usual problem. I have no money, I am not buying anything because my shop is closed. But then your shop is closed because I am not buying anything from you. Give people spending power where we have shut down the entire retail sector.

Plan so that you get the money when you can go out and buy. Or you get a promise that you’ll get the money so that you stop panicking and stop completely starving yourself so that you have a little bit of savings left. If people were reassured that in 2 months or whenever the lockdown is lifted, they will have some money in their hands, they will be much less worried about (it), they will be more willing to spend it already.

But there is a caveat

I feel you must not necessarily rush into it, because there may be places where there is no production right now, no supply right now. Putting money will just burn the money, there will be inflation. You want to wait for that. With that caveat, yes, soon.

Give everyone a ration card

Temporary ration cards to anybody who wants one. In fact, put other ration cards in abeyance, just put temporary ration cards. Anybody who wants one, gets a temporary ration card. Use that as a basis for making transfers. I think we have enough stocks. I think we can keep going for a while. The Rabi crop has been good this time, so we are going to have tonnes of Wheat and Rice. I don’t know if we have enough Dal or not. But I think the government promised Dal as well. 

Migrant movement cannot be handled by a State Government

Clearly the migrant movement question cannot be handled by a State Government. It is a bit odd that it is being handled so much bilaterally. In a sense I feel like that is a problem. This is a place where you don’t want to decentralise because you want to actually aggregate the information. If this is a population of people who were very infected, you don’t want them to be moving through the whole country. I feel this is a place where we should have tested people where they are allowed to board a train or something. That is a central question and something that only a federal government can do. Tell the Government of UP that you cannot just bring your migrants home. Conversely, the question of how to serve migrants in Bombay city is the Maharashtra Government’s problem or the Bombay City Municipality’s problem. You can’t have the federal government resolving that.

I think what I would have done is announced a bunch of money available for proposing good schemes for reaching the poorest people and let’s test and innovate. And I think there are good NGOs in most States who can be brought into that process. And as you said District Magistrates often have great ideas. And we might just benefit from all of that.

Aadhaar for PDS

One of the ideas that were mooted in the last years of the UPA but also embraced by the current government was the idea that the Aadhaar would be made national and therefore would be used for PDS and other things. You would be eligible wherever you are. That would have been wonderful to have right now. 

Looking back right now, that would have sort of saved a lot of misery. Because then a lot of people would have then gone to the local ration shop and then said that this is my Aadhaar. I am eligible for PDS, I’m collecting PDS in Mumbai, even though my family resides in Malda or Darbhanga or whatever. That’s my claim. And the fact that didn’t happen means that there are a bunch of people for whom there isn’t really a system. They aren’t eligible for MGNREGA, because there is no MGNREGA in Bombay. But they are not eligible for PDS because they are not residents.

The conceptualisation of the welfare structure was based on the idea that anybody who is really not in where they are supposed to be is actually working and therefore is earning an income and you don’t have to worry about them. And that’s what has collapsed.

Question of poverty

Will the economy revive and in particular, how does one think of the possible time paths of this disease through that process. I think we should try to be optimistic about the survival of the overall economic well-being of the country. It just takes the right actions.

Unlocking the lockdown

You don’t want to take down the lockdown when a lot of people are getting sick. We have to kind of be aware of the time path of the disease.

The interview, conducted by Rahul Gandhi, via a video call on May 5 and telecast live, may or may not have gone viral, but it has illustrated an interesting political point. Rahul Gandhi, and the Congress party, sit in the Opposition benches and have no real decision making power in the government, however, this extended Covid-19 lockdown has given them a shot in the arm as far as revining their public image is concerned. 

Live interviews with leading economists, letters to the Prime Minister, highlighting economic concerns, offering aid to stranded migrant workers, and daily video press meets are all an indication that there will be new political conversations as the nation eventualy emerges from the lockdown 2020. The general elections may still be four years away, but the Congress sure seems to be seen  in active pre-campaign mode. The nation meanwhile, waits to hear from the Union Finance minister this month. The Prime Minister of course will share his Man Ki Baat as scheduled.

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Plea in SC highlights plight of people in informal sector, seeks compensation scheme

The petition seeks directions to the Centre to formulate such a scheme and take over the financial burden of the same as States are already under financial distress

15 Apr 2020

informal sector

A petition in the Supreme Court has sought directions to Centre and States to formulate a scheme to compensate those who are economically weaker and engaged in unorganised sector for loss of livelihood. The petitioner is a graduate from IIT and IIM, also a practicing advocate and in his plea he has raised concerns about people in informal sectors who live on daily earnings and have lost all means of incomes due to the nationwide lockdown.

The petitioner recognises that states and UTs are already under financial stress managing the outbreak of COVID19 and hence “the Union of India be directed to provide to each of the states and union territories compensation for the loss of revenue caused to them as also the additional expenditure incurred by them due to Covid-19 including in respect of the recompense to the persons deprived of income during the lockdown”. The petitioner also seeks “operations of the provisions of Section 4 of the Fiscal Responsibility and Budget Management Act 2003 be stayed in the interim to ensure that the same is not a constraint on the Union is discharging its duty as guardian and protector of its citizens”.

Section 4 of the Fiscal Responsibility and Budget Management Act deals with fiscal management principles, such as managing fiscal deficit, government debt, fiscal targets and so on.

The petitioner puts forth the plight of these informal sector workers by stating, “There are innumerable people who are dependent on daily work for earning with no concept of leave or pay when not working. These are not people who are either homeless or in penury but people bravely leading lives by sheer dint of their own effort and earning a livelihood by their work. Such people have not needed to depend on the freebies of the governments as they have proudly till date earned their incomes and met their needs therefrom.”

The petitioner, as an example to the court, identifies people in informal sector as construction workers many are persons who are self employed such as auto drivers, taxi drivers and railway porters and coolies and delivery persons working for e commerce companies and food delivery companies or even drivers engaged by Ola and Uber and freelance electricians and plumbers or even rag pickers; small road side businesses such as puncture shops and small electrical and electronic repair shops and others of such kind.

The petitioner also emphasizes that needs of such persons cannot be just grains and pulses event hey are covered under the National Food Security Act (NFSA). Since these persons are prevented from doing their work during this lockdown, they are not responsible for loss of their livelihood and hence deserve to be compensated by the state which has imposed this lockdown for the larger good.

The petition also points out that “developed countries have offered income transfers given the nature of losses suffered by their citizens due to Covid-19. Given the marginal existence of the self employed and unorganised work force there is thus need to immediately formulate an income recompense scheme aimed at such persons who have lost livelihood due to the lockdown”.

Further, the petition relies on constitutional provisions and states that Articles 14 (right to equality), 19 (right to freedom) and 21 (right to life) stand infringed due to this lockdown. The right to carry on trade and profession has been denied by executive fiat and persons who were self sufficient till 24.03.2020 on which day lock down was announced have been left in the lurch endangering the very right to life of such persons, says the petition.  

The petition prays for a direction to the Centre to formulate a scheme for compensating persons working in the unorganised sector including as self employed for loss of income caused by the lock down imposed to combat Covid-19 and ensure implementation of the same through the States and Union territories. Also, to direct the Centre to compensate all States and Union Territories 100% of the loss suffered by the States in their revenues due to lock down as also 100% of the increase in expenditures incurred by them due to Covid-19 including for the scheme.

 

Related:

Covid-19 lockdown impact: India's unorganised sector faces an uncertain future

Be a lamp unto yourselves - the advice the migrant workers followed

Lay offs, salary cuts continue even as PM asks employers to be compassionate to employees

Plea in SC highlights plight of people in informal sector, seeks compensation scheme

The petition seeks directions to the Centre to formulate such a scheme and take over the financial burden of the same as States are already under financial distress

informal sector

A petition in the Supreme Court has sought directions to Centre and States to formulate a scheme to compensate those who are economically weaker and engaged in unorganised sector for loss of livelihood. The petitioner is a graduate from IIT and IIM, also a practicing advocate and in his plea he has raised concerns about people in informal sectors who live on daily earnings and have lost all means of incomes due to the nationwide lockdown.

The petitioner recognises that states and UTs are already under financial stress managing the outbreak of COVID19 and hence “the Union of India be directed to provide to each of the states and union territories compensation for the loss of revenue caused to them as also the additional expenditure incurred by them due to Covid-19 including in respect of the recompense to the persons deprived of income during the lockdown”. The petitioner also seeks “operations of the provisions of Section 4 of the Fiscal Responsibility and Budget Management Act 2003 be stayed in the interim to ensure that the same is not a constraint on the Union is discharging its duty as guardian and protector of its citizens”.

Section 4 of the Fiscal Responsibility and Budget Management Act deals with fiscal management principles, such as managing fiscal deficit, government debt, fiscal targets and so on.

The petitioner puts forth the plight of these informal sector workers by stating, “There are innumerable people who are dependent on daily work for earning with no concept of leave or pay when not working. These are not people who are either homeless or in penury but people bravely leading lives by sheer dint of their own effort and earning a livelihood by their work. Such people have not needed to depend on the freebies of the governments as they have proudly till date earned their incomes and met their needs therefrom.”

The petitioner, as an example to the court, identifies people in informal sector as construction workers many are persons who are self employed such as auto drivers, taxi drivers and railway porters and coolies and delivery persons working for e commerce companies and food delivery companies or even drivers engaged by Ola and Uber and freelance electricians and plumbers or even rag pickers; small road side businesses such as puncture shops and small electrical and electronic repair shops and others of such kind.

The petitioner also emphasizes that needs of such persons cannot be just grains and pulses event hey are covered under the National Food Security Act (NFSA). Since these persons are prevented from doing their work during this lockdown, they are not responsible for loss of their livelihood and hence deserve to be compensated by the state which has imposed this lockdown for the larger good.

The petition also points out that “developed countries have offered income transfers given the nature of losses suffered by their citizens due to Covid-19. Given the marginal existence of the self employed and unorganised work force there is thus need to immediately formulate an income recompense scheme aimed at such persons who have lost livelihood due to the lockdown”.

Further, the petition relies on constitutional provisions and states that Articles 14 (right to equality), 19 (right to freedom) and 21 (right to life) stand infringed due to this lockdown. The right to carry on trade and profession has been denied by executive fiat and persons who were self sufficient till 24.03.2020 on which day lock down was announced have been left in the lurch endangering the very right to life of such persons, says the petition.  

The petition prays for a direction to the Centre to formulate a scheme for compensating persons working in the unorganised sector including as self employed for loss of income caused by the lock down imposed to combat Covid-19 and ensure implementation of the same through the States and Union territories. Also, to direct the Centre to compensate all States and Union Territories 100% of the loss suffered by the States in their revenues due to lock down as also 100% of the increase in expenditures incurred by them due to Covid-19 including for the scheme.

 

Related:

Covid-19 lockdown impact: India's unorganised sector faces an uncertain future

Be a lamp unto yourselves - the advice the migrant workers followed

Lay offs, salary cuts continue even as PM asks employers to be compassionate to employees

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Indian traders unite against Amazon CEO, call him 'Economic Terrorist'

Jeff Bezos was in India to announce the investment of $1 billion to digitize small businesses

17 Jan 2020

Amazon

Amazon CEO Jeff Bezos was greeted with more than less of a lukewarm response on his two-day visit to India to announce the investment of $1 billion to digitize small and medium businesses where he said that in the 21st century, “the most important alliance is going to be the alliance between India and the United States.”

However, not impressed with Amazon’s intervention, small business owners took to the streets with demonstrations being planned across 300 cities said Sumit Agarwal, National Secretary of the Confederation of All India Traders (CAIT).

 

 

 

 

 

Protests against the retail giant were held in Delhi, Jharkhand, Madhya Pradesh, Pune, Patna, Ahmednagar, Jammu, Chattisgarh and Mumbai among other places. Armed with posters that read “Jeff Bezos Go Back” and “Amazon Go Back” protesters complained that Amazon had used its reputation and global presence to undercut small business on price by offering steep discounts to large sellers, something that small business aren’t in a position to do.

The Competition Commission of India, India’s anti-trust regulator too opened an investigation into Amazon and Flipkart alleging them of predatory pricing, the exclusive launch of products like mobile phones, saying they use their market dominance to price inventory ‘below cost’ giving a trying time to business who in turn find it difficult to compete with such prices.

India is a country of neighborhood or ‘kirana’ stores from where the people of India have been shopping. These ‘mom and pop’ outlets are now increasingly seeing digitization with most of the stores accepting debit cards and online wallet payments to serve customers better. However, with a massive online presence and ease of shopping, websites like Amazon and Flipkart pull customers towards them with low prices, choice and quick delivery.

Amazon claims it has done a lot to empower retailers in India, creating over 60,000 jobs and investing around $5 billion, working with more than half a million sellers in the market place, reports BBC. During this visit, Bezos announced that Amazon would look to export goods worth $10 billion from India by 2025.

However, Commerce Minister Piyush Goyal seemingly did not approve of Bezos intentions. A day after Bezos’ announcement, Goyal said, “They may have put in a billion dollars, but if they make a loss of a billion dollars every year, then they jolly well will have to finance those billion dollars. So, it is not as if they are doing a favour to India when they invest a billion dollars.”

Trade bodies hailed Goyal’s mega snub, with members of trade organizations asking the retail giant to follow the laws or exit from the market. However, P Chidambaram, former Finance Minister took a sarcastic dig at Goyal saying that the Commerce Minister should snub Google CEO Sundar Pichai and Microsoft CEO Satya Nadella next to make India a $5 trillion economy.

 

 


Related:

Global funds staying away from India, Modi magic failing?
Inflation and Oil: What ails India’s economy?
India goes on strike against anti-people policies of the Modi Govt.

Indian traders unite against Amazon CEO, call him 'Economic Terrorist'

Jeff Bezos was in India to announce the investment of $1 billion to digitize small businesses

Amazon

Amazon CEO Jeff Bezos was greeted with more than less of a lukewarm response on his two-day visit to India to announce the investment of $1 billion to digitize small and medium businesses where he said that in the 21st century, “the most important alliance is going to be the alliance between India and the United States.”

However, not impressed with Amazon’s intervention, small business owners took to the streets with demonstrations being planned across 300 cities said Sumit Agarwal, National Secretary of the Confederation of All India Traders (CAIT).

 

 

 

 

 

Protests against the retail giant were held in Delhi, Jharkhand, Madhya Pradesh, Pune, Patna, Ahmednagar, Jammu, Chattisgarh and Mumbai among other places. Armed with posters that read “Jeff Bezos Go Back” and “Amazon Go Back” protesters complained that Amazon had used its reputation and global presence to undercut small business on price by offering steep discounts to large sellers, something that small business aren’t in a position to do.

The Competition Commission of India, India’s anti-trust regulator too opened an investigation into Amazon and Flipkart alleging them of predatory pricing, the exclusive launch of products like mobile phones, saying they use their market dominance to price inventory ‘below cost’ giving a trying time to business who in turn find it difficult to compete with such prices.

India is a country of neighborhood or ‘kirana’ stores from where the people of India have been shopping. These ‘mom and pop’ outlets are now increasingly seeing digitization with most of the stores accepting debit cards and online wallet payments to serve customers better. However, with a massive online presence and ease of shopping, websites like Amazon and Flipkart pull customers towards them with low prices, choice and quick delivery.

Amazon claims it has done a lot to empower retailers in India, creating over 60,000 jobs and investing around $5 billion, working with more than half a million sellers in the market place, reports BBC. During this visit, Bezos announced that Amazon would look to export goods worth $10 billion from India by 2025.

However, Commerce Minister Piyush Goyal seemingly did not approve of Bezos intentions. A day after Bezos’ announcement, Goyal said, “They may have put in a billion dollars, but if they make a loss of a billion dollars every year, then they jolly well will have to finance those billion dollars. So, it is not as if they are doing a favour to India when they invest a billion dollars.”

Trade bodies hailed Goyal’s mega snub, with members of trade organizations asking the retail giant to follow the laws or exit from the market. However, P Chidambaram, former Finance Minister took a sarcastic dig at Goyal saying that the Commerce Minister should snub Google CEO Sundar Pichai and Microsoft CEO Satya Nadella next to make India a $5 trillion economy.

 

 


Related:

Global funds staying away from India, Modi magic failing?
Inflation and Oil: What ails India’s economy?
India goes on strike against anti-people policies of the Modi Govt.

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Inflation and Oil: What ails India’s economy?

Will 2020 prove to be a better year for India’s economy?

10 Jan 2020

IndiaImage Courtesy: thehansindia.com

Mudhol’s Vittal Tolamatti is laughing his way to the bank, crying tears of joy after he earned a whopping Rs. 92.8 lakh growing onions on his 24 acres of land in the quarter of October – December, reported the Deccan Herald.

But Tolamatti seems to be the lucky one. A Reuters poll of economists has predicted that rising vegetable prices may have had pushed retail inflation to its highest at 6.20% in December for a third straight month, exceeding the Reserve Bank of India’s medium-term target of 4%.

Onion prices went through the roof, soaring tenfold, contributing to the surge in food inflation that has been spiking since March. Products like vegetables, eggs, meat and fish pushed the retail inflation higher.

The National Sample Survey (NSS) recorded a 3.8 percent fall in per capital consumption expenditure for the country, with the decline in rural areas being close to 10 percent; potentially pushing more people towards destitution and undernourishment.

India has been suffering from ‘stagflation’ or ‘recession – inflation’ witnessing a slow economic growth and a high rate of joblessness with unemployment rate being at 7.7 percent in December 2019.

The output of primary goods that include the industries of agriculture, fishing, mining and forestry fell by 6 percent, consumer durables declined by 18 percent, construction and infrastructure output declined by 9.2 percent and the production of capital goods (buildings, machinery, equipment, tools & vehicles) fell by 21.9 percent. However, the output of intermediate goods (partly finished goods used as inputs in the production of other goods) increased by 22.2 percent.

The current inflation, experts say, is caused by the decline in output of several commodities relative to the shrinking purchasing power in the hands of the people, who are spending more money on food items, leaving them with less to spend on industrial and other commodities thus enhancing the already soaring demand deficiency in such sectors.

Now, after the tensions between the United States of India and Iran, the already suffering economy could suffer a shock from the outside, weakening the already shaky economy.

India meets more than 80 percent of its crude oil requirements, importing 4.5 million barrels of oil per day; and since the killing of General Qassem Soleimani lead to an increase in the hike of petrol prices. Currently, petrol and diesel prices are at around Rs. 75.69 and Rs. 68.68 a liter in Delhi respectively.

Higher crude oil prices and the unstable situation means India will have to pay more for insurance of the oil tankers that come to Indian shores. Experts estimate that for every $10 rise in crude oil prices, India will have to end up paying an extra $1.5 billion every month. This will push retail inflation in the country by 0.4 percent transport runs on fuel.

In 208-19, India’s import bill was around $140 billion, the current food inflation and any further increase in oil prices could only end up stoking inflation at a time when the economic growth is at an 11-year low of 5.8 percent.

However, experts believe that India will not face a crude oil shortage if tensions escalate because many countries like Venezuela, Saudi Arabia and other Mediterranean and Middle East countries can ensure supplies to the nation.

With the current economic downturn, India is facing a risk of slipping back into the ‘fragile five’, making it dependent on outside investment to fund economic growth. Slower growth in the construction sector means lesser employment opportunities and lower income. Not only the decline in exports, but also the lower imports due to lower consumption pose a worrying scenario.

Stressed loans have exceeded 12 percent of total lending, food inflation has spiked, core industries – automotive, retail and manufacturing have contracted, consumer expenditure is dwindling and the GDP growth is in the doldrums. Will this turn for the better in 2020? Only time will tell.

(Information sources – Economic Times, India Today, Newsclick)

Related:

Is Harsh Goenka scared of criticizing the Modi government?
Engineers and graduates apply for gov’t sanitation worker jobs!
‘There Are Very Strong Concerns About The Indian Economy’

Inflation and Oil: What ails India’s economy?

Will 2020 prove to be a better year for India’s economy?

IndiaImage Courtesy: thehansindia.com

Mudhol’s Vittal Tolamatti is laughing his way to the bank, crying tears of joy after he earned a whopping Rs. 92.8 lakh growing onions on his 24 acres of land in the quarter of October – December, reported the Deccan Herald.

But Tolamatti seems to be the lucky one. A Reuters poll of economists has predicted that rising vegetable prices may have had pushed retail inflation to its highest at 6.20% in December for a third straight month, exceeding the Reserve Bank of India’s medium-term target of 4%.

Onion prices went through the roof, soaring tenfold, contributing to the surge in food inflation that has been spiking since March. Products like vegetables, eggs, meat and fish pushed the retail inflation higher.

The National Sample Survey (NSS) recorded a 3.8 percent fall in per capital consumption expenditure for the country, with the decline in rural areas being close to 10 percent; potentially pushing more people towards destitution and undernourishment.

India has been suffering from ‘stagflation’ or ‘recession – inflation’ witnessing a slow economic growth and a high rate of joblessness with unemployment rate being at 7.7 percent in December 2019.

The output of primary goods that include the industries of agriculture, fishing, mining and forestry fell by 6 percent, consumer durables declined by 18 percent, construction and infrastructure output declined by 9.2 percent and the production of capital goods (buildings, machinery, equipment, tools & vehicles) fell by 21.9 percent. However, the output of intermediate goods (partly finished goods used as inputs in the production of other goods) increased by 22.2 percent.

The current inflation, experts say, is caused by the decline in output of several commodities relative to the shrinking purchasing power in the hands of the people, who are spending more money on food items, leaving them with less to spend on industrial and other commodities thus enhancing the already soaring demand deficiency in such sectors.

Now, after the tensions between the United States of India and Iran, the already suffering economy could suffer a shock from the outside, weakening the already shaky economy.

India meets more than 80 percent of its crude oil requirements, importing 4.5 million barrels of oil per day; and since the killing of General Qassem Soleimani lead to an increase in the hike of petrol prices. Currently, petrol and diesel prices are at around Rs. 75.69 and Rs. 68.68 a liter in Delhi respectively.

Higher crude oil prices and the unstable situation means India will have to pay more for insurance of the oil tankers that come to Indian shores. Experts estimate that for every $10 rise in crude oil prices, India will have to end up paying an extra $1.5 billion every month. This will push retail inflation in the country by 0.4 percent transport runs on fuel.

In 208-19, India’s import bill was around $140 billion, the current food inflation and any further increase in oil prices could only end up stoking inflation at a time when the economic growth is at an 11-year low of 5.8 percent.

However, experts believe that India will not face a crude oil shortage if tensions escalate because many countries like Venezuela, Saudi Arabia and other Mediterranean and Middle East countries can ensure supplies to the nation.

With the current economic downturn, India is facing a risk of slipping back into the ‘fragile five’, making it dependent on outside investment to fund economic growth. Slower growth in the construction sector means lesser employment opportunities and lower income. Not only the decline in exports, but also the lower imports due to lower consumption pose a worrying scenario.

Stressed loans have exceeded 12 percent of total lending, food inflation has spiked, core industries – automotive, retail and manufacturing have contracted, consumer expenditure is dwindling and the GDP growth is in the doldrums. Will this turn for the better in 2020? Only time will tell.

(Information sources – Economic Times, India Today, Newsclick)

Related:

Is Harsh Goenka scared of criticizing the Modi government?
Engineers and graduates apply for gov’t sanitation worker jobs!
‘There Are Very Strong Concerns About The Indian Economy’

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Priyanka Gandhi slams EPFO’s decision to cut interest rates

If the decision comes through, it could adversely impact the retirement corpus of over 8 crore professionals

08 Jan 2020

Priyanka GandhiImage Courtesy: indiatvnews.com

Amidst reports that the Employees’ Provident Fund Organization (EPFO) is looking to reduce its interest rate leading to lower returns for salaried people, Congress leader Priyanka Gandhi Vadra issued a statement saying that when the unrest in the country grows, it must be understood that the government is slyly planning to shock the people with some drastic decision which isn’t in their favour.

She made the statement on Twitter, sharing an article that reported the EPFO’s decision to reduce the interest rate on provident funds by 15 – 20 basis points this fiscal.

https://twitter.com/priyankagandhi/status/1214531792901787648

If the EPFO, which comes under the Ministry of Labour, goes ahead with the decision of rate cuts, more than 8 crore EPFO shareholders will get less interest than before. This decision of the rate cut comes against the backdrop of the economic downturn, lower yields for debt market instruments, government securities and fixed deposits.

First of all, every employee must keep in mind to tender an official resignation and make sure it is accepted by their employer, before joining a new firm. In the case of Suresh Kumar, who spoke to ET Now and did not follow a proper procedure while switching jobs, accessing his EPF became a nightmare. As per EPFO rules, unless an employee exits his job, he can neither transfer nor withdraw his EPF.

Even partial withdrawals from the EPF were not allowed to Suresh and he could not access his EPF passbook as the account was linked to the mobile number provided by his previous company. Updating EPFO details meant contacting his previous employer. He did so and the previous company asked him to pay one month’s salary in lieu of his one month notice period to access his EPF. It must be kept in mind to always give personal email ids and contact numbers to avoid any such circumstance.

The EPF currently offers a rate of return of 8.65 percent per annum which is one of the best ways to steadily build a retirement corpus. While some think the rate cut is a good move as it is allows more take-home salary thus aiding more spending and boosting consumption, industry experts say it can be a detrimental move in the long run.

They say while the earlier generation placed a little more focus on saving, the millennial generation, if finds it unable to meet their demands, do not hesitate to borrow putting them at risk of financial turbulences. Also, the shift from the joint family system towards single family structures makes it very important to ensure financial security at the time of retirement.

Financial experts feel that though putting more money in the hands of the people will solve short term problems by boosting consumption, it would be wise to switch back to making higher contributions to their EPF accounts, helping them save more for future needs.

The Economic Times also explained that contribution towards PF qualified for tax benefits. Lesser contributions towards the PF meant much lesser tax benefits. For example, if annual contributions towards PF fall by Rs. 7,200, then for someone paying tax at the highest slab – 31.2 percent, he / she will save nearly Rs. 2,250 lesser tax.

Government officials had told Livemint in June that there was “no logic to penalize the working class” by lowering their yield.

While the EPF ensures a good amount on retirement, if the proposal to cut contribution rates goes through, experts advise professionals to explore alternative investment avenues like equity mutual funds and public provident funds (PPF) to create a retirement corpus.

Related:

Why Small Businesses That Employ 111 Million Fall Into Debt Trap
Modi no reformer, manages economy incompetently: Western investors warned

Priyanka Gandhi slams EPFO’s decision to cut interest rates

If the decision comes through, it could adversely impact the retirement corpus of over 8 crore professionals

Priyanka GandhiImage Courtesy: indiatvnews.com

Amidst reports that the Employees’ Provident Fund Organization (EPFO) is looking to reduce its interest rate leading to lower returns for salaried people, Congress leader Priyanka Gandhi Vadra issued a statement saying that when the unrest in the country grows, it must be understood that the government is slyly planning to shock the people with some drastic decision which isn’t in their favour.

She made the statement on Twitter, sharing an article that reported the EPFO’s decision to reduce the interest rate on provident funds by 15 – 20 basis points this fiscal.

https://twitter.com/priyankagandhi/status/1214531792901787648

If the EPFO, which comes under the Ministry of Labour, goes ahead with the decision of rate cuts, more than 8 crore EPFO shareholders will get less interest than before. This decision of the rate cut comes against the backdrop of the economic downturn, lower yields for debt market instruments, government securities and fixed deposits.

First of all, every employee must keep in mind to tender an official resignation and make sure it is accepted by their employer, before joining a new firm. In the case of Suresh Kumar, who spoke to ET Now and did not follow a proper procedure while switching jobs, accessing his EPF became a nightmare. As per EPFO rules, unless an employee exits his job, he can neither transfer nor withdraw his EPF.

Even partial withdrawals from the EPF were not allowed to Suresh and he could not access his EPF passbook as the account was linked to the mobile number provided by his previous company. Updating EPFO details meant contacting his previous employer. He did so and the previous company asked him to pay one month’s salary in lieu of his one month notice period to access his EPF. It must be kept in mind to always give personal email ids and contact numbers to avoid any such circumstance.

The EPF currently offers a rate of return of 8.65 percent per annum which is one of the best ways to steadily build a retirement corpus. While some think the rate cut is a good move as it is allows more take-home salary thus aiding more spending and boosting consumption, industry experts say it can be a detrimental move in the long run.

They say while the earlier generation placed a little more focus on saving, the millennial generation, if finds it unable to meet their demands, do not hesitate to borrow putting them at risk of financial turbulences. Also, the shift from the joint family system towards single family structures makes it very important to ensure financial security at the time of retirement.

Financial experts feel that though putting more money in the hands of the people will solve short term problems by boosting consumption, it would be wise to switch back to making higher contributions to their EPF accounts, helping them save more for future needs.

The Economic Times also explained that contribution towards PF qualified for tax benefits. Lesser contributions towards the PF meant much lesser tax benefits. For example, if annual contributions towards PF fall by Rs. 7,200, then for someone paying tax at the highest slab – 31.2 percent, he / she will save nearly Rs. 2,250 lesser tax.

Government officials had told Livemint in June that there was “no logic to penalize the working class” by lowering their yield.

While the EPF ensures a good amount on retirement, if the proposal to cut contribution rates goes through, experts advise professionals to explore alternative investment avenues like equity mutual funds and public provident funds (PPF) to create a retirement corpus.

Related:

Why Small Businesses That Employ 111 Million Fall Into Debt Trap
Modi no reformer, manages economy incompetently: Western investors warned

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Karnataka Bank reports fraud of Rs. 40 crore

Hanung toys and Textiles Ltd was stated to be a non-performing asset and wilfully defaulting company

09 Dec 2019

FraudImage Courtesy: dailykiran.com

Last week, Karnataka Bank, reported a fraud of Rs. 40.39 crore in the credit facilities to Hanung Toys and Textiles Ltd, on account of diversion of funds, which has been declared a non-performing borrowing account, the Deccan Herald reported.

Hanung Toys and Textiles Ltd dealing with the bank since 2008 had availed various credit facilities under consortium arrangement since 2008 where Karnataka Bank was one of the member banks.

The company owes Rs. 2,300 crore to a consortium of 15 lenders led by state-own Punjab National Bank, which alone has an exposure of Rs. 599 crore.

"On the basis of forensic auditor's report submitted to the consortium, some of the member banks have reported to the Reserve Bank of India (RBI) regarding fraud in the borrowing account.

"In line with the Consortium decision, Karnataka Bank has reported to RBI a fraud amounting to Rs 40.39 crore in the credit facilities extended earlier to the borrowing account, on account of diversion of funds," Karnataka Bank said.

The bank said that Hanung Toys and Textiles had been classified as a non-performing asset (NPA) in July 2015 and had been fully provided for and as such, no negative impact on the bank's profitability at present.

Several other banks too have declared Hanung Toys and Textiles Ltd to be a wilful defaulter.

Hanung Toys and Textiles Limited

Hanung Toys is promoted by Ashok Kumar Bansal. He has been an IKEA supplier for 15 years and his company had been in the news for a hefty order worth Rs. 600 crore by the Swedish retailer in 2007.

Its toy manufacturing units are set up in the Noida Special Economic Zone (SEZ) and its production units include facilities in Roorkee, Bhiwandi and Noida set up to make toys and home furnishings.

In 2018, PNB had taken Hanung Toys and Textiles Ltd to the bankruptcy courts for unpaid loans. The PNB-led consortium of lenders had collectively loaned the amount to the toy-maker around three years ago in debt restructuring for around 1,800 crore.

In November 2019, authorities detained Ashok Kumar Bansal and his wife Anju Bansal, who were on their way back from Dubai, at the Delhi Airport following a lookout notice issued by the Punjab National Bank.

The Free Press Journal reported that a corporate debt restructuring plan crafted by the company four years ago failed to take off as Ashok Bansal, the Chairman couldn’t bring in his share of equity which stood at Rs. 82 crore which led to an increase in outstanding dues to Rs. 2,300 crore.

Wilful defaulter

In November 2019, the Reserve Bank of India (RBI) released a list of top 30 wilful defaulters in response to an RTI application filed by The Wire. The application came in four years after the Supreme Court had directed the RBI to disclose a list of wilful defaulters in India. While MehulChoksi’sGitanjali Gems stood at the top with a default amount of Rs. 5,044 crore, Hanung Toys and Textiles showed a default amount worth Rs. 949 crore.

The corporate debt restructuring (CDR) cell in 2015 had pointed out that according to data, every three cases approved for debt repair under the CDR mechanism had failed and exited the cell. In July that year, Hanung Toys and Textiles Ltd had exited the cell after failing to implement the CDR package.

The reasons for this, sources told Livemint were that failures occurred mostly due to the promoter’s inability to bring in his share of contribution apart (as was in the case of Ashok Bansal) from the company’s inability to meet business projections.

Karnataka Bank fraud list

Apart from the recent fraud reported by the bank in the case of wilful defaulting by Hanung Toys and Textiles Ltd, the bank in November had reported a fraud of Rs. 13.36 crore on account of diversion of funds, in the working capital facility extended to SRS Finance Ltd.

In 2018, it had reported a fraud totaling Rs. 86.47 crore in loans extended under consortium agreements to MehulChoksi’sGitanjali Gems. In a BSE filing it said, “The bank has reported a fraud to Reserve Bank of India amounting to Rs86.47 crore in the fund based working capital facilities extended to Gitanjali Gems Limited on account of non-realization of exports bills and diversion of funds.”

This year, the RBI had slapped a fine of Rs. 4 crore on the bank for violating regulatory norms. The charge was levied due to the failure of the bank with regards to the delay in implementation of four of the Swift related operational controls.

In July this year, the bank launched a web tool named VASOOL SO-Ft (VASOOL SO FAST) to digitalise the NPA recovery process.

The bank has reported a 5.3 percent year-on-year decline in its net profit at Rs. 105.91 crore for the quarter that ended in Sept 30, 2019. Even with the regulatory disclosures on bad loans, the bank was working to keep its NPAs below five percent. CEO & MD MAhabalaeshwara MS had told Business Standard last year, "There was actually no pain in the sense that we have exposure to some corporates through the consortium. With the change in NPA recognition norm, we had to recognise a few of those accounts as NPA because of default by these groups on loans from other banks. We took this opportunity to clean up our balance sheet and make adequate provisions.”

This year, the percentage of its NPAs rose to 4.78 percent against 4.66 percent in the same quarter last year, with values standing at Rs. 2,594.27 crore this year against Rs. 2,371.62 crore last year.

NPAs haunting Indian banks

In response to an RTI application filed by CNN-News 18, the Indian banking system, in the past three years has lost Rs. 1.76 lakh crore for writing off non-performing loans to 525 defaulters, with each of the defaulters owing Rs. 100 crore or more.

The responses to the RTI showed that there had been a constant increase in the amount written off by commercial banks since 2014 – 15 with the sharpest upsurge in 2017 and 2018, post demonetization.

In 2015, loans to the tune of Rs. 40,798 crore were written off. This number increased to Rs. 69,976 crore in 2016, Rs. 127,797 crore in 2017 and Rs. 217,121 lakh crore in 2018.

Newsclick reports that the write-offs are in accordance with an RBI directive that had asked the scheduled commercial banks to come clear on the amount to be written off and set the accounts straight. These write offs simply meant the uncollectible debt.

The State Bank of India (SBI) had written off the highest amounts of such bad loans, followed by PNB, IDBI, Bank of India, Corporation Bank, Bank of Baroda, Central Bank of India, Axis Bank and ICICI Bank.

After the Punjab and Maharashtra Cooperative Bank (PMC) Bank scam worth over Rs. 6,000 crore rocked the country, political interference has emerged as one of the main obstructions in clearing up sheets and restoring the health of banks. Though the RBI has taken steps in the right direction – taking wilful defaulters to insolvency courts, will it actually be able to pull up big ticket defaulters like Hanung Toys or Gitanjali Gems by staying autonomous and out of the unholy nexus between the government and the corporates?

Related:

Banks merger 'reflects' Modi's pro-corporate slant: Public sector units deserve to die

Liquidity crisis in India’s shadow banking sector is a wake-up call for government and regulators

Top 12 Corporate NPAs Cost Exchequer Twice As Much As Farm Loan Waivers

RBI denies social media rumours about closure of 9 commercial banks

Karnataka Bank reports fraud of Rs. 40 crore

Hanung toys and Textiles Ltd was stated to be a non-performing asset and wilfully defaulting company

FraudImage Courtesy: dailykiran.com

Last week, Karnataka Bank, reported a fraud of Rs. 40.39 crore in the credit facilities to Hanung Toys and Textiles Ltd, on account of diversion of funds, which has been declared a non-performing borrowing account, the Deccan Herald reported.

Hanung Toys and Textiles Ltd dealing with the bank since 2008 had availed various credit facilities under consortium arrangement since 2008 where Karnataka Bank was one of the member banks.

The company owes Rs. 2,300 crore to a consortium of 15 lenders led by state-own Punjab National Bank, which alone has an exposure of Rs. 599 crore.

"On the basis of forensic auditor's report submitted to the consortium, some of the member banks have reported to the Reserve Bank of India (RBI) regarding fraud in the borrowing account.

"In line with the Consortium decision, Karnataka Bank has reported to RBI a fraud amounting to Rs 40.39 crore in the credit facilities extended earlier to the borrowing account, on account of diversion of funds," Karnataka Bank said.

The bank said that Hanung Toys and Textiles had been classified as a non-performing asset (NPA) in July 2015 and had been fully provided for and as such, no negative impact on the bank's profitability at present.

Several other banks too have declared Hanung Toys and Textiles Ltd to be a wilful defaulter.

Hanung Toys and Textiles Limited

Hanung Toys is promoted by Ashok Kumar Bansal. He has been an IKEA supplier for 15 years and his company had been in the news for a hefty order worth Rs. 600 crore by the Swedish retailer in 2007.

Its toy manufacturing units are set up in the Noida Special Economic Zone (SEZ) and its production units include facilities in Roorkee, Bhiwandi and Noida set up to make toys and home furnishings.

In 2018, PNB had taken Hanung Toys and Textiles Ltd to the bankruptcy courts for unpaid loans. The PNB-led consortium of lenders had collectively loaned the amount to the toy-maker around three years ago in debt restructuring for around 1,800 crore.

In November 2019, authorities detained Ashok Kumar Bansal and his wife Anju Bansal, who were on their way back from Dubai, at the Delhi Airport following a lookout notice issued by the Punjab National Bank.

The Free Press Journal reported that a corporate debt restructuring plan crafted by the company four years ago failed to take off as Ashok Bansal, the Chairman couldn’t bring in his share of equity which stood at Rs. 82 crore which led to an increase in outstanding dues to Rs. 2,300 crore.

Wilful defaulter

In November 2019, the Reserve Bank of India (RBI) released a list of top 30 wilful defaulters in response to an RTI application filed by The Wire. The application came in four years after the Supreme Court had directed the RBI to disclose a list of wilful defaulters in India. While MehulChoksi’sGitanjali Gems stood at the top with a default amount of Rs. 5,044 crore, Hanung Toys and Textiles showed a default amount worth Rs. 949 crore.

The corporate debt restructuring (CDR) cell in 2015 had pointed out that according to data, every three cases approved for debt repair under the CDR mechanism had failed and exited the cell. In July that year, Hanung Toys and Textiles Ltd had exited the cell after failing to implement the CDR package.

The reasons for this, sources told Livemint were that failures occurred mostly due to the promoter’s inability to bring in his share of contribution apart (as was in the case of Ashok Bansal) from the company’s inability to meet business projections.

Karnataka Bank fraud list

Apart from the recent fraud reported by the bank in the case of wilful defaulting by Hanung Toys and Textiles Ltd, the bank in November had reported a fraud of Rs. 13.36 crore on account of diversion of funds, in the working capital facility extended to SRS Finance Ltd.

In 2018, it had reported a fraud totaling Rs. 86.47 crore in loans extended under consortium agreements to MehulChoksi’sGitanjali Gems. In a BSE filing it said, “The bank has reported a fraud to Reserve Bank of India amounting to Rs86.47 crore in the fund based working capital facilities extended to Gitanjali Gems Limited on account of non-realization of exports bills and diversion of funds.”

This year, the RBI had slapped a fine of Rs. 4 crore on the bank for violating regulatory norms. The charge was levied due to the failure of the bank with regards to the delay in implementation of four of the Swift related operational controls.

In July this year, the bank launched a web tool named VASOOL SO-Ft (VASOOL SO FAST) to digitalise the NPA recovery process.

The bank has reported a 5.3 percent year-on-year decline in its net profit at Rs. 105.91 crore for the quarter that ended in Sept 30, 2019. Even with the regulatory disclosures on bad loans, the bank was working to keep its NPAs below five percent. CEO & MD MAhabalaeshwara MS had told Business Standard last year, "There was actually no pain in the sense that we have exposure to some corporates through the consortium. With the change in NPA recognition norm, we had to recognise a few of those accounts as NPA because of default by these groups on loans from other banks. We took this opportunity to clean up our balance sheet and make adequate provisions.”

This year, the percentage of its NPAs rose to 4.78 percent against 4.66 percent in the same quarter last year, with values standing at Rs. 2,594.27 crore this year against Rs. 2,371.62 crore last year.

NPAs haunting Indian banks

In response to an RTI application filed by CNN-News 18, the Indian banking system, in the past three years has lost Rs. 1.76 lakh crore for writing off non-performing loans to 525 defaulters, with each of the defaulters owing Rs. 100 crore or more.

The responses to the RTI showed that there had been a constant increase in the amount written off by commercial banks since 2014 – 15 with the sharpest upsurge in 2017 and 2018, post demonetization.

In 2015, loans to the tune of Rs. 40,798 crore were written off. This number increased to Rs. 69,976 crore in 2016, Rs. 127,797 crore in 2017 and Rs. 217,121 lakh crore in 2018.

Newsclick reports that the write-offs are in accordance with an RBI directive that had asked the scheduled commercial banks to come clear on the amount to be written off and set the accounts straight. These write offs simply meant the uncollectible debt.

The State Bank of India (SBI) had written off the highest amounts of such bad loans, followed by PNB, IDBI, Bank of India, Corporation Bank, Bank of Baroda, Central Bank of India, Axis Bank and ICICI Bank.

After the Punjab and Maharashtra Cooperative Bank (PMC) Bank scam worth over Rs. 6,000 crore rocked the country, political interference has emerged as one of the main obstructions in clearing up sheets and restoring the health of banks. Though the RBI has taken steps in the right direction – taking wilful defaulters to insolvency courts, will it actually be able to pull up big ticket defaulters like Hanung Toys or Gitanjali Gems by staying autonomous and out of the unholy nexus between the government and the corporates?

Related:

Banks merger 'reflects' Modi's pro-corporate slant: Public sector units deserve to die

Liquidity crisis in India’s shadow banking sector is a wake-up call for government and regulators

Top 12 Corporate NPAs Cost Exchequer Twice As Much As Farm Loan Waivers

RBI denies social media rumours about closure of 9 commercial banks

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BPCL Divestment: Who Benefits?

Finance Minister Nirmala Sitaraman's recent announcement on divesting two state-run companies, Air India and BPCL has created a furore.

20 Nov 2019

Finance Minister Nirmala Sitaraman's recent announcement on divesting two state-run companies, Air India and BPCL has created a furore. The decision would help the government meet its divestment target of Rs 1 lakh crore in the current fiscal year. With the Reliance Industries expected to play a role in the deal, the question arises that will Reliance become the ultimate beneficiary of the deal? 

Courtesy: News Click

BPCL Divestment: Who Benefits?

Finance Minister Nirmala Sitaraman's recent announcement on divesting two state-run companies, Air India and BPCL has created a furore.

Finance Minister Nirmala Sitaraman's recent announcement on divesting two state-run companies, Air India and BPCL has created a furore. The decision would help the government meet its divestment target of Rs 1 lakh crore in the current fiscal year. With the Reliance Industries expected to play a role in the deal, the question arises that will Reliance become the ultimate beneficiary of the deal? 

Courtesy: News Click

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75,000 BSNL Staff Opt For VRS, Unions Blame Management for ‘Fear Psychosis’

The employees’ fronts have urged the BSNL management to engage trade unions for “constructive discussions and feedback, instead of VRS Mela.

13 Nov 2019

BSNL

File Photo.

New Delhi: Within just a week after the rolling out of the scheme on November 4, as many as 70,000 employees of the state-owned telecom company, BSNL, have opted for voluntary retirement, BSNL Chairman and MD, P K Purwar, told news agency PTI. As of November 12, the number of employees opting to retire crossed the 75,000 mark, Newsclick has learnt.

Meanwhile, another BSNL contractual employee in Kerala reportedly committed suicide on Tuesday due to non-payment of salaries, taking the total number of such deaths to eight so far.

BSNL had set an internal target of 77,000 employees opting for the Voluntary Retirement Scheme (VRS), which is open till December 3. As per the industry sources, the target will be achieved in the next two to three days.

Though the BSNL management is reportedly set to save crores in wage bills, the unexpected response among the executives and employees for the early retirement presents a worrisome picture of the road ahead for the corporation.

Foremost among these worries is the continuity of business as the workforce will be hit severely by the scheme. The current manpower strength of the state-owned corporation stands at nearly 1.60 lakh as of date. With almost half of them set to be relieved from duty by January next year, as per the schedule of the scheme, how the telephone exchanges to be manned and operations to be carried out remains a concern that is yet to be addressed by the government.

In a letter dated November 11 to BSNL’s Chairman and MD, Sanchar Nigam Executives Association shared similar apprehensions, urging the management to “engage the trade unions for constructive discussions and feedback, instead of VRS Mela.”

“More than 17,000 exchanges in the rural areas are loss-making and maintained by the BSNL employees. After VRS, it cannot be maintained by BSNL. It will be closed down before 31.01.2020 as we will not be able to maintain those exchanges.” the letter said.

According to the employees’ front, the scheme will also lead to increased work pressure over the remaining workforce which will have adverse effects over the telecom company’s day-to-day working.

Another equally disturbing concern is the outsourcing of jobs as a solution to addressing workforce shortage. In the wake of the apprehensions raised by the All Unions and Associations of BSNL (AUAB) to the management in a meeting held on November 7, the company is exploring the options on the table, one of which is outsourcing.

“Functions such as plant maintenance and running of rural exchanges may see some impact due to the absence of manpower after the VRS. We are taking care of this through an outsourcing model,” The Times of India quoted Purwar as saying.

However, as per the employees’ front, outsourcing of all the works may not be feasible and economical. Also, it leads to the worsening of the working environment for employees.

Abhimanyu P, General Secretary of the BSNL Employees Union has termed it a scheme to eventually “privatise” BSNL and MTNL, the state-owned sister telecom companies.

“Reducing manpower, cutting employees cost, restoring the operational profits, the objective behind all these measures is to privatise the corporation…In the name of restructuring, the resources will be sold off to the corporate patrons,” Abhimanyu told Newsclick.

With rumours such as retirement age to be changed to 58 from 60 and BSNL to shut down its operations any time soon, the management has created a “fear psychosis” among the employees which is the reason behind the unexpected response among the executives opting for an early retirement.

“The salaries of November have still not been disbursed,” he added, “and the message that it sends to the employees is that if you stay, this is how things are going to be.”

Speaking of salaries, one must not forget that over a lakh contract workers of BSNL across the country have not been paid for last 10 months. As many as eight cases have been reported where the temporary workers, owing to the non-payment of the salaries, have killed themselves. To them, the Modi government’s announced rescue package brings nothing, neither revival nor an end to their struggle.

Courtesy: NewsClick

75,000 BSNL Staff Opt For VRS, Unions Blame Management for ‘Fear Psychosis’

The employees’ fronts have urged the BSNL management to engage trade unions for “constructive discussions and feedback, instead of VRS Mela.

BSNL

File Photo.

New Delhi: Within just a week after the rolling out of the scheme on November 4, as many as 70,000 employees of the state-owned telecom company, BSNL, have opted for voluntary retirement, BSNL Chairman and MD, P K Purwar, told news agency PTI. As of November 12, the number of employees opting to retire crossed the 75,000 mark, Newsclick has learnt.

Meanwhile, another BSNL contractual employee in Kerala reportedly committed suicide on Tuesday due to non-payment of salaries, taking the total number of such deaths to eight so far.

BSNL had set an internal target of 77,000 employees opting for the Voluntary Retirement Scheme (VRS), which is open till December 3. As per the industry sources, the target will be achieved in the next two to three days.

Though the BSNL management is reportedly set to save crores in wage bills, the unexpected response among the executives and employees for the early retirement presents a worrisome picture of the road ahead for the corporation.

Foremost among these worries is the continuity of business as the workforce will be hit severely by the scheme. The current manpower strength of the state-owned corporation stands at nearly 1.60 lakh as of date. With almost half of them set to be relieved from duty by January next year, as per the schedule of the scheme, how the telephone exchanges to be manned and operations to be carried out remains a concern that is yet to be addressed by the government.

In a letter dated November 11 to BSNL’s Chairman and MD, Sanchar Nigam Executives Association shared similar apprehensions, urging the management to “engage the trade unions for constructive discussions and feedback, instead of VRS Mela.”

“More than 17,000 exchanges in the rural areas are loss-making and maintained by the BSNL employees. After VRS, it cannot be maintained by BSNL. It will be closed down before 31.01.2020 as we will not be able to maintain those exchanges.” the letter said.

According to the employees’ front, the scheme will also lead to increased work pressure over the remaining workforce which will have adverse effects over the telecom company’s day-to-day working.

Another equally disturbing concern is the outsourcing of jobs as a solution to addressing workforce shortage. In the wake of the apprehensions raised by the All Unions and Associations of BSNL (AUAB) to the management in a meeting held on November 7, the company is exploring the options on the table, one of which is outsourcing.

“Functions such as plant maintenance and running of rural exchanges may see some impact due to the absence of manpower after the VRS. We are taking care of this through an outsourcing model,” The Times of India quoted Purwar as saying.

However, as per the employees’ front, outsourcing of all the works may not be feasible and economical. Also, it leads to the worsening of the working environment for employees.

Abhimanyu P, General Secretary of the BSNL Employees Union has termed it a scheme to eventually “privatise” BSNL and MTNL, the state-owned sister telecom companies.

“Reducing manpower, cutting employees cost, restoring the operational profits, the objective behind all these measures is to privatise the corporation…In the name of restructuring, the resources will be sold off to the corporate patrons,” Abhimanyu told Newsclick.

With rumours such as retirement age to be changed to 58 from 60 and BSNL to shut down its operations any time soon, the management has created a “fear psychosis” among the employees which is the reason behind the unexpected response among the executives opting for an early retirement.

“The salaries of November have still not been disbursed,” he added, “and the message that it sends to the employees is that if you stay, this is how things are going to be.”

Speaking of salaries, one must not forget that over a lakh contract workers of BSNL across the country have not been paid for last 10 months. As many as eight cases have been reported where the temporary workers, owing to the non-payment of the salaries, have killed themselves. To them, the Modi government’s announced rescue package brings nothing, neither revival nor an end to their struggle.

Courtesy: NewsClick

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