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India faces military, health & economic threats, govt must restore faith, says Manmohan Singh

In a column for The Hindu, former PM Manmohan Singh advocates significant cash transfers to the poor, better access to capital for firms and autonomy for financial institutions and RBI.

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Manmohan Singh

New Delhi: India is confronted with a dangerous trinity of military, health and economic threats and it is imperative that the government restore the confidence of people in banks and businesses, said former prime minister Manmohan Singh Monday.

In a column published in The Hindu, co-authored with Congress leader Praveen Chakravarty, Singh said that India cannot afford to be fiscally restrained in these distressing times and, therefore, higher borrowings by the government are inevitable.

Singh and Chakravarty pointed out that since the global economy is set to experience one of its worst years because of the Covid-19 pandemic, Indian economy will also contract significantly, for the first time in decades.

A contraction in the economy will reverse many years of progress, push many people into poverty, force firms to shut shop and lead to severe unemployment, they wrote.

The Indian economy is forecast to contract by at least 5-10 per cent in the current year.

Furthermore, according to data from the Centre for Monitoring Indian Economy (CMIE), salaried jobs that were lost in April and May are recovering at a sluggish pace.

Anecdotal evidence shows that many businesses have also shut down due to the complete halt in economic activity in the two months following the lockdown announcement on 24 March.

Meaningful cash transfers can restore confidence in poor

In their column, Singh and Chakravarty highlighted that it is important to allow institutions like the Reserve Bank of India, state-owned banks and other regulators to function freely and professionally, to restore people’s confidence in the financial system.

“There is also a dire need to restore confidence in the financial system which acts as the vital lubricant for the economy. COVID-19 assistance measures undertaken by the RBI and the government such as interest rate reductions, credit guarantee and liquidity enhancement schemes are welcome steps, but they have largely failed since banks are not confident of lending,” they wrote, adding that reviving the health of the banking sector is not merely about capital infusion or disinvestment of public sector banks.

They noted that the government needs to look at not only the GDP numbers for its diagnosis of the economy but also at the prevailing underlying sentiment of fear and uncertainty.

They also noted that there is “extreme duress” among the poor in the country, and a “meaningful cash transfer” can restore confidence in these families. The authors dismissed the moral hazard fears that large cash transfers will discourage labour to return to work in industries.

“Money in the hands of people can provide an immediate sense of security and confidence, which is the cornerstone to restoring economic normalcy,” they added.

Deficit monetisation should be last resort 

Singh and Chakravarty also pointed out how confidence can be restored in banks and businesses.

“Restoring confidence in people through direct cash assistance and other welfare programmes can help them live their lives and spend. Restoring confidence among bankers through autonomy of institutions and processes will help them lend. Restoring confidence among businesses with greater access to capital will help them invest and create jobs” they wrote.

The authors added that India must make full use of loan programmes of the International Monetary Fund and World Bank.

However, they warned that deficit monetisation — RBI directly lending to the government — should be the government’s last resort.

“Deficit monetization imposes high intangible and institutional costs, as we have experienced in the past. It is perhaps prudent to adopt deficit monetization as the last resort when all other options are exhausted,” they wrote.

Singh and Chakravarty pointed out that India entered the Covid-19 pandemic in a “precarious position” — slowing growth, rising unemployment and a choked financial system — and the pandemic exacerbated the situation.

Taking a swipe at the Narendra Modi government, they said that diverting people’s attention from the health, military and economic threats through “choreographed events and headlines will not make them disappear”.

Blog

Rail-Roko: Farmers continue to block tracks in Amritsar against farm bills

Farmers, under the banner of the Kisan Mazdoor Sangharsh Committee, have been staging a sit-in on the rail track in Punjab since last Wednesday

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Farmers Protest

Farmers squatted on the Amritsar-Delhi railway track here on Sunday, continuing their ‘rail-roko’ agitation against the contentious farm bills passed by the Parliament last week.

People from nearby villages brought cooked food and other items for the demonstrators. ‘Langar’ (community kitchen) has also been organised at the site by local gurdwaras.

Women wearing saffron dupattas also joined the protest, raised slogans against the Centre and said they would not allow the implementation of the three legislations.

Farmers, under the banner of the Kisan Mazdoor Sangharsh Committee, have been staging a sit-in on the rail track in Punjab since last Wednesday.

Kisan Mazdoor Sangharsh Committee general secretary Sarwan Singh Pandher demanded that all the sitting 13 MPs from Punjab should tender their resignation with immediate effect in support of the farmers’ demands. He asserted that BJP leaders would not be allowed to enter villages.

The committee had announced to extend their agitation till September 29. Trains services remained suspended in the state because of the protest.

Farmers have expressed apprehension that the Centre’s farm reforms would pave a way for the dismantling of the minimum support price system, leaving them at the “mercy” of big companies.

Parliament had passed the Essential Commodities (Amendment) Bill, 2020; the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill; and the Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill. These are yet to get the assent of the President.

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Election

Ex-Bihar police chief Gupteshwar Pandey takes political plunge, joins JD(U)

Speculation is rife that he may be offered ticket to contest the assembly election from a seat in his native Buxar district.

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Gupteshwar Pandey IPS

Former Bihar police chief Gupteshwar Pandey, who took voluntary retirement from service a few days ago, joined the state’s ruling JD(U) on Sunday.

Pandey, an outspoken police officer, joined the party in the presence of Chief Minister Nitish Kumar, who is also the JD(U) president.

The 1987 batch IPS officer had strongly defended Kumar on the issue of institution of a CBI probe into the mysterious death of actor Sushant Singh Rajput.

Ever since he took VRS weeks before the October- November assembly elections, there was speculation that he could take the political plunge.

“Nitish Kumar ji personally called me and offered party membership with great love. I accepted it,” Pandey said.

“I don’t know anything about politics. I will do what I am asked to do,” he told reporters.

Speculation is rife that he may be offered ticket to contest the assembly election from a seat in his native Buxar district.

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India

President Kovind gives assent to three farm Bills amid farmer protests

The President’s assent to these bills comes amid the Opposition criticising the manner in which they were passed in Parliament.

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Ram Nath Kovind

New Delhi: President Ram Nath Kovind on Sunday gave assent to three contentious farm Bills that have triggered protests by farmers especially in Punjab and Haryana.

According to a gazette notification, the President gave assent to three Bills: The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, and The Essential Commodities (Amendment) Bill 2020.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 aims to permit the sale of agricultural produce outside the mandis regulated by the Agricultural Produce Marketing Committees (APMC) constituted by different state legislations.

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, provides for contract farming.

The Essential Commodities (Amendment) Bill 2020 deregulates the production, supply, distribution of food items like cereals, pulses, potatoes, onion and edible oilseeds.

The President’s assent to these Bills comes amid the Opposition criticising the manner in which they were passed in Parliament.

Even NDA’s oldest ally Shiromani Akali Dal (SAD) has parted ways on the issue of these farm Bills as farmers in Punjab and Haryana intensify protest.

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