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Great Leap Back For Forest Rights: Market Intelligence
Great Leap Back For Forest Rights: Market Intelligence
me/TheHindu_Zone_official
8 ISSUES AND INSIGHTS
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MUMBAI | TUESDAY, 2 APRIL 2019
O
ne of the key deficiencies of ways and means of price discovery counterproductive if the incremental usual March-April, managed to realise these messages-cum-advisories. If District Cricket Association, which is
agricultural marketing that and price risk-management in the returns do not even cover the storage 30 to 40 per cent higher prices. The more companies, especially those responsible for the stadium’s upkeep, has
has not received due attention agriculture sector are rather limited. expenses, which happens quite often average increase in earnings was engaged in agri-businesses, come for- important infrastructural issues and even
is the dearth of advance information Futures trading and, more important- in the case of potato, onion, tomato between ~100 and ~150 a quintal. ward to launch similar services, it internal politics to resolve first.
on anticipated price behaviour of dif- ly, options trading, which are the and other spoilage-prone products. Similarly, the cotton growers of would make farm marketing more
ferent crops — technically called mar- most common instruments of price The potential gains to farmers Gujarat, who went by the advisories remunerative and Indian agriculture
ket intelligence. This knowledge is discovery and price risk hedging the from credible market advice have circulated by the Junagarh centre of more profitable. All in the family
vital for farmers to take informed world over, are disallowed in India been demonstrated in a few pilot pro- the state agricultural university, When elections
decisions about what and how much for most farm commodities. Besides, jects ran by public sector farm gained around ~36,000, on an average. surinder.sud@gmail.com come, supporters
and party workers
are as important as
voters. But in
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he National Democratic Forest Conservation Act, which was absolute discretion to open any forest- and devise political strategy for his father.
Alliance (NDA) has proposed a used to regulate where and for what land to commercial plantations — It is the same with Jyotiraditya Scindia.
law to put around a fifth of reasons (such as mining and indus- either by the government or the private The party has put him in charge of
India’s geographic area — about tries) forests could be cleared. sector — in the name of increasing for- western Uttar Pradesh and he has to
708,273 square kilometres of forested With the pace of industrialisation est productivity or reducing green- occasionally visit the region. His son
lands — under a policing regime akin picking up after 1991, these laws accel- house gas emissions. This is a first. Mahanaryaman Scindia is active in the
to the Armed Forces (Special Powers) erated the usurpation of forest lands So far, despite an outcry by civil Guna-Shivpuri constituency with his
Act. The draft law, which has been cir- and resources by the powerful mining society, the Congress, too, has kept mother, Priyadarshini Raje.
culated to the states for comment, is and industrial groups. Data from the silent. On their part, forest officials jus-
called the Indian Forest Act, 2019. past 15 years shows that more than 90 tify the Bill saying it updates the legis-
Under it, the forest department gains per cent of the forest patches that lation to incorporate judicial interpre- Temple run
enhanced powers to shoot industry demanded were tations altering forest governance, Since its beginning, Dravidian politics has
at citizens, search and seize cleared for its needs. In par- address the challenges of climate been known for its atheistic views on policy
property and arrest people
even on mere suspicion of
allel, the high-handed man-
agement of forests tracts
FORCES OF NATURE change, meet the needs of a more peo-
ple-friendly approach to the issue and
and life. In tune with this legacy, the
(CONTENTIOUS PROVISIONS IN THE PROPOSED INDIAN FORESTS ACT 2019) Dravida Munnetra Kazhagam (DMK) is seen
committing a crime. People that had not been felled led empower bureaucracy to deal with the as an atheist party and its former president,
depending on these lands to the deep alienation of New provisions are to “Provide indemnity to Forest-officer using arms etc, to political pulls and pressures that
prevent forest offence. This indemnity shall be in addition to the immunity the late M. Karunanidhi, was known to be
— by government’s last esti- forest-dwellers. By the start impact the integrity of country’s a staunch and vocal atheist. His son and
mate in 2009, around 400 of the 21st century, brutal provided under Section 197 of Code of Criminal Procedure 1973 for certain forests. But as Shomona Khanna, a for- the current DMK president M K Stalin is also
million of India’s most and mass-scale evictions categories of public servant.” mer legal advisor to the tribal affairs not known as a believer and has made
marginalised and poor, were carried out in Indian ministry, points out, “A close analysis several remarks against the Brahmins and
THESE INCLUDE:
n No prosecution without sanction from n Anyone who is believed to have
largely tribals — would not forests, the principal cause of its provisions demonstrate that the their customs from time to time. However,
enjoy the same civil liber- of the law and order prob- draft crosses the boundaries of legisla- ahead of the Lok Sabha elections his wife,
ties as the rest of India’s citizens, the lems in central and eastern India. state government. Government to attempted to contravene or abet the tive competence of Parliament, making Durga Stalin, is busy visiting temples such
law provides. Under pressure from civil society, conduct inquiry by executive magistrate contravention of the law to be deemed to huge inroads into the legislative and as the Murugan temple in Palani and the
To underline the ultra-draconian the United Progressive Alliance (UPA) before giving sanction. be in violation of law. executive powers of state governments Meenakshi temple in Madurai to seek the
nature of the law, the Union govern- enacted the Forest Rights Act (FRA) in n Search and seize property even in case the n Burden on proof of innocence to be on over the forest lands.” blessings of these deities for the political
ment has helpfully prepared a table 2006. The new Act did not break down She adds, “In my view, therefore, future of Stalin. She, however, is not the
officer believes there is a likelihood of an accused in several instances. Accused to
demonstrating how the new law is the colonial architecture of the 1927 IFA quite apart from the violation of the only family member of a Dravidian leader
offence being committed. be presumed guilty till proven otherwise.
more stringent than the earlier one but bypassed it in parts. On paper, it FRA and basic principles of criminal to be visiting temples this poll season. Also
(see chart). moderated the powers of the top polit- justice, the Draft Bill needs to be reject- going to these places of worship are the
In a sense, the proposed law repre- ical executive and the forest bureau- however, the political executive and amend the Land Acquisition Act, ed in its entirety because it makes a respective spouses of Chief Minister
sents a continuum of two laws: A cracy by vesting in village councils the bureaucracy clawed back their which would have diluted the rights of complete mockery of the basic consti- Edappadi Palaniswami and his deputy
British-era one and the other enacted statutory power to govern a part of the powers -- the veto for clearing forests land-losers, it backed off. tutional principle of federalism and O Panneerselvam, who are both spiritual
33 years after independence. The 1927 forests over which rights were restored was diluted in several cases, and paper- That was a temporary move. In decentralisation of power.” themselves. Meanwhile, Thirumavalavan,
Indian Forest Act (IFA) summarily to the forest-dwellers. On paper, the work was made so onerous that tribals 2018, the FRA was challenged before The states are expected to respond the president of Viduthalai Chiruthaigal
extinguished all rights of tribals and village councils got a veto over the struggled to prove rights over the lands Supreme Court by some animal rights to the draft by early June. The political Katchi (Liberation Leopard Party) — who is
other forest-dependent communities Union environment minister in decid- they had inhabited for generations. groups, but the Union government ini- dispensation in power will have then often alleged by the right wing as
and gave the colonial power command ing if the forests would be cleared for When the NDA government came to tially sat out the crucial hearings. Then, have an opportunity to decide if forest somebody who opposes Hinduism — was
over the forests (principally to secure industrial purposes. power it tried to undercut the Forest earlier this year, the apex court’s ruling governance should be overhauled to seen visiting a Nataraja temple.
timber). The law enabled the state to By the end of UPA’s second tenure, Rights Act, but after its failure to raised the prospect of evicting more go back in time or move forward.
J
obs has taken centre-stage in this mally adopted flexible inflation targeting Give a man a fish and you feed him for a I appreciate the write up. As far as data on NYAY may survive this election irre- or other authorities.
election. While the government is on in India. Since then, inflation has declined day; teach a man to fish and you feed him of employment is concerned, I feel it spective of the Congress’ fortunes. In Second, the payment should be to
the defence (no pun intended), the and remained in control. The RBI can for a lifetime — goes the old adage. can be captured in steps or in parts. A India, the system is apparently comfort- unemployed members of families
Opposition is gunning hard on the jobs claim success. But, this success may have Governments do find the resources problem cannot be solved immediately able to retain a target catchment area of which have no earning members with
front. The Congress, which was the main come at the cost of high unemployment. to fund their pet projects. The biggest but can be handled in phases. To start people below the poverty line poor and income over a pre-decided threshold
opposition party in the state elections of The monthly unemployment series problem with NYAY (Nyuntam Aay with, the industrial training institutes illiterate, to ensure availability of cheap limit and limited to the real gap
November 2018, made several promises to from CMIE is young as it starts only in Yojana) is not the resources or the across India are doing a marvellous job labour (now rechristened as outsourced between the threshold level and the
provide some relief to select unemployed 2016. Further, the series was disrupted by administrative nightmares of identifying through trainers, technical faculties work) in different sectors. actual. Third, the funding could be from
in its campaigns and reaped benefits. demonetisation which crashed the labour the poor or the perverse impact of and teachers who are making painstak- It is in this context that we are pre- a corpus created by contributions from
But, such promises cannot go very far. force participation rate in the months fol- preservation of the scheme. ing efforts to skill youngsters. pared to dole out a portion of taxpayers’ prospective employers who will benefit
No political party can really promise jobs lowing demonetisation in November The biggest problem with the scheme We have the data of all industrial money to keep a “reserve” of illiterate from the skill development initiatives.
because this is mistakenly construed as a 2016. Data from November 2017, a full is that it will worsen India’s biggest prob- training institutes (ITIs) pan-India. and idle people who will be available on M G Warrier Mumbai
promise for government jobs and the gov- year after demonetisation suggests that lem on the labour front. It will keep the Secondly, data of all the students who call at starvation wages to do unskilled
ernment is not very enthusiastic in offer- the Philips curve seems to be at work in labour force participation rate low or it graduated last year and are still in work without any demand for fair
Letters can be mailed, faxed or e-mailed to:
ing jobs itself. Of course, no party can the short run in India. i.e. low inflation is may even depress it further. We need touch with teachers and friends still wages. The Editor, Business Standard
explicitly promise jobs in the private sec- accompanied with high unemployment. more hands to the till, not less. Feeding in these ITIs can be accessed through The arithmetic which is making the Nehru House, 4 Bahadur Shah Zafar Marg
tor. But, they need to do something about This is of course, very preliminary. them without work will keep them away the institutes. author Karan Thapar uncomfortable New Delhi 110 002
this elephant in the room. But, if there is indeed a relationship from work. This would be a structural Thirdly, information about those may be ignored by the common man Fax: (011) 23720201 · E-mail: letters@bsmail.in
Unlike inflation, which has proven between inflation and unemployment at damage to the economy and to society. who are studying in the final semester and any word uttered against NYAY is All letters must have a postal address and telephone
political power, the unemployment rate play in India then law makers need to take India already has among the lowest and will pass in due course will be read- likely to be interpreted as a criticism of number
has historically not been a macro-eco- a stance on the combination of inflation labour force participation rate in the ily available. These data can be cap-
nomic indicator with similar electoral and unemployment they prefer, and not world. NYAY will make it worse. tured and in WhatsApp, we have a > HAMBONE
potency in India. It is worth wondering if just inflation. NYAY is the outcome of India’s neglect great tool to connect students with the
it was a political conspiracy to never mea- Government apologists are busy of the severe jobs challenge that it has industrial belts and factories. By the
sure the unemployment rate as a fast-fre- counting the creation of jobs. But, the been facing. It is best used as a temporary time, the last batch graduates, they
quency indicator so far. If there are no problem is not the creation of jobs — jobs reprieve before we start using the unem- would also get engaged and the process
measurements then there are no argu- are always created. The current problem ployment rate and the labour force par- can be replicated next year. As skill
ments. But, fast-frequency measurement is that on a net basis these are not ticipation rate as macro-economic indi- management trainees are needed in
of the unemployment rate and a host of enough. The important macroeconomic cators of economic and political relevance nearby industries and factories,
other labour market indicators are now metrics are the prevalence of a high along with the inflation rate. WhatsApp groups on smartphones can
well established. CMIE has started this unemployment rate and in the case of do wonders. Now various vacancies
and the government will eventually pro- India also the low and falling labour The author is the MD & CEO of CMIE opening up in industrial belts can be
linked with WhatsApp group of all ITIs.
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OPINION 9
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he official data is now available for India’s external account in the
giving oneself more time to identify, profile and inter-
third quarter of the financial year 2018-19, between October and cept it. Ideally, surveillance satellites should monitor
December 2018. According to the statistics, the current account enemy territory to pick up the “plume” of the missile
deficit stood at 2.5 per cent of gross domestic product, or GDP. A when it is fired, with detection automatically activating
lower price of crude oil flattered the balance of payments, allowing the current the ABM system. While the DRDO is working on such
account deficit to come down from the dangerously high 2.9 per cent of GDP,
which was recorded for the second quarter of 2018-19, between July and
September 2018. The overall current account deficit for the period between
Fighting for space satellites, the current ABM system relies on the so-
called Long Range Tracking Radar (LRTR), derived
from the Israeli Green Pine radar, which detects aggres-
sor ballistic missiles 1,000 kilometres away.
April and December 2018 stood at 2.6 per cent of GDP, a big step up from the
1.8 per cent of GDP recorded in the same period of the previous year.
The A-SAT test would require two years of preparation, making it The crucial endgame is the exquisitely precise
business of interception. The incoming ballistic mis-
India’s long-term vulnerability to fluctuations in the price of oil and gas hard to argue that it was an impulsive government decision sile would have slowed down to about 2 km/second,
thus continues to be on display. Unfortunately, Indian exports have continued while the interceptor, which has less than two min-
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to be relatively stagnant, meaning that the current account deficit is dependent ast Wednesday’s anti-satellite (A-SAT) test, in ance system homes the missile onto the strike point, utes to reach 150 km altitude, would be accelerating
almost entirely on global commodity prices. This dependence on external which a Defence Research & Development compensating for variations in launch and during the to the same hypersonic velocity. Given their relative
Organisation (DRDO) interceptor missile mid-course phase. At the end of its 5,000-km journey, velocity of 4 km/second, ensuring that the ABM “kill
energy can only be considered to be a manageable problem if there is solid
destroyed a satellite 300 kilometres (km) above the the Agni-V lands within “a few hundred metres” of its vehicle” explodes within 10 metres of the incoming
and sustainable financing of the current account deficit. However, another earth, raises several questions. There are allegations intended strike point, says the DRDO. missile requires an accuracy of about one-thousandth
structural problem appears to be developing in the Indian economy, one which that the test was politically motivated and conducted A ballistic missile’s actions are all pre-programmed of a second.
enhances the already problematic vulnerability on the external account. with an eye on the coming general elections rather to make it fully autonomous after launch. Receives This has been actually achieved. As the interceptor
Attracting stable capital flows has become increasingly difficult. Net foreign than by any real need to validate and demonstrate commands during its flight would make the missile thunders up towards the incoming missile, an ABM
direct investment has not seen an appreciable increase. In the period between India’s A-SAT capability. Others have argued this vulnerable to enemy disruption. uplink station beams it the target data — its position,
April and December 2018, net FDI was just under $25 billion; in the equivalent underscores the government’s commitment to military velocity and manoeuvres. Powered by its first two sol-
R&D. To grasp the technicalities of the debate, one Anti-ballistic missile (ABM) id-fuel stages, the interceptor guides itself towards the
period of the previous year, it had been just under $24 billion. must understand three interlinked technologies — An ABM system is geared to shoot down ballistic mis- target. Once the “kill vehicle” radar seeker locks onto
NRI deposits have also largely stagnated. India is thus dependent on hot ballistic missiles, ballistic missile defence (BMD) and siles and is deployed around high-value targets like the incoming missile, its liquid fuel “divert thrusters”
money flows — portfolio investment, which is subject to the vagaries of inter- A-SAT interception. cities or national command posts. Detecting, identi- manoeuvre it towards it. At the precise millisecond it
national finance. Between April and December 2018, this hot money largely A ballistic missile works on the fying, profiling and then shooting is closest to the aggressor missile, a proximity fuse
left India. It appears that portfolio investment registered a net drain of capital simplest of principles, akin to the down an incoming ballistic missile detonates the kill vehicle, destroying or disrupting the
of almost $12 billion in the period; in the equivalent period of the previous country fair game of ringing a duck. is highly complex, especially since ballistic missile.
Where a ballistic missile lands the enemy might have fired several
year, there had been a net inflow of almost $20 billion. It is possible that Anti-satellite (A-SAT)
depends largely upon the direction missiles to assure himself of success-
portfolio investment has again reversed in the period since December, but and force with which it is thrown. fully striking the target. Shooting down a satellite requires technologies almost
that only underlines the unmanageable and unpredictable nature of such Typically, a long-range ballistic A missile can theoretically be identical to those that have driven the DRDO’s ABM
flows. The balance of payments has been in deficit for the third quarter in a missile like the Agni-V is stored in, shot down anytime in its trajectory: tests since 2008. One key difference is that a satellite
row as of December 2018. This indicates that, while the earlier danger zone and fired from, a hermetically sealed During its boost, mid-course or ter- is engaged at a higher altitude — at 300 km, rather
for the current account deficit, because of strong capital inflows, was at around canister. At launch, a gas generator minal phases. It is most vulnerable than 30-150 km in the ABM tests. An upgraded propul-
3 per cent of GDP, that danger zone has now been lowered. Even a current inside the canister ejects the 50-tonne during its boost phase, when it is sion system is required to take the kill vehicle up to
missile upwards at 20-25 metres per travelling relatively slowly and can- that altitude.
account deficit of 2.5 per cent of GDP is sufficient to stress the external account
in a scenario in which net FDI has stagnated.
second. Once outside, its massive BROADSWORD not manoeuvre or deploy counter- Further, striking a satellite requires more stringent
first-stage rocket motor ignites, pro- measures. But the boost phase lasts accuracy, since the target moves significantly faster
It is clear that these structural problems need to be more carefully pelling the missile upwards. Within
AJAI SHUKLA for barely 300 seconds (5 minutes), (about 27,000 km per hour) than the incoming ballistic
addressed. The fact that India is nowhere near a crisis at the moment does 30 seconds, it goes supersonic and, a giving an interceptor insufficient missiles simulated in ABM tests. On the other hand,
not mean that there are no signs on the horizon that a crisis has become more minute later, when the first stage finishes and the sec- time to reach a launch area that could be thousands engaging a satellite is easier because it moves along a
probable if conditions were to turn adverse. The next government will have to ond stage ignites, the missile is travelling at five times of km away. well-known flight path and behaves in an entirely pre-
focus on increasing exports and on creating more attractive conditions for the speed of sound. By the time the third stage burns The mid-course phase, which could last 1,200 sec- dictable manner without engaging in evasive manoeu-
out and the “boost phase” finishes, the missile is 1,200- onds (20 minutes), provides a longer window for engag- vres like an incoming ballistic missile.
long-term investment in India.
1,400 km above the earth, moving purely on momen- ing the incoming missile. However, it would still be The timing of the A-SAT test raises other questions.
tum at six times the speed of sound. far away, travelling extremely fast and possibly deploy- On the one hand, a decision to demonstrate A-SAT
That momentum carries the warhead 5,000 km ing decoys. The ABM system must distinguish the capability would require at least two years of DRDO
RBI’s challenges towards the target during its “mid-course phase”, with
gravity progressively pulling it down towards the earth.
While re-entering the atmosphere, intense friction
decoys from the mother vehicle and also identify the
missile, its target and its terminal velocity — parame-
ters essential for engaging the missile.
preparation to translate into a test, making it hard to
argue that this was an impulsive government decision
directed towards electoral benefits. However, it is also
High core inflation and weak transmission key hurdles heats the missile’s nose cone to 3000-4000 degrees The terminal phase, therefore, provides the most hard to argue, as many do, that India was driven to
centigrade. During the 45 seconds of re-entry, the mis- realistic opportunity for engagement. The comput- test for fear of being left out of a space security regime,
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he main takeaway from the last monetary policy review of the sile’s carbon-resin nose cone sacrifices itself, burning erised ABM command system would have calculated being discussed in Geneva. As Christopher Clary of
Reserve Bank of India in February was a growing realignment off layer after layer and absorbing the heat without engagement parameters and the interceptor missile the University at Albany tweeted: “Isro (Indian Space
between the financial stability concerns of the central bank and passing it on to the warhead inside. must now travel less distance. Further, atmospheric Research Organisation) is a space superstar and India
the economic growth concerns of the Central government. In that During this “terminal stage”, to make the missile’s drag would have slowed down the incoming missile is a nuclear power. There was a zero per cent probability
trajectory unpredictable and difficult to intercept, the significantly. that a space security regime was going to be negotiated
sense, the first policy review under RBI Governor Shaktikanta Das was a sig-
warhead starts manoeuvring. At the same time, a guid- Since any error might result in a city being without India’s buy-in.”
nificant milestone after several months of rather acrimonious interaction
between the two sides. The Monetary Policy Committee’s (MPC’s) decision
in February had two key elements: The repo rate was cut by 25 basis points;
and the MPC altered the RBI’s policy stance from “calibrated tightening” to
“neutral” — a move that led many market participants to start expecting
another rate cut in the April policy review, due to be announced on Thursday.
The political economy of justice
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he second theorem of welfare economics of public finance, each intimately concerned with permit them to earn a stable and adequate income
To a great extent, a rate cut, especially of another 25 basis points, is likely. posits that any desired income distribution delivering justice in different dimensions. from their occupations, even while there has been a
That’s because the headline retail inflation rate has remained well within can be achieved when an economy is at full The allocation branch seeks to intervene so that quantum expansion in agriculture output. Clearly,
the RBI’s target of 4 per cent, even though it has moved up a tad. It is quite potential by taxing those who earn more than society the price system does not militate against the delivery there has been a failure to deliver “justice as fairness”
possible that the sharp downward revision of the retail inflation rate and wishes and transferring these to those who earn less. of justice. Relative prices regulate both incomes and in the agriculture space. Income transfers to compen-
inflation expectation that marked the February policy may continue to hold I have previously argued that universal basic income affordability, and these must be consistent with secur- sate for the lack of “justice as fairness” will not solve
steady. Beyond inflation worries, a rate cut is also likely for reasons for poor proposals essentially genuflect to this theorem. In ing both types of justice. the problem. Interventions like the elimination of mid-
this column, I address the political economy under- The stabilisation branch ensures that macroeco- dlemen, land reforms and equal access to agricultural
growth. Fitch Ratings has recently cut India’s growth forecast for 2020 to 6.8
lying the transfers recently proposed by the national nomic conditions secure “justice as fairness” and do services are important to secure both types of justice.
per cent from 7 per cent; and Japanese brokerage Nomura says the likelihood political parties. not exacerbate distributive injustice. Income transfers can play a positive role if, and only
of the Indian economy’s growth dropping below 7 per cent in 2020 is very The political economy argument for transfers rests The transfer branch secures a minimum level of if, these allocative interventions work.
high. The key indicators paint a worrying picture. For instance, the index of on the case for justice. John Rawls distinguishes income and/or universal access to public and merit The problem of poverty has been addressed in a
industrial production (IIP) fell by 1.7 per cent in January, as against a 2.6 per between “justice as fairness” and “distributive justice”. goods that would not be secured by relying solely on substantial manner, though not fully, in the course of
cent rise in December. Especially disappointing is the weak performance of The first requires that economic the market mechanism, thus secur- India’s development transformation. However, the
the manufacturing and electricity sectors. Similarly, consumer demand across arrangements are consistent with ing “justice as fairness.” contemporary recognition that the Indian population
equal liberties and equality of oppor- The distribution branch is con- vulnerable to falling into poverty is a multiple of those
urban and rural areas is weakening. Brokerage houses suggest that consump-
tunity. In a growing market economy, cerned with securing justice in dis- actually in that condition points clearly to a failure to
tion across sectors — from cement to steel and from power to automobile — the more inclusive the growth process tributive shares. deliver justice as fairness. There can be no dispute that
has been faltering. Given the dovish policy stance of the US Federal Reserve — the more people participate in, and The motivation behind the desire this is the case when the leading indicators of the
and the overall softening of global growth momentum, the MPC is widely derive benefits from participating in to maximise growth is simply to Indian economy are about things consumed by the
expected to push for another cut this time. delivering economic growth — the increase the economic common- top 10 per cent. Income transfers to the excluded poor
However, there are a couple of worrying details that spoil this clear policy more “justice as fairness” is secured. wealth such that the size of the eco- can only compensate for the lack of “justice as fairness”
prescription. One, while headline inflation remains under control, there has “Distributive justice” is about nomic pie is not a barrier to “justice in the growth process, not address it.
correcting for inherited advantages as fairness”. Recognising that the In both cases, an instrument appropriate to secure
been a growing divergence between the headline numbers, which are lower
that some may enjoy. Thus, differ- market will not secure such justice “distributive justice” is being used to compensate for
thanks to extremely low food inflation, and core inflation (that is, headline ent intellectual or physical capabil-
RATHIN ROY even if the pie grows, a just govern- the failure to deliver “justice as fairness.” This is the
minus food and fuel), which has stayed persistently high. In fact, according ities, and differing inheritances of ment uses the public finances such crux of my concern about these proposals, not their
to the latest reading, there is a whopping 6 percentage point gap between all types of capital can result in unequal distributions that the allocation of resources, the affordability of practicability or affordability which, though important,
the food inflation rate and the core inflation rate. Efficacy of any decision on of the gains from different investments designed to goods that all consume, and overall macroeconomic are procedural matters.
the repo rate would depend essentially on whether core inflation is expected foster capabilities. This needs to be corrected. This management increase “justice as fairness”. Since the I would not be as concerned if the eminence and
is what motivates affirmative action, Piketty’s argu- development of human capabilities is a collective quantum of attention given to the design of these
to lower to the headline inflation level or the other way round. Clearly, there
ment for asset and wealth taxation, and the case for endeavour, the State uses public finances to provide transfers were accompanied by attention as to why,
are no easy answers in this regard. The other key concern is the weak monetary a universal basic income. public and merit goods like health and education. This after 30-plus years of high growth, India, now a giant
transmission in the banking system as is evident from the fact that the last Rawls argues that the first principle takes priority secures inclusive growth and, therefore, “justice as economy, is unable to deliver “justice as fairness”
rate cut in February is yet to reflect in loan and bond rates. Banks say monetary over the second. If the first is not secured then the fairness”. Taxes on assets, occupations, and wealth through productive inclusion. The fact that the only
transmission will remain partial and delayed due to a wide gap between task of dealing with the second is only compounded. are used to finance transfers secure “distributive jus- political response is to compensate those who bear
credit and deposit growth. The MPC needs to take a stand on these two issues Growth without inclusion exacerbates the advan- tice” by alleviating the unfair advantages that unequal the brunt of this failure is, in my view, an abdication
when it announces its decision later this week. tages endowed by unequal access to capital and to capital and intellectual endowments bring to some. of political responsibility.
inheritance. Let us look at the recent debate on transfers pro-
Interestingly, Rawls expresses this in public finance posed by both national parties using this lens. Farmers The writer is director, National Institute of Public Finance and
terms. Following Musgrave, he specifies four branches face injustice due to a variety of causes that do not Policy. Views are personal