1 August 2022

(PRELIMS + MAINS FOCUS)

The Hindu Editorial Analysis

1 August 2022

Editorial-1: PMLA verdict, an erosion of constitutional buffers

Context:

In the judgement of a three judge bench in Vijay Madanlal Choudhary vs Union of

India, 2022 case, Supreme Court (SC) has upheld the constitutionality of vast parts
of the Prevention of Money Laundering Act (PMLA), 2002, despite the law‘s
inversion of widely accepted maxims of criminal jurisprudence, including the
Fundamental Right under Article 20 of Indian Constitution.
Article 20

 This article provides for protection in respect of conviction of offences. It

prohibits:
o Ex post facto law (Art. 20(1))
o Double Jeopardy (Art. 20(2))
o Self-incrimination (Art. 20(3))
 However, various provisions of PMLA, 2002 violate these constitutional rights.

Money laundering:

 It refers to the process through which the proceeds from criminal activity are
masked with a view to concealing their illegitimate source.
 PMLA defines money laundering in vague terms. Section 3 of the Act says,
―Whosoever directly or indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or activity
connected with the proceeds of crime including its concealment, possession,
acquisition or use and projecting or claiming it as untainted property shall be
guilty of offence of money laundering.‖

Proceeds of crime and scheduled offences under PMLA:

 This phrase is separately defined to mean property that is obtained out of the
commission of a crime ―relating to a scheduled offence‖. The schedule
contains 30 different statutes ranging from specific offences
 under the Indian Penal Code, 1860, like murder, extortion and kidnapping, the
Arms Act, 1959, the Immoral Traffic (Prevention) Act, 1956, to minor
infractions under the Copyright Act, 1957, Trade Marks Act, 1999 as well.
 Unless the proceeds of crime relate to a ―scheduled offence‖ — or what is
also described as a predicate offence — no case can be made out under the
statute. If a person is ultimately acquitted or discharged in a case concerning
 the predicate offence, the charge under the PMLA can no longer be
maintained.

Origin of PMLA and its nature:

 India enacted the law to give effect to its international commitments,

specifically the UN Convention against Illicit Trafficking in Narcotic Drugs and
Psychotropic Substances, 1988 (Vienna Convention) and UN Convention
against Transnational Organised Crime, 2000 (Palermo Convention).
 The court has acknowledged this obligation of India while upholding some
controversial provisions of PMLA, saying that PMLA is not a penal statute, but
a sui generis one, which means that the law can, according to the Court,
overlook several constitutional safeguards, including the right against self
incrimination.

Controversial provisions of PMLA and Judicial verdicts:

Bail Conditions:

 Section 45 of the Act imposes twin conditions for bail. Apart from mandating
that the prosecutor is allowed a hearing before bail is granted, the clause also
requires the court to be satisfied that there are ―reasonable grounds‖ for
believing that the accused is not guilty of the offence and that he or she is not
likely to commit any offence while on bail.
 In its previous version, prior to an amendment made in 2018, the law
classified the predicate offences contained in the schedule into two
categories. It separated those which carried with it an imprisonment for a term
no less than three years from other offences. The twin requirement was
mandated only for those cases where the predicate offence was viewed as
more serious.
 A two judge Bench in Nikesh Tarachand Shah case declared this version
unconstitutional. The Court found the classification between offences
unreasonable and the conditions too disproportionate.
 The Parliament could have introduced a new provision for bail by removing
the defects pointed out by the Court. But instead it chose to delete the
classification itself, and imposed through Section 45 the twin conditions for all
offences under the PMLA, including for minor offences like copyright
infringement.

Amendability of laws struck down:

 The petitioners in Vijay Madanlal Choudhary case argued that Parliament

can not amend a law that had already been declared unconstitutional by SC.
The Court, however, held that the judgement in Nikesh Tarachand Shah
case did not obliterate the provision and that Parliament was entitled to revive
the law by deleting its defects.
  Vijay Madanlal Choudhary verdict not only grants sanction to Parliament‘s
effort at reintroducing a law previously declared unconstitutional but also
holds that the requirements for bail are by no means arbitrary or
unreasonable.

Test of proportionality:

 Nikesh Tarachand Shah case also distinguished crimes of terror from crimes
under the PMLA and pointed out that in requiring proof of innocence at the
stage of bail, Section 45 of the Act far outweighed the ordinary demands of a
penal law. This is violative of the Constitutional value of proportionality of
punishment to its offence.
 In K.S. Puttaswamy/ Aadhar case, SC held that fundamental rights operate
not in silos, but by giving and taking meaning from each other and that any
invasion of a constitutionally guaranteed freedom must satisfy a test of
proportionality. This meant that every time the state impinged on a right, it had
to justify that such infringement was outweighed by some benefit to the public
and that there were no less invasive means available to achieve the same
aim.

Issues with the powers of and misuse of ED:

 The Directorate of Enforcement or the ED is a multi-disciplinary organisation

mandated with investigation of economic crimes and violations of foreign
exchange laws. PMLA gives wide-ranging and unchecked powers to ED.
 ED registers an „Enforcement Case Information Report‟ (ECIR), the
equivalent of an FIR. It is not required to share the ECIR with the accused. So
any money-laundering probe is mired in opacity.
 When a summons is issued to a person, he is unaware of the reason, but
must, nevertheless, attend and answer all questions and submit the
documents asked for. The powers of search, seizure or arrest are left
completely at the whim of ED officials. Unlike in other criminal cases, there is
no judicial oversight of the process, and the accused are forced to seek bail
after arrest without knowing the exact nature of the charges against them.
 ED also has the power of a civil court to enforce the attendance of a person
summoned under Section 50. Giving a statement and producing documents
are mandatory obligations and it is an independent offence not to do so, and
giving a false statement amounts to perjury. Also, such a statement should be
signed by the person summoned and it can be used against him in a trial. This
amounts to testimonial compulsion specifically barred by Article 20 (no self
incrimination).

Way Forward:

While SC has upheld many controversial provisions of PMLA, it is unlikely to go

unchallenged. The provisions in question, by going against established norms of
Constitutional values and legal precedences, need to be amended. But it must be
done without compromising on the ability of our law enforcement agencies to
implement India‘s global commitments to combat money laundering and reducing
corruption.

UPSC Main Examination Question:

Q. Do you agree that the stringent provisions under the Prevention of Money
Laundering Act (PMLA), 2002 are adequately balanced with the fundamental rights
including protection in respect of conviction of offences? Justify your answer in light
of recent judgements of the Supreme Court.

(GS Paper 2) (150 words)

Editorial-2: India‟s „wheat waiver‟ WTO demand is risk fraught

Context:

At this year‘s World Trade Organisation (WTO) Ministerial Conference at

Geneva, India seems to have failed in achieving in its demands of WTO coming to a
permanent solution for its public stockholding (PSH) scheme for food security and
also allowing India a waiver to export wheat from such stocks given the ongoing food
crisis in some countries.

India‟s PSH policy:

 It is based on procuring food from farmers at an administered price (minimum

support price or MSP), which is generally higher than the market price. The
PSH policy serves the twin objectives of farmers‘ income and food security-
offering remunerative prices to farmers and providing subsidised food to
starved citizens.

WTO and price support:

 However, under WTO law, such price support based procurement from
farmers is counted as a trade distorting subsidy (TDS), and allowed only till
the permissible limit, called the de minimis level (DML): which for Developed
countries is 5% and for developing countries is 10% of the value of their
production.
 Domestic support/ subsidies and WTO: Domestic support refers to the
government subsidies that guarantee some Minimum Price to farmers/
producers that are provided at the domestic level. WTO classifies them into 3
boxes:

1. Green Box Subsidies: subsidies that have zero or very minimal level
distortion to global free trade. They usually include government expenditure on
 agriculture research and development, agricultural training, subsidies under
environmental programmes etc. Green box subsidies are not counted in price
support and so are not taken while calculating Aggregate Market Support
(AMS).
2. Blue Box Subsidies: Direct payments under production limiting programmes
(PLPs)- imposing quota or limits on agriculture produce. Blue Box is the
―amber box subsidy with conditions attached‖. Blue Box subsidies are also
exempted from calculation of AMS.
3. Amber Box Subsides: subsidies that are trade-distorting (TDS) in nature. So
WTO seeks to reduce them based on the formula called ―Aggregate Measure
of Support” (AMS)- the amount of money spent by governments on
agricultural production, except the money spent in the Blue Box, Green Box
and production upto de minimis level.

A temporary arrangement:

 Currently, India has temporary relief due to a ‗peace clause‟ which bars
countries from bringing legal challenges against price support based
procurement for food security purposes. However, a permanent solution to
this issue eluded even the latest WTO ministerial meeting in 2022 at
Geneva.
 For India, the real issue is not about maintaining adequate food stocks, which
WTO rules do not prohibit, provided food is stocked by employing non trade
distorting instruments such as providing income support to farmers (cash
transfers). India‘s concern is that it should have the policy space to hold public
food stocks using the MSP, which is a price support instrument. However,
there is no mention of price support in the Geneva declaration either.

India‟s new demand and its limitations:

 In the runup to the WTO ministerial meeting, India‘s demand for a permanent
solution to the PSH policy has acquired a new dimension. India now insists
that it should also be allowed to export part of the stocked food, most notably
wheat, from the pool of the foodgrain procured under the MSP.
 The Russia- Ukraine war has unleashed a food shortage crisis in many
countries, pushing up global food prices, as Ukraine was global granary. India
seeks to capitalise on this opportunity to expand its exports.
 However, WTO law bars countries from exporting foodgrain procured at
subsidised prices because it would give the countries an unfair advantage in
global agricultural trade. The country concerned will sell foodgrain in the
international market at a very low price, which, in turn, might depress the
global prices and have an adverse impact on the agricultural trade of other
countries.
 However, the global food inflation forced the Geneva ministerial to concede
a food security declaration, which states that countries may release surplus
food stocks in the international market in accordance with WTO law. Thus,
even such release of foodgrains must not violate existing WTO norms
including those regarding various boxes (Amber, Blue, Green) and De Minimis
Level.
Waivers at WTO and their conditionalities:

 WTO is unlikely to agree to a temporary waiver to allow the export of wheat

from public stockholdings. But even if it does, India must be wary of the
conditions likely to be attached to it. Afterall, the history of waivers at the WTO
is disappointing.
 The recently adopted WTO waiver on intellectual property rights (IPR) for
COVID- 19 medical products, for example, was restricted to only COVID- 19
vaccines and not diagnostics or therapeutics. It is also limited to only patents
and not other IPRs.
 The WTO Agreement also says that waivers can be adopted only in
“exceptional circumstances”. Developing and food surplus countries like
India might find it difficult to prove that the current global foodgrain shortage
amounts to such exceptional circumstances, given the reluctance of
developed countries in the West to allow such subsidised exports. Developed
countries have historically opposed India‘s PSH programme as they
apprehend that India might divert some of its public stock to the international
market, thus depressing global prices. India actively pushing for exporting
food from its public granaries gives fresh excuses to these countries in
opposing a permanent solution to the PSH issue.

Way forward:

Thus, India should revisit its stand on asking for a waiver for wheat exports from its
public stockholding. The laudable objective of helping countries facing food crises
can be accomplished by strengthening India‘s commitment to the United Nations
World Food Programme (WFP). India can also do so through bilateral agreements
as in the case of food assistance to Afghanistan following the Taliban takeover. Or, if
the domestic situation ameliorates, India can lift the ban imposed on private traders
to export wheat.

Conclusion:

Instead of adding newer objectives and shifting goalposts, India should stick to its
original demands of WTO members finding a mutually acceptable and permanent
solution to public stockholding which takes care of both food security in developing
countries and fair trade for developed countries.

UPSC Main Exam Question:

Q. ‗India needs to find a permanent solution at WTO for both its need for public
stockholding for food security purposes and capitalising on current global food crisis
to export foodgrain.‘ Examine the statement in the context of recent WTO Ministerial
outcomes.

Indian Express Editorial Analysis

1 August 2022
 Editorial-1: Electoral bonds: Parties mop up over Rs 10,000 crore since 2018

GS 2 (Important aspects of governance, transparency and accountability in

electoral funding)

Recent Context:

 As per the recently released data by SBI, Donations to political parties through
electoral bonds (EBs) have crossed the Rs 10,000-crore mark, with parties
getting another Rs 389.5 crore through such bonds in the 21st sale of EBs.
 Even, in the past Two NGOs — Common Cause and Association for
Democratic Reforms (ADR) — have challenged the scheme and while PIL in
the SC, alleging that it is ―distorting democracy‖.

Basic Understanding:

 Free, fair and transparent election is central value for the vibrant democracy.
There are multiple facets of problem in the electoral process such
Criminalization of politics, religion-caste based politics and non-transparent
funding of political parties which hamper the process of election itself.
 Therefore, Parliament enacted the Representation of People
Act, 1951 (RPA) in order to promote transparency in election.

As per the Article 327 of Indian Constitution.

Subject to the provisions of this Constitution, Parliament may from time to time
by law make provision with respect to all matters relating to, or in connection
with, elections to either House of Parliament or to the House or either
House of the Legislature of a State including the preparation of electoral
rolls, the delimitation of constituencies and all other matters necessary for
securing the due constitution of such House or Houses.

What are electoral bonds?

In the Union Budget speech on February 1, 2017, the then Finance Minister of
India stated:

―Even 70 years after Independence, the country has not been able to evolve a
transparent method of funding political parties which is vital to the system of
free and fair elections…Political parties continue to receive most of their funds
 through anonymous donations which are shown in cash. An effort, therefore,
requires to be made to cleanse the system of political funding in India.”

 Electoral bond scheme was announced in Union Budget 2017-18 to ―cleanse

the system of political funding in the country.‖
 The electoral bonds were introduced by amendments made through the
Finance Act 2017 to the Reserve Bank of India Act 1934, Representation
of Peoples Act 1951, Income Tax Act 1961 and Companies Act.
 Electoral Bond is a bearer Banking Instrument through which anyone can
donate money to eligible Political Parties. Such bonds are sold in multiples of
Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore
 It can be bought from authorised branches of the State Bank of India.
 As such, a donor is required to pay the amount via a cheque or a digital
mechanism (cash is not allowed) to the authorised SBI branch
 The donor can then give this bond (just one, if denomination chosen the is Rs
10 lakh, or 10, if the denomination is Rs 1 lakh) to the party or parties of their
choice.
 The political parties can choose to encash such bonds within 15 days
(maturity of bond) of receiving them and fund their electoral expenses.
 During the process of political party funding through electoral bond , it
is ensured that the name of the donor remains anonymous.

Note: The Electoral Bonds can be redeemed only by an eligible Political Party by
depositing the same in their Designated Bank Account maintained with Authorised
Bank. ( Not by an individual)

Which Political Parties are eligible to receive Donations through Electoral

Bonds?

An eligible Political Party is the one registered under Section 29A of the
Representation of the People Act, 1951 and secured not less than 1% of the votes
polled in the last General Election to the House of the People (LS) or the Legislative
Assembly.

Other initiatives which are taken to promote transparent political funding

 Reduction in the amount of money that a political party could accept in cash
from anonymous sources — from Rs 20,000 to Rs 2,000.

Criticism Against the Electoral bond scheme:

 The central criticism of the electoral bonds scheme is that it does the exact
opposite of what it was meant to do: bring transparency to election funding.
  As such bonds are sold via a government-owned bank (SBI) leaves the door
open for the government to know exactly who is funding its opponents. This, in
turn, allows the possibility for the government to influence the big companies,
or victimise them for not funding the ruling party — either way providing an
unfair advantage to the party in power
 Majoring of the political funding is limited to particular (ruling) party: As
per the National Campaign for People‘s Right to Information, more than 75 per
cent of all electoral bonds have gone to the BJP party, which is in power at the
Centre.
 Brings Opacity in the Political Funding- Ordinary citizens are not able to
know who is donating how much money to which political party, and the bonds
increase the anonymity of political donations
 Further, one of the arguments for introducing electoral bonds was to allow
common people to easily fund political parties of their choice but more than
90% of the bonds have been of the highest denomination (Rs 1 crore).
 It opens the possibility of misuse of corporate funding: Before the
introduction of electoral bonds scheme, A company could donate to a political
party maximum of 7.5 per cent of the average net profits of a company in the
preceding three years. However, the government amended the Companies Act
to remove this limit, opening the doors to unlimited funding by corporate India.
 Allows unchecked foreign funding- An amendment to the Foreign Contribution
Regulation Act (FCRA) allow political parties to receive funding from foreign
companies with a majority stake in Indian companies. It can lead to Indian
policies being influenced by foreign companies
 Non-governmental organisations (NGOs) — Common Cause and Association
for Democratic Reforms (ADR) — have legally challenged the scheme that
―that the introduction of electoral bonds is ―distorting democracy” in India.

What are the favorable arguments for electoral funding?

1. It limits the funding of political parties through cash: As earlier majority of

political funding in large amount in received anonymously. It increases the
chances of crony-capitalism or set up of unholy nexus between political parties
and funder of illicit money.
2. Protects donor from political victimization- as non-disclosure of the identity
of the donor is the core objective of the scheme. Therefore, checks on the
victimization of the fund provider to political party and his/her identity remain
hidden through the process.
3. It is also an effective tool to curb black in political funding: As it mandates
the funding by properly following the KYC norms and through cheque or digital
mode. It also ensures that beneficiary political party has to disclose the receipt
of this money and must account for the same I given duration of time.

Way forward

 The initiative of government is in the right direction to promote the transparency

in political funding while saving the donor from victimization for its funding to
particular party.
  However, there is need for greater transparency and accountability from
political parties by publicly publishing the data of received fund while hiding
identity of donor and timely filling if ITR timely.

Editorial-2: Tomato humble RBI

GS 3 (Indian Economy: Role and responsibilities of RBI in inflation control)

Recent context:

 Recently, In June 2022, consumer price index (CPI) inflation was at 7.01 per
cent, and Wholesale Price Index (WPI) inflation was at 15.18 per cent.
 It is crossing the set-up target for RBI to control inflation within the bandwidth of
4+/-2 per cent range (CPI).

A comparative study of WPI and CPI:

WHOLESALE PRICE INDEX CONSUMER PRICE INDEX

BASIS FOR (WPI) (CPI)
COMPARISON
Base year 2011-12 Base Year: 2012
Meaning Wholesale Price Index (WPI), Consumer Price Index (CPI),
amounts to the average change indicates the average change
in prices of commodities at in the prices of commodities, at
wholesale level. retail level.

Published by Office of Economic Advisor DIPP Central Statistics Office

Measurement of First stage of transaction Final stage of transaction

Inflation

Covers Goods only Goods and Services

Focuses on Prices of goods traded between Prices of goods purchased by

business houses. consumers.

Reasons for Divergence between WPI and CPI? (Published: Monthly)

 WPI are based on production values whereas the weights of the CPI basket
are based on the average household expenditure
 As per, Economic survey 2021-22 ,In CPI Food group has higher weight of
food and beverages which accounts 45.86 per cent (with food at 39.06 per
cent, prepared meals at 5.55 per cent and non-alcoholic beverages at 1.26 per
 cent) as compared to the combined weight of 24.4 per cent (Food articles
and Manufactured Food products) in WPI basket. As food groups and fuel are
more volatile items.
 CPI basket consists of services like housing, education, medical care,
recreation etc. which are not part of WPI basket.
 WPI item basket represents manufacturing inputs and intermediate goods
like minerals, basic metals, machinery etc. whose prices are 17 influenced by
global factors but these are not directly consumed by the households and are
not part of the CPI item basket
 prices of non-tradable items included in the CPI basket widens the gap
between WPI and CPI.

Role and Responsibilities of RBI in controlling in the Inflation:

 Under the Reserve Bank of India, Act,1934 (RBI Act,1934) (as amended in
2016, 2021), RBI is entrusted with the responsibility of conducting monetary
policy in India with the primary objective of maintaining price stability (Inflation)
while keeping in mind the objective of growth.

Note: Consumer Price Index (CPI) (combined) is used as as the key measure
of inflation by RBIs.

What is the Inflation target?

 Under the Under Section 45ZA of RBI act1934 , the Central Government, in
consultation with the RBI, determines the inflation target in terms of the
Consumer Price Index (CPI), once in five years and notifies it in the Official
Gazette
 Under which Central Government notified in the Official Gazette 4 per cent
Consumer Price Index (CPI) inflation as the target for the period from August 5,
2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the
lower tolerance limit of 2 per cent.
 On March 31, 2021, the Central Government retained the inflation target and
the tolerance band for the next 5-year period – April 1, 2021 to March 31, 2026.
 Section 45ZB of the RBI Act provides for the constitution of a six-member
Monetary Policy Committee (MPC) (which is headed by RBI governor)
determine the policy rate required to achieve the inflation target.

Therefore, Inflation target is set by central government and it is maintained by

RBI through monetary policy tools.

Instruments of Monetary Policy

There are several direct and indirect instruments that are used for implementing
monetary policy.

 Repo Rate: The interest rate at which the Reserve Bank provides
liquidity under the liquidity adjustment facility (LAF) to all LAF participants
against the collateral of government and other approved securities.
 Reverse Repo Rate: The interest rate at which the Reserve Bank
absorbs liquidity from banks against the collateral of eligible government
securities under the LAF. Following the introduction of SDF, the fixed rate
reverse repo operations will be at the discretion of the RBI for purposes
specified from time to time.
 Cash Reserve Ratio (CRR): The average daily balance that a bank is
required to maintain with the Reserve Bank as a per cent of its net
demand and time liabilities (NDTL) as on the last Friday of the second
preceding fortnight that the Reserve Bank may notify from time to time in
the Official Gazette.
 Statutory Liquidity Ratio (SLR): Every bank shall maintain in India
assets, the value of which shall not be less than such percentage of the
total of its demand and time liabilities in India as on the last Friday of the
second preceding fortnight, as the Reserve Bank may, by notification in
the Official Gazette, specify from time to time and such assets shall be
maintained as may be specified in such notification (typically in
unencumbered government securities, cash and gold).
 Standing Deposit Facility (SDF) Rate: The rate at which the Reserve
Bank accepts uncollateralised deposits, on an overnight basis, from all
LAF participants. The SDF is also a financial stability tool in addition to its
role in liquidity management. The SDF rate is placed at 25 basis points
below the policy repo rate. With introduction of SDF in April 2022, the
SDF rate replaced the fixed reverse repo rate as the floor of the LAF
corridor.
 Marginal Standing Facility (MSF) Rate: The penal rate at which banks
can borrow, on an overnight basis, from the Reserve Bank by dipping into
their Statutory Liquidity Ratio (SLR) portfolio up to a predefined limit (2
per cent). This provides a safety valve against unanticipated liquidity
shocks to the banking system. The MSF rate is placed at 25 basis points
above the policy repo rate.
 Liquidity Adjustment Facility (LAF): The LAF refers to the Reserve
Bank‘s operations through which it injects/absorbs liquidity into/from the
banking system. It consists of overnight as well as term repo/reverse
repos (fixed as well as variable rates), SDF and MSF. Apart from LAF,
instruments of liquidity management include outright open market
operations (OMOs), forex swaps and market stabilisation scheme (MSS).
 LAF Corridor: The LAF corridor has the marginal standing facility (MSF)
rate as its upper bound (ceiling) and the standing deposit facility (SDF)
rate as the lower bound (floor), with the policy repo rate in the middle of
the corridor.
 Bank Rate: The rate at which the Reserve Bank is ready to buy or
rediscount bills of exchange or other commercial papers. The Bank Rate
acts as the penal rate charged on banks for shortfalls in meeting their
reserve requirements (cash reserve ratio and statutory liquidity ratio). The
 Bank Rate is published under Section 49 of the RBI Act, 1934. This rate
has been aligned with the MSF rate and, changes automatically as and
when the MSF rate changes alongside policy repo rate changes.
 Open Market Operations (OMOs): These include outright purchase/sale
of government securities by the Reserve Bank for injection/absorption of
durable liquidity in the banking system.

What is MPC fails to achieve the inflation target: or CPI limit (upper tolerance
limit of 6 per cent and the lower tolerance limit of 2 per cent) :

 The Central Government has notified the following as the factors that
constitute failure to achieve the inflation target:

(a) the average inflation is more than the upper tolerance level of the
inflation target for any three consecutive quarters; or

(b) the average inflation is less than the lower tolerance level for any
three consecutive quarters.

 Where the Bank fails to meet the inflation target, it shall set out in a report
to the Central Government:
o the reasons for failure to achieve the inflation target;
o remedial actions proposed to be taken by the Bank; and
o an estimate of the time-period within which the inflation target shall be
achieved pursuant to timely implementation of proposed remedial
actions.

A comparing study of Indian and other nations wrt to Inflation:

 As we discussed earlier, The CPI basket in India comprises of 299

commodities grouped into six major categories. The food and beverages group
has a weight of 45.86 per cent (with food at 39.06 per cent, prepared meals at
5.55 per cent and non-alcoholic beverages at 1.26 per cent).
 Which is much lower in Germany (8.5 per cent), the UK (9.3 per cent), the US
(13.42 per cent), Canada (15.94 per cent), France (16.49 per cent. Even in
developing nations like South Africa (17.24 per cent), Brazil (25.5 per cent),
and Pakistan (34.83 per cent) have lesser weightage of food in overall CPI
than India.
 Therefore, the overwhelmingly high weight of food in overall CPI, based on
the consumer expenditure survey (CES) data of 2011-12, that distinguishes
Indian inflation from many other developed countries where the food weight is
much smaller.
  As compiled data highlights that 299 commodities that comprise CPI, the
highest contributor to overall inflation was tomatoes at 8.9 per cent. Inflation in
tomatoes was stupendously high at 158.8 per cent (year-on-year). One of the
prime reasons was the low base effect as inflation in June 2021 was minus
14.4 per cent. Due to low price realization last year, this year tomato farmers
shifted acreage to other crops and damage of tomoto crops due to heavy flood
depressed tomato supplies. Which leads to further rise in price of it.
 There are other areas of basket such as such as milk and products, and meat
and fish, which together contributed more than 10 per cent to CPI inflation in
June. Edible oils inflation is strongly impacted by global prices of palm, soya
and sunflower oils which make it difficult for RBI to control inflation.
As a result, The higher the weight of food in the overall CPI, the more difficult
it is for the monetary policy to control inflation.

Way forward:

 Monetary policy alone may not be as effective in the Indian case. Therefore,
there is a need to revise its CPI basket with the latest consumption survey
weights.
 And our parliamentarians should recognize the limitations that the RBI faces in
taming inflation. So, RBI need to be granted more autonomy to control inflation
while ensuring its accountability.
 On the other hand, there is requirement to improve the supply side by
increasing the production of basket of commodities, effective and efficient
utilization of resources, better setup of supply chain management along with
logistic support which will help in reducing the wastage of crops.
 Schemes like Operation Greens: From TOP to TOTAL need to be further
improvised for their timely intervention when there is rapid rise in price of crops
which will help in price stabilisation for producers and consumers.