EDITORIALS July 3

THE HINDU
July 3, 2024
Mixed signals
India needs to strengthen momentum in the key industrial sectors

Output data for May from the eight core infrastructure sectors show broad industrial activity slowed
under the onslaught of a heatwave that left homes, offices and factories countrywide using more power
to run their fans and cooling systems. Only coal, to fuel the power plants, and electricity generation
posted double-digit output growth, expanding by 10.2% and 12.8%, respectively, as per provisional data
on the Index of Eight Core Industries released by the Ministry of Commerce and Industry on June 28. And
production in crude oil, fertilizers and cement shrank from their year-earlier levels, while output
expansions decelerated in the remaining three sectors of natural gas, refinery products and steel. The
heatwave’s impact on economic activity in May was particularly prominent in India’s northern parts, as it
forced afternoon breaks at construction sites and daily peak power demand at the Northern Regional
Load Despatch Centre consistently hovered around or exceeded 75 gigawatts. Demand for cement and
steel weakened as construction activity was understandably curbed by the temperatures, with both the
key building materials also posting sequential declines in output. The year-on-year contraction in
fertilizers for a fifth straight month in May is a cause for concern as it signals persisting weakness in the
rural hinterland’s mainstay agriculture sector. A smart uptick in May’s index number for the farm input,
from the revised reading for April, however, offers a glimmer of hope.

Official data for the core sector as well as the Index of Industrial Production, to which it contributes more
than 40% weight, however, suffer from the infirmity of coming with a lag of more than a month.
Meanwhile, the private sector, survey-based HSBC India Manufacturing Purchasing Managers’ Index (PMI)
for June suggests that activity at factories rebounded last month from May’s heatwave-hit three-month
low. June’s PMI reading of 58.3 was 0.8 percentage points higher than May’s 57.5, and, according to HSBC
India, “comfortably above its long-run average”. The survey also indicates that manufacturers stepped up
output and buying to meet buoyant demand, and stepped up hiring to the fastest pace “seen in more
than 19 years of data collection”. However, both the job creation and demand were also accompanied by
an intensification of increases in staff expenses and material and transportation costs that led to
manufacturing companies raising their selling charges by the greatest extent in more than two years. The
inflationary trend, coupled with survey respondents’ overall confidence in future output sliding to a three-
month low, signals the economy still faces speed bumps. Policymakers have a chance to use the
upcoming Union Budget to make policy tweaks to help strengthen momentum in the key industrial
sectors.

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 EDITORIALS July 3
THE HINDU
July 3, 2024
Open court
For the first time in two decades, the Big Four are not among favourites

Wimbledon 2024 has begun with world tennis in the middle of a generational transition. There is no
Roger Federer and Rafael Nadal, with the former having retired and the latter on a long valedictory lap
which does not have SW19 as a pit stop. The 37-year-olds in Novak Djokovic and Andy Murray are closer
to the end of their careers, and have arrived in London with broken bodies. Djokovic is recovering from a
knee surgery while Murray went under a surgeon’s scalpel to mend his back barely days ago. At what is
set to be his Wimbledon swansong, Murray will only compete in doubles with his brother Jamie. Thus, the
stranglehold the ‘Big Four’ had established by winning 19 of the 20 editions from 2003 to 2023 is likely to
be loosened. Among women, this will be the first time since 1996 that neither of the famed Williams
sisters will be in action. Starting from 2000, Venus and Serena won 12 singles titles and finished runner-up
on eight occasions. Venus has not played since March 2024 and Serena since September 2022. In the year
or two preceding their last matches, they were far from tournament-winning form. Yet, such has been
their overarching excellence that they are the benchmark indices against which every grass-court career is
measured.

As the stage appears set to identify the next era’s tennis greats, Spaniard Carlos Alcaraz has staked claim
most authoritatively. As a 20-year-old, he won Wimbledon in 2023 for his second Major (US Open 2022,
the first), beating Djokovic over five pulsating sets, and last month he graduated further by claiming the
French Open. In close proximity is Jannik Sinner, the lanky Italian who won the Australian Open in January
and has since meticulously risen to the top of the singles rankings. A quarterfinalist and a semifinalist in
his last two visits to Wimbledon, the 22-year-old recently proved that he was a serious challenger on the
slick lawns by winning in Halle (Germany), his first title on grass. Sinner’s credentials will however be put
to test as early as the second round against 2021 finalist and the quintessential grass-courter Matteo
Berrettini. While the passing of the baton appears seamless among men, the battle of succession among
women has multiple contenders. Five-time Slam winner Iga Swiatek is the undisputed No.1 but her grass-
court nous is yet to fully develop. Second seed Coco Gauff’s best at Wimbledon is fourth round, which she
first reached in 2019 as a 15-year-old qualifier. And with the withdrawal of Aryna Sabalenka — third seed
and a two-time semifinalist — the field is open.

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 EDITORIALS July 3
THE INDIAN EXPRESS
July 3, 2024
The first face-off
Both Government and Opposition seem to be still locked in campaign mode. Each
should hit reset, refresh — and respect

THE ELECTION IS over and for the country to move forward, a reconstituted government and a rearranged
Opposition need to talk to each other in Parliament — it’s just that India’s new government and new
Opposition don’t seem to be in a hurry to acknowledge this. Listening to the Leader of Opposition Rahul
Gandhi in Lok Sabha Monday, and Prime Minister Narendra Modi in the same House the next day —
speaking on the motion of thanks to the President’s address — the sense was as dispiriting as it was
inescapable. Both spoke as if the campaign had not yet ended, and in fact, had begun all over again after
a break. The PM and LoP also appeared to inhabit the same make-believe — that the people had not
urged humility on both sides, that the mandate had not taken down the BJP-led government by more
than a notch, and that it had not withheld by a bigger margin a majority from the INDIA bloc. If the
Congress-led Opposition is unwise and plain wrong in its reading of the verdict as an outright victory for
itself and decisive defeat for the BJP, the BJP’s emphasis on stability and continuity, and its continuing
disdain for its political opponent, is self-serving and disconnected from the responsibility cast on it for
change.

Having said that, the government appears to be too thin-skinned. While Congress’s exultation is jarring, it
is possible to explain it as a cathartic outpouring after a decade of what had begun to seem like its
unchecked decline. Gandhi’s speech only reprised the range of well-worn themes of his election
campaign: From the BJP’s alleged peddling of hate and fear to the debilitating effect of demonetisation
on jobs and the informal economy. His show-and-tell with pictures of gods —a day after waving the
Constitution — was jarring and an abdication of subtlety if not a breakdown of speech. But those
shortcomings, and the unbecoming sloganeering during the PM’s speech, were more than matched by
the belligerence and narrow-spiritedness of those who spoke for a government-in-denial. The expunging
of remarks made by Gandhi, and exhortations by the Treasury benches to the Speaker to act against the
Opposition, show that the government is lapsing in to its winner-take-all playbook and turning its back on
the new political reality. The fact is that it confronts a re-energised political opponent and its erstwhile
dominance is now subject to checks and balances. Seeking to infantilise the Rahul-Congress — as the PM
did — by using terms like “balak buddhi (childish)”, or labelling it as anti-Hindu, and anti-Dalit, or a
“parjeevi” (parasite on its allies), is so pre-June 4. It’s so last government.

The first face-off in the House is an opportunity missed by both sides, but the term of the new
government, and the new Opposition, has only just begun. Going forward, the ruling BJP must resolve to
not play, by turn, vindictive aggressor and hapless victim of a sinister “eco-system” anymore. Let it learn to
talk to a stronger Opposition, and listen to its voice, sometimes raucous though it may be. And let the
Opposition also step back from the edge and use the political spaces that Verdict 2024 has opened up for
injudiciously and creatively. The points have been counted —they don’t need daily scoring.

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 EDITORIALS July 3
THE INDIAN EXPRESS
July 3, 2024
A HOME FOR THE CHEETAH
Gandhi Sagar Sanctuary must ensure a prey base for it.

Officials need to be equipped to monitor the big cat’s health GANDHI SAGAR WILDLIFE Sanctuary in
Madhya Pradesh is set to be the second home for cheetahs in India. An assessment of the carrying
capacity of Kuno National Park has revealed that the animal’s current habitat in the country has exceeded
its carrying capacity. The overabundance of cheetahs in the protected area (PA), also in Madhya Pradesh,
has led to a 25 percent loss in the big cat’s main prey base — the chital. The animals from Africa, and their
offspring, are not the only predators in the national park. Kuno’s leopards compete with the cheetahs for
herbivores. In an open savannah, the African animals can outrun the leopards, but the latter seems to
have made the most of its home advantage. The forest department believes that translocating surplus
cheetahs to Gandhi Sagar could restore Kuno’s ecological equilibrium. However, the two feline predators
will continue to compete for prey — now in two PAs. Project Cheetah will have to ensure that past
mistakes are not repeated and translocation is not band aid.

At Gandhi Sagar, the cheetahs will initially be housed in a 64 sq km enclosure. The first challenge will be
to remove leopards from this area. Project Cheetah’s long-term plan, to develop a longer stretch of the
3,600 km sanctuary as habitat for the feline, will pose greater challenges. An insufficient prey base
reportedly continues to be an issue at the sanctuary in Western MP. A 2021 study revealed that, despite
the reasonably good health of the sanctuary, ungulate densities are extremely low. Apart from leopards,
the sanctuary has other co-predators including sloth bears, striped hyenas, gray wolves, golden jackals,
jungle cats, Indian foxes, and marsh crocodiles. The PA authorities will also be challenged in monitoring
the health of a species that went extinct in the country more than seven decades ago. Last year, the
Supreme Court had admonished the government after a string of fatalities in Kuno. Gandhi Sagar’s
authorities would do well to learn from Project Cheetah’s experiences — and setbacks— in the past two
years.

Project Cheetah’s Steering Committee is reportedly considering a proposal for introducing a larger cat in
the Kuno mix to reduce leopard activities. This could, on paper, reduce the pressure on the National Park.
However, this could also push leopards out of the park, increasing chances of human-animal conflict
Project Cheetah has spurred conversations on long-standing problems of Indian conservation. It’s up to
policymakers to seize the moment.

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 EDITORIALS July 3
THE INDIAN EXPRESS
July 3, 2024
A WORLD IN HIS WORDS
Ismail Kadare’s writing offered resistance by bearing witness to the many shades
of oppression of a totalitarian regime

ISMAIL KADARE’S DISENCHANTMENT with communism happened not when Enver Hoxha took over
Albania in 1944 when Kadare was eight It came later, when he went to Moscow to the Gorky Institute for
World Literature to become, as he put it in an interview with The Paris Review, “an official writer of the
regime”. The indoctrination failed to move him: It reminded him of the Soviet books back home that
spoke of “hope”, “hard work” and “sunshine” in the same breath, capturing nothing of all that was fast
vanishing around them. For nearly four decades, Albania would be under the repressive communist
dictatorship of Hoxha. But in Moscow, Kadare would realise that he wasn’t a believer. When he began
writing, it would be to bear witness to the many shades of oppression that held his people prisoner. One
of Albania’s Finest writers, Kadare, 88, died on July 1.

Beginning with ‘The General of the Dead Army’ (1970) that he wrote at the age of 26 about an Italian
general who returns to Albania after World War II to repatriate bodies of dead Italian soldiers, to ‘ The
Palace of Dreams’ (1981) about a shadowy state department in a totalitarian Ottoman empire that maps
the dreams of subjects to get an inkling about the regime’s future, Kadare’s fiction and poetry relied on
myth-making and allusions to lend them distance and its writer immunity from state reprisal. There was
also a bit of self-serving manipulation, too — in 1977, he wrote ‘ The Great Winter’, a hagiographic portrait
of Hoxha. His defence in later years was practical: Between persecution and flattery, he chose the latter.

Kadare never won the Nobel Prize in Literature, even though he was considered to be in contention for
years. But the 2005 Booker International Prize winner did something more powerful. His books gave
shelter to a lost Balkan way of life—the only act of resistance that transcends regimes and offers a chance
to “overcome the impossible”.

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 EDITORIALS July 3
THE TIMES OF INDIA
July 3, 2024
When The Drama Ends
LS began with good political theatre. A tougher test of its efficacy will come once
legislative biz starts

Lok Sabha’s proceedings, starting with the oath ceremony, were loud. And clear. Voices carried. Rhetoric-
tipped arrows flew. Barbs found their targets. Quarrels over election of Speaker, and debate around
President’s address, have – almost reassuringly – demonstrated the House is in raucous form. The
theatrics were almost entertaining and as integral to an opening session as, say, the administering of oath.

Role play | If Rahul Gandhi hit the deck running, an aggressive LoP with clarity of purpose, and BJP firmly
in his sight, Modi in his third term was campaignesque sharp, targeting Congress and defending his govt.
Powerful speeches from opposition politicians and feisty counters from govt brass – mostly Union
ministers spoke – lit up the session expected to end today. The House will reconvene around the third
week of July when govt presents its Budget. Parliament is the politician’s stage. Good theatrical
performances burnish political credentials. As things stand, opposition parties have little to complain
about – of not getting a chance to speak, of not being heard. Plenty was said, including sloganeering
almost throughout PM’s speech yesterday.

Tough act | For the coalition in office, legislative business will be Modi-led govt’s primary test – a first for
a PM who led two BJP-majority govts. For any new bill, or to carry forward bills pending from its earlier
tenure, it will need to have ally TDP and JDU on board. Even in RS, it has work to do, given BJD has
decided to not support BJP. The onus is on Modi, around whom everything-NDA revolves.

No drama | The real test of the House will be in the business it gets done. Can Parliament hold a robust
debate on NEET, which impacts almost 3mn youngsters every year? And when – if – it does so, will it be a
war of words or outcome-oriented? Can the 18th LS have relevant debates on jobs, on the extent and
causes of underemployment? Creaky infra in the world’s most populous country is a debilitating factor for
any development agenda – Parliament should focus on it. And a sobering reminder came yesterday to
MPs about real questions they must ask – over 100 died in a stampede in a religious event in UP’s
Hathras.

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 EDITORIALS July 3
THE TIMES OF INDIA
July 3, 2024
Online Won’t Do
NEET should follow JEE test model that uses offline computers & two-level
examination

Allegations that this year’s NEET-UG was a compromised affair have been validated since CBI began
probing the matter. That irregularities have been reported from several states should leave no one in
doubt about terrible safety protocols followed by National Testing Agency (NTA).

Format’s the problem | It is all very well to make arrests. But what about the very nature of the exam? To
have 2.4mn students take it in offline mode on one single day across India is, experts say, a recipe for
trouble. By one reckoning, there are as many as 11 points of human interface for paper-based NEET. Thus,
the potential for leakage and manipulation in a high-stakes exam is huge.

It’s good that govt is considering doing away with offline mode for NEET. But this should not mean
switching to ‘online’ exams. Rich US, with its huge infra, can do it, we can’t.

CBT way forward | What we need are computer-based tests, as is the case for JEE – CBTs involve use of a
computer at a designated centre, but no internet. But a simple switch to CBT won’t be enough. Most
important in this context are the credentials of exam centres. There have been cases of cheating and
impersonation even in JEE.

Still, CBTs have evolved into a scientific discipline and there are reputed companies in the business. IIMs
have used the services of such entities to conduct a fair CAT for years. There is no reason NTA cannot do
the same.

Tech, ownership are key | Several other changes will be needed. Proper use of technology for safety
protocols and ensuring examinees answer a random set of questions drawn from a bank is one. The
question of ownership is another. For instance, while JEE Main conducted by NTA has seen glitches, JEE
Advanced, in which IITs are involved, hasn’t. So, it seems like a good idea to conduct a screening test for
NEET and a second one for selected candidates in which medical institutions are involved. Most
importantly, the practice of conducting NEET only once a year must be done away with. Giving examinees
more than one chance will lower their stress levels.

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 EDITORIALS July 3
THE ECONOMIC TIMES
July 3, 2024
A Woman’s Place is In the Boardroom
But it’s crucial to expand female managerial pool

Women are growing their representation faster in Indian boardrooms than in corner suites, broadly in line
with the relative time and effort that goes into directorial and managerial roles. Although India ranks low
on both parameters by international comparison, placing women on company boards is easier to push
through by fiat than placing them in senior management positions. The gap in the middle order of
women executives leads to a thinning out at the top, and companies need to be more proactive to
prevent this. In contrast, directors can move in laterally, avoiding the trade-off between professional and
family responsibilities women face as they work their way up the corporate ladder. It also helps that
business in India is driven by families, which makes it easier for women family members to find a place in
boardrooms.

The corporate benefits of gender diversity, though, are derived when women’s representation improves at
all levels. Despite its faster growth, women’s boardroom representation still trails that in senior
management, and it is in the interests of corporate governance that the female managerial pool is
widened to feed the needs of company boards. At the end of the day, directors’ quality is related to the
quality of managers a company produces. Improved choice among candidates for women directors would
require a broader dissemination of managerial skills across the corporate sector.

The rule on women’s board representation should have knock-on effects on managerial gender parity.
Yet, this is a relatively weak force. HR policies to encourage women to find a better work-family balance
and to sensitise male colleagues remain the predominant managerial intervention. To the extent that
boardroom representation affects HR strategy, the top-down approach can considerably improve
outcomes. Since the approach is also bottoms up, with affirmative action in college and entry-level
corporate hiring, India Inc could attain acceptable levels of gender parity if it pays more attention to its
middle managers.

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 EDITORIALS July 3
THE ECONOMIC TIMES
July 3, 2024
Have It on Record, Even If Expunged
Never a dull moment in Parliament. The ongoing session, the first after Lok Sabha elections, was expected
to be stormy. It lived up to the billing. On Monday, Speaker Om Birla expunged several parts of the
speech made by Rahul Gandhi, the new leader of opposition in Lok Sabha. Later, Gandhi wrote to Birla,
saying whatever he said was ‘ground reality and the factual position’, adding that while the chair has the
power to expunge remarks from the proceedings, the stipulation is that only those kinds of words the
nature of which has been specified in Rule 380 of the Rules of Procedure and Conduct of Business in Lok
Sabha can be expunged.

Considering that parliamentary proceedings are telecast live and clips are shared across social media,
does it make sense to expunge proceedings? It does, once seen through a different lens. In the pre-digital
age, expunging records meant blacking out comments. However, in a hyper-digital age, expunging
comments, like recording them, are part of a fact gathering-cum-checking process. Since comments have
already been shared, expunging them neither curtails the MP’s right to make allegations (he or she needs
to give prior notice) nor does it bar him or her from referring to the information. As due diligence,
however, presiding officers can ask MPs to provide supporting documents underpinning their claims.

Instead of using the threat of expunging as a whip, let parliamentary expunction be used as a
transparency tool. Proceedings can be marked as ‘expunged’. However, at the same time, reasons and
rules under which such an action has been taken must be provided. Old tools and provisions must be
repurposed for this effort, so that Parliament can keep functioning in a transparent and ethical manner.

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 EDITORIALS July 3
THE HINDU BUSINESSLINE
July 3, 2024
Stable picture
Banks in robust shape; fintech-NBFCs need watching

For many quarters now, banks have been reporting a consistent decline in non-performing assets (NPAs)
and comfortable capital buffers, despite brisk loan offtake. This has given rise to doubts as to whether
there’s an unseen bubble building up. There has also been concern about bank credit growth running well
ahead of deposit growth. The Reserve Bank of India’s (RBI’s) latest Financial Stability Report for the six
months ended March 31, 2024, seeks to allay these fears.

The report notes that banks are sitting on multi-year low gross non-performing assets (GNPAs) of 2.8 per
cent and net NPAs of 0.6 per cent, with no signs of emerging stress in their SMA-1 and SMA-2 accounts
(loans overdue for 30-60 days). It presents empirical data to show that credit-deposit ratios or defaults are
not a big worry as long as credit growth stays within the 16-18 per cent range (it was 16 per cent in May
2024). It puts scheduled commercial banks (SCBs) through a battery of stress tests on macroeconomic
shocks, a spike in defaults and so on, to find that they are in very little danger of falling short of capital or
liquidity in high-stress scenarios. RBI’s pre-emptive measures in November 2023 to raise risk weights on
unsecured retail loans seem to have worked by reducing banks’ CRAR (capital to risk-weighted assets) and
thus moderating their lending to this segment.

Banks reported sequentially lower net and gross GNPAs of just 1.2 per cent and of 2.1 per cent on their
retail books in March. With stock market investors relying on borrowed funds, there were concerns about
whether a stock market crash would destabilise banks. But the stress test showing that a 55 per cent drop
in stock prices would reduce banks’ CRAR only by 51 basis points, dismisses these fears. However, it must
be remembered that it is not banks but non-banking finance companies (NBFCs) that have been at the
forefront of lending to both new and below-prime borrowers of late. Data from the FSR suggests that
risks could lurk there. Prompted by the regulatory tightening in November, NBFCs slowed their pace of
retail lending and trimmed the share of unsecured loans in their books from 32.2 per cent to 22.9 per
cent, while reporting NPAs below 2 per cent.

But RBI’s recent regulatory actions against some NBFCs, after inspecting their books, show that the
reported numbers may hide evergreening and under-reporting of stress. While overall defaults on retail
loans have dipped, those for loans below ₹50,000 remain elevated. Fintech-NBFCs account for 47 per cent
of this pie. Over 8 per cent of personal loans also face defaults within a year, with more than half these
borrowers having three live loans when taking the latest one. A blow-up in NPAs here could pose indirect
risks to financial stability, as the NBFCs going big on these loans are borrowers from banks and significant
net debtors to the financial system. RBI has its task cut out in trying to balance this risk with the need to
push financial inclusion.

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 EDITORIALS July 3
BUSINESS STANDARD
July 3, 2024
Investor confidence
Index inclusion also has risks

There is considerable enthusiasm among financial-market participants over India’s inclusion in the JP
Morgan Government Bond Index-Emerging Markets. Last week, India officially became part of the index,
which global investors widely track. India’s weighting in the index will be increased by one percentage
point every month till the cap of 10 per cent is reached. According to estimates, funds worth about $240
billion track this index, which means about $24 billion will flow into India. In fact, the flows may be higher
because non-index investors too may want to increase their exposure to India after its inclusion in the
index. While Russia’s exclusion from the index may have hastened India’s inclusion, it does reflect global
investor confidence in India’s relative performance. Bloomberg has also announced that it will include
Indian bonds in its emerging-market and related indices.

However, with the inclusion in global bond indices and the intent to tap foreign funds to fund the fiscal
deficit, it is worth noting that the process has both benefits and risks. As Reserve Bank of India Governor
Shaktikanta Das had rightly noted last year, it is a double-edged sword. The increased flow into
government bonds would reduce the requirement for borrowing in the domestic market, leaving
domestic savings to that extent for domestic businesses. This will help reduce the cost of money, which
would improve investment outcomes and growth. However, on the other hand, higher exposure to
foreign funds can significantly increase volatility in financial markets. To be sure, funds tracking indices
tend to be more stable, but money can move out quickly in times of increased stress in global markets. In
times of stress, this can add to the pressure because funds from other instruments also tend to move out.
Any adjustment in India’s weighting can also lead to sudden outflows.

Further, the index inclusion has come at a time when the government is running a higher fiscal deficit and
the public debt remains elevated. Even though India is growing at a relatively high rate and the current
account remains manageable — it recorded a surplus in the March quarter — India’s fiscal position
remains a source of risk. According to the International Monetary Fund projections, India’s general
government Budget deficit is likely to remain at 7 per cent of gross domestic product (GDP) or above at
least till 2027. India’s public debt is unlikely to reach the pre-pandemic level of 75 per cent of GDP, which
was already high, at least till 2029. Sustained higher deficits and public debt can affect investor
confidence.

It is thus important for India to reduce the general government Budget deficit at a faster pace. A large
part of the adjustment in this context will need to be done by the Union government. It would be worth
watching if the government revises its fiscal-deficit target for the current year from 5.1 per cent of GDP
(announced in the Interim Budget) in the upcoming full Budget. One big constraint for the government is
that economic growth is driven largely by government expenditure. However, at some point, the
government would need to start borrowing less and make way for the private sector. In sum, to boost
investor confidence, including foreign investors, it is important that India not only achieves high economic
growth but also maintains a low and stable fiscal and current account deficit, with price stability.

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 EDITORIALS July 3
BUSINESS STANDARD
July 3, 2024
Overdue Census
The delay is disturbing

Among the many priorities before the new government, conducting the decennial Census demands
urgency. The Census, which was originally due in 2021, was postponed until further orders owing to the
pandemic. It is now over two years since the pandemic receded but there appears to be little sign of
progress on this front. Orders for states to freeze the administrative boundaries of districts, tehsils, and
towns and so on, a prerequisite for conducting the Census, have been postponed nine times. It has now
been reported that a decision on the exercise has not yet been taken. Given the intense recent debates in
the public discourse over welfarism and freebies and demands for a caste Census, it is unusual that the
National Democratic Alliance government has not accorded priority to a consequential decennial exercise
that has been postponed for the first time in 150 years, that too without visibility on a timetable.

Since the latest Census is to be in digitised form, including self-enumeration and electronic submission of
data, conducting it should be less onerous or time-consuming than earlier exercises. After the world’s
largest elections, conducted via electronic voting machines, a digital Census would enhance India’s
reputation for its IT (information technology) prowess. Instead, India is among 120 countries that had
postponed the Census on account of the pandemic. Several countries, such as China, Bangladesh, and
Nepal, managed to conduct their Censuses even during the pandemic. India shares the distinction of
being among 44 nations that have not conducted a Census yet; most of its peers in this respect include
conflict- or crisis-ridden countries like Yemen, Myanmar, Ukraine, Sri Lanka, Afghanistan, and some
countries in sub-Saharan Africa.

The importance of a demographic exercise as intensive as the Census in a vast economically and culturally
diverse country like India cannot be overstated. For one, it gives basic information, such as the size of the
population. According to the United Nations data, India has surpassed China to become the world’s most
populous country with 1.4 billion people. The irony of this is that the Indian government has no official
update on the size of its population. On account of an indefinite delay on holding the Census, India’s
official population count still stands at 1.2 billion. Important national surveys like the Consumption Survey,
National Family Health Survey, coverage of the Food Security Act, an understanding of migration patterns
and so on depend on updated Census data, but they currently rely on the last Census, done in 2011.

In other words, it is possible that a wide raft of welfare schemes are being wrongly targeted and
underfunded, or are unnecessary — vital information that is missing for lack of an updated enumeration
of the population. Without an updated Census, the 16th Finance Commission’s recommendations will be
based on 13-year-old population data. The government would do well to make it clear when it plans to
hold the Census. If it is done this year or the next, will it affect the timeline for the next Census? This is
critical because, among other things, the delimitation exercise and implementation of women’s
reservation in Parliament and Assemblies are to be based on the first Census after 2026.

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 EDITORIALS July 3
FINANCIAL EXPRESS
July 3, 2024
Less taxing regime
In the interest of equity, the Budget should give relief to taxpayers at the lower
income levels.

Given the widening inequality between the rich and poor, the government should consider giving lower-
income households a tax break. The basic exemption limit now, under the old income tax (I-T) regime, is
just Rs 2.5 lakh per annum. The applicable rate for a taxable income of between Rs 5 lakh and Rs 10 lakh is
a high 20%. Moreover, for years now, the 30% tax rate has kicked in at a taxable income of just Rs 10 lakh
and has not been adjusted for inflation. While there are exemptions available — under Sections 80C and
80D for instance — they don’t amount to much. The government is, of course, nudging taxpayers to shift
to the new I-T regime and around 60% of taxpayers have already done so. Under this regime too, the
basic exemption limit is Rs 3 lakh, although the tax rebate available under Section 87A means an income
of up to Rs 7 lakh is tax-free. For salaried employees, the standard deduction makes an income of up to
Rs 7.5 lakh tax-free.

However, the 30% tax rate kicks in at Rs 15 lakh, which is very early. The principle of vertical equity says
those earning more should pay taxes at higher marginal rates. In the old I-T regime, the surcharges are
applicable in a graded manner, starting at 10% for incomes of Rs 50 lakh per annum going up to 37% on
incomes of over Rs 5 crore. However, in the new regime, the maximum surcharge is 25% for incomes of
over Rs 2 crore. This seems rather generous and could be revisited. A back-of-the-envelope calculation
shows that if the exemption limit is raised by Rs 1 lakh, the government stands to lose around Rs 13,000
crore in revenues. However, at the same time, approximately one-fourth of this amount typically comes
back to the exchequer in the form of goods and service tax collections.

It is a fact that those at the lower end of the income pyramid have a greater propensity to spend and in
the current environment of weak consumption, relief to taxpayers at the lower end would spur demand.
While in the current fiscal the government has a cushion in the generous dividend from the Reserve Bank
of India, from next year onwards it will need to mop up far more from non-tax revenues — receipts from
the monetisation of assets, for instance, has so far been modest. Tax collections are expected to maintain
their momentum — net direct tax collections were up a strong 18% in FY24 over the previous year.

India’s tax base is narrow and only 7 persons pay tax for every 100 voters. To keep taxpayers in the net, a
nominal rate of 1-5% for lower income slabs can be levied, compelling individuals to file a return. While
improved administration and surveillance has resulted in a near 65% rise in the number of taxpayers from
57 million in FY14 to 94 million in FY22, the actual number of taxpayers is very small. The share of direct
taxes in the overall tax collections needs to be higher. To achieve this, the government must refrain from
being lenient on capital gains tax and taxes on dividends, which can now be taxed at source. Levies on
stock market transactions can be raised even as middle-class households are given some more relief on
interest earned on savings deposits.

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