1. Reserve Bank raises rates by 50 bps, brings down growth outlook to 7%

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday raised the policy repo rate by 50 basis points (bps) to 5.9%, with RBI Governor Shaktikanta Das citing the ‘persistence of high inflation that necessitated the withdrawal of monetary accommodation to restrain broadening of price pressures and contain second round effects’.

“This action will support medium-term growth prospects,” Mr. Das added.

The committee also voted by a 5:1 majority to “remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward”.

“We are in the midst of… a storm arising from aggressive monetary policy actions and even more aggressive communication from advanced economy central banks,” he said, announcing the policy.

Noting that these actions had caused tightening of financial conditions, extreme volatility and risk aversion, he asserted: “Despite this unsettling global environment, the Indian economy continues to be resilient; there is macroeconomic stability.”

However, given headwinds from extended geopolitical tensions, tightening global financial conditions and a possible decline in external demand, Mr. Das said the RBI projected economic growth in FY23 at 7% (down from the 7.2% it had forecast earlier).

The MPC, however, retained the retail inflation projection for the current fiscal year at 6.7%.

Monetary Policy Committee

The Monetary Policy Committee (MPC) is a committee constituted by the Central Government and led by the Governor of RBI. Monetary Policy Committee was formed with the mission of fixing the benchmark policy interest rate (repo rate) to restrain inflation within the particular target level. The RBI governor controls the monetary policy decisions with the support and advice of the internal team and the technical advisory committee.

Initially, the main decisions related to interest rates were taken by the Governor of RBI alone before the establishment of the committee. MPC was constituted under the Reserve Bank of India Act, 1934 as an initiative to bring more transparency and accountability in fixing the Monetary Policy of India. MPC conducts meetings at least 4 times a year and the monetary policy is published after every meeting with each member explaining his opinions. 

Use of Monetary Policy

• Monetary Policy is the process of regulating the supply of money in an economy by the monetary authority of the country. 
• The Monetary Policy, generally, adjusts the inflation rates or interest rates to sustain the price stability and to maintain the predictable exchange rates with foreign currencies. 
• The Reserve Bank of India is the central banking authority of India, which controls the monetary policy in conjunction with the central government’s developmental agenda. 
• The Reserve Bank of India is authorized to make monetary policy under the Reserve Bank of India Act, 1934.
• Monetary policy is either contractionary or expansionary and is often seen separate from the fiscal policy which deals with taxation, spending by government, and borrowing. 
• When the total money supply is increased rapidly than normal, it is called an expansionary policy, while a slower increase or even a decrease of the same refers to a contractionary policy.

Instruments of Monetary Policy

There are both direct and indirect instruments used for implementing monetary policy. Few include:

• Repo rate
• Reverse Repo rate
• Liquidity Adjustment Facility (LAF)
• Marginal Standing Facility (MSF)
• Corridor
• Bank Rate
• Cash Reserve Ratio (CRR)
• Statutory Liquidity Ratio (SLR)
• Open Market Operations (OMOs)
• Market Stabilisation Scheme (MSS)

Objectives of Monetary Policy

Monetary Policy was implemented with an initiative to provide reasonable price stability, high employment, and a faster economic growth rate. The major four objectives of the Monetary Policy are mentioned below:

1. To stabilize the business cycle.
2. To provide reasonable price stability.
3. To provide faster economic growth.
4. Exchange Rate Stability.

How was the Monetary Policy Committee formed?

Urijit Patel Committee first proposed the idea for the formation of a five-member Monetary Policy Committee. Later, the government proposed the setting up of a seven-member committee. MPC is assisted by the Monetary Policy Department (MPD) of the Reserve Bank in the formulation of the policy.  The monetary Policy Committee came into force on 27th June 2016. The Financial Markets Operations Department (FMOD) operationalizes the monetary policy, mainly through day-to-day liquidity management operations.

Structure of the Monetary Policy Committee

• Monetary Policy Committee (MPC) was constituted as per Section 45ZB under the RBI Act of 1934 by the Central Government. The first meeting of MPC was conducted on 3rd October 2016 in Mumbai.
• The committee determines the policy interest rate required to achieve the inflation target.
• The MPC is required to meet at least four times in a year.
• The quorum for the meeting of the MPC is four members. 
• Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
• Once every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain the sources of inflation and the forecasts of inflation for 6-18 months ahead.

2. Editorial-1: Letting go of a chance to democratise telecom services

The draft Indian Telecommunication Bill, 2022 (Telecom Bill) — published for public consultation on September 21, 2022 — aims to create a legal framework attuned to the realities of the 21st century to ensure India’s socio-economic development. This Telecom Bill follows the release of the consultation paper, “Need for a new legal framework governing Telecommunication in India”, which was published on July 23, 2022. However, it fails to let go of the colonial moorings that have shaped the law around telecommunications in India for the past century.

A repackaging

Instead, it represents multiple squandered opportunities for significant legislative reform. The Telecom Bill misses the opportunity for the democratisation of telecommunication services. Now, it has preferred a move towards centralisation of power through its new licensing regime. Here, the Telecom Bill also fails to inculcate the learnings evolved in courts and other institutions of authority, and instead repackages the provisions from pre-Independence laws to pass them off as legislative advancements. This is in lieu of enacting sweeping legislative reform which would cement user rights as the cornerstone of the Indian telecommunication sector.

The Telecom Bill will usher in a wave of stricter regulations and centralised power by introducing licences for telecommunication services. The definition for such services has been significantly expanded under Clause 2(21) of the Telecom Bill to include online communication service providers such as WhatsApp, Apple Watch, Jitsi, etc. Such a move reflects historical baggage and flows from a long-standing argument and demand made by large telecom companies (‘telcos’) to bring online communication services under regulation for a ‘level-playing field’.

Threat to innovation, privacy protection

The argument that over-the-top (OTT) services are a “substitute” of the services provided by telcos, often termed as the “same service, same rules” argument, is flawed as the two have inherently different functionalities. For instance, while telecom operators act as the gatekeepers to the underlying broadband infrastructure, OTT services can only be accessed through telco-controlled infrastructure. Introduction of OTT communication services under the ambit of telecommunication services is illustrative of a reductionist approach, wherein the diverse services provided by such OTT service providers such as social networking and video calling are aggregated, stripping it of its richness. Such a move may lead to uncertainty in treatment, build ad hocism, and pose overbearing compliance and legal costs on service providers, having deleterious effects on innovation.

On September 14, 2020, the Telecom Regulatory Authority of India (TRAI) issued recommendations on OTT regulation, which were broadly supportive of user choice and the demands raised mainly by digital rights organisations against placing regulatory burden on Internet communication services. However, the Department of Telecommunication (DoT) did not recognise these positive recommendations and also further diluted TRAI’s responsibility of providing recommendations to the central government prior to issuing licences under Clause 46. Moreover, the central government may, in exercising its exclusive privilege to issue a licence, require such online service providers to store data locally, in India. Such a data localisation requirement confers excessive discretion to the Government, and adversely affects the privacy of individuals.

Further, the expansion of the definition of telecommunication services to include OTT communication services, coupled with the requirements for interception under Clause 24(2)(a) may signal the death knell for end-to-end encryption (E2EE) in India. While previously Section 5(2) of the Indian Telegraph Act, 1885 authorised interception of messages transmitted through telegraphs, this has not halted attempts, regardless of success, by the executive to expand the provision to include OTT communication services such as Whatsapp and Signal.

Indeed, there is ongoing litigation before the Supreme Court of India in which the traceability requirement of the Information Technology Rules, 2021 is under challenge. However, the Telecom Bill formalises these attempts of the executive to bypass the privacy protecting practice of E2EE and requires OTT communication service providers such as Whatsapp and Signal to intercept or disclose any message or class of messages to the authorised officer. These attempts are in stark contrast with the recommendations and learnings evolved in the last decade by the Supreme Court in its right to privacy decision (2017) and the Justice B.N. Srikrishna Committee Report on data protection (2018). Both of these signalled the urgent need for reform of the existing surveillance framework in the country due to its lack of independent oversight and propensity for misuse.

Suspension of net services

Replicating this failure to learn from knowledge accumulated post-Independence, Clause 24(2)(b) of the Telecom Bill lays down, for the first time, a specific power for suspension of Internet services (Internet shutdowns). In addition to the impact Internet shutdowns have on the fundamental right to free speech of citizens, the high economic costs of such shutdowns have also been consistently raised as a criticism. Here, the Telecom Bill, which recognises socio-economic growth as one of its stated objectives, fails to take sufficient steps to deliver on its promise. The clause does not solve any of the issues that exist with the current framework for Internet shutdowns in India, specifically the Temporary Suspension of Telecom Services (Public Emergency or Public Safety) Rules, 2017. Learnings and recommendations from the Supreme Court’s decision in 2020 in Anuradha Bhasin vs Union Of India and the 2021 report of the Standing Committee on Information Technology find no place in the Telecom Bill.

The opportunity for significant legislative reform has been squandered not just for surveillance and Internet shutdowns but also for net neutrality. India has in the past adopted an indigenous and progressive approach towards net neutrality. However, we are today missing an opportunity to set global standards by not introducing principles of net neutrality in the Telecom Bill. DoT is inviting comments from the public till October 20, 2022. This is a bill that impacts everyday Internet users, their choices and safety. Thus, it must be engaged with widely.

3. Editorial-2: As India ages, keeping an eye on the elderly

The United Nations marks today as International Day for Older Persons (October 1), as part of the organisation’s efforts to draw attention to healthy ageing. Recently, a report by the UN Department of Economic and Social Affairs (UNDESA), “World Population Prospects 2022”, has projected big shifts in global demographic patterns in the coming decades.

As global birth rates stabilise and shrink, 16% of the world population by 2050 is expected to be made up of people over 65 years. India will be home to the largest population in the world which would include a large elderly sub-population. This demographic change will have a profound impact on its health systems. In this, eye care service delivery is uniquely placed to be the first point-of-contact with the elderly and to also help with health surveillance and planning.

Changes to population structure

The “World Population Prospects 2022” report estimates that by 2050, the global population will be 9.7 billion people. By then, those older than 65 years will be twice as many as children under five. That year is also projected to be a pivotal year for India’s population too. The report projects India’s population to be 1.7 billion by 2050, having overtaken China to be the world’s most populous country. Eight countries — India is among them — will account for more than half of the world’s increasing population by 2050.

Previous United Nations reports have projected that the proportion of India’s elderly population will double to be nearly 20% of the total population by that year. The prevalence of non-communicable diseases such as diabetes, hypertension and heart disease, or disabilities related to vision, hearing or mobility is higher among the elderly. The change in demographic structure will increase the pressure on public health systems that are not geared to deliver universal health care along with social security measures such as old-age and disability pensions.

Eye care and elderly health

The Hyderabad Ocular Morbidity in the Elderly Study (HOMES) by the L.V. Prasad Eye Institute has been producing a series of systematic reports on various aspects of health, quality of life, mental health, morbidity, and disability amongst the elderly living in homes-for-the-aged in Hyderabad, Telangana. Using eye care as a point of entry, the study has been measuring a variety of health and social metrics in over 1,000 participants (all aged over 60), spread across a range of socio-economic circumstances. Over 30% of the elderly in the study had distance vision loss and over 50% had near vision impairment (they needed reading glasses). Nearly half the participants had at least one disability and a third of them had multiple morbidities. About 70% of them were using at least one assistive device, spectacles being the most common. The study also explored the many links between vision impairment and an elderly person’s mental health and confidence. People with impaired vision had a greater fear, and risk, of falling (a major cause of disability and hospitalisation among the elderly). This reduced their movement and independence, leading to depression. Addressing their vision impairment improved lives.

The HOMES data show us that the first step towards tackling basic issues of access and confidence in the elderly is to address vision loss. Eye examinations are also good opportunities to assess and recognise other systemic issues in the elderly. The way forward can then be a package of interventions, including assistive devices for sight, hearing, and mobility, or referrals to psychiatric support for depression or other mental health issues. In this way, eye care can catalyse a model of elderly care that will help us recalibrate our approach to this changing world.

There is more. Most eye conditions typically affect those who are very young or the elderly — age groups that are dependent on others for health access. Therefore, the Indian eye care model has always prioritised primary care ‘vision’ centres, bringing care closer to those in need. Chronic conditions such as diabetes and hypertension lead to irreversible vision loss and so, the sector has been building referral networks connecting with other health specialities.

A perspective

Eye care has also been at the cutting edge of imaging technologies and tele-health, creating portable devices and apps that remove access issues for those who cannot travel far. Crucially, eye health in India has many cross-subsidy models to help alleviate the financial burden on individuals.

This set of experiences and expertise has put eye care in a unique position to help us navigate the transition to an ageing society. The future of elderly care needs to be long term, comprehensive, and integrated, and must be oriented towards primary care to be accessible. It must account for all kinds of socio-economic realities, working to ensure that no elderly person is denied care irrespective of their financial status. A comprehensive eye examination can be the first step towards enabling such a healthy and happy future for our elderly citizens.

4. Editorial-3: No discrimination

Supreme Court ruling makes it easier for more women to get safe abortions

The Supreme Court’s ruling holding that single and unmarried women have the same right to a medically safe abortion as married women is a necessary intervention to set right an anomaly between the letter of the law and its practice. Anchored on the equality clause in the Constitution, as well as on the right to dignity, privacy and bodily autonomy of women, the Court has ruled that there is no rationale for excluding single or unmarried women from the categories of women who could seek abortion care after the completion of 20 weeks of pregnancy, but before 24 weeks. The Delhi High Court had declined to allow the termination of the pregnancy of a 25-year-old woman who was in a consensual relationship, but did not want to carry the pregnancy to term after her partner declined to marry her. The reason cited was that being unmarried, and the pregnancy having occurred consensually, she was not eligible for the benefit of the amendment under the rules. The High Court took a technical view, as Rule 3B, which listed the women eligible for termination of pregnancy — such as rape survivors, minors, those with physical disabilities and mental illness — did not explicitly include single women who had become pregnant in a consensual relationship.

However, the Court has given a purposive meaning to the rules. “Change in marital status” as one of the reasons for which abortion during the extended upper limit of 24 weeks is permissible. As the rationale here is a possible change in the woman’s material circumstances, the Court has ruled that even abandonment by the partner could constitute a change in circumstances that could impact an earlier decision to carry on with the pregnancy. The legislature has allowed abortions up to the 24th week of pregnancy, if two registered medical practitioners are of the opinion that continuing the pregnancy would involve a risk to the woman’s life or cause grave injury to her health. Here too, the Court has taken a purposive view, laying down that an unwanted pregnancy affects a woman’s physical and mental health, rendering it quite important that she alone should decide on whether to undergo an abortion. On a question that did not directly arise in this case, the Court has said rape survivors who may legally seek an abortion in the extended period will also include survivors of marital rape. This judicial view may prevent questions being raised as to whether pregnancy caused by marital rape, which is not a crime, could also be terminated under this rule. At a time when unsafe abortions remain a major cause of maternal mortality, it is a significant verdict that advances the cause of safe abortion services.