1. ‘Economy, jobs to continue to bounce back this year’

Avoiding lockdowns will help: Economic Affairs Secretary

India is much better geared to cope with the resurgence of COVID-19 cases and the economy as well as informal sector job creation is expected to continue to bounce back through this year, Tarun Bajaj, Secretary, Revenue & Department of Economic Affairs in the Finance Ministry said in an interview. Edited Excerpts:

With the financial year 2020-21 behind us, where do you see the state of the economy this year? Is the second wave a worry?

The state of the economy is far better.

You have seen the growth rate being projected by various agencies. We have assumed a 10.4% growth this year, but IMF has projected more than 11%, while Fitch Ratings yesterday projected a rate of 12.8%. So, I think we are now looking at the economy in a much healthier state.

However, the second wave is a small worry, I would say. But at the same time, we are better equipped to handle it.

Now, no State is saying it is going for a lockdown. Maharashtra announced, but it is not doing, which is very sensible.

To live with COVID is a new normal. So now that our health infrastructure is upgraded and vaccines are there, we should handle it with these methods rather than a lockdown.

If we do that, we will also ensure jobs in the informal sector, and that the economy keeps growing. And, we have got great adaptability.

Now, when I see Delhi compared to when it was a full lockdown, one could drive down at 100 kmph. Right now, the traffic is perfectly normal.

So, I think that people are conscious that we now have to live with the coronavirus in a sense. But I am sure we will be able to overcome this situation.

Have revenue collections improved over the past two months, perhaps more than the revised estimates presented in the Budget?

The revenue figures presently have been much better in the months of February and March, both in direct and indirect taxes.

The direct tax gross collections will not be lower by more than 2%-3% of what we collected last year, 2019-20, which is a big thing.

As a matter of fact we have given ₹70,000 crore more to the taxpayers as refund over the last year which was about ₹1.86 lakh crore. This year we have refunded more than ₹2.5 lakh crore.

The GST collections for the month of March have created a record; it has never been so high. We have crossed the record collections by a good margin.

What is the update on tax disputes resolved under the Vivaad Se Vishwas dispute resolution scheme?

More than 1.33 lakh applications have come worth ₹99,960 crore of which about ₹53,800 crore have already been adjusted (as on March 31, 5 p.m.).

Industry players, foreign businesses in particular, are concerned about the implications of the equalisation levy as its phrasing suggests it could cover even firms not operating from an e-commerce platform but merely exchanging e-mails or using digital modes of payment as part of a transaction…

We will also issue a clarification in this regard.

Unemployment

Unemployment is a situation when a capable and willing to do job workforce does not get work.

Phillips Curve

It is a graphic curve which advocates a relationship between inflation and unemployment in an economy. As per the curve there is a ‘trade of’ between inflation and unemployment, i.e., an inverse relationship between them. The curve suggests that lower the inflation, higher the unemployment and higher the inflation, lower the unemployment.

Business Cycle

The business cycle describes the rise and falling production output of goods and services in an economy.

Types of Unemployment:

• Cyclical Unemployment: It is caused due to business cycle. This kind of an unemployment occurs when all those who want to work cannot be employed because there is not enough demand in the market for their work. It is called as, cyclical unemployment because it varies with the trade cycle.
• Frictional Unemployment: This kind of unemployment occurs when a person leaves/loses a job and starts looking for another one. This search for a job may take a considerable amount of time resulting in frictional unemployment. Frictional unemployment tends to be on a high when an economy is not doing so well and low otherwise because during good times it will be easier for people to find jobs that match their skills and requirements easily.
• Seasonal Unemployment: This kind of unemployment is expected to occur at certain parts of the year. For example, the jobs at a hill station may experiences seasonal unemployment during the winter months because less people will visit these areas during this time.
• Structural Unemployment: This kind of unemployment happens when the structure of an industry changes. For example, as the country is tending to move from use of bicycles to motorbikes and cars, the demand for labor in the cycle industry has continuously fallen in the country.
• Full Employment: Employment would be full literally when every able-bodied adult works the number of hours considered normal for a fully employed person.
• Under Employment: This term can be used in multiple connotations but one of the primary usage is to showcase a situation where a person with high skills works in low wage and low skills job.
• Disguised Unemployment: Such type of unemployment is quite common in the agri-cultural sector in India. It occurs when people are employed in a job where their presence or absence does not make any difference to the output of the economy.

Nature of Unemployment in India:

India being a developing country, the nature of unemployment therefore is in stark contrast to the one observed in the developed countries. In developed countries, unemployment is driven by a fall in demand because as the demand for goods and services, machines fall idle and the demand for labour goes down. But in India, the bigger problem is that of under-employment or disguised unemployment, which is not due to the lack of demand for goods but due to the shortage of capital equipment etc. in the economy. Because of lack of capital stock, India has not been able to commensurately meet the needs of the growing labour force in the country.

This manifests itself in two ways:

• The prevalence of large scale unemployment in the urban areas.
• In rural areas the growing numbers engaging themselves in the agricultural sector resulting in disguised unemployment.

As per one of NSS data 8.5 million people in the rural areas and 1.2 million people in the urban areas work for less than 14 hours a week resulting in underemployment.

2. BIMSTEC meet skirts Myanmar violence

Jaishankar takes part in online event

India on Thursday expressed commitment about taking the Bay of Bengal community to “new heights”. The statement was made by External Affairs Minister S. Jaishankar at the ministerial meet of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), which was held virtually. The meeting drew participation from all the seven-member States, including Myanmar which is witnessing a large-scale crackdown against anti-military protesters.

“Our National Security Advisers have met thrice since 2017. They have been working closely and have moved forward in several aspects of security cooperation including counter terrorism, intelligence sharing, coastal security, cyber security, etc in a tangible manner,” said Dr. Jaishankar highlighting the common security challenges facing the member countries.

Cohesion among the members has been difficult to achieve mainly because of the Rohingya refugee crisis which created bitterness between Myanmar and Bangladesh. This affected the working of the organisation to some extent as it could not develop a common charter. However, Mr. Jaishankar announced that the organisation will soon have the common set of rules and goals. “I am also delighted to note that the text of the BIMSTEC Charter has been finalised. We hope that all member states will timely complete their internal procedures for its adoption at the fifth BIMSTEC summit,” said Mr. Jaishankar.

Thursday’s meeting, the 17th BIMSTEC Ministerial, chaired by Sri Lanka, however, avoided any reference to Myanmar’s current crisis.

BIMSTEC

• The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a regional multilateral organisation.
• Its members lie in the littoral and adjacent areas of the Bay of Bengal constituting a contiguous regional unity.
• Out of the 7 members,
  • Five are from South Asia –
    • Bangladesh
    • Bhutan
    • India
    • Nepal
    • Sri Lanka
  • Two are from Southeast Asia –
    • Myanmar
    • Thailand
• BIMSTEC not only connects South and Southeast Asia, but also the ecologies of the Great Himalayas and the Bay of Bengal.
• It mainly aims to create an enabling environment for rapid economic development; accelerate social progress; and promote collaboration on matters of common interest in the region.

Genesis of BIMSTEC

• This sub-regional organization came into being in 1997 through the Bangkok Declaration.
• Initially, it was formed with four Member States with the acronym ‘BIST-EC’ (Bangladesh, India, Sri-Lanka and Thailand Economic Cooperation).
• It became renamed ‘BIMST-EC’ in 1997, following the inclusion of Myanmar.
• With the admission of Nepal and Bhutan in 2004, the name of the grouping was changed to ‘Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation’ (BIMSTEC).

Objectives

• Creating an enabling environment for the rapid economic development of the sub-region.
• Encouraging the spirit of equality and partnership.
• Promoting active collaboration and mutual assistance in the areas of common interests of the member countries
• Accelerating support for each other in the fields of education, science, and technology, etc.

Principles of BIMSTEC

• Sovereign Equality
• Territorial Integrity
• Political Independence
• No-interference in Internal Affairs
• Peaceful Co- existence
• Mutual Benefit
• Constitute an addition to and not be a substitute for bilateral, regional or multilateral cooperation involving the Member States.

Potential

• Bridge between South and South East Asia and represents a reinforcement of relations among these countries.
• Platform for intra-regional cooperation between SAARC and ASEAN members.
• Home to around 1.5 billion people that constitute around 22% of the global population.
• With a combined gross domestic product (GDP) of 2.7 trillion economy, BIMSTEC Member States have been able to sustain an average 6.5% economic growth trajectory in the last five years.
• A fourth of the world’s traded goods cross the bay every year.
• Important Connectivity Projects:
  • Kaladan Multimodal Project – links India and Myanmar.
  • Asian Trilateral Highway – connecting India and Thailand through Myanmar.
  • Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement – for seamless flow of passenger and cargo traffic.

Significance for India

• Allows India to pursue three core policies:
  • Neighborhood First – primacy to the country’s immediate periphery;
  • Act East – connect India with Southeast Asia; and
  • Economic development of India’s northeastern states – by linking them to the Bay of Bengal region via Bangladesh and Myanmar.
• Allows India to counter China’s creeping influence in countries around the Bay of Bengal due to the spread of its Belt and Road Initiative.
• A new platform for India to engage with its neighbors with South Asian Association for Regional Cooperation (SAARC) becoming dysfunctional because of differences between India and Pakistan.

Areas of Cooperation

• Trade and Investment
• Technology
• Energy
• Transportation and Communication
• Tourism
• Fisheries
• Agriculture
• Cultural Cooperation
• Environment and Disaster Management
• Public Health
• People-to-People Contact
• Poverty Alleviation
• Counter Terrorism and Transnational Crime
• Climate Change

Institutional Mechanisms

• BIMSTEC Summit – highest policymaking body in BIMSTEC process and is comprised of heads of state/government of member states.
• Ministerial Meeting – second apex policy-making forum of BIMSTEC attended by the External/Foreign Ministers of Member States.
• Senior Officials’ Meeting – represented by Senior Officials of Foreign Ministries of the Member States.
• BIMSTEC Working Group – attended by Ambassadors of BIMSTEC Member Countries to Bangladesh or their representatives on a monthly basis at the BIMSTEC Secretariat in Dhaka.
• Business Forum & Economic Forum – the two important forums to ensure active participation of private sector.

Challenges

Though largely devoid of bilateral tensions, as is the case in SAARC, BIMSTEC does not seem to have made much progress.

• Inconsistency in Meetings: BIMSTEC planned to hold summits every two years, ministerial meetings every year, but only four summits have taken place in 20 years upto 2018.
• Neglect by member states: It seems that India has used BIMSTEC only when it fails to work through SAARC in the regional setting and other major members like Thailand and Myanmar are focused more towards ASEAN than BIMSTEC.
• Broad Focus Areas: The focus of BIMSTEC is very wide, including 14 areas of cooperation like connectivity, public health, agriculture etc. It is suggested that BIMSTEC should remain committed to small focus areas and cooperate in them efficiently.
• Bilateral Issues between Member Nations: Bangladesh is facing one of the worst refugee crisis of Rohingyas from Myanmar who are fleeing prosecution in the state of Rakhine in Myanmar. There is a border conflict between Myanmar and Thailand.
• No FTA: BIMSTEC FTA was negotiated in 2004, talks on it are yet to be concluded.
• BCIM: The formation of another sub-regional initiative, the Bangladesh-China-India-Myanmar (BCIM) Forum, with the proactive membership of China, has created more doubts about the exclusive potential of BIMSTEC.

SAARC	BIMSTEC
1. A regional organisation looking into South Asia 2. Established in 1985 during the cold war era. 3. Member countries suffer for mistrust and suspicion. 4. Suffers from regional politics. 5. Asymmetric power balance. 6. Intra-regional trade only 5%.	1. Interregional organisation connecting South Asia and South East Asia. 2. Established in 1997 in the post-Cold War. 3. Members maintain reasonably friendly relations. 4. Core objective is the improvement of economic cooperation among countries. 5. Balancing of power with the presence of Thailand and India on the bloc. 6. Intra-regional trade has increased around 6% in a decade.

3. Editorial-1: An Act of colourable legislation

Enactment of the Places of Worship Act, 1991 in its current format damages the liberty of belief, faith and worship to all

In his article, “The needless resurrection of a buried issue” (The Hindu, March 29, 2021), Dushyant Dave, senior advocate of eminence, has articulated why he opposes the challenges on constitutional grounds to the Places of Worship Act, 1991, now before the Supreme Court.

We have by way of a public interest litigation (PIL) in the Supreme Court (WP(C) 619 of 2020, which was filed earlier but notice was issued later vide order of the Supreme Court dated March 26, 2021), challenged Sections 3 and 4 of the Places of Worship Act, 1991 being unconstitutional, void ab initio, and against the Basic Structure of the Constitution of India.

No precedential value

Mr. Dave has relied mainly on the Supreme Court’s observation in the Ram Janmabhoomi Case of November 9, 2019 (M. Siddiq vs. Mahant Suresh Das) with respect to the Places of Worship Act, 1991. However, there was no application of the provisions of the Places of Worship Act, 1991 to the case (Shri Ram Janmabhoomi dispute).

Section 5 of the Places of Worship Act, 1991 clearly states that nothing in the Act shall apply to any suit, appeal or other proceedings relating to the said place or place of worship, i.e. the Ram-Janmabhoomi-Babri Masjid situated in Ayodhya, in the State of Uttar Pradesh. Thereby, the 2019 judgment of the Supreme Court’s (Shri Ram Janmabhoomi dispute (2020 1 SCC 1)) observation(s) with respect to the Places of Worship Act, 1991 lacks any precedential value.

The pith and substance of the Act of 1991 is that it is ultra vires the fundamental rights enshrined in the Constitution since it bars the jurisdiction of the Supreme Court and furthermore nullifies the Fundamental Right(s) guaranteed by the Constitution of India as elucidated in Article 32 of “enforcement of fundamental rights” which cannot be suspended except as otherwise stated in the Constitution.

This importance of Article 32 can be understood by the words of the Chairman of the Constitution Drafting Committee, B.R. Ambedkar who asserted, inter alia, that Article 32 is the very soul of the Constitution and the most important Article in the Constitution.

Under Article 32 of the Constitution of India, the Supreme Court has the power to issue writs appropriate for enforcement of all the Fundamental rights conferred by Part III of the Constitution.

The top court, on various instances, ruled that in view of the constitutional scheme and the jurisdiction conferred on the Supreme Court under Article 32 and on the High Courts under Article 226 of the Constitution that “the power of judicial review being an integral part of the basic structure of the Constitution, no Act of Parliament can exclude or curtail the powers of the Constitutional Courts with regard to the enforcement of fundamental rights”.

The Act of 1991, is appropriately called an Act of colourable legislation. As the Courts have held, “you cannot do indirectly which you are prohibited from doing directly”.

A weakening

The Preamble in the Constitution gives prominent importance to liberty of belief, faith and worship to all citizens, and the same is sought to be weakened and effectively nullified or severely damaged by the enactment of the Act of 1991 in its current format.

The concepts of faith, belief and worship are the foundations of Articles 25 and 26 of the Constitution of India. Therefore, prohibiting citizens from approaching appropriate courts with respect to suit or any other proceedings to handover the land of any temple of certain essential significance (such as being the birthplace of Lord Rama in Ayodhya and Lord Krishna in Mathura or Lord Shiva sending his fiery Jyotirlinga in the Gyanvapi premises of Varanasi), is arbitrary, unreasonable and mala fide in the context of the fundamental rights to pray and perform religious practice as guaranteed by Articles 25 and 26 of the Constitution of India. The intent of the Act of 1991 under Section 5, i.e. exception extended to the “Ram-Janmbhoomi matter” identifies the need and importance of resolution of such a controversy and settling long on-going disputes before the courts. But such an exception should be made for other two matters of dispute stated above.

Other disputes

The exclusion of the Mathura and Varanasi disputes as being additional exceptions from the Act of 1991 is wholly unacceptable and against what is given by the people of India to the makers of the Constitution, enshrined in the Preamble, which is part of the Basic Structure of the Constitution.

Those who rely on the Act of 1991 to avoid the settlement of the dispute in Varanasi Mathura have failed to anticipate the legal principles enunciated in the judgment of the top court (in Ismail Faruqui vs. Union of India (1994 6 SCC 360)), on the religious significance of mosques and temples. Even in countries like Saudia Arabia, only Mecca and Medina have the immutable religious protection from demolition. And only authorised demolition is permitted.

Section 4 (1) of the Act declaring that religious character of a place of worship existing on the 15th day of August, 1947 shall continue to be the same as it existed on that day, is no longer good law after this Court’s judgment in ((1994) 6 SCC 360) which held that a mosque is not an essential part of the practice of the religion of Islam and namaz (prayer) by Muslims can be offered anywhere, even in the open maidan, on the road, railway platforms or airports.

Ultimately, students of law are also students of history and we must not lose sight of the past. We must learn from it. But we accept one sentiment of Mr. Dave — that we cannot open the flood gates of rebuilding all 40,000 temples which were demolished on firmans of the Mughal emperors.

Yet, where by faith Hindus believe there was a forcible demolition of an irreplaceable non-shiftable temple, it has to be rebuilt. There are only two more such temples in the list of 40,000 — the Gyanvapi Kashi Vishwanath Temple in Varanasi and the Krishna Janmabhoomi Temple in Mathura.

Hence, by the doctrine of casus omissus, the Supreme Court can in an appropriate case before it order that the number of exceptions in Section 5 of the Places of Worship Act, 1991, be three as an alternative solution. The Supreme Court under Article 142 of the Constitution can pass any order to carry out for doing complete justice being in the public interest, while upholding the Constitution of India.

Doctrine of Colorable Legislation: The literal meaning of Colorable Legislation is that under the ‘color’ or ‘appearance’ of the power conferred for one particular purpose, the legislature cannot seek to achieve some other purpose which it is otherwise not competent to legislate on. It comes into play when a Legislature does not possess the power to make laws upon a particular subject but it indirectly makes law on it.

For example, under the guise of exercising a legislative power, if an attempt is made to exercise judicial power, then this would imply a covert attempt to overcome one of the limitations imposed on the legislature by the Constitution.

4. Editorial-2: Overseeing oversights

U-turn on the drastic cut in small savings rates deferred the impact, but revealed the intent

India’s small savings instruments witnessed unprecedented overnight volatility in rates this week. On Wednesday evening, the Budget division in the Department of Economic Affairs revised downwards the interest rates payable on small savings instruments for the April-June 2021 quarter, by 40 basis points (0.4%) to 110 basis points (1.1%). The return on the most popular PPF scheme was pegged at 6.4%, the lowest level in 46 years. The government had refrained from tweaking these rates for the last three quarters after effecting a similarly sharp cut in Q1 of 2020-21, when the PPF interest was pruned from 7.9% to 7.1%. However, by early Thursday, the rate cuts had disappeared and the status quo reinstated, following a tweet by Finance Minister Nirmala Sitharaman. The only explanation: ‘Orders issued by oversight shall be withdrawn.’ It is not clear whose ‘oversight’ led to the rates being cut. In the process, the intent has been revealed even if the impact is deferred. Surely, Wednesday’s order, approved by the competent authority, was not based on random numbers keyed in and notified inadvertently amidst a flurry of last-minute economy-related government notifications on the last day of the financial year.

It is difficult to believe that the oversight is on the bureaucracy’s part, for it simply executed the stated policy decision to link small savings rates to the interest paid on government securities of a comparable tenure every quarter. So one must deduce the oversight is on the political executive’s part on the timing and implications of executing the required decision as per the extant policy. The clinching factor — the five Assembly polls. The government, that has brazened it out on Opposition jibes about rising unemployment, high inflation along with soaring fuel prices, could ill afford to yield a fresh talking point — the squeezing of the middle class and senior citizens, even as they brace up for the fresh tax on provident fund incomes. This rollback is not the first instance of post-haste policy ad hocism, but it may make the government’s ₹12.05-lakh crore borrowing plan for the year harder as the central bank has been complaining of high small savings rates as a deterrent to lower interest rates. Another instance is the mysterious practice of oil companies freezing pump prices during electoral campaigns, even though oil prices are deregulated. The PM, as part of his ‘One Nation, One Election’ pitch, has often said that the virtually perennial poll season hits development. On the same note, if governments need permission to announce initiatives while the model code of conduct is in force, any deviation or reversal from routine administrative decisions should also attract the Election Commission’s scrutiny.