Blog

Daily Current Affairs 09.04.2022(Shah pitches for Hindi use, Opposition cries foul, RBI holds benchmark interest rates, SC upholds new restrictions on receiving foreign funds, Bodoland State demand revived, Strict regime necessitated by experience of abuse: SC, RBI to ‘focus’ on inflation, lifts estimates)

Daily Current Affairs 09.04.2022(Shah pitches for Hindi use, Opposition cries foul, RBI holds benchmark interest rates, SC upholds new restrictions on receiving foreign funds, Bodoland State demand revived, Strict regime necessitated by experience of abuse: SC, RBI to ‘focus’ on inflation, lifts estimates)

image-74

1. Shah pitches for Hindi use, Opposition cries foul

Union Home Minister Amit Shah’s statement that people from various States speaking different languages should communicate with each other in Hindi instead of English has triggered widespread criticism from Opposition leaders, who dubbed it “Hindi imperialism”.

A statement from the Ministry of Home Affairs quoted Mr. Shah, the chairman of the Parliamentary Official Language Committee, as saying the time had come to make the official language an important part of national unity.

He said that when citizens of States who speak other languages communicate, it should be in the language of India. Hindi should be accepted as an alternative to English and not to local languages. In response, Congress leader Jairam Ramesh asked why the Minister did not learn a south Indian language instead of ramming Hindi down everyone’s throat.

Constitutional Provision

Article 343 of the Indian Constitution states The official language of the Union shall be Hindi in Devanagari script. Also according to Article 345, the legislature of a state may adopt any one or more of the state’s official languages, including Hindi, like the language or languages to be used for all or some of the state’s official purposes.

Official Language – Constitutional Provisions

  • The Indian Constitution gives Hindi (in Devanagari Script) as the official language of the union.
  • The Constitution states that, till January 25,1965, English shall continue to be used for all official purposes of the Union. This is mainly because complete replacement by Hindi was not expected within the short time. Thus, English along with Hindi became an associate official language.
  • Article 343(1) of our constitution specifically provided;
  • Hindi in Devanagari script shall be the official language of the Union.
  • For official purposes, the international form of Indian numerals shall be used.”
  • In the eighth schedule of the Indian constitution there are 22 languages that have been recognized (Originally 14 languages were mentioned).

The Schedules Languages

The Schedules Languages

Articles 344(1) and 351 of the Constitution (the eighth schedule) provided the following 22 languages as the official:

AssameseMeitei (Manipuri)
BengaliMarathi
BodoNepali
DogriUdiya
GujaratiPunjabi
HindiSanskrit
KannadaSanthali
KashmiriSindhi
KonkaniTamil
MaithiliTelugu
MalayalamUrdu

Extension of the language list

Extension of the language list

  • 1950: Originally 14 languages were included in the Constitution.
  • 1967: the Sindhi language added via 21st Constitutional Amendment Act.
  • 1992: The 71st Constitutional Amendment Act provided Konkani, Manipuri (Meitei), and Nepali as official languages.
  • 2003: Bodo, Dogri, Maithili, and Santali included via 92nd Constitutional Amendment Act.
  • 2011: The word Oriya was changed to Odia by the 96th Constitutional Amendment Act.

Regional Languages

The Constitution does not provide for the official language of states. However, It says that :

  • The legislature of a state may adopt any one or more of the languages belonging to the state or Hindi as the official language of that state. Until then, English will continue as the official language of that state.
  • As a response to this the states have adopted the following regional languages as their official language:
    • Andhra Pradesh – Telugu
    • Meghalaya, Arunachal Pradesh and Nagaland – English
    • Jammu and Kashmir – Urdu (and not Kashmiri)
    • Goa – Marathi and Konkani
    • Gujarat – Hindi and Gujarati
    • Himachal Pradesh, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand, Haryana, and Rajasthan – Hindi.
    • Odisha–Odia
    • West Bengal–Bengali
    • Assam–Assamese
    • Kerala–Malayalam
      • Note, There is no compulsion for the state to choose the language from the Eighth Schedule of the Constitution.
  • For the time being, English would remain the communication language between the Union and the states or between various states.
  • Any two or more states are free to agree to use Hindi (instead of English) for communication between themselves (Rajasthan, Uttar Pradesh, Madhya Pradesh and Bihar are communicating in Hindi among themselves).
  • The Official Languages Act (1963) provides that English should be the communication language between the Union and the non-Hindi states.
  • The act also provides that, The communication between Hindi and Non-Hindi states if done in Hindi then it must be accompanied by an English translation.
  • If a demand is made to the president and he is satisfied that a substantial proportion of the population of a state wish to use any language spoken by them to be recognized by that state, then he may direct them to recognize that language as an official language of the state. The main objective here is to protect the linguistic interests of minorities in states.

The Language of judiciary and laws

The Language of judiciary and laws

The constitutional provisions:

  • The parliament by law can provide for the language of the Supreme court’s proceedings and the language of the union laws.
  • Currently, the language of SC proceedings is English only.
  • As per the provisions of the Official Languages Act of 1963, the Hindi translation of acts, ordinances, orders, regulations and bye-laws published under the authority of the president must be considered as the authoritative texts.
  • Also, any bill introduced in the Parliament must be accompanied by its Hindi translation.
  • The act also provides for the Hindi translation of state acts or ordinances in specific cases.
  • The governor of a state, by seeking the previous consent of the president, can authorize the use of Hindi or any other official language of the state, in the proceedings in the high court of the state
  • However, it must be noted that with respect to the judgments, decrees, and orders of HC can be pronounced in English only (until Parliament does not provide otherwise).
  • As per the act, the governor of a state, with the previous consent of the president, to authorize the use of Hindi or any other official language of the state for judgements, decrees and orders passed by the high court of the state along with English translation.
  • The translation of any official language, wherever provided, must be done as per the prescriptions of the Authorised Translations (Central Laws) Act of 1973.
  • A state legislature can provide the use of any language (other than English) with respect to bills, acts, ordinances, orders, rules, regulations or bye-laws, with a compulsory translation of the same in the English.

The Anti-Hindi agitations of Tamil Nadu:

  • These agitations took place in the Indian state of Tamil Nadu (formerly Madras State) before and after the Independence periods. The agitations were marked with mass protests, riots, student and political movements in Tamil Nadu as a reaction to the imposition of Hindi as an official language.
  • The first agitation happened in 1937, in opposition to the introduction of mandatory teaching of Hindi in the schools. This compulsory Hindi education was later abandoned by the British Governor of Madras Lord Erskine in February 1940.
  • During 1946–50, again there were agitations against Hindi by the Dravidar Kazhagam (DK) and Periyar. This time also there were attempts made by the government to introduce Hindi as a compulsory language in schools.
  • A solution was reached between the government and agitators. Finally, the government kept Hindi teaching optional in the schools. Also,, students are allowed to participate in other activities as optional to Hindi learning.

2. RBI holds benchmark interest rates

The Reserve Bank on Friday held benchmark interest rates and retained its ‘accommodative’ stance, even as it emphasised it was pivoting to focus on ‘withdrawal of accommodation to ensure that inflation remains within the target’.

The RBI raised its forecast for inflation in FY23 to 5.7% from its February projection of 4.5%.

The central bank also lowered its growth estimate for the current fiscal to 7.2% from the 7.8% forecast earlier.

What is meant by Monetary Policy?

Monetary policy refers to the policy of the central bank – ie Reserve Bank of India – in matters of interest rates, money supply and availability of credit.

It is through the monetary policy, RBI controls inflation in the country.

RBI uses various monetary instruments like REPO rate, Reverse RERO rate, SLR, CRR etc to achieve its purpose. (This is explained well in one of our earlier articles – basics of economy concepts).

In short, Monetary policy refers to the use of monetary instruments under the control of the central bank to regulate magnitudes such as interest rates, money supply and availability of credit with a view to achieving the ultimate objective of economic policy.

Expansionary and Contractionary Monetary Policy

We have already seen that monetary policy refers to the actions undertaken by a nation’s central bank to control the money supply. Control of money supply helps to manage inflation or deflation.

The monetary policy can be expansionary or contractionary.

An expansionary monetary policy is focused on expanding (increasing) the money supply in an economy. An expansionary monetary policy is implemented by lowering key interest rates thus increasing market liquidity.

A contractionary monetary policy is focused on contracting (decreasing) the money supply in an economy. A contractionary monetary policy is implemented by increasing key interest rates thus reducing market liquidity.

How does the Reserve Bank of India get its mandate to conduct monetary policy?

The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.

Recently there were many changes in the way Monetary Policy of India is formed – with the introduction of Monetary Policy Framework (MPF), Monetary Policy Committee (MPC), and Monetary Policy Process (MPP). We shall see each of these terms in detail soon.

What is the main goal of Monetary Policy of India?

Maintain price stability.

The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition for sustainable growth.

To maintain price stability, inflation needs to be controlled. The government of India sets an inflation target for every five years. RBI has an important role in the consultation process regarding inflation targeting. The current inflation-targeting framework in India is flexible in nature.

The Monetary Policy Framework (MPF)

While the Government of India sets the Flexible Inflation Targeting Framework in India, it is the Reserve Bank of India (RBI) which operates the Monetary Policy Framework of the country.

  • The amended RBI Act explicitly provides the legislative mandate to the Reserve Bank to operate the monetary policy framework of the country.
  • The framework aims at setting the policy (repo) rate based on an assessment of the current and evolving macroeconomic situation, and modulation of liquidity conditions to anchor money market rates at or around the repo rate.
  • Note: Repo rate changes transmit through the money market to the entire financial system, which, in turn, influences aggregate demand – a key determinant of inflation and growth.
  • Once the repo rate is announced, the operating framework designed by the Reserve Bank envisages liquidity management on a day-to-day basis through appropriate actions, which aim at anchoring the operating target – the weighted average call rate (WACR) – around the repo rate.

Monetary Policy Committee (MPC)

Now in India, the policy interest rate required to achieve the inflation target is decided by the Monetary Policy Committee (MPC). MPC is a six-member committee constituted by the Central Government (Section 45ZB of the amended RBI Act, 1934).

The MPC is required to meet at least four times 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.

The resolution adopted by the MPC is published after the conclusion of every meeting of the MPC. Once in every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain: (1) the sources of inflation and(2) the forecast of inflation for 6-18 months ahead.

The present Monetary Policy Committee (MPC)

The Central Government constituted the present MPC as under:

  1. Governor of the Reserve Bank of India – Chairperson, ex officio;
  2. Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy – Member, ex officio;
  3. One officer of the Reserve Bank of India to be nominated by the Central Board – Member, ex officio;
  4. Shashanka Bhide, Senior advisor at National Council for Applied Economic Research (NCAER) – Member;
  5. Ashima Goyal, Professor at the Indira Gandhi Institute of Development Research in Mumbai – Member; and
  6. Jayanth Varma, Professor, Indian Institute of Management, Ahmedabad – Member.

The Monetary Policy Process (MPP)

The Monetary Policy Committee (MPC) determines the policy interest rate required to achieve the inflation target.

The Reserve Bank’s Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy. Views of key stakeholders in the economy and analytical work of the Reserve Bank contribute to the process of arriving at the decision on the policy repo rate.

The Financial Markets Operations Department (FMOD) operationalises the monetary policy, mainly through day-to-day liquidity management operations.

The Financial Market Committee (FMC) meets daily to review the liquidity conditions so as to ensure that the operating target of monetary policy (weighted average lending rate) is kept close to the policy repo rate. This parameter is also known as the weighted average call money rate (WACR).

Monetary Policy Instruments (MPI)

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

  1. Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).
  2. Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.
  3. Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under fine-tuning variable rate repo auctions of a range of tenors. The aim of term repo is to help develop the inter-bank term money market, which in turn can set market-based benchmarks for pricing of loans and deposits, and hence improve the transmission of monetary policy. The Reserve Bank also conducts variable interest rate reverse repo auctions, as necessitated under the market conditions.
  4. Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow an additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.
  5. Corridor: The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.
  6. Bank Rate: It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes.
  7. Cash Reserve Ratio (CRR): The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such percentage of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India.
  8. Statutory Liquidity Ratio (SLR): The share of NDTL that a bank is required to maintain in safe and liquid assets, such as unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector.
  9. Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.
  10. Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through the sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank.

3. SC upholds new restrictions on receiving foreign funds

‘Unbridled inflow may destabilise sovereignty of the nation’

The Supreme Court on Friday upheld amendments introducing restrictions in the Foreign Contribution (Regulation) Act (FCRA) while holding that no one has a fundamental or absolute right to receive foreign contributions.

In a judgment that may hit non-governmental organisations (NGOs) working at the grass-root level with no direct link to foreign donors, the court reasoned that unbridled inflow of foreign funds may destabilise the sovereignty of the nation.

The restrictions involve a bar on using operational FCRA accounts to get foreign contributions and mandatory production of the Aadhaar card for registration under the FCRA. They require NGOs and recipients to open a new FCRA account at a specified branch of the State Bank of India in New Delhi as a “one-point entry” for foreign donations.

The petitioners, including individuals and NGOs engaged in cultural, educational, religious activities, argued that the amendments suffered from the “vice of ambiguity, over-breadth or over-governance” and violated their fundamental rights. They said the new regime amounts to a blanket ban on the capacity of intermediary organisations in India to distribute foreign donations to smaller and less visible NGOs. But the court countered that the amendments only provide a strict regulatory framework to moderate the inflow of foreign funds.

‘No absolute right’

“No one can be heard to claim a vested right to accept foreign donations, much less an absolute right,” a three-judge Bench led by Justice A.M. Khanwilkar, who authored the verdict, said.

Free and uncontrolled inflow of foreign funds has the potential to impact the socio-economic structure and polity of the country. “Philosophically, foreign contribution (donation) is akin to gratifying intoxicant replete with medicinal properties and may work like a nectar,” the ruling said.

4. Bodoland State demand revived

A new students’ union has revived the Bodoland statehood demand that is said to have ended with the signing of the Bodo Peace Accord in January 2020.

The Bodo National Students’ Union (BoNSU) has submitted a memorandum to Prime Minister Narendra Modi through the Kokrajhar district head in this regard.

The union was formed in February this year.

5. Strict regime necessitated by experience of abuse: SC

‘Ease of doing business’ did not stop govt. from taking action, says court

Its goal of ‘ease of doing business’ did not stop the government from bringing a “strict” regime of the Foreign Contribution Regulation Act (FCRA) in 2020 to stop the abuse and misutlisation of foreign funds, the Supreme Court said in a judgment on Friday.

“Ordinarily, convenience of business and persons engaged in doing business must be uppermost in the mind of the Parliament/Legislature to effectuate the goal of ease of doing business… the strict regime became essential because of the past experience of abuse and misutilisation of the ‘foreign contribution’ and cancellation of certificates of as many as 19,000 registered organisations on the ground of being grossly non-compliant,” a three-judge Bench, led by Justice A.M. Khanwilkar, said in support of the restrictions in the 2020 FCRA amendments.

Permitting inflow of foreign contribution, which is a donation, is a matter of policy of the State backed by law, the top court held. It was open for the State to even have a regime which may completely prohibit receipt of foreign donation, as no right inheres in the citizen to receive foreign donations.

Besides, the court said, anyone wanting foreign contributions cannot be said to be engaged in “usual or ordinary business”.

Particular bank branch

One of the amendments criticised by NGOs involved a bar on operating existing FCRA accounts in scheduled banks of their convenience and the opening of a new bank account at the State Bank of India branch at Sansad Marg in New Delhi. Foreign donations can be remitted from abroad only through this “primary” account in this particular branch and no other.

But the court said FCRA account operators could not claim the right of continuity of a “deficient and flawed framework”. Opening an account at the Sansad Marg branch was only a one-time exercise to ensure inflow of foreign contribution through one channel only.

“There is no restriction regarding utilisation of the funds only through that (primary) FCRA account. For, it is open to the recipient to operate multiple accounts in other scheduled banks for its utilisation,” Justice Khanwilkar, accompanied by Justices Dinesh Maheshwari and C.T. Ravikumar on the Bench, said.

“The Parliament must be credited with having taken recourse to corrective dispensation for eradicating the mischief, which any sovereign country can ill-afford… The Parliament is supreme and has a final say in matters of legislation,” the court said.

6. RBI to ‘focus’ on inflation, lifts estimates

Central bank holds interest rates, lowers GDP growth forecast as war clouds India’s economic outlook

The Reserve Bank of India’s Monetary Policy Committee on Friday raised its estimate for inflation in FY23 to 5.7%, from the 4.5% forecast in February before Russia invaded Ukraine, and stressed that it would now turn its focus to the “withdrawal of accommodation to ensure that inflation remains within the target going forward”.

“In the sequence of priority we have now put inflation before growth,” RBI governor Shaktikanta Das said at a press conference after announcing the MPC’s decision to hold interest rates at its first policy review of the new fiscal year. “For the last three years growth was ahead of inflation in sequence. This time we have reversed it because we thought the time is appropriate,” he added.

The RBI has also started withdrawing some of the accommodation it had provided in the last two years, though gradually.

“The stance continues to be accommodative but we are now focussing on withdrawal of accommodation. So, gradually we are moving away from an ‘accommodative’ stance which has been there for more than two years,” Mr. Das stressed.

Elaborating on the change in tack, RBI Deputy Governor Michael Debabrata Patra said, “We have taken the policy repo rate to an all-time low which is 4%. If you adjust it with the targeted inflation then the real rate is zero. That was ultra accommodation. The situation is changing and now we want to withdraw the ultra accommodation but there is scope to remain accommodative.”

‘War-induced factors’

Mr. Das said the MPC had decided to revise the inflation projections for FY23 upwards with the estimate for Q1 at 6.3%; Q2 at 5.8%; Q3 at 5.4%; and Q4 at 5.1% due to “war-induced factors”.

He pointed to the sharp increase in crude oil, edible oil and wheat prices, and the cost of feed — which has pushed prices of poultry, egg and dairy products — as reason for the higher estimates.

Earlier, the MPC voted unanimously to keep the policy repo rate unchanged at 4%.

Mr. Das said escalating geopolitical tensions had cast a shadow on India’s economic outlook. As a result, real GDP growth for FY23 has been projected at 7.2%, compared with 7.8% estimated earlier.

Asked about the likely impact of any economic fallout due to India’s ongoing trade with Russia, which is facing sanctions from western nations, Mr. Das said, “The government is seized of the issue… as far as RBI is concerned, we will not do anything that goes against the sanctions.”

For more updates and admission to best academy click https://kurukshetraiasacademy.com/

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
kurukshetraiasacademy

kurukshetraiasacademy

Leave a Reply

Your email address will not be published. Required fields are marked *