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Daily Current AFfairs 16.07.2021 (Interference an investigating officer can do without, Inflation to persist at elevated levels for a while: RBI officials)

Daily Current AFfairs 16.07.2021 (Interference an investigating officer can do without, Inflation to persist at elevated levels for a while: RBI officials)

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1.Interference an investigating officer can do without

Growing instances of judicial interference in an investigation are not only undesirable but also not sanctioned by law

It is an accepted axiom in a democracy such as India that the Executive shall abide by the Constitution. By the same logic, the bureaucracy is answerable to the lawfully elected government. It is this unassailable legal position which keeps a check on police conduct in a democratic nation.

Writing just after a Minneapolis police officer was sentenced in the United States, on June 25, to 22-and-a-half years in prison for the horrific murder of a hapless citizen, George Floyd, and the enormous media publicity it has received the world over — Floyd was videotaped in May 2020, that showed him dying as the officer was kneeling on his neck — my uneasy feeling is that government and public distrust of the police will further widen. Even a straightforward and law-abiding policeman will hardly be believed. The onus will be on him to prove that he is honest and humane.

The Minneapolis court verdict will no doubt receive support from everyone who believes in a system of checks and balances. My question, however, is whether happenings of this kind and our own horrific episode in Sattankulam, Tamil Nadu, when in June 2020, a 58-year-old father and his 31-year-old son were subject to police brutality and died, justify further curbs on the police authority to investigate an established crime. I know well that I will be in the minority when I plead for at least a slightly kindlier view of police conduct and more latitude to them in the standard operating procedures which they follow, especially when they investigate a complicated crime.

Top court’s observation

It is in this context that I cite a recent Supreme Court of India observation that courts have no authority to direct an investigating officer to in turn direct the arrest of any particular individual connected with a crime. This view should be examined in the background of growing instances of subordinate judicial officers, and even High Courts sometimes, directing the investigating officer to effect the arrest of a particular individual who has come to adverse notice as a suspect in the commission of a crime.

I am happy that the highest court of the land has intervened in the matter. I have come across many instances of courts bullying police officers, asking why ‘x’ has been arrested and not ‘y’. Such directions cut at the roots of criminal justice ethics, because the bedrock of English jurisprudence that we have adopted with some modifications is the principle that anyone hauled up by law should be considered innocent unless he is proved guilty The direction to the police with regard to arrests during a criminal investigation is harmful to police morale and cuts at the roots of field policing. Court observations that smack of a lack of faith in police ability and integrity will make grass-root level policemen even more arbitrary than now and force them into carrying out questionable actions that will cast aspersions on an officer’s ability to think for himself.

I strongly believe that the Code of Criminal Procedure (CrPC) vests sufficient discretion in the investigating officer to take such decisions as arrests and searches, and even the dropping of further action after registering a first information report

Court interference — mind you, it is not intervention — in the day-to-day investigation is not only undesirable but is also not sanctioned by law. I am of the view that except for the Supreme Court, in whom the Constitution vests enormous authority and discretion which are not questionable, the lesser courts shall not give directions in the matter of arrests and searches.

Courts should remember that the police are a well-established hierarchy that is obligated to ensure objectivity during a criminal investigation. Every investigation is supervised by at least two immediate senior officers. In the more important cases, there are a few more levels. It is their duty to ensure that every investigation is handled lawfully and impartially. Where supervisory officers fail in their duty because of sheer indolence or buckle under external pressure, they deserve to be pulled up by courts. But not before they are found guilty of indifference or malfeasance.

FIR is mandatory

We need to educate the Executive and the common man that it is now well-established law that a first information report is not an act of charity to the aggrieved complainant. It is mandatory that every police station in the land should register a complaint under the relevant sections of a statute the moment a cognisable offence is made out in the complaint. The complaint may be false or frivolous in order to settle personal scores. But the basic requirement is registration.

There is another safeguard against police misconduct. The CrPC makes it obligatory for the investigating officer to write a diary that details the action taken every day following registration. To such a diary are attached witness statements. When in doubt, the competent court, which already has a copy of the first information report, can demand to see the case diary. If the content of such a diary establishes the complicity of an individual, the court can question an investigating officer as to what he proposed to do on the basis of such evidence. Directing an investigating officer to go ahead with an arrest even before he has scrutinised the evidence collected is unsustainable in law.

Holding up a mirror

I am not pleading the cause of police officers, many of whom are burdened with the task of unravelling the truth in a complicated occurrence. I also concede that there are many dishonest police officers at all levels who work overtime to sabotage an investigation with a view to saving an offender or are waiting to please a rank outsider for monetary consideration. To paint all police officers with the same brush is hugely unfair to a majority of investigators.

To sum up, I would place the blame for the ills that affect the police, particularly in the area of criminal investigation, squarely at the door of many senior officers who are waiting to be browbeaten by outsiders or are looking for unethical avenues to aggrandise themselves.

About Section 144 CrPC:

  • This law empowers the magistrate of any state or union territory in India to pass an order prohibiting the gathering of four or more people in a specified area.
    • It is imposed in urgent cases of nuisance or apprehended danger of some event that has the potential to cause trouble or damage to human life or property.
    • This order can be passed against a particular individual or general public.
  • Features of Section 144:
    • It places restrictions on handling or transporting any kind of weapon in the given jurisdiction. The maximum punishment for such an act is three years.
    • According to the order under this section, there shall be no movement of public and all educational institutions shall also remain closed.
    • Further, there will be a complete bar on holding any kind of public meetings or rallies during the period of operation of this order.
    • It is deemed a punishable offence to obstruct law enforcement agencies from disbanding an unlawful assembly.
    • It also empowers the authorities to block internet access in the region.
    • The ultimate purpose of Section 144 is to maintain peace and order in the areas where trouble could erupt to disrupt the regular life.
  • Duration of Section 144 Order:
    • No order under this section can remain in force for a period of more than 2 months.
    • Under the state government’s discretion, it can choose to extend the validity for two more months with the maximum validity extendable to six months.
    • Once the situation becomes normal, Section 144 levied can be withdrawn.
  • Difference between Section 144 and Curfew:
    • Section 144 prohibits gathering of four or more people in the concerned area, while during curfew people are instructed to stay indoors for a particular period of time. The government puts a complete restriction on traffic as well.
    • Markets, schools, colleges and offices remain closed under the curfew and only essential services are allowed to run on prior notice.
  • Criticism of the Section:
    • The criticism is that it is too broad and the words of the section are wide enough to give absolute power to a magistrate that may be exercised unjustifiably.
    • The immediate remedy against such an order is a revision application to the magistrate himself.
    • An aggrieved individual can approach the High Court by filing a writ petition if his fundamental rights are at stake. However, fears exist that before the High Court intervenes, the rights could already have been infringed.
  • Court’s Ruling on Section 144:
    • Dr Ram Manohar Lohiya case 1967, the Supreme Court held that “no democracy can exist if ‘public order’ is freely allowed to be disturbed by a section of the citizens”.
    • The Supreme court in another recent judgement said that the section cannot be used to impose restrictions on citizens’ fundamental right to assemble peacefully, cannot be invoked as a ‘tool’ to ‘prevent the legitimate expression of opinion or grievance or exercise of any democratic rights’.

2. Inflation to persist at elevated levels for a while: RBI officials

Price pressures to ease in third quarter of 2021-22, they write in a Bulletin article

The tapering of the second wave, coupled with an aggressive vaccination push, has brightened near-term prospects for the economy but inflation will remain elevated for some more months, senior RBI officials wrote in an article on the ‘State of the Economy’ in the RBI’s monthly Bulletin.

While several high frequency indicators of activity were recovering, a ‘solid increase in aggregate demand’ was yet to take shape.

On the supply side, agricultural conditions were turning buoyant with the revival in the monsoon, but the recovery of manufacturing and services sectors had been interrupted by the second wave, they added.

The pick-up in inflation was driven largely by adverse supply shocks caused by the pandemic, including increases in margins and taxes, and sector-specific demand-supply mismatches, the article’s authors wrote.

“These factors should ease over the year as supply side measures take effect,” they contended.

Inflation, which had ruled above the tolerance band during June-November 2020, had again moved above the upper tolerance threshold in May and June.

‘Kharif harvest key’

“The sense is that inflation will persist at these elevated levels for some months before easing in the third quarter of 2021-22, when the kharif harvest arrives in markets,” they posited.

The economy was struggling to regain the momentum of recovery that had started in the second half of 2020-21 before it was interrupted by the second wave, the RBI officials added.

The Reserve Bank of India today released the March 2021 issue of its monthly Bulletin. The Bulletin includes one Speech, four Articles and Current Statistics.

The four articles are: I. State of the Economy; II. Unconventional Monetary Policy in Times of COVID-19; III. Union Budget 2021-22: An Assessment; and IV. Q2:2020-21 Estimates of Household Financial Savings and Household Debt-GDP Ratio.

I. State of the Economy

As countries rush to inoculate their populations, the global economy should regain lost momentum in Q2. Bond vigilantes could, however, undermine the recovery, unsettle financial markets and trigger capital outflows from emerging markets. The Reserve Bank is striving to ensure an orderly evolution of the yield curve, but it takes two to tango and forestall a tandav. There is a restless urgency in the air in India to resume high growth, with signs that the capex cycle is uncoiling and turning, and earnings results of corporates having beaten market expectations. Inflation has witnessed upside pressures.

II. Unconventional Monetary Policy in Times of COVID-19

  • The outbreak of COVID-19 posed enormous challenges for life and livelihood globally, warranting policy response from national governments and central banks at an unprecedented scale. Besides fiscal stimulus, several unconventional monetary policy tools (UMPTs) were deployed by central banks to unfreeze financial markets and revive economic activity.
  • This article presents a synoptic overview of various UMPTs deployed by central banks world-wide and their rationale. In the backdrop of the international experience, the article discusses several measures announced by the Reserve Bank and their efficacy in revitalising financial market activity.
  • Empirical analysis suggests significant announcement impact of long term repo operations (LTROs) and targeted long term repo operations (TLTROs) in money and bond markets while the announcement of special OMOs (Operation Twists) caused significant moderation of term premium in the G-sec market, thereby lowering funding costs and easing financial conditions.

III. Union Budget 2021-22: An Assessment

This article presents an assessment of the Union Budget 2021-22. The budget strikes the right chord by prioritising counter-cyclical investment-led fiscal support to post-COVID recovery in growth.

Highlights:

  • As against the budgeted gross fiscal deficit (GFD) of 3.5 per cent of GDP for 2020-21, the revised estimates (RE) for GFD stood at 9.5 per cent of GDP primarily due to cyclical revenue shortfall coupled with higher expenditure on account of on-budgeting of subsidies. The budgeted GFD for 2021-22 stands at 6.8 per cent of GDP on the back of a cut in revenue expenditure and higher disinvestment receipts.
  • Gross market borrowing through dated securities for 2021-22 is budgeted at ₹12.1 lakh crore as compared with ₹12.8 lakh crore in 2020-21 (RE). Apart from market borrowing, the National Small Savings Fund (NSSF) has also emerged as a significant source of financing, accounting for about 26 per cent of GFD. A notable change envisaged by this Budget is to end the practice of public sector undertakings accessing the NSSF. Due to higher borrowing in 2020-21 (RE), the centre’s debt-GDP ratio increased to 64.3 per cent, which is budgeted to be lower at 62.5 per cent in 2021-22.
  • Though the fiscal consolidation path has been stretched, the measures proposed in the Budget, if implemented well, could help in realising its intent, and be a game changer in achieving higher growth in the medium term.

IV. Q2:2020-21 Estimates of Household Financial Savings and Household Debt-GDP Ratio

In succession to the Reserve Bank’s November 2020 Bulletin article, “Preliminary Estimates of Household Financial Savings – Q1:2020-21”, this article provides estimates for Q2:2020-21 along with the estimate of households’ debt to GDP ratio. Major highlights of the article are presented below:

Highlights:

  • Preliminary estimates show a substantial waning of the household financial savings rate to 10.4 per cent of GDP in Q2:2020-21 from the high of 21.0 per cent in the immediately preceding quarter, as households switched from an ‘essentials only’ spending to discretionary spending with the gradual reopening/unlocking of the economy.
  • Household debt to GDP ratio, which has been steadily increasing since Q1:2018-19 rose sharply to 37.1 per cent in Q2:2020-21 from 35.4 per cent in Q1:2020-21.
  • The moderation in household financial savings has taken place despite an increase in their financial assets, as the flow of financial liabilities returned to positive territory on the back of loans from banks and NBFCs in Q2:2020-21.
  • Households’ financial savings rate might have fallen further in Q3:2020-21 with the intensification of consumption and economic activity.
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