1.The comrades and their divergent perspectives

Russia’s uncritical advocacy of China’s global vision is what seems to be leaving India quite confounded

Russian President Vladimir Putin has recently asserted that both the Indian Prime Minister, Narendra Modi, and the Chinese President, Xi Jinping, are “responsible” enough to solve issues between their countries, while underlining the need to debar any “extra-regional power” to interfere in the process. The implications of Mr. Putin’s advice for India are numerous and far-reaching as Moscow expects New Delhi to ignominiously give up all efforts to reverse Beijing’s encroachment strategies. The Russians may have their reasons to remain blind to China’s growing aggressiveness, but the Indians have learned to expect at Chinese hands an unremitting effort to undermine India’s global position — to destroy their confidence in themselves and the confidence of others in them — and to reduce India to a state of isolation and impotence in global affairs.

The Quad factor

Mr. Putin’s remarks can only be seen as reinforcing China’s claim that the Quadrilateral or Quad (comprising India, the United States, Japan and Australia) is aimed at containing Beijing’s influence in the Indo-Pacific region. In fact, Mr. Putin’s assertion is the logical extension of views expressed by Russia’s Ambassador to India, Nikolay Kudashev. Sometime ago, he had advised New Delhi to take a “larger look at Chinese foreign policies”, while describing the Indo-Pacific strategy as an effort to revive the Cold War mentality. Russia’s Foreign Minister, Sergey Lavrov, has frequently, and quite acerbically, lashed out at the Quad.

Notwithstanding the cataclysmic changes in the global and regional politico-security environment, India has been able to maintain amicable ties with Russia. Yet, Russia’s continued criticism of the Indo-Pacific and the Quad give ample evidence of the divergent perspectives of New Delhi and Russia on how to deal with China’s rise to global prominence. Russia has rejected the Indo-Pacific construct in favour of the Asia-Pacific on the ground that the first is primarily an American initiative designed to contain both China and Russia.

Obviously, India thinks otherwise since Russia’s simplistic advice is not sagacious enough to solve its China problem. India’s External Affairs Minister, S. Jaishankar, in a virtual discussion with his Australian and French counterparts, had recently asserted that no country can have a veto on India’s participation in the Quad. This assertion was an indirect counterpoise to what Mr. Lavrov had termed the Quad — as “Asian NATO”. In an unmistakable indication of India’s attempt to reimagine a new geostrategic maritime role for itself, Mr. Jaishankar had further observed that incorporation of the Indo-Pacific concept in Indian diplomacy means that India can no longer be confined between the Malacca Strait and Gulf of Aden.

Though the recent diplomatic romance between Russia and Pakistan has generated some unease in India, it is Russia’s uncritical advocacy of China’s global vision that seems to have left New Delhi overly confounded. For many policymakers and people in our country, the Russian attitude toward China’s growing power and influence will be the touchstone of Russia’s relations with India. While the Sino-Indian relationship has experienced a sharp downward trend since the Galwan clashes in June 2020, New Delhi has become particularly concerned with Moscow downplaying China’s display of coercive military pressure against India. With the catastrophic rise of populist nationalism amidst the bankruptcy of globalisation, the resolution of the Sino-Indian boundary dispute appears a hopeless dream in the absence of a miracle. India is confronted in Ladakh with a situation far uglier and more recalcitrant than is generally recognised.

Beginnings of looking West

It need not be necessary to remind us again that the decade following the disintegration of the Union of Soviet Socialist Republics (USSR) was a period of great turbulence in global politics. A bewildered India soon realised Russia was much weaker than the erstwhile USSR and incapable of helping New Delhi balance potential threats from Beijing. This does not mean that India completely abandoned external balancing strategies; it began to diversify its sources of external balancing. On the other hand, Russia began to cast Moscow as the leader of a supposed trilateral grouping of Russia-India-China against a U.S.-led unipolar world.

Leaving behind the bitterness and mistrust between Moscow and Beijing during the Cold War, Russia became an early proponent of the ‘strategic triangle’ to bring together the three major powers. Aware of the emerging international system as an expression of western expansion, India’s fear of the unipolar moment too made it easier for New Delhi to become part of this initiative. But China’s dismissive attitude toward Indian capabilities, coupled with an emerging China-Pakistan nexus, prevented the success of this trilateral. India, instead, invested its diplomatic energies in rapprochement with the United States.

Unlike Russia, which tried to build an alternative international economic architecture, India decided to get integrated in the economic order it once denounced. Economic liberalisation also allowed New Delhi to buy sophisticated weapons from a wider global market that included suppliers such as Israel and France. Both were keen to sell weapons technology to India, and this also boosted New Delhi’s bargaining capacity with Moscow. As the logic of intensive engagement with the West was effectively established, strategic partnership with the U.S. was a logical corollary.

India’s cooperation with the U.S. has strengthened still further, in part against the perceived terrorism threat, but also in light of China’s growing assertiveness whose undesirable impacts are now being felt across the world. However, Russia’s ability to influence the India-China relationship has become doubtful. India has been searching for other major powers to balance against China as it does not have the sufficient means for hard balancing. Adding options to its statecraft toolbox, India has deepened its ties with Japan and Australia in a way that is close to soft balancing. Nevertheless, among all of India’s balancing efforts, the stupendous growth in ties with the U.S. has been the greatest source of concern for China which views the India-U.S. rapprochement as containment.

While India needs Russia’s partnership for its defence needs, New Delhi cannot endorse the Russian perspective on the Indo-Pacific and the Quad. For New Delhi, it would be self-defeating to accept that the Indo-Pacific is an American construct. With the first-ever summit of the four leaders in the ‘Quadrilateral framework’ in March this year, the Quad is being formalised into a functional strategic alignment.

Maritime structures

The real ‘strategic triangle’ in the maritime domain will be that between New Delhi, Washington and Beijing. While other powers such as France, Australia, Japan and Russia will have an impact on the emerging maritime structures of the Indo-Pacific region, it is the triangular dynamic between India, China and the U.S. that is going to be the most consequential. Russia is yet to realise that it will gain immensely from the multilateralism that the Indo-Pacific seeks to promote, and being China’s junior partner only undermines Moscow’s great-power ambitions. But the Putin regime is making things unnecessarily hard for Russia as well as for India; and it is clear that those responsible for Russian policy have arrived at a flawed assessment of the current situation. As the Kremlin’s policymakers are obsessively preoccupied with Russia’s ‘status’ rivalry with the U.S., Russia’s view of India-China relations seems understandable. But there is an inherent danger in permitting it to harden into a permanent attitude as an increasingly pro-Beijing Russia might adopt more aggressive blocking of India’s policy agendas. That is why India is particularly interested in a normalisation of relations between Washington and Moscow as it will help it steer ties among the great powers. and also diminish Moscow’s propensity to closely coordinate its South Asian policies with Beijing.

India-China ties

There is no doubt that shared identities and beliefs in the principle of non-alignment, painful memories of colonial subjugation, opposition to great-power hegemony, and strong beliefs in sovereignty and strategic autonomy have been the key influencers in shaping India’s and China’s engagement with each other as well as the western world. But this has begun to change as Beijing is asserting its hegemony over Asia. In such circumstances, multilateral forums such as the Russia-India-China (RIC) grouping and BRICS (Brazil, Russia, India, China and South Africa) have little practical value for Indian diplomacy. Without China’s reciprocity, options before India are limited. India’s concessions, whatever their form, must meet with some form of positive response from China. The response cannot be just symbolic or rhetorical. The absence of any material evidence of reciprocity is bound to doom an attempt at Sino-Indian rapprochement.

Beijing seems to be acting as though it is immune not only to the strategic consequences for its actions but also to all the conventional rules of international politics. China is undoubtedly the most powerful actor in its neighbourhood but it cannot simply have its way in shaping Asia’s new geopolitics. Beijing’s policies will still be constrained and altered in fundamental ways by India which cannot be expected to adopt a hopeless stance of remaining peripheral in its own strategic backyard.

Vinay Kaura is Assistant Professor in the Department of International Affairs and Security Studies, Sardar Patel University of Police, Security and Criminal Justice, Jodhpur, Rajasthan. He is also a Non-resident Scholar at the Middle East Institute, Washington DC

Why in News

Recently, the Ministry of External Affairs has announced that it will participate in the virtual meeting of the Russia-India-China (RIC) grouping scheduled to be held on 23^rd June, 2020.

• It can be noted that the RIC was also a platform for the first meeting between India and China in New Delhi after the end of Doklam standoff.

Key Points

• the 75th anniversary of the victory in the second world war over Nazism and creation of the United Nations (24th October, 2020).Special Session: This special session of the RIC has been called by the current Chair- Russia to commemorate
  
  
  • It will also discuss the current situation of the global pandemic and the challenges of global security, financial stability and RIC cooperation in that context.
• India’s Stand: The Indian decision to go ahead with the ministerial level exchange has created an opening for de-escalation of tension along the Line of Actual Control.
• China’s Stand: While confirming the participation in the meeting, China has also agreed to control the situation in the border areas.
• Russia’s Stand: Russia indicated that it would support “constructive dialogue” over the tension in eastern Ladakh as Russia is trusted by both India and China

Regional Connectivity:

Regional connectivity projects such as the International North South Transport Corridor involving India, Russia and Iran are expected to figure in the agenda.
International North-South Transport Corridor (INSTC), is multi-modal transportation established in 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.

• This corridor connects India Ocean and the Persian Gulf to the Caspian Sea via the Islamic Republic of Iran and then is connected to St. Petersburg and North Europe via the Russian Federation.
• No Bilateral Issues: However, the focus of the meeting will be on global coronavirus pandemic and no bilateral issues will be discussed.

RIC

• RIC is a strategic grouping that first took shape in the late 1990s under the leadership of Yevgeny Primakov, a Russian politician as “a counterbalance to the Western alliance.”
• The group was founded on the basis of ending its subservient foreign policy guided by the USA and renewing old ties with India and fostering the newly discovered friendship with China.
• Together, the RIC countries occupy over 19% of the global landmass and contribute to over 33% of global GDP.

Relevance of RIC for India

• Strategic Balance: Along with JAI, India would do well to give RIC the same importance. The groupings like the Quad and the JAI essentially revolve around the Indo Pacific and will confine India to being only a maritime power when it is actually both a maritime and continental power.
  • Forum for Cooperation: Even though India, China and Russia may disagree on a number of security issues in Eurasia, there are areas where their interests converge, like, for instance, on Afghanistan. RIC can ensure stable peace in Afghanistan and by extension, in Central Asia.
  • Regular RIC interactions could also help the three countries identify other issues where they have congruent views like the volatile situation in West Asia.
• Creation of New Order: Contribute to creating a new economic structure for the world. The US apparently wants to break down the current economic and political order. While the existing structure is not satisfactory, the RIC could offer some suggestions which could be acceptable to the US.
• Governance over Arctic: With the Northern Sea Route opening up due to climate change, the RIC has a common interest in ensuring that it is not left to the West and Russia alone and that India and China also have major say in rules governing the Arctic route.
• Other Aspects: They could work together on disaster relief and humanitarian assistance.

Concerns

• India has traditionally avoided taking sides in international politics, especially between the great powers, preferring its traditional nonalignment. However, China’s hostile attitude towards India in recent years is increasingly forcing India to confront.
• This makes it difficult to see how engagements through platforms such as RIC, are going to alter the basic conflictual nature of relations between India and China.
• Even though Russia has remained an old friend for India, it is increasingly under stress to follow China’s dictates. E.g. earlier, it openly opposed the Indo-Pacific concept at the Raisina Dialogue.
• On issues such as Jammu and Kashmir, which China raised at the UN Security Council, Russia preferred taking a middle position, not supporting India’s stand entirely.

2.The rise of Raisi

The new President should use his clout to push for economic, political reforms in Iran

With the election of Ebrahim Raisi, a hardline cleric, as Iran’s President, the Islamic Republic’s ruling clergy have tightened their grip on all institutions of power — the military, Parliament, the judiciary, and the presidency. In Iran’s unique political system, effectively controlled by the Supreme Leader, Presidents, who run the day-to-day affairs, have an important role to play. In the past, the country had seen tensions between moderate/reformist Presidents and the Supreme Leader. While the reformists, a powerful constituency, have pushed for gradual reforms by rallying behind leaders like Mohammad Khatami and Hassan Rouhani, the conservatives always pushed back. In this tussle for power, Mr. Raisi has been the popular face of the establishment for years. He had contested the 2017 presidential elections, but lost to Mr. Rouhani, who was seeking a second term. Believed to be close to Supreme Leader Ali Khamenei, Mr. Raisi was appointed the Chief Justice in 2019, which kept him in the top echelons of power till the presidential elections. There were allegations that the June 18 election was rigged in favour of Mr. Raisi even before the first ballot was cast. The Guardian Council, which vets potential candidates, had rejected almost all major reformists, leaving him the only prominent figure on the ballot. This led to opposition activists calling for an election boycott, which seems to have had an impact on the voting — the turnout was 48.8%, an all-time low. Mr. Raisi won 62% of the vote, while blank ballots came second at 14%.

Mr. Raisi is a controversial figure. The U.S. has accused him of serving in the “death commission” of 1989 that implemented Ayatollah Khomeini’s secret decree to execute thousands of political prisoners. At home, he has presided over a harsh campaign against “corruption”, which critics say had targeted political rivals. And he assumes the presidency at a time when Iran is facing daunting challenges. The revolution seems to be ageing — the country has seen protests in recent years; the push to reform the system from within, a long-time promise of the reformists, has not made much progress and the economy is in a shambles. When Mr. Rouhani won the presidency in 2013, he promised a new beginning. But his attempts to open a new chapter with the West through diplomacy were set back by Donald Trump, and his policies at home were resisted by the conservatives. Mr. Raisi, who has supported reviving the nuclear deal, might also bank on sanctions being removed to reboot the economy. And there is growing discontent in society and desperate calls for reforms and liberties. For now, Iran’s tactical response to these challenges is repression. Mr. Raisi, as President, should understand that repression will not solve any of Iran’s problems. A member of the clerical establishment, he should use his clout and the election victory to push for gradual economic and political reforms.

THE GUARDIAN COUNCIL

The Guardian Council has three constitutional mandates: a) it has veto power over legislation passed by the parliament (Majles); b) it supervises elections; and c) it approves and disqualifies candidates seeking to run in local, parliamentary, presidential, and Assembly of Experts elections. The council consists of twelve members: six constitutional law experts and six experts of Islamic law.

This section features the decisions and opinions of the Guardian Council on legislation passed by the parliament from the first parliament to the seventh (1980-2008); opinions on constitutional questions (1980-2010); the negotiations and debates in the Guardian Council in 1359 and 1360 (1980 – 1982); a declaration issued by the Guardian Council relating to the disputed 2009 election (the Council’s defense of the accuracy of the vote tally); and the Guardian Council’s statement on the 2015 nuclear agreement (JCPOA).

3.When inflation threatens your finances

Commodity or financial services stocks, and realty may offer better returns

Even as COVID-19 continues to be a cause for concern, many fear a rise in inflation because of supply-side constraints owing to lockdowns in various parts of the country. In this article, we discuss whether you can moderate the effects of inflation on your personal finance.

Inflation risk

Inflation has a direct impact on your living expenses because you have to spend more to maintain your current standard of living. It is moot if your income would increase given the current state of the economy. Even if your income does increase, it is unlikely to keep pace with inflation. Now, increased spending without corresponding increase in income would mean lower savings to meet life goals.

Then, there is the secondary effect on your life goals. You may be investing to accumulate money to buy a house, fund your child’s college education or save for your retirement. All these goals are exposed to inflation risk.

The house you want to buy may be worth ₹2 crore today. Assuming a housing inflation of 10% per annum over the next five years, the house, five years hence, would cost ₹3.22 crore. Let us suppose you plan to save ₹64 lakh (20% of ₹3.22 crore) over the next five years for down payment and intend to borrow the rest from the bank.

In addition to the possibility that your investment may not earn the required return, your risk is that actual housing inflation could be greater than 10%. So, even if you accumulate ₹64 lakh in five years, you may fall short of offering the 20% down payment as housing would now be costlier. Inflation risk affects everyone whether you are a working executive or a retiree.

Inflation-based products

The best way to moderate inflation risk is to invest in inflation-based products.

Some products provide returns to protect your purchasing power.

For instance, in U.S., there are Treasury Inflation Protection Securities (TIPS). Similar retail products are yet to be available in India.

Other inflation-based products generate positive returns when inflation rises. Managed futures in the U.S., for instance. In the absence of such products in India, you have to directly trade in commodity futures such as crude, copper and zinc, which many already do. What if you are uncomfortable with trading in commodity derivatives?

A less-preferred alternative is to trade in momentum stocks. Momentum stocks are those that have been rising for a while and are expected to continue their uptrend. Such stocks produce positive returns but have the tendency to decline sharply when the market turns.

The argument is that you can capture handsome returns on these stocks in quick time. The additional cash flows from such investments can moderate the stress you could face because of rising inflation, but the associated investment risks are high.

Alternatively, you should consider buying shares of commodity-based producers and financial services companies. Commodity producers ought to do well when the commodity prices increase (which increases inflation).

Likewise, rising inflation could push interest rates, making the financial sector appear attractive. The caveat is that better earnings prospects for companies may not necessarily translate into higher stock prices.

Conclusion

Rising inflation (inflation risk) is an issue for working executives. Fortunately, retirees and those approaching retirement can moderate inflation risk by investing in income-generating real estate.

This is because rental income can keep pace with rising inflation. New properties fetch market rentals and, therefore, move more closely with inflation than older properties. Real estate is sub-optimal for working executives as such investments are lumpy and illiquid.

Inflation’s saving grace? The value of your existing borrowings will fall as money will be worth less than when you borrowed. Hardly comforting when living expenses are increasing, you might say.

(The writer offers training programmes for individuals for managing their personal investments)

Reserve Bank of India

• The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
• The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated.
• Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.

Preamble

• To regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.
• To have a modern monetary policy framework to meet the challenge of an increasingly complex economy.
• To maintain price stability while keeping in mind the objective of growth.

Structure

• The Reserve Bank’s affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act.
• The directors are appointed/nominated for a period of four years.

Constitution

• Official Directors (central board of directors)
  • Full-time: Governor and not more than four Deputy Governors
• Non-Official Directors
  • Nominated by Government: ten Directors from various fields and two government Official
  • Others: four Directors – one each from four local boards (regional)

Main Functions

1. Monetary Authority:

• It implements and monitors the monetary policy and ensures price stability while keeping in mind the objective of growth.

An amendment to RBI Act, 1934, was made in May 2016, providing the statutory basis for the implementation of the flexible inflation targeting framework. 

Section 45ZB of the amended RBI Act, 1934, also provides for an empowered six-member Monetary Policy Committee (MPC) to be constituted by the Central Government by notification in the Official Gazette

Monetary Policy Committee

• It was created in 2016.
• It was created to bring transparency and accountability in deciding monetary policy.
• MPC determines the policy interest rate required to achieve the inflation target.
• Committee comprises of six members where Governor RBI acts as an ex-officio chairman. Three members are from RBI and three are selected by government.
• Inflation target is to be set once in a five year. It is set by the Government of India, in consultation with the Reserve Bank.

Current inflation target is pegged at 4% with -2/+2 tolerance till March 31, 2021.

2. Regulator and Supervisor of the Financial System:

• Prescribes broad parameters of banking operations within which the country’s banking and financial system functions such as issuing licenses, branch expansion, liquidity of assets, amalgamation of banks etc.
• Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services such as commercial banking, co-operative banking, to the public.

3. Manager of Foreign Exchange:

• Manages the Foreign Exchange reserves of India.
• It facilitates external trade and payment and promotes orderly development and maintenance of foreign exchange market in India.
• It also maintains external value of rupee.

4. Issuer of Currency:

• Issues and exchanges or destroys currency and coins not fit for circulation.
• Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

5. Developmental Role:

• Performs a wide range of promotional functions to support national objectives such as making institutional arrangements for rural or agricultural finance.
• Commercial banks lend loans to small-scale industrial units as per the directives (Priority Sector Lending) issued by the Reserve Bank of India time to time.

6. Financial Inclusion:

• The Reserve Bank has selected a bank led model for financial inclusion in India. RBI has undertaken a series of policy measures. Some of the important ones are:
  • No Frills Accounts – account either with nil or very low minimum balance as well as charges that would make such accounts accessible to vast sections of population.
  • Use of Technology – devices such as ATMs, hand held devices to identify user accounts through a card and biometric identifier, Deposit taking machines and Internet banking and Mobile banking facility to provide the banking services to all sections of society with more ease.

7. Related Functions:

• Banker to the Government: performs merchant banking function for the central and the state governments.
• It is entrusted with central govt.’s money, remittances, exchange and manages its public debt as well.
• Banker to banks: maintains banking accounts of all scheduled banks. It also acts as lender of last resorts by providing fund to banks.

Independence of RBI

• Under section 7 of the RBI Act, the central government may from time to time give such directions to the RBI as it may, after consultation with the Governor of the Bank, consider necessary in the public interest. Moreover, there is no legal act mandating autonomy of the RBI.
• Yet, RBI has always been looked upon as an autonomous body which has under its umbrella all commercial banks, be it PSBs or private banks or foreign banks.
• It is not only vested with the powers to formulate the monetary policy but also to monitor the functioning of all banks.
• To play its role effectively, autonomy in its functioning is sine qua non for RBI.
• However, the independence of RBI has been challenged many times due to a continued tug of war for wresting more power between the bank and the govt.
• The main reasons for this have been:
  • RBI’s failure to check the growth of Non Performing Assets.
  • Reduced liquidity in the economy due to tight monetary policy followed by RBI.
  • Corrective measures taken by RBI to clean up the banking system which are not seen very positively by the government
  • Clash between short term populist agenda of the government and long term view for price stability taken by RBI.
  • Regulation of Public Sector Banks: One important limitation is that the Reserve Bank is statutorily limited in undertaking the full scope of actions against public sector banks (PSBs) – such as asset divestiture, replacement of management and Board, license revocation, and resolution actions such as mergers or sales –– all of which it can and does deploy effectively in case of private banks.
  • Erosion of statutory powers of the central bank through piece-meal legislative amendments that directly or indirectly eat at separation of the central bank from the government.

RBI’s Important Publication (half yearly)

• Financial Stability Report
• Monetary Policy Report
• Report on Financial Review

4.Building the right emergency fund

Liquidity and easy access at all times must be the watchwords while saving money to meet a difficult situation

One of the first pieces of financial advice given to young folks starting their career is that they should build an emergency fund. That’s good advice, given that emergencies can deliver big setbacks to one’s finances, if one is forced to turn to credit card debt or personal loans.

But how large should that emergency fund be and where should it be invested? Recent experience of real-life emergencies suggests that this is where generic advice tends to trip up.

Needed, a buffer

It is common practice to link the size of one’s emergency fund to one’s living expenses. So, if your family’s expenses on basics such as house rent, loan EMIs, groceries, food, health, school fees and so on work out to say, ₹40,000 a month, you are advised to hold an emergency fund equal to say, 6 to 9 month’s equivalent (₹2.4 lakh to ₹3.6 lakh).

The reasoning behind pegging the size of your emergency fund to monthly living expenses is that it should help your family tide over periods of income loss. If there’s a temporary interruption in your earning capacity due to quitting a job, getting fired or suffering an illness or accident, the emergency fund should take over during this period.

While this is logical, job losses or accidents are not the only events that can require large out-of-pocket spending and force you into debt. In recent times, families where multiple members were affected by COVID-19 incurred medical expenses running into lakhs of rupees that either completely eroded savings or led to high debt. During the Kerala and Chennai floods, folks had to vacate their homes at short notice and were forced to replace most or all of their household appliances damaged by floods, at one go. Emergency funds amounting to 6 or 9 months’ living expenses are clearly not built to handle such exigencies.

This is where insurance comes in, fetching you relatively high cover against a modest premium payment. While most young folks know that adequate health insurance covering dependents is essential, fewer know about household insurance and personal accident covers, both of which come at nominal premiums.

Insurance isn’t enough

Health and property insurance are essential components of preparing for emergencies. However, they do not do away with the need for an emergency fund. In natural calamities, accidents or medical emergencies, you need to prepare for the possibility that the event that put you through the wringer may be excluded from your insurance plan.

Most insurance contracts come with truckloads of fine print that include some kinds of emergencies, and leave out others. During COVID-19, many folks filing cashless hospital claims have found to their chagrin that they had to fork out large out-of-pocket expenses, because 40-50% of their hospital bills were disallowed by their insurer. Quite a few hospitals demanded upfront cash deposits to allot beds, over-charged on consumables such as PPE kits or billed more than government-approved rates for treatment that led to such partial reimbursement.

To guard against such exclusions, it would be best to build a buffer of say ₹1-2 lakh into your emergency fund, over and above your 6-9 months’ living expenses.

Cash component

Thanks to the rise of net banking and digital wallets, most of us can get by with very little hard cash in normal times. But in extraordinary times, currency often turns out to be the king. During the Chennai floods, most ATMs could not be operated as the machines simply didn’t receive cash refills. During COVID-19 times, we hear of hospitals demanding cash advances for quick admission and off-the-book purchases of hard-to-get medication.

An emergency fund lying in a bank FD or mutual fund may not meet all your needs in such cases. Though it is a sub-optimal choice from the point of view of safety and returns, it may best for you to hold some hard currency at home to tide over such situations. About a month’s living expenses should suffice.

Safety, not returns

Savings accounts, bank fixed deposits and liquid debt funds are the usual avenues that advisers recommend for investing your emergency money. But when making these selections, avoid the temptation to shoot for high returns.

Co-operative banks, small finance banks, new banks or banks with slightly shaky financials may offer higher interest rates on savings accounts and FDs to woo depositors. But, should they land in trouble, RBI can impose sudden moratoriums on withdrawals when you urgently need the money. The recent cases of PMC Bank and Yes Bank which saw withdrawals capped by RBI moratoriums are examples. For your emergency money, it is best to stick to systemically important banks despite uninspiring rates.

With liquid or debt funds, there’s even more reason not to be lured by returns. The crisis that the Franklin Templeton funds have run into, tell us that debt mutual funds with higher yields than peers are likely to be taking on both credit and liquidity risks. It is also best to go with conservative liquid funds that invest mainly in government paper.

Prioritise liquidity

The primary purpose of having an emergency fund is to be able to access the money at very short notice.

Take the case of liquid funds, a popular vehicle. The instant withdrawal facility on such funds is limited to ₹50,000. When you redeem higher sums, the official processing time is one or two business days. But the word ‘business’ is the operative word here. Should non-business days intervene, you may need to endure a 3- or even 4-day wait to get your hands on the money.

To avoid such delays, it may be best to divide up your emergency fund, to park some portion (say a third of it) in bank deposits with an instant online liquidation feature and a portion in liquid funds, while also holding hard currency that you can immediately access.

5. Plan to put Lakshadweep under Karnataka HC

It is under Kerala HC jurisdiction now

The Lakshadweep administration, which has been facing widespread protests over its policies, has mooted a proposal to shift its legal jurisdiction from the Kerala High Court to the Karnataka High Court, officials said.

The proposal was initiated by the administration after several litigation were moved before the Kerala High Court against the decisions taken by the islands’ new Administrator Praful Khoda Patel. These decisions included revising standard operating procedures for COVID-appropriate behaviour, introduction of the “goonda Act” and demolishing hutments of fishermen for widening of roads.

Mr. Patel, who is the Administrator of Daman and Diu, was given the additional charge of the Union Territory of Lakshadweep in the first week of December last year, when former Administrator Dineshwar Sharma died after a brief illness.

This year, as many as 23 applications, including 11 writ petitions, have been filed against the Administrator and also against the alleged high-handedness of either the police or the local government of the islands. The proposal for shifting the legal jurisdiction from the High Court of Kerala to Karnataka comes amid these developments.

Advisor of the Administrator A. Anbarasu did not respond to queries on the proposal.

However, Lakshadweep Collector S. Asker Ali said no proposal had been made by the administration to shift its legal jurisdiction from the Kerala High Court to the Karnataka High Court.

The jurisdiction of a High Court can be shifted only through an Act of Parliament, according to the law.

5. Pact signed to conserve rare turtle in Assam

NGOs, zoo and Kamrup administration to work with temple for project

A major temple in Assam has signed a memorandum of understanding with two green NGOs, the Assam State Zoo-cum-Botanical Garden and the Kamrup district administration for the long-term conservation of the rare freshwater black softshell turtle or the Nilssonia nigricans.

A vision document 2030 was also launched after Turtle Survival Alliance India and Help Earth signed the pact involving the Hayagriva Madhava Temple Committee. The temple, revered by both Hindus and Buddhists, is at Hajo, about 30 km northwest of Guwahati.

Until sightings along the Brahmaputra’s drainage in Assam, the black softshell turtle was thought to be “extinct in the wild” and confined only to ponds of temples in northeastern India and Bangladesh. The International Union for Conservation of Nature had in 2021 listed the turtle as “critically endangered”. But it does not enjoy legal protection under the Indian Wildlife (Protection) Act of 1972, although it has traditionally been hunted for its meat and cartilage, traded in regional and international markets.

“Various temple ponds in Assam such as that of the Hayagriva Madhava Temple harbour various threatened species of turtles. Since the turtles are conserved in these ponds only based on religious grounds, many biological requirements for building a sustainable wild population have since long been overlooked,” Arpita Dutta of Turtle Survival said.

“This multi-stakeholder association [conservation pact] aims to restock the wild with viable, self-sufficient and genetically pure threatened turtle populations in the region. We will offer assistance for the required improvement of husbandry of turtles kept in such ponds, and further recovery efforts are recommended for the long-term survival and existence of the endangered freshwater turtles,” she added.

Kamrup Deputy Commissioner Kailash Kartik N. emphasised the mass awareness on the conservation issues of all species of turtles in the region while working on threats and opportunities to strengthen the black softshell turtle population in Assam.

Zoo director Tejas Mariswamy and Help Earth’s Jayaditya Purkayastha attended the programme on June 19, along with members of the Hayagriva Madhava Temple Committee.