A DETAILED ANALYSIS OF CONSTITUTIONAL SAFEGUARDS PROVIDED TO WOMEN IN INDIA - Business Guardian
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A DETAILED ANALYSIS OF CONSTITUTIONAL SAFEGUARDS PROVIDED TO WOMEN IN INDIA

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The principle of gender equality is enshrined in the Indian Constitution in its Preamble, Fundamental Rights, Fundamental Duties and Directive Principles. The Constitution not only grants equality to women, but also empowers the State to adopt measures of positive discrimination in favour of women. Within the framework of a democratic polity, our laws, development policies, Plans and programmes have aimed at womens advancement in different spheres. India has also ratified various international conventions and human rights instruments committing to secure equal rights of women. Key among them is the ratification of the Convention on Elimination of All Forms of Discrimination Against Women (CEDAW) in 1993. Women do play major role in shaping the society by providing moral force at home. They have very unique position at every society whether it is developed, undeveloped or developing. Women have gained a lot in almost every field. It is said that to understand things in a better manner we need look upon the history. There was a time in history when women were forced to live within the four walls and they were not even allowed to raise their opinion. Now, in the modern days we find woman in every campaign and both men and women are bread earner of the family. Both the spouses are sharing the responsibilities and the stereotypical roles placed on women are slowly dissolving. Women are the embodiment of Shakti, the Creator and the Destroyer of human race. Since Independence the position of Indian women is no better. On one hand she is held high, worshiped, considered as the epitome of virtues and the one who could just sacrifice everything for their family. But on the other hand she has been the victim of miseries, hardships and atrocities that are caused due the male dominating society. They are most deprived and backward section of the society. She had been the victim of tyranny. As a solution to every problems mainly the gender discrimination, women empowerment is the need of hour. It is high time to provide women equal rights, opportunities in decision making and they should be recognized as the builders and moulders of the nation’s destiny. According to a report published by United Nations in 1980 it was found that women do constitute the half of the world’s total population. They do perform nearly about two-thirds of work hours and they receive one tenth of the world’s income. They own less than one hundred percent of the world’s property. According to the Apex Court of India’s observation in the case Madhu krishna v. State of Bihar women constitute half of the Indian population. They have always been the discriminated section of the society and have suffered a lot. In spite, the number of sacrifices they have been treated as the inferiors. With the aim to provide women protection against their sufferings, the framers of the Indian Constitution have incorporated special provisions. These provisions would enable a woman to develop in all spheres of life.

Social Justice when interpreted simply means that larger goal must be achieved and nobody should be deprived of their legal rights. It also means that state should make all those positive laws that are required for the development of society. The expression “social and economic” means that all should have equal opportunities and injustice should not be done even to unequal of the society. The preamble of our constitution is non- discriminatory where all sections are treated equally and alike. But when we look at the history of India, suppression of women is very old and long. The framers have historically examined the situation and incorporated provisions with the view to grant equal status to women in terms of all spheres. The Part III5 of the India Constitution primarily deals with fundamental rights. Even though Articles 12-35 are applicable to all citizens and no discrimination is made on the basis of sex but certain special provisions has been made for the protection of rights of the women. Article 14 of the Indian Constitution guarantees equality before law and equal protection of the law. Thus, a woman of the Indian society enjoys same treatment and protection to that of men as guaranteed by Indian Constitution. Article 15 of the Indian Constitution prohibits discrimination against women. When we talk about clause 1 of Article 15 it states that state should not make any discrimination against any citizen mainly on the grounds of religion, caste, sex of place or any of them. On the other hand, Article 15(3) lifts that ignominy and permits the state will not hesitate to make positive discriminatory laws for women to meet up their special needs. The intention of the f framers could be seen that in order to protect the interest of women such specific clause has been inserted. The concept of Article 15(3) was justified by Honorable Justice S. Manohar. He observed that clause 3 of Article 15 recognises that fact that women have been deprived of their rights since ages and they have been socially and economically handicapped. Dr. G.B Reddy also stated that clause 3 of Article 15 is in favour of women and states are empowered to make special provisions to ameliorate their social, economic and political condition. The object of the Article 15(3) is to eliminate socio- economic backwardness of women. Again in the case of Charan Singh v Union of India, The Honorable Court observed:- that women should be treated as class and their social, economic and political condition should be compared with men. Article 16 talks about equal opportunity in matters of public employment and Article 16(1) states that no discrimination should be made in opportunity and employment to any office under state. In the case, C.B. Muthamma v Union of India,8 the rules requiring female employees to get permission before marriage and denial of right to employment to married women were held to be discriminatory and violative of Article-16 of the Indian Constitution. Now Article 16(4) talks about empowerment of the backward and deprived communities to give them proper share in administrative apparatus. Here the question may arise that whether women are included in the deprived and backward community. Talking into account their condition, position and status they fulfill almost all the characteristics and hence they must be given benefit. Article 19 to 22 deals with right to freedom that must be guaranteed to both men and women. Article 21 states that: No person shall be deprived of his life or personal liberty except by the procedure established by law. This section has been widely interpreted in Maneka Gandhi’s Case. Article 23 of the Indian Constitution talks about prohibits human trafficking. In the case, Vishal Jeet v Union of India, the court observed that trafficking in India is prevalent since ages in the form of prostitution and buying and selling of human beings. And every citizen as per Articles 32 to 35 has right to constitutional remedies. Now taking into consideration the above discussion certain questions may arise. Can a woman be denied a job merely because she is a woman? In the landmark case, Air India v. Nargesh Meerza the Apex Court held that woman should not be denied employment merely on the ground that she is a woman. It is gross violation of Article 14 of the Indian Constitution. Can a person be denied of seniority promotion on the ground of sex? The same question arose and was Indian Foreign Service was challenged in the case Miss C.B. Muthamma v. Union of India. It was held by the court that rules relating to seniority and promotions in India Foreign Services which makes discrimination on the ground of sex only was not only unconstitutional but also a hangover of masculine culture. Whether beauty contests are violation of constitutional provisions? This question arouse in the case of C. Rajakumari v. Commissioner of Police, Hyderabad. The Honorable Court held that beauty contest that is likely to degrade, deprive, corrupt or injure the public mortality is violative of Articles 14, 21 and 51-A of the Indian Constitution. Can a woman make reproductive choice? The Honorable Supreme Court in the case of Suchita Srivastava and Another v. Chandigarh Administration observed that women do have right to make reproductive choice and is covered under Article 21. Can there be reservation of seats for women in college? The Honorable Bombay High Court in Dettatreya v. State of Bombay, held that reservation of seats for women in college in not unconditional. What is the relation between immoral trafficking and the Indian Constitution? Article 23 of the Indian Constitution prohibits human trafficking. In the case, Vishal Jeet v Union of India, the court observed that trafficking in India is prevalent since ages in the form of prostitution and buying and selling of human beings. Can a mother act as a natural guardian during the lifetime of father? The Apex Court in the case, Githa Hariharan v. Reserve Bank of India17 held that father cannot alone was the natural guardian which was violation of Articles 14 and 15 of the Indian Constitution. Hence, the mother can also be the natural guardian during the lifetime of father.

To uphold the Constitutional mandate, the State has enacted various legislative measures intended to ensure equal rights, to counter social discrimination and various forms of violence and atrocities and to provide support services especially to working women. Although women may be victims of any of the crimes such as Murder, Robbery, Cheating etc, the crimes, which are directed specifically against women, are characterized as Crime against Women. These are broadly classified under two categories:- The Crimes Identified Under the Indian Penal Code (IPC) and The Crimes identified under the Special Laws (SLL). Although all laws are not gender specific, the provisions of law affecting women significantly have been reviewed periodically and amendments carried out to keep pace with the emerging requirements. Special Initiatives for women include (i) National Commission for Women, In January 1992, the Government set-up this statutory body with a specific mandate to study and monitor all matters relating to the constitutional and legal safeguards provided for women, review the existing legislation to suggest amendments wherever necessary, etc. (ii) Reservation for Women in Local Self -Government The 73rd Constitutional Amendment Acts passed in 1992 by Parliament ensure one-third of the total seats for women in all elected offices in local bodies whether in rural areas or urban areas. (iii) The National Plan of Action for the Girl Child (1991-2000), The plan of Action is to ensure survival, protection and development of the girl child with the ultimate objective of building up a better future for the girl child.( iv) National Policy for the Empowerment of Women, 2001, The Department of Women & Child Development in the Ministry of Human Resource Development has prepared a National Policy for the Empowerment of Women in the year 2001. The goal of this policy is to bring about the advancement, development and empowerment of women.

Fundamental Duty:- Article 51A (e)enjoins upon every citizen to renounce practices derogatory to the dignity of women. Reservation of seats for Women in Panchayats and Municipalities – Article 243 D and Article 243 T(3) provide for reservation of not less than one third of total number of seats in Panchayats and Municipalities for women to be allotted by rotation to different Constituencies. Article 243 D(4) provides that not less than one third of the total number of officers of chairperson in the Panchayat and Municipalities at each level to be reserved for women. Voting rights/Electoral law – Not less than one-third seats shall be reserved for women. Such seats may be allotted by rotation to different constituencies in a Panchayat. The office of the chairperson in the Panchayat at the village or any other level shall be reserved for SCs, STs and women in such manner as the legislature of state may, by law provide. Reservation of seats for women in Municipalities is provided – To uphold the Constitutional mandate, the state has enacted various legislative measures intended to ensure equal rights, to counter social discrimination and various forms of violence and atrocities and to provide support services especially to working women. Although women may be victims of any of the crimes such as ‘Murder’, ‘Robbery’, ‘Cheating’ etc, the crimes, which are directed specifically against women, are characterized as ‘Crime against Women’. The Maternity Benefit Act, 1961 – An amendment was made in 2017 to the Maternity Benefit Act, 1961. Under the Act, paid maternity leave for women employees with less than two surviving children, from the original twelve (12) weeks to twenty-six (26) weeks was extended. The amendment further provided working mothers who have adopted a child below the age of three months, to take 12 weeks of maternity leave from the date of receiving the child and also allowed mothers to work from home after completing 26 weeks subject to their mode of work and employer’s consent. The Dowry Prohibition Act, 1961 – This Act prohibits the payment or acceptance of dowry as a consideration for marriage. Asking for or giving of dowry can be punished by imprisonment of up to six months, a fine of up to Rs. 15000 or the amount of dowry, or imprisonment up to 5 years.

Vishaka v. State of Rajasthan (1997) – In this case, the court laid down ‘The Vishaka Guidelines’ which were later converted into the Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act, 2013. This case pertains to a woman Bhanwari Devi who was gang-raped by five men as revenge on her for attempting to terminate the marriage of an infant and to fight against the male ego in Rajasthan which was part of her job. The court held that sexual harassment was a clear violation of rights under Articles 14, 15, 19 and 21 of the Indian Constitution. Air India v. Nargesh Meerza (1981) – In this case, an inclusive reading of Article 14 was done by the Supreme Court and it was decided that employment cannot be denied to any person on the grounds of sex. For inflight services, stress was laid on the height of the youth, appearance, and glamour quotient of the employees. An aviation company called Air India regulated that the air hostesses should retire if they reach the age of 35, conceiving a child, or on marriage whichever occurs earlier. These conditions were derogatory and offending and hence challenged in the court and were later struck down. Vineeta Sharma v. Rakesh Sharma (2020) In this case, the Supreme Court held that daughters will have equal coparcenary rights in the Hindu Undivided Family by their birth and cannot be excluded from inheritance irrespective of whether they were born before the amendment of 2005 to the Hindu Succession Act, 1956.

The Indian Constitution has made equality a basic right of all the citizens of this country. Ever since the enactment of the Constitution, society and values have evolved, but there are still some flaws. Some people still consider having a girl child as a burden to the family. The Government, the Supreme Court, and other authorities have time and again implemented various measures to prevent discrimination but, this still does not change the shallow thinking of the people who even consider practising female foeticide. Due to all this, achieving absolute gender equality in a country like India continues to be a huge challenge.

Social Justice when interpreted simply means that larger goal must be achieved and nobody should be deprived of their legal rights. It also means that state should make all those positive laws that are required for the development of society. The expression “social and economic” means that all should have equal opportunities and injustice should not be done even to unequal of the society. The preamble of our constitution is non- discriminatory where all sections are treated equally and alike. But when we look at the history of India, suppression of women is very old and long.

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Policy&Politics

Govt extends date for submission of R&D proposals

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The Government has extended the deadline for submission of proposals related to R&D scheme under the National Green Hydrogen Mission. The R&D scheme seeks to make the production, storage, transportation and utilisation of green hydrogen more affordable. It also aims to improve the efficiency, safety and reliability of the relevant processes and technologies involved in the green hydrogen value chain. Subsequent to the issue of the guidelines, the Ministry of New & Renewable Energy issued a call for proposals on 16 March, 2024.

While the Call for Proposals is receiving encouraging response, some stakeholders have requested more time for submission of R&D proposals. In view of such requests and to allow sufficient time to the institutions for submitting good-quality proposals, the Ministry has extended the deadline for submission of proposals to 27th April, 2024.

The scheme also aims to foster partnerships among industry, academia and government in order to establish an innovation ecosystem for green hydrogen technologies. The scheme will also help the scaling up and commercialisation of green hydrogen technologies by providing the necessary policy and regulatory support.

The R&D scheme will be implemented with a total budgetary outlay of Rs 400 crore till the financial year 2025-26. The support under the R&D programme includes all components of the green hydrogen value chain, namely, production, storage, compression, transportation, and utilisation.

The R&D projects supported under the mission will be goal-oriented, time bound, and suitable to be scaled up. In addition to industrial and institutional research, innovative MSMEs and start-ups working on indigenous technology development will also be encouraged under the Scheme.

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Policy&Politics

India, Brazil, South Africa to press for labour & social issues, sustainability

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The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

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Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

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India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

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Policy&Politics

ONLY 2-3% RECOVERED FROM $2-3 TN ANNUAL ILLEGAL TRADE THROUGH BANKING: INTERPOL

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However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

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Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

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Finance Minister Nirmala Sitharaman defended the Atal Pension Yojana (APY) against Congress criticism, asserting its design based on choice architecture and a guaranteed minimum 8% return. She emphasized the scheme’s opt-out feature, facilitating automatic premium continuation unless subscribers choose otherwise, promoting retirement savings. Sitharaman countered Congress allegations of coercion, stating the APY’s guaranteed returns irrespective of market conditions, supplemented by government subsidies.

Responding to Congress’s claim of scheme misuse, Sitharaman highlighted its intended beneficiaries – the lower-income groups. She criticized Congress for its alleged elitist mindset and emphasized the scheme’s success in targeting the needy. Sitharaman accused Congress of exploiting vote bank politics and coercive tactics, contrasting it with the APY’s transparent framework. The exchange underscores the political debate surrounding social welfare schemes, with the government defending its approach while opposition parties raise concerns about implementation and efficacy.

Finance Minister Nirmala Sitharaman’s robust defense of the Atal Pension Yojana (APY) against Congress criticism highlights the ongoing debate over social welfare schemes in India. Sitharaman’s assertion of the APY’s design principles, including its opt-out feature and guaranteed minimum return, underscores the government’s commitment to promoting retirement savings among lower-income groups. The Atal Pension Yojana, named after former Prime Minister Atal Bihari Vajpayee, was launched in 2015 to provide pension benefits to workers in the unorganized sector. It aims to address the significant gap in pension coverage among India’s workforce, particularly those employed in informal and low-income sectors. The scheme offers subscribers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on their contribution and age at entry, after attaining the age of 60. Sitharaman’s response comes after Congress criticism alleging the APY’s inefficacy and coercive tactics in enrolment.

Congress General Secretary Jairam Ramesh described the scheme as poorly designed, citing instances of subscribers dropping out due to unauthorized account openings. However, Sitharaman refuted these claims, emphasizing the APY’s transparent and beneficiary-oriented approach. The finance minister’s defense focuses on three key aspects of the APY: Choice Architecture: Sitharaman highlights the opt-out feature of the APY, which automatically continues premium payments unless subscribers choose to discontinue.

This design element aims to encourage long-term participation and ensure consistent retirement savings among subscribers. By simplifying the decision-making process, the scheme seeks to overcome inertia and promote financial discipline among participants. Guaranteed Minimum Return: Sitharaman underscores the APY’s guarantee of a minimum 8% return, irrespective of prevailing interest rates. This assurance provides subscribers with confidence in the scheme’s financial viability and incentivizes long-term savings.

The government’s commitment to subsidizing any shortfall in actual returns further strengthens the attractiveness of the APY as a retirement planning tool. Targeting the Needy: Sitharaman defends the predominance of pension accounts in lower income slabs, arguing that it reflects the scheme’s successful targeting of its intended beneficiaries – the poor and lower-middle class. She criticizes Congress for its alleged elitist mindset and suggests that the party’s opposition to welfare schemes like the APY stems from a disconnect with the needs of marginalized communities. Sitharaman’s rebuttal also addresses broader political narratives surrounding social welfare policies in India.

She accuses Congress of exploiting vote bank politics and coercive tactics, contrasting it with the transparent and inclusive framework of the APY. The exchange underscores the ideological differences between the ruling Bharatiya Janata Party (BJP) and the opposition Congress, with each side advocating for their vision of social welfare and economic development. In addition to defending the APY, Sitharaman’s remarks shed light on the broader challenges and opportunities facing India’s pension sector.

Despite significant progress in expanding pension coverage through schemes like the APY, the country still grapples with issues such as financial literacy, informal employment, and pension portability. Addressing these challenges requires a multifaceted approach involving government intervention, private sector participation, and civil society engagement.

As India strives to achieve its vision of inclusive and sustainable development, initiatives like the APY play a crucial role in promoting economic security and social equity. Sitharaman’s defense of the scheme underscores the government’s commitment to addressing the needs of vulnerable populations and ensuring their financial well-being in the long run.

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Economic

Regulatory steps will make financial sector strong, but raise cost of capital

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India’s financial system regulator, the Reserve Bank of India (RBI), is demonstrating a serious commitment to improving governance and transparency at finance companies and banks, with the RBI’s recent measures aimed at curtailing lenders’ overexuberance, enhancing compliance culture and safeguarding customers.

While the global ratings firm has appreciated the RBI’s “diminishing tolerance for non-compliance, customer complaints, data privacy, governance, know-your-customer (KYC), and anti-money laundering issues”, it has cautioned that increased regulatory risk could impede growth and raise the cost of capital for financial institutions. “Governance and transparency are key weaknesses for the Indian financial sector and weigh on our analysis. The RBI’s new measures are creating a more robust and transparent financial system,” says S&P Global Credit Analyst, Geeta Chugh. “India’s regulator has underscored its commitment to strengthening the financial sector. The drawback will be higher capital costs for institutions,” Chugh cautions.

The RBI measures include restraining IIFL Finance and JM Financial Products from disbursing gold loan and loans against shares respectively and asking Paytm Payments Bank (PPBL) to stop onboarding of new customers. Earlier in December 2020, the RBI suspended HDFC Bank from sourcing new credit card customers after repeated technological outages. These actions are a departure from the historically nominal financial penalties imposed for breaches, S&P Global notes.

Besides, as the global agency points out, the RBI has decided to publicly disclose the key issues that lead to suspensions or other strict actions against concerned entities and become more vocal in calling out conduct that it deems detrimental to the interests of customers and investors. “We believe that increased transparency will create additional pressure on the entire financial sector to enhance compliance and governance practices,” adds Chugh. The global agency has also lauded the RBI’s recent actions demonstrating scant tolerance for any potential window-dressing of accounts.

These actions include the provisioning requirement on alternative investment funds that lend to the same borrower as the bank finance company. Amidst the possibility of some retail loans, such as personal loans, loans against property, and gold loans getting diverted to invest in stock markets and difficulty of ascertaining the end-use of money in these products, S&P Global underlines the faith of market participants that the RBI and market regulator, the Securities and Exchange Board of India, want to protect small investors by scrutinizing these activities more cautiously.

On the flip side, at a time of tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025 (year ending March 2025). “We expect loan growth to decline to 14 per cent in fiscal 2025 from 16 per cent in fiscal 2024, reflecting the cumulative impact of all these actions,” says Chugh. The other side of the story is that stricter rules may disrupt affected entities and increase caution among fintechs and other regulated entities and the RBI’s decision to raise risk weights on unsecured personal loans and credit cards may constrain growth. Household debt to GDP in India (excluding agriculture and small and midsize enterprises) increased to an estimated 24 per cent in March 2024 from 19 per cent in March 2019. Growth in unsecured loans has also been excessive and now forms close to 10 per cent of total banking sector loans.

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