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Policy&Politics

Indic Traditionalism & International Environmental Law: Tangible realities and ideation strategies

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The internalisation of economic liberties is another interesting reality that can be met through glocalisation. We must remember that China used glocalisation to uplift the middle class under Deng Xiaoping. The problem with the current establishment under Xi Jinping is that his BRI project and the string of pearls render debt trap and hostage diplomacy. However, it does not support any generic benefit to the Chinese people because the Chinese Communist Party has lost the cultural-geographic capabilities of the Chinese state due to its socialist policies.

Civilizations have an inherent connect towards the conception and relativity of its commitments in any period. Currently, while civilizations have transcended from monarchies and empires to democracies (in most of the cases), it is important to note how the legal and ethical commitments of every civilization would relatively transform. India is no different to any of it. However, while civilizations emerge and globalization is transformed, it is very important to realize that the nature of implementation and fulfilment of such commitments cannot be deemed as ethnocentric, whether by a top-to-down legal approach, or whether by contemporaneous but out-of-touch policy suggestions. No law and policy can survive civilizational and rational issues in a contemporary post-modern age, where it is proposed to adopt ‘globalist’ or too much generalist standards over issues related to either environment or cybersecurity. Environment issues, like technology – are politically consensual and motivated. It always depends on the balance struck and obviated.

Let us understand the conception of Indic traditionalism to deal with the issue of environment protection in the Indian context. Indic traditionalism refers to a plethora of schools of thought in Indian jurisprudence, anthropology and philosophy. Indic traditionalists believe that the conception of law and politics must have a naturalized and geographic purpose, which fits the naturality of cultures and social orders created in the state. Experts such as Sanjeev Sanyal, Subhash Kak & David Frawley have often regarded this as a culturalgeographic way of understanding issues of economics, environment, rule of law and others. Unlike socialism and capitalism, where profit and power are at the centre of action, the Dharmic way of protecting environment is – in line with the European model of Kuznets curve, where once developed countries attain relevant economic growth, they can optimise their developmental activities to focus on ecological solutions.

The Indic view is proposed to be better and effective than the Western view towards ideas such as Responsibility to Protect, Sustainable Development and Carbon Taxation in International Law in this work, due to the reasons as enumerated: • The Indic worldview is not expansionist and thus, does effectively discriminate power and competence with sheer and clear dissection, even within the ambit of law; • Since competence and responsibility are essential for post-civilizational democracies (even postcolonial in the case of the Global South), it is clear to state that the discourses and analyses on issues related to human rights shall not be based on ideological, political or metaphysical obscuration; • The Indic worldview does not reckon itself as the best and final means to endorse solutions, nor any worldview has been. Instead of calling out civilizational ideas as experimental, within the Indic worldview, we must look at the problems in different worldviews and considerations holistically, with a sense of positive conviction.

In the realm of environment law, Indic traditionalism focuses on a culturalgeographic conception of natural law, unlike a metaphysical and imaginatively materialistic conception of Catholics & Protestants, Communists and Islamists. The Indic worldview does not focus on extreme crony capitalism to defy natural order, neither it can rely on socialism to deprive individuals and communities from their indigenous economic liberties. Since, many civilizational texts are lost, and some of them are traceable and observable, it would be better to assume that the Indic worldview cannot be dogmatic. However, the propensity and reasonability of interpretations should always be idea-centric and practical. Vedic philosophers have analyzed wideranging texts and rituals which glorify various elements of Nature such as Mother Earth (Prithivi), atmosphere (Bhuvah), air (Vayu), space(akash), water (Aapa), and fire (Agni), all together known as Pancha Mahabhutas. The notion that Earth being the sustainer of all life and that human activity should not devastate the equilibrium the evident leitmotif of the Vedas. Swami Vivekananda also focuses on the Vedic view as a quote by him speaks clearly:

Man is first to be saved; he must be given food, education and spirituality.

HOW CAN INDIA PERCEIVE SUSTAINABLE DEVELOPMENT UNDER INDIC LENS?

Sustainable Development Goals of 2030, like the Millennium Development Goals – have been predicated on imaginative basis of humanist outlook towards the international community. More or less, the predicated understanding of the UN targets has been proposed with good faith, with no successful implementation till date. Noted historian, Ian Morris, in his incredible works on Civilizational Economics, focuses on the nativity of geographical realities that cause industrialization, mercantilism and other phenomena. Even within the Indic upfront, it is possible that we understand and transform the operational basis and considerations of how the targets can be achieved. Since sustainable development is a more overarching and discoverable conception in international environmental law, let us understand despite the fact that India does have its own limitations in terms of implementation and pause to lead to environment protection, it is with humble submission that the Indic take or worldview does not ignore the problems and fallacies that might emerge in the approach. However, it would be appropriate to proceed with the aesthetic propositions that the Indic worldview can provide to improve the legal and ethical ethos of SDGs in international law:

1. That since power and competence are separated, the scope of the sustainable development goals is to be considered within the sovereign considerations of states, and policies cum solutions must be tailormade, not internationalized until the approach is geographically cogent;

2. That a top-to-down approach to policy solutions does not serve the real cause of SDGs, and would threaten the cause of international environmental law;

3. Trust is an important consideration, but instead of discussing climate crisis and its mediation, it would be more appropriate to focus on the glocalization of the economic liberties and environmental necessities of the state, which are based on open, fairly bargained and politically consensual aspects of environmental problems;

4. Implementation reforms cannot be based on mere judicial overreach or review: it is seriously imperative that while a freer basis of democracy and dialogue is given, it must be based on the notion of responsibility, and not attractive and technocratic liability;

Let us discuss some of the important sustainable development goals, and their targets in the Indic context, to understand the fallacies and probable solutions that can be provided in order to lead towards better and transformative solutions:

• With respect to SDG 7 – which espouses emancipation of clean energy, India can enforce solar, geothermal and nuclear energy to render sustainable and cost-effective solutions. Even PM Modi inaugurated the Rewa solar plant amidst the COVID19 pandemic and emphasized on the One Sun One World One Grid initiative. However, a cost-benefit analysis is strictly necessary so that it does not become an economic failure like the Belt and Road Initiative by China. At the same time, India can focus on clean energy based on the characteristics of its ecological diversity and geographical abundance. However, having a rendition of renewables cannot combat climate change, and therefore, the principled usage of nuclear, solar and geothermal power must be based on support and self-prosperity considerations, which can be a good starting point with utmost humility.

• SDG 9, which is central to industrial development, entrepreneurship and innovation, is a great opportunity the Indian state has to achieve. The current socialist establishment which is wrongly enforced by a 42nd Amendment Act in the Indian Constitution is an obstruction to India’s economic and ecological development. Even the interpretations by the Hon’ble Supreme Court on ecocentric environment laws, especially by Justice Radhakrishnan, is good on paper, but on implementation, does not merit any support to the conception and practice of rule of law in economics and development. It is therefore important that India’s innovation strategies are not regarded as merely frugal. Like Africa, we can form frugal and cheap solutions and services. However, the Indic worldview can help here in this way – (1) instead of monopolizing services and products for an ultimatum of profit, it would be better to focus on the internalization of profiteering of indigenous entities such as MSMEs and proprietors; (2) taxation must be limited gradually but competition must be reasonable so that monopolistic considerations and corporatism are regulated with better geo-economic understandings, including the frugality & ingenuity of cyberspace and splinternet, based on the doctrines of Arthashastra by Vishnugupta Chanakya; and (3) conflict economics, ideology economics, or any means of economics, which defies the autonomy, integrity and dignity of any economic liberty exercised by an individual, a company or any other entity (legal);

• SDG 16 on Peace, Justice and Strong Institutions, for example can be achieved. However, the Indic worldview does not believe in the micromanagement of law and order circumstances. Regionalization and federalism are already within the ambit of the Indian Constitution from Arts 245 to 254. To expand its purpose, the socialist estimate of governance and administrative law, inherited from common law democracies such as the British (colonial) must be removed and replaced with better governance initiatives. However, a top to down approach will fail as it always has, and thus, it does not serve the cause of a rules-based international order. Instead, like the Gujarat Model, state governments in India can make a good example of competitive federalism, with a special focus on collective and cultural liberties, while maintaining the scope of individual liberties by removing the dichotomous behavior asserted by Western scholars across the globe. In the case of environment issues, Indic traditionalism can instrument cultural-geographic patterns from the states and UTs, which eventually can force the Central establishment to implement reforms. Even if the current political map of India does not support the same, the Indic worldview provides a patient, consultative and reasonable approach.

CAN INDIC TRADITIONALISM OVER ECOLOGY ISSUES TRIUMPH INTERNATIONAL REGULATIONS?

The approach of international law towards environmental issues stands in various domains, and has transformed in capitalist economies. However, there are some conflicting behaviours that most of the principles of international environmental law certify, which is important to be understood:

• International Environmental Law does not discriminate between issues of power and competence. Inducing a strictly technocratic conception of green criminology does not render any solutions to the problematic behaviour of liability frameworks;

• IEL instruments cannot internalize the rule of law issues that exist separately in the Global North countries and the Global South countries. While in the Global North regions, the issue is more related to the influence of corporatism over the corrosion of the geographic and civilizational originality of the regions, the Global South faces economic and skill issues at large. Immigration, excess volunteerism and too much financial stimulus to the Global South countries granted by developed countries sometimes turns out to be in contradiction with any possible chance that a cost-benefit analysis must have been done or the same might be a debt trap;

• Internationalization of liabilities does not help out in ecological issues, because in private international law, countries stay in disagreements & the nature of disagreements differ a lot in the Global North and Global South regions;

• The post-modern approach of international environmental law cannot be based on climate activism, extreme veganism and cultural Marxism. If radical legal principles are made and implemented, then it would not be just some topto-down approach imposed on indigenous economies, but it would also not support the cause of IEL, leading to its bitter collapse, which is possible even in the case of multilateral bodies such as the IPCC, WHO and UNICEF;

The Indic worldview therefore at an international level, can be based on these following underpinnings:

1. Foreign Relations and Eco-diplomacy;

2. Internalizing economic liberties;

3. Prevent hyphenation of environment policies and ideological manifestos;

Foreign Relations and Policy issues define but not enforce the peremptory norms of IEL. Therefore, a smooth transformation of IEL can be based on by seeking the diversification and lubrication of implementation mechanisms in various countries. There cannot be globalized approaches to appropriate ecological solutions. Sustainability can be based on autonomy of profit and trust, therefore protecting economic liberties, and harmonizing the environment. The internalization of economic liberties is another interesting reality that can be met through glocalization. We must remember that China used glocalization to uplift the middle class under Den Xiaoping. The problem with the current establishment under Xi Jinping is that his BRI project and the string of pearls, renders debt trap and hostage diplomacy. However, it does not support any generic benefit to the Chinese people because the Chinese Communist Party has lost the culturalgeographic capabilities of the Chinese state due to its socialist policies. Cashing support does not mean you can cause development schemes that can pay you back. This is the reason why the CCP has to face the middle income trap, which they can never overcome until 20-30 years or maybe more. India’s glocalization therefore must not be sensitive, but conscious – so that at communitarian levels, judicial overreach is avoided and better anthropological interpretations are done to serve both ecological and economic causes. Mainstreaming economics is one of the failures of American capitalism, and it must be taken into consideration anyways.

The hyphenation of environment policies and ideological manifestos is not helpful for the jurisprudential development of international law and politics. No jurist can define topto-down policies, which cannot serve proper and realistic causes. The best examples can be taken from the Kyoto Protocol, which again lacks at implementation, and enforces standards. In most of the cases, the focus on the equality of outcome is given. In reality, the equality of opportunity is lost the most. The Indian civilization has the inalienable right to earn some equality of opportunity, which must be internalized and free. If at a civilizational level, equality of opportunity is granted, then it is for sure that solutions to fix international environmental law are not far trodden.

Abhivardhan is Chief Executive Officer,  Internationalism™ C/O AbhiGlobal Legal Research and Media LLP. Founder, Chairperson & Managing Trustee, Indian Society of Artificial Intelligence and Law And Member, MIT Technology Review Global Panel.

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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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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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