Just One Psychiatrist For All Prisoners With Mental Illness In State Not Sustainable: Orissa HC - Business Guardian
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Just One Psychiatrist For All Prisoners With Mental Illness In State Not Sustainable: Orissa HC

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It cannot be easily glossed over that none other than the Orissa High Court itself in an extremely laudable, learned, landmark and latest judgment titled Krushna Prasad Sahoo v. State of Orissa & Ors. in W.P.(C) No. 6610 of 2006 pronounced as recently as on May 21, 2022 has expressed deep concerns on the issue of the mental health of prisoners. On learning that there existed only one psychiatrist to attend all prisoners in the state with mental illness, a Division Bench of Chief Justice S Muralidhar and Justice RK Pattanaik noted with concern that, “This situation is unsustainable considering that it is physically impossible for just one psychiatrist to attend all prisoners in the state with mental illness.” It merits mentioning that the development comes in an ongoing case in which the Orissa High Court had previously directed the Director-General, Prisons, to ensure food, hygiene, and health facilities in all the jails/sub-jails of the State.

ATHAMALIK SUB-JAIL MATTER

To start with, this brief, brilliant, bold and balanced judgment authored by a Bench of Orissa High Court comprising of Chief Justice Dr S Muralidhar and Justice RK Pattanaik sets the pitch in motion by first and foremost putting forth in para 1 that, “Pursuant to the directions issued by this Court on 5th May 2022, the District and Sessions Judge, Angul has submitted a report dated 18th May, 2022 enclosing original statements of 12 inmates and 2 staff of the Athamalik Sub-Jail. The sealed cover containing the report was opened and the report has been perused by the Court. Copies of the report be made available to Mr. Debakanata Mohanty, learned Additional Government Advocate (AGA) and Mr. Gautam Misra, learned Amicus Curiae (AC).”

In the fitness of things, the Bench then points out in para 2 that, “Mr. Manoj Chhabra, DG, Prisons, Odisha, who is present in virtual mode, states that he will immediately act on the said report by taking an appropriate action against the person involved in the incident of the assault on a convict as mentioned in that report. After copies of the report have been provided to them, the said report will again be placed in the sealed cover and kept with Registrar (Judicial) of this Court.”

To be sure, the Bench then discloses in para 3 that, “Affidavits dated 20th May, 2022 have been filed by the Deputy Inspector General of Prisons and the Member Secretary, Odisha State Legal Services Authority (OSLSA) regarding status of compliance with the earlier directions issued by this Court. The learned AC has also prepared a detailed convenience note for consideration of this Court.”

OVERCROWDING

While according top priority to overcrowding of prisons, the Bench then mentions in para 4 that, “At today’s hearing, the Court first considered the issue of overcrowding of prisons. The note of the AC, refers to two SubJails, viz., the Balliguda Sub-Jail and the Jajpur Sub-Jail, where even now the prison population is more than 100% of the carrying capacity of the said Sub-Jails. Mr. Chhabra, the DG, Prisons is conscious of this position and has offered a temporary solution of shifting the prisoners to neighbouring jails. He has also undertaken to re-examine the earlier suggestion whether pending the actual increase in the additional capacity of the jails and sub-jails, there can be a temporary solution found for accommodating prisoners in other state-owned buildings.”

To put things in perspective, the Bench then envisages in para 5 that, “In the course of the discussion, a concern was raised about the resistance faced when applications are filed before the concerned Courts for shifting of an inmate from one Jail to another. Considering that the problem of overcrowding of jails in Odisha is a real and serious one, and it is going to take some time before the additional capacity in jails can be constructed, if a request is made for shifting of an inmate from a jail to a jail in a neighbouring district at the nearest possible location then such request should be considered in its proper perspective keeping in view the serious problems faced by inmates in an overcrowded Jail. It is emphasized that this is only a temporary solution pending the creation of the additional capacity in the Jails.”

Quite revealingly, the Bench then notes in para 6 that, “Apart from the above two sub-jails, there are four jails viz., the Phulbani District Jail, Bhadrak Special Sub-Jail, Kamakhyanagar Sub-Jail and the Malkanagiri Sub-Jail, where the prison population between 50 to 100% in excess of the carrying capacity of those jails even as of today. That apart, fifteen District Jails, Special Jails and Sub-Jails face the situation of prison population being in excess to the extent of 20 to 50%. Mr. Chhabra assures the Court that each of these situations is receiving the highest attention of the prison authorities and wherever possible, applications will be filed before the concerned Courts for shifting of the excess population to the nearest possible jails to tide over the critical situation.”

PRISONERS WITH MENTAL ILLNESS

No doubt, the Bench then specifies in para 7 that, “The issue of prisoners with mental illness was highlighted during today’s hearing. As per the figures collated by the Secretary, Odisha State Legal Services Authority (OSLSA), from the reports of visit undertaken by the District Magistrates (DMs) there are at least 286 prisoners with mental illnesses in the various jails and sub-jails. Mr. Chhabra anticipates that this number may be even higher and would be in the range of around 500 prisoners.”

Alarmingly, the Bench then notes in para 8 that, “The statistics provided to this Court show that there are as many as 42 prisoners in Circle Jail, Koraput, 33 in Circle Jail, Sambalpur, 29 in District Jail, Keonjhar, 22 in District Jail, Bhawanipatna, 19 in Special Sub-Jail, Bonaigarh, 14 in District Jail, Angul, 14 in Sub-Jail, Nayagada and 15 in Special Jail, Rourkela, who have been diagnosed with mental illnesses that require urgent attention. It is a matter of deep concern, and a concern that is shared by Mr. Chhabra, that there is just one psychiatrist in Choudwar Circle Jail, who is expected to cater to the needs of all prisoners with mental illnesses throughout the State. This situation is clearly unsustainable considering that it is physically impossible for just one psychiatrist to attend to all prisoners with mental illnesses.”

Commendably, the Bench then lays bare in para 9 that, “A suggestion that has come forth from the learned AC and which the Court is willing to accept is to have the OSLSA to step in to arrange for visits by psychiatrists to each of the jails where there are prisoners with mental illnesses to have an assessment done of their present condition and what urgent measures need to be taken to alleviate their distress. The Member Secretary, OSLSA, who is present in virtual mode, has undertaken to arrange for such visit by specialist psychiatrist not just from Public Health Facilities but even from Private Health Facilities, the expenses for which will be defrayed by OSLSA. The OSLSA will then follow up on such reports of individual assessment by filing appropriate applications before the concerned Courts on behalf of the prisoners enclosing such assessments and praying for appropriate orders from the Court concerned, particularly for interim or regular bail. Each such prisoner with mental illness will be assigned with an individual lawyer from the panel of the OSLSA.”

PRISONERS’ PANCHAYAT COUNCIL

Essentially, the Bench then stipulates in para 10 that, “The Court’s attention was drawn to Rule 802 of the Odisha Model Jail Manual, 2020 (2020 Manual), which provides for constitution of Prisoners’ Panchayat Council (PPC). Mr. Chhabra has undertaken to examine the position of the constitution of such PPC in the jails since that would address a large number of problems faced by inmates within jails, which can be then brought to the notice of the jail administration for remedial action. The Court emphasises that since this is a statutory requirement, it has to be complied both in letter and spirit and on the next date of hearing, the Court will be informed of the constitution of such PPCs in every circle jail, district jail, special jail, special sub-jail or sub-jail as mandated under Rule 802 of 2020 Manual.”

PRISON DEVELOPMENT BOARD

As we see, the Bench then lays down in para 11 that, “As regards the Prison Development Board (PDB), Mr. Chhabra informs the Court that in view of the draft agenda proposed by his predecessor having to be revised, a meeting has not yet been held. However, he expects it will happen very soon and definitely before the end of June, 2022. The Court expects the PDB to take up in its agenda the issue of the budgetary allocations per prisoner, which requires revision among the other issues including infrastructure, overcrowding, medical facilities, skill development of the prison inmates and the like. The deliberations of the meeting of the PDB be placed before the Court on the next date.”

INFORMATION ABOUT PRISONERS’ CASES

As things stand, the Bench then maintains in para 12 that, “On the issue of information being provided to prisoners about their cases, Mr. Chhabra states that during his visit to the Circle Jail, Choudwar and District Jails in Angul and Puri, he did notice such e-kiosk and his information is that there are around 20 jails in Odisha that have such e-kiosks. He states that he will be visiting the jails in other States to ascertain the best practice in this area and ensure that those are made available in the jails in Odisha. Basically, a prisoner must have easy and ready access to latest updated information regarding his own case as well as orders of the concerned Court in his case.”

VACANT POSTS OF MEDICAL STAFF

On key issue of vacant posts of medical staff, the Bench then directs in para 13 that, “On the issue of vacant post of Medical Staff, the position of 3 psychiatrists is still lying vacant and 31 sanctioned posts of Medical Officers are also still vacant. It is stated that since the D.G. of Prisons has made a request to the State Government in this regard, a direction is issued to the Home Department as well as the Health and Family Welfare Department, Government of Odisha to immediately act upon the above requests of the D.G., Prisons and expedite the process of filling up of the vacant posts of Medical Officers and Psychiatrists.”

Adding more to it, the Bench then also directs in para 14 that, “Mr. Chhabra states that although directions have been issued by the Health Department and Home Department for increasing the frequency of the visits by the Medical personnel to the jails, that is not happening as was directed. This aspect must be immediately examined by both the Health and Family Welfare Department and the Home Department to ensure that the instructions are strictly carried out. The responsibility should be fixed on the concerned Chief District Medical Officer (CDMO) in each of the districts in this regard. A further circular/order be issued to that effect forthwith.”

Segregation of UTPs from convicted inmates, Segregation of Young Offenders from Adults and Separate Enclosures for Women Prisoners

Quite worryingly, the Bench then enunciates in para 15 that, “A concern has been expressed that at least in six sub-jails in Champua, Kamakshyanagar, Banki, Jajpur, Dharamagarh and Jeypore, under trials were not segregated from convicted inmates. Further, young offenders in the age group of 18 to 21 are not separated from adults in jails of several districts including Bargarh, Malkanagiri, Keonjhar, Bhadrak, Cuttack, Jajpur, Kalahandi, Koraput and Nuapada. A third aspect here is that the reports collated by the Member Secretary, OSLSA reveal that there are no separate enclosures for women prisoners in the District Jail in Bhawanipatna and even the report from the visit of the DLSA to Jharsuguda reveals that the women’s ward is in a pathetic condition. As regards the jail in Jharsuguda is concerned, Mr. Chhabra states that the Additional I.G. has visited the said jail and corrective measures have already been taken. As regards the issue regarding segregation in the jail in Bhawanipatna, he states that steps will immediately be taken to rectify the situation and that he will be issuing instructions in that regard.”

BIJU PATNAIK OPEN AIR PRISON

Be it noted, the Bench then states in para 16 that, “This Court had in its order dated 23rd December 2021, pointed out that the Biju Patnaik Open Air Prison, which has a capacity of 125, has remained largely underutilized. The position as of 30th April, 2022 is that the said prison has only 33 prisoners. Mr. Chhabra stated that once the COVID-19 situation totally eases and convicts return to the jails, the prison population in the open-air prison would increase. The Court urges that this issue receive the highest and most urgent attention of the prison department and on the next date, the Court must be informed of a substantial increase in the prisoner population in the open air prison.”

DUTY LAWYERS

It is worth noting that the Bench then recalls and puts forth in para 17 that, “This Court had issued detailed directions regarding the duty lawyers being to be attached to every Police Station and of the directions issued by the Supreme Court in Arnesh Kumar v. State of Bihar (2014) 8 SCC 273, having to be followed in letter and spirit. The Court is informed by Mr. Biswajit Mohanty, Secretary, OSLSA that in 418 Police Stations in Odisha, the Duty-Lawyer system has already been implemented. The names and the mobile numbers of the Duty-Lawyers are stated to be displayed on boards in a prominent place in each of these Police Stations. He expects the Duty-Lawyer system to be implemented in all the remaining Police Stations by the 10th June, 2022. The Duty-Lawyers will be given an orientation through the DLSAs, emphasizing the need to ensure compliance with the directions issued by the Supreme Court in Arnesh Kumar (supra). The orientation will also be for effective interaction with the persons brought into Police Stations and proper advice as to their options.”

Needless to say, the Bench then mentions in para 18 that, “Mr. Chhabra states that the efforts would be made to earmark some space in every jail and sub-jail for library books and reading materials to be kept for prisoners.”

Of course, the Bench then reiterated in para 19 that, “The learned AC points out that despite the directions issued by this Court in its order dated 23rd December, 2021 in Para-48 about the Police authorities having to strictly comply with the directions issued by the Supreme Court in Joginder Kumar v. State of U.P. AIR 1994 SC 1349 and the subsequent amendments by which Sections 41-A to 41-D were introduced in the Cr.P.C., those provisions are not yet being strictly implemented. The direction to the Police to publish every month on its website the relevant information of persons arrested is reiterated.”

Quite remarkably, the Bench then mandates in para 20 that, “In modification of the direction issued by this Court in Para-7 of its Order dated 23rd December 2021, it is directed that the Member Secretary, OSLSA will facilitate the release of prisoners, who were unable to be released on bail despite being granted bail on account of their inability to furnish bail bonds, by filing applications before the Court of Sessions or the High Court under Section 440 (2) of the Cr.P.C. for modifying the conditions and the terms of both the Judgments of the Supreme Court as well as the guidelines issued by the NALSA in this regard.”

Most commendably, the Bench then notes in para 21 that, “A suggestion has been received from the D.G. Prisons to the DLSAs, who organize the visits by Panel Counsel or themselves visit the prisons should compile a list of Under Trial Prisoners (UTPs), who may be informed sick or aged or in need of urgent medical attention including pregnant women and on that basis, advise moving the Court for bail on medical grounds. This suggestion will also be acted upon by the Secretary, OSLSA, who will instruct the DLSAs accordingly.”

What’s more, the Bench then adds in para 22 that, “The Court also notes its satisfaction on the various measures that have been taken in the jails in Odisha pursuant to the orders passed by this Court, which has resulted in a considerable improvement in the conditions in he prisons in Odisha, as is reflected in the reports submitted to the Court by the District Magistrates, the DLSAs and even the District Judges, who have undertaken visits, all of which has been collated and presented in this Court at today’s hearing. Nevertheless, much more needs to be done. Hopefully, the further directions issued by this Court today should help in that direction.”

Finally, the Bench then concludes by holding in para 23 that, “List on 28th July, 2022 at 2 pm.”

In sum, we thus see that the Orissa High Court has taken great pains to ensure that prisoners are properly looked after in prisons. The Court minced no words to express its serious concern on the deplorable condition of prisoners in jail. It also made it indisputably clear that just one psychiatrist for all prisoners with mental illnesses in State is not sustainable. No denying it!

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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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