Kashmiri collective conscience rejects Pakistan’s bigotry, terrorism and radicalized narrative - Business Guardian
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Policy&Politics

Kashmiri collective conscience rejects Pakistan’s bigotry, terrorism and radicalized narrative

Kashmir calls for peace and its people deserve justice to be seen as delivered as citizens of inclusive and democratic India.

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As terrorists recently killed many civilians,off duty policemen ,members of the Kashmiri Pandit and Hindu community, residing in Kashmir Valley, the response from the majority of community members shows that the soul of Kashmir is still intact. This came to the fore that soon after the targeted civilians killing series of inter-community dialogues known as “Kaath Baath” (dialogue) took place under the aegis of, the Kashmir Policy and Strategy Group.

They were attended by a galaxy of prominent civil societies activists of all age groups from both communities of Kashmir. The Kashmiris unitedly and vocally advocate the doctrine of peaceful coexistence and promoting human rights values among the communities. The civil society personalities unanimously say-the Kashmiri collective conscience rejects bigotry, terrorism and the radicalized narrative. The revival of our rich heritage, plurality, peace and human rights values is the befitting answer to the enemies of Kashmir. They say plurality is the keystone of our proud heritage and we shall unitedly endeavour to save it and revive it with societal unity and mutual trust and deep commitment.

It was once again highlighted that the soul and pristine of Kashmir is live and phenomenal aptly described by some poets in Persian:

GAR FIRAUS BAR-RUE ZAMIN AST, HAMI ASTO, HAMI AST

(If there is a heaven on earth, it’s here, it’s here, it’s here)

Therefore it is high time after the three decades of death and destruction suffered by all the Kashmiri communities, to look beyond the blame games and seriously discuss the ways and means for standing up unitedly against demons of doom and saving Kashmir by promoting Kashmiri’s proud heritage of coexistence, societal cohesion and progressive narrative. Peace-loving Kashmiris are striving for democracy and enjoyment of the peaceful right to life. Peace is the sine qua non for democracy and the promotion of human rights. The strength of civilizational ethos has defeated the evil forces that tried to thrust the alien socio-cultural narratives on Kashmiri Society. -Kashmir is the cradle of civilisation, innovation, science and technology for thousands of years, no terrorism and radicalism will ever succeed to obliterate that.-say the civil society leaders.

Some opine constituting, that a people’s truth and reconciliation commission may further strengthen the doctrine of reconciliation between the communities which has fallen apart for a variety of reasons and circumstances. Terrorism and the exodus of Kashmiri pandits have sharply divided the communities and there is a dire need to bridge the gulf and unitedly rebuild our robust plural society in the times ahead.

Kashmiris are waiting to warmly welcome the aborigines native exiled Kashmiri Pandit Community back home, as people say Kashmir is incomplete without the physical presence of this illustrious community, the Kashmiriyat is in peril and peace shall allude without them. The rich ethos of Kashmir and the humanitarian values are on display during the Shri Amar Nath Ji Yatra and nature’s wrath has brought the big tragedy of death and destruction by cloud burst near the holy cave. It has brought Kashmiris deep grief and condolence. People are hopeful that the Yatra resumes and people get the chance to display their humanitarian support to Yatris.

-Changing ground realities

The ground realities in Kashmir are people are sick of terrorists violence ,the huge participation of people in last panchayat and DDC elections demonstrates the People’s preference for peace ,democracy and development.possibly a mandate for moratorium to political rhetoric and negation of emotive blackmail by corruption and political ambivalence of traditional political class.

Kashmiris have huge expectations. The alienation caused psychologically by bifurcation of the State,into two union territories,ad-hocism and mismanagement of Kashmir affairs from time to time would be set right by the current dispensation as promised.The unrest in Kashmir actually is due to the unabated turmoil and political turbulence rooted deep in the denial of justice, disrespect to legitimate aspirations and skullduggery resorted to by New Delhi.It is compounded by dividing the glorious and prestigious State of Jammu & Kashmir that is perceived as robbing the Kashmir’s pride and its geo strategic importance.It is the high time that the Statehood is restored back urgently-say the thought leaders.

Aug. 5, 2019, Prime Minister Narendra Modi’s government revoked Article 370 of constitution, and with it, the region’s special status as a semiautonomous state is gone.The move divided the former state of Jammu and Kashmir into two union territories: a smaller Jammu and Kashmir, and Ladakh. Union government presented it as a patriotic project to bring economic development to the Kashmir Valley, the mountainous, area along the border with Pakistan that is also eyes annexation by Islamabad. Most Kashmiris say the change in the region’s status is part of an attempt by Modi’s administration to open up Valley for whole of the Country.Traditional mainstream polity is sceptical and say -the intend of current central Govt.is to change its demographics being the only Muslim-majority State in India.The change in Kashmir’s status is brought about without consulting local public and political opinion.

But the fact remains it was widely supported by Indians within Country and abroad.

-NORMALCY AND DEVELOPMENT ASSURANCE

PM Modi assured the people and said that while J&K would regain its statehood, the UT status for Ladakh will continue with the Centre seeing it as its special responsibility. He also minced no words in saying that Article 370 had been cast in the dustbin of history. This was seen as a move to assuage the sense of hurt over the downgrade to UT following the shock of the constitutional scheme of Article 370 being junked.

Modi promised that normalcy would return, saying, “I assure you that the situation will slowly normalise and your problems will reduce.” He said a handful of people were trying to foment trouble and they would be given a fitting reply by the people of J&K themselves after realising the benefits of complete integration.

Modi emphasised that doing away with Article 370 and the reorganisation of J&K was an internal matter of India. Saying that he understood that there would be different opinions and appealed for national unity, He appealed to the film industry, public and private enterprises to make J&K a part of their plans.

The PM Modi,said differences were part of democracy, but called on those who differed to keep national interest in mind and join hands with the government in imparting a new direction to J&K. He said the doing away of Article 370 and scrapping of Article 35A would soon see their negative effects fading away. He said important laws like right to education, minimum wages and political reservations for SCs and STs would apply to J&K and a large number of people who originally came to India from Pakistan would gain full rights as citizens.The people who have been living outside Kashmir due to terrorism shall be rehabilitated back in the Valley.

He said with Ladakh becoming a UT, its development was the “natural responsibility” of the Centre while development projects in J&K related to connectivity, like roads, railway lines and the modernisation of Srinagar airport, would be taken up speedily. He expressed confidence that panchayat members and heads elected last year would prove to be catalysts in increasing electrification and ODF status of villages.

Despite having a free hand for more about three years now to politically turn around Jammu and Kashmir, the Central government continues to enlist the support of local populations even as the India-China military stand-off continues in Ladakh. The alienation and despondency is on the decline.

The moot question arises is -has the removal of the special status brought Kashmir closer to India, reduced the sources of extremism and separatism, and undermined Pakistani influence in the Valley.The answer is -that the collective conscience of Kashmiris has rejected bigotry,terrorism and radicalised narrative.

-Militancy on decline

Most indicators show the terrorist violence in Kashmir have shown substantial decline.Mainstream Kashmiri politicians today are able to resume the political activities and the separatist politicians only are restive as they are fast loosing the relevance. Youngsters across South,north and central Kashmir are engaged in studies and sports activities etc.Pakistan is leaving no stone unturned to foment,aid and abet violence in the Valley but no takers,-for Rawalpindi, all bets are off on Kashmir. India’s national and strategic interest is best served by Kashmiris turning towards India for the bright future of current and future generations..

This is a worrying phenomenon for the parents and people,who are sick of militancy and killings of Kashmiri natives by their own trigger happy crazy Kashmiri youngsters.

The militancy in the Valley, however, has developed an autonomous raison d’etre in the absence of any political dialogue. Kashmir analysts are surprised that New Delhi’s policy and its political managers are so apolitical and naive, as not to be willing to leave any space or room for the Kashmiri leadership to exert a moderating influence that could prevent youngsters from taking up the gun.

The militancy in the Valley, however, has developed an autonomous raison d’etre in the absence of any political dialogue. Kashmir analysts are surprised that New Delhi’s policy and its political managers are so apolitical and naive, as not to be willing to leave any space or room for the Kashmiri leadership to exert a moderating influence that could prevent youngsters from taking up the gun.

The changing character of the insurgency/militancy is a serious warning signal for the reason people are in Introspection mode as to what is best way forward to exit from the death & destruction syndrome unleashed by terrorists and Pakistan,and bring about secured & better life for future generations.People expect the LG administration for a policy correction at all levels of governance, and a strategic shift, urgently to prevent drift,despondency and societal radicalisation.

The unrest in Kashmir has always been attributed to cross-border hostilities and terrorism. But actually the unabated turmoil and political turbulence in Kashmir is rooted deep in the denial of justice, disrespect to legitimate aspirations by various State governments and skullduggery resorted to by New Delhi from time to time.

-STATESMAN VISION NECESSARY

Kashmir deserves to be managed by a “Statesman’s Vision” that can encompass a comprehensive process,instead of misinformation,dithering and use of muscle power alone.Humane face of Indian democracy nurtured by freedom fighters,Mahatma Gandhi,Pt Nehru,& humanitarian approach of Vajpayee and

MODI-doctrine- Dil Ki Aur Dili ki Duri Mitanni Hia -is being extended to Kashmir as a vision to finally resolve the imbroglio.There is a dire strategic necessity for the restitution,return and rehabilitation of the exiled Kashmiri Pandit Community living out of Kashmir for more than three decades payba in the Valley or else the process of idea of India in Kashmir and restoration of peace would seemingly be flawed,faulty and incomplete.The aborigines Pandit Community has an existential stake in the Valley for their roots are engraved for more than 5000 years in the soil of Kashmir.Kashmiri Pandits are the bulwark against radicalisation and have enormous contribution in Kashmiri history and development.

One of the causes of the new age turbulence is attributed to the betrayal of democratic expectations. The youth had participated in large numbers in the electoral process in the 2014 state Assembly elections and voted out the incumbent government headed by Omar Abdullah. The experimentation of BJP-PDP combine government failed for its unholiness,contradictions within and mistrust.Consequently the governance went for a toss and regional/communal political polarisation deepened.

CHANGING PUBLIC PERCEPTION

Kashmir has been on the boil for more than 30 years. Tens of thousands of people, both civilians and soldiers have died and the population of Kashmiri Pandits exiled. Kashmir affairs seemingly messed up due to Pakistan’s proxy war.Terrorism has rendered the state, especially the Valley, without liberty and individuality. It has devastated the economy, education and normal living pattern, the plural ethos, and imperilled institutions. The societal psyche is turning cynical and despondent and that is what Pakistan and militancy have managed to do with the people of Kashmir. In the name of so called self-determination people have no voice of their own and the emotions are controlled and charged by proxies. People know the disastrous consequences of the harm Pakistan and terrorists have done to the current and future generations of Kashmir. But the anti-India sentiment that has grown over the years has seeped in that people refuse to see the logic.

The government has an understanding that use of military option alone is not a solution to the complex situation of Kashmir. It has to be a blend of engagement and dialogue with all the stakeholders. It is the psychological, attitudinal, social, political and economic grievances that need to be addressed. Therefore, the government should worry more about winning back the trust of the people and let the terrorism be handled by the security forces.

The Line of Control remains perpetually hot. Sometimes the unusual escalation results in a high death toll.The collateral damage to civilians living in the border areas is colossal. On the Indian side alone thousands of civilians had to be evacuated, makeshift camps set up to house them at safe distances, economic activities disrupted and schools closed in the areas adjoining the LoC and International Border. Besides the loss of human lives, houses were destroyed and damaged, cattle killed and injured and local water and electricity infrastructure disrupted.Inflitration of terrorists though marginal is on & on through borders.In recent times because of ceasefire agreement the LOC firings have substantially reduced.

PAKISTAN ELEPHANT IN THE ROOM

People are making a connection between the heating up of the LoC and terrorist attacks in the state and proxies of the Pakistan Army. The argument goes that by using terrorist proxies, the Pakistan Army distances itself from terrorist attacks and pays no price for its subterfuge. The ‘robust’ response of the Indian Army this time around, it is said, is meant to punish the other side by specifically targeting Pakistani Army posts.Despite this policy qua Pakistan the Kashmir continues to bleed -30 years it has been facing the terrorists violence unabated. After all how long -Kashmiri’s as on date have rejected Pakistan’s relevance in Kashmir affairs.

New Delhi is now attempting to approach the issues keeping in sight the fact that India’s strategic interests are intertwined with the goodwill of the Valley’s ordinary people including Kashmiri Pandits, and not the land alone. Before the new age violent unrest and upsurge gets further out of hand, New Delhi deals with the issues with a party independent “Stateman Vision.”

The Union of India is determined to act now and engage with the youth of today and Kashmir’s leadership in a serious dialogue. Political dialogue with all the stakeholders is an internationally recognised jurisprudence for conflict resolution. For New Delhi, sees it as the prudent and astute political & strategic approach for a resolution of the Kashmir imbroglio.Earlier central governments have always flip-floped on political and diplomatic efforts that never brought peace in Kashmir. Therefore, a course correction and a policy perception of Modi:2:0 -Sab Ka Saath and Dil ke Doori & Dili ki Doori Mitanni hia is the only way forward. Kashmir calls for peace and its people deserve justice,democracy and peaceful coexistence to enjoy fully the human rights .

Ashok Bhan, Senior Advocate, Supreme Court of India And; Chairman,Kashmir (Policy and Strategy)Group

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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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