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Marital rape: An analysis

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ABSTRACT

The concept of marital rape is alien to Indian penal jurisprudence. Black’s Law Dictionary defines the offence as “a husband’s sexual intercourse with his wife by force or without her consent”. The notion positively rests on a husband’s licentious disposition in disregarding the autonomy of his wife. That a wife owes to her husband in body, forms the core of the philosophy of a legal system that refuses to hold a man accountable for sexually violating his spouse.

The authors, hereby, endeavor to make an examination of the legal status of marital rape in India. In a quest to anchor a comprehensive account of the concern at hand, expansive research has been undertaken to support and supplement the contentions raised throughout the text. The reader shall bear it in mind that the authors are generally reproving of the legitimacy ascribed to the act by the laws of the country and the same shall underline the tone of the discourse hereon.

Keywords: Marital rape, Consent, Perpetration, Violence, Marriage.

MARITAL RAPE: EXPLICATING THE CONCERN

In India, the offence of “rape” finds its explication in Section 375 of the Indian Penal Code, 1860, which lays out,

“A man is said to commit “rape” if he—

(a) penetrates his penis, to any extent, into the vagina, mouth, urethra or anus of a woman or makes her to do so with him or any other person; or

(b) inserts, to any extent, any object or a part of the body, not being the penis, into the vagina, the urethra or anus of a woman or makes her to do so with him or any other person; or

(c) manipulates any part of the body of a woman so as to cause penetration into the vagina, urethra, anus or any part of body of such woman or makes her to do so with him or any other person; or

(d) applies his mouth to the vagina, anus, urethra of a woman or makes her to do so with him or any other person.”

The prerequisites for any or all of these acts to be adjudged “rape” involve the performance thereof either without the will and consent of the woman, or, with her consent obtained through threat, coercion, deceit, or, require that the woman be a minor, or, of unsound mind, in a state of intoxication, or, unable to communicate her consent.

While the underscoring insistence on unequivocal voluntary consent advances an invulnerable image of the state of laws, a reckoning of the exceptions attached to the aforementioned provision moots the authors’ matter of concern. Accordingly, the second exception subjoining Section 375 avers, “Sexual intercourse or sexual acts by a man with his own wife, the wife not being under fifteen years of age, is not rape.” The clause marshals the contention that a nonconsensual sexual intercourse with one’s wife does not constitute rape, so as long as the wife is over fifteen years of age, thus, making marital rape an exception to the law.

A glib cleft in the general philosophy, however still, is arrested by Section 376B of the Penal Code.

While nonconsensual sexual intercourse with a conjugating wife has not been deemed actionable under Section 375, the same act is subject to attract an imprisonment of two to seven years, along with a fine, when performed on a wife living separately, whether under a decree of judicial separation or otherwise. This tapering oddity, though, offers little comfort to the unfurl of the parlous ramifications of the wretched state of laws. The most of petrifying of these, ironically, could be condensed in a single unostentatious sequencing of words, implying that in India, the act of a man raping his wife is, in fact, absolutely legal.

MARITAL EXEMPTION: TRACING ITS GENESIS IN INDIA

It makes for a curious case that while the Indian Penal Code unambiguously exempts husbands from any liability in case of sexually violating their wives, no explanation whatsoever accounts for the exception in question. An attempt to decipher the same, however, could be made by delving into the socio-legal context of the time when it was drafted. The Code, drafted in 1860, is a feature of the English Law and reflects a certain philosophy that pervaded the period. One peculiar advancement of the ideology was the belief that gauged a wife to be the private property of her husband.

The standing was exalted by the most notable Jurists of the time, thus, embedding into the crevasses of the foundation the Law in question. Sir Mathew Hale, in his 1736 treatise, The History of the Pleas of the Crown, stated, “The husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given herself up in this kind unto her husband, which she cannot retract.” Similar was the view of East, in 1803, when he declared, “… a husband cannot by law be guilty by ravishing his wife, on account of the matrimonial consent which she cannot retract.” Thus, idea was that the consent for sexual intercourse was impliedly given by the wife at the time of the wedding, to subsist throughout the course of it.

Also distinctive is the fact that under the English Law, the husband and wife were considered to be one person. Justice Blackstone, while describing the Principle of Coverture, stated, “By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband: under whose wing, protection, and cover, she performs everything…and her condition during her marriage is called her coverture.” The implications of having had her legal rights subsumed by the husband meant that the wife, if injured, could not propose an action without his consent. Nor could she take a recourse against being sexually violated, for, being one person in law meant that one could not rape oneself. While these peculiarities eliminated the scope of treating spousal rape as a crime, they did not necessarily eliminate the possibility of conviction of the husband on other grounds. In R. v Clarence, the husband, suffering from a venereal disease, communicated the same to his wife through sexual intercourse. While the charges of sexual assault were absolved, the Trial Court did convict the husband for unlawfully conflicting grievous bodily harm on his wife. Similar was the stance in R. v Miller, wherein the wife had presented a petition for divorce. But before it was heard, the husband committed sexual intercourse with her against her will. The husband was charged with rape and with assault causing bodily harm. While the Court quashed the charge of rape, the charge of assault was upheld. The position was extrapolated by Justice Lynskey, “Although the husband has a right to marital intercourse, and the wife cannot refuse her consent, and although if he does have intercourse against her actual will, it is not rape, nevertheless he is not entitled to use force or violence for the purpose of exercising that right. If he does so, he may make himself liable to the criminal law, not for the offence of rape but for whatever other offence the facts of the particular case warrant.”

While the exception, as a whole, could be understood in the light of the views discussed hitherto, the provision concerning the age of the wife stemmed from a more pragmatic spot. With child marriage being a significant feature of the Indian society back in the nineteenth century, several instances of child brides succumbing to severe injuries, and even death, owning to premature intercourse with their husbands, were reported commonly. To protect young girls against the same, the initial draft mandated the bride to be above ten years old for the husband to seek the exception. After the renowned case of Queen Empress v. Hari Mohan Maiti, however, the age was raised to twelve years by an amendment to the Age of Consent act, 1861, when Phulmoni Devi, an elevenyear-old child bride succumbed to vaginal injuries due to excessive bleeding when her husband Hari Mohan, in his mid-thirties, tried to consummate their wedding. That the India Penal Code was drafted in the backdrop of the aforementioned developments, thus, provides one with reasonable ground to conclude that the rationale behind the marital exception clause in Lord Macaulay’s draft stemmed, unquestionably, from the idiosyncrasies of the legal philosophy of the era.

AN ENTRENCHED TRIBULATION: A SCRUTINY OF THE CURRENT STATE OF AFFAIRS “I was married at the age of seventeen. At that time, we could not understand what is right and what is wrong. Gradually, when we started discussing sex, he would talk about things that I just did not like listening to. Then gradually, the problems between us reached a level that he started harassing me badly for sex…and if I refuse to do it, then he beats me up.” The precursive statement was recorded by the correspondents from Video Volunteers – a community media organization – while the victim, a young lady from rural Madhya Pradesh, s o b b e d h e r a n g u i s h through the veil. Though instances of marital rape do often wrest documentation in hospitals, scarcely, if ever, are such cases registered with the law enforcement authorities, owing to the want of any law recognizing the act in question as an offence. One petrifying ramification begotten by the present state of affairs is the absence of inclusive data to comprehensively illustrate the extent of the predicament. That 99.1 percent of all rape cases, even immune to the exception of Section 375, go unreported leaves one with little reason to believe that the scant reporting of an act subject to the very exception, does not conceal, behind its sparse numbers, a chilling picture. Notwithstanding the lack of systematic records, a perusal of the reports of several independent organizations, affords a glance into the plausible magnitude of the problem. The International Council for Research on Women, in its IMAGES survey, questioned around 12,000 men and 6,000 women respondents, between the ages of 18 and 59 years, from among five countries to report statistics of the levels of sexual violence faced by women and girls around the world. Published in 2014, the study concluded that the most common manifestation of sexual violence was against “intimate partners (girlfriends or wives)”. Across seven field states in India, the prevalent rates of intimate partner sexual violence among men ranged from 7.5 percent to 29.6 percent. In the same study, 14.2 percent to 59.1 percent women contended sexual violation at the hands of their intimate partners. The study also highlighted that, more often than not, intimate partner sexual violence occurs concomitantly with other forms of violence, principally physical and emotional. Out of the 37.3 percent women reporting physical violence and the 24.4 percent women reporting sexual violence, an overlapping 18.3 percent reported being subjected to both by their intimate partners. The gravity of the matter was reinforced in World Health Organization’s report on sexual violence. In a representative sample of 6000 Indian men, 22 percent reported sexually abusing their wives, while 7 percent reported inflicting sexual violence along with physical violence over their significant others. The World Health Organization also drew a nexus between the age of marriage and marital rape. It concluded that, in India, the median age at first marriage for women is 16.4 years. A survey of 5000 women in the state of Rajasthan found that 56 percent of the women had married before the age of 15 years, and of these, 17 percent contended being forced for sex at least once within their marriage. Correspondingly, young brides are more likely to experience sexual violence at the hands of their spouse, and, owing to their vulnerability, much less likely to seek redressal. The trends also found themselves mirrored in United Nations Population Fund’s report on marital violence in India. The research indicated that between one-tenth and half of women surveyed in various studies had experienced physical violence, and between one in twenty and one in three women had experienced sexual violence perpetrated by their husband. Evidence also suggested the subjection of between one in twenty and one in three women to sexual violence by their spouse during pregnancy. Among young women, between one in ten and three in five women reported experiencing sexual violence within one year of the marriage. The study also reflected on the pervasiveness of marital violence by instating the evidence garnered from men, wherein, between one-sixth and almost one-third of all surveyed men reported the perpetration of sexual violence against their wives. The reports of the National Family Health Survey scarcely exhibit a rerouting over the preceding findings. The data from the National Family Health Survey-3 (NFHS-3) indicated that 9.5 percent of the married women, aged between 15 and 49 years, had experienced sexual violence perpetrated by their current or former husband over the course of their married life. The number stood at 5.4 percent in the National Family Health Survey-4 (NFHS-4) for the year 2015- 16 and at 30 percent in first phase of the National Family Health Survey-5 (NFHS5) for twenty-two States and Union Territories, reflecting an almost unvarying trend of sexual violence perpetration within marital relationships. It is not unreasonable to believe that the plight of victims only stands exacerbated in view of the COVID 19 pandemic. Successive lockdowns, among other ramifications of the crisis, had women finding themselves in the constant reach of their perpetrators within the domestic confines. The National Commission for Women, alone, registered a total of 587 complaints within three weeks of the first nationwide lockdown, a steep rise from 396 complaints received in the preceding twenty-five days. The three months of lockdown from April to June recorded more complaints than those received in the entire decade of 2010. That 17.5 percent of these documentations reported sexual violence, in one form or the other, at the hands of marital partners, is ground enough to moot the authors’ contention, that, the need of a reform has never been more substantial than now, a time United Nations has called, “The Shadow Pandemic”. The ‘Here’ and ‘Now’: An Overview of Domestic Laws The exploration of the concern hitherto leaves one with little reason to contest the culpability of the second exception to Section 375 in shaping the marital rape predicament in India. The well deemed escape clause creates a vacuum of injustice for married women within the circumspect of laws dealing with sexual abuse. This lacuna, however, calls for more than an oversimplified blackand-white analysis, for the attitudes and musings of various Courts, Commissions and even certain legislations, illuminate specks of grey where the non-recognition of marital rape as an offence contrasts an overlap with recognized principles of law. A reference to cornerstone judgments and relevant laws is, thus, imperative in mooting the matter of concern. It is significant to note that though said exception in Lord Macaulay’s Code formally mandates the age of the wife to be more than fifteen years in immunizing the husband against any charges of marital rape, the same is not construed defensible after the Apex Court’s judgment in Independent Thought v. Union of India. The Court, in the given case, ruled that the presence of the marital exception under Section 375 did not discredit sexual intercourse with a girl below the age of eighteen years as rape, notwithstanding her marital status. It held that, “The exception carved out in the IPC creates an unnecessary and artificial distinction between a married girl child and an unmarried girl child and has no rational nexus with any unclear objective sought to be achieved.” A certain form of marital rape, where the wife is a minor, thus, stands recognized by the Courts today, bearing the penal implications of imprisonment and fine as laid down by Section 376 (1) of the Indian Penal Code. Another form of marital rape that bears recognition involves sexual perpetration by a husband on his wife during separation. Section 376B of the Indian Penal Code reads, “Whoever has sexual intercourse with his own wife, who is living separately, whether under a decree of separation or otherwise, without her consent, shall be punished with imprisonment of either description for a term which shall not be less than two years but which may extend to seven years, and shall also be liable to fine.” Of particular interest, here, are the penal consequences attached with the offence. While the minimum term of imprisonment of two years, as provided for by the Criminal Law (Amendment) Act, 2013, is an improvisation over a maximum term of two years laid down in the Criminal Law (Amendment) Act of 1983, the bias is evident in the fact that the maximum period of incarceration for raping a separated wife remains seven years. The same period is prescribed as the minimum sentence in case of sexual abuse outside the marriage. That the retribution does not bear equal stringency for married and unmarried victims only serves to elucidate the hesitation in treating spousal rape at par with non-marital rape. Notwithstanding the aforementioned circumstances, the larger implications of the absence of specific laws are borne by cohabiting wives of over eighteen years of age. The Indian Penal Code frustrates any remedy to such victims in its non-recognition of marital rape as an absolute offence. An important legislation at play, then, remains the Protection of Women from Domestic Violence Act, 2005. Section 3(a) of the Act brings sexual abuse, defined as “any conduct of a sexual nature that abuses, humiliates, degrades or otherwise violates the dignity of woman”, within the purview of domestic violence. Although it does not yield criminal recognition to marital rape, it does serve as a beacon of hope in providing monetary, compensatory and other reliefs to the victim. The reports of various Law Commissions have reflected an evolving trend in the acknowledgement of marital rape. The 172nd report of the Law Commission, in response to Sakshi v. Union of India and ors., refused to criminalize the concern at hand. The Commission refuted Sakshi’s suggestion to do away with the second exception to Section 375, while stating, “Representatives of Sakshi wanted us to recommend the deletion of the Exception, with which we are unable to agree…We are not satisfied that this Exception should be recommended to be deleted since that may amount to excessive interference with the marital relationship.” Concurrently, Courts and authorities across India have expressed similar apprehensions in intermeddling with the institution of marriage. The Delhi High Court, in Harvinder Kaur v. Harmander Singh stated that, “Introduction of Constitutional Law in the home is most inappropriate. It is like introducing a bull in a china shop. It will prove to be a ruthless destroyer of the marriage institution and all that stands for. In the privacy of the home and the married life neither Article 21 nor Article 14 have any place. In a sensitive sphere which is at once intimate and delicate the introduction of the cold principles of Constitutional Law will have the effect of weakening the marriage bond”. Similar was the view of Justices AR Dave and R Banumathi when, in 2015, the Supreme Court bench, rejected the plea of a woman accusing her husband of repeated sexual perpetration. The bench stated, “You are espousing a personal cause and not a public cause… This is an individual case.” Former Minister of State for Home Affairs, Haribhai Parathibhai Chaudhary, reiterated the same while responding in negative to MP Kanimozhi’s question on whether a bill would be introduced to remove the marital exception to Section 375. “It is considered that the concept of marital rape, as understood internationally, cannot be suitably applied in the Indian context due to various factors — e.g. level of education/illiteracy, poverty, myriad social customs and values, religious beliefs, mindset of society to treat marriage as a sacrament etc.”, said the Parliamentarian. The conservative stance was forfeited by the Justice JS Verma Committee while presenting its report in the aftermath of the 2012 Nirbhaya rape case. The committee, among other suggestions, stood advocating the recognition and criminalization of marital rape. “The law ought to specify that marital or other relationship between the perpetrator or victim is not a valid defense against the crimes of rape or sexual violation”, it said in its report. The committee opined, “Relationship between the accused and the complainant is not relevant to the enquiry into whether the complainant consented to the sexual activity and the fact that the accused and the victim are married or in another intimate relationship may not be regarded as a mitigating factor justifying lower sentences for rape.” Though the recommendation did not find eventuation in the Criminal Law (Amendment) Act, 2013, an increasingly greater disquietude, concerning the sexual rights of women within marriage, has shaded the judgments of various Courts in the recent times. An important development in this favor was the verdict of the Andhra Pradesh High Court in Saroj Rani v. Sudarshan Kumar Chadha, wherein the Hon’ble Court noted, “No positive act of sex can be forced upon the unwilling persons, because nothing can conceivably be more degrading to human dignity and monstrous to human spirit than to subject a person by the long arm of the law to a positive sex Act.”, while establishing that conjugality, in a Hindu marriage, did not mandate sexual cohabitation as it went beyond mere procreation and sexual relations. The Gujarat High Court, while examining the law relating to sexual offences in Nimesh Bhai Bharatbhai Desai v. State of Gujarat, also expressed its concerns over the non-criminalization of marital rape. Observing that husbands need to be reminded that marriage is not a licence to forcibly rape their wives, the Court stated, “Marital rape is in existence in India, a disgraceful offence that has scarred the trust and confidence in the institution of marriage. A large population of women has faced the brunt of the non-criminalization of the practice.” The trend is transpicuous. The sentiments resonating the rights and liberty of married women often find themselves echoed across the board in courtroom exchanges and intellectual deliberations. While such transactions of thought reflect a comforting stance, they stand bereft of actualization mechanisms. Unquestionably, the ethos being routed by the civil society need to find their way into a legislative consensus lest an attempt at criminalizing marital rape should be made – an endeavor that’s only been met with rebuffs so far.

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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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