Matrimonial dispute if left unchecked, false implication of husband’s relatives would result in misuse of process of law: Telangana HC - Business Guardian
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Matrimonial dispute if left unchecked, false implication of husband’s relatives would result in misuse of process of law: Telangana HC

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While taking a very grim view of the trend of false implication of the relatives of the husband in matrimonial disputes, the Telangana High Court in an extremely laudable, learned, landmark and latest judgment titled P Rajeshwari And Another Vs The State Of A.P. in CRL.P. Nos. 6400 and 7242 of 2013 pronounced as recently as on July 14, 2022 minced absolutely no words to observe that the false implication of the relatives of the husband in matrimonial disputes based on general and omnibus allegations, if left unchecked would result in misuse of the process of law. It is high time and the Centre must step in and promptly amend the law by introducing reasonable checks and balances like where the allegations are mala fide and with intent to falsely implicate then the women who does so and so also her relatives who abet her to do so must be made to undergo a minimum imprisonment term of at least five years and so also would have to give compensation of few lakhs of rupees to the husband. This will definitely go a long way in checking the open and rampant abuse of dowry laws against the husband and his relatives. We thus see that the Bench of Hon’ble Sri Justice A Santhosh Reddy ordered to quash further proceedings against the mother-in-law/A2, brother-in-law/A3 (husband’s brother), and sister-in-law/A4 (wife of husband’s brother) of a woman, who had levelled allegations of harassing her for dowry [booked u/s 498-A IPC and S. 3, 4 of Dowry Prohibition Act].

At the outset, this cogent, composed, convincing and common order authored by a Single Judge Bench of the Telangana High Court comprising of Hon’ble Sri Justice A Santhosh Reddy sets the ball rolling by first and foremost putting forth in para 1 that, “Crl.P.No.6400 of 2013 is filed by the petitioners/A-2 and A-4 under Section 482 Cr.P.C. to quash the proceedings in P.R.C.No.123 of 2013 on the file of IX Metropolitan Magistrate, Miyapur.”

Simply put, the Bench then states in para 2 that, “Crl.P.No.7242 of 2013 is filed by the petitioner/A-3 under Section 482 Cr.P.C to quash the proceedings in P.R.C.No.123 of 2013 on the file of IX Metropolitan Magistrate, Miyapur.”

Needless to say, the Bench then observes in para 3 that, “Since these two criminal petitions arose out of the same crime number and one P.R.C., they are being disposed of by way of common order.”

To put things in perspective, the Bench then envisages in para 4 that, “The second respondent herein filed a private complaint before the Court of IX Metropolitan Magistrate at Miyapur alleging that her marriage with A-1 took place on 14.12.2006 at Gold Merchant Association Community Hall, Gandhi Bazaar, Ongole, Prakasham District. During the time of marriage, Rs.5.00 lakhs cash and 25 tulas of gold were given towards dowry to the accused. Since the day of marriage, in-laws started harassing the second respondent on one or other pretext and suspecting her fidelity. It is alleged that A-1 harassed the second respondent physically and mentally for additional dowry. The second respondent went to the house of her in-laws at Ongole during the month of February, 2007 for leading marital life. A-1 continued the harassment and used to come in drunken condition and used to undress her and beat her till early hours of the following day. On their demand, the father of the second respondent gave additional dowry of Rs.3.00 lakhs on 20.04.2007. A-3 husband of A4 expressed his sympathy towards her and took her forcefully in his lap and tried to caress her, when the second respondent resisted and tried to run away, upon which A-3 told that entire family would support him. When she revealed the incident the entire family supported him and warned her that she has no option except to satisfy him and he tore her blouse. With great difficulty, the second respondent hit him with pestle and he sustained injuries. It is also alleged that the second respondent informed to A-1 and her father-in-law, they called A-3 and A-4 and all of them gagged her mouth and mercilessly beat her. Thereafter, the second respondent was brought by A-1 to Hyderabad on 28.02.2007 and left her at her parents house.”

While continuing in the same vein, the Bench then discloses in para 5 that, “It is also alleged that the mother-in-law of the second respondent was insisting her to do all house-hold work and find fault with her deliberately and used to abuse her in filthy language. During the month of June, 2011, A-4 along with his cousin brother came to her residence and threatened with dire consequences if additional dowry is not given. On 16.03.2012 midnight her husband contacted to the father of the second respondent and threatened him with dire consequences if he does not convince his daughter to join him. Basing on the complaint referred, a case in crime No.203 of 2012 was registered for the offences punishable under Sections 498-A, 354 IPC and Sections 3 and 4 of Dowry Prohibition Act and after completion of investigation, the charge sheet was filed against the A-1 and the petitioners/A-2 and A-4 for the offences punishable under Sections.498-A IPC and Sections 3 and 4 of Dowry Prohibition Act and under Sections 498-A and 354 IPC and Sections 3 and 4 of Dowry Prohibition Act against A-3 and the same was numbered as PRC.No.123 of 2013 on the file of X Metropolitan Magistrate, Miyapur. Aggrieved by the same, the present Criminal Petitions are filed.”

As we see, the Bench then points out in para 7 that, “Learned Senior counsel for the petitioners submits that the petitioners are relatives of husband of the second respondent and they were residing in different places and she made all the allegations against her husband only except saying that A-3 touched her hand in the year 2007 and that too when her brief stay of two months in her husband’s house and when she went to the house of A-3 to discuss the issue. Insofar as A-2 and A-4 are concerned, the learned Senior counsel for the petitioners submits there are no allegations against the petitioners/A-2 and A-4 except saying that they abused the second respondent in her brief stay of two months at her in-laws house that she is not cooking properly. Therefore, the continuation of proceedings against the petitioners/A-2 to A-4 without therebeing any material allegations satisfying the alleged offences and making the petitioners to undergo the rigor of trial, would amount to abuse of process of law and prayed to quash the proceedings.”

To be sure, the Bench then states in para 8 that, “Learned Senior Counsel relied on the following decisions:

1. Preeti Gupta v. State of Jharkhand (2010) 7 Supreme Court Cases 667

2. Geeta Mehrotra v.State of Uttar Pradesh (2012) 10 Supreme Court Cases 741

3. K.Subba Rao v. State of Telangana (2018) 14 Supreme Court Cases 452

4. Mirza Iqbal alias Golu v. State of Uttar Pradesh 2021 SCC Online SC 1251

5. Kahkashan Kausar @ Sonam v. State of Bihar 2022 SCC OnLine SC 162.”

As it turned out, the Bench then specifies in para 10 that, “A perusal of the allegations of the charge sheet would reveal that A-1 is the husband of the second respondent, A-2 is the mother of A-1. A-3 is the brother of A-1 and A-4 is the sister-in-law of A-1. The marriage of A-1 and the second respondent took place on 14.12.2006 at Gold Merchant Association Community Hall, Gandhi Bazaar, Ongole, Prakasham District. At the time of marriage, an amount of Rs.10.00 lakhs, 25 tolas of gold was demanded, but on negotiations dowry amount was reduced to Rs.5.00 lakhs and 25 tolas of gold. The father of the second respondent spent huge amount in the marriage. It is further alleged that A-1 and the second respondent went to Tirupathi and returned to the house of the second respondent and thereafter, the accused started suspecting infidelity of the second respondent and used to beat her with belt. It is also alleged that the second respondent went to the house of in-laws at Ongole during the month of February, 2007 and A-1 continued harassment. It is alleged that the second respondent informed the first petitioner and others, but they did not take any steps. Further they demanded additional dowry. The father of the second respondent paid Rs.3.00 lakhs on 20.04.2007.”

Furthermore, the Bench then maintains in para 11 that, “The main allegations against the A-3, who is the husband of A-4, is that he expressed sympathy towards her and took her forcibly in his lap and tried to caress her and the second respondent resisted and tried to run away and she informed the same to A-1 and her father- in-law and they called A-3 and A-4 and all of them gagged her mouth and mercilessly beat her and on 28.02.2007 A-1 left the second respondent at her parents house.”

Most forthrightly, the Bench then sought to clearly state in para 12 that, “The allegations of the charge sheet coupled with the statements of the second respondent, her father and other witnesses reveal that there is only allegation against the petitioner/A-3 that he expressed his sympathy towards the second respondent and caught hold her hand. She resisted the alleged incident occurred prior to 28.02.2007. If at all there is truth in the allegations of the second respondent, so far as A-3 is concerned, she being a software Engineer would not have kept quite without taking any recourse from 12.06.2007 on which date the second respondent was alleged to have molested by the petitioner/A-3. . The said allegation prima facie do not make out or satisfy the essential ingredients of the alleged offence under Section 354 IPC and appears to have made with an oblique motive.”

It cannot be just glossed over that the Bench then unequivocally states in para 13 that, “Coming to the allegations made against the petitioners/A-2 to A-4 infact, the learned Senior Counsel submitted that they are residents of Ongole, Prakasham District. Admittedly, in the complaint, it is alleged that the second respondent is not living with A-1 since 28.02.2007, on which date she was taken to her parents house. The only allegation made by the second respondent after she left to her parents house is that on 16.03.2012, A-1 called her and threatened her with dire consequences. It appears these allegations are prima facie appears to be made to implicate the petitioners probably to bring pressure on the family.”

While citing the relevant case law, the Bench then hastens to add in para 14 that, “It would be relevant at this stage to take note of opt observation of the Hon’ble Apex Court in G.V.Rao v.LHV Prasad (2000) 3 SCC 693 and at para No.12 held as under:

“12 There has been an outburst of matrimonial dispute in recent times. Marriage is a sacred ceremony, main purpose of which is to enable the young couple to settle down in life and live peacefully. But little matrimonial skirmishes suddenly erupt which often assume serious proportions resulting in heinous crimes in which elders of the family are also involved with the result that those who could have counselled and brought about rapprochement are rendered helpless on their being arrayed as accused in the criminal case. There are many reasons which need not be mentioned here for not encouraging matrimonial litigation so that the parties may ponder over their defaults and terminate the disputes amicably by mutual agreement instead of fighting it out in a court of law where it takes years and years to conclude and in that process the parties lose their “young” days in chasing their cases in different courts.””

Most commendably, the Bench then states upfront in para 15 that, “Coming to the facts of the present case, when the contents of charge sheet and the statements of the witnesses, F.I.R. are perused, it is apparent that all the main allegations are against A-1 for the alleged offences under Sections 498-A IPC and Sections 3 and 4 of Dowry Prohibition Act, whereas the family members i.e. A-2 and A-4 who is mother and sister in law of A-1 appears to have been implicated by way of general and omni bus allegations and there is no specific and distinct allegations have been made as to the role played by them in the alleged offences. Insofar as, A-1 is concerned, the veracity of the allegations made against him need not be examined by this Court, since he is not before this Court. However, as far as the petitioners are concerned, the allegations made against them being general and omnibus, do not warrant prosecution.”

While citing most relevant case laws, the Bench then notes in para 16 that, “In Preeti Gupta (supra 1), the Hon’ble Apex Court held as under:

32. “It is a matter of common experience that most of these complaints under section 498-A IPC are filed in the heat of the moment over trivial issues without proper deliberations. We come across a large number of such complaints which are not even bona fide and are filed with oblique motive. At the same time, rapid increase in the number of genuine cases of dowry harassment are also a matter of serious concern.

37. Before parting with this case, we would like to observe that a serious relook of the entire provision is warranted by the legislation. It is also a matter of common knowledge that exaggerated versions of the incident are reflected in a large number of complaints. The tendency of over implication is also reflected in a very large number of cases. The criminal trials lead to immense sufferings for all concerned. Even ultimate acquittal in the trial may also not be able to wipe out the deep scars of suffering of ignominy. Unfortunately a large number of these complaints have not only flooded the courts but also have led to enormous social unrest affecting peace, harmony and happiness of the society. It is high time that the legislature must take into consideration the pragmatic realities and make suitable changes in the existing law. It is imperative for the legislature to take into consideration the informed public opinion and the pragmatic realities in consideration and make necessary changes in the relevant provisions of law.”

In Mizra Iqbal Alias Golu (supra 4), the Apex Court held as under:

“ However, we deem it appropriate to add by way of caution that we may not be misunderstood so as to infer that even if there are allegations of overt act indicating the complicity of the members of the family named in the FIR in a given case, cognizance would be unjustified but what we wish to emphasise by highlighting is that, if the FIR as it stands does not disclose specific allegation against the accused more so against the co-accused specially in a matter arising out of matrimonial bickering, it would be clear abuse of the legal and judicial process to mechanically send the named accused in the FIR to undergo the trial unless of course the FIR discloses specific allegations which would persuade the court to take cognizance of the offence alleged against the relatives of the main accused who are prima facie not found to have indulged in physical and mental torture of the complainant wife.””

Most significantly, the Bench then ostensibly lays bare in para 17 stating that, “It is manifest from the judgments of the Apex Court relied on by learned senior counsel as cited above, the false implication of the relatives of the husband in matrimonial disputes basing on general and omnibus allegations, if left unchecked would result in misuse of the process of law. In the instant case, the relatives of A-1 i.e. A-2 to A-4 have been roped in on the basis of omnibus allegations and without any specific instances of their involvement in the alleged offences deserves to be quashed to avoid the rigor of undergoing trial.”

Frankly enough, the Bench then holds in para 18 that, “For the aforesaid reasons, I am of the view that from the averments of the complaint, F.I.R., charge sheet and the statements of the witnesses apparently there is no sufficient to material prima facie to proceed against the petitioners /A-2 to A-4 for the alleged offences.”

Quite candidly, the Bench then also maintained in para 19 that, “Therefore, this Court is of the view that continuation of the proceedings against the petitioners herein would certainly amount to abuse of process of law. It is, therefore, considered as fit cases to invoke the inherent powers of this Court under Section 482 Cr.P.C., and quash further proceedings against the petitioners/A-2 to A-4.”

Finally, the Bench then aptly concludes by holding in para 20 that, “In the result, both the criminal petitions are allowed and the proceedings against the petitioners/A-2 to A-4 respectively in P.R.C.No.123 of 2013 on the file of IX Metropolitan Magistrate, Kukatpally at Miyapur, are hereby quashed. Miscellaneous petitions, if any, pending shall stand closed.”

In essence, what the Telangana High Court has ruled in this leading case is a clear pointer of what is most notably pointed out also that the false implication of the relatives of the husband in matrimonial disputes based on general and omnibus allegations, if left unchecked would result in gross misuse of the process of law. It is really high time and Centre must also now step forward and insert adequate safeguards in penal laws to ensure that the laws meant for ensuring the safety of women does not become a potent instrument to harass, humiliate and harangue the husband and his relatives as we see so very often which the Telangana High Court has so very forthrightly, firmly and finally pointed out in this case also! There can certainly be no more dilly dallying anymore on this now!

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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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