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REMEMBERING GORKHA CONTRIBUTIONS TO THE INDEPENDENCE MOVEMENT

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Under the leadership of Hon’ble Prime Minister Sh. Narendra Modi ji as our nation commemorates ‘Azadi ka Amrit Mahotsav,’ we take a solemn moment to remember all those brave hearts who sacrificed their lives so that we could live in a free country. The struggle for Independence attracted active participation from all the communities across the nation, however the contributions of smaller communities, especially those from North East India have remained relatively unknown. All that is changing, thanks to the ‘Azadi ka Amrit Mahotsav’ commemoration as envisioned by Modi ji, more and more people are coming to know about the freedom fighters from smaller regions and communities too.

The sacrifices and contributions of the Indian Gorkha community towards our freedom struggle and nation building is immense, sadly majority of the people across our nation are unaware of the sacrifices made by our Gorkha ancestors. As a Member of Parliament from Darjeeling Lok Sabha constituency, which is the heart of Gorkha community in India, and being a Gorkha by ethnicity, here is my humble attempt at highlighting some of the icons from Indian Gorkha community whose contributions in the history of India’s Independence remains relatively unknown among the general population.

INA CAPT. RAM SINGH THAKURI – HIMACHAL PRADESH

Among the very many celebrated Gorkha Freedom Fighters, perhaps the one with the most iconic contribution, yet the least known, remains Capt. Ram Singh Thakuri of Himachal Pradesh.

Call it a coincidence or destiny, Capt. Thakuri was born on the 15th of August 1914 to a Gorkha family in Khaniara village, Dharamshala, HP. In 1924, he had joined the 2/1 Gorkha Rifles as a unit musician. He was a talented young man, who was proficient in many fields including football, athletics, and wrestling. In the Second World War, his Battalion was shipped overseas to Singapore. In 1942, Singapore fell and the Allied forces surrendered to the Japanese. This is when Capt Ram Singh Thakuri joined the Indian National Army (INA). Soon he became very popular due to his musical talents, so much so that Netaji himself took a note of his talents. Netaji an astute military strategist understood the power music could have on the morale of the soldiers asked him to raise a marching band for the INA.

Capt. Thakuri didn’t let Netaji down, as he produced some of the most well know songs from India’s freedom movements like Kadam Kadam Badhaye Ja, Sare Jahan se Accha, Inquilab Zindabad, Hind Sipahi, the Rani of Jhansi Regiment marching song “Hum Bharat ki Ladki Hai,” and others.

The Azad Hind Government had strongly felt that a National Anthem was required which would connect all Indians through a common thread of music. While some had favoured the great poet Bankim Chandra Chatterjee’s ‘Vande Mataram’ as the national anthem, some others felt it wasn’t inclusive enough. It was Capt. Lakshmi Sahgal who introduced Gurudev Rabindranath Tagore’s ‘Jana Gana Mana’ to Netaji, by having it performed at INA women’s wing meeting, which Netaji had attended. Following which, Netaji instructed Capt Ram Singh Thakuri to re-compose the music of Gurudev Rabindranath Tagore’s version of Jana Gana Mana in a martial tune to which INA soldiers could march to.

In one of his interviews, Capt. Thakuri fondly recalled Netaji instructing him, “the song should have such an indelible impact and force that the Cathay Building [in Singapore] should ‘break’ into two parts and the sky should become visible.”

While Capt Abid Ali and Mumtaz Hussain rewrote Gurudev’s “Jana Gana Mana” to “शुभ सुख चैन – Subha Skhuh Chain ki Barsha Barse”, Capt. Ram Singh Thakuri gave music to it.

Subha Skhuh Chain ki Barsha Barse was adopted by the Provisional Free Government of India (Arzi Hukumat-e-Azad Hind) led by Netaji as the Qaumi Tarana – National Anthem. “Subha Sukh Chain” was played as the national anthem of free India first time on 11 September 1942 at Hamburg, when on October 31, 1943, when the INA came to power, the orchestra led by Capt. Thakuri played the Qaumi Tarana, the Cathay Building did indeed reverberate thunderously.

The music of Capt. Thakuri’s ‘Qaumi Tarana’ became a base on which our current national anthem “Jana Gana Mana” is set. In 1944, Capt. Thakuri was decorated by Subhas Chandra Bose with a gold medal for his contribution. Capt. Thakuri also received a violin and a saxophone as personal gifts from Netaji.

Capt. Thakuri was especially invited to play the ‘Quami Tarana’ when Pt. Jawahar Lal Nehru unfurled the Tiranga from Lal Quila on the 15th of August, 1947, he had used the violin presented to him by Netaji, who had told him, “you will play this violin when India gets her Independence”.

Sadly, after Independence, the brave INA Freedom Fighters were neglected by the then governments. Capt. Thakuri was appointed as a DSP with the Provincial Arms Constabulary (PAC) band of Uttar Pradesh Police, and he continued to serve our nation through his music till his last days.

PUSHPA KUMAR GHISING – DARJEELING

The Naval Uprising of 1946 is among the lesser-known moments of the Indian Freedom Movement, but perhaps it is the most significant. This is when the Indian Navy soldiers staged a revolt against the British in Karachi and Bombay. Inspired by the Indian National Army over 20000 mutineers joined the Freedom Fighters from Karachi to Calcutta, taking

over the 78 ships afloat and onshore establishment. This had inspired other servicemen in the army, air force and even the civilians to join the protests.

[Pushpa Kumar Ghising during his Navy days]

During the rebellion, navy personnel Puspa Kumar Ghising from Darjeeling fought with at least three British soldiers and managed to take control of the Bombay naval ammunition dump alone. The weapons from the ammunition dump were used by the rebelling Indian sailors to hold back the British for 5 days. However, on the fifth day, the leaders from the Indian National Congress had intervened and coaxed the sailors to lay down their arms. Ghising and his friends were arrested and taken to the Mulundi Jail where he was court-martialled but acquitted during the trail.

He resigned from the Navy on September 8, 1946, and plunged into the independence movement.

Even though the Naval Uprising has not been given due importance in the history books, unlike the other important incidents in the Freedom Movement, however, many contemporary historians attribute Naval Uprising as the pivotal movement that hastened the British decision to quit India.

In recognition of Ghisingh’s role in the Independence movement, the government

felicitated him with the Tamra Patra on August 15, 1989.

HELEN LEPCHA – SIKKIM AND KURSEONG

Helen Lepcha was born in 1902 in South Sikkim and is perhaps the only female freedom fighter from Sikkim. The family migrated to Kurseong in search of better education and livelihood prospects. During the floods of 1920 in Bihar, Helen Lepcha worked as a volunteer, providing tireless service to the victims, this brought her to the attention of Mahatma Gandhi, who later named her as Sabitri Devi in honour of her service to the people. Helen Lepcha worked with the coal workers from the coalfields in erstwhile Bihar and among the workers in United Provinces (Uttar Pradesh), strengthening the Freedom Movement and participated in the non-cooperation movement in 1921. She was arrested for “inciting the people against the government” and sent to jail for three months and a further house arrest later that year.

[Helen Lepcha – hero who helped Netaji]

When Netaji was kept under house arrest in Giddhey Pahar in Kurseong from 1939-40, Helen Lepcha played a vital role in smuggling in and out coded messages, ultimately laying the foundation for Netaji’s escape later right under the nose of the British authorities from Calcutta to Germany.

In appreciation of the immense contributions during the freedom movement, the Government of India honoured her with a Tamra Patra the citation.

MAJOR DURGA MALLA – UTTARAKHAND

Born on 1st of July in 1913 at the Doiwala village in Dehradun district of Uttarakhand, Durga Malla joined the Gorkha Rifles in 1931 at the age of 18. In 1942, at the height of the 2nd World War, a group of Indian soldiers led by Durga Malla decided to breakaway and form the Indian National Army under Netaji Subash Chandra Bose. Durga Malla was one of the key figures responsible for the formation of the INA, as he was largely responsible for encouraging fellow Gorkha soldiers to quit the British and join the INA. Seeing his dedication towards the Freedom of India and his military talents, he was promoted to the rank of Major by Netaji, and posted in the intelligence branch of INA, where he performed exemplarily often taking risky missions that helped INA march forward.

[Major Durga Malla – the INA Hero]

It was during one such intelligence gathering missions that he was arrested on the 27th of March, 1944 near Urkhul in Manipur. He along with fellow INA prisoners were kept in a prison at the Red Fort as a prisoner of War. There, the British tried to persuade him to renounce INA and offered him that his life would be saved if he did so. But he flat out refused to bow before the British. When all tricks and coercions failed, the British brought his wife Smt. Sharda Devi to get him to denounce INA, but instead he told his wife, “Sharda, I am sacrificing my life for the freedom of my motherland. You need not be worried and distressed. Crores of Hindustanis will be with you after my death. The Sacrifice I am offering, shall not go in vain. India shall be free. I am confident, this is only a matter of time.”

On 25th August 1944, he was sent to the gallows.

Today, his statue adorns the premise of our Parliament, marking the contribution of Gorkha community towards our Independence.

SUBEDAR NIRANJAN SINGH CHHETRI – MANIPUR

Among the illustrious Gorkha community that has produced so many heroes for our nation, the honour of being the 1st Gorkhali to have martyred for our motherland goes to Subedar Niranjan Singh Chhetri ji, from Manipur.

When the great Manipuri hero Jubraj Tikendrajit Singh decided to resist the British incursions into Manipur, 39-year-old Niranjan Chhetri of Tikuamoh, who was an ex-army sipahi of the 34th native Infantry, joined the native force of Manipur led by Bir Tikendrajit and Thangal General. His past experience as a soldier and bravery was evident, and he was appointed as Subedar by Jubraj Tikendrajit himself.

[Subedar Niranjan Singh Chhetri – the 1st Gorkha Freedom Martyr]

Following the war, he was tried by the Chief Political Officer, Manipur Field Force and was hanged to death by the British on June 8th, 1891. His last words were, “My birthplace is my Motherland, I am ready to die for this land, and I am ready to kill for this land, but I am not ready to accept surrender and subjugation of my own land”.

For decades, his sacrifice had been relegated to the pages of history. However, under

Hon’ble Chief Minister N Biren Singh ji the history and legacy of this legendary Gorkha

Freedom Fighter is finally being brough to light. On March 7th, 2021, CM N Biren Singh ji unveiled the statue of Saheed Subedar Nirajan Singh Chhetri, he acknowledged the role played by Subedar Niranjan by writing, “Immensely glad to unveil the statue of Saheed Subedar Niranjan Singh Chhetri, one of the heroes of Ango-Manipur War, 1891. His bravery, patriotism & sacrificial spirit for the motherland were unparalleled. He was hanged to death by the British on June 8,1891 for his role in the war.”

Chhetri – the 1st Gorkha Freedom Martyr]

DALBIR SINGH LOHAR – ASSAM

Dalbir Singh Lohar from Assam joined the freedom movement in 1921 during Gandhi ji’s visit to Dibrugarh. He was a labour leader and one of the most prominent Freedom Fighters from Assam, who led the Civil Disobedience Movement in Dibrugarh from the front. He was imprisoned between 1930-31 for his participation in the Civil Disobedience Movement, along with other Gorkha freedom fighters from Assam like Bhakta Bahadur Pradhan, Anantalal Sharma.

In 1939, Assam saw the historic strike at the Asia’s oldest refinery and the birthplace of oil industry in India in Digboi, Assam. Dalbir Singh Lohar was one of the key leaders of the strike called by the non-unionised Digboi Oil Refinery workers. Citing tensions with Germany, the British crushed the Digboi strike with an iron hand sending down eight platoons of Asssam Rifles to crush it. All the prominent leaders like Dalbir Singh Lohar were issued Quit Digboi, Quit Lakhimpur, and finally Quit Assam within 72-hours’ notice by the British.

[Dalbir Singh Lohar – the people’s leader from Dibrigarh]

He was again arrested during the Quit India Movement called by Gandhi ji, and all the Gorkha freedom fighters like Bhakta Bahadur Pradhan, Anantalal Sharma and others and kept in separate jails. However, they soon became the symbols of working-class people’s resistance against the British government.

After Independence, Dalbir Singh Lohar went onto become the first MLA of Gorkha ethnicity to be elected from the Digboi Assembly, by winning the 1951 election with a landslide margin. He continued to serve the working-class people all through his life.

These are only a few, whose contributions I have highlighted today, there are hundreds of others who have played a significant role towards ensuring our Independence, but due to the paucity of space, accommodating them all is not possible.

As can be seen, the Gorkhas no matter which state they were born in, have played a significant role in our Freedom Struggles, and I am hopeful that as we celebrate the “Azadi ka Amrit Mahotsav” more people across the nation will come to know about heroes like them.

Jai Hind

*Raju Bista is the Member of Parliament from Darjeeling and National Spokesperson for BJP

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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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