SC Sentences Navjot Singh Sidhu To One Year’s Rigorous Imprisonment In 1988 Road Rage Case - Business Guardian
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SC Sentences Navjot Singh Sidhu To One Year’s Rigorous Imprisonment In 1988 Road Rage Case

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While sending a very loud, strong and clear message to one and all that no one can be above the law, the Apex Court most recently on May 19, 2022 in a latest, learned and landmark judgment titled Jaswinder Singh (Dead) Through Legal Representatives vs Navjot Singh Sidhu and others in Review Petition (Crl.) No.477 of 2018 in CRL.A. No.60 of 2007 with Review Petition (Crl.) No.478/2018 in CRL.A. No.58/2007 Review Petition (Crl.) No.479/2018 in CRL.A. No.59/2007 (Arising out of impugned final judgment and order dated 15-05-2018 in Crl.A. No. No. 60/2007 passed by the Supreme Court of India) and cited in 2022 LiveLaw (SC) 498 has enhanced the sentence of senior Congress leader and former Indian cricket team member Navjot Singh Sidhu to one year rigorous imprisonment in a 1988 spontaneous road rage accident in which a 65-year-old person named Gurnam Singh had died. The untoward incident actually occurred on December 27, 1988 at a traffic junction in Patiala when a dispute pertaining to the right way of vehicles led to altercation with Navjot Sidhu pulling out the deceased from his vehicle and assaulting him with fist blows in a fit of rage. Even Sidhu himself could not have believed that the person whom he beat would die as everything happened suddenly without any preparation or past enmity. This alone explains why the Bench of Justice Sanjay Kishan Kaul and Justice AM Khanwilkar rejected the plea for fastening culpable homicide not amounting to murder charge under Section 304A of the IPC. Very rightly so!

We know that Sidhu was earlier let off with a fine of Rs 1000 and the court spared him a jail term. In 2018, the top court had convicted Sidhu for the offence of “voluntarily causing hurt” but had acquitted him in connection with the culpable homicide charges as Sidhu had no intention to murder. But now the maximum possible sentence under Section 323 of the IPC has been awarded to the former Punjab Congress President and former Indian cricketer Navjot Singh Sidhu as the victim’s family filed a review petition before the top court while pressing for enhancement of punishment. Sidhu will now be taken into custody by Punjab police to serve out the sentence.

The key points of this judgment are as follows:

1. When a 25 year old man, who was an international cricketer, assaults a man more than twice his age and inflicts, even with his bare hands, a severe blow on his (victim’s) head, the unintended consequence of harm would still be properly attributable to him as it was reasonably foreseeable – The indulgence was not required to be shown at the stage of sentence by only imposing a sentence of fine and letting him go without any imposition of sentence.

2. The hand can also be a weapon by itself where say a boxer, a wrestler or a cricketer or an extremely physically fit person inflicts the same. This may be understood where a blow may be given either by a physically fit person or to a more aged person. (Para 24)

3. Even though any harm might not be directly intended, some aggravated culpability must be attached if the person suffers a grievous hurt or dies as a result thereof. (Para 32)

4. While a disproportionately severe sentence ought not to be passed, simultaneously it also does not clothe the law courts to award a sentence which would be manifestly inadequate, having due regard to the nature of the offence, since an inadequate sentence would fail to produce a deterrent effect on the society at large – A long period had lapsed by the time the appeal was decided cannot be a ground to award the punishment which was disproportionate and inadequate. (Para 25 -32)

BACKGROUND

To start with, this notable judgment authored by Justice Sanjay Kishan Kaul for a Bench of Apex Court comprising of himself and Justice AM Khanwilkar sets the ball rolling by first and foremost putting forth in para 1 that, “The original controversy emanates from an FIR dated 27.12.1988 under Section 304/34 of the Indian Penal Code, 1860 (hereinafter referred to as the ‘IPC’) registered by the Sub-Inspector of P.S. Kotwali of Patiala District, Punjab on the basis of the information given by one Shri Jaswinder Singh (Informant) about an occurrence around 12:30 p.m. at the traffic light of Battian Wala Chowk. The Informant and one Avtar Singh (PW-3 and PW-4 respectively) were travelling with the deceased, Gurnam Singh in a Maruti Car driven by the deceased. Apparently, a dispute arose on the right of way between the accused and the deceased and respondent No.1 (the first accused) came out of his vehicle, pulled out the deceased from his vehicle and inflicted fist blows. As per the Informant his endeavour to intervene resulted even in the second accused (respondent No.2) (not mentioned in the FIR) getting out of the vehicle and giving fist blows to the Informant. It was alleged that the car keys of the deceased’s car were removed by the accused and they fled from the scene of occurrence. PW-3 and PW-4 took the deceased in a rickshaw to the hospital where the doctors announced that Gurnam Singh was dead.”

To put things in perspective, the Bench then envisages in para 2 that, “A post-mortem was conducted by Dr. Jatinder Kumar Sadana (PW-2), who recorded that the injuries were ante-mortem in nature and caused by a blunt weapon though he reserved his opinion on the cause of death as it could apparently be given only after receiving the report of the pathologist. The Pathologist’s report dated 09.01.1989 noticed a large number of abnormalities in the condition of the deceased’s heart and did not notice any pathology insofar as the brain is concerned. Even after the Pathologist’s report, PW-2 did not give a definite opinion regarding the cause of death of Gurnam Singh. Thereafter, PW-2 wrote to the Civil Surgeon, Patiala on 11.01.1989 requesting that the case be referred to Forensic Expert, Government Medical College, Patiala, as a result of which a Medical Board was constituted consisting of six members. Two of these members were examined as PW-1 and PW-2 but a very cryptic opinion was given by PW-1 with disinclination to give any further clarification when sought for by the prosecution.”

As it turned out, the Bench then enunciates in para 3 that, “A chargesheet dated 06.03.1989 was filed on 14.07.1989 under Section 304 of the IPC against respondent No.2, exonerating respondent No.1. During the course of trial, the Sessions Court exercised its powers under Section 319 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the ‘Cr.P.C.’) and after recording the statement of the Informant summoned respondent No.1 to stand trial. The Informant also filed a private complaint against both the accused for commission of offences under Sections 302/324/323 read with Section 34 of the IPC. Both the cases were consolidated and on 20.08.1994 charges under Section 304 Part I were framed against both the accused arising from the FIR. While in the complaint, charges were framed under Section 302 of the IPC against respondent No.1 and under Section 302/34 of the IPC against respondent No.2. Charges under Section 323/34 of the IPC were framed against both the accused for causing hurt to the Informant.”

As we see, the Bench then states in para 4 that, “The trial court post trial acquitted both the accused vide judgment dated 22.09.1999. In terms of the judgment of the trial court, the death was not caused by subdural haemorrhage and the deceased suffered sudden cardiac arrest under stress because of which he fell and received two abrasions leading to subdural haemorrhage. The death was caused due to violence but it was not certain as to when precisely Gurnam Singh had died.”

Furthermore, the Bench then mentions in para 5 that, “The State and the complainant both moved the High Court vide separate appeals. The High Court in terms of the judgment dated 01.12.2006 opined that the cases of the two accused were to be considered separately. The High Court convicted respondent No.1 under Section 304 Part II of the IPC based on the testimony of the doctors, PW-1 and PW-2. As per their testimony, the cause of death was cardiac failure and all that they had stated was that the cardiac condition of the deceased was very weak. On the opening of the skull, subdural haemorrhage was present over the left parietal region and brain. It was the haemorrhage which caused the death of the deceased and not the cardiac arrest. Insofar as respondent No.2 is concerned, he was held guilty under Section 304 Part II read with Section 34 of the IPC as well as Section 323 of the IPC.”

Simply put, the Bench then states in para 6 that, “Three criminal appeals were filed before this Court by the two accused and the Informant.”

To be sure, the Bench then postulates in para 7 that, “The High Court judgment was analyzed by this Court, wherein it was opined that the testimony of the witnesses was trustworthy. Merely because there was a relationship between the Informant, Avatar Singh and the deceased, and more witnesses were not examined, could not have led to a conclusion that the case had not been proved beyond reasonable doubt.”

Adding more to it, the Bench then mentions in para 8 that, “The post-mortem report was examined closely which indicated only two external injuries – one on the temporal region and another on the left knee of the deceased, and both were abrasions. The doctors had opined that the second injury could be the result of the fall and, thus, it is most unlikely that a person would simultaneously aim at the head and also the knees of the victim while giving fist blows. Respondent No.1 possibly delivered more than one fist blows while only one of them landed on the head of the deceased and others missed the target. This Court did not agree with the observations of the High Court that the death was caused by subdural haemorrhage and not cardiac arrest. There was stated to be uncertainty regarding the cause of death of Gurnam Singh and no weapon had been used, nor was there any past enmity between the parties, and what happened was the result of an instant brawl.”

Still adding more, the Bench then notes in para 9 that, “The case against respondent No.2 was held not to have been proved and mere presence of respondent No.2 with respondent No.1 was not sufficient to result in a conviction based on common intention. Even for the offence under Section 323 of the IPC, respondent No.2 was held not guilty.”

In hindsight, the Bench then recalls in para 10 that, “The Court recognized that there were lapses in investigation but then people are not convicted on the basis of doubts. Respondent No.1 was held not guilty of causing the death of Gurnam Singh, and the only conclusion which was found acceptable was of the respondent No.1 causing voluntary hurt to Gurnam Singh which is punishable under Section 323 of the IPC. It was noticed that respondent No.1 was an international cricketer and a celebrity at the time of the incident and at times there was an endeavour to turn a blind eye to the violations of law committed by celebrities. On the question of sentence, a fine of Rs.1,000/- alone was imposed vide order dated 06.12.2006, since the incident was 30 years old at the time, there was no enmity between the parties and no weapon was used.”

It deserves mentioning that the Bench after hearing both sides then observes in para 24 that, “We have given our thought to the matter. In our view, some material aspects which were required to be taken note of appear to have been somehow missed out at the stage of sentencing, such as the physical fitness of respondent No.1 as he was an international cricketer, who was tall and well built and aware of the force of a blow that even his hand would carry. The blow was not inflicted on a person identically physically placed but a 65 year old person, more than double his age. Respondent No.1 cannot say that he did not know the effect of the blow or plead ignorance on this aspect. It is not as if someone has to remind him of the extent of the injury which could be caused by a blow inflicted by him. In the given circumstances, tempers may have been lost but then the consequences of the loss of temper must be borne. In fact, this Court to some extent had been indulgent in ultimately holding respondent No.1 guilty of an offence of simple hurt under Section 323 of the IPC. The question is whether even on sentence, mere passage of time can result in a fine of Rs.1,000/- being an adequate sentence where a person has lost his life by reason of the severity of blow inflicted by respondent No.1 with his hands. The hand can also be a weapon by itself where say a boxer, a wrestler or a cricketer or an extremely physically fit person inflicts the same. This may be understood where a blow may be given either by a physically fit person or to a more aged person. Insofar as the injury caused is concerned, this Court has accepted the plea of a single blow by hand being given on the head of the deceased. In our view, it is this significance which is an error apparent on the face of the record needing some remedial action.”

While mentioning relevant US Apex Court judgments, the Bench then states in para 34 that, “The US Supreme Court has also moved in the same direction in Payne v. Tennessee 501 US 808 (1991) while examining the aspect of the “victim impact statement” in a case of capital offence at the time of sentencing. The court considered the aspect from the dissenting judgment in the case of Booth v. Maryland 482 U.S. 496 (1987) which emphasized on “reminding the sentencer that just as the murderer should be considered as an individual, so too the victim is an individual whose death represents a unique loss to society and in particular to his family.” The words of Justice Benjamin Cardozo in Snyder v. Massachusetts 291 US 97 (1934) bring out that “justice, though due to the accused, is due to the accuser also. The concept of fairness must not be strained till it is narrowed to a filament. We are to keep the balance true.””

To put it differently, the Bench then observes quite forthrightly in para 35 that, “Thus, a disproportionately light punishment humiliates and frustrates a victim of crime when the offender goes unpunished or is let off with a relatively minor punishment as the system pays no attention to the injured’s feelings. Indifference to the rights of the victim of crime is fast eroding the faith of the society in general and the victim of crime in particular in the criminal justice system. (Shri P. Babulu Reddy Foundation Lecture, Victims of Crime – The Unseen Side by Dr. Justice A.S. Anand, Judge, Supreme Court of India (as he then was) (1998) 1 SCC (Jour) 3. Delivered at Hyderabad on 28th September 1997.).”

For clarity, the Bench then stipulates in para 36 that, “We noticed the aforesaid judgments to repel the contention of learned senior counsel for the respondent that the victim should have no say in the matter of enhancement of sentence.”

It is worth noting that the Bench then clearly states in para 38 that, “We are not setting forth much about how the investigation proceeded initially, how the court had to intervene to see that the relevant people are charged, the manner of leading of evidence, the hesitancy of doctors all of which weighed in this Court opining that a case beyond reasonable doubt could be only of one under Section 323 of the IPC. We do believe that the indulgence was not required to be shown at the stage of sentence by only imposing a sentence of fine and letting the respondent go without any imposition of sentence.”

Quite significantly, the Bench then holds in para 39 that, “The present case is not one where two views are possible such that review should not be exercised. It is a case where some germane facts for sentencing appear to have been lost sight of while imposing only a fine on respondent No.1 and, therefore, no question of choosing between two possible views arises.”

CONCLUSION

Finally and far most significantly, the Bench then concludes by directing in para 40 that, “The result of the aforesaid is that the review applications/petitions are allowed to the aforesaid extent and in addition to the fine imposed we consider it appropriate to impose a sentence of imprisonment for a period of one year rigorous imprisonment to be undergone by respondent No.1. The parties are left to bear their own costs.”

In essence, the Apex Court has made it indubitably clear that there is merit in the review petition of victim’s family. We thus see that the punishment for Sidhu is enhanced from just Rs 1000 fine to one year rigorous imprisonment in jail. It is really a fine gesture on the part of Navjot Singh Sidhu to humbly accept the Supreme Court verdict without any ifs and buts and he tweeted saying clearly that, “Will submit to the majesty of law…” No denying it!

“The High Court judgment was analyzed by this Court, wherein it was opined that the testimony of the witnesses was trustworthy. Merely because there was a relationship between the Informant, Avatar Singh and the deceased, and more witnesses were not examined, could not have led to a conclusion that the case had not been proved beyond reasonable doubt.”

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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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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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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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