Woman’s character can’t be decided by certificate given by people having an ostrich mindset: Chhattisgarh High Court - Business Guardian
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Woman’s character can’t be decided by certificate given by people having an ostrich mindset: Chhattisgarh High Court

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In a significant observation, the Chhattisgarh High Court has in a refreshing, remarkable, robust, rational and recent judgment titled Deepa Nayak v. Pitamber Nai in FAM No. 35 of 2016 delivered on March 28, 2022 has ruled that if a wife doesn’t squeeze into the mold as per the desire of husband, it would not be a decisive factor to lose the custody of the child. We thus see that in this leading case, the Court set aside an order of the Family Court, Mahasamund wherein the custody of a 14-year-old child was granted in favour of the respondent/father and ordered that the child’s custody be handed over to his mother (appellant). The Chhattisgarh High Court thus held that, “Wife not molding herself as per husband’s desire not a decisive factor to deprive mother of child’s custody”. Most commendably, the Bench of Justice Goutam Bhaduri and Justice Sanjay S Agrawal further remarked that the character certificate given by a few of the society members, who might have an ostrich mindset, can’t be the basis to decide the character of a woman.

To start with, this brief, brilliant, bold and balanced judgment authored by Justice Goutam Bhaduri for a Bench of Apex Court comprising of himself and Justice Sanjay S Agarwal sets the ball rolling by first and foremost putting forth in para 1 that, “The instant appeal is preferred by the mother against the impugned judgment dated 28.01.2016 passed in Civil M.J.C. No.09/2014 by the learned Family Court, Mahasamund whereby the custody of the child is given to the respondent/father.”

While dwelling on the facts of the case, the Bench then envisages in para 2 that, “The brief facts of the case are that an application was filed under Section 25 of the Guardians and Wards Act, 1890 by the respondent/father seeking custody of the child namely Dheeraj Kumar, who was born on 12.12.2007. The background of the facts are that the appellant and respondent were married on 05.04.2007. They could not go along eventually a divorce by mutual consent was passed on 04.03.2013 and during such divorce proceedings it was agreed that the child would be in the custody of the mother/appellant herein. Subsequently, the instant application for custody of the child was filed after the child crossed 5 years on the ground that the mother is in company of different male and she used to travel along with other male member and the attire of the lady was not befitting to which would reflect that she had lost her chastity. So if the child is kept in her custody, there would be an ill effect to the mind of child as such the child be given in custody of father. It was also alleged that she was in illicit relation with one Vivek Sharma, therefore, for the welfare of the child, the application for custody was filed.”

Simply put, the Bench then states in para 3 that, “The respondent Pitamber Nai examined himself as AW-1, one Ravi Prakash Pradhan was examined as AW-2, Smt. Saraswati Sharma was examined as AW-3 and Deepak Kumar Sahu was examined as AW-4. While on behalf of appellant/mother, the appellant was examined as NAW-1, one Gaurhari Kewat was examined as NAW-2 and Kamal Kishore Nayak was examined as NAW-3. Learned Family Court, Mahasamud after evaluating the evidence directed the custody of the child to be handed over to the father. Therefore, this appeal.”

To put things in perspective, the Bench then after hearing learned counsel for the parties and perusing the documents then discloses in para 7 that, “Perusal of the record would show that an agreement named and styled as Talaqnama (EX. P/2) was executed in between the parties on 05.07.2009, wherein the husband and wife agreed to stay separate with an agreement that after the age of 5 years the child who was born out of the wedlock would be in the company of the father. The document filed as Ex. P/5 is a decree of divorce under Section 13B of the Hindu Marriage Act, 1955 (hereinafter referred to as ‘the Act, 1955’) which was passed on 04.03.2013 that is much after the document of the agreement dated 05.07.2009. By such decree of divorce, the marriage which was solemnized between appellant and respondent on 05.04.2007 was dissolved. The order of divorce reflects that the parties admitted the fact that the child namely Dheeraj Kumar, who was aged about 5 years would continue to stay with the appellant/mother namely Deepa Nayak and the father will have the visiting right. The parties though agreed by way of an initial document captioned as Talaqnama that the child would be in the custody of the mother up till 5 years and thereafter with the father and subsequently at the time of divorce under Section 13B of the Act, 1955 it was agreed by the parties that the child would be in the company of the mother. In matter of custody of child such type of inter se agreement between the parties will not decide the fate of the child and his custody. The child cannot be treated like a commodity and by product of an agreement which can be executed shelving to look into the fact of welfare of the child. The predominant factor which would govern in respect of custody of the child is the welfare.”

While citing the relevant case law, the Bench then stipulates in para 8 that, “The Supreme Court in Mousami Moitra Ganguli v. Jayanti Ganguli AIR 2008 7 SCC 673 at para 14 expressed the view that while deciding the issue as to which parent the care and control of a child should be committed, the first and paramount consideration is the welfare and interest of the child and not the rights of the parents under a statute.”

While citing yet more relevant case laws, the Bench then states in para 9 that, “The Supreme Court further in Tejaswini Gaud and others Vs. Shekhar Jagdish Prasad Tewari (2019) 7 SCC 42 held that the Court while deciding the custody cases of the child, it is not bound by the mere legal right of the parents or guardians. It held that though the provisions of the special statutes govern the rights of the parents or guardians, but the welfare of the minor is the supreme Consideration in cases concerning the custody of minor child. Therefore, the paramount consideration should be the interest and welfare of the child. The Supreme Court in the aforesaid judgment reiterated the view taken in Nil Ratan Kundu Vs. Abhijit Kundu reported in (2008) 9 SCC 413 and emphasized that paramount consideration should be the welfare of the child and due weight should be given to the child’s ordinary comfort, contentment, health, education, intellectual development and favourable surroundings.”

While underscoring the utility of human touch in deciding cases of minor custody, the Bench then postulates in para 10 that, “With respect to the oral and documentary evidence so created by the parties in custody matters, the Supreme Court in M.K. Hari Govindan Vs. A.R. Rajaram reported in 36 2003 OnLine Mad 48: AIR 2003 Mad 315 held that the custody cases of child cannot be decided on documents, oral evidence or precedents without reference to “human touch”. It held that human touch is the primary one for the welfare of the minor since the other materials may be created either by the parties themselves or on the advice of counsel to suit their convenience.”

While dwelling on the nitty gritty of the case, the Bench then divulges in para 12 that, “The father Pitamber Nai (AW-1) and the witness Ravi Prakash Pradhan (AW-2) had stated that the lady used to consume liquor along with others. She also used to consume Gutkha and used to smoke cigarette. The husband stated that he has seen the wife consuming liquor at some place named Sankra in company of one Vivek Sharma. He further stated that he has seen his wife consuming liquor in the house of Vivek Sharma and she used to move along with him, who is the electrical contractor. The witness further stated that the wife used to work along with Vivek Sharma and used to travel for her job along with him at different places. Likewise, the statement of Ravi Prakash Pradhan (AW-2), it would show that he has stated that the mother used to work under Vivek Sharma, who is an electrical contractor used to travel along with him. He further stated that she is addicted to cigarette, liquor and Gutka and she has lost her character and she used to move along with other male members of the society, which is against the moral. He further has stated that she do not follow the rituals and describe her as a female don. It is further stated that the husband Pitamber Nai has not married and he is the only son but because of the arrogance of the wife the entire family is deprived of the love & affection towards the child. This witness has further stated that the day when the child will come to know about the character of the mother, he would be demoralized and would become pervert. Likewise the statement of one Smt. Saraswati Sharma (AW-3), who is the wife of Vivek Sharma, she has deposed because of the fact that the appellant is being kept as wife, the relation in between her and Vivek Sharma has become estranged and as such certain litigations are pending against the husband.”

Delving deeper, the Bench then reveals in para 13 that, “The evidence of the aforesaid witnesses would show that the efforts have been made to show that the character of the wife is not good. The reason which is been assigned that she used to consume liquor and is also addicted to cigarette and Gutka, moves along with other male members of the society in the car. As against this witnesses of the mother Deepa Nayak (NAW-1) she stated that she is presently doing a job of Rs.15000/- under a contractor. She further stated as there is no other female employee works, therefore, in order to carry out the job in the field she has to travel to the field. She further stated that she used to travel different sites in the field on the motorcycle and also at times in the car with the contractor. She further stated that at that time other supervisors also travels with her. She further stated that wherever she goes to field she wears capri and T-shirt. She denied the suggestion that she is being looked after by the contractor with whom she works as against this she performs duty from morning to evening.”

Furthermore, the Bench then observes in para 14 that, “Further coming to the statement further the mother/appellant has referred that while she goes out for job the boy is being looked after by her mother, who is aged about 58 years. The document produced also would show that the boy is admitted to the School, wherein he is studying. As against this, the statement of AW-1 would show that in the cross-examination he admits that till date he has not sent any money order or any financial help to the child. It was admitted that once he had written a letter to purchase some books and clothes but it was not accepted. There is no evidence on record to show the gesture that at any point of time he wanted to extend support by way of financial help. The father further stated that he goes for a duty of 12 hours and if the child is given to him he would call his sister to look after the child. The statement of the father, therefore, except the oral future promise nothing can be inferred that actual help or support was ever extended. Whereas the statement of Kamal Kishore Nayak (NAW-3) he stated that the child is being looked after by the mother and the likewise statement of Gaurhari Kewat (NAW-2) also supported the fact that the appellant/mother is looking after the child very well. This witness also appears to be Secretary of the society of the appellant and the respondent and reiterated the fact that the child is being looked after by the mother very well.”

Most commendably, the Bench then holds in para 15 that, “There being total conflict between the witnesses on one side and those on other. Therefore, the evidences both pro and contra whether has a bearing upon the issue are to be examined. The evidence on behalf of father it appears that the witnesses have stated according to their own opinion and thought. If the lady is required to do a job that too in the field for her livelihood, naturally she would be required to move from one place to other and only because of the fact that she is required to rub her shoulder with public at large or male i.e. to accompany them in the car, there cannot be an inference that she has lost her chastity. Only bald oral statement is made that she is addicted to consume liquor and smoke etc. It is important to set a red line when the attack is made to assassinate character of lady. The statement of witnesses of plaintiff would show that they are largely influenced by attire of women as she wears jeans and T-shirt along with the fact that she is marching along with male members of society. We are afraid that if such ill conceived exercise is given a spot light, then to protect the right & freedom of women would be a long arduous battle. If the wife do not squeeze into the mold as per desire of husband, it would not be a decisive factor to lose the custody of the child by her.”

Most significantly and also most decisively, the Bench then minces no words to hold in para 16 that, “By attacking the character of wife to impress upon that it would have an adverse impact on the mind of the child, the degree of nature of evidence should have been much more & severe to hold that continuous a kind of behaviour of wife would be detrimental to the interest of child. The character certificate by few of the society members, who might have ostrich mind set, should not be allowed to decide the character of a woman and to draw an inference while deciding the custody of the child that because of the behaviour of mother it would have an adverse impact on the mind of the child. Therefore, considering the entire evidence on record we are of the view that the welfare of the child would hold the sway if the child is kept in the custody of the mother. Accordingly, the direction of the Court below to handover the custody of the child to the father is set aside.”

Moving on, the Bench then observes in para 17 that, “Now coming to the visitation rights of the father in respect of the child is ordered to be kept in custody of the mother there is no specific visitation right has been conferred. The Apex Court in Yashita Sahu Vs. State of Rajasthan (2020) 3 SCC 67 held that even after the custody was given to one parent, the other parent must have sufficient visitation rights to ensure that the child keeps in touch with the other parent and does not lose social, physical and psychological contact with any one of the two parents. It is only in extreme circumstances that one parent should be denied contact with the child. The evidence in this case does not show any extreme circumstances whereby one parent for all practical purposes can be denied to meet the child. The evidence has come on record that even though the mother and father are living separately and the children are staying with the mother, yet the father often uses to meet the children.”

Quite forthrightly, the Bench then pointed out in para 18 that, “The Supreme Court in Yashita Sahu (Supra) further observed that the concept of “visitation rights” is not fully developed in India. Most courts while granting custody to one spouse do not pass any orders granting visitation rights to the other spouse. It held that the child has a human right to have the love and affection of both the parents and Courts must pass orders ensuring that the children are not totally deprived of the love, affection and company of one of their parents.”

Most forthrightly, the Bench then conceded in para 19 that, “In addition to “visitation rights” the court observed that the“contract rights” is also important for the development of the child specially in cases were both the parents live in different places the concept of contact rights in the modern age would be contact by telephone, e-mail or in fact we feel the best system of contact, if available, between the parties should be video calling. It observed that with the increasing availability of internet, and the Courts dealing with the issue of custody of child must ensure the parent who is denied the custody of the children should be able to talk to his/her child as often as possible. It held that the communication will help in maintaining and improving the bond between the children and the parent who is denied the custody. If that bond is maintained, the children will have no difficult in moving from one home to another during vacation or holidays. The purpose was held that the court cannot provide one happy home with two parents to the child then let the child have the benefit of two happy homes with one parent each.”

Most remarkably, while citing a recent and relevant case law, the Bench then enunciated in para 20 that, “In a recent decision rendered in Ritika Sharan Vs . Sujoy Ghosh , 2020 SCC OnLine SC 878 the Supreme Court held that a balance has to be drawn so as to ensure that in a situation where the parents are in a conflict, the child has a sense of security. The interests of the child are best served by ensuring that both the parents have a presence in his/her upbringing. Therefore, following the principles laid down in Yashita Sahu Vs. State of Rajasthan (supra) and Ritika Sharan Vs. Sujoy Ghosh (supra), we hereby order to facilitate the grant of visitation and contact rights to the father. The following arrangements shall be made by both the appellant and respondent as father and mother :

(i) The respondent/father would be able to engage with the child on a suitable video conferencing platform for one hour every Saturday and Sunday and 5 – 10 minutes on other days.

(ii) Both the respondent/father and the appellant/mother in order to facilitate the video conferencing between them shall procure smart phones which would facilitate the inter-se video calling.

(iii) During long holidays/vacation covering more than 2 weeks the child will be allowed to be in the company of the father for a period of 7 days. The period shall be fixed by the father after due intimation to the mother and she will permit the child to go with the father for the aforesaid period and the mother, if so desires, may also accompany him.

(iv) Every month preferably on Saturday or Sunday the mother shall allow the child to visit his father or father may take the child in his company and leave him back in the evening of such day.

(v) During festivals the father may join the company of the child at the place of the mother and spend the festival days with the child along with the mother.”

Finally, the Bench then concludes by holding in para 21 that, “With the aforesaid observations/direction, the appeal is disposed of.”

In essence, the Chhattisgarh High Court has ruled most decisively in favour of woman in this notable case. The Bench comprising of Justice Goutam Bhaduri and Justice Sanjay S Agrawal has made it indubitably clear that the woman’s character can’t be decided by certificate given by people having an ostrich mindset. It also very rightly made it crystal clear that if a wife doesn’t squeeze into the mold as per the desire of husband, it would not be a decisive factor to lose the custody of the child.

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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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