Tuesday, 9 August, 2022
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Pratap B Mehta on protest, M Sabnavis on making bank deposits safe & what millenials want

The best of the day’s opinion, chosen and curated by ThePrint’s top editors.

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The test in protest

Pratap Bhanu Mehta | Academic

The Indian Express

The sedition charges against eminent citizens, now dropped, are a reminder of the “crisis of liberal institutionalism” in India, writes Mehta. Questioning the future of the “politics of resistance to civic oppression”, he says the law cannot be relied upon — it often disappoints and protects elites. The judiciary has been failing to address the threats to civic liberty.
Discussion cannot be relied upon — public discussion is under “severe threat”. The main channel of public debate, the media, now supplies propaganda. “Fragmentation of power” cannot be relied upon either, as fragmented powers like regional parties that were meant to check concentrated power have failed.

The power of money cannot be relied upon. “It is having to devote all its capital, political funding, philanthropic commitment, media ownership, and even its symbolic capital, to the BJP and RSS,” he writes.

The government’s “serial authoritarianism” has singled out targets one by one. This tires out protesters. Protests against sedition, lynching, Kashmir, NRC are mostly individual protests. As we prepare for new ways of social resistance in the name of civic freedom, “we should be prepared that things will have to get worse before they get better”, concludes Mehta.

Just blame it on millennials

Bhaskar Chakravorti | Dean of Global Business at The Fletcher School, Tufts University

The Indian Express

Bhaskar writes about Finance Minister Nirmala Sitharaman’s comments about millennial habits’ adverse impact on the economy. She lists out three points on how and why this may be happening.

Firstly, millennials marry late. Marriage and children translate into “greater engagement” with the economy — shopping, gold-buying etc. In fact, the World Gold Council claims Indian millennials are buying less gold than their predecessors.

Secondly, Indian millennials have increasingly digital lives. They are moving towards “shareable experiences” on social media, directing their disposable income to more service-oriented sectors like food, travel, entertainment rather than consumer goods from the manufacturing sector.

Thirdly, millennials don’t have very high disposable incomes to begin with. There are few jobs, and most out there are not high paying. Joblessness is at a “45-year high and millennials are paying the brunt of it”, writes Bhaskar. Sitharaman should “spare” millenials and ask why the economy isn’t able to deliver “jobs, skills and better pay that Modi promised”, concludes Bhaskar.

Affirmative action at the crossroads

Ashwini Deshpande | Professor of Economics, Ashoka University

The Hindu

Deshpande writes about how a Harvard undergraduate admissions case is similar to India’s reservation debate. The case involves claims by “Students for Fair Admissions (SFFA)” that Harvard discriminates against Asian-American applicants in undergraduate admissions as they are held to higher standards than students from other races.

Harvard says race is one of many factors used to ensure diversity. When the SFFA argued that African-American and Latino students with lower academic scores than Asian-Americans were admitted, the rebuttal was that factors like “quality of high school, socio-economic circumstances, resources and opportunities available to the applicant” are also factored in. Similarly, in India, lower cut-offs for reserved category students make people believe that reservation policies are “anti-merit”, not taking into account various other disadvantages.

Critics of affirmative action feel the “preferential policies are unfair and foster inequality”, but don’t have issues with legacy admissions in the US. In India, too, there are discretionary management quotas or donation-based admissions that are not based on merit but privilege. The Harvard case shows that “critics of affirmative action world over argue exactly the same way”, concludes Deshpande.

How safe is your bank deposit?

Madan Sabnavis | Chief Economist, CARE Ratings

Financial Express

Sabnavis writes that the DICGS (Deposit Insurance Credit Guarantee Corporation) website states that deposits are insured for an upper limit of only Rs 1 lakh. According to Sabnavis, cooperative banks and public sector banks provide the highest coverage, followed by private banks and foreign banks provide the least insurance coverage.
He adds that banks have been “progressively lowering their insurance cover”, it has come down from “58.8% to 29.2% in a period of around 12 years. Even PSBs have halved their cover”.

This is due to the fact that most deposits come from higher-income accounts and since the upper limit of insurance is Rs 1 lakh, “This has led to a fall in the overall cover of deposits under insurance.”

Sabnavis recommends four ways in which this situation can be improved — depositors should distribute their savings across banks, deposits of up to Rs 5 lakh should be insured, a clear policy formulated to evaluate a bank’s resilience “to adverse economic cycles”, and a “resuscitation package” for banks.

It’s high time we got a better trade deal for our farmers

Chitra Subramaniam | Journalist and author

Mint

Subramaniam writes that international trade rules on textile and cotton are extremely unfair, since they cannot be freely traded in the international market. “India produces cotton at $0.95 cents a kilo, among the cheapest in the world,” she writes, and highlights the “harsh reality” of the Multi-Fibre Agreement (MFA), wherein rich countries impose a quota on imports from developing countries “to protect their own mills”.

India assumed that agreeing to US’s other demands (such as patents) during trade talks would provide some leeway on cotton and textiles. But it did not. Under the WTO’s Agreement on Agriculture (AoA), countries can provide domestic farmers with general subsidies and US offers its farmers $19 billion in Aggregate Measurement of Support (AMS). Thus, Indian farmers are not able to compete since they don’t have access to the same type of subsidies.

She adds that cotton and khadi are considered “the poor cousins of patents and information technology in the fight for free trade”. There is a need for cotton and khadi initiatives to educate themselves about the distinction between “variables of cost and price”, writes Subramaniam.

Corporate tax cuts and growth

Shankar Acharya | Honorary professor at ICRIER and former chief economic adviser to the Government of India

Business Standard

Acharya highlights the possible consequences of the corporate tax cut that was introduced in September by Finance Minister Nirmala Sitharaman. First, he writes, the move will provide a fiscal stimulus in the short run. Since giving up on extant incentives and exemptions is a prerequisite to enjoy this benefit, the net revenue loss from tax reductions will be brought down to “0.4-0.5 per cent of GDP”.

Second, this move will entail higher government borrowing, which will lead to “higher medium- and long-term interest rates”, dampening investment. Third, according to Acharya, these cuts may have “potent incentive effects on corporate investments”. However, he warns that the extent of these investments will vary from company to company. Fourth, “the tax cuts impart a clear signal in favour of private sector investment and activity”.

Fifth, the boost to stock prices is expected to be positive on valuations and wealth is expected to “induce higher expenditure on consumption and investment”. His final point is on foriegn investment and the probable negative effects on investment in import-export industries.

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