Corporate tax cut is nothing but a subsidy being given to Indian industrialists. It might marginally raise the fiscal deficit but this does not matter to mainstream economists who feel it will help big corporate houses. There is no indication of the recent tax cut benefiting the common man in any way.
Courtesy: News Click
The survey comes within a month of the “partnership” between Trump and Fox News, of the type one sees between Modi and Republic TV in India, falling apart, with TV channel anchor Neil Cavuto declaring: “First of all, Mr President, we don’t work for you. I don’t work for you. My job is to cover you, not fawn over you or rip you. Just report on you – call balls and strikes on you.”
Cavuto’s response was to Trump, who had tweeted: “Just watched Fox News heavily promoting the Democrats… The New Fox News is letting millions of GREAT people down! We have to start looking for a new News Outlet. Fox isn’t working for us anymore!”
Reporting on the survey, which took place on September 17-19, and released just ahead of the Modi event, a Fox News report said, “Many voters are frustrated with how the federal government is working and a growing number are nervous about the economy”. It added, “While 37 percent feel confident about the economy, 48 percent feel nervous. That’s up from a low of 43 percent nervous in March 2019.”
“The poll also finds the president’s economic policies receive mixed reviews: 43 percent think Trump’s policies are hurting the economy, while 39 percent say helping”, the report says, adding, “Views are more negative on tariffs, as voters think they hurt rather than help the economy by a 45-31 percent margin.”
The report continues, “Despite those concerns, the economy barely makes the top five when voters are asked, without prompting from a list, the most important issue facing the country. Immigration is the most frequently mentioned at 13 percent. No other issue hits double-digits. Next is gun violence (9 percent), health care (8 percent), opposing Trump (8 percent), and the economy (7 percent).”
According to the report, Trump’s “job ratings on every other issue tested are underwater: national security (45 approve-48 disapprove), immigration (42-54), international trade (38-53), foreign policy (36-54), guns (35-56), health care (34-56), and Afghanistan (31-49).”
The report further says, “About two-thirds (64 percent) think many people — if not nearly all people — in government are corrupt, and almost half (46 percent) say the Trump administration is more corrupt than previous ones.” On the other hand, “25 percent say this White House is less corrupt than others and 24 percent think it’s about the same.”
Taking an overview, the says, “37 percent say the Trump administration makes them feel more energized about politics, but for a 52 percent majority it makes them feel more exhausted.”
Insisting that voters see “several threats to the stability of the United States”, the report says, “Nearly 6-in-10 see corporate influence over government (59 percent), racism (58 percent), and foreign interference in US elections (56 percent) as major threats to the country.”
It adds, “Half perceive climate change (50 percent) as a major threat, and nearly half say the same about political polarization (48 percent), illegal immigration (47 percent), illegal voting (47 percent), and income inequality (45 percent). Fewer feel that way about socialism (39 percent major threat) and political correctness (36 percent).”
Trump’s downward rating comes amidst another top Modi ally internationally, Israeli Prime Minister Benjamin Netanyahu, suffering a major defeat what a commentator calls, “despite the Centre-left’s abysmal campaign flop”. Benjamin Netanyahu’s Likud party got 32 seats while Benny Gantz’s Blue and White received 33 seats in election results. According to the present scenario Netanyahu’s Likud-led bloc control 55 of parliament’s 120 seats. On the other hand, Gantz’s Blue and White-led left-bloc will have 56-57 seats.
Courtesy: Counter View
A Wide-Angled Perspective: A rural-led strategy will deliver slower overall growth but it will have a bigger impact on poverty under the present circumstances that keep the East Asian strategy out of India’s reach for now.
The Government is also showing signs of panic. Soon after witnessing the unease in the corporate sector after her budget speech in July 2019, the Finance Minister started holding consultations with business leaders to assuage their displeasure. The tax surcharge on income of over Rs 2 crore on capital gains of individual and institution investors (domestic and foreign) has been removed; only that on salaries and rent received by individuals remains. Several other measures have been announced: the merger of some public sector banks, recapitalisation, loan melas and moratorium on repayment of micro, small and medium enterprise (MSME) loans. All of these, except the last one, are supply side measures and are unlikely to have much of an impact anytime soon on stimulating demand.
Will the corrective measures recently taken by the government arrest the slowdown? If they do not, what would?
The measure that has received the most media attention is the corporate tax cut. In the third week of September came the announcement that the corporate tax rate would be cut from 30% to 22% for firms that do not seek any exemptions and from 35% to 25% for those who do. For manufacturing firms the tax rate would be as low as 15% for those making investments after October 2019. The news was welcomed by the corporate sector and boosted the Sensex index on the day of the announcement by as much as 4.5%.
How did such a state of affairs come to pass in this fast growing country? Will the corrective measures recently taken by the government arrest the slowdown? If they do not, what would? This essay is an attempt to answer these questions by examining the genesis of the present problems and then asks what should be the way forward. The goal is to put together a plausible and coherent story.
1. Development in a Dual Economy
Before we start putting together an explanation for the present state of affairs, we should understand the structure of the Indian economy.
Let us start by defining the terms ‘formal’ and ‘informal’. The ‘formal’ sector consists of all the registered firms (i.e., firms employing 10 or more employees) plus the government sector. The ‘informal’ sector consists of the rest. Typically, formal sector jobs are better jobs in which the workers get some basic benefits like provident fund, pensions, etc. Informal sector workers do not. Agriculture — the sector that employees the largest part of Indian labour force (over 40%) — is informal. Much of the rural economy is informal and so is a part of the urban economy. Eighty percent of India’s population makes their living in the informal sector and produces half of India’s GDP. Almost all the poor toil in the informal sector.
Consider India as a dual economy made up of two free trading regions – “Urban” and “Rural”. Urban is more developed and hence the average incomes are higher there. This is so because typically Urban growth is based on productivity growth in the formal sector while Rural growth is based much more on productivity growth in the informal sector (agriculture).
Typically, labour productivity and also the potential for productivity growth tends to be higher in the formal sectors like industry than in an informal sector like small-scale agriculture. Faster industrial growth would allow agricultural labour to move to higher productivity jobs in industry, and this can be a significant contributor to the overall growth propelled by productivity growth in each sector.
When there are fewer farmers left tilling the same amount of land, they too see an increase in their incomes. There can be a further increase in agricultural incomes through productivity gains in agriculture. When rural incomes rise, they also result in an increased demand for industrial goods, thus producing a virtuous cycle of growth. This is what happened in successful Asian countries. Not only did they grow fast, but they also managed to drastically reduce poverty in a generation.
All developed countries have gone through this process. Even large agricultural exporting countries like the United States (US), Canada and Australia have a miniscule percentage of their labour living off agriculture now.
The two oft repeated questions: ‘Why is the economy not creating enough good jobs?’ and ‘Why is there such rural distress?’ have a common answer. India has not succeeded in producing enough high productivity jobs to draw labour away from agriculture. Of course, there are further reasons for the present distress in rural areas, demonetisation being an important one. We will discuss these later.
If developed countries underwent this process and so did many other Asian countries, why is India taking so long to do this? To understand this let us first understand the strategy employed by the successful Asian countries.
2. A Successful Developmental Strategy
Except for the city-states like Hong Kong and Singapore, all the successful Asian countries were primarily agrarian before they industrialised. What they accomplished within 20 years was a total transformation of their economies.
Initially, the policymakers concentrated on increasing productivity in agriculture. This directly increased the incomes of the rural population, and, in addition, allowed a higher level of agricultural exports that would, in turn, enable imports of machinery and technology.
When a country industrialises in a transformative way, it needs to undertake some major structural reforms.
Late-developing countries have the advantage that they can rapidly improve their productivity by transferring technology from developed countries rather than having to invent it themselves. Some of the technology transfer is done through foreign investment and the rest through direct purchase or copying. However, in order to absorb the transferred technology they need a well-trained labour force and supporting infrastructure. Moreover, in order to sustain a high rate of capital formation, they needed to have a high rate of domestic savings. All the Asian success stories paid due diligence to these essential aspects of development.
When a country industrialises in a transformative way, it needs to undertake some major structural reforms. In order to facilitate a movement of land and labour to their more productive use, laws pertaining to land and labour may have to be reformed. In order to facilitate savings by households, the financial system needs to be modernised. The financial system should be easily accessible for people no matter where they live and also it should be able to inspire trust. Foreign investors should be assured of legal protection of their intellectual property rights. The success of these Asian countries was based on these basic preliminaries.
Another crucial aspect of their development strategy was to start by focusing on producing labour-intensive goods (textiles, footwear, toys, etc.) for the markets in developed countries. They could thus take advantage of their cheap labour and then produce these goods in quantities far in excess of what they could have sold domestically. Thus, domestic demand was never a constraint for them in expanding their industries producing goods in which they had a comparative advantage.
There is a certain logic behind this export-led strategy for fast growth. First, when firms can see that there is a potential market for their products they are inclined to make investments. Second, to be able to accumulate capital, a country needs to have a high savings rate; but high savings imply low domestic consumption and hence low domestic demand. However, when a country produces for foreign markets, the trade-off between savings and consumption becomes irrelevant. It can afford to have a high savings rate domestically. With access to export markets, it can have both high domestic savings and high demand coming from consumption abroad. In addition, there is a much greater choice in what to produce as the world demand is bound to be more diverse than domestic demand.
The manufacturing sector, especially labour-intensive manufacturing, does not require years of university education to acquire the requisite skills. A high-school graduate or less with some on the job training is often adequate for most of the jobs in manufacturing.
Surplus labour from the informal sector, including agriculture, can move into labour-intensive manufacturing with minimum additional training, as long as they have basic skills like literacy and numeracy. This is what happened in Taiwan, South Korea, Thailand, Indonesia and China. Lately, even Vietnam and Bangladesh have followed course.
Most importantly, as their industrial sector expanded, they absorbed more and more labour from agriculture – a sector with markedly lower productivity. Poverty declined as labour moved to a more productive sector, and the productivity of the remaining agricultural labour also increased. The growth was fast and also inclusive.
It is important to mention that their respective governments actively aided this effort to develop a manufacturing sector in select areas with an eye on export markets. This was done through an industrial policy that included low interest loans, land grants, tax holidays and requisite infrastructure like power, container ports and other transportation networks. Albeit, it is easier to do it in countries where the democratic norms are rather flexible.
3. Why has India Failed to Follow the East Asian Script?
Unlike the East and Southeast Asian governments, the Indian government did not direct the course of the post-1991 growth. Liberalisation certainly helped unleash market forces but the course of development was determined more or less through serendipity.
When the licence raj ended in 1991, a few significant aspects of the reforms determined the subsequent course of the Indian growth story.
In 1992, the government monopoly on the communication sector officially ended. The years between 1994 and 1999 saw a great deal of churning in this sector. Gradually, cell phones became pervasive. This was an opportune time for communication technology to take off in India. Due to excessive emphasis on public sector investments since 1960s in high-end technical and managerial institutions like the IITs and IIMs, there was a surplus of highly trained manpower available.
At the same time, there was a sudden surge of demand all over the world for IT professionals as the Internet was appearing on the world stage. Indian engineers who were over-skilled for the Indian market had been migrating to the US since the 1960s where they had managed to establish quite a reputation. All this turned out to be fortuitous for Indian firms like TCS, WIPRO and Infosys to emerge on the world stage. Communications and business services grew to be India’s fastest growing sectors from 1993 to 2004 at 20.7% and 24.3% per annum, respectively. Software exports grew at the astronomical rate of 34% per annum over that period1.
[I]nclusive growth in India is a far more difficult prospect for India in 2020 than for China in 2000.
India’s fast growth episode was propelled by exports of IT services. It was indeed an export-led growth. However, unlike China’s or South Korea’s growth through manufactured exports that absorbed low-skilled labour in vast numbers, India’s growth episode was led by a high-skilled service sector that failed to adequately absorb unskilled labour from agriculture.
In the early 1990s, India could have also developed its manufacturing exports like China and South Korea. But there were several major obstacles: restrictive labour laws that created incentives for keeping the scale small; an outdated land acquisition law that made the process of acquiring land extremely messy; weak infrastructure limiting access to power, ports and roads and, most importantly, a badly educated labour force. Successive governments have found it challenging to address, let alone overcome, these obstacles.
India has some unique problems that make any progress on this front difficult. First, any laws pertaining to agriculture and land are in the State List of the Constitution. This means that each state makes its own laws. The Centre can only override them if and only if they are repugnant to a law passed by Parliament. Land is also designated by whether it is agricultural land or not. In order to locate a large industrial project on any land designated as agricultural land, the state government needs to buy it from the farmers and sell it to the industrial house or change the land-use classification of the concerned area. In most states, this is a source of massive corruption and creates incentives for state politicians to block any attempt by the Centre to change these laws.
Labour laws are in the Concurrent List of the Constitution. This means that the residual powers remain with the Centre, and the Central Government has greater degrees of freedom to change the laws. Yet, successive governments have found it politically difficult to do so. Rajasthan made some changes under the Bharatiya Janata Party (BJP) state government, but these changes were marginal.
The existing laws are set up so as to put more restrictions on larger employers, especially with regard to adjusting the work force in response to changes in demand. This discourages attaining scales that would allow Indian manufacturers to compete internationally.
These laws can be endured in situations where demand does not move cyclically, which was the case in India for many years in the past.
However, international markets are notoriously cyclical, and firms need to adjust their output with a fair degree of flexibility.
More importantly, since the mid-1990s, the Indian economy too has been displaying distinct business cycle behaviour, which makes the impact of these laws even more damaging. In fact, this could be an important factor driving the process of automation and robotics in Indian industry.
After China entered the World Trade Organization (WTO) in 1999, it went on to occupy most of the unfilled space in the developed countries’ markets for manufactured goods. “Made in China” became a universal brand. It became much more difficult for countries like India to compete with China after that. In addition, the climate for international trade has recently changed. Developed countries have witnessed a denuding of their manufacturing sectors and the widespread resentment due to it has led to the election of right wing nationalists like Donald Trump. Countries such as the US are not so receptive any more to importing cheaper goods from low wage countries.
Moreover, Indian workers now have to compete not just with Chinese and Vietnamese workers but also with robots and artificial intelligence. Even in India, firms have strong incentives to make production more capital-intensive. This is not just because of labour laws but also because long-term interest rates are not that much higher than short-term interest rates. The long and short of this is that inclusive growth in India is a far more difficult prospect for India in 2020 than for China in 2000.
Yet, we must ask how other democratic nations like Thailand, Malaysia, and Indonesia have managed to solve these problems. Especially the problem of skilling the labour force. Even Bangladesh managed to develop a strong textile sector that could compete in international markets. When primary and secondary education itself fails to impart basic literacy and numeracy, any subsequent skilling programme is bound to fail. Why has public education been such a challenge for India?
The genesis of India’s present problems of a lack of job creation and rural distress lies in these factors.
Why did the growth of domestic investment and consequently the rate of gross capital formation slow down after 2008?
It is important to note that the Asian success stories including that of China were based on an extremely high rate of investment. You need investment to create jobs and wages by bringing in new technology as well as by adding more capital (machines). India’s investment rate has not been bad at all, compared to the other Asian countries, except China. But it has faltered of late, particularly post the Global Financial Crisis of 2008.
Why did the growth of domestic investment and consequently the rate of gross capital formation slow down after 2008?
4. Investment Slowdown
To understand the present slowdown it is useful to examine the ups and downs in the rate of domestic investment or gross domestic capital formation (GDCF) as a percentage of GDP between 2001 and 2018 as in Chart 1 below.
It is easy to see that GDCF as a percentage of GDP grew impressively from 25.3% in 2002 to 30.7% to 2004, then kept growing to 35.8% in 2007 (the highest rate of investment reached so far). This was a high growth period for the Indian economy. However, it was also a period of high credit growth. The investment spree was financed by heavy borrowing by the corporate sector. Corporate exuberance during the boom period of 2002-08 partly explains the present state of indebtedness of the corporate sector, but it is a necessary corollary to a high investment/high growth development process.
In the aftermath of the Global Financial Crisis of 2007-08, corporate investment fell. The post-2011 period is a period of decline in investment as massive corruption scandals rocked the Indian economy and the corporate sector faced a backlash from watchdogs like the CAG and from investigation agencies like the CBI etc. There was some recovery after 2014 but that was torpedoed by demonetisation at the end of 2016. Initial exuberance during the high growth period of 2002-08 and then the shock of the 2008 financial crisis are the root causes of corporate indebtedness of today.
There was a major slump in international demand after the 2008 crisis and inevitably Indian exports slumped. There is no doubt that the slowdown in the Indian growth rate as well as in domestic investment should be attributed to this world-wide phenomenon.
What is surprising is the fact that the GDCF rate does not decline that much and in fact recovers to 34.3% in 2011. A plausible explanation for this is that in 2008 international food prices rose due to many extraneous reasons, including because following high oil prices, large food producers in North and South America shifted their land to cultivation of crops to produce crops for gasohol. This rise in world prices pulled up domestic agricultural prices in India. (Minimum support prices — MSPs — were repeatedly raised during this period.) As a result, the terms of trade shifted in favour of agriculture. This most likely brought about a significant redistribution of income in favour of the rural sector which, in turn, gave a boost to investment in the informal sector. This compensated to some extent a fall in corporate investment.
[A] change in the terms of trade probably played a significant role in maintaining a high rate of investment even after 2008.
This hypothesis is supported by the fact that this was also a period of rising rural wages and declining poverty numbers. Perhaps the introduction of the National Rural Employment Guarantee Scheme (NREGS) helped to some extent. But the scheme took several years to get going in many parts of the country. We believe that a change in the terms of trade probably played a significant role in maintaining a high rate of investment even after 2008.
This episode does offer a clue as to how a transfer from the urban to the rural sector suggests itself as an antidote to the present slump in aggregate demand. This is an issue that we will explore toward the end of this essay.
GDCF declined steadily from 34.31% to 28.73% in 2015 and has stayed stagnant thereafter. There are two big reasons for this. First, by 2015, it had started to become clear that the Indian corporate sector was heavily indebted. As debt soared, investment growth declined. Also, at the end of 2016, the Indian economy had to suffer the enormous shock of demonetisation that hit the informal sector especially hard. A decline in the demand from the informal sector also resulted in unsold inventories of the corporate sector. In a 2017 report, Credit Suisse pointed out that 40% of corporate debt was held by firms that could not hope to earn enough to even cover their interest costs. There was an alarming growth in corporate debt. It grew from 34.2 % of GDP in 2002 to 56.8% of GDP in 2018. (https://fred.stlouisfed.org/series/QINPAM770A, Original Source: Bank of International Settlements.)
Why did corporates over-borrow? Was it just irrational exuberance? Or was it the result of the weakness of the Indian banking system? Unfortunately, it was both. After the heady days of fast growth from 2002 onwards, faster growth was anticipated despite the fact that world demand had slackened. Corporates invested heavily on the back of bank credit. Infrastructural investments, clearly essential for long-term development, also reached a peak around 2012.
Much more importantly, there is systemic moral hazard built into the Indian banking sector. Public sector banks can always rely on public revenues to bail them out. As a consequence, they have never bothered to develop a decent risk assessment system. Moreover, politicians have often directed them to loan money to their pet projects. For example, there is the present government’s MUDRA programme that obliges banks to give small loans to informal sector businesses without collateral. Or, periodic loan waivers to farmers. All this has made the Indian banking sector prone to moral hazard.
5. Financing Infrastructure
Infrastructural projects are typically long gestation projects. They take a long time to complete and a long time to start yielding financial returns. To preclude the strain on public revenues, the government resorted to Public Private Partnerships (PPPs). It was both, the public sector banks as well as private banks, that provided funding for these projects. Both types of lenders exhibited poor risk assessment. Non-bank financial corporations (NBFCs) also joined in the lending spree and faced even fewer obstacles in doing so as they were not constrained by even the kind of regulation that commercial banks have to observe.
There was a great deal of infrastructural building during the years 2006 to 2012. Infrastructural investment went from 4.7% of GDP in 2006 to 8.4% of GDP in 2012 and then declined to 5.1% in 2013. It very gradually rose very slightly to 5.6% of GDP by 20172.
Large-scale projects have to face many hurdles – acquiring land and then getting environmental clearances being two of the most difficult ones. Even the most recent land acquisition legislation (2013) makes acquiring land for industrial production a complex and time-consuming process. You can now understand why private investors especially those who had borrowed for infrastructural projects ended up defaulting on their loans. If the project gets stuck in legal wrangles for a few years, the horizon for getting returns from the project moves away while they are obliged to pay interest on their loans over a longer period. At some point, the project becomes worthless and investors walk away or default.
Roads and power stations can remain half built and end up as non-performing assets on the balance sheet of the lending agency. See Chart 2 to appreciate the rise in non-performing loans ratio (defined as the ratio of ‘loans overdue by more than 90 days to the total loans (which defines a NPA)’) over the last decade. Notice how steeply it goes up after 2015.
Thus, there was a 10-year period from 2004 to 2014, when India NPAs were lower than the global norm. Not because of superior banking skills, but because of pervasive “evergreening” of bad loans. These chickens finally came home to roost in 2015. What is happening today is a stock effect that should gradually correct itself through a combination of write-offs and much lower levels of new NPAs.
But there are new problems looming before the banking sector — a potential meltdown in the NBFCs triggered by the IL &FS crisis, and growing defaults in MUDRA loans.
When large NBFCs like IL & FS default, it also creates NPAs on the balance sheets of the banks they borrow from. When corporates cannot complete their projects, their own balance sheets as well as the balance sheets of the banks and NBFCs develop a large set of NPAs. This is the twin balance sheet problem that the Indian economy is plagued with today. This is a serious problem for the economy as it results in corporates curtailing their investment and banks curtailing their lending. As of January 2019, the gross NPAs to total outstanding loans ratio stood at over 10% and it is disproportionately born by public sector banks.
The MUDRA loans are a different story altogether. In the aftermath of demonetisation, when the informal sector was faced with a serious liquidity crunch, MUDRA loans enabled a number of these firms to stay afloat by repaying the outstanding bank/NBFC loans.
Unfortunately, things have not improved sufficiently since then for the informal sector and now they face the prospect of defaulting on their MUDRA loans.
Demonetisation in 2016 was a serious negative shock to the rural economy that had already been reeling under successive drought years since 2014. Rural investment as well as consumption declined after demonetisation.
One thing that is clear from the above account of how we got here is that this sort of problem will keep recurring until there are structural reforms in land acquisition, banking regulation, labour etc. One step was taken with the passage of the Insolvency and Bankruptcy Code Act in 2016. It allowed lenders to put a closure on bad loans that were never going to be paid back. They could write off the bad loans but could get quick access to the borrowers’ collateral that they could then liquidate. This will help in relieving the gridlock in the financial system, but not entirely. In the first place, NBFCs have very few assets other than their loan portfolios, which may not be easy to unwind. Second, MUDRA loans are non-collaterised, so there is nothing to liquidate.
There are also a number of systemic problems with India’s banking system that cannot be easily solved. First, public sector banks that hold three-fourths of the total deposits have been unabashedly used by politicians and their management is very much subject to a serious moral hazard. Second, commercial banks in India are ill-equipped to be effective lenders for long-term projects on the basis of short-term deposits. Long-term bond markets are not yet well developed in India. Third, financial institutions in India are poorly regulated.
The problems in the financial sector have now affected overall demand in the economy. Aggregate demand consists of private investment by domestic producers (rural and urban), public investment, export demand and consumption. Demonetisation in 2016 was a serious negative shock to the rural economy that had already been reeling under successive drought years since 2014. Rural investment as well as consumption declined after demonetisation. Export demand was already declining due to slow growth in developed countries. The indebtedness of corporations dampened corporate investment. As inventories started piling up, the corporates started laying people off. Firms invest when they see signs of rising demand for their products. Presently, they see none. This, in turn, resulted in the slowdown of consumption growth. This is why we are witnessing signs of an onset of a more serious slowdown today.
We do not think the recently announced cut in corporate tax is an effective way to stimulate demand.
Will the new bold initiative of corporate tax cuts help arrest the slowdown? The main idea behind the tax cut is to remove the disincentives for corporate firms to produce in India by bringing down the corporate tax rates to those prevailing in competing nations like Vietnam. But is there any reason for us to believe that this would stimulate demand by inducing corporates to increase investment? For it to work as a demand stimulant, the logic would have to be as follows: tax incentives would encourage firms to cut prices that would tempt reluctant consumers to the market and spend. But there are better ways to bring prices down – for example, a cut in the Goods and Services Tax (GST). We do not think the recently announced cut in corporate tax is an effective way to stimulate demand.
As mentioned before, corporate investment is being withheld because they do not expect any increase in consumption demand. If nobody is going to buy, why produce? We called it a bold move because at least over the short run, the proposed tax rate would also cause a substantial revenue loss to the government hurting for revenues. If the aggregate demand does not budge, the revenue loss is estimated to be very substantial – Rs. 1.45 trillion. It is worth asking if it might not have been more effective to use this huge sum to stimulate demand in a more direct fashion.
However, in the long-run perspective the move makes good sense. Nations do compete with each other to attract foreign investment and the corporate tax rate is certainly one aspect of this competition. However, it is not the only one. The ease of doing business, the integrity of the legal system to enforce contracts, the state of the infrastructure, and the quality of the labour force are equally important. In the absence of structural reforms, it seems unlikely that even in the long run the new initiative of the corporate tax cut alone will make a substantial difference to India’s fortunes in attracting multinational investment.
In our story, the demand slowdown today is not just a cyclical slowdown that can be cured by a monetary measure like lowering interest rates or a fiscal measure like a tax cut. Instead, it is a combination of having missed the express bus of export-led growth with manufactures through our tardiness in carrying out structural reforms, and then the shocks of demonetisation and messy implementation of the GST that flattened the informal sector of the economy. The challenge of structural reforms is a long-standing one. The rest of the factors are of a more recent vintage.
In addition to the above factors, there is growing unease among the corporate executives about harassment by tax authorities. This stems from a peculiar world-view held by the top level of the government that all bad economic outcomes have at their source bad or corrupt people. “If we use the disciplinary organs of the state to go after everyone who could be potentially corrupt, the system will be cleansed and the economy will start humming again.” This kind of thinking may win elections but does little to perk up the economy.
Demonetisation and tax raids are a testament to this. But draconian and extra-judiciary measures ensnare the innocent as well as the guilty and make the country inhospitable for business. This is an additional reason for the slowdown of business investment over the last few years.
6. The Way Forward?
It is clear that fast, sustained and transformative growth that will create good jobs, relieve rural distress and take India to the ranks of a developed country is not possible unless some structural problems are solved. These include vastly improving the public education and public health system to improve India’s human capital, reforming labour and land laws, improving the financial system, and changing the suspicious and punitive attitude toward business.
The idea of a rural-led strategy is predicated on the notion that at this juncture in time it might be easier to revive demand in rural India than in urban India.
Market forces operate through the animal spirits of entrepreneurs and there is little scope for these to manifest themselves unless the structural bottlenecks are cleared. Governments of different parties have come and gone and these structural problems have remained unresolved.
Yet, it is not clear that even if the domestic obstacles are overcome, India will succeed in charting the East Asian course of development (through labour-intensive exports of manufactures) to the extent that China and other Asian countries did. As mentioned earlier, the times are different now. Developed country markets are less receptive to imports from low wage countries. Automation has eroded the comparative advantage of cheaper Indian labour. What then is the way forward?
7. Rural-led Strategy
An approach worth trying is a rural-led growth. The idea of a rural-led strategy is predicated on the notion that at this juncture in time it might be easier to revive demand in rural India than in urban India. Growth driven by productivity growth in agriculture and the informal sector would be slower than industry-led growth. But it would make more sense given the state of affairs today.
Urban demand growth has slowed down due to the myriad reasons recounted earlier. The skewed pattern of growth in India over the last several decades implies that income growth has been concentrated in the same upper crust of the population that benefited from skill-biased technology. Their demand for consumer durables may have now reached a saturation point. If a person who already owns a house gets richer, he or she is not likely to buy another house. If on the other hand, a person marginally below the income that makes house ownership affordable experiences an income increase, he or she may be inclined to buy a house. Here we are taking the “house” just as an example of an urban product. But the principle is valid for any consumer durable. In general, the marginal propensity to consume will be higher for lower income consumers.
[O]ne way for the Government to arrange for an urban to rural transfer is by increasing the terms of trade for agriculture through an increase in MSPs.
Rural consumers, on an average, are poorer than urban consumers. A transfer of income from the urban to the rural would therefore tend to increase overall consumption demand. Some of this will be for goods produced in the urban sector such as two-wheelers and other consumer durables. Farmers in the upper strata may also be induced to buy expensive items like cars, pick-up trucks and tractors if they experience an income boost.
It is also true that after repeated drought years, demonetisation and GST, the rural population has been in distress for several years. They are likely to have a great deal of pent up demand. Any transfers to them are likely to spill onto a demand for durables as well as non-durables. All this suggests is that transfers to rural areas through different government schemes such as the NREGS, the Public Distribution System (PDS), the Pradhan Mantri Awas Yojana (PMAY) and pensions, should be regarded not just as poverty alleviation schemes but also as antidotes to the present slowdown.
Most forms of urban to rural sector transfers would require the government to tax urban residents and subsidise rural residents. However, the claims on the existing revenues are many and the Government’s capacity to garner more revenues is limited. Under the circumstances, one way for the Government to arrange for an urban to rural transfer is by increasing the terms of trade for agriculture through an increase in MSPs. Of course, this would also mean an increase in food subsidy through PDS to prevent an increase in the issue price.
However, such an increase in government expenditure would be a more effective stimulant since the entire burden of increasing demand would not fall on the treasury. Demand for food of the urban consumers is inelastic. An increase in the MSP would result in a direct transfer of ready cash income from Urban to Rural. It would no doubt increase the hardship of the urban poor who are not protected by access to PDS. However, it would help the urban residents by alleviating the demand slowdown in their economy. The Government did increase the MSPs for several crops in July 2019 but they could be raised higher.
We would like to suggest that under the present circumstances when the prospects of exporting to developed countries are weak, when structural reforms in land and labour laws are not easy to implement, and when reforming public health and education is taking a very long time, it would make sense to explore … a rural-led strategy.
Note that an increase in MSP is only the second best option of bringing about an urban to rural transfer when fiscal constraints make other avenues of transfers infeasible. It may distort the crop choice toward crops whose MSPs are raised. It may create storage problems and frictions with WTO. Worse still, it will create inflationary pressures making the measure politically difficult. Yet, we are suggesting it as an effective way to bring about transfers to the rural economy if all other avenues are blocked. We find support for our idea in the events following 2008 when MSP increases prevented a growth collapse, despite the crippling effect of a slow-down in demand for software exports after the Global Financial Crisis.
Is this just short-term thinking? Do we not think of industrialisation as synonymous with development? We would like to suggest that under the present circumstances when the prospects for exporting to developed countries are weak, when structural reforms in land and labour laws are not easy to implement, and when reforming public health and education is taking a very long time, it would make sense to explore the avenue of a rural-led strategy.
Urban manufacturing requires a larger scale and this is what is running smack into India’s hard-to-reform land and labour laws. Large manufacturing units also need environmental clearances, delays in which are partly the reason for many projects being stalled. Rural growth may steer clear of these obstacles.
Why is the rural economy poor and stagnant? If they just produce to satisfy their own demand, there is no point in raising productivity. If they increase the output of food, prices will fall as their own demand for food will not be elastic enough. They would ideally like to export to the urban economy and perhaps also to the rest of the world. To accomplish this they must diversify into fruits, vegetables, flowers, dairy, poultry etc., for which urban consumers will have a relatively elastic demand. They need infrastructural facilities like refrigerated storage, suitable transport, even agro-processing industry.
A rural-led strategy should prioritise this type of investment. A rural-led strategy would imply diverting some of the public investment from urban to rural areas. Even though in principle there is greater potential for productivity growth in urban industry, the systemic obstacles to industrial development makes a rural-led strategy relatively more fruitful. The additional advantage this sort of strategy would generate is that it would create a lot more jobs for unskilled and semi-skilled labour. Consequently, growth would be much more equitable and the trend towards widening inequality would be thwarted.
It is worth noting that though now China has become the manufacturing hub for the whole world, the first steps it took after it started liberalising from 1979 to 1986 focussed on increasing agricultural productivity. The intermediate stage of Township and Village Enterprises (TVE) was an attempt to utilise the resources available in its rural areas and for providing employment there. Even other successful countries like Taiwan, Indonesia, Malaysia, and Thailand paid a great deal of attention to the development issues in their countryside. Indian policymakers should take notice.
We believe that it does not make sense to set economic goals in terms of GDP (a 5 trillion $ economy) for a country like India. Growth is just the means to the end of poverty reduction. A high growth rate is desirable because it may lead to a faster poverty decline. But how much impact an increase in the growth rate would make on poverty would depend on the pattern of growth. Himanshu reports on the basis of the 2017-18 Periodic Labour Force Survey that despite the fact that the growth exceeded 6% from 2015 to 2018, consumption expenditure per capita has declined at the rate of 4.4% per annum in rural areas and by 4.8% in urban areas3. This is much more alarming news than the growth slowdown.
A rural-led strategy will deliver slower overall growth but it will have a bigger impact on poverty under the present circumstances that keep the East Asian strategy out of India’s reach for now.
Ashok Kotwal is Professor Emeritus of Economics at the University of British Columbia, Vancouver, Canada and presently the Editor-in Chief of “Ideas for India”. Pronab Sen is Country Director, International Growth Centre, India and former Principal Economic Adviser, Planning Commission.The analysis and arguments in this article have benefited from discussions in recent times that both authors have had with a large number of individuals, far more than can be named here. Our thanks to all of them. Ashok Kotwal would like to thank Parikshit Ghosh, Ashwini Kulkarni, Milind Murugkar and Bharat Ramaswami for many useful conversations.
No arrests have yet been made in the heinous rape and murder of a girl in Sultanpur, UP. The body of the girl was found on September 10, grievously mutilated and hung from a tree in the Baijapur village of the district. The villagers out to weed the fields in the morning, witnessed the horrible image and immediately alerted the local police about the matter.
However, a fortnight later, no arrests have been made in the matter. The police have been tight-lipped about the incident since day one for the fear of the intensity of the crime causing a furore about the public. Furthermore, they have not even been able to identify the victim in all this time.
Though the police have kept its silence on the issue, the cause to deliver justice to the victim has been taken up by women and human rights organizations in the State.
On Thursday, members of the political party of CPI(M), Democratic Youth Federation of India (DYFI), All India Democratic Women’s Association (AIDWA) and the Student’s Federation of India (SFI) along with advocates and other activists, demanded a judicial enquiry in the matter along with the conviction of the negligent police officers investigating the case.
It is disappointing to see that the police have treated this matter with such flippancy what with delaying the post-mortem and losing crucial evidence.
Whether these protests will take steam and compel the police to speed up its probe and bring the offenders to book remains to be seen.
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2. सुल्तानपुरकेनिर्भयाकांडपरडीजीसेमिलनेपहुंचामहिलासंगठनकाप्रतिनिधिमंडल, नहींमिले
Image Courtesy: safelibraries.blogspot.com
Political agitation intensified on Wednesday in the case of the alleged suspension of 17 students of Church School Beldih in Bishtupur for purportedly bunking class and chanting the slogan “Jai Shri Ram” in the coridoor.
The ICSE- affiliated school neither denied nor confirmed that the 17 students, including two girls, were chanting “Jai Shri Ram”, but confirmed that the students were sent home on Tuesday on a “weeklong study leave”. The right-wing group Shiksha Satyagraha and the Akhil Bharatiya Vidyarthi Parishad (ABVP), the students’ wing of the RSS termed the leave as ‘suspension’.
Members of the Sampoorna Hindu Samaj, Jamshedpur Tiger Club, KesariSena, My Durbar SevaSangh, Student AJSU and VHP took to the road regarding the matter. They also submitted a memorandum to Vineet Kumar, the District Superintendent of Education (DSE) demanding action on the school.
According to sources, the school’s management got to know about these protests in the early hours on Wednesday, when they decided to revoke the so-called ‘suspension’ and asked the students to return to school. The parents told the media that the school had asked the students to resume classes on Thursday.
Lillian Peterson, the Principal of the school, did not speak to the media in this matter and the management said that it wanted no more controversy. Later, in a press release on Wednesday, it clarified that it never suspended any student.
Ankit Anand from Shiksha Satyagraha said, “The school follows a particular religion; why can’t they respect others’ religion?” He added, “Schools say that they are secular and teach their students to respect all religions, so why do we come across these incidents? I know that as students they shouldn’t have shouted slogans in the school corridor. But, instead of being sent home, the students could have been counselled properly. What was the point of sending them home on a so-called study leave? The school only didn’t use the term suspension.”
Much Ado About Nothing?
The furore kicked up by the right-wing groups seems to only stir up communal feelings in the area.
Statements by some of the parents of the children involved in the issue imply that the organizations protesting against the school’s disciplinary action had been exaggerated in nature.
A parent, who did not want to be named, said the students were chanting “Jai Shri Ram” in a “spirit of fun” and “among themselves”.
“This is a sensitive time, because the students are in Class XII and have their pre-boards and boards,” the parent said. “It (the chanting) was blown out of proportion.”
Nipping It in The Bud
District Education Officer (DEO) Shivendra Kumar in his statement clarified the official stand on the matter. Saying that the education department would with what the school had given in writing, he said, “First, it’s an internal matter of the school. Second, when the school has said in writing that students have not been suspended, there is no room for further discussion. I hope things calm down soon.”
Image Courtesy: .jagranjosh.com
The crime of a casteist slur or intimidation under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act has to be in public view of a public witness, said the Bombay High Court while granting pre-arrest bail to an accused.
The Act, under section (3)(1)(x) provides that the offense of abusing the person on the basis of his/her caste must have taken place ‘in any place within public view.’
In a case put forth by a Kalyan court last year, Justice A M Badar had rejected the anticipatory bail plea of the accused. The case was taken up by the Bombay HC this year and it said, “is clear that the word ‘public’ not only relates to the location, but also to the subjects witnessing the incidence of insult or intimidation to the member of scheduled caste or scheduled tribe.” It also said, “Presence of both ingredients is necessary for making out the offence of atrocity.” The Court added that it was “clear that abuses, insult or humiliation must take place in presence of or in the proximity of at least one independent public witness.”
The court said the expression “in any place within public view” has a specific meaning. “The act of insult or intimidation must be visible and audible to the public in order to constitute such act to be an offence under Section 3(1)(x) of the Act…The word ‘public’ not only relates to the location defined by the word ‘place’, but also to the subjects witnessing the incidence of insult or intimidation…” said the order.
In this case, the FIR stated that, “accused caught hold of her hand and threatened her.” Here the Court did not take into account Section (3)(1)(xii) “being in a position to dominate the will of a woman belonging to a Scheduled Caste or a Scheduled Tribe and uses that position to exploit her sexually to which she would not have otherwise agreed”, which does not mention ‘within public view’ to be a deciding factor for a slur / intimidation to be considered an offense.
The other sections of the The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, apart from Section (3)(i)(x), do not anywhere mention of atrocities to be considered offenses only under ‘public view’.
Similar Cases
In March 2018 last year, a division bench of Justices Satyaranjan Dharmadhikari and PrakashNaik granted a man interim protection from arrest saying, “Prima facie, on reading of the complaint, the abuses which have been hurled at the complainant by the accused are not within public view.”
The case against the man was filed by his neighbour with whom he had a prior dispute. According to the FIR, he had allegedly accosted the woman and threatened her to withdraw the case registered against him. The woman who belongs to the Hindu Mahar community, was then allegedly abused by him in the name of her caste.
The court ignored the Section (3)(i)(xii) in this case too.
In 2017, the Delhi High Court ruled that any offensive post on social media that targets an individual of the Scheduled Caste or Scheduled Tribe communities, even if made in a closed group, is punishable. Justice VipinSinghi noted, “When a member registered with Facebook changes the privacy settings to ‘public’ from ‘private’, it makes his/her writings on the ‘wall’ accessible not only to the other members who are befriended by the author of the writings on the “wall”, but also by any other member registered with Facebook. However, even if privacy settings are retained by a Facebook member as “private”, making of an offending post by the member – which falls foul of Section under Section 3(1)(x) of the SC/ST Act—may still be punishable.”
In the same year, a bench of Justices J Chelameshwar and S Abdul Nazeer ruled that using casteist remarks over phone in a public place against the Scheduled Caste and Scheduled Tribe category amount to criminal offence warranting a jail of a maximum five years.
How You Can Take Action
In 2008, a bench comprising Justice AltamasKabir and Justice MarkandeyKatju said that in the age of democracy and equality, no people or community should be insulted or looked down upon, and nobody’s feelings should be hurt. This is also the spirit of our Constitution and is part of its basic features.
Why then, in some of the cases mentioned above, is the Court taking such a myopic view of the Act instead of taking a wholesome view to cease such atrocities?
The Constitution of India and its hate speech laws aim to prevent discord among its many ethnic and religious communities. If you have been a victim of such an offense or have witnessed someone being subjected to such slurs, we request you to be a crusader of unity with us and take action by:
A study by researchers at Oxford University has found that India is among the nations involved in organised social media manipulation, and such disinformation campaigns can be attributed to politicians and political parties. The researchers monitored social media platforms for three years to take note of organised manipulation by government agencies or political parties, and found over 70 countries were playing foul, up from 48 in 2018. Facebook and Twitter attributed foreign influence operations to seven countries — China, India, Iran, Pakistan, Russia, Saudi Arabia, and Venezuela — who have used these platforms to influence global audiences.
The report titled The Global Disinformation Order was released on Thursday, and said there is a growing use of social media to manufacture consensus, automate suppression, and undermine trust in the liberal international order around the world. The authors note, this disinformation campaign “involves building an inventory of the evolving strategies, tools, and techniques of computational propaganda, including the use of ‘political bots’ to amplify hate speech or other forms of manipulated content, the illegal harvesting of data or micro-targeting, or deploying an army of ‘trolls’ to bully or harass political dissidents or journalists online.” It termed these actors as “cyber troops”
In India, the report counted instance of political parties using advertising to target voters with manipulated media. It found political parties and private contractors high among those engaged in social media manipulation, but also noted such cases by civil society organisations and private citizens and influencers. In India, it found social media manipulations of three types: Supporting the government, attacking the opposition and driving divisions. Such actions were common among other nations, including the US, the report identified with manipulation.
State-sponsored trolling or doxing was also on the rise globally, with 47 nations using such tactics. In 52 of the 70 countries, cyber troops actively created content such as memes, videos, fake news websites or manipulated media in order to mislead users. In India, it noted misleading campaigns, trolls as well as data-driven strategies by cyber troops.
The capacity of cyber troops varied among nations. India was among nations with “medium cyber troop capacity“, involving full-time staff members who are employed year-round to control the information space. The US, China, Russia, Iran and Israel were among nations with “high cyber troop capacity”, involving large numbers of staff, and large budgetary expenditure on psychological operations or information warfare
A point to note:
Access the report here.
Image Courtesy: ANI
Reacting strongly to the bail granted to four of those accused of killing her late husband, IPS officer, Subodh Kumar, Rajni Singh said that the “government should kill her if they can’t imprison the criminals.”
“I am very upset that the accused got bail. Bail was not possible in this case. I am very upset with the justice system. What is happening is very wrong. I want to appeal to the government, kill me if you cannot punish the criminals then get me killed! Then there will be nobody to question the government and the government will not have to answer to anybody!” Ms Singh was speaking to ANI.
“This is very bad news for us,” said the slain IPS officer’s son, Shrey Pratap Singh. “They were prime suspects in the case and he (Yogesh Raj) was mainly responsible for what had happened. What guarantee is there that he will not indulge in such activities again? It is only eight months since the tragedy and they have got bail!”
Yesterday, the Allahabad high court granted bail to Bajrang Dal leader, Yogesh Raj and three. In less than three months after the UP government sanctioned sedition case against 44 jailed accused in the December 2018 Bulandshahr violence, the Allahabad high court on Wednesday granted bail to four accused, including Bajrang Dal leader Yogesh Raj, whose alleged role in instigating the locals had hogged national headlines. It was on December 3 last year, that the heated arguments between the police and the agitated men had taken place.
Last month, Sabrangindia had reported how after seven other accused were released on bail, the accused got a heroes welcome! In August 2019, seven accused in Bulandshahr violence, where an inspector was killed by a mob last year, were released on bail recently. The accused including one of the key conspirators Shikhar Agarwal got a hero’s welcome amid sloganeering of “Jai Shree Ram” and “Vande Mataram”. The video was posted on facebook.
Seven persons accused of the brute killing of police inspector and SHO, Subodh Kumar Singh, on December 3 last year were released on bail by the Allahabad high court on Saturday. The accused, Rajiv, Rohit, Raghav, Shikhar Agarwal, Jitendra Malik, Rajkumar and Sourav allegedly attempted murder, rioted and committed arson during the protests against cow slaughter on December 3 in Siyana, which led to the death of Inspector Subodh Kumar Singh. Agarwal, who headed the BJP’s local Yuva Morcha and posted a video along with Yogesh Raj, another accused, while in hiding, received a hero’s welcome outside the prison. Earlier too, Sabrangindia’s exclusive investigation had revealed how ‘social media’ had been used to plot the killing.
Videos of the accused being released emerged on Facebook and social media which showed the crowd chanting ‘Jai Shri Ram’ while welcoming Shikhar Agarwal and other accused with garlands and flowers. People in the video can also be seen hugging the accused as they leave the jail premises.
The gruesome killing of Subodh Kumar Singh in December last year had elicited a sharp response across India. Former civil servants demand resignation of UP CM Adityanath. They had said,”
“The mob violence in Bulandshahr in Uttar Pradesh (U.P), on December 3, 2018, instigated and engineered with malicious intent,which led to the cold blooded murder of a police officer brave enough to step forward single-handedly to pacify the mob, marks the most dangerous turn yet in the direction taken by the politics of hate in recent times. It shows that in India’s most populous state, Uttar Pradesh, fundamental principles of governance, of constitutional ethics and of humane social conduct stand perverted. The Chief Minister of the state acts as a high priest of the agenda of bigotry and majoritarian supremacy – an agenda which now seems to take precedence over everything else.
Why is this incident such a frightening indicator of the complete collapse of constitutional values? This is not the first instance of a situation intentionally created to foment communal tension. The history of U.P. is replete with such instances. This is not the first time that a policeman has been killed by a frenzied mob. This is also not the first time that the politics of cow protection has been used as a means of isolating and cornering the Muslim community and deepening the social divide.”
Our investigation published on December 6 had found how, the social media posts by the main accused Yogesh Raj, a member of Bajrang Dal and other posts show that the violence which claimed the life of police inspector Subodh Kumar Singh (SHO) and a student named Sumit, was pre-planned. Various news reports and social media posts paint a gory picture of the Bulandshahr violence that rocked Uttar Pradesh on Monday. The social media posts by the main accused Yogesh Raj, a member of Bajrang Dal and other posts show that the violence which claimed the life of police inspector Subodh Kumar Singh (SHO) and a student named Sumit, was pre-planned.
It had also come to light that a letter was sent by representatives of BJP and other Hindutva outfits to Bulandshahr MLA Dr. Bhola Singh on September 9, complaining about Inspector Subodh Singh. The written complaint spoke about how inspector Singh was creating obstacles in Hindu religious events and that people were angry with his interference. The ‘controversy’ that was deliberately generated was the Ijtema which is an integral part of the Tablighi Jamaat. Many Hindutva outfits questioned the validity and aim of holding the Ijtema and tried to incite hatred towards the organisers through social media.
Bail
Following the bail granted to seven accused in August 2019, the police reaction was ambivalent, given the offence was against a policeman on duty. “We respect the judgment of the honorable High Court. As per procedure, the bail has been granted on certain conditions which includes that the accused will not, in any way, attempt to influence the investigation. If they are found violating any such condition, we will file for their bail cancellation. Five accused facing section 302 (for Subodh Kumar Singh’s murder) have not been granted bail yet,” said Raghvendra Kumar Mishra, who headed the Special Investigation Team constituted to look into the incident.
According to the police, the lawyers of the defendants argued that the accused did not have any prior criminal record and that they are not prone to commit a crime if they are granted bail. Accused Yogesh Raj and Shikhar Agarwal released videos alleging innocence and witch-hunt by the authorities, while they were absconding. Jitendra Malik, an Army jawan who was allegedly part of the rioting crowd, was also granted bail. A charge sheet against 38 accused was filed on March 2 in which five people were charged with the murder of the Inspector.
“The police have clubbed Sumit’s murder with the rioting and police officer’s murder in the same investigation. The police should investigate that (Sumit’s murder) separately,” said Sanjay Sharma, the lawyer representing Jitendra Malik and three others.
On December 3, Bajrang Dal activist Yogesh Raj and several other accused protested outside Chingrawait police booth against an alleged incident of cow slaughter in Siyana. Siyana SHO Subodh Kumar Singh tried to control the crowd but riots broke out soon. During the violence, one of the accused shot Subodh Kumar Singh with his service revolver. One of the protesters, Sumit, was also shot dead by the police officer, allegedly in self-defence.
This is not the first time that the social media has been misused by allies of the ruling regime to justify this crime. Earlier, Hindutva organisations Bajrang Dal and Vishwa Hindu Parishad had put up posters in Uttar Pradesh’s Bulandshahr district that carry a photograph of local Bajrang Dal leader Yogesh Raj wishing the public on Makar Sankranti and Republic Day.
Yogesh Raj, the main accused in the December mob violence in Uttar Pradesh’s Bulandshahr in which a police officer was killed, was featured in Bajrang Dal posters across the region.
On these posters by Bajrang Dal and Vishwa Hindu Parishad, Yogesh Raj “wishes” people on behalf of the two organisations on the occasion of Makar Sankranti and the upcoming Republic Day celebrations.
The wishes came on the behalf of Praveen Bhati and Yogesh Raj whose title is mentioned as District coordinator. Defending the move, Bajrang Dal’s Assistant Regional Convenor Praveen Bhati told News18.com, “There is nothing wrong in putting up such posters as Yogesh Raj is the local convenor, and just an accused. He is yet not guilty.” Bhati also features in the poster.
The second application for bail, filed a month later, was solely of Yogesh Raj. The order could not be accessed by TOI but Tiwari confirmed the bail of Yogesh as well. All the accused have been granted bail in other crimes pertaining to the incident including an attempt to murder and dacoity.
It may be noted that a local (Bulandshahr) court of the chief judicial magistrate had already granted bail to seven of the accused, including Shikhar Agarwal, Jeetu Fauji, Kalua, Sachin Kumar, Hemu, Rohit Raghav and others on August 13. Shikhar was heading the district unit of Bharatiya Janata Yuva Morcha, the youth wing of BJP.
Yogesh Raj and BJP youth wing leader Shikhar Agarwal were accused of instigating crowds and later played hide and seek with police by uploading videos on social media claiming their innocence. Yogesh was finally arrested on January 3 while Agarwal was nabbed from Hapur on January 10 this year.
It may be noted, on March 6, 2019, after police had filed the chargesheet, including the sedition charges, under IPC section 124 A, the CJM court had pulled up investigation officer Mishra as to “Why sedition charges were applied without the approval by the state government.” Reacting to the development, Mishra had replied back then, “The court had sought clarification as to why IPC section 124 A was slapped without government approval. We have informed the court that at the time of filing of the chargesheet the permission had not yet arrived and we will submit the same moment we receive it in writing.”
Later, in June, the UP government had granted the sanction and on June 28 the then circle officer Khurja and investigation officer in the case Raghvendra Mishra had deposited the letter of sanction in the court.
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