+91 9004418746enquiry.aashah@gmail.com
+91 9004078746aashahs.ias@gmail.com

10 February 2017 Editorial

 

10 FEBRUARY 2017

Prudence amid uncertainty

For the first time in six meetings this fiscal, the Reserve Bank of India has shifted its policy poise, moving to ‘neutral’ from an ‘accommodative’ stance. The central bank’s Monetary Policy Committee has opted to sit pat on rates and choose to give itself time to “assess how the transitory effects of demonetisation on inflation and the output gap play out”. The decision came just a day after Prime Minister Narendra Modi told Parliament that the government’s move to withdraw high-value currency notes had been undergirded by the premise that the economy was “doing well and thus our decision was taken at the right time”. The RBI’s emphasis on caution suggests that not only has the economy suffered short-run disruptions — as the central bank said in December — but that the long-term impact may be far more enduring and hard to predict than anticipated. The policy statement issued by the six-member MPC also projected the second successive downward revision in economic growth as measured by the Gross Value Added for the current year ending in March, with the pace of increase in GVA now forecast at 6.9%, from 7.1% in December and 7.6% prior to the November demonetisation.

Separately, both the outlook for inflation and international uncertainty are also causes for concern, according to the RBI. Viral Acharya, the recently inducted Deputy Governor overseeing monetary policy, flagged the risks that global inflation and a strengthening U.S. dollar pose to domestic price gains. Specifically, the central bank is worried about the “unyielding” nature of core retail inflation, which strips out food and fuel costs, and has been stuck around 4.9% since September, mainly due to stickiness in price gains for housing, health, education, personal care and household services. The MPC reckons that the “persistence of inflation excluding food and fuel could set a floor on further downward movements in headline inflation and trigger second-order effects” that, when combined with hardening international crude oil and base metal prices and exchange rate volatility. It could have the potential to threaten the RBI’s baseline inflation path of 4.5% to 5% in the second half of 2017-18. And ironically, were the effects of demonetisation to wear off quickly, vegetable prices, that had softened on the back of distress sales of perishables, could potentially rebound, posing another risk to the central bank’s inflation outlook. As Mr. Acharya summed it up at the post-policy briefing, the RBI has plumped for prudence and flexibility.

  

Bowing down to patriarchy

One of the success stories of affirmative action in India has been the implementation of reservation of seats in local body elections for women, to the order of 33% or more. The importance of democratising the public sphere by inclusive participation of women in a largely male-dominated society cannot be stressed enough. In rural areas the quota has helped improve local governance, enhancing outcomes in delivery of civic services related to drinking water supply, sanitation and irrigation, among others. In urban local bodies, the visible impact has been more quantitative in terms of representation rather than qualitative, with success being linked to emphasis on gender sensitisation by civil society and political parties. It is therefore unfortunate that the Nagaland government, after initial steadfastness to hold the long-delayed urban local body polls on February 1, declared the elections as “null and void” after some tribal bodies, opposed to reservations for women, sought to disrupt the process. Rather than bowing to this pressure, the State government led by the Nagaland People’s Front should have enforced the rule of law. That a substantial number of towns participated in the elections despite a bandh called by the tribal bodies reflects public support for affirmative action as mandated by the 74th Amendment to the Constitution.

Article 371A of the Constitution secures a special status for Nagaland. But as the civil society groups striving for reservation have argued, urban local bodies are not part of traditional Naga society, and ULBs are constitutional bodies to which customary Naga laws cannot be applied. The conduct of the long-delayed elections was achieved after a protracted legal struggle led by women’s groups. Arguments against women’s reservation invoking Naga customs have been consistently quashed by the courts, ultimately paving the way for elections to be announced for February 1. The State government later submitted to pressure exerted by the Naga Hoho, an apex group of 16 tribal groups, which smelled blood and sought Chief Minister T.R. Zeliang’s resignation. The State government then wrote to the Centre seeking exemption for Nagaland from Part IXA of the Constitution — which is clearly untenable. The Centre, meanwhile, sees Nagaland merely through the lens of the still- pending peace accord with some insurgent groups. This milieu has emboldened patriarchal forces to assert themselves and deny women their constitutionally guaranteed rights of representation in local bodies. Civil society and women’s groups now have their work cut out in realising their just demand for electoral representation. Denial of women’s rights cannot be a measure of the State’s autonomy.

Back to Top