Editorials/Opinions Analysis For UPSC 12 August 2023
- Promoting India’s Economic Resilience: Monetary Policy Review
- Defending Constitutional Values: High Courts and Article 226
Promoting India’s Economic Resilience: Monetary Policy Review
In a fluid financial environment, central banks can frequently achieve their goals not by changing their goals but by implementing new strategies. This idea is reinforced by the most recent monetary policy choice, which was announced on Thursday. By sustaining established policies, this choice strengthens the basis of India’s economy, putting it in a resilient and adaptable position to deal with future external shocks.
GS Paper 3 – Monetary Policy
How does the Reserve Bank of India’s commitment to fostering financial inclusion and innovation in the digital payment ecosystem reflect in the proposed initiatives, such as “Conversational Payments” and the Digital Public Tech Platform? (250 words)
Monetary policy is a macroeconomic plan created by the central bank of a nation to accomplish particular objectives including controlling inflation, encouraging consumption, supporting economic growth, and ensuring liquidity. It functions as a demand-side economic strategy used by the government to affect the overall state of the economy.To change interest rates, monetary policy uses a variety of direct and indirect measures. Open market transactions, reserve requirements, and foreign exchange trading are some of these instruments. Credit policy, which controls the volume and interest rates at which banks extend credit, is a subset of monetary policy.
Monetary policy can be divided into two main categories: expansionary policies and contractionary policies.
- Expansionary policy: This strategy is used to boost economic activity during slow or recessionary periods. It entails expanding the economy’s entire money supply. cut interest rates encourage more consumer borrowing and spending because they cut the general interest rates on loans and other debt instruments. This encourages economic expansion and recovery in turn.
- Contractionary policy: This strategy, which is carried out through raising interest rates, tries to reduce the total amount of money in circulation in the economy. This policy aims to stabilise prices by increasing interest rates to combat inflationary pressures brought on by an excessive money supply.
- Governments and central banks use monetary policy as a key instrument to accomplish their economic goals. It strives to maintain financial stability, promote economic growth, maintain exchange rate stability, balance savings and investment, and assure price stability. In India, the Reserve Bank works with the government to establish flexible inflation objectives that may be adjusted to shifts in the economy.
- Navigating Uncertain Global Macroeconomic Trends Central banks in advanced economies are raising interest rates despite ongoing inflationary pressures and complex labour market indications, indicating that the global economic picture is still uncertain. A recent rating of the US by Fitch Ratings and tech-related tensions between the US and China further contribute to the complexity of the global economy. This complex environment has complicated effects, including the declining advantage of arbitrage across countries. These difficulties are made worse by China’s weak export and import numbers as well as huge defaults in the country’s real estate industry.
Maintaining Policy Rates: A Wise Decision
- The Reserve Bank of India (RBI) has decided to keep its policy rates and unchanging posture in the face of these global complications. The RBI has updated its inflation forecast for 2023–2024 to 5.4%, but a significant upward revision to second-quarter forecasts to 6.2%—linked to an increase in vegetable costs, notably tomatoes—deserves attention. Even yet, it is anticipated that the inflationary effect would only last a short time before it fades away as supplies of fresh vegetables restock.
- •Following the recent spike in inflation beyond 6.5%, a following decrease beginning in September is anticipated, eventually settling at 6% or lower. Additional comfort is provided by the predicted drop in core inflation to about 5%, which is in line with empirical data suggesting that headline inflation in India tends to revert to core inflation.
Innovative Approaches and Future Growth
- Of note is the unexpected implementation of an incremental cash reserve ratio of 10% on the increases in net demand and time liabilities (NDTL) between May 19 and July 28, which was intended to absorb surplus liquidity. Given the influx of Rs 2,000 notes into deposits and the likelihood that this action will remove roughly Rs 1 trillion from the banking sector and effectively control liquidity. As a result, this action may be crucial in maintaining inflation and inflationary expectations.
- The growth prognosis is still balanced, with chances of going over the RBI’s predicted 6.5%. Despite volatility in vegetable and supermarket prices, a strong financial environment and lowering core inflation encourage optimism and revive loan demand. The thorough framework for financial benchmarks and updates to the NBFC-IDF laws show how committed regulatory policies are to openness, good governance, and sustainable growth.
Enhancing Digital Initiatives and Payment Systems
- The RBI’s initiatives include cutting-edge payment methods like “Conversational Payments” on UPI, which improve usability and security.
- The raising of the lower limit for small-value offline digital payments to Rs 500, along with the proposal of a Digital Public Tech Platform based on the successful KCC pilot, underpins financial inclusivity and prudent credit distribution.
- Offline transaction capabilities through UPI-Lite utilising near-field communication (NFC) technology support the adoption of UPI for small-value transactions.
An Effective Framework for Economic Vigilance
The RBI’s commitment to upholding stability, encouraging sustainable growth, and strengthening the resilience of India’s economy against global volatility is reaffirmed by the most recent monetary policy. Combining established practises with novel approaches and supporting them with practical regulatory adjustments results in a comprehensive framework that not only reduces risks but also steers the country towards a course of steady and balanced economic growth.
Defending Constitutional Values: High Courts and Article 226
In the recent past, disturbing conflicts between two communities have enveloped districts in Haryana, causing death and destruction. In light of these difficulties, it is clear that efficient governance is required to reinstate order and uphold justice. But an unsettling pattern, similar of the behaviours seen in Uttar Pradesh, appears when administrations appear to stray from their obligations. The Haryana government’s decision to demolish homes over night, particularly those in one group, highlights how crucial it is to uphold legal equality and due process.
GS Paper 2 – Polity – High Courts
With a focus on their authority under Article 226 of the Constitution, talk about the importance and role of High Courts in defending constitutional ideals. Give examples from previous events where the High Courts were instrumental in preserving justice and equality during trying times to support your position. (150 Words)
The Courts’ Role and Response in The Guardians of Justice
The judiciary is recognised by the Constitution as the guardian of fundamental rights and representative of constitutional principles. The need for a strong judicial function is revealed by comparing the Supreme Court’s and the High Courts’ answers. Where incisive inquiries and forceful responses were anticipated, the Supreme Court’s circumspect response to the Uttar Pradesh house demolitions leaves a gap. In contrast, as demonstrated by the perceptive question from Justices G.S. Sandhawalia and Harpreet Kaur Jeevan, High Courts in Punjab and Haryana display a firm demeanour. Their involvement, which was brought about by the court itself, stands out in these trying circumstances.
The Problem with the Supreme Court’s Silence
Examining the Supreme Court’s involvement in such situations raises important issues. What prevented it from exercising suo motu jurisdiction? Why did no one petition the Supreme Court? These concerns provide insight into a bigger issue: the point at which the judiciary must step in to protect constitutional values. The statements of Justice Vivian Bose emphasise the necessity for aggressive judicial action to safeguard each person’s rights and serve as a reminder that the Constitution is intended for all citizens.
The Acceptance of Jurisprudential Wisdom
Although some senior judges may have expressed reservations, it is crucial to take guidance from illustrious jurists. The wisdom of legal giants directs us in the face of uncertainty. High Courts emerged as bulwarks of justice throughout the terrible days of the Emergency, despite being let down by the Supreme Court. It is crucial to rekindle the spirit of law, with a renewed dedication to the values that saw us through turbulent times.
High Courts’ Empowerment: The Comprehensive Function of Article 226
The Constitution’s Article 226 is a strong weapon for upholding justice. High Courts have more power than the Supreme Court to issue different writs for the enforcement of legal rights, including basic rights. The words “for any other purpose” broaden their purview beyond fundamental rights and offer a distinctive path to justice. If the cause of action arises within their purview, High Courts may issue writs to entities within or outside of their territorial jurisdiction.
promoting social justice and fair laws
To stop unfair practises, fair rules are necessary throughout all industries, from the workplace to the marketplace. It is important to recognise the crucial role played by the government in upholding these laws and ensuring social fairness. Social justice is supported by an equitable allocation of opportunities and resources that provides an equal playing field for all residents. Initiatives to remedy societal injustices, like gender inequality and insensitivity to marginalised groups, show a dedication to preserving individual worth and wellbeing.
High Courts as Symbols of Hope: The Peak of Constitutional Watchfulness
The current environment emphasises the necessity for High Courts to establish themselves as the protectors of justice. Their crucial significance in maintaining constitutional ideals is attested to by Punjab and Haryana High Court’s proactive and assertive approach during crises. While the Supreme Court’s restraint occasionally raises questions, Article 226’s potential acts as a formidable counterpoint. Due to their ability to uphold both basic and common law rights, High Courts can provide an all-encompassing barrier against injustice.
A Call to Action: Being Resilient in Difficult Times
The judiciary’s importance increases during turbulent times. We must use the lessons learned from the past, especially during the Emergency, to direct our actions now. The whole legal community must work together to uphold constitutional ideals, ensuring that the court is vigilant, decisive, and unyielding in its pursuit of justice. Armed with Article 226 in their arsenal, High Courts have the power to confront even the greatest challenges to our democracy.
- In conclusion, the court must act forcefully in response to the contemporary issues affecting India. High Courts have the opportunity to take the lead in upholding constitutional ideals because they are endowed with the power provided by Article 226. High Courts can rebuild trust in the rule of law and the values upheld by the Constitution by wisely using their authority, addressing important issues, and providing equitable justice. No matter their ethnicity or beliefs, all residents may look forward to a brighter and more just future thanks to this group effort.
- Because of the judiciary’s tenacity, the jurists’ insight, and society’s dedication, the beacon of constitutional ideals shines increasingly brighter as we navigate these challenging times. We create a route towards a future for our country that is more just and equitable through these joint actions.