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Indian Economic Slowdown: Path to Recovery May go Through Dusty Rural India

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Shimla-After the release of economic growth figures for the April-June quarter of FY20 by Central Statistics Office last week, at least we have a consensus on one sobering fact: Indian economy is in the doldrums, and we no longer are the fastest growing economy in the world.

A sizable slowdown has been reported across most segments-manufacturing, farm, mining, construction, real estate, financial, professional services IT, auto, etc. The data on display is alarming considering the huge bearing these sectors have on employment. The slowdown of such enormous scale is likely to increase India’s unemployment rate in the coming months that stood at 6.1% in FY18- the highest in the last 45 years. For some time now, there has been a manifest lack of demand and investment sentiments in the market.  

In the thick of all this, disconcerting is the lowest consumption growth in the last 18 quarters – remember the consumption growth was the major driver behind the rapid growth story of the Indian economy and it accounts for significant  55-58% of the GDP.  

One of the major reasons for the decline in consumption growth is the shrinking rural wages, which is the result of the unacknowledged farm crisis going across the country for a few years now. As per the World Bank collection of development indicators report, the rural population in India was 66.46% of the total population in 2017. The constant decline in rural wages resulted in a substantial decline in disposable income, hence, the demand too weakened. The constant decline in food prices bedevilled agriculture income and subsequently lowering the spending and hurting the rural demand. In economic, high inflation hurts the end consumers, similarly, low inflation impacts the producers. The lower inflation rate impacted the farm producers tormenting rural India badly.  

The favorable demographic profile (65% of the population in India is below the age of 35) of India, initially, acted as a stimulus for attracting investments. As the younger population of a nation aspire their own house, car, yearly holiday, white goods, electronic gadgets, etc. But, as India’s much-touted growth story has failed to generate enough jobs, sagging the aspirational spirits of the youth. Thus, resulting in the slackening of demand, in return, this affected the confidence and sentiments of the investors in the Indian market.

 It has a cascading impact in an economy, as an investor invests in anticipation of demand and keeping in view the market sentiments; at present both these factors are lacking in the India economy. 

Another reason for the economic slowdown is the decline in the saving rate from 34.6% to 30% over five years in India; the worst dip is in the household savings-the biggest source of Investment and accounts for 61% of the total savings- dropping to 16.3% from 23.6% over the same period.  The 18% & 28% GST slabs, that covers 43 % and 19% of the good and services respectively also took a toll on the disposable income, weakened the demand and eating up the savings among the great Indian middle-class.

The credit household debt has also increased manifold in last decade. This has reduced the purchasing power and reduced saving of the household in India.

The credit growth over the years has remained weak- in spite of successive rate cuts by the RBI- owing to the problem of NPA plaguing the banks. The recent liquidity woes in the Non-Banking Financial Companies (NBFC) – shadow banking – have also fuelled speculation, instability, and stress in the financial market. This mess in the financial sector has impacted the investments as reflected by the subdued CAPEX cycle also.  

The gig economy (responsible for 96% of the employment in the country) is yet to recover from the double whammy of demonization and GST. A testimony to this is the high unemployment rate prevailing in India. Gig in India is too big to be ignored.  

Besides this, weakening currency and decline in export only piled up the concerns in the economy, in spite of favorable crude oil prices and low inflation. The aftermaths of the trade war and global slowdown have also started to reflect on the Indian economy.

In India, the richest 10% owes 77.4% of the national wealth; the poorest 60% have 4.7% only. This represents the widening cleavage between the rich and the poor, the growing plutocracy is a concern for developing nations like India. As more and more wealth is concentrated in few hands, instability in the economy increases, making the macroeconomic parameters vulnerable. For such economies with rising plutocracy, a gloomy economic prognosis beacons.

The next few months will be critical for the Indian economy, as demand and investment sentiments need to be spiked up. The disposable income must be increased immediately by revamping at the multiple tax slabs under the present GST regime and replacing them with a simpler lower single tax slab. The technical issues with the input tax credit software should be addressed immediately. This will sort out the delay input credit and reduce its proceeding time too. We need a simpler GST rather than the labyrinth one.

A major part of Rs 1.76 lakh crores given by the RBI to the government can be used on the public expenditure, this will revive the infrastructure projects and boost disposable income and revive demand. This will also bolster the credit demand which has been facing a massive downturn.  

For decades now, the Indian growth story was riding on factors like a demographic dividend, a huge market for consumption and a strong base of saving to stimulate investment. But, the time has proved that such a model can’t work for long only on these factors. All these factors are favorable for economic development but, it has to be buttressed with policies that produce high enough economic growth with sufficient jobs; cultivate a conducive investment climate and boost confidence in the system. At present, there is a perceptible lack of these elements.

 In developing nations, an economic model driven by consumption growth can’t work for long, rather economic model should be driven by continuous investment. 

In India, unfortunately, all the limelight is hogged by urban India, whereas rural India remains unnoticed. Few quarters of stress in the auto industry becomes front-page news; on the contrary years of farm stress does not get any mention. Although, the path to the economic recovery may go through dusty rural India and foster on the sweat, toil and hard work of the prosaic gig economy. Albeit, it may not make a beaming headline. Rural India, for one more time, will not mind; as it never did earlier. 

A former banker, interested in matters on economics, globalization, emerging markets, financial sector and public policy; Economic and Management graduate. He lives in Shimla.

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Video: Three Shimla MC Workers Caught Dumping Garbage in Forest, Suspended After Video Shared on Twitter

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Shimla MC Workers Dumping garbage into forest

Shimla- Three sanitation workers of Shimla Municipal Corporation were suspended after a video was posted on social media showing them disposing of a large amount of garbage in a forest area. The incident became an embarrassment for SMC as the video went viral on Twitter and reached Central officials and green activists.

As per the local who recorded the video, on November 22 at about 1:30 PM; he saw garbage being dumped in the forest near SMC parking on the cart-road.

A green activist of Healing Himalaya organization picked the video on Twitter and brought it to the attention of the officials of the Centre government. The organization tagged BK Agarwal, Secretary Lokpal, Govt. of India and IFS officer Parveen Kaswan.

Sanjeev Gupta, Secretary, ISCS, Home Ministry, also responded on the video and Tweeted,

“An absolute shocker. Stern action should be taken against these reckless murderers of the environment (most likely working for Shimla MC). Will take it up with the State Govt & Shimla MC.”

It’s pertinent to mention that Healing Himalayas had undertaken a cleaning campaign in the said area a few months back. The organization in its Tweet said,

“It is so disheartening to see our work being undone near lift Shimla.”

The SMC was directed to take action. It was found that the sanitation workers of the SEHB society were dumping about two tons of garbage collected from the lift area during one of its cleanliness campaigns.

However, instead of carrying it up to the road for transportation, they dumped it into the forest.  The workers were identified from the video and suspended.

According to the Commissioner, SMC, Pankaj Rai, the Area Supervisor and Sanitary Inspector have been served show-cause notices.

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Baddi Dumping Yard Case: Blow to Solan Admin as HC Directs Relocation of Family, Construction of House, Cow-Shelter

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Baddi Dumping Yard Case 2

Solan-As a blow to the trickery of District Administration, Solan, and the Baddi-Barotiwala-Nalagarh Development Authority (BBNDA), the Himachal Pradesh High Court on November 21, 2019, gave a big relief to the families forced to live in inhuman conditions in Baddi’s Kenduwal. These two authorities had been reluctant to relocate or compensate victim families. They went to the extent of not following the orders of the court. In fact, this case has highlighted the hypocrisy of the government over its own Swachh Bharat campaign. 

However, hearing the petition, a bench of Chief Justice L.Narayana Swamy and Justice Jyotsna Rewal Dua on november 21, 2019, passed orders directing the Deputy Commissioner, Solan, to identify a piece of land to relocate the family, provide them with a house, electricity and water connection, and consider construction of cow-shelters for their cattle to the satisfaction of the families.  The court also appointed Rajnish Maniktala, a senior advocate as Amicus Curiae to assist the court in this petition. Further, the implementation of Solid Waste Management Rules in the entire state has come under the ambit of this petition, which was filed by Shimla-based Advocate, Deven Khanna. 

The BBNDA and Baddi Municipal Council had turned the site at Kenduwal into an illegal dumping yard. The Authority was supposed to construct a Solid Waste Treatment Plant years ago, however, instead, it simply created a dumping yard and violated several environmental laws and guidelines. As per the petition, none of the 36 Conditions mentioned in the Environment Clearance letter are fulfilled by BBNDA. Such grieve environmental violation under the patronage of the state government is a matter of huge concern for the state. 

The houses of about 32 members of four families belonging to Gujjar families were located at this site. These families had been living here for over three decades. Creating dumping yard around their habitat had made their lives unbearable as well as unsafe due to unhygienic conditions arising due to this illegal dumping yard.

 

These families had been running from pillar to post seeking relief. However, none of the state government bodies, district administration, police, or the BBNDA authority listened to their grievance. Eventually, Suleman, on behalf of these families, approaches the court to file a PIL.

About six months ago, the court had eventually asked the Authorities to relocate the family to a piece of land that is located at a considerable distance from the dumping yard.

However, BBNDA defied the orders of the court and, in a bid to allegedly threaten the families, it demolished their cow-sheds last month. Over 80 cattle, including about 40 cows and newborns, were left shelter-less to face winters under the open sky.  The families had alleged that officials trespassed and demolished their cow-sheds without showing any orders from any authority. Instead, the officials used police force, including armed jawans, to scare them. Himachal Watcher had published a story regarding the same along with a video of the said demolition being carried out.

Surprisingly, none of the other media (dailies and regional news portals) covered this news. In fact, media hardly showed any interest in this petition ever. It appears, belonging to minority community, the suffering of these Gujjar families did not appeal to anyone except the State High Court. 

Through their advocate, Khanna, the families have also filed a contempt petition in the court, which is pending.

Meanwhile, hearing the main petition, the said orders were passed by the court.

“In the peculiar facts and circumstances of the case, we permit the petitioner to approach the Deputy Commissioner Concerned by filing a separate application with a prayer for relocation of his house to the extent of land, which is in his occupation, to any other suitable area to the satisfaction of the petitioner,”

the bench said in its order.

“If such approached by way of application is made to the DC concerned, the said Authority shall consider his request and pass appropriate order at the earlier,”

the bench said.

“It is stated by the learned counsel for the petitioner that the cow-shed, having cattle, was demolished. For this purpose, DC concerned to also look into the matter while considering the application of the petitioner for relocation/construction of house/ow-shed as well as providing electricity and water connection for the decent living of the petitioner,”

the bench directed the DC referring to the act of demolishing petitioner’s cow-shelter.

It’s pertinent to mention that when previously contacted by HW, the DC, Solan, had termed this as a case of encroachment, and had said that these families are not eligible for relocation as they are not covered by any such policy.  Considering the indifference of the district administration, the current order has come as a blow to it.

The next hearing has been scheduled for December 16, 2019. 

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CBI Probe in Kotkhai Gudia Case Under Scanner, Forensic Report Suggests Involvement of More Than One Person

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Kotkhai Gudia case forensic experts report

Shimla-Gudia Nyay Manch has demanded fresh probe into the ill-fated 2017 Kotkhai Gudia rape and murder case after new revelations were made in the recent hearing in the case.   

The case was closed by the Central Bureau of Investigation (CBI) team after booking and arresting a woodcutter for the said crime with a conclusion that it was not a gangrape and only one person was involved. The turn of events left the family of the 16-year-old victim and the people of the state stumped and unsatisfied. Media reports had also challenged the probe

While CBI claimed to have solved the case after eleven months of investigation, hardly anyone was convinced that a woodcutter could have possibly committed this crime and managed to fool CBI and bribe nine police personals including IG, SP, and DSP to frame wrong people.

The accused police officials, who were booked for the custodial killing of Suraj – one of the six suspects allegedly framed by them, were defending someone, the public suspected. There were many other questions which remained unanswered thus the CBI’s claim failed to convince anyone that justice was done to Gudia.

After a silence of about one year, the inquiry conducted by the CBI is in the public court. During the hearing of the case of custodial death at Chandigarh-based CBI court, forensic experts claimed that there is a possibility that more than one persons were involved in the rape and murder of Gudia.

These forensic experts – HV Acharya, Assistant Director, Forensic Science Laboratory, Gandhinagar, and Hemangi Shah Assistant Director, Forensic Psychological Division, Directorate of Forensic Science, Gandhinagar- had conducted polygraph and Brain Electrical Oscillation Signature Profiling (BEO) tests on the five accused – Rajinder Singh, Lokjan, Deepak, Ashish Chauhan, and Subhash Singh.

During this hearing, they were cross-questioned by the defense counsel, Atvinder Singh.

Singh asked Dr Acharya if he still stands by his observation that the crime in Gudia was conducted by more than one person, Acharya said “Yes” as an affirmative response. Dr Shan also supported Acharya.

A joint observation report was compiled by the two experts and submitted to the CBI.

While their report clearly said that no role of these five accused was observed in Gudia case. Their report had also said that no role of Rajinder was observed in killing of Suraj.

Moreover, the report of these experts has also observed that there was “definite police effort to defend someone”.

The experts stood by their observation that these six accused were arrested and tortured without any direct evidence.

The Gudia Nyay Manch is up in arms again against CBI for an allegedly botched up investigation in the case. The Manch said it would be staging fresh protest against CBI soon.

What is Kotkhai Gudia Case

On July 4, 2017, a 16-year-old girl, who was returning home from her school in Mahasu are of Kotkhai, Shimla, went missing. Her naked body was found in the forest of Halaila on July 6. As per the initial investigation by the police SIT, Gudia was gang-raped and then murdered. The SIT on July 13 arrested six persons claiming that they cracked the case.

However, the family and locals were not convinced that these six accused, five of which were laborers and daily wagers, had committed the crime. The pubic, as well as the media, wasn’t convinced with the theory given by the police SIT. On July 18, public outrage was witnessed after one of these accused was killed in the police custody while locked up at the police station, Kotkhai. The locals pelted stones on the police staff and compelled them to leave the station. The station was then set on fire.

Under huge pressure from the public, then Congress-led state government asked the CBI to investigate the case. By the end of August 2017, CBI had arrested nine police officials including the head of the SIT Zahur H Zaidi, IG, Southern Range, DSP, Theog, Manoj Joshi, and six others for the custodial killing of Suraj. Later, the CBI also booked then Superintendent of Police, Shimla, D W Negi.

In its charge-sheet submitted to the court, the CBI had said that all six accused were falsely framed by the SIT.

The CBI had filed a separate case to investigate rape and murder of Gudia. The CBI team investigated for next eleven months without any success, thereby, facing backlash from the state high court over delay in the investigation. Ultimately, disappointed with the CBI, the court questioned the competence of CBI and asked its Director to appear personally before it.

Immediately after this summon, CBI claimed to have cracked the case in which a woodcutter was arrested. The case was considered to be closed thereafter.

However, doubts remain over botched up CBI investigation in the case.  

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