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1.Whither consumer? Private consumption is economy’s foundation. Boost it
In popular perception, banks have a reflexive association with factories and wholesale trade. That’s where bank money ends up. There’s a sound basis for it. However, there’s another area which has increasingly been the recipient of bank resources, retail consumption. Banks have been at the forefront of India’s consumer boom over the last two decades. Today, about Rs 28 of every Rs 100 lent outside agriculture is towards personal loans, up from Rs 19 a decade ago. It’s a manifestation of an economic transition that is being driven by a young aspirational consuming class.
A bird’s-eye view of this trend shows that after adjusting for inflation, about 56-57% of GDP comes from private consumption spending. It’s the foundation of India’s economic edifice. Anything that weakens the foundation should be a cause of serious concern. Rising unemployment is one such worry. CMIE’s unemployment reading was 14.7% for the week ended May 23, unusually high for India. Lockdowns across states are the primary cause for it, but a longer term look at proxies for consumer vibrancy doesn’t bode well. For example, net financial savings of households show an unusual pattern.
Household net financial savings at the end of March 2020 were 7.8% of disposable income, a level that’s been sticky for a while. A closer look shows that net saving has held up because households have cut back on loans. It does raise the question whether India’s consumption story is under threat and with it the larger growth impulse. How badly will a country with a median age less than 30 be scarred by the first recession in over 40 years? This anticipated contraction will come on the heels of a slowdown in economic momentum. There is a case for the government to pull out all stops to support consumption demand. It’s our economic foundation.
2.Judging rape: Don’t shame complainant, her personal life
Goa government’s appeal in Bombay high court against Tarun Tejpal’s acquittal in a rape case witnessed Solicitor General Tushar Mehta taking a strong position against “any person who is a victim of sexual assault” being required to “exhibit her trauma” in order to be believed. The references to the complainant’s personal life must also be revisited promptly by a higher court. Note that investigation from 2013 to final orders in this case took nearly eight years.
In rape trials, defence lawyers commonly highlight aspects of a rape complainant’s personal life to suggest that women not subscribing to patriarchal mores of “chaste conduct” have no right to allege sexual assault. Courts must see through such ploys. Personalities and situations vary among rape survivors: Trauma and external injuries don’t manifest in every case. There are no normative traits here; judges shaming survivors is the unkindest cut.
The 2013 criminal law amendment clarified that failure to “physically resist” wasn’t evidence of consent and that evidence of the complainant’s previous sexual experience “shall not be relevant on the issue of such consent or the quality of consent”. Yet courts lose sight of such precepts. Last year, a Karnataka HC judge observed that the survivor falling asleep after rape was “unbecoming of an Indian woman”. Surveys indicate India’s reported sexual offences are a massive undercount. Judging the woman instead of the crime discourages rape survivors from reporting crimes. Parliament or binding judicial precedent must expressly warn courts against shaming rape complainants.
3. Fuelling misery
Centre, states reluctant to forgo fuel taxes
If the trend of rising international crude prices coupled with high Central and state taxes continues, Madhya Pradesh may soon join Rajasthan in recording pump prices of over Rs 100 per litre. The turning point was in April 2020, when international fuel prices touched rock bottom. Though consumers thought they would reap the benefits, the Centre and the states saw it as an appropriate moment to earn some easy revenue. They hiked their respective taxes on fuel while the consumer kept paying the same price despite low global crude rates.
Now when international prices are rising, governments have been unwilling to cut taxes in order to provide fuel at the previous rates. As a result, the average fuel price in India is among the highest in the world — Rs 93 per litre for petrol and Rs 88 per litre for diesel. From this, the Centre corners Rs 33 on every litre of petrol sold and states about Rs 20. This is reflected in the skewed correlation between global crude prices and the rate at the pump. Since May last, global petrol prices have risen by just Rs 3.53. But retail prices went up by Rs 20. States claim they have been deprived of the entire 41% of their excise share because the Centre levies cess which is not shared with them. Therefore, they are forced to play with the duty structure on fossil fuels (and liquor).
If the state’s compulsions are reasonable, it is difficult to accept the Centre’s reasoning that pump prices are high due to cartelisation among oil-producing nations. If market forces are indeed behind the rise, why was there an 18-day pause when four states and a UT went to the polls recently? And as soon as counting was over, rates were jacked up half a dozen times, though global prices did not rise proportionally. It is also a mystery why PSU oil companies charge nearly the same price, despite different efficiencies. As inflation has crossed the RBI’s upper band, the Centre should provide some relief to the consumer, who has already been kneecapped by the pandemic.