Srinagar: The Yaripora police station in Kulgam in Jammu and Kashmir was attacked by terrorists around 8 pm. tonight.
According to available reports there were 3 to 4 terrorists who opened fire at the highly fortified police station and the police retaliated. There was heavy firing, which lasted about 5 minutes. No casualty has been reported. The area has been cordoned off and search is on.
Mumbai: Reserve Bank Governor Urjit Patel today announced the decision to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to six year low 6.25 per cent with immediate effect.
The RBI Governor was addressing a press conference to brief the media on the fourth Bi-Monthly Monetary Policy for the year 2016-17.
Patel said that on the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate to 6.25 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.
The decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth.
The main considerations underlying the decision are set out in the statement below.
Global growth has been slowing more than anticipated through 2016 so far, with weak investment and trade damping aggregate demand. Meanwhile, risks in the form of Brexit, banking stress in Europe, rebalancing of debt-fuelled growth in China, rising protectionism and diminishing confidence in monetary policy have slanted the outlook to the downside. World trade volume has contracted sharper than expected in the first half of 2016, and the outlook has worsened with the recent falling off of imports by advanced economies (AEs) from emerging market economies (EMEs). Inflation remains subdued in AEs and has started to edge down in EMEs.
International financial markets were overwhelmed by the Brexit vote in Q2, with equity markets losing valuations worldwide, currencies plunging and turning volatile, and investors rushing for safe havens. Markets, however, recovered quickly and reclaimed lost ground in Q3, with a return of risk appetite propelling capital flows back into EMEs. Nonetheless, an uneasy calm prevails on uncertainty about the stance of monetary policy of systemic central banks. Commodity prices have firmed up slightly, easing stress for commodity exporters and shaving off some of the terms of trade gains accruing to commodity importers. Crude prices rose to a recent peak in Q2 of 2016, mostly on supply disruption in various parts of the world, and again in late September as the OPEC announced intentions of cutting back on supply; but, the upturn has been curbed by higher inventories.
On the domestic front, the outlook for agricultural activity has brightened considerably. The south west monsoon ended the season with a cumulative deficit of only 3 per cent below the long period average, with 85 per cent of the country’s geographical area having received normal to excess precipitation. Kharif sowing has surpassed last year’s acreage, barring cotton, sugarcane and jute and mesta. Accordingly, the first advance estimates of kharif foodgrains production for 2016-17 by the Ministry of Agriculture have been placed at a record level, and higher than the target set for the year. The industrial sector, by contrast, suffered a manufacturing-driven contraction in early fiscal year Q2, after a sequential deceleration in gross value added in Q1. Even after trimming the statistical effects of the lumpy and order-driven contraction of insulated rubber cables, industrial production as measured by the index of industrial production (IIP) turned out to be slower than a year ago. In August, steel production rose to a 37-month high and cement production maintained momentum – auguring well for construction activity – even though the output of core industries as a whole was weighed down by a decline in the production of coal, crude oil and natural gas and deceleration in refinery products and electricity generation. Nonetheless, business expectations polled in the Reserve Bank’s industrial outlook survey and by other agencies remain expansionary in Q2 and Q3. The strong public investment in roads, railways and inland waterways, the recent efforts to unclog cash flows in large projects under arbitration, and the boost to spending from the 7th Pay Commission’s award, should improve the industrial outlook. In the services sector, the acceleration in the pace of activity in Q1 appears to have been sustained. An increasing number of high frequency indicators are moving into positive territory, construction is boosted by policy initiatives, and public administration, defence and other services will be supported by the pay commission award.
Retail inflation measured by the headline CPI had been elevated by a sharp pick-up in the momentum of food inflation overwhelming favourable base effects during April-July. In August, however, the momentum of food inflation turned negative and surprised expectations; consequently, base effects in that month came into full play and pulled down headline inflation to an intra-year low. Fuel inflation has moderated steadily through the year so far. Inflation excluding food and fuel (including petrol and diesel embedded in transportation) has been sticky around 5 per cent, mainly in respect to education, medical and personal care services. Households reacted to the recent hardening of food inflation adaptively and raised their inflation expectations in the September 2016 round of the Reserve Bank’s inflation expectations survey of households. Input costs in the manufacturing sector, including staff costs, have firmed up slightly as evident in various surveys, but the presence of considerable slack has restrained their transmission into corporate pricing power.
Liquidity conditions have remained comfortable in Q3, with the Reserve Bank absorbing liquidity on a net basis through variable rate reverse repo auctions of varying tenors. Liquidity was injected through open market purchases of ₹200 billion in line with the system’s requirements. As a result, the weighted average call money rate (WACR) remained tightly aligned with the policy repo rate and, in fact, traded with a soft bias. Interest rates on commercial paper (CPs) and certificates of deposit (CD) also eased.
In the external sector, merchandise exports contracted in the first two months of Q2. Subdued domestic demand was, however, reflected in a faster contraction in imports. Moreoever, the still soft crude prices pared off a fifth of the oil import bill and gold import volume slumped to a fifth of its volume a year ago. Consequently, the merchandise trade deficit narrowed by US$ 10 billion in April-August on a year-on-year basis. These developments are likely to have contained the current account deficit in Q2 at its level in Q1, although the decline in remittances and the flattening of software earnings warrants monitoring. While the pace of foreign direct investment slowed compared to a year ago, portfolio flows were stronger after the Brexit vote, galvanised by a search for returns in an expanding universe of negative yields. The level of foreign exchange reserves rose to US$ 372 billion by September 30, 2016 – an all-time high.
The Committee expects that the strong improvement in sowing, along with supply management measures, will improve the food inflation outlook. It notes that the sharp drop in inflation reflects a downward shift in the momentum of food inflation – which holds the key to future inflation outcomes – rather than merely the statistical effects of a favourable base effect. The Government has announced several measures to cool food inflation pressures, especially with regard to pulses. These measures should help in moderating the momentum of food inflation in the months ahead. This has opened up space for policy action, as indicated in the third bi-monthly monetary policy statement. The easy liquidity conditions engendered by the Reserve Bank’s operations should also enable the smooth transmission of the policy action through various market segments. Furthermore, banks should find added impetus for better transmission by the recent downward adjustment in small savings rates. The Committee took note of potential cost push pressures that may emerge, including the 7th pay commission award on house rent allowances, and the increase in minimum wages with possible spillovers through minimum support prices. The fuller play of these factors will need vigilance to prevent a generalised cost spiral from taking root. On balance, the Committee envisages a trajectory taking headline CPI inflation towards a central tendency of 5 per cent by March 2017, with risks tilted to the upside albeit lower than in the second and third bi-monthly monetary policy statements of June and August respectively (Chart 1).
The momentum of growth is expected to quicken with a normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to the urban consumption spending from the pay commission’s award. The accommodative stance of monetary policy and comfortable liquidity conditions should support a revival of credit to the productive sectors. The continuing sluggishness in world trade and smaller terms of trade gains than in the past point, however, to further slackening of external demand going forward. Accordingly, the projection of growth of real gross value added (GVA) for 2016-17 is retained at 7.6 per cent, with risks evenly balanced around it (Chart 2).
Statement on Developmental and Regulatory Policies Reserve Bank of India
This Statement reviews the progress of various developmental and regulatory policy measures announced by the Reserve Bank in recent policy statements and sets out new measures to be taken for further strengthening the banking structure; broadening and deepening financial markets; extending the reach of financial services to all; and extending the reach of financial services by enhancing the efficacy of the payment and settlement systems and improving currency management.
Review of Prudential Regulations for All India Financial Institutions (AIFIs) – All India Financial Institutions (AIFIs) currently operate under the Basel I capital framework. Over the years, the operational landscape and risk profiles of AIFIs have changed significantly. With the introduction of Basel III by the Basel Committee on Banking Supervision (BCBS) as a part of global financial regulatory reforms, many development finance institutions across the world have adopted Basel III either voluntarily or as required by their regulatory authorities. Keeping in view the importance of ensuring the safety and soundness of financial institutions in general, it has been decided to selectively extend elements of the Basel III capital framework to the four AIFIs,viz., EXIM Bank, NHB, NABARD and SIDBI with effect from April 1, 2018. Guidelines/modifications to existing guidelines will be issued by end-October 2016.
Large Exposure Framework – In order to align the exposure norms for Indian banks with the BCBS standards, and based on comments and feedback received on the Discussion Paper on the Large Exposures Framework, a Draft Large Exposures (LE) Framework was issued on August 25, 2016 for public comments. The comments/feedback received from stakeholders on the draft proposals will be examined and the final guidelines will be issued by end-October 2016 for full implementation by March 31, 2019.
Final Guidelines on Computing Capital for Counterparty Credit Risk and Exposures to Central Counterparties – Draft guidelines on computing capital for counterparty credit risk and exposures to central counterparties, based on the revised framework of the BCBS, were issued in June 2016 for public comments. Based on the feedback received, final guidelines to banks on these aspects will be issued by end-October 2016.
Guidelines on Interest Rate Risk in the Banking Book – Based on the revised framework of the BCBS on interest rate risk in the banking book, draft guidelines to banks will be issued by end-November 2016.
Scheme for Sustainable Structuring of Stressed Assets – The Reserve Bank has put in place a ‘Scheme for Sustainable Structuring of Stressed Assets’ (S4A) in order to provide an avenue for reworking the financial structure of entities facing genuine difficulties and requiring co-ordinated deep financial restructuring. The scheme provides flexibility in restructuring, which may involve material write-down of debt and/or making large provisions, under a credible framework. Banks that have taken up cases for resolution under the S4A have represented that the asset classification norms under the S4A may be reviewed to make the scheme more effective. Accordingly, it is proposed to allow that portion of debt determined to be sustainable to be treated as a standard asset in all cases, subject to certain conditions. Detailed guidelines in this regard will be issued by end-October 2016.
Operating Guidelines for Small Finance Banks and Payment Banks – After in-principle approvals were granted to 11 applicants to set up payments banks (PBs) and 10 applicants to set up small finance banks (SFBs) in the private sector in August 2015 and September 2015, respectively, banking licences were granted to three banks to commence small finance bank business, and to one bank to begin paymentsbank business. Two of the three small finance banks have commenced operations. Draft operating guidelines were discussed with the applicants who had received the in-principle approvals. Based on their comments, operating guidelines have been finalised and will be issued during this week.
II. Financial Markets
Monitoring of Derivative Transactions of Foreign Portfolio Investors (FPIs) – Custodian banks of FPIs will be responsible for monitoring all derivative transactions of an FPI. Accordingly, each FPI will report all derivative transactions conducted with any market-maker (other than its custodian bank) to its custodian bankon the date of transaction itself.
Centralised Hedging Facility for Indian subsidiaries of Non-resident Companies – At present, non-residents are allowed to hedge the currency risk arising out of genuine trade transactions involving exports from and imports to India, invoiced in Indian rupees (INR). It has been decided to allow the overseas parent or its central treasury to hedge the currency risk arising out of genuine current account exposures of the Indian subsidiary in order to better manage the latter’s currency risk.
Introduction of Interest Rate Options – The report of the Working Group on Introduction of Interest Rate Options was placed on the Reserve Bank’s website in February 2016 and comments were sought from market participants. Taking into account the feedback, final guidelines on Interest Rate Options will be issued by end-October 2016.
External Commercial Borrowings (ECBs) for Start-ups – Start-ups have the potential to play a significant role in economic growth and job creation by spurring innovation and injecting competition. Taking into account the available funding channels from overseas for start-ups, the Reserve Bank, in consultation with the Government of India, will allow such entities to raise ECB up to USD 3 million or equivalent per financial year either inINR or in any convertible foreign currency or a combination of both.Guidelines will be issued by end-October 2016.
Import Data Processing and Monitoring System (IDPMS) – With a view to improving the effectiveness of monitoring the import payments, a Working Group on Import Data Processing and Monitoring System (Chairman: Shri A K Pandey) was constituted and based on its recommendations, a single centralized system in the form of Import Data Processing and Monitoring System is proposed to be implemented. The IDPMS will provide end-to-end monitoring of import transactions from shipment to final payment, thereby doing away with the existing gap in current monitoring on a stand-alone basis by the custom authorities, authorised dealer banks and the Reserve Bank. The IDPMS will go live with effect from October 10, 2016.
Payment and Settlement
Acceptance Development Fund – It has been decided to set up an Acceptance Development Fund (ADF) in order to encourage wider adoption of electronic payments and to ensure planned expansion of card acceptance infrastructure in the country. The ADF, which would be established and operated under the aegis of Indian Banks’ Association (IBA), will set the rules for contribution and utilisation of funds. In addition, it will plan deployment of acceptance devices across various geographic and merchant segments in the country. Guidelines for the ADF framework will be issued by December 31, 2016.
Review of Guidelines for Pre-paid Payment Instruments (PPI) – Around 47 non-bank entities and 45 banks currently operate the payment systems forpre-paid payment instruments (PPI). In view of significant developments in the payments space using newer technologies, products and players, it has been decided to undertake a comprehensive review of the guidelines for issuance and operations of PPIs. The revised guidelines will be put in place by December 31, 2016. Accordingly, the receipt and processing of fresh applications have been temporarily suspended.
Review of Security of Treasure in Transit – A high level inter-agency committee will be set up by end-October 2016 to review the entire gamut of security of treasure in transit in order to beef up security of remittance of currency notes/coins.
There is over-crowding to the extent of 150% or more in jails in Assam, Chhattisgarh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh and Delhi.
New Delhi: Supreme Court of India, in response to a writ petition on “Inhuman Conditions in 1382 prisons” in the country, yesterday passed an order expressing distress by noting “even though this Court has held on several occasions that prisoners both under trials and convicts have certain fundamental rights and human rights, little or no attention is being paid in this regard by the States and some Union Territories including the National Capital Territory of Delhi.”
The Supreme Court order passed by a two Judge Bench comprising Justice Madan B. Lokur and Justice R.K. Agrawal categorically states: “Certainly fundamental rights and human rights of people, however they may be placed, cannot be ignored only because of their adverse circumstances.”
Further the Apex Court order points out that not a single State or Union Territory has bothered to prepare a Plan of Action and bring it to the Court’s notice or to the notice of the Amicus. Underscoring this, the Court has said that it is left with no option but to direct the States and the Inspector General of Prisons to prepare a Plan of Action, as already directed on 6 May 2016, for reducing the prison population.
On the information provided to the Court by the Amicus, on the basis of affidavits filed by some of the States, that there are proposals for constructing additional barracks or jails, the order says – these appear to be ad hoc proposals with no time limit specified for completion and in some cases it is not clear whether provision has been made for providing resources for the construction. In this regard, the Court has directed that a viable Plan of Action should be prepared within the next six months and in any event by 31 March 2017.
The Supreme Court has also pointed out that more than sufficient time has elapsed but the Manual for juveniles in custody has not yet been prepared by the Ministry of Women and Child Development of the Government of India. Hence the Court has directed the Ministry to expedite the preparation of the Manual and fixed 30 November 2016 as the deadline for this purpose.
With regard to over-crowding in jails, the Amicus has told the Court that there are several jails where over-crowding is to the extent that there are more than one and a half times the number of prisoners than the permissible limit. It was especially highlighted that an excessive prison population has its own set of problems including hygiene, sanitation, management, and discipline. In terms of suggestion, he submitted that in the first instance the States could be directed to identify jails in which over-crowding was to the extent of 150% or more so that further directions could be given. On the basis of this submission the Supreme Court had called for information. In this context the latest order says: “now find that the situation continues to be not only tragic but also pathetic.”
According to the Amicus, the Emicus drew Court’s attention in writing on 20 September 2016 regarding over-crowding to the extent of 150% or more in jails in Assam (8), Chhattisgarh (17), Jharkhand (3), Karnataka (7), Kerala (21), Madhya Pradesh (5), Maharashtra (16), Rajasthan (21), Uttar Pradesh (47) and Delhi (12). On this issue, the order says: “It is unfortunate that in spite of our directions the prison authorities have not been able to take any effective steps for reducing over-crowding in jails.”
The court has fixed October 18 as the next date of hearing in this case with the direction that the Union of India through the Ministry of Home Affairs should obtain the status of compliance of Court orders passed on 5 February 2016 and 6 May 2016 and on 30 September 2016. The Court has observed that even the rights of prisoners, whether convicts or under trials should be given due importance.
The Supreme Court has reminded the Union of India and the State Governments that as far back as in 1975 the Apex Court, in D. Bhuvan Mohan Patnaik v. State of Andhra Pradesh (referring to a decade old decision then in State of Maharashtra v. Prabhakar Pandurang Sangzgiri) had reminded that:
“Convicts are not, by mere reason of the conviction, denuded of all the fundamental rights which they otherwise possess. A compulsion under the authority of law, following upon a conviction, to live in a prison-house entails by its own force the deprivation of fundamental freedoms like the right to move freely throughout the territory of India or the right to “practice” a profession. A man of profession would thus stand stripped of his right to hold consultations while serving out his sentence. But the Constitution guarantees other freedoms like the right to acquire, hold and dispose of property for the exercise of which incarceration can be no impediment, likewise, even a convict is entitled to the precious right guaranteed by Article 21 of the Constitution that he shall not be deprived of his life or personal liberty except according to procedure established by law.”
The latest order also points out that a Constitution Bench of the Apex Court held in Sunil Batra v. Delhi Administration in paragraph 213 of the Report stated as follows:
“It is no more open to debate that convicts are not wholly denuded of their fundamental rights. No iron curtain can be drawn between the prisoner and the Constitution. Prisoners are entitled to all constitutional rights unless their liberty has been constitutionally curtailed (see Procunier v. Martinex). However, a prisoner’s liberty is in the very nature or things circumscribed by the very fact of his confinement. His interest in the limited liberty left to him is then all the more substantial. Conviction for crime does not reduce the person into a non-person whose rights are subject to the whim of the prison administration and, therefore, the imposition of any major punishment within the prison system is conditional upon the observance of procedural safeguards (see Wolff v. McDonell).”
The October 3 order goes on to say:
“Unfortunately, it seems that the views of this Court over the 50 years (since Prabhakar Pandurang Sangzgiri in 1966) have continuously fallen on deaf ears and the situation does not seem to be changing even now.
Unless due importance is given to the fundamental rights and human rights of the people, the right to life and the right to live with dignity under Article 21 of the Constitution will have no meaning.”
Bhopal: The Madhya Pradesh Government’s response and the chain reaction in the ruling Bharatiya Janata Party, leading to the transfer of the Inspector General of Police and district superintendent of Police from the naxalite infested Balaghat district bordering Chattisgarh after the Additional SP and the concerned police station TI, along with four constables, had already been shunted out for assaulting an RSS district “pracharak” for posting objectionable content on a social networking platform is being dissected and analysed minutely in police and different social circles.
On Sunday, 2 October, the Madhya Pradesh Government issued orders transferring the Balaghat IG D C Sagar and bringing in his place G. Janardan, IG Anti-Naxalite Operations (Police Headquarters, Bhopal) as Balaghat Range IG. Amit Sanghi, till now the Zonal SP Special Branch at Jabalpur has replaced Asit Yadav as district SP. The removal of these officers has come after a protest strike in Balaghat and adjoining Mandla district called by the RSS.
Earlier Additional SP Rajesh Sharma, Town Inspector (TI) Zia ul Haq, sub inspector Anil Ajmaria and a couple of police constables were suspended and charged under different sSections of the Indian Penal Code (IPC). Action was taken against them after RSS Pracharak Suresh Yadav was allegedly beaten up by them on receiving a complaint from a section of the local people about a certain objectionable comment posted said to have been posted by him on a social media platform.
It has been reported that after receiving the complaint, Additional SP Rajesh Sharma, along with a police team, which included TI Ziaul Haq, went to the local RSS office on Sunday 25 September and brought Yadav to the Police station. According to an available version, the RSS pracharak was beaten up on the way and at one point, when he managed to escape, the Police chased and caught him and brought him to the Police station where he was again thrashed. Yadav was later admitted in a private hospital in Jabalpur for medical care. Police sources have a different take. It is being pointed out in knowledgeable circles that Police had to use force against Yadav when he intimated the police team, tried to rough up the cops and run away.
The suspension of the Additional SP and other cops involved in the Balaghat incident was announced by State Home Minister Bhupendra Singh on September 28 in Gwalior, where the Madhya Pradesh unit of the ruling Bharatiya Janata Party was meeting for its executive meet. On the eve of the BJP meet, national General Secretary of the BJP Kailash Vijavargiya had sent a strong message through a tweet stating that the “beating up of an RSS pracharak in a brutal manner inside his office by the TI and local goondas in the presence of the additional SP is a crime that cannot be pardoned.” Vijayvargiya’s tweet that went viral went on to ask – “the bureaucracy can have such guts under our government???”