15 Jan 2020: The Hindu Editorial Analysis
1) On rise of consumer price inflation: Inflation shocker
- The inflation devil is back and at the wrong time. The 7.35% rise in consumer price inflation in December is a shocker even to those who were prepared for an elevated level of inflation in the backdrop of the rise in prices of food commodities in general, and the astronomical rise in the price of onions, in particular.
- The disturbing December print has set off fears over whether India is entering a period of slow growth accompanied by high inflation, in other words, stagflation.
- Such fears have to be weighed against a few facts. First, the headline inflation number is driven mainly by food inflation at 14.12% - it was 10.01% in November and -2.65% in December 2018.
- While onion was the prime villain pushing up price inflation in vegetables to a huge 60.50% compared to December 2018, prices of other food items such as meat and fish (up 9.57%), milk (up 4.22%), eggs (up 8.79%) and some pulses were also on the upswing.
- These are a largely seasonal rise in prices and are driven mainly by supply-side factors and the prices will reverse once the supply shortfall is addressed. With growth sagging and prices rising, the economy is entering a difficult phase.
- An analysis by State Bank of India’s research team shows that minus the increase in prices of onion, potato and ginger, headline CPI inflation would be just 4.48%. Second, core inflation, which is the one that should be of concern, has only inched up marginally from 3.5% in November to 3.7% in December.
- That said, it would be worrisome indeed if core inflation were to shoot up or if food inflation does not cool down in the next couple of months. Also, the effects of the increase in telecom tariffs, rail tickets and in fuel prices need to be closely watched.
- The sharp jump in the CPI has queered the pitch for the Reserve Bank of India’s monetary policy review in February. The central bank stood pat on rates in the December policy precisely due to fears of inflation and had even revised upwards its inflation projection for the second half of the fiscal to 4.7-5.1%.
- The December print is way above the monetary policy committee’s (MPC) mandated limit of 6% (4% plus 2%) which means that a rate cut is pretty much off the table for now.
- Yet, with growth sagging, there is pressure on the central bank to cut rates at least one more time to stimulate growth. It would be interesting to watch the deliberations of the MPC in February.
- While the market may be prepared to accept a standstill policy for now, any change in the RBI’s stance from accommodative to neutral may not go down well. A lot would also depend on the fiscal arithmetic that would emerge from the budget to be presented on February 1.
- Meanwhile, the government should engage all levers to address the supply-side issues that are behind the rise in food inflation. A calming down of food prices will help the bank do what the government and markets want - lower rates.
2) On SC's hearing in Sabarimala temple case: Theological thicket
- The opening hearing before a nine-judge Supreme Court Bench, constituted to give an authoritative pronouncement on the nature of religious freedom under the Constitution, has revealed the conceptual confusion over the reference made to it.
- The Bench, headed by the Chief Justice of India, S.A. Bobde, has asked lawyers to “re-frame” the issues, or add to them, following submissions that the questions framed by a Bench of five judges were too broad.
- Further, the CJI has clarified that the Court will not be deciding the petitions seeking a review of the verdict in the Sabarimala temple case. Instead, it would limit itself to “larger questions” such as the interplay between freedom of religion and other fundamental rights; and the extent to which courts can probe whether a particular practice is essential to that religion or not.
- At the same time, he has said, “We will decide questions of law on women’s entry into mosques/temples, genital mutilation among Dawoodi Bohras, entry of Parsi women who marry outside the community into the fire temple.
- We will not decide the individual facts of each case.” It would be prudent if this approach means that the Bench would set out the limits of the freedom of religion, against which such practices can be tested and their legality determined.
- However, it would be unwise if the examination of every discriminatory practice becomes a fresh treatise on Articles 25 and 26, instead of being subjected to a simple test whether the particular practice is protected by the freedom of religion, or can be curbed on the grounds of “public order, morality and health”.
- A signal flaw in the reference is that it did not emanate from Benches before which these matters were pending. Normally, such issues are referred to a larger Bench only if the Court is faced with apparently contradictory precedents, or feels that the settled law requires reconsideration.
- A five-judge Bench, while hearing the Sabarimala review petitions, had referred a set of questions to a larger Bench. But two dissenting judges had pointed out that it was up to Benches before which such cases came up to decide whether they should go by existing precedent, or refer the matter to larger Benches for fresh consideration.
- That the strength of the Bench was fixed at nine may indicate that the court is leaving scope for revisiting the 1954 seven-judge Bench decision in the Shirur Mutt case, holding that religious denominations had the autonomy to decide what religious practices were essential to them.
- A reconsideration of this “essentiality doctrine” will be useful only if it is a means to rid the court of the burden of entering the theological thicket. SC must mark limits of religious freedom, against which legality of practices can be tested.
- However, even without revisiting the judgment, courts have often given verdicts that protect individual rights, and uphold equality and dignity over regressive religious practices.