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The Lok Pal (anti-corruption body) Bill has generated widespread interest in the past few days.
The Bill is an attempt by the government, under massive pressure due to corruption charges, to gain some of its lost ground. However, civil rights activists, including Anna Hazare, Swami Agnivesh, Kiran Bedi and Arvind Kejriwal, have termed the draft legislation as weak and demanded that fifty per cent of the members in the committee drafting the bill should be from the public.
But the common man appears to be in the dark about the scope of the proposed bill.
Here's an FAQ on the controversial bill.
What is the controversy between the government and Anna Hazare about?
Anna Hazare and other civil society activists have proposed a draft Lok Pal Bill to tackle the menace of corruption. The Prime Minister formed a sub-committee of the Group of Ministers to discuss the issue with these activists. However, these two groups were unable to reach an agreement on the provisions of the Lok Pal Bill. According to the government, the activists demanded that the government should accept the Bill drafted by them without any changes.
What steps has the government taken to enact the Lok Pal Bill?
In January 2011, the government has formed a Group of Ministers chaired by Shri Pranab Mukherjee to suggest measures to tackle corruption, including examination of the proposal of a Lok Pal Bill.
What is the purpose of the office of Lok Pal?
The office of the Lok Pal is the Indian version of the office of an Ombudsman who is appointed to inquire into complaints made by citizens against public officials. The Lok Pal is a forum where the citizen can send a complaint against a public official, which would then be inquired into and the citizen would be provided some redressal.
What are issues that have generated debate on the Lok Pal Bill?
There are diverging views on issues such as the inclusion of the office of the Prime Minister, Ministers and Members of Parliament, inclusion of judges, and powers of the Lok Pal. Some experts contend that all public officials should be accountable while others feel that the autonomy and privilege of Parliament require the Prime Minister, Ministers, and Members of Parliament to be accountable only to Parliament.
Have there been other attempts to establish the institution of Lok Pal at the central level?
Yes. The Lok Pal Bill has been introduced eight times in the Lok Sabha (1968, 1971, 1977, 1985, 1989, 1996, 1998 and 2001). However, each time the Lok Sabha was dissolved before the Bill could be passed, except in 1985 when it was withdrawn.
Have any expert commissions made recommendations on the office of Lok Pal?
Yes, a number of commissions have made various recommendations regarding the necessity of the office of the Lok Pal, its composition, powers and functions, and jurisdiction. The commissions, which dealt with the Lok Pal include the First Administrative Reforms Commission of 1966, the National Commission to Review the Working of the Constitution of 2002 and the Second Administrative Reforms Commission of 2007. The Lok Pal Bills that were introduced were referred to various Parliamentary committees (the last three Bills were referred to the Standing Committee on Home Affairs).
What are the present laws that deal with corruption of public officials in India?
Public servants (such as government employees, judges, armed forces, and Members of Parliament) can be prosecuted for corruption under the Indian Penal Code, 1860 and the Prevention of Corruption Act, 1988. However, the Code of Criminal Procedure and the 1988 Act require the investigating agency (such as the CBI) to get prior sanction of the central or state government before it can initiate the prosecution process in a court.
Have the state governments been more successful in setting up bodies to redress public grievances against administrative acts?
So far 18 state governments have enacted legislation to set up the office of Lokayukta and Uplokayukta (deputy Lokayukta). The 18 states are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Jharkhand, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Uttarakhand, and Uttar Pradesh.
Which other countries have the office of the Ombudsman for grievances?
Sweden, Finland, Denmark, the Netherlands, Austria, Portugal, Spain, New Zealand, Burkina Faso and the United Kingdom are some of the countries which have the office of an Ombudsman.
The article was published on rediff.com on April 5, 2011
The Monetary Policy Committee (MPC) has decided to conduct an off-cycle meeting today to discuss the failure to meet the inflation target under Section 45ZN of the Reserve Bank of India Act, 1934. As per the Reserve Bank of India Act (RBI), 1934, MPC is required to meet at least four times each year, to discuss the macroeconomic issues in the country, and take policy decisions to address those. This is the second time MPC has conducted an off-cycle meeting in 2022-23. The meeting is scheduled in light of inflation being consistently high for nine consecutive months.
In this blog, we discuss what the inflation targeting framework is, examine retail and wholesale prices, and the divergence between them.
What is the inflation targeting framework, and what happens if inflation is persistently high?
In 2016, Parliament amended the RBI Act, 1934 to change the monetary policy, and introduce an inflation targeting framework. This framework prioritises price stability to achieve sustainable GDP growth. Price stability allows investors to confidently invest their money for productive activities, without worrying about it losing value. Price stability also maintains the purchasing power of consumers, i.e., the ability to purchase a good (or service) with a given amount of money.
As per the new framework, the central government, in consultation with RBI sets: (i) an inflation target, and (ii) an upper and lower tolerance level for retail inflation. The target has been set at 4%, with an upper tolerance limit of 6% and a lower tolerance limit of 2%. The upper and lower limits indicate that although it is desirable for inflation to be close to 4%, deviation between these limits is acceptable. The target and bands are revised every five years. In March 2021, the existing targets were carried forward.
Retail inflation has been above 6% for the past nine months, and it has been above 4% from October 2019 onwards (See Figure 1).
Figure 1: Consumer price index (year-on-year; in percentage)
Sources: Database on Indian Economy, Reserve Bank of India; PRS.
If inflation is above or below the prescribed limits for three quarters, RBI must submit a report to the central government explaining why prices have been rising (or falling) persistently, what will be done to correct that, and an estimate as to when the target will be achieved.
The MPC uses tools such as interest rates to control the level of inflation in the economy. One such rate is the policy repo rate, which is the rate at which RBI lends money to banks. An increase in the policy repo rate makes borrowing money more costly, and hence is expected to control inflation by reducing the money supply. MPC increased this rate from 4% in April 2022 to 4.4% in May 2022, to 4.9% in June 2022, to 5.4% in August 2022, and to 5.9% in September 2022.
Breaking down the Consumer Price Index and the Wholesale Price Index
Consumer Price Index (CPI) measures the general prices of goods and services such as food, clothing, and fuel over time. Retail inflation is calculated as the change in the CPI over a period of time. Goods and services such as petrol, food products, health, and education are considered for its calculation, which are assigned different weights (See Table 1). Between February 2022 and August 2022, the average annual inflation was 6.9%. The rise in prices of subcomponents of the CPI during this period is indicated in Table 2.
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Table 1: Assigned weights for the calculation of CPI
Sources: MOSPI; PRS. |
Table 2: Average inflation of some CPI components
Sources: Database on Indian Economy, RBI; PRS. |
CPI is not the only index that measures inflation in an economy. The Wholesale Price Index (WPI) measures the wholesale prices of goods. A change in wholesale prices reflects wholesale inflation. Table 3 indicates the weights assigned to goods for calculating the WPI. Manufactured goods include metals, chemicals, food products, and textiles.
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Primary articles (23%) include food articles, and crude petroleum and natural gas. Fuel and power (12%) include mineral oils, electricity, and coal. WPI has remained above 10% from April 2021 onwards. It reached an all-time high of 17% in May 2022. This was driven by the inflation in metals, kerosene and petroleum coke, fruits and vegetables, and palm oil. |
Table 3:Assigned weights for the
Sources: Ministry of Commerce and Industry; PRS. |
Why has WPI inflation been consistently above CPI inflation?
Movements in the WPI have an impact on the CPI. For almost a year and half, CPI inflation has remained below WPI inflation. However, as per the design of the indices, it is expected that CPI would remain above WPI, and that any increase in WPI would reflect in the CPI after a time lag. This is because retail prices include taxes (as a percentage of price), while wholesale prices do not. Additionally, some of the goods in WPI act as inputs in the goods considered in CPI. An increase in input prices would lead to higher retail prices after a time lag.
We discuss possible reasons for why CPI has remained below WPI for a year and a half.
Figure 2: Consumer Price Index and Wholesale Price Index
Sources: Database on Indian Economy, Reserve Bank of India; PRS.
Composition of indices
As indicated in Table 2 and 3, the composition of the two indices varies. For instance, prices of manufacture of basic metals, chemicals, and machinery grew at an average rate of 13% between February 2021 and September 2022. They contribute 7% to the WPI. These are input goods for producing final goods and services such as automobiles, which are included in the CPI. The rise in prices of transport vehicles, communication devices, fuel for transport, and housing (CPI components) rose by 6% during this period.
The Ministry of Finance has observed that wholesale prices did not feed into retail prices (from March 2021 onwards) as wholesalers absorbed the rising input costs and did not pass them on to retailers. In August 2022, it noted that as retail prices are rising now, the pass-through may occur.
