U.S. top court spurns Louisiana, Kansas on Planned Parenthood cuts

U.S. top court, Kavanaugh spurn Planned Parenthood defunding case


WASHINGTON (Reuters) – The U.S. Supreme Court on Monday rejected appeals by Louisiana and Kansas seeking to end their public funding to women’s healthcare and abortion provider Planned Parenthood through the Medicaid program, with President Donald Trump’s appointee Brett Kavanaugh among the justices who rebuffed the states.

FILE PHOTO: Healthcare activists with Planned Parenthood and the Center for American Progress pass by the Supreme Court as they protest in opposition to the Senate Republican healthcare bill on Capitol Hill in Washington, U.S., June 28, 2017. REUTERS/Joshua Roberts

The justices left intact lower court rulings that prevented Louisiana and Kansas from stripping government healthcare funding from local Planned Parenthood affiliates. The case was one of a number of disputes working their way up to the Supreme Court over the legality of state-imposed restrictions involving abortion.

Three conservative justices – Clarence Thomas, Samuel Alito and Neil Gorsuch – dissented from the decision by the nine-member conservative-majority court, saying it should have heard the appeals by the states.

At least four justices must vote to grant review for the court to hear an appeal. Along with the four liberal justices, Kavanaugh and Chief Justice John Roberts – the court’s two other conservative justices – opposed taking up the matter.

Planned Parenthood’s affiliates in Louisiana do not perform abortions, but some in Kansas do. Medicaid, the state-federal health insurance program for low-income Americans, pays for abortions only in limited circumstances such as when a woman’s life is in danger.

It marked the first-known vote by Kavanaugh in a case since he joined the court in October after a fierce confirmation fight in the Senate. Kavanaugh was named by Trump to replace the retired Justice Anthony Kennedy, a conservative who sometimes sided with the court’s liberals on social issues like abortion.

Some Kavanaugh opponents feared he would back legal efforts to overturn or further restrict the legal right to abortion.

Thomas suggested the justices who rejected the appeals put politics over the law.

“So what explains the court’s refusal to do its job here? I suspect it has something to do with the fact that some respondents in these cases are named ‘Planned Parenthood,’” Thomas wrote in dissent.

“Some tenuous connection to a politically fraught issue does not justify abdicating our judicial duty,” Thomas added.

Louisiana and Kansas announced Republican-backed plans to terminate funding for Planned Parenthood through Medicaid after an anti-abortion group released videos in 2015 purporting to show Planned Parenthood executives negotiating the for-profit sale of fetal tissue and body parts. Planned Parenthood denied the allegations and called the videos heavily edited and misleading.

The organization’s affiliates in each state, as well as several patients, sued in federal court to maintain the funding.

“We regret today’s decision from the U.S. Supreme Court announcing that it fell one vote short of taking our case against Planned Parenthood,” Kansas Governor Jeff Colyer, a Republican, said in a statement.

‘FUNDAMENTAL RIGHT’

Leana Wen, president of the Planned Parenthood Federation of America, praised the court’s action, saying in a statement: “Every person has a fundamental right to healthcare, no matter who they are, where they live or how much they earn.”

Legal battles over other laws from Republican-led states could reach the court in the next year or two. Some seek to ban abortions in early pregnancy, including Iowa’s prohibition after a fetal heartbeat is detected. Others impose difficult-to-meet regulations on abortion providers such as having formal ties, called admitting privileges, at a local hospital.

The cases from Kansas and Louisiana did not challenge the constitutionality of abortion itself.

Many social and religious conservatives in the United States have argued against government funding of Planned Parenthood, and Republican politicians have made efforts at the state and federal level to eliminate public funding for abortion services.

The New Orleans-based 5th U.S. Circuit Court of Appeals in 2016 blocked Louisiana’s Medicaid cuts, saying the action would harm patients. The 5th Circuit said no one disputed that Planned Parenthood was actually qualified to provide the medical services it offers and the state was seeking to cut funding “for reasons unrelated to its qualifications.”

In February, the Denver-based 10th U.S. Circuit Court of Appeals ruled Kansas could not block funding because states “may not terminate providers from their Medicaid program for any reason they see fit.”

Reporting by Andrew Chung; Editing by Will Dunham



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U.S. sanctions three North Korean officials for suspected rights abuses


FILE PHOTO: Choe Ryong Hae, a close aide of North Korea’s leader Kim Jong Un, attends a meeting with Russia’s Foreign Minister Sergei Lavrov in Moscow, November 20, 2014. REUTERS/Maxim Shemetov

WASHINGTON (Reuters) – The United States on Monday imposed sanctions on three North Korea officials, including a top aide to North Korean leader Kim Jong Un, citing “ongoing and serious human rights abuses and censorship,” the U.S. Treasury Department said on Monday.

The sanctions “shine a spotlight on North Korea’s reprehensible treatment of those in North Korea, and serve as a reminder of North Korea’s brutal treatment of U.S. citizen Otto Warmbier,” the department said in a statement.

Warmbier was an American student who died in June 2017 after 17 months of detention in North Korea, which contributed to already tense exchanges between Pyongyang and Washington, primarily over North Korea’s nuclear development program.

U.S. President Donald Trump and North Korean leader Kim met in Singapore in June this year. In the lead up to the summit, North Korea released three American prisoners, although talks between the two countries have since stalled. Last month, North Korea said it would deport another detained U.S. citizen.

The sanctions freeze any assets the officials may have under U.S. jurisdiction and generally prohibits them from engaging in any transactions with anyone in the United States.

Ryong Hae Choe, an aide close to Kim who, according to the U.S. Treasury, heads the Workers’ Party of Korea Organization and Guidance Department, was sanctioned, as were State Security Minister Kyong Thaek Jong and the director of North Korea’s Propaganda and Agitation Department, Kwang Ho Pak.

Reporting by Tim Ahmann and Susan Heavey; Editing by David Alexander and Grant McCool



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About 300,000 without power in U.S. southeast after storm

Heavy snow kills one, snarls travel, in U.S. southeast


ATLANTA (Reuters) – An intense snow storm headed out to sea on Monday after dumping up to 2 feet of snow on parts of the southeastern United States, leaving one person dead in North Carolina and cutting off power for more than 200,000 people.

School districts across North and South Carolina and Virginia canceled classes for the day and emergency officials warned that heavy snow and icy roads were slowing their responses to reports, such as those of hundreds of stranded motorists.

The storm dropped its heaviest snow in the appropriately named Whitetop, Virginia, tucked in the Appalachian Mountains along the western end of the Virginia-North Carolina border, the U.S. National Weather Service said. Whitetop received 2 feet (60 cm) of snow, while Greensboro, North Carolina, had 16 inches (41 cm) and Durham, North Carolina, got 14 inches (36 cm).

David Ashby, chief deputy for the sheriff’s office in Grayson County, Virginia, where Whitetop is located, said in a phone interview that heavy snowfall had made responding to emergency calls difficult in residential areas.

“Someone passed away in her house and normally it would have been a short amount of time for us to verify, but it took about four or five hours,” Ashby said, adding that the death was unrelated to the storm. “Tremendous amount of gravel roads to clear up.”

A motorist died and a passenger was injured in Matthews, North Carolina, on Sunday when a tree fell on their vehicle as it was traveling, causing the driver to slam into a church, Matthew police officials said in a statement.

In Kinston, North Carolina, divers searched for a driver whose 18-wheeler was found in a river, a NBC affiliate in Raleigh reported.

More than 220,000 customers were without power in the Carolinas and Virginia, Poweroutage.us reported.

The storm prompted the cancellations of one in four flights into and out of Charlotte/Douglas International Airport, the sixth-busiest in the country, and other airports across the region, according to flight-tracking website FlightAware.

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Greensboro, North Carolina Mayor Nancy Vaughan, who declared a state of emergency for the city on Sunday, said online that its police and fire departments have responded to over 100 accidents and 450 stranded motorists.

“Stay off the roads if you can,” Vaughan tweeted on Monday.

More than 100 counties across Georgia, North Carolina and Virginia have delayed or canceled classes on Monday due to severe weather.

Additional reporting by Gina Cherelus and Maria Caspani in New York and Brendan O’Brien in Milwaukee; Editing by Scott Malone, Steve Orlofsky and Richard Chang



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Brexit in turmoil as UK PM May pulls vote on her divorce deal

Brexit in turmoil as UK PM May pulls vote on her divorce deal


LONDON (Reuters) – British Prime Minister Theresa May abruptly postponed a parliamentary vote on her Brexit deal on Monday, throwing Britain’s plan to leave the European Union into chaos after admitting that she faced a rout.

May’s move on the eve of the scheduled parliamentary vote opens up an array of possible outcomes ranging from a disorderly Brexit without a deal, a last-minute deal clinched just weeks before Britain’s March 29 exit, or another EU referendum.

Announcing the delay, May was laughed at by some lawmakers when she said there was broad support for her deal reached with the EU last month, the result of 18 months of tortuous negotiations, and that she had listened carefully to different views over it.

With her position at home in open jeopardy, May said she would go back to the EU and seek reassurances over the so-called Irish backstop, aimed at ensuring there will be no return to a hard border on the island of Ireland as a result of Brexit.

“If we went ahead and held the vote tomorrow the deal would be rejected by a significant margin,” May told parliament, adding that she was confident it was the right deal.

“We will therefore defer the vote scheduled for tomorrow and not proceed to divide the House at this time,” May said. The United Kingdom would meanwhile step up contingency planning for a no-deal Brexit when it is due to leave on March 29.

The vote postponement marks what many lawmakers cast as the collapse of May’s two-year attempt to forge a compromise under which the United Kingdom would exit the EU while staying largely within its economic orbit.

Sterling skidded to its weakest level since April 2017, falling to $1.2527. It was trading at $1.50 on the day of the 2016 Brexit referendum. Yields on U.S. 10-year bonds dropped to the lowest since late August.

MORE TALKS?

It was not immediately clear whether the EU’s 27 other members, which have a combined economic might six times that of the United Kingdom, would countenance changes which would convince her domestic opponents to support a deal.

The leader of the opposition Labour Party, Jeremy Corbyn, said Britain no longer had “a functioning government” and called on May to “make way” for a Labour government.

Other smaller parties, such as the Scottish nationalists and the Liberal Democrats, said they would support a vote of no confidence in May’s government.

May indicated she was seeking further assurances from the EU on the working of the backstop – an insurance policy to avoid a return to border checks between the British province of Northern Ireland and the EU-member Irish Republic, and would seek to give the British parliament more power over its application.

May said that other EU leaders were open to a discussion about the backstop, though Germany’s foreign minister said he could not see what could be changed in the 585-page deal.

“Please, prime minister, really do start listening and come back with changes to the withdrawal agreement or it will be voted down,” said Nigel Dodds, deputy leader of the Northern Irish party which props up May’s minority government.

The Democratic Unionist Party are upset as the backstop could align Northern Ireland more closely with the EU than the rest of the United Kingdom.

Britain’s Prime Minister Theresa May makes a statement in the House of Commons, London, Britain, December 10, 2018. Parliament TV handout via REUTERS

The EU is due to hold a summit on Dec. 13-14.

DELIVER BREXIT?

May said the deeper question was whether parliament wanted to deliver on the will of the people for Brexit, or open up the divisions in the world’s fifth largest economy with another referendum.

“If you take a step back, it is clear that this house faces a much more fundamental question: does this house want to deliver Brexit?” May asked.

Her decision to halt the vote came just hours after the EU’s top court, the Court of Justice, said in an emergency judgment that London could revoke its Article 50 formal divorce notice with no penalty. [nL8N1YF1JY]

“The United Kingdom is free to revoke unilaterally the notification of its intention to withdraw from the EU,” the court said.

The timing of the ruling on the eve of the British parliamentary vote was no coincidence – the court said it had ruled with unprecedented haste to ensure that British lawmakers would understand their options.

May said the result of the 2016 referendum, in which 17.4 million voters, or 52 percent, backed Brexit while 16.1 million, or 48 percent, backed staying in the EU, should be honored. The United Kingdom will leave as planned on March 29, she said.

John Bercow, speaker of the lower house of parliament, called for lawmakers to be given a vote on the decision to defer the vote on the deal itself.

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“I politely suggest that in any courteous, respectful and mature environment, allowing the house to have a say would be the right and, dare I say it, the obvious course to take,” Bercow said.

A spokesman for May said no vote was required to delay the Brexit vote and that a new date would depend on when her government got the assurances it needs to satisfy parliament.

Additional reporting by Costas Pitas, David Milliken, Kate Holton, Michael Holden, Kylie MacLellan, William James, Ben Martin, Andy MacAskill, Alastair MacDonald and Gabriela Baczynska; Writing by Guy Faulconbridge; Editing by Peter Graff and Mark Heinrich



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Trump calls hush money payments a 'simple private transaction'

Trump calls hush money payments a ‘simple private transaction’


WASHINGTON (Reuters) – Donald Trump on Monday defended hush money payments reported by his former lawyer, responding a day after Democratic lawmakers said the U.S. president could face impeachment and jail time if the transactions are proven to violate campaign finance laws.

FILE PHOTO: U.S. President Donald Trump pauses while delivering remarks at the Project Safe Neighborhoods National Conference in Kansas City, Missouri, U.S., December 7, 2018. REUTERS/Jonathan Ernst

Trump said on Twitter that Democrats were wrongly targeting “a simple private transaction.” Court filings last week drew renewed attention to six-figure payments made during the 2016 presidential campaign by Trump’s personal lawyer to two women so they would not discuss their alleged affairs with the candidate.

U.S. Representative Jerrold Nadler, who will lead the Judiciary Committee when Democrats take control of the House of Representatives next month, said on Sunday that if the payments were found to violate campaign finance laws it would be an impeachable offense.

His Democratic counterpart on the Intelligence Committee, Representative Adam Schiff, said Trump could be indicted once he leaves office and could “face the real prospect of jail time.”

Under U.S. law, campaign contributions, defined as things of value given to a campaign to influence an election, must be disclosed. Such payments are also limited to $2,700 per person.

Earlier this year, Trump acknowledged repaying his former lawyer Michael Cohen for the $130,000 paid to porn star Stephanie Clifford, also known as Stormy Daniels. He previously disputed knowing anything about the payments.

On Monday, the president again denied wrongdoing and sought to shift any blame to Cohen. One post misspelled the word “smoking” twice, drawing criticism and ridicule on Twitter.

“Democrats can’t find a Smocking Gun tying the Trump campaign to Russia after James Comey’s testimony. No Smocking Gun…No Collusion,” he wrote, referring to Fox News comment on the case.

“So now the Dems go to a simple private transaction, wrongly call it a campaign contribution, which it was not,” he wrote. He said that even if it were a campaign contribution it would amount to a civil case, adding, “but it was done correctly by a lawyer and there would not even be a fine. Lawyer’s liability if he made a mistake, not me.”

Trump has denied affairs with Stormy Daniels and the other woman who Cohen said was given hush money, former Playboy model Karen McDougal.

U.S. prosecutors on Friday sought prison time for Cohen, Trump’s self-proclaimed “fixer,” for the payments they said were made in “coordination with and at the direction of” Trump, as well as on charges of evading taxes and lying to Congress.

The case stemmed from a federal investigation into alleged Russian interference in the 2016 presidential election and possible collusion with Trump’s campaign. Russia has denied interfering and Trump has said his campaign did not cooperate with Moscow.

Legal experts are divided over whether a sitting president can be charged with a crime, as well as on whether a violation of campaign finance law would be an impeachable offense.

Reporting by Susan Heavey and Doina Chiacu; Editing by Susan Thomas and Frances Kerry



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Wall Street drops over 1 percent on growth fears, Brexit uncertainty

S&P drops to eight-month low on global growth worries


(Reuters) – The S&P 500 fell to an eight-month low on Monday as Apple Inc, as well as financial and healthcare sectors led losses on mounting worries over global growth, the U.S.-China trade war and uncertainty over Britain’s exit from the European Union.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 10, 2018. REUTERS/Brendan McDermid

The S&P and the Dow Industrials, already in the red for the year after shedding more than 4.5 percent last week, fell over 1 percent. The Nasdaq reversed after an earlier bounce to drop about 0.5 percent.

Markets have been dogged by signs of cooling global growth, concerns over interest rates and worries that escalating tensions between the United States and China could scuttle a fragile trade truce.

“You have political tensions with China, the potential for slowing global growth, and other geopolitical tensions, that continue to weigh on the markets,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

All the 11 major S&P sectors were lower. The biggest drag on the market was a 2.5 percent drop in financials as the U.S. Treasury yields dropped further on worries over U.S.-China trade conflict and the Brexit turmoil. [US/]

British Prime Minister Theresa May said she was delaying a planned vote in parliament on her Brexit deal as it was set to be rejected “by a significant margin”.

The rate-sensitive bank stocks tumbled 3.22 percent on worries that Brexit could hamper global growth, giving the Federal Reserve more reason to slow its pace of interest rate hikes.

“If the Fed is slowing, that means economic activity is below normal and that can negatively impact earnings,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

JPMorgan Chase & Co, Wells Fargo & Co, Citigroup Inc and Bank of America Corp fell over 3 percent.

At 11:50 a.m. ET, the Dow Jones Industrial Average was down 356.82 points, or 1.46 percent, at 24,032.13. The S&P 500 was down 30.14 points, or 1.14 percent, at 2,602.94, and the Nasdaq Composite was down 29.50 points, or 0.42 percent, at 6,939.75.

Energy stocks retreated 3.1 percent, as oil prices fell. Global pharmaceutical stocks weighed the most on the health index, which fell 1.3 percent and led losses among the seven sectors that were down over 1 percent.

Apple dropped 2.1 percent after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.

Despite that, the technology index was down only 0.3 percent, the least among the 11 sectors.

Declining issues outnumbered advancers for a 3.68-to-1 ratio on the NYSE and a 2.15-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 90 new lows, while the Nasdaq recorded three new highs and 303 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva



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RBI Governor Urjit Patel’s Resignation Severe Blow To India’s Economy, Says Former Prime Minister Manmohan Singh


Former prime minister Manmohan Singh says Urjit Patel’s resignation is very unfortunate. (File)

New Delhi: 

Former prime minister Manmohan Singh today said Reserve Bank of India (RBI) Governor Urjit Patel’s resignation is “very unfortunate” and a “severe blow” to the country’s economy.

In a statement, he said he hoped that the RBI Governor’s sudden resignation is not a harbinger of Prime Minister Narendra Modi government’s attempts to “destroy” the institutional foundations of India’s $3 trillion economy.

Mr Singh said it will be “foolhardy” to diminish institutions for short-term political gains.

Urjit Patel resigned as Reserve Bank of India Governor on Monday amid growing differences with the government over a range of subjects including the central bank’s autonomy.

“On account of personal reasons, I have decided to step down from my current position effective immediately,” said the 55-year-old in the letter announcing his shock resignation, with over a year left in his term.

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'Yellow vest' protests stunt French growth, Macron under pressure

Macron faces pressure to change tack as French unrest slows economy


PARIS (Reuters) – President Emmanuel Macron met French lawmakers, trade unions and business groups on Monday before giving a national address when he will respond to violent anti-government protests convulsing the country.

Heaping pressure on Macron, the Bank of France said the nationwide unrest was stunting the economy, forecasting that growth would slow to a virtual standstill in the fourth quarter.

The president’s address at 1900 GMT comes 48 hours after rioters fought street battles with riot police in Paris, hurling missiles, torching cars and looting shops in another wave of unrest that has challenged the 40-year-old’s authority.

Macron faces a delicate task: he needs to persuade the middle class and blue-collar workers that he hears their anger over a squeeze on household spending, without being exposed to charges of caving in to street politics.

“The president indicated that there are several paths opening up before him, around this idea of a social pact, taxes and the central question of France’s energy transition plan,” Hugues Vidor, leader of business lobby group UDES told Reuters after he met Macron at the Elysee Palace.

The “yellow vest” protests – named after the fluorescent safety vests French motorists must carry – were born out of a backlash against fuel prices and the cost of living for the working poor. However, they have become a broader anti-Macron rebellion and this month central Paris has witnessed the worst violence since the 1968 student uprising.

The revolt has raised questions over Macron’s ability to reform France. A former investment banker, he was elected on a promise to ease taxes and liberalize an economy long choked by regulation, but in doing so has opened himself to charges of favoring the wealthy while doing little to help the poor.

Record levels of employment and new business creation point to structural reform that may boost France’s long-term competitiveness. But tax cuts for big business and the wealthy have earned him the moniker “president of the rich”.

The central bank’s downwards revision for fourth quarter growth to 0.2 percent from 0.4 percent will complicate Macron’s task of finding concessions to placate the yellow vest movement.

Finance Minister Bruno Le Maire said the nationwide tumult would trim 0.1 percent of a point off national output. His deputy projected growth this year would round out “closer to 1.5 percent”.

CRISIS

In a sign of the perceived heightened risk of holding French debt, French government bond yields rose on Monday, pushing the gap over safer German debt to its widest since May. Ten-year bond yields hit 0.725 percent FR10YT=RR, almost 8 basis points above 4 1/2-month lows hit last week, before easing to around 0.69 percent, still higher on the day.

On the Paris bourse, shares in airport operator ADP (ADP.PA), retailer Casino (CASP.PA) and hotels company Accor (ACCP.PA) all fell.

Supermarket revenues slumped 15-20 percent on Saturday, the retail umbrella group FCD said.

People walk by a vandalized savings bank window the day after clashes during a national day of protest by the “yellow vests” movement in Paris, France, December 9, 2018. REUTERS/Piroschka van de Wouw

Upscale department store Printemps, which shut its flagship store in Paris on Saturday, said it had suffered a 25 to 30 percent slump in sales since the unrest began. “There has been a colossal loss in sales and they won’t be recouped,” Pierre Pelarrey, who runs Printemps Haussmann, told Reuters.

The economy’s slow-down will worry Macron, who faces huge pressure to make concessions while also keeping France’s budget deficit below a European Union limit.

Responding to the demands of the yellow vests for a higher minimum wage, lower taxes, and better retirement provisions will leave France in danger of breaching EU deficit rules.

“The big picture is that the budget deficit will worsen and political problems will make cuts to spending hard,” said Rabobank rates strategist Lyn Graham-Taylor.

The government’s latest estimates are for a deficit equal to 2.8 percent of GDP in 2019, just below the EU’s 3 percent cap – a target Macron has cast as critical to meet to cement his reformist credentials.

Le Maire said France faced a crisis and that Macron’s task was to heal a nation divided by the forces of globalization.

The finance minister reiterated his desire to accelerate tax cuts but suggested he was not in favor of reinstating a wealth tax.

“Does the wealth tax help reduce poverty, reduce our debts, reduce public spending? No. If you want to hunt for money, go knocking on the doors of digital tech companies,” Le Maire said.

(For a graphic on ‘French economic growth’ click tmsnrt.rs/2zQhrf0)

(For a graphic on ‘Impact of unrest on stocks’ click tmsnrt.rs/2RDxLXu)

(For a graphic on ‘Impact of unrest on bonds’ click tmsnrt.rs/2JRSanb)

Additional reporting by Leigh Thomas, Pascale Denis, Jean-Bapttiste Vey, Marine Pennetier in Paris and Dhara Ranasinghe in London, Editing by John Irish and David Stamp



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With Urjit Patel’s Exit, Team Modi Delivers A New First


Narendra Modi promised us that his would be a government of firsts, and he has certainly delivered. Not once in the post-liberalisation years of India’s rise has the governor of the Reserve Bank of India had to resign. Urjit Patel may have declared that he is resigning for personal reasons but the timing of his departure is revealing: it comes just days before the RBI Board was due to meet to consider “governance reform” of the central bank, a polite euphemism for greater control by the central government.

urjit patel

Urjit Patel resigned as RBI Governor today amid growing differences with the government over a range of subjects including the central bank’s autonomy

I remember that when candidate Modi was barnstorming through India in the months before his landslide election as Prime Minister, many liberal intellectuals argued that India’s institutions were strong and independent, and could therefore serve as a check on any Prime Minister’s ambitions, even the sort of Prime Minister Modi promised to become. Patel’s departure is just one more example of how detached from reality were such pronouncements.

The independence of the central bank is a hard-won achievement in India. We have too few such world-class institutions. The RBI’s reputation was badly damaged by its supine acceptance of demonetisation in 2016, but to Patel’s credit, he has worked hard since then to repair its image. Now, at one stroke, we are back in a pre-1991 world in which, as in any banana republic, the government can order the central bank into line.

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The government reportedly wanted to use the provision to control lending rates and also get its hands on reserve cash kept in RBI coffers

Why is this dangerous? As Viral Acharya, the deputy governor of the RBI, pointed out a few weeks ago, any subservience of a central bank to the government means that the financial system becomes fundamentally untrustworthy. In the Indian context, it means that the reserves of the RBI, which it relies on as a buffer to manage any future economic crises, would be taken away to finance the government’s vote-buying expenditure. It means that the government will be able to run higher deficits without the RBI responding by reducing liquidity and raising interest rates – the best of both worlds as far as a high-spending government is concerned, but something that would mean that India’s debt and inflation could balloon out of control. It means that the agonisingly slow clean-up of the banking sector might stall or even be thrown into reverse in order to protect the government’s interests and those of the interest groups it wishes to placate through the state-controlled financial sector. And yes, these are things that happen in a banana republic, not in a mature economy and a modern country that aspires to superpower status. A government elected on the promise of finally fulfilling India’s aspirations to greatness is taking us backward to the darkness of the 1970s and 1980s. 

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Viral Acharya – claimed in a speech on October 26 – that the government’s efforts to undermine the central bank’s independence would be “potentially catastrophic” for the country

The plain truth is that the Modi government has shown itself to be fundamentally uncomfortable with any institutions it does not control or “manage”. When the Rajya Sabha was bypassed to pass legislation like the Aadhaar Act that it should instead have been able to debate and vote on, many made excuses for the government. When a Lok Pal was not appointed in spite of there being legislation enabling it, many said it proved nothing. When the Central Information Commission, charged with safeguarding the Right to Information, began denying requests on the flimsiest of grounds, many chose to look the other way. But when four senior judges of the Supreme Court held an unprecedented and shocking press conference in which they sounded a warning about judicial independence, even the friendliest of voices would have struggled to portray the government as being respectful of India’s constitutional structure. When the leadership of the CBI, in a piece of dark comedy, fell to raiding each other and then was sacked en masse, the pattern of interference became clear to even the most jaundiced eye. And now, after a well-plotted and public campaign to undermine the Reserve Bank has caused the resignation of a hand-picked governor, it is evident that not since the authoritarian Indira Gandhi was in power has India had to deal with a government as centralising, as cavalier, as ambitious and as irresponsible as the one we have now.

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Former RBI chief Raghuram Rajan also made a case for Reserve Bank autonomy, saying that the central bank is as important as a seat belt is to a car

The allergy to independent thought on display here is not just dangerous for India’s constitutional order. It does not just reduce the checks on prime ministerial power that are essential in any liberal democracy, it also means that that power will be poorly wielded. It means that good advice will not just be ignored but not be available. Every well-known economist who could have served as a counter-point to dangerous or foolhardy political instincts has left: Arvind Panagariya, Raghuram Rajan, Arvind Subramanian and now Urjit Patel. You want to know what happens when no independent advice gets through, or is disregarded? You get world-class, historic, Himalayan policy errors – like demonetisation. 

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People wait in a long queue outside a bank after high-value notes were scrapped in November 2016 (File)

The worst part, perhaps, is that there is so much still to worry about. The vigilance authorities and the Comptroller and Auditor General have been silent so far – will they be able to stand up and defend the integrity of their offices, or will in time we discover that these too are lost to us? Most worryingly, will the Election Commission continue to be the trustworthy guardian of our electoral process that it has been since T N Seshan? The time to look the other way has passed. It may well be the case that India’s economy will survive, in the short term, the departure of Patel as it survived the departure of Rajan. But the long-term hits to the economy and to the emergence of a modern India delivered by the Modi government are adding up. It will not be too long before we collapse under the strain. Can we settle for being a second-rung, also-ran country of the sort we were before 1991? 

(Mihir Swarup Sharma is a fellow at the Observer Research Foundation.)

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

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Vijay Mallya

UK court calls Vijay Mallya a flashy playboy during its extradition verdict


The court concluded that the “flashy billionaire” does have a case to answer in the Indian courts over substantial “misrepresentations” of his financial dealings.

Vijay Mallya

Vijay Mallya said the judge was perfectly entitled to make whatever judgment she thought fit. (Photo: Reuters)

HIGHLIGHTS

  • Judge refused to accept Mallya’s claims that fraud cases were politically motivated
  • Court said “flashy billionaire” does have a case to answer in Indian courts
  • Mallya has been accused of bank fraud to the tune of Rs 9,000 crore

As a UK court ordered Vijay Mallya’s extradition back to India, the judge who delivered the verdict took the opportunity to tell Mallya’s legal team what she really thought of his lifestyle as well as the attitude of the banks in their failure to “abide by their own rules” to lend money.

Refusing to accept that the fraud cases slapped against Mallya were politically motivated, judge Emma Arbuthnot trashed Mallya’s legal team’s claims and she called him a “glamorous, flashy playboy” who defrauded banks.

The court concluded that the “flashy billionaire” does have a case to answer in the Indian courts over substantial “misrepresentations” of his financial dealings, in a major boost to India’s efforts to bring back the businessman wanted for alleged bank fraud and money laundering amounting to an estimated Rs 9,000 crore.

“Having considered the evidence as a whole, there is a case to answer There is clear evidence of dispersal and misapplication of the loan funds and I find a prima facie case that Mallya was involved in a conspiracy to launder money,” Judge Arbuthnot concluded.

“There was no evidence which allowed me to find that if extradited Mallya was at real risk of suffering a flagrant denial of justice,” she said, adding that she is sending the case to the Home Secretary of State for a decision to be taken on whether to order his extradition.

Under India’s extradition treaty with the UK, the sign off on the extradition order is made by the UK home secretary, in this case senior British Pakistani minister Sajid Javid, who has two months to formally order the extradition.

Meanwhile, Mallya has the right to lodge an appeal in the UK High Court against the Chief Magistrate’s order but that appeal would only be addressed once Javid has made his decision on the extradition order, until which time Mallya remains on the same bail conditions as before.

“I am disappointed that the judge felt I made misrepresentations to IDBI bank and persuaded them to loan money to Kingfisher Airlines. Be that as it may, the judge is perfectly entitled to make whatever judgment she thought fit. I have my rights,” Mallya told reporters after the verdict.

(With PTI inputs)

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