India needs a Uniform Civil Code
Introduction
India, being a diverse nation, is home to many religions, each with its distinct personal laws governing marriage, divorce, adoption, inheritance and succession. It would be accurate to say that the absence of a Uniform Civil Code (UCC) has only served to perpetuate inequalities and inconsistencies in our land of rich diversity. In fact, this has been a hindrance in the nation’s progress towards social harmony, economic and gender justice.
In the Constituent Assembly
- The debate on the UCC goes back to the Constituent Assembly debates.
- Constituent Assembly debates shed light on the need and the objective behind promoting a common civil code.
- Babasaheb Ambedkar, the chief architect of the Indian Constitution, had made a strong case in the Constituent Assembly for framing a UCC. He stressed the importance of a UCC in ensuring gender equality and eradicating prevailing social evils.
- Since a consensus on a UCC could not be reached in the Constituent Assembly, the subject found a place under Article 44 of the Directive Principles.
- Thus, Article 44, in a sense, is the Constitutional mandate which requires the state to enact a UCC that applies to all citizens cutting across faiths, practices and personal laws.
The apex court’s call
- It would be also pertinent to point out here that the Supreme Court had dwelt on the matter on more than one occasion.
- The top court had observed in the Shah Bano case that “It is a matter of regret that Article 44 has remained a dead letter.”
- The Court had pointed out that a UCC would help the cause of national integration.
- However, despite articulating its views clearly on the subject in many cases, the Supreme Court refrained from issuing any clear directive to the government being mindful of the fact that the framing of laws falls within the exclusive domain of Parliament.
The essence
- The UCC is, therefore, a step in the right direction, long overdue, to safeguard the fundamental rights of all citizens and reduce social inequalities and gender discrimination.
- It should be seen and understood as an attempt at creating a unified legal framework that upholds the principles enshrined in the Constitution and reaffirmed by Supreme Court judgments.
- The doubts in the minds of some and the opposition to this initiative stemming from unfounded apprehensions need to be addressed through enlightened debate and constructive engagement.
- It will serve as a powerful instrument for the promotion of equality and justice for all citizens. Seen in this light, every citizen should welcome it.
- A UCC would eliminate discriminatory practices that deprive women of their rights and provide them with equal opportunities and protections.
- Our diverse society calls for a unified legal framework to foster social cohesion and national integration.
- Personal laws should have a two-dimensional acceptance — they should be constitutionally compliant and consistent with the norms of gender equality and the right to live with dignity.
Way forward
- Finally, fellow citizens, leaders of religious groups and political parties should rise above all differences and support implementation of the UCC.
- They should contribute to making it an instrument of social reform, a legislative framework fully aligned with principles of justice and equity underscored by the Constitution.
- It will be a yet another step, a very significant one, towards building a new, inclusive, egalitarian India that we all want.
Editorial 2 : Internationalising the rupee without the ‘coin tossing’
Context
The government’s announcement of a long-term road map for further internationalisation of the rupee can turn out to be a positive exercise.
Background
- In the 1950s, the Indian rupee was legal tender for almost all transactions in the United Arab Emirates (UAE), Kuwait, Bahrain, Oman and Qatar, with the Gulf monarchies purchasing rupees with the pound sterling.
- In 1959, to mitigate challenges associated with gold smuggling, the Reserve Bank of India (Amendment) Act was brought in, enabling the creation of the “Gulf Rupee”, with notes issued by the central bank for circulation only in the West Asian region.
- However, by 1966, India devalued its currency, eventually causing some West Asian countries to replace the Gulf rupee with their own currencies.
- Flagging confidence in the Indian rupee’s stability combined with an oil-revenue linked boom, slowly led to the introduction of sovereign currencies in the region.
- The move, in 2023, to withdraw the ₹2,000 note has also impacted confidence in the rupee.
- The demonetisation of 2016 also shook confidence in the Indian rupee, especially in Bhutan and Nepal.
- The rupee’s internationalisation cannot make a start without accounting for the concerns expressed by India’s neighbours.
Very little international demand
- The rupee is far from being internationalised — the daily average share for the rupee in the global foreign exchange market hovers around ~1.6%, while India’s share of global goods trade is ~2%.
- India has taken some steps to promote the internationalisation of the rupee (e.g., enable external commercial borrowings in rupees), with a push to Indian banks to open Rupee Vostro accounts for banks from Russia, the UAE, Sri Lanka and Mauritius.
- However, such transactions have been limited, with India still buying oil from Russia in dollars.
- Ongoing negotiations with Russia to settle trade in rupees have been slow-going, with Russia expected to have an annual rupee surplus of over $40 billion.
- For a currency to be considered a reserve currency, the rupee needs to be fully convertible, readily usable, and available in sufficient quantities.
- India does not permit full capital account convertibility (i.e., allowing free movement of local financial investment assets into foreign assets and vice-versa), with significant constraints on the exchange of its currency with others.
Pursue these reforms
- Many reforms can be pursued to internationalise the rupee.
- It must be made more freely convertible, with a goal of full convertibility by 2060 – letting financial investments move freely between India and abroad.
- This would allow foreign investors to easily buy and sell the rupee, enhancing its liquidity and making it more attractive.
- Additionally, the RBI should pursue a deeper and more liquid rupee bond market, enabling foreign investors and Indian trade partners to have more investment options in rupees, enabling its international use.
- Indian exporters and importers should be encouraged to invoice their transactions in rupee.
- Additional currency swap agreements (as with Sri Lanka) would further allow India to settle trade and investment transactions in rupees, without resorting to a reserve currency such as the dollar.
- Additionally, tax incentives to foreign businesses to utilise the rupee in operations in India would also help.
- The RBI and the Ministry of Finance must ensure currency management stability and improve the exchange rate regime.
- More demonetisation (or devaluation) will impact confidence.
- A start could be made to push for making the rupee an official currency in international organisations, thereby giving it a higher profile and acceptability.
- The Tarapore Committees’ (in 1997 and 2006) recommendations must be pursued including a push to reduce fiscal deficits lower than 3.5%, a reduction in gross inflation rate to 3%-5%, and a reduction in gross banking non-performing assets to less than 5%.
Conclusion
The government’s road map for further internationalisation of the rupee will make it easier for Indian businesses to do business/invest abroad and enhance the rupee’s liquidity, while enhancing financial stability. It must also benefit Indian citizens, enterprises and the government’s ability to finance deficits. It is a delicate balance to trade off rupee convertibility for exchange rate stability.
