Supreme Court to Hear Petition Challenging India's Places of Worship Act: A Look into the Krishna Janmasthan and Gyanvapi Disputes

In a significant development, the Chief Justice of India has announced that the Supreme Court will list for hearing in April 2025 a case challenging the Places of Worship (Special Provisions) Act, 1991. This announcement comes from a post by Subramanian Swamy, a noted politician and the original petitioner in this case, who is actively involved in seeking judicial intervention to address historical religious disputes.

Dr. Swamy's petition seeks exceptions to the rules in The Places of Worship Act, specifically aiming at the restoration of two significant Hindu temple sites: Krishna Janmasthan in Mathura and Gyanvapi in Varanasi.

Krishna Janmasthan Temple in Mathura

According to Hindu tradition, Krishna Janmasthan in Mathura is believed to be the birthplace of Lord Krishna. The site has a long history of being a focal point of religious significance, with claims that a temple dedicated to Krishna was initially built by his great-grandson Vajranabh. Over the centuries, the site has seen various transformations, including the construction of a mosque, leading to disputes over rightful ownership and religious use. Dr. Swamy's petition specifically requests the restoration of this site, arguing for the historical and religious significance it holds for Hindus.

Gyanvapi Mosque in Varanasi

Similarly, the Gyanvapi mosque in Varanasi is at the heart of another contentious dispute. The mosque was built over the ruins of the ancient Kashi Vishwanath temple, which was allegedly demolished during the reign of Mughal Emperor Aurangzeb. The mosque's location near the famous Kashi Vishwanath temple adds to the complexity, with Hindu groups seeking permission to worship deities they believe are still present within the mosque's structure.

Dr. Swamy's argument

Dr. Subramanian Swamy's legal argument for seeking exceptions for the Krishna Janmabhoomi in Mathura and the Kashi Vishwanath site in Varanasi under the Places of Worship Act revolves around the profound cultural and religious significance these locations hold within Hindu tradition. He emphasizes that both sites are not merely places of worship but are deeply embedded in the spiritual and historical narrative of Hinduism. Krishna Janmabhoomi is revered as the birthplace of Lord Krishna, one of the most worshipped deities in Hinduism, with centuries-old traditions and stories associated with this location. Similarly, Kashi Vishwanath is one of the twelve Jyotirlingas, the holiest abodes of Lord Shiva, making it a pivotal pilgrimage site.

Dr. Swamy's contention is that these sites were originally Hindu temples before being demolished and mosques being constructed in their place during historical conquests, specifically under the reign of Mughal Emperor Aurangzeb. He argues that the restoration of these temples would not only serve to restore the sanctity and continuity of Hindu religious practice but also address the historical injustices where these sacred spaces were forcibly altered.

By focusing solely on Krishna Janmabhoomi and Kashi Vishwanath, Dr. Swamy aims to highlight their exceptional status in Hindu cosmology, suggesting that their restoration is a matter of correcting specific historical wrongs.

Depreciation of INR and Its Impact on the Indian Stock Market

Introduction

The depreciation of the Indian Rupee (INR) against major global currencies, particularly the US Dollar, has been a significant concern for investors, both domestic and foreign. This article explores how the weakening of INR can lead to a fall in the stock market, focusing especially on the perspective of Foreign Portfolio Investors (FPIs).

Understanding Currency Depreciation

Currency depreciation refers to the decline in the value of one currency relative to another. For the INR, this often means it takes more rupees to buy a dollar or other foreign currency. Several factors contribute to this depreciation, including:

• Trade Deficits: When India imports more than it exports, it needs more foreign currency, thus devaluing the INR.
• Inflation: High inflation rates in India compared to other countries can lead to a weaker currency.
• Global Economic Conditions: Shifts in global investor confidence, changes in oil prices, or geopolitical tensions can affect currency values.
• Monetary Policy: Actions by the Reserve Bank of India (RBI) or foreign central banks can influence currency strength.

Impact on the Stock Market

1. Higher Import Costs: As INR depreciates, the cost of importing goods rises, which can lead to increased prices for consumers and businesses, potentially reducing corporate profits and, consequently, stock valuations.
2. Decreased Foreign Investment: 
   • Capital Outflows: FPIs might convert their profits back to their home currency, leading to a sell-off of Indian stocks. This is because a weaker INR means less return when converted back to stronger currencies like the USD or EUR.
   • Increased Risk Perception: A depreciating currency often signals economic instability, which can deter new foreign investments.
3. Impact on Debt: Companies with foreign currency-denominated debt face higher repayment costs in INR, affecting their financial health and stock prices.
4. Inflation Hedge: While a weaker currency can theoretically make Indian goods cheaper abroad, the immediate impact is often higher inflation at home, reducing the real value of stock returns.

Concerns for FPIs

• Currency Risk: The primary concern for FPIs is currency risk. When the INR depreciates, the returns on investments in India might not cover the currency loss when repatriated.
• Repatriation of Earnings: The process of converting INR back to a stronger currency becomes less profitable, which might lead to a decrease in new investments or even withdrawal of existing ones.
• Economic Stability: FPIs look for stability and predictability; currency depreciation can signal underlying economic issues or policy uncertainties, making the market less attractive.
• Cost of Capital: For FPIs, financing in foreign currency becomes more expensive if they lend or invest in India, as the cost of capital increases with a weaker INR.

Conclusion

The depreciation of the INR is a complex issue with significant implications for the Indian stock market, particularly through its impact on FPIs. While a weaker rupee can boost export competitiveness, the immediate effects on investment flows, corporate earnings, and investor sentiment are generally negative.

Revisiting Economic Reforms: Dr. Swamy's Vision for India's Growth

Dr. Subramanian Swamy, a noted economist and former Member of Parliament, has long championed a series of bold economic reforms aimed at catalyzing India's growth. His suggestions include the abolition of income tax, reducing the prime lending rate to as low as 5%, enhancing returns on fixed deposits, and the liberal printing of currency for infrastructure development. These propositions have parallels in global economic practices that merit a closer look for their potential benefits.

Abolition of Income Tax

Dr. Swamy's call to abolish personal income tax is anticipated to significantly boost savings and consumption. He argues that with the removal of income tax, people would have more disposable income, encouraging higher savings rates, which could be channeled into investments. Although no major economy has entirely abolished personal income tax, there are instances where countries have significantly reduced tax rates or complexity to stimulate economic activity. For example, Estonia introduced a flat tax system in the 1990s, which simplified tax collection and reportedly spurred economic growth by enhancing compliance and reducing administrative burdens. Similarly, Hong Kong maintains one of the lowest personal tax rates in the world, contributing to its status as an economic powerhouse.

Reducing the Prime Lending Rate

The suggestion to lower the prime lending rate to 5% is designed to make borrowing cheaper, thereby encouraging businesses to invest in expansion and consumers to finance big-ticket purchases like homes and vehicles. This strategy echoes the monetary policies seen in Japan post-2008, where near-zero interest rates were used to combat deflation and stimulate economic activity. Japan's experience showed that low interest rates will encourage business investment and consumption.

Increasing Interest Rates on Fixed Deposits

Dr. Swamy advocates for higher interest rates on fixed deposits to incentivize savings. This approach could be likened to the policies in countries like Singapore, where high savings rates have been part of a broader strategy to ensure economic resilience. Singapore's high savings rates have contributed to a strong national savings pool, which in turn supports robust investment in both public and private sectors. By increasing the attractiveness of fixed deposits, India could potentially increase its domestic savings, providing a buffer for economic downturns and funding for growth.

Printing Currency for Infrastructure

The proposal to print currency for infrastructure development aligns with the concept of quantitative easing (QE), famously used by the U.S. Federal Reserve post the 2008 financial crisis. The U.S. saw significant improvements in infrastructure and employment by injecting liquidity into the economy, although this was managed through buying back government securities rather than direct printing for infrastructure. Closer to home, China has employed massive infrastructure spending partly funded by increased money supply, which has been credited with maintaining economic momentum even during global downturns.

Cultural and Economic Context

Dr. Swamy's ideas are framed within the unique socio-economic context of India, where high savings rates and a burgeoning young population could support such radical reforms. His vision, which also involves encouraging corporate R&D and educational expenditure through tax deductions, aims at a holistic approach to stimulate both demand and supply sides of the economy.

Dr. Swamy's vision offers a provocative discussion on how India might rethink its economic strategies to harness its full potential.

Dr. Swamy's economic suggestions could potentially unlock new avenues for growth in India, leveraging both domestic savings and infrastructure development to propel the nation towards a more prosperous future.