NOVEMBER - 2018
www.uniqueshiksha.com
NOVEMBER-2018
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
Support for lives on the move #GS3 #Economy
What:
Internal migration can be driven by push and/or pull factors.
In India, over the recent decades, agrarian distress (a push factor) and an increase in better-paying jobs in urban areas (a pull factor) have been drivers of internal migration.
Data show that employment-seeking is the principal reason for migration in regions without conflict.
Distress due to unemployment or underemployment in agriculture, natural calamities, and input/output market imperfections.
Why:
• At the destination, a migrant’s lack of skills presents a major hindrance in entering the labour market. • Further, the modern formal urban sector has often not been able to absorb the large number of rural workers entering the urban labour market. • This has led to the growth of the ‘urban informal’ economy, which is marked by high poverty and vulnerabilities. • The ‘urban informal’ economy is wrongly understood in countries such as India as a transient phenomenon. • Most jobs in the urban informal sector pay poorly and involve self-employed workers who turn to petty production because of their inability to find wage labour. • Migrant workers earn only two-thirds of what is earned by non-migrant workers, according to 2014 data. • Further, they have to incur a large cost of migration which includes the ‘search cost’ and the hazard of being cheated. • Often these costs escalate as they are outside the state-provided health care and education system; this forces them to borrow from employers in order to meet these expenses. • And frequent borrowing forces them to sell assets towards repayment of their loans.
• Employment opportunities, the levels of income earned, and the working conditions in destination areas are determined by the migrant’s household’s social location in his or her village. • The division of the labour market by occupation, geography or industry (labour market segmentation), even within the urban informal labour market, confines migrants to the lower end. • Often, such segmentation reinforces differences in social identity, and new forms of discrimination emerge in these sites.
What are the benefits of migration?
• Despite these issues, internal migration has resulted in the increased well-being of households, especially for people with higher skills, social connections and assets. • Migrants belonging to lower castes and tribes have also brought in enough income to improve the economic condition of their households in rural areas and lift them out of poverty. • Data show that a circular migrant’s earnings account for a higher proportion of household income among the lower castes and tribes. • This has helped to improve the creditworthiness of the family members left behind — they can now obtain loans more easily. • Thus, there exists a need to scale-up interventions aimed at enhancing these benefits from circular or temporary migration. • Interventions targeting short-term migrants also need to recognise the fact that short-term migration to urban areas and its role in improving rural livelihoods is an ongoing part of a long-term economic strategy of the households. • Local interventions by NGOs and private entrepreneurs also need to consider cultural dimensions reinforced by caste hierarchies and social consequences while targeting migrants.
Why a national policy?
The need for a national policy towards internal migration is underscored by the fact that less than 20% of urban migrants had prearranged jobs and nearly two-thirds managed to find jobs within a week of their entry into the city, as a study in the early ’90s showed and that we verified through field work in Tamil Nadu in 2015.
• The probability of moving to an urban area with a prearranged job increases with an increase in education levels. • Access to information on employment availability before migrating along with social networks tend to reduce the period of unemployment significantly. • Social networks in the source region not only provide migrants with information on employment opportunities, but are also critical as social capital in that they provide a degree of trust.
• While migrants interact with each other based on ethnic ties, such ties dissipate when they interact with urban elites to secure employment. • In India, the bulk of policy interventions, which the migrants could also benefit from, are directed towards enhancing human development; some are aimed at providing financial services. • As government interventions are directed towards poverty reduction, there is a dearth of direct interventions targeted and focussed on regions. • The first kind could aim at reducing distress-induced migration and the second in addressing conditions of work, terms of employment and access to basic necessities.
To way forward
• Narrowly defined migrant-focussed interventions will not enhance the capabilities of migrants that could lead to increased earnings and an eventual exit from poverty. • There is also a need to distinguish between policy interventions aimed at ‘migrants for survival’ and ‘migrants for employment’. • Continued dynamic interventions over long periods of time would yield better results compared to single-point static interventions, especially in the context of seasonal migrants. • Local bodies and NGOs which bring about structural changes in local regions need to be provided more space. • Interventions aimed at enhanced skill development would enable easier entry into the labour market. • There is also need independent interventions aimed specifically at addressing the needs of individual and household migrants because household migration necessitates access to infrastructure such as housing, sanitation and health care more than individual migration does. • For instance, government interventions related to employment can be supported by market-led interventions such as microfinance initiatives, which help in tackling seasonality of incomes. • Policy interventions have to consider the push factors, which vary across regions, and understand the heterogeneity of migrants. • As remittances from migrants are increasingly becoming the lifeline of rural households, improved financial infrastructure to enable the smooth flow of remittances and their effective use require more attention from India’s growing financial sector. https://www.thehindu.com/todays-paper/tp-opinion/support-for-lives-on-the- move/article25385079.ece
Conservation, environmental pollution and degradation
Choked by smog #GS3 #Environment
What:
Air pollution is choking several cities in the northern States once again, as changes in temperature and slowing winds trap soot, dust and fine particulate matter.
The National Capital Region is badly hit, as the burning of agricultural residue in Punjab and Haryana is releasing large volumes of smoke containing, among other pollutants, highly damaging fine particulates, or PM2.5.
Why:
The problem is aggravated by the burning of urban waste, diesel soot, vehicular exhaust, road and construction dust, and power generation.
Although India has nine of the 10 most polluted cities in the world, it has not taken consistent action on pollution.
Tens of millions live with ambient air quality that is well short of even the relaxed parameters the country has set for fine particulates, compared with those of the World Health Organisation.
How:
• India should at least now give high importance to the WHO warning about air pollution being the new tobacco. • This year’s ‘severe’ air quality rating for Delhi and poor conditions prevailing in other cities in the Indo-Gangetic Plain should compel a decisive shift in policy. • The Centre and the State governments need to get into crisis mode to dramatically reduce emissions. • They must address the burning of carbon, which is a direct source, and emissions with oxides of nitrogen and sulphur from vehicles that turn into fine particulates through atmospheric reactions. • Failure to take sustainable and urgent measures will inflict long-term harm on public health, affecting children even more by putting them at higher risk for diseases. • The UN Environment Programme’s recent report titled ‘Air Pollution in Asia and the Pacific: Science- Based Solutions’ has sounded a warning, pointing out that only 8% of the population in the countries of the region get to breathe air of acceptable quality. • One study of degradation of Delhi’s air over a 10-year period beginning 2000 estimated premature mortality to have risen by as much as 60%. • With the steady growth in the population of the capital and other cities, the trauma is set to worsen. • Farm stubble burning is a major contributor to the problem, and its footprint may be growing because of wider use of mechanical harvesters that is producing more waste.
To way forward
• An innovative approach could be to use climate change funds to turn farm residues into a resource, using technological options such as converting them into biofuels and fertilizers. • From an urban development perspective, large cities should reorient their investments to prioritise public transport, favoring electric mobility. • The World Bank has said it is keen to enhance its lending portfolio to tackle air pollution, opening a new avenue for this. • Governments should make the use of personal vehicles in cities less attractive through strict road pricing mechanisms. • Sharply escalated, deterrent parking fees can be implemented. • If governments delay action on the critical issue of pollution control, public pressure must force them to act. https://www.thehindu.com/todays-paper/tp-opinion/choked-by-smog/article25396439.ece
Conservation, environmental pollution and degradation
Green crackers make Sivakasi see red #GS3 #Environment
What:
According to an affidavit filed by the Ministry of Environment, Forests and Climate Change (MoEF&CC) in the Supreme Court on August 21 this year, ‘green crackers’ are less polluting, with lower emission levels.
However, Sivakasi views the court order as striking a deathblow to the pyrotechnics industry.
The MoEF&CC had commissioned a team from the Council of Scientific and Industrial Research-National Environmental Engineering Research Institute (CSIR-NEERI), Nagpur, to conduct research on ‘green crackers’.
In its affidavit to the Supreme Court, the Ministry has mentioned a ‘CSIR-Kaliswari joint facility’, which is Selvarajan’s firm, Sri Kaliswari Fireworks Private Limited, implying an industry partner for the ‘Green Cracker experiment’.
Why:
The petition for the firecracker ban was first filed in the Supreme Court, on behalf of three infants, in 2015.
In November 2016, in light of Delhi’s air quality having deteriorated sharply after Deepavali, the Court suspended the permanent and temporary licences of all cracker retailers in Delhi and banned the entry of fireworks into the National Capital Region (NCR).
The suspension of firecracker licences was revoked briefly in September 2017 on the ground that there were no definitive pollution standards for the industry to adhere to.
But in October 2017, just ahead of Deepavali, the court overturned its earlier order and ordered an experimental ban on firecrackers in the NCR.
This led to the petitioners seeking an all-India ban on firecrackers.
The court asked the MoEF&CC and affiliated bodies to come up with solutions.
Some points:
The court order, which was issued when Deepavali was barely two weeks away, included other strictures too:
• a ban on the use of barium salts in cracker manufacturing, • and also a ban on using series or joint crackers (garlands/ laris ) on the ground that these caused noise pollution and generated way too much garbage.
All these decisions by the court were based on suggestions from the MoEF&CC which the judiciary swiftly accepted and worked into its order.
According to NEERI’s scientist on the project, ‘green crackers’ operate on a technology called Safe Water and Air Sprinklers (SWAS).
When a material absorbs water, it generates heat, which aids the bursting of crackers.
In a ‘green cracker’, a reactant such as aluminium absorbs the water, generating a lot of heat, which enables the explosion.
If there is one thing that both the firecracker industry and the Petroleum and Explosives Safety Organisation (PESO), the industry’s licensing body, are keen to avoid, it is aluminium coming in contact with moisture.
How:
Fireworks manufacturing units are graded on the basis of their scale of operation, nature of licences, and whether they are in the organised or the unorganised sector.
PESO, which comes under the Ministry of Commerce and Industry, is the licensing authority for units of higher capacity (in terms of chemical handling and production).
The second category, of smaller units or ‘DM (district magistrate)-licensed units’, are monitored by the local revenue and police departments.
The ban on barium
• Barium nitrate only gives an attractive green colour and the court may consider its immediate banning. • The Court immediately banned the use of barium salts in firecrackers. In practice, this translates into an indirect ban on the industry as a whole as 60% of its products require barium. • Anything that emits light needs barium, while something that only explodes does not need barium. Barium added to aluminium gives off white light. • When PVC [polyvinyl chlorde] powder is added to barium, it lends a green colour to that light. • A ban on barium effectively means a ban on flower pots, chakraas, pencils, sparklers, and aerial fireworks.
About Fireworks Research and Development Center (FRDC):
• Created under PESO and with its campus in Sivakasi, the FRDC was set up with the specific objective of researching and “developing environment-friendly crackers”. • Its website talks about its excellent infrastructure. • They have been around for 12 years, operating under the Department of Industrial Policy and Promotion, but without any encouragement for research. • The industry asserts that it has always responded positively to change. • Another focus of the MoEF&CC’s recommendations has been the ‘series’ or ‘joint’ crackers (garlands). • The rules prescribed a noise level ceiling of 125 db for a single cracker, when measured at a distance of 4 metres. • For a string of crackers, a single piece from the string is tested and using a formula, the decibel level for the total number of crackers is calculated. https://www.thehindu.com/todays-paper/tp-opinion/green-crackers-make-sivakasi-see- red/article25408086.ece
Science and Technology- developments and their applications and effects in everyday life
Protecting against polio #GS3 #SnT
Why the inactivated polio vaccine is essential for India?
• With wild polio virus strains reduced by 99.9% since 1988, the world is inching towards eradicating polio. • More children today are affected by the live, weakened virus contained in the oral polio vaccine (OPV) that is meant to protect them.
• The weakened virus in the vaccine can circulate in the environment, occasionally turn neurovirulent and cause vaccine-derived poliovirus (VDPV) in unprotected children. • While the wild-type virus has caused 22 and 25 polio cases in 2017 and 2018 (as on October 30, 2018), respectively, in just two countries (Pakistan and Afghanistan), VDPV was responsible for 96 and 75 polio cases in more countries during the same periods. • Paradoxically, vaccination (using OPV) has become the main source of polio paralysis in the world,” notes a 2018 paper in The Lancet.
About VAPP burden
• While circulating VDPV strains are tracked, and outbreaks and cases are recorded and shared, little is known about vaccine-associated paralytic poliomyelitis (VAPP) cases, particularly in India. • VAPP occurs when the virus turns virulent within the body of a recently vaccinated child and causes polio. • The frequency of VAPP cases varies across countries. • With high-income countries switching to the inactivated polio vaccine (IPV) that uses dead virus to immunise children, the VAPP burden is concentrated in low-income countries which continue to use the OPV. • In spite of the World Health Organisation asking all countries using the OPV to include a “continuous and effective system of surveillance” to monitor the frequency of VAPP in 1982, India did not comply. • However, even after 1997, India did not count VAPP cases. • This is because it does not add value to the polio elimination programme. • The justification that VAPP cases can be ignored as they are “sporadic and pose little or no threat to others” is ethically flawed.
How:
• Many member countries autonomously chose the IPV over the OPV, mainly to avoid any risk of VAPP. • In India, the VAPP cases can be avoided once the government stops using the OPV to immunise children. • India ignored the problem of VAPP until their numbers were counted. • A paper and a letter published in 2002 in the Bulletin of the WHO said the number of VAPP cases in India in 1999, 2000 and 2001 were 181, 129 and 109, respectively. • The WHO had suggested a rate of 1 case of VAPP per million births and had estimated the annual global burden of VAPP to be approximately 120 cases in 2002.
• Under these circumstances, India’s share would been merely 25 VAPP cases per year, based on the annual birth cohort of 25 million. But the observed number of cases in India in 1999 was 181. • This indicates that the actual risk is seven times the expected number. • It is reasonable to assume that there would be 400-800 annual cases of VAPP globally,” Dr. John wrote in 2002 in the Bulletin. • That would have meant that there were 100-200 VAPP cases in India each year. • The global estimated incidence of VAPP was then revised to 200-400 cases. • Despite knowing that there is a higher burden of polio caused by oral vaccines, India continued to use the OPV. • The decision to use only the OPV was faulty. Parents were obliged to accept the OPV and face the consequences of VAPP as well as VDVP.
About Switching to IPV
The reason for not switching over to the IPV is because global production was too low to meet India’s demand. India is the largest cohort. It needs 48 million doses per year to immunise all children.
The decision to manufacture the IPV in India was taken in 1988 and a company was eventually set up with technology transfer from France.
Indigenous production of IPV before 1991 shall be aimed at as new IPV programme ramps up, the OPV will ramp down.
To way forward
The IPV is essential for post wild-type polio virus eradication, to get rid of VDPV and VAPP.
The globally synchronised switch from trivalent to bivalent OPV in mid-2016 was accompanied by administering a single dose of the IPV prior to administering the OPV.
A single dose of the IPV given before the OPV prevents VAPP cases.
A single dose of the IPV primes the immune system and the antibodies against the polio virus, seen in more than 90% of immunised infants, notes a paper in The Lancet.
With no way of monitoring VAPP cases in India, there is no way of knowing if the use of a single dose of IPV followed by immunisation using bivalent OPV has led to a reduction in the number of VAPP cases. https://www.thehindu.com/todays-paper/tp-opinion/protecting-against-polio/article25440455.ece
Polio vaccine contamination is a worry?- Priyanka Pulla #GS3 #SnT
What happened?
Since April 2016, all oral polio vaccines (OPV) across the world contain only two of the three polio serotypes — Type 1 and Type 3.
Type 2 is banned because the wild, disease-causing version of this virus was eradicated globally by 1999, and because OPV itself can cause polio in rare cases.
However, sometime in September, routine surveillance detected the Type 2 vaccine virus in stool samples from children in Uttar Pradesh, implying that someone was still making the vaccine. Further investigations revealed that the OPV, made by a Ghaziabad-based firm called Bio-Med, contained traces of the Type 2 vaccine virus.
Can a vaccine cause polio?
Yes. There are two ways in which all three oral vaccine viruses can cause polio. The first is called Vaccine Associated Paralytic Polio (VAPP). Here, in extremely rare cases, the vaccine virus mutates into a virulent version of itself, causing disease in the child who received the vaccine, or in a person who came in contact with the child. VAPP causes isolated cases and not outbreaks, because it doesn’t spread from person to person.
The second way in which the vaccine can cause polio is through Circulating Vaccine Derived Polio Virus (cVDPV). Here, too, the vaccine virus mutates into a virulent version, but spreads from person to person, causing outbreaks.
For this to happen, though, the vaccine virus must circulate among people for at least around 12 months. During this transmission, the virus has a chance to mutate. This usually happens in communities where vaccination rates are low. cVDPV, too, is extremely rare.
Can contamination cause VAPP or cDVPV?
It can, but the probability is small. According to T. Jacob John, a Vellore-based virologist, “The risk is virtually zero, but not absolutely zero.”
Take VAPP for instance. The risk of VAPP is extremely low, in general. A 2002 study in the Bulletin of the World Health Organisation estimated that India saw one case of VAPP for every 4.1-4.6 million OPV doses administered in 1999. This was the combined risk from all three serotypes. The risk from the Type 2 virus alone is even smaller. cVDPV, on the other hand, is a bigger worry, because the Type-2 vaccine virus is the most likely to turn cVDPV among all the three. But for this to happen, two conditions must be fulfilled. First, a large number
of children must be unimmunised against Type-2. Second, the virus needs to circulate from person to person for several months.
Both these conditions don’t seem to be met in Uttar Pradesh. Even though India stopped giving children OPV Type 2 in 2016, it has been giving them the Inactivated Polio Vaccine, which also protects against the Type-2 polio.
After news of the contamination, mop-up rounds to give IPV to any children who had missed it earlier were conducted. All this drastically reduces the chance that the vaccine virus will stick around in the environment for long enough to turn into cVDPV.
Is there anything to worry about?
Yes. The Central Drugs Standard Control Organisation ought to trace the source of the contamination, which it hasn’t done yet. Unless this happens, we won’t know how to prevent incidents of larger contamination in future.
The two possible sources are Ghaziabad’s Bio-Med and PT Bio Farma, an Indonesian firm which supplied the vaccine raw material to Bio-Med and all other Indian OPV manufactures. Therefore, if Bio Farma was the source, the worry is bigger.
Second, Uttar Pradesh health authorities haven’t made it clear how widespread the contamination was. Early media reports said 1.5 lakh vials were contaminated.
Assuming 20 doses per vial, this is around 3 million doses. The previous calculations of low risk are based on this number. If a substantially larger number of doses was administered, the risk would grow.
However, when asked for the final number of doses administered, Uttar Pradesh Expanded Programme for Immunisation Officer A.P. Chaturvedi told The Hindu that this number was unknown. https://www.thehindu.com/todays-paper/tp-national/polio-vaccine-contamination-is-a- worry/article25466355.ece
Effect of policies and politics of developed and developing countries on India's interests
India and the U.S., oceans apart #GS2 #IR
What:
The U.S. has sold nearly $15 billion worth of arms to India over the last 10 years.
The Donald Trump administration’s displeasure at India’s recent decision to buy the S-400 missile system from Russia puts a question mark about the future of India-U.S. cooperation in the Indo-Pacific for three reasons.
Washington perceives Russia as a security threat. It stresses interoperability with U.S. armed forces.
How:
• The Indo-Pacific at the Asia-Pacific Economic Cooperation (APEC) Summit in Da Nang, Vietnam, in November 2017, he hailed Vietnam as being at “the very heart of the Indo-Pacific”. • The NSS 2017 views the Association of Southeast Asian Nations (ASEAN) and APEC as “centerpieces of the Indo-Pacific’s regional architecture”. • The Indo-Pacific, as described in the NSS, represents the most populous and economically dynamic part of the world and “stretches from the west coast of India to the western shores of the United States”. • The NSS 2017 has omitted some of India’s most vital interests, including the Bay of Bengal and the Arabian Sea. • Also left out is the Strait of Malacca, which links the Indian and Pacific Oceans and is India’s gateway to trade with Southeast Asia, Japan and South Korea.
About Countering China
• China is the main security threat to U.S. primacy in Asia. It also has a long-standing border dispute with India. • That gives India and the U.S. a shared interest in countering China’s growing military power and territorial revisionist tendencies. • The NSS 2017 recognises that China’s military power rests on its economic progress and its focus is on blunting China’s competitive edge. • Business engagement is at the centre of the Trump administration’s strategy for a “free and open Indo-Pacific”. • For India, defence cooperation is the most significant dimension of the India-U.S. strategic partnership. • India itself is unclear about what it means by the Indo-Pacific. New Delhi has tended to present the term “Indo-Pacific” as raising India’s strategic stature.
How useful is India to the U.S.?
• Prosperous states are stronger security partners who are able to share the burden of confronting common threats.
• China’s economy ($14 trillion) is nearly five times bigger than India’s, and its defence spending ($228 billion) is far more than India’s $63 billion. • Mr. Trump wants India to offer more investment to Asian countries. • But India needs Chinese investment to upgrade its own infrastructure and is nowhere near competing successfully against China as an investor in Southeast Asia. • In 2016, two-way trade between India and ASEAN moved up to $71.6 billion. • In contrast, two-way trade between China and ASEAN stood at more than $452 billion.
Some points:
• At another level, maritime power is the key to international clout in the 21st century. • About 90% of India’s trade passes through the Indian Ocean. India has less than 20 submarines in service; China 78. • That is one reason why India needs the intelligence-sharing and drones promised by the U.S. at the 2+2 Dialogue in September to detect Chinese submarines in the Indian Ocean. • Significantly, of India’s three services, its Navy gets around 15% of the defence budget. • The U.S. Navy and Marines get the lion’s share of the U.S. military budget. • Moreover, in April 2017, China successfully launched its second aircraft carrier, which was domestically built. • The U.S. is sceptical about India’s capacity to counter the growing influence of China in the Indian and Pacific Oceans.
To way forward
Dependent on the U.S. and Russia for most of its arms — and on the U.S. and China for much of its trade — India’s simultaneous efforts to cultivate good relations with the U.S., Russia and China highlight the conceptual differences between New Delhi and Washington on the Indo-Pacific and on how best to counter China in Asia.
India-U.S. ties could also be encumbered by India’s need for greater economic strength, its red tape and its trading methods.
The extent to which India’s purchase of the S-400 will widen the gap between it and the U.S. on the Indo-Pacific will soon become apparent. https://www.thehindu.com/todays-paper/tp-opinion/india-and-the-us-oceans- apart/article25440449.ece
Science and Technology- developments and their applications and effects in everyday life
Cause to remain alert #GS3 #SnT
What:
Despite the recent announcement suggesting that the Jaipur Zika virus strains cannot cause foetal microcephaly, all possible measures to control transmission and monitor pregnancies should be taken.
Some facts:
• Over the last few years, the international community has banded together to quickly address a growing international public health crisis — the Zika virus epidemic. • After its detection in Brazil during 2015, observant clinicians began to notice a striking increase in the rates of babies born with microcephaly, a rare neurological condition characterised by underdeveloped brains and undersized heads. • Epidemiological, clinical, and experimental data has indicated that microcephaly, and a range of other birth defects (such as miscarriages and ocular disease) could be caused by the Zika virus passing from a pregnant women to her foetus. • The Indian Council of Medical Research (ICMR) recently announced that the Zika virus strains causing the outbreak in Jaipur, Rajasthan, cannot cause microcephaly. • This conclusion was based on a genetic sequencing of viruses isolated from the outbreak. • In these sequences, the ICMR did not find a Zika virus mutation linked to microcephaly that was suggested in a Science magazine study, in 2017. • The problem with this conclusion is that the research was based on infection in mouse brains — not humans — and contains no epidemiological or clinical support. • Numerous other studies suggest that all Zika virus strains may have the capacity to infect foetuses and cause neurological disease. • Much more research is needed to determine if some strains are associated with a higher risk.
How:
• According to the most recent updates, 159 people in Jaipur had confirmed Zika virus infections. • Considering that most infections do not cause noticeable disease, and thus most infected individuals do not seek medical attention, the true number of cases may be more than 10,000. • At least 50 of the infected individuals are pregnant women, but again, the true number is likely to be much higher. • According to the Centers for Disease Control and Prevention in the U.S., only 5-10% of Zika virus infections during pregnancies lead to Zika-associated birth defects, and the rates of microcephaly are much lower. • So, while the chances for the Zika virus to cause harm to an individual baby are low, there is still a chance, regardless of the Zika virus strain in circulation.
About precautions
Pregnant women and their families, including those planning to get pregnant, should take great caution to avoid mosquitoes — wear long sleeves and trousers, stay indoors when possible, use DEET/insect repellent, and remove standing water that mosquitoes use for breeding.
Zika virus infection is not guaranteed upon mosquito bite, but the chances for infection rise with each new bite.
Zika-associated birth defects could be a serious public health crisis in India, and, without a vaccine, all possible measures to control transmission and monitor pregnancies should be taken. https://www.thehindu.com/todays-paper/tp-opinion/cause-to-remain-alert/article25459196.ece
Science and Technology- developments and their applications and effects in everyday life
Defeating pneumonia #GS3 #Health
What:
Air Pollution and Child Health: Prescribing Clean Air”, a new World Health Organisation report, says that 98% of children under the age of five from countries such as India are exposed to toxic air.
Acute Respiratory Infections — which are the leading cause of death among children under five, and claiming the lives of approximately 2,400 children a day — accounted for approximately 16% of the 5.6 million under-five deaths, killing around 880,000 children in 2016. Most victims are less than two years old.
How:
A report by Save the Children (“Fighting for Breath”) showed that pneumonia kills two children in this age group every minute — more than malaria, diarrhoea and measles combined.
More than 80% of victims have weakened immune systems caused by malnutrition or insufficient breastfeeding and unable to fight the infection.
For countries with high levels of toxicity in the air, delivering on the pledge of the UN’s Sustainable Development Goals (SDGs) will require an unrelenting focus on the most disadvantaged children.
Children born into poverty, and also those living in the hardest-to-reach places, and facing discrimination are the ones who face the greatest risks.
Why:
• Air pollution is a ‘major risk factor for pneumonia.
• The sources of pollution vary across and within countries. • Outdoor air pollution, which is associated with emissions from factories, the burning of rubbish and coal, and traffic, is a growing concern. • Children living in urban slum environments often face high levels of exposure to these sources of pollution. • Indoor air pollution is a major contributor of respiratory infection in many high-burden pneumonia countries, where the burning of biomass for cooking, heating and lighting are the common sources of pollution’.
What report says?
• According to the International Energy Agency’s Energy Access Outlook 2017 report, over 63% of households in India use biomass energy sources. • Tackling household air pollution that is a major source of pneumonia infections is another priority. • In 2016, pneumonia was the leading cause for under-five deaths in India, and more than 25 million children under the age of two were found not immunised with pneumococcal conjugate vaccine. • The “Fighting for Breath” report says that globally, a million children are dying from pneumonia annually, even though it can be treated with antibiotics costing as little as Rs. 26. • While the Indian government has taken several steps to improve the health of children, India continues to top the world ranking in the number of deaths due to the disease burden. • The number of unvaccinated children in the 0-2 age range in developing countries is estimated to be at around 170 million, with India dominating. • Research shows that that the association between pneumonia and air pollutant exposure is particularly strong during the first year of life. • It is a well-known that exclusive breastfeeding in the first six months acts as an effective vaccine and continued breastfeeding with the gradual introduction of complementary food is another risk- reducer.
To way forward
• Defeating pneumonia necessitates multi-sectoral action plans. • Concerted action by the government, backed by civil society, corporates and communities can help save children’s lives, but we need to move fast. • Looking at the threat that bad air is posing, it is imperative for the government to develop comprehensive national guidelines and multi-sectoral convergent action plans and ensure adequate resourcin. • The complexity of interventions places a premium on coordinated policy responses.
• The Partnership for Maternal, Newborn and Child Health summit is to be hosted by India in December and this should hopefully bring rigour to commitments made under the SDGs vision 2030. • Pneumonia leaves desperately vulnerable children struggling, parents coping with anxiety and, all too often, the grief and trauma that comes with the loss. https://www.thehindu.com/todays-paper/tp-opinion/defeating-pneumonia/article25466303.ece
Most child deaths due to pneumonia in India #GS3 #SnT
India continues to have the highest burden of pneumonia and diarrhoea child deaths in the world, with 1,58,176 pneumonia and 1, 02,813 diarrhoea deaths in 2016. This was stated in the ‘Pneumonia and Diarrhoea Progress Report’ released on Friday by the International Vaccine Access Centre (IVAC) at the Johns Hopkins Bloomberg School of Public Health.
Q- What does report says?
The new report, which looked at progress in fighting pneumonia and diarrhoea in 15 countries with the greatest number of deaths from these illnesses — finds health systems are falling woefully short of ensuring the most vulnerable children have access to prevention and treatment services.
The 15 countries that the report looked at account for 70% of global pneumonia and diarrhoea deaths in children under five.
Globally, pneumonia and diarrhoea led to nearly one of every four deaths in children under five years of age in 2016. Authors at the IVAC have also called on the global community to collect better data and target communities of greatest need. The report has been released ahead of the 10th World Pneumonia Day on November 12.
The report analyses how effectively countries are delivering 10 key interventions — breastfeeding, vaccination, access to care, use of antibiotics, oral rehydration solution (ORS) and zinc supplementation — to help protect against, prevent, and treat, pneumonia and diarrhoea.
The measures are proven to help prevent death due to these illnesses and could help achieve the United Nations’ Sustainable Development Goal target of reducing under-five mortality to at least as low as 25 per 1,000 live births by 2030.
The Pneumonia and Diarrhoea Progress Report, supported by the Bill & Melinda Gates Foundation, issued annually, finds that although countries are making progress in immunisation coverage, they seriously lag in efforts to treat childhood illnesses — especially among populations that are remote, impoverished or otherwise left behind.
Progress in India — home to more under-five pneumonia and diarrhoea deaths than any other country in 2016 — has been mixed.
Increasing coverage of Haemophilus Influenzae Type B (Hib) vaccine, as well as continued scale-up of rotavirus vaccines, first introduced in mid-2016, led to a bump in scoring for these interventions since last year’s report. Introduced in 2017, the Pneumococcal Conjugate Vaccine has been included in only six States to date. Further scale-up of the vaccine to all States should be considered. https://www.thehindu.com/todays-paper/tp-life/most-child-deaths-due-to-pneumonia-in- india/article25459164.ece
Indian Economy
India jumps to 77th rank in the Ease of Doing Business Index #GS3 #Economy
India jumped 23 ranks in the World Bank’s Ease of Doing Business Index 2018 to 77. In the 2017 report, the country was ranked 100. The Index ranks 190 countries based on 10 indicators across the life-cycle of a business, from “starting a business” to “resolving insolvency.”
India’s strong reform agenda to improve the business climate for small and medium enterprises is bearing fruit. It is also reflected in the government’s strong commitment to broaden the business reforms agenda at the State and now even at the district level. https://www.thehindu.com/todays-paper/india-jumps-to-77th-rank-in-the-ease-of-doing-business- index/article25385205.ece
Indian Economy
Tussle for power- K. Bharat Kumar #GS3 #Economy
What is the RBI aggrieved about?
One, the Reserve Bank of India wants more powers over regulating public sector banks (PSBs). Two, it feels that the government should not dictate the quantum of its surplus that can be paid as annual dividend. And three, it is miffed that the Centre has suggested a separate payments regulator.
Does it have a point?
Slammed for poor regulation following the fraud at Punjab National Bank, RBI Governor Urjit Patel told a parliamentary panel in June that it does not have enough powers over PSBs. But the RBI does have nominee directors on bank boards. It leads physical inspection at banks and financial audits.
It has also orchestrated mergers between banks whenever a bank has been on the verge of collapse (for instance, Global Trust Bank merged with Oriental Bank of Commerce). So, the RBI does have adequate control over PSBs but may not be exercising it fully.
The RBI earns income from lending to commercial banks and from purchase and sale of government securities. It also has a surplus seigniorage (the difference between the value of notes that it prints and the cost of printing and distributing them). After setting aside an amount for contingency and asset development, the RBI transfers the surplus to the government.
In 2016, that amount was Rs. 65,876 crore; this dropped to Rs. 30,659 crore in 2017. This year, it paid Rs. 50,000 crore to the government. One view is that if the RBI dips further into its reserves to pay the Centre, this would weaken its balance sheet. On the other hand, the RBI is accountable to the government. Plus, globally, central banks do transfer surplus reserves to their governments.
As payment systems fall under monetary policy, a separate payments regulator is unwarranted.
Why is the government miffed?
The RBI’s circular on February 12 stressed assets recognition as a sore point. The regulator scrapped all the past restructuring mechanisms and said that if a borrower delayed payment for even one day, he should be dragged to an insolvency court and the asset classified as a non-performing asset (NPA).
The Centre sees the prompt corrective action (PCA) framework by the RBI, which restricts weak banks from lending, as contributing to the liquidity crisis. It also wanted special dispensation by the RBI to help non-banking finance companies (NBFCs) apart from relaxed norms for lending to micro, small and medium enterprises.
Are these arguments valid?
Mr. Patel calls the circular as “Samudra Manthan” (when you churn the ocean, it is unavoidable that some poison will precede the nectar). Bankers, industry and the government view the circular as harsh and are unhappy with its timing.
The RBI is right in placing weak banks under the PCA. If anything, the RBI says, it has helped control the problem of bad loans. The government wants the PCA diluted so that bank lending rises, thereby easing the liquidity crisis.
The RBI could have heeded the Centre’s signals on easing liquidity through extraordinary measures in addition to routine open market operations. It is a fact that NBFCs, housing finance companies and microfinance institutions are in a spot of bother due to the squeeze on liquidity. https://www.thehindu.com/todays-paper/tp-opinion/tussle-for-power/article25385075.ece
Indian Economy
RBI firm despite govt. seeking consultation under Section 7 #GS3 #Economy
The Reserve Bank of India (RBI) has refused to provide any leeway to stressed borrowers or give in to the demand of higher dividend by the government, which issued three letters to the central bank in the last one month for consultation under Section 7 of the RBI Act.
Section 7 of the RBI Act empowers the central government to issue directions to the RBI in public interest. This section has, however, never been invoked by the government so far.
Section 7 has two parts — consultation and then issuing a direction to the RBI for taking some action in public interest.
According to central banking sources, one letter pertained to exemption for power companies from new stressed asset norms, while another one was to dilute capital threshold norms of the prompt corrective action framework. Yet another one communication was pertaining to more capital to the government from the reserves of the central bank.
It was speculated that if the government issued directions under this Section, RBI Governor Urjit Patel would quit. “RBI has responded to all the communications that were sent by the government. RBI has decided to maintain its stance.
As the spat between the central bank and the government came out in public, the finance ministry issued a statement emphasising on RBI’s autonomy, but added that it would continue consultations.
“The autonomy for the central bank, within the framework of the RBI Act, is an essential and accepted governance requirement. Government of India has nurtured and respected this. https://www.thehindu.com/todays-paper/tp-business/rbi-firm-despite-govt-seeking-consultation- under-section-7/article25385040.ece
Indian Economy
RBI & government: A delicate balance #GS3 #Economy
In 1980, with a raging inflation and an unemployment rate of over 7% in the US, advisers of President- elect Ronald Reagan warned that the Federal Reserve’s independence “should not mean a lack of accountability”, demanded clearer monetary targets from the central bank, and encouraged efforts by the US Congress to monitor the Fed’s performance.
Several economists including the Nobel Prize winner Milton Friedman assailed Paul Volcker, the Chairman of the Federal Reserve — and Arthur F Burns told Volcker that “Milton wants to abolish the Fed (and) replace you with a computer”, Sebastian Mallaby recorded in his magisterial biography of Volcker’s successor Alan Greenspan, The Man Who Knew: The Life and Times of Alan Greenspan (2016).
After Reagan moved into the White House in January 1981, his staff let it be known that the President would visit the Federal Reserve headquarters at Eccles Building in Washington DC. “Bristling at the thought — the symbolism of the Commander-in-Chief marching into his office had to be avoided — he [Volcker] changed the meeting to the Treasury,” Mallaby has written.
When they met, Reagan asked Volcker: “I’ve had several letters from people who raise the question of why we need the Federal Reserve. What do you suggest I say to them?”
Volcker replied: “Mr President, there have been concerns along those lines, but I think you can make a strong case that we have operated quite well. Unfortunately, we are the only game in town right now fighting inflation. Once the budget gets under control, we will have a better shot at taking the pressure off prices.”
The answer did the trick — it switched the focus to budget policy. “The more he could avoid monetary issues, the more he would preserve his independence,” Mallaby wrote. Volcker, who served until 1987, finally won the battle against inflation.
Government vs RBI
RBI Deputy Governor Viral Acharya may have alluded to this approach to decision-making in his October 26 speech that riled the government. A government’s horizon of decisionmaking is rendered short, like a
T20 cricket match, by considerations such as national and state elections, and populist alternatives acquire urgency, Acharya said.
A central bank, by contrast, plays a Test match, trying to win each session of a day’s play but importantly, also to survive so as to have a chance to win the next session. In that speech came the first indication of an escalation that has seen the sovereign take the first step towards issuing a directive to RBI by initiating consultations with the Governor — invoking a provision in the RBI Act that had not been used even during wars or major financial crises.
Early problems
To be sure, conflicts between the government and RBI are not new. The longest-serving RBI Governor after Independence, Benegal Rama Rau (1949-57), was forced to quit after a confrontation with then Finance Minister T T Krishnamachari. Prime Minister Jawaharlal Nehru backed his cabinet colleague, and wrote to Rau: “Obviously [the Bank] also has a high status and responsibility. It has to advise the government, but it also has to keep in line with the government.”
However, in April 1964, the same TTK told Lok Sabha: “I am very happy that successive Governors of the Reserve Bank have been able to shoulder this increasing responsibility that is being cast on them, are… able to take an independent view and [do] not completely subordinate their views to those of the party in power, including the Minister.
I have been very grateful during my two spells as Finance Minister for the independence shown by the Reserve Bank and I want it to have that independence.” (History of the Reserve Bank of India)
Politics and tenures
The tenures of two other RBI Governors were impacted by political changes. K R Puri, who was appointed by Indira Gandhi’s government a couple of months into the Emergency had to leave in May 1977 after the Janata Party came to power. R N Malhotra, who became Governor in 1985, got an extension after his term ended; however, he had to leave in 1990 after Chandra Shekhar became PM.
The Chandra Shekhar government, in which Yashwant Sinha was Finance Minister, moved Finance Secretary Bimal Jalan to the Prime Minister’s Economic Advisory Council. Ironically, in 1998, when Atal Bihari Vajpayee’s NDA government assumed office, Sinha “inherited” Jalan as RBI Governor — appointed by the United Front government in the previous year.
“We built the best of relationships, with our roles clearly defined, and by building a rapport with the backing of Prime Minister Vajpayee, who kept the [RSS affiliate] Swadeshi Jagran Manch at bay,” Sinha told The Indian Express Wednesday.
Give-and-take
Unlike what is unfolding now, differences between the government and RBI were probably handled with greater subtlety in the past. Several earlier Governors refrained from boiling over in public, and tempered their language while signalling disagreements with fiscal policymakers. “You can differ strongly when pushed to the extreme. But you have to choose your words carefully,” a former Governor said Wednesday.
Manmohan Singh, who was RBI Governor between 1982 and 1985 provided an insight into negotiations with the government in a conversation that his daughter Daman Singh reproduced in her book Strictly Personal: Manmohan and Gursharan (2014).
There is always give-and-take. I had to take the government into confidence. The Governor of RBI is not superior to the Finance Minister in authority. And if the Finance Minister insists, I don’t see that the Governor can really refuse unless he is willing to give up his job.”
Indeed, that is what some Governors may have chosen to do. Over a decade ago, a Governor of the RBI was called by a Parliamentary panel whose chief asked him who appointed the head of the central bank. “The Cabinet and the Prime Minister,” the Governor said. The MP then wanted to know who sacked the Governor. “Sir, they don’t wait [for that]. They go,” the Governor replied.
That Parliamentary Committee chief was gracious enough to apologise. But as Manmohan Singh, when asked if he would have liked to stay on in the RBI, told his daughter: “Well, I would have liked to, but then when you are told to leave, I guess you leave.” https://indianexpress.com/article/explained/rbi-government-a-delicate-balance-5428060/
India and its neighborhood- relations
India protests China-Pakistan bus via PoK #GS2 #IR
India reiterated its opposition to a proposed luxury bus service between Pakistan and China that would pass through parts of Pakistan-occupied Kashmir and Gilgit-Baltistan — territory that India claims — terming it “a violation of India’s sovereignty”, a day after it had summoned a Chinese diplomat to South Block to lodge a strong protest against the initiative.
“We have lodged strong protests with China and Pakistan on the proposed bus service that will operate through areas of Pakistan Occupied Jammu and Kashmir State under the so-called ‘China-Pakistan Economic Corridor. “Any such bus service through Pakistan Occupied Jammu & Kashmir State will be a violation of India’s sovereignty and territorial integrity.”
While China asserted that the bus service from Lahore to Tashkurgan in Xinjiang — timed to begin when Pakistani Prime Minister Imran Khan will be visiting Beijing — did not alter the country’s stance on the Kashmir issue, Pakistan dismissed India’s objections as “frivolous”.
It is an economic cooperation project between China and Pakistan and not targeted at any third party. It has nothing to do with the territorial dispute and it will not affect China’s principled position on the issue of Kashmir.
India has consistently opposed the 1963 “China-Pakistan Boundary Agreement” that recognises PoK as under “actual Pakistani control” without prejudicing a final dispute resolution with India, and India has protested the Karakoram Highway on which traffic has been plying regularly, as well as subsequent infrastructure projects built by China in the disputed area. https://www.thehindu.com/todays-paper/tp-national/india-protests-china-pakistan-bus-via- pok/article25396496.ece
Indian Economy
NRIs deposits surge as rupee slides and oil prices rise #GS3 #Economy
Non-resident Indian (NRI) deposits jumped to $5.7 billion in the first five months of this fiscal compared to $0.5 billion in the same period last year. The rise is attributed to the sliding rupee, which makes deposits in the currency attractive for NRIs, and to higher oil prices which have prompted inflows from NRIs in the Middle-east to increase.
According to data published by RBI, during the April-August period of 2018-19, NRI deposit inflow was $5.7 billion. Non-Resident (External) Rupee Account was the main contributor at $4.1 billion compared to $1.7 billion during the same period of the previous year. These deposits are freely repatriable and tax free.
Also, when currency depreciates, interest rates in the country develop an upside bias. So, prospective interest earnings also go up. This too incentivises NRIs to send more money during the episodes of currency depreciation.
The other components of NRI deposits are FCNR(B), which saw inflows of $597 million during April- August (compared to outflow of $799 million in the year ago period) and NRO, which attracted inflow of $986 million (versus outflow of $327 million).
The UAE is the top source of inward remittances into India, with Kerala receiving the maximum funds sent from abroad, according to the RBI’s survey of inward remittances for 2016-17.
“Given that the major proportion of NRI deposits originate from the Middle East and the oil prices have been on an upswing in addition to the weakness in rupee, we believe that the net inflow of these deposits may touch $20 billion in the current year,”
The government and RBI have taken measures in the past to attract a higher quantum of NRI deposits. However, any sharp upsurge in such deposits over a short period may not be necessarily favourable over the longer term as these deposits are repatriable and can therefore lead to sudden currency outflows in future periods https://www.thehindu.com/todays-paper/tp-business/nris-deposits-surge-as-rupee-slides-and-oil- prices-rise/article25396409.ece
Indian Economy
Loans for MSMEs in 59 minutes #GS3 #Economy
Prime Minister Narendra Modi announced 12 measures to boost the Micro, Small and Medium Enterprises (MSME) sector, including a portal that would enable the units to get a loan in just 59 minutes and interest subvention of 2%.
The Prime Minister said firms registered on the Goods and Services Tax portal would be able to avail themselves of this facility on the portal itself. GST-registered firms will also get a 2% rebate on interest rates. Being a part of the GST and being an honest taxpayer will become your strength.
Mr. Modi said public sector companies had now been asked to compulsorily procure 25%, instead of 20%, of their total purchases from the MSMEs. He said that of the 25% procurement mandated from the MSMEs, 3% must now be reserved for women entrepreneurs.
The Prime Minister recalled India’s strong traditions of small scale industries, including Ludhiana’s hosiery and Varanasi’s saris. https://www.thehindu.com/todays-paper/msmes-can-get-loans-in-59-minutes-on-new- portal/article25408212.ece
Conservation, environmental pollution and degradation
Oceans heating faster: study -AGENCE FRANCE PRESSE #GS3 #Environment
The world’s oceans have absorbed 60% more heat than previously thought over the last quarter of a century. Oceans cover more than two thirds of the planet’s surface and play a vital role in sustaining life on Earth.
According to their most recent assessment this month, scientists from the Intergovernmental Panel on Climate Change (IPCC) said that the world’s oceans have absorbed 90% of the temperature rise caused by man-made carbon emissions.
It found that for each of the last 25 years, oceans had absorbed heat energy equivalent to 150 times the amount of electricity mankind produces annually.
While those studies relied on tallying the excess heat produced by known man-made greenhouse gas emissions, a team of U.S.-based scientists focussed on two gases found naturally in the atmosphere — Oxygen and carbon dioxide.
By measuring atmospheric oxygen and CO2 for each year, scientists were able to more accurately estimate how much heat oceans had absorbed on a global scale. She said the data showed mankind must once again revise down its carbon footprint, with emissions needing to fall 25% compared to previous estimates.
The IPCC warns that drastic measures need taking in order to limit global warming to 1.5 Celsius by the end of the century but the world produced a record amount of carbon emissions in 2017. https://www.thehindu.com/todays-paper/tp-life/oceans-heating-faster-study/article25396786.ece
Indian Economy
What ails the NBFC sector #GS3 #Economy
India’s non-banking financial companies (NBFC) sector — also known as the shadow banking system that provides services similar to traditional commercial banks but outside normal banking regulations — is passing through a turbulent period following a series of defaults by Infrastructure Leasing and Financial Services (IL&FS) and the subsequent liquidity crunch.
The liquidity squeeze faced by NBFCs has led to a conflict between the government and the Reserve Bank of India, with the Finance Ministry pushing for easier fund flows while the RBI insists there’s enough money available in the system.
What is the crisis in the NBFC sector?
Several corporates, mutual funds and insurance companies had invested in short-term instruments such as commercial papers (CPs) and non-convertible debentures (NCDs) of the IL&FS group that has been defaulting on payments since August. This has stoked fears that many of them could have funds stuck in IL&FS debt instruments which, in turn could lead to a liquidity crunch in their own backyard.
Liquidity conditions had tightened, with a deficit of Rs 1.37 lakh crore on October 22, 2018, though this has has declined since. There are rising fears that the funding cost for NBFCs will zoom and result in a sharp decline in their margins.
Is this a result of the fact that banks that were the biggest lenders to NBFCs have applied the brakes?
Banks did slow down lending to NBFCs, virtually closing a major resource avenue for NBFCs and housing finance companies (HFCs). The fundamental issue, however, is an asset-liability mismatch in the operations of NBFCs like IL&FS.
What this means is that these firms borrow funds from the market — say for 3 or 5 years — and lend for longer tenures — 10 to 15 years. In a scenario where interest rates are rising, this hurt the NBFCs as their margins came under pressure and sourcing of funds became tough.
Defaults will keep potential investors away from the debt instruments of HFCs and NBFCs. On top of this, sharp losses in NBFC stocks triggered a vicious cycle as losses in leveraged positions led to selling in other stocks, which in turn fuelled further losses in markets.
What did the RBI do to provide liquidity?
There was a complaint from some quarters that the RBI was slow in stepping in and injecting funds. On October 26, the RBI said it will inject Rs 40,000 crore into the system in November through purchase of
government securities to meet the festive season demand for funds. This is on top of the Rs 36,000 crore it injected through open market operations in October.
The government and industry pushed for a special window to meet the fund requirements of the NBFC sector. The RBI refused, on the ground that once a special window or dispensation to provide liquidity is opened, the RBI will have to provide liquidity to all companies approaching it for funds.
The rationale is that there is adequate liquidity available for the sector through normal channels, and the RBI won’t be able to assess the asset quality of NBFCs to distinguish between those that deserve funds and those that do not. It also expressed concerns that this could lead to similar demands from other sectors, too, creating new problems for the regulator.
On October 10, before the RBI could step in, State Bank of India offered to bail out NBFCs with a proposal to buy good quality assets worth Rs 45,000 crore from them. SBI, which earlier planned to purchase assets worth Rs 15,000 crore, has decided to buy additional assets of up to Rs 30,000 crore.
But hasn’t RBI offered special liquidity support to the sector in the past?
What the RBI offered in 2008-09 was a special repo window for banks to lend to NBFCs, mutual funds and housing finance companies after the global financial crisis. In July 2013, too, the RBI opened a three- day special liquidity window of Rs 25,000 crore for banks to meet the cash requirements of debt mutual funds facing redemption pressures after bond prices fell leading to lower Net Asset Values.
How big is the NBFC industry?
NBFCs have been slowly moving into the space of commercial banking. When banks slowed down their lending business in the wake of huge bad loans, NBFCs continued to grow at a higher pace. As of March 2018, there were 11,402 NBFCs registered with the RBI, of which 156 were deposit accepting NBFCs (NBFCs-D), and 249 systemically important non-deposit accepting NBFCs (NBFCs-ND-SI).
The aggregate balance sheet size of the NBFC sector as of March 2018 was Rs 22.1 lakh crore. There was deceleration in share capital growth of NBFCs in 2017-18 whereas borrowings grew at 19.1%.
NBFCs in India include not just finance companies, but also a wider group of companies that are engaged in investment, insurance, chit fund, nidhi, merchant banking, stock broking, alternative investments etc. as their principal business. NBFCs being financial intermediaries are supposed to play a supplementary role to banks.
NBFCs, especially those catering to the urban and rural poor — including the micro-finance institutions (NBFC-MFIs) and asset finance companies — have a complementary role in the financial inclusion agenda of the country.
Further, some of the big NBFCs — infrastructure finance companies — are engaged in lending exclusively to the infrastructure sector, and some are into factoring business, thereby giving a fillip to the growth and development of various sectors. In short, NBFCs bring diversity to the financial sector.
What’s the fund source of NBFCs?
NBFCs were the largest net borrowers of funds from the financial system, with gross payables (loans) of around Rs 717,000 crore and gross receivables of around Rs 419,000 crore in March 2018. A breakup of gross payables indicates that the highest funds were received from banks (44%), followed by mutual funds (33%) and insurance companies (19%).
HFCs were the second largest borrowers with gross payables of around Rs 528,400 crore and gross receivables of only Rs 31,200 crore. As of March 2018, HFCs’ borrowing pattern was quite similar to that of NBFCs except that financial institutions also played a significant role in providing funds to HFCs.
Like NBFCs, long-term debt, loans and CPs were the top three instruments through which HFCs raised funds from the financial markets.
Now with the system facing a liquidity crunch, mutual funds, insurance companies and other big investors are unlikely to invest in NBFCs in a big way. The exposure of banks to NBFCs had shot up by 27%, or over Rs 1 lakh crore, to Rs 496,400 crore in a span of six weeks in March 2018.
However, banks started cutting their exposure since April this year, leading to a 4.6% decline in their exposure to NBFCs, according to RBI data. The outstanding credit of banks was at Rs 391,000 crore in March 2017. The sudden spike in bank exposure to NBFCs prompted the RBI to direct banks to bring down the exposure.
Where do NBFCs go from here?
The reversal in liquidity implies funding for NBFCs may remain tight. The recent adverse sentiment in the bond market could mean even higher borrowing costs. They are likely to see lower growth/margins ahead, analysts say.
On the other hand, the RBI is likely to tighten the guidelines for HFCs and NBFCs, bringing them almost on par with commercial banks in terms of regulation.
After the 2008 financial crisis, the RBI has prescribed tighter prudential norms for NBFCs. The minimum tier-I capital requirement was raised to 10% from 7% in a phased manner by the end of March 2017. Asset classification norms were revised from 180 days to 90 days in a phased manner by the end of March 2018, in line with that of banks.
Analysts say NBFCs are facing a liquidity squeeze and not a new credit shock. While the government has announced bailout of IL&FS, reflecting its intent to prevent escalation of the crisis, the RBI is expected to neutralise the liquidity squeeze but an easy money period is unlikely to come back in a hurry. https://indianexpress.com/article/explained/non-banking-financial-companies-rbi-5430162/
Indian Economy
Josh returns as markets light up on Diwali eve #GS3 #Economy
Just ahead of Diwali, Indian benchmark indices clocked their best weekly gains in more than two years as global crude prices fell and the rupee strengthened. A strong trend in the Asian markets with the easing of concerns over the U.S.-China trade war and strong GST collections in October also acted as a catalyst for lifting investor sentiments.
The 30-share Sensex managed to close above the psychological 35,000-mark at 35,011.65, gaining 579.68 points or 1.68%. Auto stocks got a fillip after crude prices cooled to $73 a barrel after touching four-year high levels of over $80 a barrel in the early part of October. The week saw Brent crude fall by about 6% to currently trade at seven-month lows
Q- What are some of the factor influencing for rupee strengthen?
Positive news flow over rupee, crude and GST revenue collection lifted the sentiments. These factors have been negatively impacting the markets in the recent past, and, hence, with crude cooling off and rupee gaining strength, market sentiments got a boost.
Incidentally, global financial major Morgan Stanley expects India's gross domestic product (GDP) growth to average around 7% over the next 10 years with investment, exports and consumption contributing to the growth.
We believe that India’s medium-term growth trend will be supported by the inter-play of the structurally-positive factors of demographics (strong growth in the working age population), reforms (including recent changes to tax laws and India's digitization drive that can help improve productivity) and globalisation (accelerating productive job opportunities, income and saving). https://www.thehindu.com/todays-paper/tp-business/josh-returns-as-markets-light-up-on-diwali- eve/article25408054.ece
Conservation, environmental pollution and degradation
Palau becomes first country to ban sunscreen to save coral reefs #GS3 #Environment
The Western Pacific nation of Palau has become the first country to ban many kinds of sunscreen, in a move to protect its coral reefs from chemicals that scientists say cause significant damage.
Under the ban, which will take effect in 2020, “reef-toxic” sunscreen — defined as containing one of 10 prohibited chemicals, a list that could grow later — can be confiscated from tourists when they enter the country, and retailers who sell it can be fined up to $1,000.
Damage to coral reefs worldwide from climate change has been widely reported, but scientists say there is growing evidence that chemicals from sunscreen, which washes off swimmers or enters the ocean through sewer systems, also causes grave harm.
Palau passed the ban into law last week. President Tommy Remengesau called it “especially timely,” saying that a major impetus was a 2017 report that found sunscreen products to be “widespread” in Jellyfish Lake, one of the country’s UNESCO World Heritage sites.
Studies have shown that chemicals in sunscreen can cause localized coral bleaching and can disrupt the reproduction of fish by interfering with their hormonal systems. A 2015 study found that oxybenzone in sunscreen stunts coral growth and is toxic for the algae that live within reefs. https://www.thehindu.com/todays-paper/tp-miscellaneous/tp-others/palau-becomes-first-country-to- ban-sunscreen-to-save-coral-reefs/article25416833.ece
Conservation, environmental pollution and degradation
Water ATMs may help in bridging safe water gap- Priscilla Jebaraj #GS2 #Governance #GS3 #Environment
For thousands of communities across India, the process of getting drinking water is now the same as the process of getting cash: they head to an ATM.
With 82 crore people who still do not have access to piped water and 70% of water in the country contaminated by pollutants, the government is increasingly starting to accept small water enterprises — such as water ATMs and community purification plants — as an alternative solution to the safe drinking water challenge.
A new report by Safe Water Network (SWN) says the government needs to spend Rs. 44,000 crore on 2.2 lakh small water enterprises to provide safe drinking water to about 37 crore people, mostly in
urban slums where piped water infrastructure is difficult to build, and in rural areas with contaminated water sources.
While such enterprises cost only a fraction of piped water infrastructure, policy changes and at least a doubling of tariffs are needed to help them bridge the safe water gap, says the report released this week.
A recent report by the Comptroller and Auditor General of India (CAG) pointed out that only 18% of the rural population has access to potable piped water, failing to meet the 2017 target of 50%.
India is ranked at 120 out of 122 countries on the Water Quality Index, said Niti Aayog, adding that 70% of the country’s water supply is contaminated.
“For those who can afford it, you buy a household RO (reverse osmosis system) to purify your water for drinking. But for many people, that is not possible. The community purification plants treat water locally. The water ATM is a dispensation system, which can be automatic with a coin or smart card, or manual.
Community water purification plants have grown from less than 12,000 in 2014 to almost 50,000 in 2018, according to the SWN, as they have been incorporated into government planning. To reach the government’s Har Ghar Jal target of 100% piped water by 2030, almost Rs. 5 lakh crore of infrastructure investment will be required, says government data.
SWN estimates that if the government is willing to spend less than 10% of that amount on small water enterprises, it could provide safe drinking water at a fraction of the cost. https://www.thehindu.com/todays-paper/tp-national/water-atms-may-help-in-bridging-safe-water- gap/article25421390.ece
Indian Economy
Challenge to the Reserve Bank of India’s reserve(s) #GS3 #Economy
There are many issues on which the Reserve Bank of India (RBI) and the Centre disagree but the most significant one is over the treatment of the sizeable reserves in the central bank’s balance sheet. If the reserves are mouth-watering for the Centre, they’re a source of security for the RBI and not up for bargaining.
Q- What is Centre view?
The outlay for recapitalisation of banks is continuing to grow. After coughing up over Rs. 2.11 lakh crore over the last year, the government finds itself in the unenviable position of having to cough up even more as the skeletons keep tumbling out of bank lockers.
Second, the Centre is still smarting from the return of all the cancelled notes in the demonetisation exercise. Remember, it was banking on a large part of the notes not returning which would have accrued to its account.
Third, throw in the fact that it’s an election year when it would like to push up spending to create a feel- good factor with voters, and the picture is complete. Now you know why the government is salivating over the booty in RBIs vaults.
Q- How RBI sees it?
As of June 30, 2018, the RBI had Rs. 10.46 lakh crore in reserves, bulk of it under two heads — currency and gold revaluation reserve (Rs. 6.91 lakh crore) and contingency reserve (Rs. 2.32 lakh crore).
The currency and gold revaluation reserve (CGRA) accounts for 19.11% of total assets and the contingency reserve for another 6.41%. Back in 2004, a committee under Usha Thorat, then Deputy Governor, examined the question of what should be the ideal size of RBIs reserves.
It suggested that the CGRA should be 12.26% of total assets while the contingency reserve should be 5.5%, totalling 17.76% in all. But the RBI Board did not accept the recommendation and preferred to continue with the level set by an earlier committee in 1997.
That committee, under V. Subrahmanyam, had set a contingency reserves level of 12% of total assets. The reserves are built through transfers from the annual surpluses in the profit and loss account of RBI. The balance surplus after transfper to reserves is given to the Centre as dividend.
In 2013-14, then governor, Raghuram Rajan, decided to transfer the entire surplus in the RBI’s profit and loss account to the Centre without appropriation to reserves. He was acting on the recommendation of another committee under Y.H. Malegam which said the existing reserves were in excess of the needed buffer and hence no transfers from the profits were necessary.
So, what were the reserves then? The CGRA was 21.81% of total assets and the contingency reserve was 8.44%. The corresponding numbers now (2017-18) are 19.11% and 6.41% respectively. By imputation, it can therefore be concluded that the buffer is now inadequate going by the Malegam Committee’s recommendation.
Q- What’s the object of these reserves?
The CGRA is meant to cover a situation where the rupee appreciates against one or more of the currencies in the basket — and the basket has several currencies ranging from the dollar to the euro and the yen — or if there is a decline in the rupee value of gold.
The level of CGRA now covers about a quarter of the total currency reserves of the RBI.
The contingency reserve is meant to cover depreciation in the value of the RBI’s holdings of government bonds-- domestic and foreign-- if yields rise and their prices fall. The reserve is also meant to cover expenses from extraordinary events such as demonetisation (you could argue that like the tsunami, an exercise like demonetisation hits the country once in several generations), money market operations and currency printing expenses in a year of insufficient income.
Most important of all, the contingency reserve supports the mother of all guarantees — the central bank’s role as the lender of the last resort. The reserve is also a cover for the deposit insurance fund given that the Deposit Insurance and the Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the RBI.
The RBI’s position, therefore, is that it would be imprudent to consider sharing any part of the reserve with the Centre. The Centre’s view is that the technocrats in RBI are too conservative and the money belongs to it.
The reserves have been built from higher seigniorage income (the difference between the value of new notes printed by the RBI and the costs of printing and distribution) and interest paid by the Centre to the central bank on the latter’s holdings of government securities.
Q- What’s the solution to this?
Such a committee should have representatives from government, the central bank, academicians and the market. The committee should go into all aspects of the RBI’s balance sheet, suggest a safe buffer in reserves and set out a fair method of sharing the reserves, if at all they should be. https://www.thehindu.com/todays-paper/tp-business/challenge-to-the-reserve-bank-of-indias- reserves/article25421346.ece
Indian Economy
How RBI surplus transfers work #GS3 #Economy
One of the issues in the current public tussle between the RBI and the government concerns the transfer of the Bank’s dividend to its sole shareholder. In his speech, delivered on September 3, 2016, Rajan underlined that the RBI under him had made the largest ever dividend payouts to the government —
99.99% of its surplus in 2013-14, 2014-15 and 2015-16 — and yet there were suggestions that the Bank could do still more.
These suggestions, he said, reflected an inadequate understanding of the way a central bank’s balance sheet works.
How does a central bank generate profits?
Rajan explained this: “We print currency… as well as issue deposits (or reserves) to commercial banks. Those are our fixed liabilities…We buy financial assets from the market. We do not pay interest on our liabilities. However, the financial assets we hold, typically domestic and foreign govt bonds, do pay interest.
So we generate a large net interest income simply because we pay nothing on virtually all our liabilities. Our total costs… amount to only about 1/7th of our total net interest income. So we earn a large surplus profit, more than all the public sector put together, because of the RBI’s role as the manager of the country’s currency.
This belongs entirely to the country’s citizens. …After setting aside what is needed to be retained as equity capital to maintain the creditworthiness of the RBI, the RBI board pays out the remaining surplus to the RBI’s owner — the government.”
After the RBI’s risk analysis showed that its equity position of around Rs 10 lakh crore was adequate, the Bank’s board decided to transfer its entire surplus to the government (peaking at Rs 65,876 crore for 2015-16, which accrued to the Centre in the following fiscal), Rajan said.
“Yet some suggest we should pay more, a special dividend over and above the surplus we generate. Even if it were legally possible to pay unrealised surplus — it is not — and even if the board were convinced a higher dividend would not compromise the creditworthiness of the RBI, there is a more fundamental economic reason why a special dividend would not help the government with its budgetary constraints.”
So what is the problem with being generous?
Rajan explained that much of the RBI’s surplus comes from interest on government assets or from capital gains it makes off other market participants. In paying this to the government as dividend, the RBI is putting back into the system the money it has made from it — there is no extra money-printing involved.
However, to pay an additional dividend to the government, the RBI has to create additional permanent reserves, i.e., print more money. “Every year, we have in mind a growth rate of permanent reserves consistent with the economy’s cash needs and our inflation goals,” Rajan said.
“Given that budgeted growth rate, to accommodate the special dividend we will have to withdraw an equivalent amount of money from the public by selling government bonds in our portfolio, or alternatively, doing fewer open market purchases than we budgeted.”
There were no “creative ways of extracting more money from the RBI”, Rajan said. “…The government should acknowledge its substantial equity position in the RBI and subtract it from its outstanding debt when it announces its net debt position…
We have been tasked with the job of maintaining macroeconomic stability, and often that task requires us to refuse seemingly obvious and attractive proposals… That is why the country needs a trusted independent central bank.”
What is the view on the government’s side?
Rajan’s predecessor Duvvuri Subbarao, who was Finance Secretary before he became Governor, has written that central banks are apprehensive of threats to their balance sheets because
(i) despite having the ability to discharge their financial obligations by creating money, sustained losses can weaken their ability to conduct policy effectively and,
(ii) mounting losses can compel them to approach the government for capital infusion, which they want to avoid in order to preserve their independence.
The quantum of surplus transfer has, however, not been a major factor in defining the central bank’s relationship with the government — “a settlement is reached with both sides showing some flexibility”, Subbarao has written. This is why the recent acrimony has appeared worrisome to many.
Two years ago, then Chief Economic Advisor Arvind Subramanian flagged the issue of surplus profits and capital in the annual Economic Survey. Like now, the Finance Ministry has earlier, too, felt that the building up of buffers such as the Contigency Fund and Asset Reserve by the RBI — which began under Governor C Rangarajan and his Deputy S S Tarapore — has been far in excess of what is required to maintain creditworthiness.
How do other central banks maintain this balance?
Almost all central banks are owned by their national governments, and have to transfer surpluses or profits to the Treasury. The UK has a formal Memorandum of Understanding on the financial relationship between the Treasury and the Bank of England.
The entire net profits are passed to the government. The MoU is formally reviewed at least every five years, and there is a provision for an intermediate review in the event of changes to the risk environment.
In the United States, too, the Federal Reserve transfers all its net earnings to the Treasury. Three years ago, the Fixing America’s Surface Transportation (FAST) Act made it mandatory for the Fed to transfer part of its surplus to the Treasury to fund spending on highways, drawing criticism from former Fed Chair Ben Bernanke, who described it as a budgetary sleight of hand.
How does the relationship framework work in India?
In his September 2016 speech, Rajan said the risk management framework adopted by the RBI board indicates the level of equity the RBI needs, given the risks it faces. The dividend policy then becomes a technical matter of how much residual surplus is available each year after bolstering equity.
“Frameworks reduce the space for differences. Clarity would be useful on when RBI should issue a warning on fiscal profligacy rather than be seen as interfering in the legitimate decisions of elected representatives…,” he said.
The Indian economy is now too big and complex for the RBI to remain a “subordinate office”, as a former Finance Minister had described it. There is a reason central bank Governors sit along with Finance Ministers at the G20, Rajan had said: the Governor, unlike government Secretaries, “has command over significant policy levers and has to occasionally disagree with the most powerful people in the country”.
So, what is the best way forward here on?
Former Governor Y V Reddy said in a public lecture that RBI’s autonomy vis-à-vis the Finance Ministry is more de facto than de jure, and that “de facto autonomy is possible only when the central government… reposes confidence and trust in the RBI”.
The RBI’s longer-term view of macroeconomic management ensures an intrinsically varying perspective with the government, Reddy said. However, “If a central bank always concurs with the government, it becomes superfluous, while if it persists with constant disagreements, it becomes obnoxious.”
In 2016, there was no major uproar in Germany after the Bundesbank’s surplus fell significantly short of Budget projections. Presumably, this was because the German federal government was running a surplus budget.
During the high-growth years of 2004-05 to 2008-09, voices in India demanding higher surplus transfers to the government remained muted. Aggression in demands indicates that the government’s fiscal position is under pressure.
In the context of the noise over the government using Section 7 of the RBI Act as the first step before issuing a directive to the RBI, it is helpful to remember that the previous government had come close to
issuing a similar diktat to securities markets regulator Sebi — and that the situation had been defused by cool heads in New Delhi. https://indianexpress.com/article/explained/how-rbi-surplus-transfers-work-5433894/
Conservation, environmental pollution and degradation
Green building
A structure that uses less resources than others. How many buildings in India meet that standard?
A RATING system has assessed that less than 2% of India’s buildings are “green buildings”, but underlined an opportunity to improve on this as new infrastructure is put in place. The assessment comes from Green Rating for Integrated Habitat Assessment (GRIHA) Council, a not-for-profit society jointly set up by The Energy and Resources Institute (TERI) and the Ministry of New and Renewable Energy to promote green buildings in India.
Green buildings are structures that are designed to utilise less resources than conventional buildings. Buildings account for up to 40% of the total energy consumption in India, the Environment Ministry’s ENVIS Centre says in a web post. It stresses the need for sustainable construction and operation strategies during design and planning stage itself.
Objectives include minimising water demand and promoting recycling, besides air pollution control measures. “Green buildings are much more healthy entities in terms of designing but the air that is going to come inside would be something that is present outside but to a certain extent you could minimise or reduce the damage through a green building.
A green building can reduce the interference from outside pollutants,” PTI quoted GRIHA Council chief executive officer Sanjay Seth as saying. While less than 2% of India’s buildings are green, Seth told PTI that there is a huge opportunity to increase that number as about 60% of infrastructure for the next 20 years is yet to be put in place https://indianexpress.com/article/explained/punjab-stubble-burning-decline-since-2016-but-still-a- concern-for-delhi-air-5434042/
Effect of policies and politics of developed and developing countries on India's interests
Iran oil: India, China get relief- Sriram Lakshman #GS2 #IR
India is one of eight countries to receive temporary exemptions from U.S. sanctions on Iran that came into effect.
USA has decided to issue temporary allotments to a handful of countries, responsible to the specific circumstances and to ensure a well supplied oil market. The U.S. will be granting these exemptions to China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey.
Each country on the list had demonstrated “significant reductions “ of the purchase of Iranian crude over the past six months. He added that two have stopped importing oil from Iran and would not do so as long as sanctions were in effect.
China and India, in that order, are the top two importers of Iranian oil. All payments for Iranian oil will be held in Foreign Accounts. Tehran can use the money to purchase non-sanctioned goods and for humanitarian purposes, including food, medicines and medical devices.
In the last fiscal year, India, which imports over 80% of its oil, sourced some 10% of its oil imports, or just over 22 million tons from Iran. The Indian Oil Corporation is the biggest Indian customer for Iranian oil.
More than 20 countries have decreased their imports of Iranian crude, the Secretary of State said, cutting Iran’s oil revenues by more than $2.5 billion since May this year, when Donald Trump pulled the U.S. out of the Joint Comprehensive Plan of Action (JCPOA) or “ Iran Deal” .
The European Union, which has stayed in the deal, has been frustrated by the America’s efforts to stifle European business’s activities with Iran. https://www.thehindu.com/todays-paper/iran-oil-india-china-get-relief/article25431327.ece
Effect of policies and politics of developed and developing countries on India's interests
India declares nuclear triad operational #GS3 #Defence
India declared that its nuclear triad, stated in its nuclear doctrine, is operational after indigenous ballistic missile nuclear submarine INS Arihant achieved a milestone by conducting its first deterrence patrol.
This means that Arihant is now prowling the deep seas carrying ballistic missiles equipped with nuclear warheads. “Prime Minister Narendra Modi received the crew of ship submersible ballistic nuclear INS Arihant. The submarine recently returned from its first deterrence patrol.
Calling it a major achievement for the entire nation, Mr. Modi said the success of INS Arihant enhances India’s security needs.
Given India’s stated position of ‘No-First-Use’ (NFU) in launching nuclear weapons, the SSBN is the most dependable platform for a second-strike. Because they are powered by nuclear reactors, these submarines can stay underwater indefinitely without the adversary detecting it. The other two platforms — land-based and air-launched are far easier to detect.
Arihant was quietly commissioned into service in August 2016 but its induction was never officially acknowledged. It has a displacement of 6000 tonnes and is powered by an 83 MW pressurised light- water reactor with enriched uranium. The second submarine in the series, Arighat is now undergoing sea trials after which it will be inducted. https://www.thehindu.com/todays-paper/india-declares-nuclear-triad-operational/article25431323.ece
Conservation, environmental pollution and degradation
Earth's ozone layer is finally healing, says UN #GS3 #Environment
The ozone layer is finally beginning to heal from all the damage caused by aerosol sprays and other man- made chemicals, a new United Nations report has revealed. The protective shield in Earth’s atmosphere had been thinning out before scientists raised the alarm about the impact of chlorofluorocarbons (CFCs) in the 1980s.
As a result of bans introduced by global governments, the upper ozone layer above the Northern Hemisphere should be completely restored in the 2030s.
A gaping hole in the ozone over the Antarctic won’t disappear until later – sometime in the 2060s, according to a scientific assessment released on Monday at a conference in Quito, Ecuador. The ozone layer in the Southern Hemisphere should be repaired by mid-century. https://www.independent.co.uk/environment/ozone-layer-earth-healing-cfcs-chemicals-united-nations- antarctic-a8618731.html
Infrastructure: Energy, Ports, Roads, Airports, Railways etc
Testing the waters, breaking new ground: what a cargo voyage signifies #GS3 #Economy
A cargo of 16 containers carrying snacks and other food items manufactured by Pepsi is on its way to Varanasi. What makes this nine-day journey special is that instead of roads or railways, this cargo has taken the waterway — part of an effort by the government to resurrect the Ganga as a significant transportation artery.
On November 12, Prime Minister Narendra Modi will receive the vessel, MV R N Tagore, at the new multimodal freight terminal in Varanasi. Modi will dedicate to the nation the terminal, designed mainly for construction material, foodgrains, cement, and fertilisers.
Minister for Road Transport and Shipping Nitin Gadkari tweeted on November 3, the day after the ship departed Haldia at the mouth of the Hooghly in West Bengal: “This should have been the biggest news of the week in India. For the first time since Independence, a container is moving on inland vessel… Such a huge accomplishment!”
The background
The push to revive the country’s waterways as viable commercial freight corridors is among the government’s less talked-about big-ticket infrastructure initiatives. Rivers and canals were traditionally used in pre-modern India to transport humans and materials, and to carry out trading activity. Inland waterways started to decline with the advent of widespread road and rail networks.
Long, slow voyages began to be considered incompatible with the faster pace of doing business, and as silt deposits led to channels becoming increasingly shallow, commerce dried up in the traditional docks and ports.
The MV VV Giri leaves Ghazipur, Uttar Pradesh, on its journey towards Patna en route to Kolkata two years ago. In August 2016, the VV Giri, carrying 24 Maruti cars, and MV Joy Basudev, carrying a cargo of 1,400 tonnes of goods to Ballia, travelled on the Ganga, National Waterway 1. (Photo: Neeraj Priyadarshi/Archive)
The potential
India has 14,500 km of navigable waterways in rivers, canals, backwaters, creeks, etc. About 55 million tonnes of cargo moves on waterways, but the activity is largely restricted to the Ganga-Bhagirathi- Hooghly system, the Brahmaputra, the Barak river, the rivers in Goa, the backwaters of Kerala, inland waterways in Mumbai, and the delta regions of the Godavari and Krishna.
Overall, waterways account for just about 3% of all freight movement in India, and the mode remains grossly underutilised, officials say. Also, according to the calculations in various government papers, the same amount of energy can move several times more cargo (by weight) by water than it can move via rail or by road.
Authority and Act
The Inland Waterways Authority of India (IWAI) was established in 1986. Five waterways were identified, but the investment in them remained inadequate. Between 1986 and 2014, India spent only Rs 1,456 crore on its inland waterways. In comparison, China invested $15 billion (Rs 1,09,000 crore) from 2005-10, and Germany pumped in €9 billion (Rs 77,000 crore) in its waterways in 2016 alone.
After the NDA government came to power, India invested Rs 1,605 crore in this sector from 2014-18. The National Waterways Act, 2016, which came into effect on April 12 that year, merged existing Acts to make a law to notify 106 National Waterways, including the existing five.
Constraints and effort
There are multiple constraints in transporting men and materials perennially on inland waterway corridors. Periodic dredging is required to clear the silt that comes with the monsoon, so that adequate depth is maintained.
Both fixed and floating terminals are needed at multiple points along the waterways. Many rivers are becoming progressively drier; many of those that retain adequate volumes are spanned by low bridges that would hinder passage of larger vessels.
The Jalmarg Vikas Project approved by the Cabinet in January this year receives financial assistance from the World Bank to upgrade navigability on National Waterway 1 from Varanasi to Haldia, a distance of 1,380 km. The project seeks to develop a fairway of 3-metre depth in phases, at an estimated cost of Rs 5,369 crore.
The project is intended to be completed by 2023.
There are plans to develop three multimodal terminals along National Waterway 1. Apart from the one in Varanasi, being built for Rs 169.59 crore, there is one planned in Sahibganj in Jharkhand, and the third in Haldia. It also involves building a Farakka navigation lock for Rs 359 crore, to be completed by June 2019.
The government has also tapped the National Clean Energy Fund and the Central Road Fund for the initiative, and has borrowed from the market by issuing government bonds.
Northeast milestone
Completing a month-long, 2,085-km voyage from Bihar to Assam, 1,233 tonnes of bagged fly ash from NTPC’s Kahalgaon plant reached Guwahati’s Pandu Inland Port, marking one of the longest hauls in waterways sector movement in India. The government called it “a critical integrated movement through three waterways — NW1 on the Ganga, the Indo-Bangladesh Protocol (IBP) route, and NW2 on the Brahmaputra.
The PepsiCo cargo
Since August 2016, when Minister Gadkari flagged off a consignment of Maruti cars from Varanasi to Haldia, pilot movements have been carried out on various stretches of NW1.
More than 15 voyages have been completed, including integrated movements through multiple waterways. What the PepsiCo cargo shows is that a commercial shipment can use this as a viable, working route for transportation.
https://indianexpress.com/article/explained/testing-the-waters-breaking-new-ground-what-a-cargo- voyage-national-waterways-1-kolkata-varanasi-container-vessel-5436518/
Conservation, environmental pollution and degradation
Proposed Ganga bill bans ports, jetties #GS2 #Governance #GS3 #Environment
The government has banned the construction of jetties, ports or “permanent hydraulic structures” in the Ganga, unless permitted by the National Ganga Rejuvenation Authority, according to a proposed ‘Ganga Act’.
The legislation, formally called the National River Ganga (Rejuvenation, Conservation and Management) Bill, 2018, proposes to create a management structure that will supervise the health of the 2,500-kilometre long Ganga which, the draft Bill defines, as ‘India’s national river.’
Q- What does Bill says and importance of waterways?
The Bill is now being circulated for comments among several Ministries, and proposed to be tabled in Parliament during the winter session, according to sources.
The Bill lays down a host of restrictions to ensure the “uninterrupted, ecological flow” of the river. Currently, a host of dams in the upper stretches of the river lead to the river’s flow being obstructed, say several activists and researchers, and persistent campaigns — notably led by the late G.D. Agrawal — led to the government finally recognising the need for proposed and existing hydropower projects to change their design plans to ensure minimum flows all through the year.
The legislation looms even as the government is developing a National Waterways Project-1 (River Ganga) from Haldia to Varanasi (1,390 km), with the technical and financial assistance of the World Bank, at an estimated cost of Rs. 5,369 crore.
Food and beverage giant PepsiCo has dispatched 16 containers from Haldia containing packaged food and assorted goods, and — in a ceremony to be attended by Prime Minister Narendra Modi — they are expected to dock in Varanasi on November 12, according to a statement from the Union Shipping Ministry. This is the first container movement aboard an inland vessel in independent India.
The waterways project involves creating permanent and movable terminals that require dredging and frequent de-silting to ensure that minimum river depths — for the smooth movement of the vessels — are maintained.
Q- What are the issues?
However, the proposed legislation specifies that “unauthorised” activities that cause “…obstruction or discontinuity of water in the River Ganga…due to engineered diversion of water or stoppage of water…could be liable to a prison term of 3 years or fines upto Rs. 50 crore, or both.”
Activists say that while the government’s efforts have been largely on cleaning the Ganga — namely, by installing sewage plants in riverine cities such as Allahabad and Varanasi and Kanpur — but neglecting to take steps to ensure the river’s natural flow is maintained through the stretch.
“The government’s draft does not keep the interest of the Ganga as prime focus. The intent seems to be to maintain a flow, whereas we have been insisting on achieving natural flow. The NGO was associated with G.D. Agrawal, and his call for a ban on hydropower projects on the Ganga. https://www.thehindu.com/todays-paper/tp-national/proposed-ganga-bill-bans-ports- jetties/article25440467.ece
Conservation, environmental pollution and degradation
Advancing BS-VI emission norms #GS3 #Environment
What does the Supreme Court order say?
On October 24, the Supreme Court banned the sale and registration of vehicles conforming to Bharat Stage (BS)-IV emission standards across the country, from April 1, 2020, citing “alarming and critical” pollution levels. With this decision, vehicle makers will only be able to sell BS-VI compliant vehicles from April 2020. However, BS-IV vehicles already sold will continue to ply.
When were emission standards introduced?
In India, the first stage of mass emission norms came into force for petrol vehicles in 1991 and for diesel vehicles in 1992. However, it was in 2000 that vehicles — both passenger and commercial — met the Euro-I standards. The BS-II (equivalent to Euro-II standards) norms came into force in 2001 and were implemented in a phased manner. Gradually, BS-III was introduced, paving the way for implementation of BS-IV by April 2017.
What happened to BS-V?
According to an earlier road map by the government, BS-V emission norms were to come into effect by 2020-21, while BS-VI was to be implemented 2024 onwards. However, given the drastic increase in air pollution levels, particularly in the Delhi-NCR region, the government decided to leapfrog BS-V, while also advancing the introduction of BS-VI emission norms to 2020. The implementation of BS-VI norms will bring Indian emission regulations almost on a par with EU regulations.
Who gets impacted, and how?
The Supreme Court order impacts both the industry and consumers. For the industry, the decision brings clarity on the timelines for sale. However, the challenge will be to meet the new target date.
The government had earlier proposed a grace period of three months for manufacturers to sell BS-IV compliant passenger vehicles and six months for buses and trucks that may remain unsold with the dealer or manufacturer post April 1, 2020.
The industry had also argued in court that since they were allowed to manufacture BS-IV vehicles till March 31, 2020, they should be granted reasonable time to sell that stock. An industry expert pointed out that manufacturers will need to start manufacturing BS-VI complaint vehicles by February 2020, while phasing out BS-IV compliant vehicles. The industry has pointed out that this advancement will lead to shorter time for vehicle-testing and validation.
On the other hand, customers will get access to better technology and hopefully better air. However, BS-VI compliant vehicles will be more expensive. According to research agency ICRA, the price of diesel cars is expected to go up by about Rs. 75,000 compared to an increase of about Rs. 20,000 for petrol cars. The BS-VI fuel is also expected to cost more.
What lies ahead?
For BS-VI compliant vehicles to comply, it will be critical that the fuel of the desired specification be made available across the country before the deadline. While it will be possible for BS-IV compliant cars to run smoothly on BS-VI fuel, BS-VI vehicles will not be able to operate optimally on lower-grade fuels. https://www.thehindu.com/todays-paper/tp-opinion/advancing-bs-vi-emission- norms/article25440452.ece
Indian Economy
Why the rupee’s fall is not a major worry, why intervention by govt and RBI has its limits #GS3 #Economy
While the strengthening of the US economy and rising oil prices, the rupee has suffered a sustained fall this year, sliding from levels of 63 against the dollar in January to over 74 in October.
On whether the slide is worrying
Not particularly. Every currency moves; the exchange rate will move both in the long term and in the short term, because there are differences in productivity, inflation rates, etc. Thirty or forty years ago, the rupee was 25-30 [against the dollar], but it would not stay there.
In the long term, the reasons are productivity differences; in the short term, it is demand and supply and inflation differences, and in the even more short term, expectations, and just what happens in financial markets across the world.
So I would say it is very normal for a currency to move. In fact, I was getting worried when the rupee was not moving. For a whole year or so, the real effective exchange rate was actually appreciating. Our inflation rates were higher than the inflation rates of our competitors and trading partners, and because the nominal exchange rate was not moving, it meant that in real terms we were losing competitiveness.
Our exports were more expensive than our competitors’, our imports were cheaper, so it would be cheaper to import things than to buy domestically produced things… The rupee was due for a correction, and yes, when there is a correction, there might often be overshooting, because expectations often determine the correction… So no, the fall of the rupee doesn’t particularly worry me.
On the ways to look at the slide
Let’s talk about the gainers and losers. So, while I might be happy with the depreciation, you might be unhappy. If you have borrowed in dollars, you’re certainly worse off, because you have to return a lot more in rupee terms than you would if the rupee had not depreciated. But if you are an exporter, you will be happier.
If you are in an import-competing industry, you’re a gainer if imports become more expensive, because for the same cost of production, your products will sell more than they did when people preferred to buy imported products because those were cheaper.
So whether you are worried or not really depends on where you are, what you are doing, what your dollar holdings are, what your dollar liabilities are, and what your assets are.
On how corporates avoid risk
There are usually two ways in which you hedge. The first is a natural hedge that every exporter has — so, if you have borrowed in dollars, your payouts are in dollars, but so is your income. But if you are not an exporter, you buy dollars in the forward market, you hedge through derivative products — there is a premium to be paid, but it allows the fixing of a price…
So, let’s say I get a dollar borrowing at 10%, and I am able to hedge one year forward at 5%, so the cost to me is about 15%. Unfortunately, people often just take the exchange rate risk — they don’t hedge because they think kuchh nahin hoga (nothing will happen), that the central bank will intervene, that the government will feel bad about the rupee depreciation, and so the rupee won’t depreciate.
And we find that in situations where a central bank intervenes too much, it actually creates a moral hazard where a lot of people start taking unhedged foreign currency exposure, which is dangerous for the system as a whole.
On RBI intervention to arrest the slide of the rupee
I think they have sent some signals in the market, but if the outflow of foreign capital becomes too much, I am not sure how much they will intervene. Because the larger the market, the more developed the economy, the bigger its GDP, the bigger its trade account.
If it is a very small market and I buy something for a billion dollars, say, I sell dollars and buy rupees, then I can move the exchange rate by a larger amount; but as economies grow — and India is growing — the impact of the same billion dollars becomes smaller and smaller. So if there is too much outflow, I would think that they won’t go too far.
Because then they could be losing 10 or 20 billion a day, they won’t want to do that because the moment that happens, it becomes a self-fulfilling prophecy, and everyone wants to run away before the currency depreciates further.
On government intervention by raising import duties
All these products [such as certain telecommunications equipment, refrigerators, washing machines, and ACs] put together constitute 2.6% of our imports. It’s really only signalling — like saying yes, we will do something, but we are not going to do an awful lot… It’s a gentle signal, not too strong.
On the oil import bill and weakening rupee
When global oil prices rise, we certainly have a larger current account deficit. Because in the short run, demand for oil is usually very inelastic. So we would expect our oil import bill to go up, and if the oil import bill is going up, then either we find ways to make up for that gap, or we let the rupee depreciate.
And that makes oil more expensive, and the political economy of oil prices is such that people worry if it moves… In the short run, an oil price rise makes transport more expensive, and there is some pass- through into the rest of the economy, so it is inflationary. There is an exchange rate pass-through as well. The two put together is not a very happy situation to be in.
On the current account deficit and the sliding rupee
When you think of CAD, there is the oil price, of course, but it is also that other exports have not been increasing. Chemicals, metals, and so on, they have not been doing well. I would not worry as much about any sustainable or unsustainable levels of CAD as I would about doing some mismanagement somewhere else — because why are we losing our export share, why are we not competitive in world markets?
Maybe these are just teething problems of GST, maybe they are part of the impact demonetisation had on small industry, maybe it is partly due to the strength of the rupee… it’s difficult to say. But imports are going fine, because the economy is growing fast enough, but exports are not doing well, and that would worry me.
So it’s not really the trade deficit — rather, it’s why is it that we are slowing down, why are our exports not doing well… why are our exports growing slower than the exports of competitor countries? Are there structural problems? The outcome [of this situation] is the trade deficit, but if it was that exports were doing fine but imports were growing faster, I wouldn’t be worried…
On India’s inability to exploit its resources like coal
There are old problems with the coal policy. [Coal imports have recently surged, even though we have adequate coal resources.] But it has also to do with the quality of the coal we have, transport costs; there are many factors.
And that’s why when you refer to structural problems, then I would say that if reducing our imports and increasing our exports are structural issues, then yes, we should be thinking of addressing those. And actually, regardless of what they do to the trade deficit, just to be a more efficient economy, we should be thinking of this.
On politicians’ fascination for a strong rupee
I am not sure politicians always want a strong rupee. There was a time when we were trying to keep the rupee weak, and we were actively buying up dollars, so from 1993-94, when we had a deluge of dollars after we opened up the capital account, up to 1996, the rupee was kept at 31.37…
For 16 months, we built up reserves. Similarly, from 2001 to 2004, when there was huge pressure on the rupee to appreciate, what the government was trying to do, what RBI was trying to do, was keep the rupee weak.
The entire East Asian model, China’s export-led growth, was a lot through keeping their currencies weak. In fact, China has often been accused of being a currency manipulator because they try to keep it weak.
I think election speeches are one thing, but if you see the actual policy, despite the speeches that might have been made in 2014, the currency has been allowed to move. All over the world, currencies move, and politicians understand that there are pros and cons.
On whether only the market should decide rupee’s value
You could say what should be done or should not be done, and you and I can agree or disagree. But my question would be, what can you do? All you can do is maybe postpone the movement of the currency for some time, you really can’t stop it.
If I have 100% inflation and you have 2% inflation, regardless of what you do, it will only be a matter of time before the currency moves. So, should or should not is a matter of opinion, but on what can be done, I think the options are limited.
You can try to intervene, but if you are selling reserves, at the end of the day your reserves will finish. You could hike interest rates, but beyond a point, you will hurt your economy, and foreign inflows may slow down because you have hurt the economy — is that an option that you want to take?
On the option of raising interest rates
You should be hiking rates when your business cycle conditions are such that they require a rate hike. If your economy is overheating, or if you are trying to prevent further higher inflation, that’s when you should be hiking interest rates.
If you start jerking rates around… let’s look at what we did in 2013, after the “taper talk” [indications that the US Federal Reserve might begin to gradually reduce its securities purchases from the then existing levels of $85 billion a month], we hiked interest rates so much that there was no liquidity in the economy, the cost of borrowing went up from 400 to 600 basis points.
It was a temporary thing that happened between [Fed Chairman] Ben Bernanke’s May 22, 2013 speech [to Congress] to the next Federal Open Market Committee meeting [in September, when “the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its (securities) purchases], and the whole world was going through this.
Our response was very aggressive, and we hurt ourselves. And by over-responding, we were actually the worst performing currency in the May to September period compared with all other emerging economies. https://indianexpress.com/article/explained/why-the-rupees-fall-is-not-a-major-worry-why- intervention-by-govt-and-rbi-has-its-limits-5437172/
Achievements of Indians in science & technology; indigenization of technology and developing new technology
Army fire power gets booster shot #GS3 #Defence
Emerging from the shadow of the Bofors scandal, the Army inducted its first artillery gun systems in three decades. The M777 Ultra Light Howitzers from the U.S. and K9 Vajra-T self-propelled artillery gun from South Korea were inducted at the Devlali Field Firing Ranges in Maharashtra. The third equipment inducted is a common gun tower.
The Army last inducted an artillery gun system — the Bofors guns procured from Sweden — in the early 1980s. Attempts to buy new guns did not make progress.
A third equipment is also being inducted today — The common gun tower, a 6x6 vehicle with cross- country capability. Required to tow the medium guns. These are made by the Indian company Ashok Leyland.
In April 2017, the Indian engineering conglomerate Larsen & Toubro (L&T) and South Korea’s Hanwha Techwin signed a contract to make the K9 Vajra-T guns. The gun was short-listed by the Army after extensive trials. The deal is worth Rs. 4,500 crore for 100 guns.
The K9 Vajra-T is a 155-mm, 52-calibre self-propelled gun with a maximum range of 40 km. It has been customised from the original K9 Thunder. Its fire control system has been customised for desert conditions.
Under the agreement, the first 10 guns will be imported from South Korea and the rest will be made by L&T in India. The first regiment will be in place by July 2019 and all 100 guns will be delivered by November 2020.
India signed a $737-million deal with the U.S. in November 2016 under the Foreign Military Sales Programme for 145 M777 Ultra Light Howitzers. Twenty-five guns will be imported and the rest will be assembled in India in partnership with Mahindra Group. Deliveries will be completed by mid-2021.
The M777 brings a new level of capability to the artillery unit by offering rapid deployment and extreme accuracy. The M777 is a 155-mm, 39-calibre towed artillery gun. It weighs just four tonnes, making it transportable underslung from helicopters.
https://www.thehindu.com/todays-paper/tp-national/army-fire-power-gets-booster- shot/article25459216.ece
Challenges to internal security through communication networks, role of media and social networking sites in internal security challenges, basics of cyber security; money-laundering and its prevention
Fake currency network intact- Vijaita Singh #GS3 #Security
Two years after demonetisation, the fake currency notes seized so far are not of a high quality, a probe by the National Investigation Agency (NIA) has found.
Another Home Ministry official said the network of same fake currency operators was still intact as two years ago, that pushed fake notes from the Bangladesh border. But there was not much evidence to link it to Pakistan yet. A reason cited by the government for scrapping Rs. 500 and Rs. 1,000 notes in 2016 was to wipe out fake notes.
India had accused Pakistan’s Inter-Services Intelligence (ISI) of printing high-quality fake notes and channelling it into India. Agencies suspected that certain security features of Rs. 500 and Rs. 1,000
notes were compromised as the supplier of raw currency notes, ink and silver thread was same for India and Pakistan.
“The fake notes seized recently are of poor quality, and look like photocopies in most cases. It seems Pakistan has not been able to copy the security features yet. The carriers and the receivers have links to Bangladesh, not Pakistan.
Most arrests were made from Malda in West Bengal, and some cases registered in Kerala, Karnataka and Gujarat. Pakistan is using Bangladesh as a transit to push in the fake notes.
Q- How Intelligence agency works?
The NIA and the Rapid Action Battalion (RAB), the anti-crime and anti-terror unit of Bangladesh, signed a memorandum of understanding (MoU) in 2015, to share intelligence on fake notes and other terrorist modules in real time.
The NIA registered at least 13 cases related to the seizure of fake currency in the past two years, but could not invoke the provisions under the stringent Unlawful Activities (Prevention) Act, 1967, (UAPA) because of the inferior quality of the fakes seized.
By norms, the UAPA can be invoked against the accused only if the notes are of high quality. In all the cases, the forensic report ruled out that the notes were of a fine quality and that any of the security features had been compromised.
According to an NIA official, the agency passed on information to the local police in many cases, which led to the arrests. The police book the accused under Sections 489B and 489C (possession of forged or counterfeit currency notes, punishable by life imprisonment) of the Indian Penal Code (IPC), which is then taken over by the NIA.
“Since Section 498B and Section 489C of the IPC are scheduled offences, the NIA can investigate such cases,”
Though there was no definite account of the number of fake notes in circulation with the government when demonetisation was announced, a study done by the Indian Statistical Institute (ISI), Kolkata, in 2015, had said that at any given point of time, fake notes of Rs. 400 crore face value were in circulation. https://www.thehindu.com/todays-paper/tp-national/fake-currency-network- intact/article25466381.ece
Conservation, environmental pollution and degradation
Groundwater depletion alarming in northwest, central India- R. Prasad #GS3 #Environment
With 230 billion metre cube of groundwater drawn out each year for irrigating agriculture lands in India, many parts of the country are experiencing rapid depletion of groundwater. The total estimated groundwater depletion in India is in the range of 122–199 billion metre cube.
Q- What is the current situation now?
The Indo-Gangetic Plain, northwestern, central and western parts of India account for most intensive groundwater-based irrigation. And among these regions, western India and the Indo-Gangetic Plain have more than 90% of the area irrigated using groundwater.
While districts with significant decrease in groundwater are located in the Indo-Gangetic Plain, northwest, and central (Maharashtra) regions, a few districts in Punjab show substantial decline in groundwater table.
With depletion occurring at a rate of 91 cm per year, Punjab has been witnessing a steep decline in groundwater table since 1996. “In northwestern India, the amount of groundwater extracted exceeds the total recharge leading to groundwater depletion
If groundwater is depleted and the region experiences drought for two–three years consecutively, there will be serious challenges. Availability of even drinking water will be a huge problem. Natural recharge during monsoon may not help much if groundwater depletion becomes acute, as rainfall of past several years controls the current groundwater storage levels.
The study published in June this year found that groundwater recharge has declined between 1996 and 2016 in northwest and northcentral India due a reduction in low-intensity rainfall. Low-intensity rainfall during the monsoon is responsible for groundwater recharge in northwest and northcentral India.
The study also found that carbon dioxide emission from pumping groundwater and release of carbon dioxide into the atmosphere from the soil when groundwater is depleted is less than 2-7% of the total carbon dioxide emissions in India.
Q- How Groundwater management will work?
More than 500 tensiometers to visually monitor soil moisture conditions in rice fields and irrigate the crops only when required were used in five districts in Punjab. Irrigation based on information provided by the tensiometers helped farmers in the five districts save 10–36% groundwater.
Using groundwater to irrigate the field only when necessary led to a reduction in electricity consumption and greenhouse emissions.
“The tensiometer gives visual information about the availability of soil moisture conditions. Irrigating the field based on this information will help conserve groundwater.
The tensiometer is 2–3 feet long and has a ceramic cup containing numerous tiny pores at the bottom. It is inserted up to 8 inches into the soil, which is beyond the root zone of rice. The water inside the tensiometer reaches equilibrium with soil moisture, and rises or falls depending on the amount of moisture in the soil.
Farmers are advised not to irrigate the field when the water level in the tensiometer is in the green zone. When the soil gets dry the water level in the tensiometer drops and reaches the yellow zone in the device. Farmers should start irrigating the field at this time and never allow the water in the device to reach the red zone.
One device per farm would be sufficient, especially when the terrain is nearly flat. So far, over 22,000 tensiometers, manufactured by Punjab Agriculture University, have been given to rice farmers in Punjab. It costs just Rs.300 per piece.
“Since stopping or reducing the subsidy in electricity prices may not be possible, farmers in the regions where groundwater depletion has already occurred should consider cultivating less water-intensive crops, use better irrigation technologies and irrigate crops only when necessary. https://www.thehindu.com/todays-paper/tp-features/tp-sci-tech-and-agri/groundwater-depletion- alarming-in-northwest-central-india/article25466417.ece
Indian Economy
Growth held back due to demonetisation, GST: Rajan #GS3 #Economy
Demonetisation and the Goods and Services Tax (GST) are the two major headwinds that held back India’s economic growth last year. Dr. Rajan said for four years — 2012 to 2016 — India was growing at a faster pace before it was hit by two major headwinds.
The successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off at a time when growth in the global economy has been peaking up.
Dr. Rajan, in his address, said a growth rate of 7% per year for 25 years was “very, very strong” growth, but in some sense this has become the new Hindu rate of growth, which earlier used to be 3.5%. India has become a much more open economy, and if the world grows, it also grows more.
On rising Non-Performing Assets (NPA), he said the best thing to do in such a situation is to “clean up”. It is essential to “deal with the bad stuff,” so that with clean balance sheets, banks can be put back on track.
The bankruptcy code is only one element of a larger clean-up plan, he said. There should be a multi- pronged approach to address the challenge of NPAs. India is capable of strong growth. As such, the 7% growth is now being taken for granted.
The country today is facing three major bottlenecks.
One is the torn infrastructure, observing that construction is the one industry that drives the economy in the early stages.
Second, the short-term target should be to clean up the power sector and to make sure that the electricity produced actually goes to the people who need the power.
Cleaning up the banks is the third major bottleneck in India’s growth. https://www.thehindu.com/todays-paper/tp-miscellaneous/tp-others/growth-held-back-due-to- demonetisation-gst-rajan/article25466494.ece
Science and Technology- developments and their applications and effects in everyday life
Defeating pneumonia #GS3 #SnT
What:
“Air Pollution and Child Health: Prescribing Clean Air”, a new World Health Organisation report, says that 98% of children under the age of five from countries such as India are exposed to toxic air.
Acute Respiratory Infections — which are the leading cause of death among children under five, and claiming the lives of approximately 2,400 children a day —
Accounted for approximately 16% of the 5.6 million under-five deaths, killing around 880,000 children in 2016.
Most victims are less than two years old.
Some facts:
A report by Save the Children (“Fighting for Breath”) showed that pneumonia kills two children in this age group every minute — more than malaria, diarrhoea and measles combined.
More than 80% of victims have weakened immune systems caused by malnutrition or insufficient breastfeeding and unable to fight the infection.
For countries with high levels of toxicity in the air, delivering on the pledge of the UN’s Sustainable Development Goals (SDGs) will require an unrelenting focus on the most disadvantaged children.
Children born into poverty, and also those living in the hardest-to-reach places, and facing discrimination are the ones who face the greatest risks.
How:
Air pollution is a ‘major risk factor for pneumonia.
The sources of pollution vary across and within countries.
Outdoor air pollution, which is associated with emissions from factories, the burning of rubbish and coal, and traffic, is a growing concern.
Children living in urban slum environments often face high levels of exposure to these sources of pollution.
Indoor air pollution is a major contributor of respiratory infection in many high-burden pneumonia countries, where the burning of biomass for cooking, heating and lighting are the common sources of pollution’.
According to the International Energy Agency’s Energy Access Outlook 2017 report, over 63% of households in India use biomass energy sources.
Tackling household air pollution that is a major source of pneumonia infections is another priority.
Why:
In 2016, pneumonia was the leading cause for under-five deaths in India, and more than 25 million children under the age of two were found not immunised with pneumococcal conjugate vaccine.
The “Fighting for Breath” report says that globally, a million children are dying from pneumonia annually, even though it can be treated with antibiotics costing as little as Rs. 26.
While the Indian government has taken several steps to improve the health of children, India continues to top the world ranking in the number of deaths due to the disease burden.
The number of unvaccinated children in the 0-2 age range in developing countries is estimated to be at around 170 million, with India dominating.
Research shows that that the association between pneumonia and air pollutant exposure is particularly strong during the first year of life.
It is a well-known that exclusive breastfeeding in the first six months acts as an effective vaccine and continued breastfeeding with the gradual introduction of complementary food is another risk-reducer.
To step forward
Defeating pneumonia necessitates multi-sectoral action plans.
Concerted action by the government, backed by civil society, corporates and communities can help save children’s lives.
Looking at the threat that bad air is posing, it is imperative for the government to develop comprehensive national guidelines and multi-sectoral convergent action plans and ensure adequate resourcin.
The complexity of interventions places a premium on coordinated policy responses.
India has made remarkable progress.
The Partnership for Maternal, Newborn and Child Health summit is to be hosted by India in December and this should hopefully bring rigour to commitments made under the SDGs vision 2030.
Pneumonia leaves desperately vulnerable children struggling, parents coping with anxiety and, all too often, the grief and trauma that comes with the loss. https://www.thehindu.com/todays-paper/tp-opinion/defeating-pneumonia/article25466303.ece
Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure
A reality check on cooperative federalism #GS2 #Governance
What:
In relation to the imposition of President’s rule under Article 356 of the Constitution, federalism is far more mature. Between 1947 and 1977, there were 44 instances when the power to impose President’s rule was exercised.
Some facts:
Between 1977 and 1996, the power was exercised almost 59 times.
Prime Minister Indira Gandhi’s cabinet resorted to the power an estimated 50 times in her 14 years.
The fact that it includes 15 instances between 1980 and 1984 after the Supreme Court held federalism a basic feature of the Constitution is quite telling.
From 1991 till 2016, there have been 32 instances of the exercise of this power — compared to 92 instances in the preceding period.
In S.R. Bommai v. Union of India (1994), the limitation laid down by the Supreme Court might have placed gentle breaks on exercise of this power, but the Centre continues to wield superior legislative powers, including residuary powers and legislative precedence.
Recently, in Govt. of NCT of Delhi v. Union of India , the Supreme Court gently tilted the balance of executive power in favour of the Government of the National Capital Territory vis-à-vis the Lieutenant Governor (and by extension, the Centre).
However, the court’s observations on cooperative federalism were stating the obvious considering members of both cabinets take an oath to uphold the Constitution.
The facts behind the case and the acrimonious litigation, which the Supreme Court did not examine in its July 2018 ruling, clearly bring out the yawning gap between the Constitution’s intent and political reality.
Why:
Taxation powers are another contentious issue and the Central government has won most of the disputes purely due to express provisions in the Constitution.
In the Goods and Services Tax (GST) scenario, States have foregone some taxation powers (octroi, entry tax, luxury and entertainment taxes, etc.) but have powers to levy taxes through panchayats and municipalities.
Such powers can result in an anomalous situation of a transaction being taxed under GST laws and a local law, and this is yet to be tested in court.
After the GST amendments to the Constitution, States have power to levy tax on sale of petrol, diesel, etc. and these would be revenues of the respective States.
However, the GST Council is yet to recommend inclusion of these items under GST.
This brings us to another key dynamic that defines the Centre-State relationship — sharing of taxes.
The southern States have been vocal about the false positives and negatives from tax sharing and this mechanism is largely subject to the recommendations of the Finance Commission (FC) and action by Parliament. State levies and State GST form part of a State’s revenue.
Under Article 269A (1) the GST Council — and not the FC — has the powers to make recommendations in relation to sharing of taxes from inter-State trade.
How:
However, Articles 270(1A) and 270(2) provide that taxes levied under the GST laws will be shared in the manner ‘prescribed’ in Article 270(2) — which takes us to the FC, and not the GST Council.
The possible anomaly between roles and powers of the FC and the GST Council has not been tested but it may make sharing of these revenues subject matter of the FC and Parliament rather than the GST Council, where States have more power.
States don’t merely seek parity with each other, historically States have also sought parity with the Centre (Sarkaria and Punchhi Commissions).
Recommendations of the FC are placed before Parliament and States have no role in the debate.
To way forward
There is no provision for an aggrieved State to challenge the FC report or seek its enforcement.
If the Centre refuses to make allocations as per the GST Council, or if a State is aggrieved by the recommendations itself, an aggrieved State would have to litigate in the Supreme Court as it appears that the GST Council is yet to establish a mechanism for resolving differences in terms of Article 279A(11). https://www.thehindu.com/todays-paper/tp-opinion/a-reality-check-on-cooperative- federalism/article25489433.ece
Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests
Four corners #GS2 #IR
What:
As officials from the ‘Quadrilateral’ grouping of India, Australia, Japan and the U.S. meet in Singapore, their challenge will be to accurately describe their common agenda.
The Quad is billed as four democracies with a shared objective to ensure and support a “free, open and prosperous” Indo-Pacific region.
How:
The four countries are expected to discuss infrastructure projects they are working on, and building humanitarian disaster response mechanisms.
Over the past few months, India and Japan have announced they will combine efforts on a number of projects in South Asia, including bridges and roads in Bangladesh, an LNG facility in Sri Lanka and reconstruction projects in Myanmar’s Rakhine province.
Australia has unveiled an ambitious $2 billion project to fund infrastructure and build maritime and military infrastructure in the Pacific region, on which it is willing to cooperate with other Quad members.
The four countries are expected to talk about regional developments, including elections in the Maldives, the collapse of the government in Sri Lanka and the latest developments in North Korea.
With Quad talks being held on the sidelines of the East Asia summit, the Regional Comprehensive Economic Partnership summit and the ASEAN-India informal summit, discussions will include some of the overlapping issues among these groupings.
Why:
However, despite the potential for cooperation, the Quad remains a mechanism without a defined strategic mission.
In 2007, when the grouping was first formed following cooperation after the 2004 tsunami, the idea was to better coordinate maritime capabilities for disaster situations.
When revived in 2017, the grouping seemed to have become a counter to China’s growing inroads into the region, despite denials that any particular country had been targeted.
While Washington sees the U.S. and India as “bookends” of the Indo-Pacific, India and Japan have included the oceans up to Africa in their definition.
The entire focus on the Indo-Pacific makes the Quad a maritime, rather than land-based, grouping, raising questions whether the cooperation extends to the Asia-Pacific and Eurasian regions.
Even on maritime exercises, there is a lack of concurrence.
India has not admitted Australia in the Malabar exercises with the U.S. and Japan, despite requests from Canberra, and has also resisted raising the level of talks from an official to the political level.
To way forward
The fact that India is the only member not in a treaty alliance with the other Quad countries will slow progress somewhat, although each member is committed to building a stronger Quadrilateral engagement.
The outcome of the third round in Singapore will be judged by the ability of the group to issue a joint declaration, which eluded it in the first and second rounds. https://www.thehindu.com/todays-paper/tp-opinion/four-corners/article25489426.ece
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
A question of writ #GS2 #Governance
What:
Sabarimala is considered to be one of the holiest temples in Hinduism, with one of the largest annual pilgrimages in the world.
The faithful believe that the deity’s powers derive from his asceticism, and in particular from his being celibate. Women between the ages of 10 and 50 are barred from participating in the rituals.
Some facts:
The exclusion was given legal sanction by Rule 3(b) of the Kerala Hindu Places of Public Worship (Authorisation of Entry) Rules, 1965.
The validity of the rule and other provisions restricting the entry of women was decided by the Supreme Court last month.
The Court, by a majority of 4:1, held that the exclusion of women between these ages was violative of the Constitution.
The Sabarimala judgment
The practice of excluding women did not constitute an “essential religious practice”.
Crucially, the judges also relied on Section 3 of the Act mentioned above which stipulates that places of public worship must be open to all sections and classes of Hindus, notwithstanding any custom or usage to the contrary.
It was held that Rule 3(b) prohibiting the entry of women was directly contrary to this. The right of women (in the age bracket in question) to enter Sabarimala was guaranteed under Article 25(1).
This provision states that all persons are “equally entitled” to practise religion. According to him, Rule 3 prohibiting the entry of women, was violative of Article 15(1) of the Constitution.
More crucially, it was a founding document, designed to “transform Indian society by remedying centuries of discrimination against Dalits, women and the marginalised”.
‘Morality’ used in Articles 25 and 26, the judge held, referred to constitutional morality which includes the values of justice, liberty, equality and fraternity.
Barring menstruating women from entering the shrine is violative of Article 17 (the constitutional provision prohibiting untouchability).
The concept of untouchability is grounded in the ideas of ‘purity and pollution’. These same notions form the basis for excluding the entry of menstruating women into religious shrines. https://www.thehindu.com/todays-paper/tp-opinion/a-question-of-writ/article25500469.ece
Issues relating to poverty and hunger.
Setting a proper diet plan #GS2 #Governance
What:
Despite being one of the fastest growing economies in the world, India has been ranked at 103 out of 119 countries, with hunger levels categorised as “serious”, in the Global Hunger Index 2018.
India’s child malnourishment level is not only the highest in the world but varies considerably across States.
As per the National Family Health Survey-2016, the proportion of stunted (low height for age) children under five is significantly higher (38.4%) than global (22.9%) averages.
The underweight (low weight for age) children rate (35.7%) is a lot higher than the global average (13.5%) too.
India is home to over 53.3 million stunted, 49.6 million underweight and 29.2 million wasted (low weight for height) children under five.
How Major challenges tackles?
One problem lies with the current thinking of growth-oriented development.
The low income and Empowered-Action-Group (EAG) States face major challenges to improve malnutrition, but, two EAG States, Chhattisgarh and Odisha, have performed better on this front compared to Gujarat and Maharashtra where per capita income is almost double.
The development path prevalent in Gujarat is more about growth, development, investment, which, however, has not been able to translate as better nutritional status in the State.
Odisha, which is a low income State, has a better network of Integrated Child Development Services (ICDS), public health facility/workforce per lakh population and educational attainment among women, which have translated into a better nutritional status when compared with Gujarat.
Further, tribals, rural, poor and illiterate mothers’ children are badly off in so-called developed States of Haryana, Gujarat and Punjab.
These groups are also affected in poorer States of U.P., Bihar, Jharkhand and Madhya Pradesh.
Around two-thirds of stunted/underweight children are from 200 districts of both less developed and developed States.
Why:
• The need to link agriculture and nutrition, as agriculture provides answers to most nutrition problems. • However, show malnutrition continues to be high in agricultural surplus States like Haryana (34% stunting and 29.5% underweight). • Malnutrition in some of its agriculturally-developed districts (Karnal, Panipat, Sonipat, Rohtak as well as in Gurugram) is even higher than the average of Odisha. • Recently, Madhya Pradesh has registered double-digit growth in food grain production making it one of the wheat granaries of India, but acute malnutrition is still critical in most of its districts with a high proportion of underweight (42.8%) and stunted children (41.9%). • With the increase in diversity in food intake, measured through Food Intake Index using 19 food items in all 640 districts, malnutrition (stunted/underweight) status declines. • Only 12% of children are likely to be stunted and underweight in areas where diversity in food intake is high, while around 50% children are stunted if they consume less than three food items. • A majority of children across districts in Tamil Nadu consume a reasonably highly diversified food, leading to lower percentage of stunted/underweight children across districts. • Children in a majority of districts in West Bengal, Odisha, Kerala and Karnataka consume mediocre level of food items and malnutrition is relatively lower than in Rajasthan, U.P., Jharkhand, M.P., Gujarat, Bihar and Haryana (children in many of their districts consume less diversified food). • The diversified food intake is very low in a majority of Indian districts; just 28% of children consumed over five items of the total 19 food items.
To way forward
An inclusive and holistic approach, including controlling/regulating food price, strengthening the public distribution system (PDS) and income support policies for making food cheaper are important steps.
The ICDS was a high impact nutrition intervention, but its universal availability and quality are questionable due to poor functioning.
The government must broaden the ICDS programme by ensuring diversity in food items in worst-hit districts.
The launch of the National Nutrition Mission as a strategy to fight maternal and child malnutrition is a welcome step towards achieving the targets of underweight and stunted children under five years from 35.7% to 20.7% and from 38.4% to 25% respectively by 2022. https://www.thehindu.com/todays-paper/tp-opinion/setting-a-proper-diet-plan/article25500470.ece
Indian Economy
Full disclosure #GS3 #Economy
What:
SEBI has come out with new guidelines to improve the quality of disclosures made by credit rating agencies.
According to the new norms, credit rating agencies will have to inform investors about the liquidity situation of the companies they rate through parameters such as their cash balance, liquidity coverage ratio, access to emergency credit lines, asset-liability mismatch, etc.
Further, rating agencies will have to disclose their own historical rating track record by informing clients about how often their rating of an entity has changed over a period of time.
How:
SEBI has been working hard to improve transparency and credibility among rating agencies for some time now, including through a circular issued in November 2016 calling for enhanced standards for rating agencies.
The latest disclosure norms seem to be a response to the IL&FS defaults and the ensuing crisis.
While rating agencies already make at least some of these disclosures one way or the other, mandating the formal disclosure of these facts is still welcome.
Why:
1. The primary one is the flawed “issuer-pays” model where the entity that issues the instrument also pays the ratings agency for its services.
This often leads to a situation of conflict of interest, with tremendous potential for rating biases.
2. Second, the credit rating market in India has high barriers to entry, which prevent competition that is vital to protecting the interests of investors.
Better disclosures can increase the amount of information available to investors, but without a sufficient number of alternative credit rating providers, quality standards in ratings will not improve.
To way forward
Structural reform should aim to solve another severe problem plaguing the industry, which has to do with rating shopping and the loyalty of credit rating agencies in general.
Rating agencies will have to come up with lucrative business models that put the interests of investors above those of borrowers.
Such a change requires a policy framework that allows easier entry and innovation in the credit rating industry. https://www.thehindu.com/todays-paper/tp-opinion/full-disclosure/article25500466.ece
Conservation, environmental pollution and degradation, environmental impact assessment
Protecting the tiger’s habitat #GS3 #Environment
Why is the death of tigress Avni controversial?
Since 2016, the deaths of 13 people in the Pandharkawda divisional forest of Maharashtra have been attributed to tigers and at least five of them to Avni, a 6-year-old with two cubs.
India’s wildlife laws permit a tiger which is believed to have preyed on humans to be killed.
The State’s chief wildlife warden claimed he had evidence. The decision to shoot T1 (known as Avni) was taken in January but stayed by the Bombay High Court after appeals by activists.
How serious is the tiger-human conflict?
The killing of a man-eating tigers is a rare but not unprecedented in India.
As tigers are India’s apex predators and symbols of its success at conservation, the unusual death of even one tiger causes disquiet in forest departments and among conservation biologists, tourism officials and activists.
Out of 553 tiger deaths from 2012 to 2017, 22.1% were due to poaching, 15.4% were seizures, and 62.4% were attributed to natural causes and causes not attributable to poaching, according to information from the Rajya Sabha.
India has 50 tiger reserves, but with forest area increasingly spilling into hamlets, there have been several instances of tigers preying on cattle, livestock and, sometimes, people.
Days after the killing of Avni, villagers in Lakhimpur Kheri, U.P., crushed a tiger to death with a tractor after it fatally attacked a farmer.
Are conservation efforts adequate?
A recent study by the World Wildlife Fund said that eight tiger sanctuaries in India could, over time, support more than four times the current population of tigers in these sanctuaries.
It is futile to preserve individual members of a species and that efforts must be made to conserve the species as a whole.
Conservationists have also said that “man-eaters” is a legacy term from colonial hunters and incorrect in today’s times.
Tigers don’t actively seek out humans; it is only because of increased contact between humans and animals that there are more conflicts which leads to deaths. https://www.thehindu.com/todays-paper/tp-opinion/protecting-the-tigers-habitat/article25500473.ece
Awareness in the fields of IT, Space
Another orbit #GS3 #SnT
What:
The Indian Space Research Organisation has marked a big milestone by successfully testing its heavy-lift launcher while launching an advanced communication satellite.
It plans to use this for the Chandrayaan-II moon mission in the early months of 2019.
Some facts:
The Geosynchronous Satellite Launch Vehicle MarkIII (GSLV MkIII) launched GSAT29, an advanced communications satellite, into a geosynchronous transfer orbit where the satellite’s closest approach to earth would be 190 km and the farthest 35,975 km.
The launcher bearing the 3,423 kg satellite took off from a launchpad at the Satish Dhawan Space Centre at Sriharikota.
ISRO’s master control facility at Hassan assumed the command and control of the satellite, and it will be manoeuvred into a geostationary orbit, its final destination, in days.
With a liftoff mass of 640 tonnes, the GSLV MkIII is the heaviest launch vehicle made in India, and GSAT29 is the heaviest satellite to take off from Indian soil.
The launcher can carry payloads up to 4 tonnes to the geosynchronous transfer orbit and up to 10 tonnes to a low-earth orbit.
The multi-band, multi-beam satellite can cater to the communication needs of people in Jammu and Kashmir and the Northeast.
Other points:
The first successful experimental flight of the GSLV MkIII was in 2014 when it carried a dummy crew module as a payload.
This proved its capacity in the atmospheric flight regime. Its first developmental flight was on June 5, 2017, when it launched GSAT19, weighing 3,136 kg.
The present launch marked the second developmental flight of the MkIII. With these two successes, the launcher is declared ‘operational’ and joins the ranks of the working vehicles, the PSLV and the GSLV.
The third cryogenic stage could establish its performance in just two developmental flights.
The GSLV MkIII has not just boosted the satellite into its orbit, but also restored morale at ISRO, which had been dented by the GSAT 6A setback. https://www.thehindu.com/todays-paper/tp-opinion/another-orbit/article25511640.ece
Science and Technology- developments and their applications and effects in everyday life Achievements of Indians in science & technology;
Unnecessary, destabilising and expensive #GS3 #Defence
What:
On November 5, PM Modi announced that India’s first indigenous ballistic-missile armed nuclear submarine (SSBN), Arihant, had “successfully completed its first deterrence patrol” and claimed that this “accomplishment” would “always be remembered in our history”.
Some facts:
A nuclear submarine is fuelled by an onboard nuclear reactor, which allows it to operate underwater for long periods of time.
In contrast, a conventional diesel submarine uses batteries to operate underwater, but is forced to surface periodically to recharge its batteries using diesel-combustion engines that require oxygen.
SSBNs were first deployed during the Cold War and justified as a tool of last resort.
If an adversary were to launch a devastating first-strike on a country, destroying its land-based missiles and paralysing its air force, the submarine — undetected at sea — could still deliver a counter-strike, assuring the “mutual destruction” of both countries.
About Indian context
• There is no realistic threat, which the Arihant could counter, that could wipe out India’s existing nuclear deterrent. • The range of the missiles carried by the Arihant is about 750 km, and so it can only target Pakistan and perhaps China. • The Pakistan government has threatened to use “tactical nuclear weapons” to counter India’s cold-start doctrine that envisions a limited invasion of Pakistan. • However, these are relatively small nuclear weapons that could devastate a battlefield but would not affect the Indian military’s ability to launch a counter-strike using its existing land or air-based forces. • China has consistently pledged, for more than 50 years, that it will never be the first to use nuclear weapons in a conflict. • Even if China were to suddenly change its policy, any attempt to disable India’s nuclear weapons would be fraught with unacceptable risks regardless of whether India possesses SSBNs. • Even the United States, which maintains the world’s largest nuclear stockpile, is unwilling to militarily engage a limited nuclear power such as North Korea since it understands that it cannot reliably disable Pyongyang’s land-based deterrent. • Last year, 122 nations voted in favour of the “Treaty on the Prohibition of Nuclear Weapons”. • The Indian government skipped these negotiations claiming, nevertheless, that it was “committed to universal... nuclear disarmament”. • So the government’s active pursuit of nuclear-armed submarines undermines India’s stated international position and reflects a security assessment that is becoming increasingly irrelevant.
Some risks:
In fact, nuclear-armed submarines increase the risks of an accidental conflict.
Traditionally, nuclear weapons in India have been kept under civilian control, and separate from their delivery systems.
However, the crew of a nuclear-armed submarine will have both the custody of nuclear weapons and the ability to launch them at short notice.
Even though reports suggest that nuclear weapons on Indian SSBNs will be safeguarded by electronic switches, called “permissive action links”, such a setup can dangerously weaken the civilian command- and-control structure, as declassified documents from the Cuban missile crisis show.
During the crisis, U.S. warships recklessly attacked a Soviet submarine with practice depth charges to force it to surface.
The British government recently estimated that the cost of four new SSBNs would be £31 billion, or about Rs. 70,000 crore per submarine.
This is similar to the U.S. Navy’s estimate of the cost of a new “Columbia-class” SSBN.
The lifetime costs of operating such submarines are even larger than these initial costs; British and American estimates suggest that each SSBN requires between Rs. 2,000 crore and Rs. 5,000 crore in annual operational costs. https://www.thehindu.com/todays-paper/tp-opinion/unnecessary-destabilising-and- expensive/article25522307.ece
Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes;
Road map to affordable medicines #GS2 #Governance
What:
The Indian government has been focussing on making medicines affordable by making them available through Jan Aushadhi Kendras, enabling price control of essential medicines, promoting prescription of generic medicines by medical practitioners and focussing on a conducive intellectual property regime (IPR).
About Generic drugs:
Generic drugs tend to cost less than branded ones. These drugs form the largest segment of the Indian pharmaceutical sector.
The increasing prevalence of chronic diseases and ever-rising costs of hospitalisation and medicines are responsible for the growth of the generic drugs market.
In this context, the National Health Protection Scheme (NHPS), also known as ‘Ayushman Bharat’, launched in 2018 — which seeks to insure 10 crore families for Rs. 5,00,000 — is expected to exponentially increase the demand for medicines.
A well-functioning, end-to-end generic medicine supply chain will keep costs low.
How:
An initiative to ensure affordable medicines through dedicated outlets was launched in the form of the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) in 2008.
The mission was to create awareness about generic medicines and provide commonly used generic medicines and health-care products.
However, as on March 31, 2012, only 157 stores were opened; later, many became non-functional. Till the end of 2014-15, there were 99 stores. In 2014, a ‘Strategic Action Plan’ was prepared.
The product basket now has more than 600 medicines and 154 surgical and consumables in all therapeutic categories.
There are over 4,000 Jan Aushadhi Kendras. These centres are gradually becoming ubiquitous.
Why:
• Due to sustained efforts by the government to put in place a legal framework to promote generic medicines, the Medical Council of India issued a directive in September 2016, making it mandatory — • By amending the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 — to prominently mention the generic names of drugs along with brand names in prescriptions. • There is an advisory to State drug controllers that all branded drugs, imported or domestically manufactured, should mandatorily have generic names mentioned in bold while packaging. • The instrument of price control is also being used to restraint companies from pricing their medicines exorbitantly. • ‘Every few years, the Health Ministry, in consultation with experts, draws up a National List of Essential Medicines (NLEM).
• These medicines, deemed essential for the treatment of common conditions, automatically come under price control. • Under NLEM 2015, a total of 376 drugs are under price control. In addition, the government has the power to bring any item of medical necessity under price control — paragraph 19 of the Drugs (Prices Control) Order, 2013. • This provision was used to regulate the prices of cardiac stents and knee implants’. • There has been an attempt to strike a fine balance between the health interests of consumers and the financial health of Indian pharmaceutical companies. • The Indian pharmaceutical sector industry supplies over 50% of the global demand for various vaccines, 40% of generic demand in the U.S. and 25% of all medicines in the U.K. Over 80% of antiretroviral drugs (used in the AIDS fight) are supplied by India.
To step forward
A serious threat to affordability of medicines comes from big global firms.
These companies and their governments have been trying to lobby with India to make patent protection more stringent
Despite the fact that both compulsory licensing and prohibition of evergreening, provided under the Indian Patents Act, 1970, are valid under the TRIPS agreement of the World Trade Organisation.
India has resisted any change in its intellectual property laws that can have the effect of making medicines unaffordable. https://www.thehindu.com/todays-paper/tp-opinion/road-map-to-affordable- medicines/article25529104.ece
Statutory, regulatory and various quasi-judicial bodies.
EC warns parties on criminal cases #GS2 #Governance
Candidates with criminal antecedents and their political parties can be charged with contempt of the Supreme Court if they fail to widely publicise the cases against them as prescribed. They may also be penalised for false statements.
Separate formats have been specified for the candidates and the parties to submit reports about publication of the declaration. The failure of the candidates and the parties to publicise the details in the manner prescribed may be a ground for post-election action like election petition or contempt of court.
The court has made it mandatory for the candidates and their parties to publish or broadcast details of the cases against them at least three times ahead of elections. The ruling applies to all candidates in the
Rajasthan, Madhya Pradesh, Chhattisgarh, Mizoram and Telangana Assembly elections. The parties are also required to upload the details on their websites.
If anyone furnishes a false statement, the Election Commission can act under various provisions, including Section 171 (G) of the Indian Penal Code that prescribes a fine.
The Election Commission has received a representation about expenses on television and newspaper advertisements of criminal antecedents, and it may take a decision on Monday. “It is up to them to get advertisements published in television channels and newspapers with wider circulation in the constituencies or districts concerned, or publicise information about the cases through the media,” https://www.thehindu.com/todays-paper/tp-national/ec-warns-parties-on-criminal- cases/article25471426.ece
Indian Economy
Behind India’s leap in ease of doing business- Aarati Krishnan #GS3 #Economy
India’s leap in the World Bank’s Ease of Doing Business rankings this year has slipped under the radar, in the cacophony over demonetisation and the RBI-Centre spat.
The country has, in fact, been one of the biggest ‘improvers’ in the 2019 study, with its rank shooting up from 100 to 77, among 190 countries. This is quite a big jump, given that its rank crept up from 142 to 100 in the four years from 2015 to 2018.
The World Bank now deems India an easier place to do business in than BRICs peers such as Brazil (109) and South Africa (82) and West Asian economies such as Qatar (83) and Saudi Arabia (92).
But it has a long way to go before it can catch up with China (46, the Hong Kong Special Administrative Region is at 4), the U.S. (8) or Singapore (a lofty 2). New Zealand is the top dog here.
India’s climb in the 2019 rankings seems to have come mainly from sharply higher scores on two ‘doing business’ indicators — securing construction permits and trading across the borders. It also made smaller improvements in starting a business and getting credit.
The World Bank found that India’s top cities managed to drastically shrink the number of days they took to give out construction permits, from 144 days last year to 95 days, while slashing their costs from 23% of the building value to just 5%. Single-window clearance for securing building permits in Delhi and a new online system in Mumbai, brought about this quantum change.
From 146 on cross-border trade, its rank climbed to 80. In 2017-18, importers spent 264 hours at the border complying with formalities, but only spent 97 hours this year. For exporters, the timeline shrank from 106 to 66 hours, delivering big savings.
Upgrades in port infrastructure, a move to online documentation and facilities for exporters to seal their containers on their own, helped.
India also managed incremental reforms in a few other indicators. On starting up a business, its rank improved from 156 to 137, as the time taken to start a new company was crunched from 30 days to 17 days, thanks to quicker GST registration and the abolition of site inspections in Mumbai.
Q- What were the flaws where India needs to be adhering?
While India managed dramatic changes in some indicators, there were others where its scores barely budged.
Its score remains dismal on registering property, where it ranks 166. While it takes 69 days to register a piece of property and costs about 8% of its value in India, the norm for OECD countries is just 20 days at half that cost. New Zealand gets this done in a single day.
The other vexatious aspect that most business folk will readily identify with, is paying taxes. Despite the advent of GST, India has remained a back-bencher on this at a rank of 121. A typical Mumbai-based firm makes 13 tax payments a year, spends 278 hours on this and coughs up 52% of its profits.
But businessmen in Hong Kong make just three payments a year, those in Singapore spend just 49 hours paying taxes. The average tax rate across global economies is less than half of the Indian rate! India also fares poorly, at rank 163, on enforcing contracts. While enforcing a claim through the courts in Mumbai takes 1,445 days and costs 31% of claim value, OECD nations manage this feat in 582 days at a cost of 21%.
Q- How this index is measured?
The EODB study tries to capture the experience of small and mid-sized companies in a country with their regulators, by measuring the time, costs and red tape they deal with.
To collect data, it empanels experts from the largest business cities in each country, with Mumbai and Delhi surveyed in India. It has many rounds of interactions with them — typically lawyers, business consultants, accountants, freight forwarders, government officials — who can capture the experience of multiple businesses.
Over 13,800 experts participated in the 2019 study, from June 2, 2017 to May 1, 2018. Each country is assigned a rank out of 190 based on the total score it earns on 10 key aspects of doing business.
The indicators considered now are: starting a business, getting construction permits, securing electricity, registering property, getting credit, protecting minority investors, paying taxes, cross-border trade, enforcing contracts and resolving insolvency.
In short, the World Bank’s intent is to measure a country’s progress on a few ‘doing business’ indicators in great depth, without trying to be comprehensive about the indicators, or striving for a statistically large sample. The above facts make the shortcomings of the study obvious.
In India, it may not reflect the experience of partnership or proprietorship firms that dominate the small business space, or those located in tier 2 or tier 3 towns. With the ten indicators measured by the study well-known, it is also easy for governments to specially target these areas for reforms.
But the EODB rankings do serve as the most trusted ready-reckoner for foreign investors looking to set up shop in a country. For that reason, this is an achievement for India to celebrate.
https://www.thehindu.com/todays-paper/tp-business/behind-indias-leap-in-ease-of-doing- business/article25471369.ece
Indian Economy
Decoding the Central Board of the RBI #GS3 #Economy
What is the RBI Board?
The RBI Board is a body comprising officials from the central bank and the Government of India, including officials nominated by the government. According to the RBI, the “general superintendence and direction of the affairs and business of the RBI is entrusted to the Central Board” and the Board exercises all powers and does all acts and things that are exercised by the RBI. The Board is also to recommend to the government the design, form and material of bank notes and also when and where they can serve as legal tender.
Who sits on the Board?
The Board consists of official directors, who include the Governor and up to four Deputy Governors, non-official directors, who include up to ten directors from various fields and two government officials, and one director from each of four local boards of the RBI.
Currently, the Board members are: RBI Governor Urjit R. Patel; Deputy Governors N. S. Vishwanathan, Viral V. Acharya, B.P. Kanungo, and Mahesh Kumar Jain; Dr. Prasanna Kumar Mohanty, Dilip S. Shanghvi, Revathy Iyer, Sachin Chaturvedi, Natarajan Chandrasekaran, Bharat Narotam Doshi, Sudhir Mankad, Ashok Gulati, Manish Sabharwal, Satish Kashinath Marathe, Swaminathan Gurumurthy; Economic Affairs Secretary Subhash Chandra Garg and Financial Services Secretary Rajiv Kumar.
The Governor and Deputy Governors hold office for not more than five years, the ten directors nominated by the government hold office for four years, and the government officials are to hold a term on the RBI Board as long as the government sees fit.
According to the RBI Act, the director of the RBI Board cannot be a salaried government official (except for the ones specifically nominated by the government), be adjudicated as insolvent or have suspended payments to creditors, an officer or employee of any bank (again, this does not include the government nominee), or, interestingly, “is found lunatic or becomes of unsound mind”.
When does the Board meet?
The Governor has to call a Board meeting at least six times in a year, and at least once each quarter. A meeting can be called if a minimum of four Directors ask the Governor to call a meeting. The Governor
or, if for any reason unable to attend, the Deputy Governor authorised by the him to vote for him, presides the Board meetings. In the event of split votes, the Governor has a second, or deciding vote.
Why has the RBI Board been in the news?
The RBI Board recently entered the news during the public spat between the central bank and the Finance Ministry. One of the reasons for the disagreement was the government’s alleged threat of invoking Section 7 of the RBI Act.
Section 7 basically empowers the government to supersede the RBI Board and issue directions to the central bank if they are considered to be “necessary in public interest”. https://www.thehindu.com/business/Economy/decoding-the-central-board-of-the- rbi/article25469861.ece
Science and Technology- developments and their applications and effects in everyday life Achievements of Indians in science & technology;
Neutrino facility has miles to go #GS3 #SnT
A week ago, the National Green Tribunal (NGT) upheld the environmental clearance granted to the India-based Neutrino Observatory (INO), a major research facility proposed in Theni district of Tamil Nadu. While this removes all current legal hurdles in building the facility, there are still other obstacles to be overcome before work can begin on this project, which has been in planning since 2001.
What it will do
The INO promises to be a one-of-its-kind facility to detect and study neutrinos. These are extremely tiny elementary particles that are omnipresent in universe but very difficult to detect because they pass seamlessly through all kinds of matter.
Neutrinos carry no electric charge. Predicted in 1931, neutrinos were detected for the first time in 1959, and are now considered to be the second most abundant particle in the universe — after the photon, or light particle.
Groups in many countries are carrying out research on neutrinos, believed to hold important clues to some of the basic questions on the universe. Research on neutrinos has led to award of the Nobel Prize in Physics in 2002 and 2015, and before that, in 1988 and 1995.
Once built, INO would be the biggest research facility in India. The Indian Express has reported earlier that the underground laboratory will be located nearly 1.5 km below the Earth’s surface, where a giant neutrino detector is to be placed. The laboratory will consist of a cavern of size 132 m × 26 m × 20 m and with several small rooms, and will be accessed by a tunnel nearly 2 km long and 7.5 m wide.
Series of holdups
The project has been mired in all kinds of trouble — litigation, public protests, opposition from NGOs and political parties, besides government apathy. It has had to move locations once, because the nearby Mudhumalai National Park had been declared a tiger reserve during the same time.
Environmental clearance granted in 2011 for the second site, too, was put in abeyance by the NGT because the project was within 5 km of the Mathikettan Shola National Park in Idukki, and no application had been moved for the approval from the National Board of Wildlife.
Fresh environmental clearance was given last March by the Expert Appraisal Committee (EAC) of the Ministry of Environment and Forest. This was challenged in the NGT again, which has now thrown out the challenge.
The result of all these obstacles has been that work, originally scheduled to start in 2012, is yet to take off. The original timeline had envisaged experimental work starting from 2017, later advanced to 2020. It is now unlikely to begin before 2025, even if construction starts next year. Construction of the underground facility would take at least five years.
The project cost, too, likely to escalate. The Union government had, in 2015, approved a budget of Rs 1,583 crore for the project. That budget was based on cost assessments done in 2012. It is estimated the project would now cost at least 25% more than that amount.
More challenges ahead
Bigger uncertainties in terms of government approvals, meanwhile, are still to come. The project applied for clearance from the National Board of Wildlife only in January this year. That approval is still awaited.
Last year, the INO was told it would also need building approval from relevant state government agencies. That building plan is being prepared and an application is likely to be moved later this month. It is unclear how much time it will take to get that approval.
The Tamil Nadu government, which has handed over, free, 26.5 hectares of land in the Bodi West Hills near Pottipuram village in Theni district, has taken its time deciding on approvals for the project.
It took two years for the state government to grant approval to a change in land use, from residential to residential-cum-educational, to the project’s control facility in Madurai, and that too after it became
evident that the matter was to come up for discussion at the Pragati meeting that Prime Minister Narendra Modi takes with state governments to expedite stalled projects.
Again, for three years, the state’s Pollution Control Board did not take any action on the application for the final go-ahead after environmental clearance had been obtained in 2011.
Then there is a pending case in the Madurai bench of Madras High Court, filed in 2015 by MDMK leader Vaiko, who has been opposing the project. The court has passed interim orders asking the INO not to begin any “research work” until final clearance is obtained from the state Pollution Control Board. It is being understood, as of now, that once final clearance is obtained, this interim order will lose its meaning. https://indianexpress.com/article/explained/neutrino-facility-neutrino-observatory-national-green- tribunal-ino-5441579/
Effect of policies and politics of developed and developing countries on India's interests
Rafale deal not done in a hurry: Centre #GS2 #Governance
The Cabinet Committee on Security (CCS) approved the procurement of the 36 Rafale jets well over a year after the Indo-French Joint Statement to acquire the aircraft “as quickly as possible” was issued, said a government note in the Supreme Court on the Rafale deal.
The Defence Procurement Procedure (DPP) 2013 mandates that acquisitions worth over Rs. 1,000 crore should be first cleared by the CCS.
Since 2002, over 1,100 contracts valued at Rs. 7.45 lakh crore were successfully concluded using the DPP structure, introduced after the Kargil War.
The document showed that the CCS approved the signing of the Inter-Governmental Agreement (IGA) for procurement of the 36 jets only on August 24, 2016 — well over a year after the Indo-French statement of April 10, 2015, which the note said conveyed an “intent” to acquire the jets in a fly-away condition.
The approval of the Defence Acquisition Council (DAC), the highest body for defence procurement, was taken on May 13, 2015. Again, a month after the Indo-French statement.
The note said the joint statement was issued after the Government of India conveyed to the French government about the “critical operational necessity” for Multi-role Combat Aircraft for the Air Force. This necessity, it said, was triggered by the “extremely critical” combat potential of the Air Force caused by a three-year stalemate.
The situation was due to “unresolved issues” over man-hours and contractual obligations between HAL and Dassault Aviation over the production of 108 Rafale jets, of a total 126, to be inducted in the Air Force as part of an earlier proposal.
https://www.thehindu.com/todays-paper/rafale-deal-not-done-in-a-hurry-centre/article25481110.ece
Indian Economy
Important to anchor rupee expectations, so that they don’t get caught in a self- fulfilling spiral #GS3 #Economy
From being strong and synchronised a year ago, global growth has suddenly become very divergent. This has had a bearing on the Indian rupee, leading to a sharp depreciation. Economist SAJJID Z CHINOY explains to Indian Express and select readers how this happened, and what could follow.
Dr Chinoy is chief India economist at J P Morgan and also covers South Asia. Earlier with IMF and McKinsey & Co. Recently appointed adviser to 15th Finance Commission, he has served on RBI expert committee on monetary policy framework, and was a consultant to government-appointed FRBM review committee.
On the global events leading to depreciation of the rupee
Just a year ago, we were talking about how the global environment is in a Goldilocks phase where you had strong, synchronised growth. The US is in the 10th year of its expansion. Think of a business cycle and multiply it by 10 for a human life — so, for the US to be in the 10th year of expansion is tantamount to somebody being 100 years old and still growing, and growing at the fastest pace in many years.
Just a year ago, the sense was that there will be global synchronised growth — capital flows are flooding into emerging markets, the rupee is going to go high up. What has changed? We went from an environment of convergence — where the US is doing well, Europe is doing well, Japan is doing well, China surprised for six successive quarters — to divergent growth.
If you are on a highway and you are all driving at the same pace, there is no tension. If you are all accelerating at the same pace, there is no tension; if you are all slowing at the same pace, there is no tension. Tension comes when there is divergence in speed. So in 2018, the US is on a full-blown sugar rush. At this stage of the business cycle, to grow at 4% in the second quarter, 3.5% in the third quarter, is much above potential growth.
The US is doing much above potential; Europe has hit a pothole and now it is looking like a ditch where for three successive quarters it has underperformed. So, suddenly that convergent growth has become very divergent.
The US is doing very well, Europe is underperforming and China, which was already slowing as a policy- induced re-balancing, is slowing further because of the worries of the trade war. Whenever there is divergence in growth, what happens is people get worried, and there is a flight to safety. So capital flows from the periphery back to the centre, which is the US, and the dollar strengthens.
When the dollar strengthens, any emerging market with a dollar liability — Argentina, South Africa, Turkey — comes under stress. So the root of this entire problem is divergence in global growth. The US had a large fiscal stimulus so late in the business cycle, which no economist would really recommend — it is like running a marathon and in the last 5 km you consume coke and you have the sugar rush and you are bursting along, but that’s unsustainable.
What you are seeing is two quarters of very strong growth, our sense is that in the next two quarters growth slows sharply. The stress is… The US Fed keeps hiking rates, because the US economy is doing well. By their own estimates, they have three more rate hikes just to reach their definition of neutral. Policy in the US is accommodative at a time when the unemployment rate is at a 40-year low.
They need to be actually in restrictive territory, but they are accommodative. So they have got three more hikes to get to neutral, if not more. And at the same time the US is raising rates, China is easing policy. And that’s where the global stress is emanating from.
We will talk a lot about the rupee, how to judge it, but this is not a domestically induced trigger. These triggers are purely, largely global. There are imbalances locally which exacerbate some of the stress. That is the crux of why 2018 is so different from 2017; the convergence then has turned to divergence now.
On the impact of global crude oil prices on the Indian rupee
India is very sensitive to oil prices; most of the emerging markets are very dependent on imported oil. Oil had collapsed [earlier], and India got this huge terms of trade shock. As the oil prices went down, the windfall to the Indian economy was 3% of GDP , which was very large, and most of it got spent. Therefore, three years ago when global growth was slowing, Indian growth accelerated past 8%.
People were wondering why India was doing so well when global economy was slowing. A lot of it was because of the huge terms of trade shock from oil. When that happens, typically economic theory would say, you spend this terms of trade shock.
The trade-weighted exchange rate — the real exchange rate — should actually appreciate. Many people look at the dollar-rupee rate — and that may be important… for the economy as a perspective, that’s not what matters. If you look at all your trading partners, and look at those bilateral trade exchange rates, and take a weighted average of that, that’s what matters for the economy as a whole.
The trade-weighted, real exchange rate appreciated 20% between 2014 and early 2018. People will look at the dollar-rupee rate and say, “Well it was 65 then, it’s 69 now, things were even-steven”. It wasn’t. What was happening that under the radar, the exchange rate on a trade-weighted basis was getting progressively stronger, which was not visible in the dollar-rupee rate.
That, in my view, hurt Indian competitiveness… The stronger rupee — in trade-weighted terms, it was much stronger —actually hurt Indian competitiveness. There is a phrase for this in economics, it’s called the Dutch disease.
In 1961, Holland gets a huge windfall of gas deposits, capital comes flooding in, they spend that windfall, the exchange rate appreciates, and the rest of the Dutch economy becomes uncompetitive. A little bit of the Dutch disease has happened to India. Our windfall is from lower oil — we spent it, the exchange rate went up, and that made the underline current account less competitive.
Which is why some degree of rupee depreciation is healthy, is necessary, will help the Indian economy. After 20% appreciation in trade-weighted terms, we have now weakened by 9%.
When I hear the rupee is the worst performing in Asia, it is misleading, because our comparative set is our trading partners — compared to them we were 20% stronger; we have only given back 9% of that. To come back to oil, because the underline current account is getting worse, when oil prices jump up, the headline number takes a shock.
So the current account of 1.9% last year is tracking 3% of GDP this year — 3% is hard to finance at the best of times, especially when global financial conditions are tightening and US rates are going up.
On how far rupee depreciation should be a cause for concern
There was very little that policymakers could do on the way up. That 20% depreciation was despite the fact that RBI was buying dollars like there’s no tomorrow. That was the equilibrium response to the terms of trade shock.
Now the exact opposite is happening. Oil prices have gone back up, and terms of trade have become less favourable, and this is the equilibrium response to that. I think that there are two principles policymakers should follow. One is not to panic, because I firmly believe that this is not like 2013.
Our starting points are much better. Add up the fiscal deficit and the current account deficit to get the concept of twin deficits.
The twin deficits have gone up in the last two years, but they are still much lower than what they were five or seven years ago. The second is, our buffers are much higher — by all measures of adequacy, the reserves are sufficient. If it is a shock, you have got to spread the adjustment across different instruments.
Some of the shock absorbers should be the rupee, some have to be drawing down reserves, some have to be higher interest rates, some have to be tighter fiscal policy. As long as you do this, you are spreading the adjustment across… I think they have handled it very well.
On a theory that market rigging is running the rupee down
Our market is too deep and too wide and spread across too many countries, for anyone to rig it in my view. The fact that this has happened in tandem with every other emerging market on the globe, and the fact that it is reflecting imbalances — not insurmountable imbalances — tells me that this has to be understood: we are running a balance-of-payments deficit, which simply means that the demand for dollars is less than the supply of dollars.
When demand exceeds supply, prices go up. I don’t think you can have a seven-month depreciation in a market as deep as India (there are both onshore and off-shore markets) that it can — we are not in the 70s-80s — that it can be rigged by anybody. It is philosophically important to separate two phenomenons. One is “rigging of the markets”.
But can the market get into a self-fulfilling spiral? Yes, it can. Everybody believes that the rupee is going to weaken. Then exporters will basically stop hedging because they believe that the rupee tomorrow is going to be weaker than today; importers will front-load; the imbalance gets worse; the rupee weakens. Everybody says, “I was right, let me do more of the same”. That’s a self-fulfilling spiral.
Which is why it is good to have two-sided volatility, to keep markets honest. It’s important once in a while for central banks to intervene to push the rupee the other way, but exporters can’t say this is a one-way street. It is important to anchor rupee expectations, so that they don’t get unhinged and you don’t get caught in a self-fulfilling spiral. That is a legitimate concern which policy should address.
On exports not doing well in the last few months
It’s been a much longer phenomenon. In the last six years, India’s exports have fallen very sharply. The export sluggishness has predated the last six months. It is global in the sense that this is what de- globalisation is — global growth picked up a little bit but exports have not picked up in tandem. There is a worry about de-globalisation.
I would argue, in India’s case, it has been compounded a little bit by the stronger rupee. In India, there is a lot of dispute about the elasticity of exports to the rupee. A lot of people feel exchange rates don’t matter — whether the rupee depreciates or appreciates by 10%, it doesn’t hurt exports. Now it’s undoubtedly true that exports are driven largely by global growth; most empirical studies find that.
But what we found in our paper in July was that, in a long enough horizon, there is a very strong relationship between a trade-weighted real exchange rate and India’s non-oil exports. Every 1% increase
in the exchange rate hurts export volumes by 1.3%, which is very large, but over a period of time — over six, eight months down the line.
All else being equal over the next year, you will see exports picking up. The complication is, even as the exchange rate is depreciating, will global growth prospects get worse next year, which will hurt exports? Then people will say, “I told you so, the rupee depreciation meant nothing”. But you have to disentangle these effects; you have to look at the impact of the rupee depreciation, holding global growth constant. My suspicion is, there is an elasticity there.
On depreciating Asian currencies and trade wars affecting India
The two risks to monitor — one is of course oil prices, which are hard to forecast — are how quickly will the US Fed move, will there be one rate hike every quarter for the next six quarters, what does that do to the dollar; and what happens to the trade war with China. If you look at India’s trade deficit and you strip out oil, half that — 50% to 60% of the trade deficit — is actually with one country, China.
The bilateral trade deficit has gone up, so we need to be particularly sensitive to how the rupee is doing versus the CNY [Chinese yuan]. Our sense is that the trade war is going to get worse before it gets better. US and China economists believe that the base case is that on January 1, the US imposes a 25% tariff on all Chinese imports.
That will be massive — politically, it is the most popular item on President Donald Trump’s agenda. If you do that, estimates are that Chinese growth will get affected by a full percentage point, which will take it much below 6%.
But we know Chinese policymakers don’t want that to happen; they want a soft landing. China economists say you will see a pretty large policy response coming from China. There’s been a fiscal response, and there will be a monetary response.
The CNY has weakened by 9% this year, from April to now. And the base case is that CNY goes to 7.5 against the dollar next year [6.95 as of November 14]. That is the best antidote to putting on tariffs — the Chinese policymaker depreciates. Why does this matter so much? Because if the Chinese currency is depreciating, that has a spillover effect on all the countries in the region that are either part of the value chain, or are competing with China.
In India’s case, we have to be particularly sensitive because if the Chinese currency is depreciating and the rupee is stable, then the rupee becomes expensive vis-à-vis CNY. That means all imports from China will become 10-15% cheaper, which is the last thing we want.
The balancing act for Indian policymakers will be, how do you keep a modicum of stability so that you don’t have a self-fulfilling spiral in the foreign exchange market?
At the same time, how do you keep pace with the CNY so that the bilateral currency does not become expensive? The last time the rupee became expensive against the CNY, between 2015 and 2017, the bilateral trade deficit jumped. The worry is that if China is going to ease and the US is going to hike, that creates very peculiar tensions for most emerging markets.
On whether this mitigates the rupee slide problem to an extent
This year the rupee, in trade-weighted terms, has come down about 9%. I think most people will argue that for one calendar year, that is sufficient adjustment. It also has inflationary consequences. You have got some financial stability concerns — corporates with unhedged dollar debt, you don’t want too much of it.
On a trade-weighted basis, it is 9% down. So the question is, even if we don’t depreciate on a trade- weighted basis, at least we should keep movement with our partner currencies, so that we may be depreciating with them against the dollar, but on a trade-weighted basis we are the same. The objective will be, at least on a trade-weighted basis don’t appreciate from these levels, remain more or less stable. https://indianexpress.com/article/explained/sajjid-z-chinoy-indian-express-explained-indian-economy- global-growth-crude-oil-prices-rupee-depreciation-5446893/
Indian Economy
Four southern states account for 46% of $69 billion overseas remittances #GS3 #Economy
The Southern states of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh accounted for a share of 46 per cent — or $31.74 billion (Rs 2,30,900 crore) — of total remittances of $69 billion from abroad with Kerala, which received $13.11 billion (over Rs 95,000 crore), topping the list during the year 2017, a Reserve Bank of India (RBI) survey has said.
The RBI survey reveals that 58.7 per cent of total remittances of $69 billion in 2017 was received by four states — Kerala, Maharashtra, Karnataka and Tamil Nadu. Of this Kerala accounted for 19 per cent of the remittances, followed by Maharashtra 16.7 per cent ($11.52 billion) and Karnataka 15.0 per cent ($10.35 billion).
However, the RBI study said the survey results are largely corroborated by surveys independently conducted by multilateral agencies (viz., ILO, 2018), which have also highlighted a shift in cross-border migration flow from prosperous states such as Kerala and Karnataka to states such as Uttar Pradesh and Bihar largely comprising of low or semiskilled contractual workers with low level of income. These two states accounted for 4.4 per cent of total remittances in 2016-17, it said.
India continues to be the top recipient country with $69 billion of remittances in 2017 sent by a large pool of skilled, semi-skilled and unskilled Indian migrants across the globe.
According to the RBI, 82 per cent of the total remittances received by India originated from seven countries — the United Arab Emirates (UAE), the United States, Saudi Arabia, Qatar, Kuwait, the UK and Oman.
With over 90 per cent of overseas Indians working in the Gulf region and South East Asia — mostly semi- skilled and unskilled workers — the Gulf Cooperation Council (GCC) countries accounted for more than 50 per cent of total remittances received in 2016-17, notwithstanding a sharp decline in oil prices and fiscal tightening in these countries,” the RBI said.
The Indian diaspora in the US, characterised by high skills and high earnings, is the second largest contributor. A size-wise analysis by the RBI has revealed that that 70.3 per cent of all reported transactions were of more than or equal to $500 and only 2.7 per cent were of less than or equal to $200 category. This indicates that a large number of remittances were by unskilled workers in the GCC countries.
Based on responses gathered from banks, the RBI has estimated that more than half of remittances received by Indian residents were used for family maintenance (consumption), followed by deposits in banks (20 per cent) and investments in land property and shares (8.3 per cent), the RBI has said.
The RBI study reveals that Rupee Drawing Arrangement (RDA) is the most preferred mode accounting for 75.2 per cent of remittances, particularly from the GCC countries. RDA enables tie-ups between banks and non-resident exchange houses for opening and maintaining their vostro accounts.
Banks disburse remittances to the final recipient immediately after the cheque/ draft is deposited in the rupee/foreign currency vostro account of the non-resident exchange houses. A maximum of 20 such tie- ups are allowed per bank. “The cost of transaction through this channel is less than other channels. The second most popular channel is the SWIFT, followed by direct transfers and cheques and drafts, the RBI said.
Despite banks having greater access to RDA, the overall cost charged by money transfer operators (MTOs) is significantly lower probably due to their core advantages in low value remittance business and dynamic cost structure. However, the average cost of sending $200 to India declined from 9.1 per cent in 2013 to 5.6 per cent in Q1 of 2018 (from 4.9 per cent to 3.3 per cent for sending $500). https://indianexpress.com/article/business/economy/rbi-survey-for-2017-four-southern-states-account- for-46-of-69-billion-overseas-remittances-5446945/
Indian Economy
Fitch retains rating for India at ‘BBB-’ #GS3 #Economy
Fitch Ratings retained India’s sovereign rating at ‘BBB-’, the lowest investment grade rating, although maintaining its stable outlook.
The company added that the economy would shrug off any lingering effects of demonetisation and GST during 2018-19 and 2019-20.
“India’s rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still- difficult, but improving business environment.
Fitch forecasts growth to rebound to 7.3% in FY19 and 7.5% in FY20, as a temporary drag will fade from the withdrawal of large-denomination bank notes in November 2016 and the introduction of a GST in July 2017.
India’s five-year average real GDP growth of 7.1% is the highest in the APAC region and among ‘BBB’ range peers. Growth has the potential to remain high for a substantial period of time, as convergence with more developed economies can be expected
The agency added that a recent analysis conducted by it found that India had the highest medium-term growth potential among the largest emerging markets.
The RBI is building a solid monetary policy record, as consumer price inflation has been well within the target range of 4% +/- 2% since the inception of the Monetary Policy Committee in October 2016,
“Fitch expects inflation to average close to 4.9% in FY19, still almost double the ‘BBB’ range median of 2.5% for 2018.” The agency said it expected the RBI to start raising its policy repo rate next year, from the 6% currently, as growth gains further traction.
It added that monetary tightening could be brought forward in case recent government policies such as the MSP hike for agricultural goods push up inflation expectations. https://www.thehindu.com/todays-paper/tp-business/fitch-retains-rating-for-india-at- bbb/article25511608.ece
Indian Economy
India may see fall in credit availability as NBFCs face credit squeeze: Moody’s #GS3 #Economy
India faces a potential sharp slowdown in credit availability as non-bank financial institutions face a possible credit squeeze even as the asset quality is stabilising, Moody’s said in its 2019 Global Emerging Market Outlook.
“In India, an ample foreign exchange reserves buffer and very low external debt levels help provide greater resilience to economic shocks, including from potentially higher oil prices. However, India also faces a potential sharp slowdown in credit availability as non-bank financial institutions face a possible credit squeeze.
While the asset quality cycle is stabilising following massive recognition of problem loans and their gradual resolution and provisioning, the recent default of IL&FS, a large infrastructure company, and the subsequent liquidity stress in the capital market, has created an emerging risk for banks in the country.
While Moody’s has forecast that the Indian economy will grow by 7.3% in 2019, it believes that delinquency rates in Indian asset-backed securities (ABS) backed by loans against property to small and medium enterprises will increase in 2019.
This will be on account of rising interest rates and ongoing headwinds from the implementation of the GST outweighing the positive influence of robust growth.
The possible credit squeeze in capital markets caused by the default of IL&FS is unlikely to hurt the credit quality and performance of Indian structured finance deals, unless it escalates to the point where it results in significant weakness or even solvency concerns among non-bank financial institutions.
On an overall level, slower global growth, rising interest rates, trade protectionism and geopolitical tensions pose challenges for emerging markets in 2019, said Moody’s.
“Our broadly stable outlook incorporates the likely resilience of most EM (emerging markets) issuers to these challenges, thanks to a range of different buffers including strong balance sheets, domestic growth and supportive policy.
“Nonetheless, credit stress could emerge for issuers operating in countries with macroeconomic imbalances or rising political risk, particularly those highly reliant on international financing,” https://www.thehindu.com/todays-paper/tp-business/india-may-see-fall-in-credit-availability-as-nbfcs- face-credit-squeeze-moodys/article25522294.ece
Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth
At WTO, India under increasing trade fire #GS3 #Economy
Australia’s move to refer India to the World Trade Organization (WTO) over subsidies paid to sugarcane farmers is the latest in a series of challenges and reverses in recent months. The action comes on the back of a November 12 filing by the US at the Geneva-based global trade regulator alleging that India has paid out far more in cotton subsidies than the WTO rules permit.
Trade analysts point to the trend being a cause for concern, especially the increasing intensity of action by countries and the leeway that this offers for other nations to cite the penal action as a justification in their submissions.
Incidentally, the mounting list of trade disputes coincides with a phase when India has resorted to well over a dozen hikes in customs duties covering over 400 items during the last 24-30 months, marking a “calibrated departure” from the underlying policy of reducing import duty that was consistently followed by successive governments over the last two decades.
Prior to the large-scale hikes, India’s peak customs duty — the highest of the normal rates — on non- agriculture products had come down steeply from 150 per cent in 1991-92 to 40 per cent in 1997-98 and subsequently, to 20 per cent in 2004-05 and 10 per cent in 2007-08.
On September 27, the NDA government had approved a fresh Rs 5,538-crore package for the sugar industry. A query on the issue sent to the Commerce Minister’s office on the latest action initiated by Australia and series of actions earlier by other countries did not elicit a response.
India’s stated position on the issue is that the country’s sugar exports comply with WTO rules as it does not extend a subsidy to its farmers for exports, but instead gives a production subsidy.
The US’ contention in its November 12 WTO filing was that India has paid out far more in cotton subsidies than the rules permit. “It appears that India provides MPS (market price support) for cotton vastly in excess of what it has reported to the WTO,” the US filing said.
India has previously dismissed these allegations and has demanded that MPS should be calculated by using the recent reference period instead of 1986/88 prices, which was factored in at the time of the creation of the WTO.
Besides cotton, in an earlier consultations request by the US in the WTO during the second week of March 2018, it listed 27 examples of Indian laws and regulations that it claimed are WTO-prohibited export subsidies.
In May 2018, the US submitted a communication under provisions of the WTO Agreement on Agriculture (AoA) on certain measures of India providing MPS to wheat and rice for the years 2010-11 to 2013-14. In this communication, Washington stated that India has “under-reported” its domestic support provided for wheat and rice and “breached” its commitments under the WTO AoA.
“The calculations done by them, to support this claim is based, as per them, on information available in the public domain and news reports. The US has, however, clarified that the purpose of the counter notification is to facilitate conversation and improve transparency.
India has refuted the calculations done in the US counter notifications as being flawed on technical grounds and asserted that the methodology used by India in its domestic support notifications is in accordance with the rules under the AoA,
On November 7, a three-member panel ruled that the safeguard duties imposed by India at different periods during 2015 and 2018 are “inconsistent” with core provisions of the WTO’s Safeguards Agreement.
While WTO members are entitled to slap safeguard duties to curb unforeseen surges in imports that cause material injury to their domestic industries, there is a need to demonstrate that it is a “sudden” and “sustained” spike in imports causing injury to its domestic industry. Japan launched the dispute settlement proceedings against India last year challenging the “definitive” safeguard duties imposed on imports of hot-rolled steel flat products by the revenue department of the Indian finance ministry during September 2015 and March 2018 https://indianexpress.com/article/business/business-others/at-wto-india-under-increasing-trade-fire- 5450732/
Conservation, environmental pollution and degradation
90% citizens aware of air pollution but lack awareness of causes and impact’ #GS3 #Environment
A public perception study designed to find out the level of awareness — cause, effect, precaution and solution — of air pollution showed that 90% of the people interviewed across highly polluted cities have heard of air pollution but lack awareness about the causes and effects.
Although awareness was higher in tier-1 metro cities, with Delhi-NCR leading the way, understanding of technical terms such as AQI, PM2.5 and PM10 ranked at 54%, 29.6% and 17.8% respectively. The study also revealed that the age group of 18-25 years “always” seeks information on air quality.
The study was commissioned by the Clean Air Collective, an unbranded network of more than 80 civil society organisations, citizen groups and experts working on the issue of air pollution across the country. It was conducted by CMSR Consultants, a multidisciplinary research group.
“This comprehensive survey reveals that while awareness of the adverse effects of air pollution is very high, most people seem to think that they need to do nothing at the individual level. This perception needs to be addressed. It is only when people make this a priority issue will politicians wake up and take action.
He was speaking about people’s initiatives to control pollution — which only looked at walking whenever possible (59.7%), tree plantation (40.2%) and reduced energy consumption at home (36.2%).
An urban emissions study revealed that close to 5 million kg of firecrackers were burnt in Delhi. While the Environment Ministry is yet to notify the revised National Clean Air Action Plan for India’s choking cities, towns and villages, there is a high demand for immediate government intervention.
More than 80% agreed that a mass media campaign needed to be launched by the government, polluting companies should be fined as per the law, the government should bring in stricter and newer laws to control and mitigate pollution, and also put pressure on power stations and industries to switch to cleaner processes.
This [survey] highlights a big problem in the way information is disseminated currently, which is entirely based on AQI by the CPCB [the Central Pollution Control Board] and very less emphasis on disseminating the underlying constituents in an easy to access and use manner. Measures to be employed for each type of pollutant are different and affect various vulnerable groups differently
https://www.thehindu.com/todays-paper/tp-national/tp-newdelhi/90-citizens-aware-of-air-pollution- but-lack-awareness-of-causes-and-impact/article25529858.ece
Awareness in the fields of IT, Space
GROWTH-India telescope’s first science observation #GS3 #SnT
The 0.7 m GROWTH-India telescope at the Indian Astronomical Observatory located in Hanle, Ladakh, has made its first science observation which is a follow-up study of a nova explosion.
Novae are explosive events involving violent eruptions on the surface of white dwarf stars, leading to temporary increase in brightness of the star. Unlike a supernova, the star does not go on to die but returns to its earlier state after the explosion.
The GROWTH-India telescope was commissioned six months ago soon after which it saw first light, on the night of June 12. “The telescope has been taking readings since then, and this is the first ‘follow-up’ work. We are happy to see this first science observation.
This recurrent nova, named M31N-2008, has been observed to erupt several times, the most recent eruption happening in November 2018. Recurrent nova systems are interesting because they are candidates for progenitors of Type Ia supernovae.
The telescope is potentially fully robotic and can operate on its own, but the way these readings were taken has only partly used its potential for automation. This telescope has a field that is five to six times larger. It can ‘slew’ or move its focus from one part of the sky to another in just about 10-15 seconds and its camera can view stellar objects that are thousands to millions of light years away.
The GROWTH-India telescope is part of the Global Relay of Observatories Watching Transients Happen. Its goals are threefold: (1) Search for explosions in the optical regime whenever LIGO group detects a Binary Neutron Star merger (2) study nearby young supernova explosions. (3) Study nearby asteroids.
Transient phenomena such as supernovae are important parts of time-domain astronomy which is a less-explored frontier in astronomy. “Such an explosion is when the inner material of the star is thrown out. There is no other way we can actually see what is inside a star. https://www.thehindu.com/todays-paper/tp-features/tp-sci-tech-and-agri/growth-india-telescopes- first-science-observation/article25529225.ece
Conservation, environmental pollution and degradation
Microplastics – a scourge stalks the sea #GS3 #SnT
Sometime in 2009, Bindu Sulochanan, a marine ecologist at Mangalore’s Central Marine Fisheries Research Institute (CMFRI), was dissecting sardines in her laboratory. Scientists at the CMFRI have been doing this for decades, to study the feeding behaviour of various ocean-dwelling fish.
As Dr. Sulochanan peered at the contents of the fish’s gut under a microscope, she noticed something unusual – bright unnatural shades such as yellow, instead of the drab colours of the semi-digested plankton that sardines eat. She was looking at plastic.
From litter thrown on beaches by people, the plastic had entered the water, and the fish had mistaken it for food. “We were shocked,” Dr. Sulochanan says. In some samples, the plastic was shredded and unrecognisable, but in larger fish, the source was obvious. Some plastics had readable print on them, linking them to branded milk packets and blister packs of medicines.
It was just the beginning. Since 2009, CMFRI’s scientists have recovered plastic from the gut of dozens of species: mackerel near Mangalore, yellowfish tuna near Kochi and anchovies off the coast of Alappuzha, among them.
In 2014, researchers from Gujarat’s Sasan Gir Forest Department did a post-mortem on the 1-ton carcass of a Longman’s Beaked Whale on a beach in the Sutrapada municipality. They found four large
plastic bags in the whale’s stomach. It appeared that the plastic had blocked the whale’s digestive system.
Plastics are widespread in the marine ecosystem today, and countries across the globe are contributing to it. But several estimates suggest that Asia is the larger debris-producer. Even though the U.S. and Europe manufacture most of the plastic, Asia seems to be leading in marine debris because of its population density and poor waste management.
Q- What is the current stage of debris dumping in Ocean and its ways?
In a 2015 Science study, the researchers estimated that India had dumped 0.6 million tonnes of plastic into the ocean in 2010. China was the top dumper, while India ranked 12th and the US ranked 20th. This was despite the fact that Indians generated only around 0.34 kg of waste per person per day (ppd), while Americans threw away 2.58 kg ppd.
The problem was that India was mismanaging over 80% of its waste, while in the U.S. it was only 2%. “If you look at packaging of FMCG goods, the US and Europe are the manufacturers. But we are buying it and polluting the environment, because there is no awareness that what we throw comes back to us.
The impact of plastic debris on marine life is just emerging. The commonest way in which plastic hurts is entanglement. Fishing nets lost at sea, and plastic bags can trap fish and mammals, preventing them from swimming, foraging for food and mating.
In October 2011, CMFRI researchers on-board the research vessel FORV Sagar Sampada sighted a group of about 400 Olive Ridley turtles at sea, likely travelling towards their mass nesting sites on the Odisha coast.
One of the turtles was entangled in a plastic buoy, while another had a plastic bag around its neck. While swimming, Olive Ridley turtles dive periodically to find food, but the plastic was preventing them from doing so. The ultimate fate of these turtles may be death by starvation.
The biggest culprit in entanglement is “ghost nets”, says Vasant Kripa, the head of the Fisheries Environment Management Division at CMFRI, who was aboard the Sagar Sampada when the Olive Ridley sighting occurred.
Ghost nets are nylon fishing nets that are either deliberately discarded, or lost. They remain in the water for years. Ironically, fisherfolk are not spared the impacts of plastic debris either. A major problem they face when using stake nets – a vertical mesh in the water that intercepts fish and guides them to traps – is plastic litter. Bags, bottles and other items get caught in the net, reducing the catch.
In 2017, the Kerala government began a programme called Suchitwa Sagaram to prevent dumping of nets, and to bring back plastic litter as well. Fishermen can now sell their damaged nets in a buyback programme. Also, when nets trap litter, the fishermen bring it back to the shore.
Q- What are the ill effects on marine species?
If entanglement with plastic hurts marine species, so does ingestion. Plastic can block and perforate the digestive tract. This gives the animal a feeling of fullness, reduces its immunity and leads to starvation. Some of the earliest reports of this phenomenon come from large seabirds called Laysan Albatrosses in the North Pacific Ocean’s Midway Island.
Researchers found that up to 90% of the albatross chicks had plastic pieces in their stomach. Adult albatrosses normally collect floating fish eggs from the ocean’s surface and regurgitate them to feed their chicks.
But by the eighties, albatrosses were also plucking bottle caps and cigarette lighters out of the sea, and their chicks were gorging on them. The researchers found no obvious health effects in chicks which ate little plastic, but those which ate over 150 gm had partially blocked digestive systems.
If large birds eat larger plastic pieces, small fish tend to swallow microplastic: particles measuring less than 5 mm, which large plastic disintegrates into. Microplastics settle in phytoplankton, or the microscopic organisms at the base of the marine food chain. So, phytoplankton-eating fish are at risk.
CMFRI researchers have found such particles in the guts of anchovies and sardine. These fish are filter feeders: they eat by keeping their mouth open, so that phytoplankton in the flowing water is trapped in filter-like structures called gill-rakers.
The problem is that microplastics are under-researched. One reason is that it is hard to identify them. “You can’t recognise them with the naked eye. Sophisticated instruments like spectrophotometers are needed.
Estimating the number of individuals exposed is tough, because this would require systematic sampling, which is not common. But CMFRI has begun astudy involving food pellets containing plastic in fish and whether it can damage the intestine.
But there is evidence from elsewhere showing that microplastics hurt species. For example, in one experiment, algae, which are at the base of the food chain, were not able to photosynthesise efficiently when exposed to 20 nanometre polysterene beads.
Higher up in the food chain, mussels, when fed microplastics in a lab, developed a type of inflammation called granuloma, and grew slower than usual. Still higher, the Japanese Medaka, a fish species, has been shown to suffer from liver stress when it ingests marine microplastics.
In the experiment, the researchers fed the fish three types of food – regular food, virgin microplastic and microplastic that had been left in the San Diego bay for three months. The researchers found that marine microplastics had higher levels of pollutants such as polychlorinated biphenyls than the virgin ones. Further, when the fish were fed all three feeds, the ones that ate plastic ended up with liver damage.
Microplastics are as big a worry as macroplastics, says Mark Browne, an ecologist at the University of California, Santa Barbara. Plus, microplastics are more abundant in the water. Yet, few countries, including India have policies to minimise microplastic waste. Most Indian bans focus on large plastics. https://www.thehindu.com/todays-paper/tp-national/microplastics-a-scourge-stalks-the- sea/article25529351.ece
Indian Economy
Balance of power, in the balance #GS3 #Economy
What:
The role of the Board of Directors of the Reserve Bank of India (RBI) and its powers vis-à-vis the RBI Governor have come into focus in the ongoing tussle between the Centre and the central bank.
The relationship between the board and the Governor is not comparable to a corporate set-up where the managing director (the corporate equivalent of the Governor) reports to the board and draws his powers from it.
What is the constitution of the RBI board like?
As per the RBI Act, the board is made up of the following members:
The Governor and four Deputy Governors, four directors (one each from the four regional boards of the RBI), 10 directors to be nominated by the Centre, and one government official who is also to be nominated by the Centre.
The present board is made up of 18 members, which is the Governor and four Deputy Governors, four regional board members and nine nominees from the Centre who include two officials, the Economic Affairs Secretary and the Secretary, Department of Financial Services.
Where does the balance of power lie between the Governor and the board?
• The sections in the RBI Act dealing with this subject are rather vaguely worded.
• Eminent past Governors have interpreted Section 7, the relevant one, to mean that the powers of the board and that of the Governor are concurrent. • The Governor draws his powers from Section 7(3) of the Act. • He can exercise all powers and do all things that may be exercised and done by the RBI. • The board, under Section 58, can make regulations that will give it the powers to override those of the Governor’s.
This is subject to two important conditions.
1. First, the regulations have to be consistent with the provisions of the RBI Act, which essentially means that the board has to act within the framework of the Act. 2. Second, these regulations have to go through an elaborate approval process before they become law (Section 58(4)). • The board has to forward the regulations to the Centre, which will have to table them in both Houses of Parliament. • Members have a period of 30 days within which they can either suggest modifications to the regulations or annul them. • And then, Section 7(1) which confers powers on the Centre to issue directions to the RBI “from time to time” in the public interest after consultations with the Governor.
About the convention till now?
The RBI Board has always functioned in an advisory role with the understanding that the Governor would consider its advice while making policy decisions.
In other words, there was mutual respect between the board and the Governor, with both operating in a spirit of accommodation.
The fact is that neither Section 7(1) nor Section 7(3) has been unleashed in the 83-year existence of the RBI. Not even when the RBI was privately owned between 1935 and 1949. https://www.thehindu.com/todays-paper/tp-opinion/balance-of-power-in-the- balance/article25533921.ece
Govt., RBI call truce after a marathon board meeting- MANOJIT SAHA #GS3 #Economy
The most contentious issue between the central bank and the Finance Ministry was the RBI’s capital. Now, while the RBI has agreed to set up an expert committee on the economic capital framework (ECF), its mandate is restricted to future earnings and not the existing reserves.
The board decided to constitute an expert committee to examine the ECF, the membership and terms of reference of which will be jointly determined by the Government of India and the RBI.
Sources indicate there were detailed presentations by the RBI on economic capital as well as other issues such as the prompt corrective action (PCA) framework.
On the PCA, the Board for Financial Supervision (BFS) of the RBI will review the norms and take a call if some of the parameters like net non-performing asset (NPA) ratio could be relaxed so that some of the banks come out of the PCA. There are 11 public sector banks out of 21 that are on the PCA.
The BFS consists of the Governor, four Deputy Governors and a few other board members. Another significant decision was relief to micro, small and medium enterprises — the sector which is badly hit by the twin blows of demonetisation and patchy implementation of the Goods and Services Tax (GST).
https://www.thehindu.com/todays-paper/govt-rbi-call-truce-after-a-marathon-board- meeting/article25543085.ece
In case of a split vote, Governer holds the ace- TCA Sharad Raghavan #GS3 #Economy
Opinions on the matter ranged from saying that the government had no business to engage in monetary policy decisions to opining that the RBI was never really independent of the government due to the way the RBI Act is worded, and still others pointing out that the whole issue was not a tussle between institutions but between two particular individuals.
The issue of the government encroaching on the RBI’s autonomy has been discussed extensively already, but less has been mentioned about the effects that differences between the RBI Governor and the Centre could have on decision-making, as seems to be the case currently.
One of the main issues with bodies like the RBI Board and the Monetary Policy Committee is whether decision making by committee is preferable to one man calling the shots.
The government prefers decisions by committee, as can also be seen by how it pushed to install a Monetary Policy Committee to replace the Governor as the sole arbiter of monetary policy decisions.
Q- What is Section 13 of the RBI Act about?
Section 13 of the RBI Act says: “The Governor, or if for any reason, he is unable to attend, the Deputy Governor authorized by the Governor under the proviso to subsection (3) of section 8 to vote for him, shall preside at meetings of the Central Board, and, in the event of an equality of votes, shall have a second or casting vote.” In other words, the Governor is the tie-breaker in all decisions of the Board. In doing so, they risk giving a potentially discontented Governor the deciding vote.
The theorem says that if a system is completely democratic where everybody has an equal vote, then it would be vulnerable to tactical voting (which is where people vote according to their own private interests, even if their stated interests are different). In other words, people try to game the system in their favour every time they get the chance.
The only way to counter this is something the government seems to have realised — empowering a single individual in the voting system more than the others. In both the RBI Board and the MPC, that person is the Governor, who has been given the deciding vote in the case of a tie. https://www.thehindu.com/todays-paper/tp-business/in-case-of-a-split-vote-governer-holds-the- ace/article25533907.ece
Conservation, environmental pollution and degradation
Further stressed by thermal power #GS3 #Environment
What:
The Composite Water Management Index (CWMI) by the NITI Aayog, shows that 600 million people face high to extreme water stress in India.
The report, which was published in association with the Ministry of Water Resources, Ministry of Drinking Water and Sanitation and the Ministry of Rural Development, places India at a dismal 120 among 122 countries in the water quality index.
It predicts that a persistent water crisis will lead to an eventual 6% loss in the country’s Gross Domestic Product by 2030.
How:
A significant key to this stress is the vast gulf — of about 1498 billion cubic metres (BCM) versus 744 BCM — that has been predicted between the demand and supply of fresh water, by 2030.
In the projections that the Central Water Commission (CWC) released in 2015, the sector-wise requirement of water (that is, for drinking and domestic use, industry and energy) will rise steeply between 2030 and 2050.
The share of water consumed by this sector was 0.62% in 2010, which is pegged to rise up to 1.37% in 2030 and 8.98% in 2050.
The CWMI report covers these broad themes — ground water and surface-water restoration; major and medium irrigation; watershed development; participatory irrigation management; on-farm water use; rural and urban water supply; and policy and governance.
The projected water demand of the energy sector makes it an important point for the NITI Aayog to consider while bringing out future iterations of the CWMI.
Some facts:
As per the Central Electricity Authority (CEA), March 2018, thermal electricity accounts for more than 86% of India’s total power generation.
Analysis shows that 77% of India’s total electricity comes from thermal power plants that are dependent on freshwater sources.
Of all the freshwater-cooled thermal plants, 38.9% of generation capacity is installed in areas with high or extremely high water-stress.
By 2030, more than 70% of India’s existing thermal power utilities are likely to experience an increased level of water competition from agricultural, urban, and other industrial demands.
As the power sector consumes more water, competition between power and the other thirsty players is only likely to increase — a factor that future editions of the CWMI will have to consider.
The CWMI also raises three main issues related to data:
• limited coverage, • unreliable data and
• Limited coordination and sharing.
Measuring water consumption by power plants has been a challenge for long. However, it can easily be tackled by using the existing CEA reporting mechanism for daily generation. To do so, daily water withdrawal and consumption reporting should be mandated.
These can be measured with existing technology and added into this reporting framework.
To way forward
• Such information will also help in implementation of the Ministry of Environment, Forest and Climate Change Notification (dated December 7, 2015), which mandates specific water consumption norms for existing and new thermal power plants. • In addition, information about water stress, power plant siting (location) and so on must be shared seamlessly across departments — a service that the CWMI could perform. • This Index is expected to establish a public, national platform providing information on key water indicators across states. • This platform will help in monitoring performance, improving transparency, and encouraging competition, thereby boosting the country’s water achievements by fostering the spirit of ‘competitive and cooperative federalism’ among the states. • Further, the data can also be used by researchers, entrepreneurs, and policymakers to enable broader ecosystem innovation for water in India. • The CWMI concludes by noting that water-scarce States such as Gujarat, Madhya Pradesh, Andhra Pradesh, Karnataka, Maharashtra and Telangana are leaders in the Index. • It notes that this is “likely driven by necessity in the face of looming water shortages”. • Factoring in the water-energy nexus linkages, especially the metrics around power plant water withdrawal and consumption, will only help make the Index better and the States better prepared to manage their water and power resources. https://www.thehindu.com/todays-paper/tp-opinion/further-stressed-by-thermal- power/article25533924.ece
Science and Technology- developments and their applications and effects in everyday life
A 21st century revolution #GS3 #SnT
What:
Over the last seven years, the Bill and Melinda Gates Foundation (BMGF) has devoted $200 million to incubate new technologies that will dramatically scale up sanitation.
It has announced a further investment of $200 million to achieve this, and trials of new toilets and processing technologies are going on in India, among other countries.
According to UNICEF, 22.2% of children, or 151 million, under five years were stunted globally in 2017. The World Bank says annual healthcare costs from lack of sanitation in developing countries is a staggering $260 billion.
Why:
• At the Beijing conference, which also hosted the Reinvented Toilet Expo, that “in many places in India today, 30% or 40% of the kids end up malnourished. • Because faeces containing pathogens lie exposed. • Open defecation has a high health cost. • It spreads disease, stunts children and prevents them from achieving normal physical and mental development. • If India adopts them, it can rapidly expand sanitation at low cost. • India is further behind on sanitation than on other issues, which is reflected in the high levels of stunting. • This situation persists despite high levels of economic development over the years. • The BMGF wants to change that not just for Indians, who form a significant proportion of the 4.5 billion people worldwide looking for solutions, but those in Africa and other parts of Asia. • The solution it offers is the reinvented toilet and omni processor waste treatment plants.
How:
• Technologists and researchers have been working on these from the time the BMGF issued a “challenge” to them in 2011 seeking innovative solutions. • Innovation involves a shift away from the gold standard of flush toilets connected to sewers. • In the new order, there will be stand-alone facilities that are aesthetically designed, finely engineered and equipped with reliable chemical processes that produce nothing more than ash from solids, while reusing the liquid as non-potable water after treatment. • The future, the BMGF hopes, will belong to these Multi-User Reinvented Toilets. • The prototypes are undergoing trials in far-flung centres such as Coimbatore in Tamil Nadu and Durban in South Africa. • The technologies that run inside them have been developed by research institutions such as California Institute of Technology (Caltech), University of South Florida, and Duke University. • Caltech’s partnership with toilet-maker Eram Scientific will help induct the technology and deploy it at scale. • There may also be a mix-and-match approach, leveraging the best technologies from the individual prototypes.
• These reinvented toilets turn liquid waste into clear water for flushing, and solids into pellets or ash that is fertilizer. • Success will depend on making large community deployments, and developing cost-effective models for individuals. • One reinvented toilet by Helbling of Switzerland has a classic European design and cost $500 to develop. • While the reinvented toilet gets optimised, India should, in parallel, look at omni processors for faecal sludge treatment plants (FSTP). • These “zero emission” processors will end dumping of faecal sludge taken from septic tanks into rivers, lakes, farms and open spaces. • They can also prevent the death of workers in septic tanks. Some models also attach a gasifier that can use municipal solid waste, providing a solution to handle that urban waste stream as well.
Some important points:
India’s record in treating urban sewage is poor at 30%, and a third of about 847 large sewage treatment plants are not functional, according to BMGF estimates.
The Swachh Bharat Mission has brought faecal sludge treatment within its ambit, and many Chief Ministers want FSTPs.
Even in an advanced State such as Tamil Nadu, which is working to upgrade its infrastructure, only 30% of urban sewage is treated. Odisha wants 115 faecal sludge treatment plants.
Andhra Pradesh has taken the lead and funded 33 plants, and, importantly, tendered for omni processors for these.
Tamil Nadu has announced that it will build 48 plants out of its own funds, estimating that 80% of the faecal sludge problem can be managed across the State at a cost of less than about Rs. 200 crore.
Large and often idle sewage treatment plants can be put to dual use, by adding an FSTP, preferably with an omni processor.
In the case of small towns, a cluster approach will help, and two or three of them can come together to share treatment plant capacity. https://www.thehindu.com/todays-paper/tp-opinion/a-21st-century-revolution/article25542968.ece
Science and Technology- developments and their applications and effects in everyday life
Make it the Indian way #GS3 #Economy #SnT
What:
Industrial 3D printing has begun to transform manufacturing in Western countries.
Traditional manufacturing of mechanical parts involves making a mould and then stamping out parts by thousands every day.
Some facts:
• The equipment to make these parts and moulds is expensive, thus the cost of the first hundred units is high. • Per unit costs decline only when they are mass produced. • Because of limitations of how this technology works, one typically builds many small parts, which are later on assembled on an assembly line using unskilled labour or robots to build an entire system. • Traditional manufacturing leads to high inventory costs of multiple parts that need to be produced and stored before being assembled. • This makes the design phase complex and costly, rendering it expensive to redesign to correct initial mistakes or innovate to meet changing consumer needs. • In additive manufacturing, the physical object to be built is first designed in software. • This design is fed to computerised machines, which build that object layer by layer.
Why:
The technology is suitable for building the entire system in one go, with hollow interiors without assembly or interlocked parts.
Changing features or tweaking shapes is a simple software change effected in minutes. Retooling of machines is not required and each unit can be customised.
By eliminating the need to hold a large inventory of parts, set up an assembly line and purchase costly machines, adaptive manufacturing reduces capital and space requirements as well as the carbon footprint.
How:
• Additive manufacturing started out as a technology for nerds and geeks trying to build an arm of a robot or a body of a drone in their garages. • Rapid progress in technology over the last five years has taken this type of machines from using one nozzle and simple resin materials to multiple nozzles, diverse materials and materials with different hardness in the same system.
• One recent survey of U.S. manufacturers shows that about 12% have started using additive manufacturing for their products and expectations are that this will result in about 25% of products in the next three-five years. • This technology is used to build helmets, dental implants, medical equipment, parts of jet engines and even entire bodies of cars. In some industries, the progress is astonishing. • Nearly all hearing aid manufacturers now use additive manufacturing. • This technological nirvana carries dangerous implications for developing nations. • It decreases reliance on assembly workers and bypasses the global supply chain that has allowed countries like China to become prosperous through export of mass-produced items. • This may well lead to the creation of software-based design platforms in the West that distribute work orders to small manufacturing facilities, whether located in developed or developing countries, but ultimately transfer value creation towards software and design and away from physical manufacturing.
About Opportunities in India
Fortunately, this manufacturing paradigm has several features that play to the strengths of the Indian ecosystem.
1. First, it eliminates large capital outlays.
• Machines are cheaper, inventories can be small and space requirements are not large. • Thus, jump-starting manufacturing does not face the massive hurdle of large capital requirement and the traditional small and medium enterprises can easily be adapted and retooled towards high technology manufacturing.
2. Second, the Indian software industry is well-established, and plans to increase connectivity are well under way as part of ‘Digital India’.
• This would allow for the creation of manufacturing facilities in small towns and foster industrial development outside of major cities.
3. Third, it is possible to build products that are better suited for use in harsh environmental conditions.
• Products that required assembly of fewer parts also implies that they may be better able to withstand dust and moisture prevalent in our tropical environment and be more durable.
4. Fourth, in a country where use-and-throw is an anathema, maintaining old products is far easier because parts can be manufactured as needed and product life-cycles can be expanded.
5. Finally, maintaining uniform product quality is far easier because the entire system is built at the same time and assembly is not required.
To way forward
The “Make it the Indian Way” approach will need public-private partnership and multi-pronged efforts.
On the one hand, There is need to accelerate research at our premier engineering schools on manufacturing machines and methods and encourage formation of product design centres so that the products built suit the Indian environment and consumers.
There is also need to government support to provide incentives for distributed manufacturing in smaller towns, and for the IT industry to work on creating platforms and marketplaces that connect consumer demands, product designers and manufacturers in a seamless way. https://www.thehindu.com/todays-paper/tp-opinion/make-it-the-indian-way/article25552833.ece
Statutory, regulatory and various quasi-judicial bodies.
Limits of CBI jurisdiction #GS2 #Governance
Can States bar the Central Bureau of Investigation (CBI) from functioning in their territory?
• The CBI is a national agency with police powers. • Its primary jurisdiction is confined to Delhi and Union Territories. • As policing (detecting crime and maintaining law and order) is a State subject, the law allows the agency to function outside only with the consent of the States. • Andhra Pradesh and West Bengal have withdrawn their general consent to the CBI to operate within their territories.
Has it happened before? And why?
• There are several instances of State governments withdrawing their consent. • The most common reason for withdrawal of consent is a strain in Centre-State relations, and the oft-repeated allegation that the agency is being misused against Opposition parties. • The decision by Andhra Pradesh and West Bengal has come amid concerns being voiced by Opposition parties that Central agencies such as the CBI, Enforcement Directorate and Income Tax Department are being used against them.
Under what law is it done?
• The CBI draws its power from the Delhi Special Police Establishment (DSPE) Act. • The Home Ministry, through a resolution, set up the agency in April 1963. • Under Section 5 of the Act, the Central government can extend its powers and jurisdiction to the States, for investigation of specified offences.
• However, this power is restricted by Section 6, which says its powers and jurisdiction cannot be extended to any State without the consent of the government of that State.
What is the impact of States taking back their consent?
• The withdrawal of general consent restricts the CBI from instituting new cases in the State concerned. • However, as decided by the Supreme Court inKazi Lhendup Dorji(1994), the withdrawal of consent applies prospectively and therefore, existing cases will be allowed to reach their logical conclusion. • The CBI can also seek or get specific consent in individual cases from the State government.
How has the consent issue played out?
In most cases, States have given consent for a CBI probe against only Central government employees.
The agency can also investigate a Member of Parliament.
Apart from Mizoram, West Bengal and Andhra Pradesh, the agency has consent in one form or the other for carrying out investigations across the country.
What happens to cases in which there is a demand for a CBI probe?
The Supreme Court has made it clear that when it or a High Court directs that a particular investigation be handed over to the CBI, there is no need for any consent under the DSPE Act.
A landmark judgment in this regard was the 2010 Supreme Court decision by which the killing of 11 Trinamool Congress workers in West Bengal in 2001 was handed over to the CBI. https://www.thehindu.com/todays-paper/tp-opinion/limits-of-cbi-jurisdiction/article25561731.ece
Achievements of Indians in science & technology; indigenization of technology and developing new technology
Aligning the triad #GS3 #Defence #SnT
What:
The INS Arihant, India’s first nuclear ballistic missile submarine that completed its sea patrol earlier this month, will contribute significantly to making India’s deterrence capability more robust.
Submarine-based nuclear capability is the most survivable leg of a nuclear triad, and its benefit must be seen especially in the light of the growing naval capabilities of India’s potential adversaries.
In this light, certain questions need to be addressed on the third leg of India’s nuclear triad, as well as major challenges for strategic stability in the southern Asian region.
Why:
1. To begin with, there is no clarity on whether the first deterrence patrol of INS Arihant had nuclear- tipped missiles on board.
• If not, the deterrence patrol would have been intended for political purposes devoid of any real deterrent utility. • Without nuclear-tipped ballistic missiles on board an SSBN (ship submersible ballistic nuclear) such as INS Arihant, it might not be any more useful than an ordinary nuclear-powered attack submarine (SSN).
2. Second, even if INS Arihant had nuclear-tipped ballistic missiles on board, it is not clear what ranges they would cover.
• Reports suggest that it had the 750 km range K-15 missiles on board, which is insufficient to reach key targets in, say, China or Pakistan unless it gets close to their waters, which would then make the Indian SSBN a target. • While the K-4 missile (3,500 km range) currently under development would give the country’s sea deterrent the necessary range vis-à-vis its adversaries, INS Arihant would not be able to carry them on board. • The Navy would require bigger SSBNs (S-4 and S-5) to carry the K-4 ballistic missiles. • In other words, deterring India’s adversaries using the naval leg of its nuclear forces is a work in progress at this point of time.
3. Third, if indeed the objective of India’s nuclear planners is to achieve seamless and continuous sea deterrence, one SSBN with limited range is far from sufficient.
• Given the adversaries’ capabilities in tracking, monitoring and surveilling India’s SSBNs, it would need to invest in at least four more. • Maintaining a huge nuclear force and its ancillary systems, in particular the naval leg, would eventually prove to be extremely expensive. • Given that India does not have ‘first strike’ or ‘launch on warning’ policies, it can adopt a relatively relaxed nuclear readiness posture. • New Delhi could, in the long run, invest in a survivable fleet of nuclear submarines armed with nuclear-tipped missiles of various ranges, and decide to reduce its investment in the land and air legs of its nuclear deterrent, thereby reducing costs. • While this might bring down costs without sacrificing the country’s deterrence requirements, inter-service claims might frustrate such plans.
4. Finally, the naval leg of the nuclear triad also poses significant command and control challenges.
• As a matter of fact, communicating with SSBNs without being intercepted by the adversaries’ tracking systems while the submarines navigate deep and far-flung waters is among the most difficult challenges in maintaining an SSBN fleet. • Until such sophisticated communication systems are eventually put in place, India will have to do with shallower waters or focus on bastion control, which in some ways reduces the deterrence effect of SSBNs, as bastions would be closer to the ports..
How:
For one, it is bound to make the maritime competition in the Indian Ocean region sharper, even though the lead in this direction was taken by the People’s Liberation Army Navy (PLAN) a long time ago.
Hence, the dominant driver of India’s SSBN plans appears to be China's expanding inventory of nuclear submarines. The PLAN’s Jin class submarine with the JL-2 missiles with a range of 7,400 km began its deterrent patrol several years ago.
Chinese nuclear-powered submarines (reportedly without nuclear weapons on board) have been frequenting the Indian Ocean on anti-piracy missions, creating unease in New Delhi.
Pakistan’s reaction to India’s response to China would be to speed up its submarine-building spree, with assistance from Beijing.
China’s mega infrastructure project, the Belt and Road Initiative, with its ambitious maritime objectives; and the revival of the Quadrilateral Security Dialogue, or Quad, with India, U.S., Japan, and Australia.
This sharpening of the maritime competition further engenders several regional ‘security dilemmas’ wherein what a state does to secure itself could end up making it more insecure.
To way forward
India’s sea deterrent also throws up several key questions about the country’s nuclear command and control systems.
To begin with, unlike in the case of the air or land legs of the triad where civilian organisations have the custody of nuclear warheads, the naval leg will be essentially under military custody and control given that there would be no civilian presence on board an SSBN.
The SSBN captain would have the authority to launch nuclear missiles on orders from the political authority. In sum, while INS Arihant makes India’s nuclear deterrence more robust, it also changes deterrence stability in the southern Asian region.
https://www.thehindu.com/todays-paper/tp-opinion/aligning-the-triad/article25572201.ece
Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes
Without maternity benefits #GS2 #Governance
What:
Under the National Food Security Act (NFSA) of 2013, every pregnant woman is entitled to maternity benefits of Rs. 6,000, unless she is already receiving similar benefits as a government employee or under other laws.
The PMMVY was announced by Prime Minister Narendra Modi on December 31, 2016.
It violates the NFSA in several ways.
1. First, the benefits have been reduced from Rs. 6,000 to Rs. 5,000 per child. 2. Second, they are now restricted to the first living child. Third, they are further restricted to women above the age of 18 years.
How:
The scheme largely defeats the purpose it is supposed to serve: according to a recent analysis, it excludes more than half of all pregnancies because first-order births account for only 43% of all births in India
Among those who were eligible, a little over half had applied for maternity benefits.
The application process is cumbersome and exclusionary: a separate form has to be filled, signed and submitted for each of the three instalments, along with a copy of the applicant’s mother-child protection card, her Aadhaar card, her husband’s Aadhaar card, and the details of a bank account linked to her Aadhaar number.
The compulsory linking of the applicant’s bank account with Aadhaar often causes problems.
Further, the PMMVY provides little assistance to women who lose their baby, because the successive payments are made only if the corresponding conditionalities are met.
The worst form of hardship reported by pregnant women in sample, among those related to lack of funds, and was the inability to improve their nutritional intake or even to eat properly during pregnancy.
Why:
The provision for maternity entitlements in the NFSA is very important for women who are not employed in the formal sector.
The PMMVY, however, undermines this provision due to the dilution of the entitled amount and the exclusion criteria.
Even in this restricted form, the scheme is yet to reach eligible women as the implementation record has been dismal till date. The scheme seems to be achieving very little for now, in Jharkhand at least.
To way forward
There is an urgent need for better implementation as well as for compliance of the scheme with the NFSA. Maternity benefits should be raised to Rs. 6,000 per child at least, for all pregnancies and not just the first living child. https://www.thehindu.com/todays-paper/tp-opinion/without-maternity-benefits/article25618731.ece
Important International institutions
Protect indigenous people #GS2 #Governance #IR
What:
Jawaharlal Nehru’s Tribal Panchsheel were the guiding principles after Independence to formulate policies for the indigenous communities of the Andaman and Nicobar Islands.
Based on them, the Andaman and Nicobar Islands (Protection of Aboriginal Tribes) Regulation (ANPATR), 1956 was promulgated by the President.
Some facts:
This Regulation protected the tribals from outside interference, specified the limits of reserved areas and said no land in a reserved area shall be allotted for agricultural purposes or sold or mortgaged to outsiders.
Those violating the land rights of the tribals were to be imprisoned for one year, fined Rs. 1,000, or both. Despite this, there continued to be constant interactions between the tribals and settlers/ outsiders.
A policy of non-intervention was also proposed by an expert committee on the directions of the Supreme Court. The committee submitted its report in July 2003.
The trigger for this was a 1999 petition that sought to bring the Jarawas into the mainstream.
The committee recommended protecting the Jarawas from harmful contact with outsiders, preserving their cultural and social identity, conserving their land and advocated sensitising settlers about the Jarawas.
Why:
• In 2005, nearly 50 years after it was promulgated, the ANPATR was amended. • The term of imprisonment as well as the fine were increased. • However, in the years in between, the Andaman Trunk Road had already ensured increased interaction with the tribals. • In the case of the Jarawas, this had led to the spread of diseases, sexual exploitation, and begging. Similarly, a policy for protecting the Shompen tribes was released only in 2015. • However, in spite of the 2005 amendment, videos of commercial exploitation of the Jarawas in the name of “human safaris” were widely reported in the media. • Following this, the government amended the ANPATR yet again in 2012, creating a buffer zone contiguous to the Jarawa tribal reserve where commercial establishments were prohibited, and regulating tourist operators. • Despite all these amendments and provisions, there continue to be numerous reports of civilian intrusion into the Jarawa tribal reserve.
About International conventions
• International policy has changed over the decades. • While the Indigenous and Tribal Populations Convention, 1957, of the International Labour Organisation (ILO) insisted on an integrationist approach towards tribal communities, • The 1989 convention insisted on a policy of non-intervention, “recognising the aspirations of these peoples to exercise control over their own institutions, ways of life and economic development.” • India ratified the 1957 convention but has not ratified the 1989 convention.
However, despite not signing it, India tried to tread the path of non-interference.
To way forward
Therefore the government relaxed the restricted area permit (RAP) for 29 islands in the Andaman and Nicobar, including North Sentinel Island.
If the government has decided to ease the restrictions in a phased manner, this could adversely affect the indigenous population in the long run.
Considering the significance of the indigenous tribes of the Andaman and Nicobar Islands, the government needs to reorient its priorities towards protecting them from outside influence.
India needs to sign the 1989 convention of the ILO, and implement its various policies to protect the rights of the indigenous population. It should also make efforts to sensitise settlers and outsiders about them. https://www.thehindu.com/todays-paper/tp-opinion/protect-indigenous-people/article25618739.ece
An endangered tribe- G. Ananthakrishnan #GS1 #Geography
Who are they?
The Sentinelese, a negrito tribe who live on the North Sentinel Island of the Andamans, have not faced incursions and remain hostile to outsiders.
The inhabitants are connected to the Jarawa on the basis of physical, as well as linguistic similarities, researchers say. Based on carbon dating of kitchen middens by the Anthropological Survey of India, Sentinelese presence was confirmed in the islands to 2,000 years ago. Genome studies indicate that the Andaman tribes could have been on the islands even 30,000 years ago.
How are they protected?
The Govt. of India issued the Andaman and Nicobar Islands (Protection of Aboriginal Tribes) Regulation, 1956 to declare the traditional areas occupied by the tribes as reserves, and prohibited entry of all persons except those with authorisation.
Photographing or filming the tribe members is also an offence. The rules were amended later to enhance penalties. But restricted area permits were relaxed for some islands recently.
Have they made contact?
The Sentinelese have been fiercely hostile to outside contact. But in 1991 they accepted some coconuts from a team of Indian anthropologists and administrators.
Some researchers argue that the Sentinelese have been mostly left alone even from colonial times, unlike other tribes such as the Onges, Jarawas and Great Andamanese, because the land they occupy has little commercial attraction.
How many are there?
From 1901 to 1921 they were estimated to be 117 people. In 1931, the number dropped to 50, a figure used for the 1961 Census too. In 1991 their head count was put at 23. Census 2001 counted 39 inhabitants. https://www.thehindu.com/todays-paper/tp-national/an-endangered-tribe/article25561756.ece
Andaman & Nicobar Islands: home to a tenth of India’s fauna species- Shiv Sahay Singh #GS3 #Environment
The Narcondam hornbill, its habitat restricted to a lone island; the Nicobar megapode, a bird that builds nests on the ground; the Nicobar treeshrew, a small mole-like mammal; the Long-tailed Nicobar macaque, and the Andaman day gecko, are among the 1,067 endemic faunal species found only on the Andaman and Nicobar Islands and nowhere else.
A recent publication by the Zoological Survey of India (ZSI) titled Faunal Diversity of Biogeographic Zones: Islands of India has for the first time come up with a database of all faunal species found on the island, putting the number at 11,009. The documentation proves that the islands, comprising only 0.25% of India’s geographical area, are home to more than 10% of the country’s fauna species.
The publication, however, also cautions that tourism, illegal construction and mining are posing a threat to the islands’ biodiversity, which is already vulnerable to volatile climatic factors.
The total area of the A&N Islands, which comprises of 572 islands, islets and rocky outcrops, is about 8,249 sq. km. The population of the islands, which includes six particularly vulnerable tribal groups (PVTGs) — Great Andamanese, Onge, Jarawa, Sentinelese, Nicobarese and Shompens — is not more than 4 lakh.
The number of tourists visiting the islands has crossed the number of people residing in them, with latest data showing 4.87 lakh tourists visiting the islands annually.
In a recent development, the Government of India relaxed the Restricted Area Permit (RAP) norms for some foreign nationalities notified under the Foreigners (Restricted Areas) Order, 1963, to visit 29 of its inhabited islands, till December 31, 2022. This has triggered further concerns of increased anthropogenic pressures over the islands’ ecosystem.
Some of the islands removed from the RAP list have no habitation except PVTG like Sentinelese in case of North Sentinel Island, and there is nothing other than a police outpost on the Narcondam Island.
“The development paradigm that we are pushing for this place at the macro level, such as tourism, construction and development of military, are not taking in account three factors — ecological
fragility of the area (the endemism), geological volatility (earthquakes and tsunamis), and the impact they will have on local communities,”
Of the ten species of marine fauna found on the islands, the dugong/sea cow, and the Indo-Pacific humpback dolphin, are both classified as Vulnerable under the IUCN (International Union for Conservation of Nature) Red List of Threatened Species.
Among the 46 terrestrial mammalian species found, three species have been categorised as Critically Endangered — Andaman shrew ( Crocidura andamanensis ), Jenkin’s shrew ( C. jenkinsi ) and Nicobar shrew ( C. nicobarica ). Five species are listed as Endangered, nine species as Vulnerable, and one species as Near Threatened, according to the IUCN.
Among birds, endemism is quite high, with 36 among 344 species of birds found only on the islands. Many of these bird species are placed in the IUCN Red List of threatened species under the Wildlife Protection Act (WPA).
Similarly, eight species of amphibians and 23 species of reptiles are endemic to the islands, and thus are at high risk of being threatened.
Another unique feature of the islands’ ecosystem is its marine faunal diversity, which includes coral reefs and its associated fauna. In all, 555 species of scleractinian corals (hard or stony corals) are found in the island ecosystem, all which are placed under Schedule I of the WPA. https://www.thehindu.com/todays-paper/tp-life/andaman-nicobar-islands-home-to-a-tenth-of-indias- fauna-species/article25593524.ece
Effect of policies and politics of developed and developing countries on India's interests
Walking the tightrope #GS2 #IR
What:
The six-month waiver on sanctions granted by the U.S. to India and seven other countries importing oil from Iran highlights the importance of economic factors in the India-U.S. strategic partnership.
The exemption also puts the spotlight on the link between economics and strategy.
Some facts:
• The waiver gives India a breathing space of sorts and will help maintain India-U.S. ties on an even keel. • The U.S. has not given any special treatment to India.
• China, India’s main Asian competitor and perceived by the U.S. as its main security threat, has also been granted a waiver. • The waiver shows that Washington and New Delhi will cooperate on India’s oil and gas needs. • Their Strategic Energy Partnership (April 2018) sees energy cooperation serving “as a centerpiece in the bilateral relationship”. • This is because the U.S. believes that it is the world’s leading producer of oil and gas. • The U.S. National Security Strategy of November 2017 highlighted the importance of “energy dominance — America’s central position in the global energy system as a leading producer, consumer, and innovator”. • In 2017, India imported 8 million barrels of American crude. Until this July it had imported more than 15 million barrels of U.S. crude.
Why:
• India needs the help of both the U.S. and Iran. The U.S. is India’s main strategic partner. • American naval power is indispensable for preserving maritime freedom and security in the Indian Ocean and the South China Sea. • In 2009, the International Atomic Energy Agency demanded that Iran stop uranium enrichment. • India made it clear that it did not support Iran’s nuclear weapons ambitions and voted against it. • At another level, India has had a bilateral trade deficit with Iran over many years. In 2017 it was $8.5 billion. • India’s offer to pay for oil in rupees is unattractive to Iran. • Tehran does not want to buy enough Indian goods to make acceptance of rupee payment for its oil worthwhile. • The use of any currency other than the U.S. dollar would mean that a cash-strapped Iran must extend more credit to India.
How:
• On the security front, India’s cooperation with Iran has to be seen against the broader context of its regional rivalries with Pakistan and China. India and Iran share regional interests. • They could build a strategic partnership focussing on Afghanistan, Central Asia and West Asia. • Together with Russia and some other countries, they are signatories to the International North- South Transport Corridor (INSTC) agreement, using Iran as the trade route to Russia and northern Europe. • INSTC transit routes enable India to bypass a hostile Pakistan by exporting goods via the sea. • That is why India has been developing the Chabahar port in southern Iran in a strategic bid to connect to Central Asia through Iran and Afghanistan. • Chabahar provides war-torn Afghanistan a crucial link to Indian goods and Iranian oil.
• In December 2017, India made its first shipment of wheat to Afghanistan via the port.
Other points:
• Realising the advantage of India developing Chabahar, the U.S. has also exempted India from certain sanctions so that it can make progress on the port. • The sanctions relief for the port is motivated by a mix of politics and economics. • Washington sees Chabahar’s utility in development and humanitarian relief work in Afghanistan. • The U.S. is also aware that China has a stake in developing Chabahar port and could easily replace India if the latter were unable to maintain its foothold there. • On its part, Iran is keenly interested in building the port. Control over Chabahar could put the ace card in its hands as it deals with the competition between China, India and Russia in South and Central Asia.
To way forward
A nuclear Iran would disrupt the balance of power across West and Central Asia, with serious consequences for India’s economic and strategic interests.
A stronger relationship with Iran would increase India’s influence in West and Central Asia.
That could help to counter China. And a friendly U.S. could then approach Iran on nuclear issues through India’s good offices. https://www.thehindu.com/todays-paper/tp-opinion/walking-the-tightrope/article25628025.ece
Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth
U.S., Europe firms looking at India as alternative to China #GS3 #Economy
How will the U.S.-China trade war impact Indian manufacturing?
China is significantly larger as a manufacturing base and has a bigger part of the global supply chain. However, China is now seen as not as cost competitive as it was in the past. Companies in the U.S. and Europe are looking at long-term options to build supply chain capabilities in India as an alternative to China. There is generally a move to de-risk.
The fact that U.S. and European firms are looking at options away from China is an opportunity for India. The other option they are looking at is to create a manufacturing hub in India, recreating what they did in China in the past. These are the two ways that foreign trade could potentially benefit India.
For the first time, geo-politics, as much as economics, is playing a role in global trade. An adjustment in trade relationship is happening. As long as India plays its cards right, businesses in the country will benefit. Our Prime Minister has played his cards well, both on trade and foreign relationship fronts. Infrastructure development, too, has been really good in the country in the last couple of years.
How will this affect employment?
India certainly is in a good position to take advantage of this though scale is a challenge for us to match China.
Quality is less of an issue for India. It is an opportunity for India to leverage over the next three years if we are able to scale up. We have to look at industries in India where the scale is somewhat comparable with that in China. There are enough segments which are supply chain-based to create some kind of manufacturing hub.
The government should look at job creation by expanding industries (even if multi-national firms create jobs) within India. Trade-related competition from other countries should be looked at from the point of view of creating enough employment in India. That’s when we will grow faster.
You have said industrial inflation is a challenge.
Fuel is a big inflationary factor for India because it creates a discontinuity in pricing due to rupee depreciation. Fuel prices affect the rupee in relation to the dollar. That affects landed costs of all other commodities entering the country and thereby creates a spiral of inflation. The good news is, the world economy is probably doing well after many years.
Globally, fuel consumption across the board is higher (that is a positive). For all commodities, demand is higher. But industrial inflation is a challenge.
How do you address the challenge?
Firms need to be flexible between different fuel types. On currency, we, as a company, believe that as long as we are a net exporter, we should be okay. https://www.thehindu.com/todays-paper/tp-business/us-europe-firms-looking-at-india-as-alternative- to-china/article25533914.ece
Indian Economy
GST, a game-changer reform for logistics sector- R. Dinesh #GS3 #Economy
It has been 15 months since the rollout of what is considered one of India’s biggest tax reforms — the Goods and Services Tax (GST). But, we are already witnessing a major positive transition in the logistics sector.
Q- What is current logistics sector going and how GST is helping for its growth?
Outsourcing and the value addition in the logistics sector is set to take off post GST. Considering the double-digit growth, the logistics market would exceed $250 billion in the next two years. As per a recent survey, the Indian logistics sector provides livelihood to 22 million-plus people, which is expected to be over 40 million by 2020. The high rate of growth in the next couple of years is expected largely due to implementation of GST.
GST has replaced at least 7 indirect tax heads and has eliminated the need for warehouse hubs across States. Further, GST has eliminated check posts across the nation and thereby waiting time, leading to at least 12-15% reduction in the turnaround time of trucks.
Better utilisation of assets like vehicles and warehouses will lead to efficiency and increased productivity thus lowering overall cost. This would considerably benefit the supply chain directly and India’s growth indirectly.
The manufacturing and other services sectors have now started planning their supply chains, bearing in mind fleet cost and fast delivery, rather than tax structure and compliance.
Q- How is the competition going in Logistics sector?
Pre-GST, the Indian logistics sector was struggling to add value to customers, compared to global peers. Indian firms were seen as labour contractors or mere transporters, which denied them the benefits of being a part of the supply chain. But the equation has changed now.
Manufacturers are looking to optimise supply chains and are willing to outsource value-added planning to logistics players, who have invested in technology and operate with a focus on quality and compliance.
These logistics players are seeing a positive shift in the mindset of their clients and are gaining momentum. Further, small transporters can also now work with third party logistics (3PL) providers and expand their fleet. GST has aided this move at a faster clip.
Post GST, there is a marked improvement in the use of technology and digitisation by logistics players. 3PL players can become real ‘differentiators’ as they embrace technology to enhance visibility of load carried, turn-around time, vehicle utilisation, improvement in loading/unloading time by removing congestion at the docks, and the like.
Equipped with technology and software for load design solutions, vehicle geo-tracking, inventory (order/part level) tracking and route optimisation, 3PL players add more value to their customers’ supply chain.
Logistics costs have been one of the biggest stumbling blocks for Indian manufacturers eyeing exports. At about 13-14% of GDP, India’s logistics cost is high, and compares with about 8% in advanced nations that have efficient systems. This despite the percentage of outsourcing being higher in developed markets.
The Centre has made clear its intention to bring down this cost to less than 10%, which would make Indian manufacturers globally relevant.
The Centre created a new division in the Commerce Ministry to deal with the integrated development of logistics and urged all stakeholders to bring to India relevant best practices to enhance efficiency in logistics.
This is a good move as logistics firms used to deal with six different ministries separately and each would require separate paper work and formalities. It is a big sense of relief to note there will soon be a system where a single document would be accepted for multi-modal logistics within India.
India has moved from the 54th position in 2014 to 44th in 2018 in the World Bank’s Logistics Performance Index.
Q- What is the status in terms of infrastructure?
The much-awaited ‘infrastructure’ status to the sector was conferred in November 2017, which is helping the sector avail cheaper finance (2% lower) for its warehousing and cold storage needs.
This will bring in a lot more players with an integrated service approach that would again help Indian manufacturers. New investments in this sector is good news as it could create a lot more jobs in the near future.
Together, the implementation of GST and other reforms have already started bringing efficiencies into the supply chain of various firms. Digitisation, asset utilisation and visibility enhancement are facilitating better value-added outsourcing to logistics firms.
The government, too, has realised that aspirations for economic growth, employment generation, manufacturing and exports are all inextricably linked to efficient management of logistics https://www.thehindu.com/todays-paper/tp-business/gst-a-game-changer-reform-for-logistics- sector/article25533910.ece
Indian culture will cover the salient aspects of Art Forms, Literature and Architecture from ancient to modern times.
How climate change may have changed Harappan society, led to its decline #GS1 #History
A new study suggests that climate change may have led to the decline of the Indus Valley Civilisation. First, a wetter winter monsoon may have led to urban Harappan society turning into a rural one, as inhabitants migrated from a summer flood-deficient river valley to the Himalayan plains. Later, a decline in the winter monsoon could have played a role in the demise of the rural late Harappans, the study states.
The findings
Titled ‘Neoglacial climate anomalies and the Harappan metamorphosis’, the study was conducted by an international team of scientists. They looked at sediments from the Arabian Sea from the continental margin of Pakistan, reconstructed the Indian winter monsoon for the last 6,000 years, and examined undersea fossils and marine DNA.
Lead author Liviu Giosan, a geologist at the Woods Hole Oceanographic Institution in the US, said a shift in temperatures and weather patterns over the Indus Valley caused summer monsoon rains to gradually dry up, making agriculture difficult or impossible near Harappan cities.
In 2012, his team had showed that floods in the Indus and tributary rivers became less severe and probably less predictable. “That affected the Indus people who depended a lot on inundation agriculture. We also showed that Ghaggar-Hakra, which is the probable course of the Saraswati river, dried at the same time.
The study finds that between 4,500 and 3,000 years ago, strong winter monsoons were characterised by “early neoglacial anomalies (ENA)” — changes in wind and precipitation patterns that are evident across the eastern Northern Hemisphere and tropics. It was this coordinated climate reorganisation that “may have helped trigger the metamorphosis of the urban Harappan civilisation into a rural society”.
The decline in the winter monsoon took place between 3300 and 3000 years ago at the end of these anomalies. This “could have played a role in the demise of the rural late Harappans during that time as the first Iron Age culture established itself on the Ghaggar-Hakra interfluve”.
Indus Valley & monsoons
The civilisation developed on the Indus alluvial plain and adjacent regions. At the time, what is now a largely defunct and smaller drainage system, the Ghaggar-Hakra, which lies between the Indus and Ganga watersheds, was also heavily populated.
Though the Harappans were agrarians, they reached their “urban peak” or the ‘Mature Phase’ between 4,500 and 3,900 years ago, building architecturally complex urban centres.
“Harappans appear to have invested less effort to control water resources by largescale canal irrigation near cities but relied primarily on fluvial inundation for winter crops and additionally on rain for summer crops,” the study states.
Though the trigger for the urban Harappan collapse was probably the decline of the summer monsoon, the study also points out that the agricultural Harappan economy showed a large degree of adaptation to water availability. The long survival of the Late Harappan cultures until 3,200 years ago under a drier climate and less active fluvial network, in fact, is the subject of ongoing studies.
The evidence
Giosan points to the difficulty in finding evidence from soil samples to establish the shift in seasonal rainfall. “We could not use soil samples from Haryana or Punjab because you need to have in those soils a signal that can separate summer vs winter conditions. There is no type of mineral or rock that would form or be transported there only in winter or only in summer,” he said.
The team of researchers focused on sediments from the seafloor near the mouth of Indus, a very low- oxygen environment, so whatever grows or dies is very well preserved in sediments. “Sample collection was done by coring at strategic locations that were chosen using a “chirp”, which is an acoustic sub- bottom profiler that images the sediments on the seafloor.
A piston corer extracts a cylinder of mud from the seafloor and we study its layers that get older and older from the top to the bottom of the core. We sieve the mud to extract foraminifera (small shells of calcium carbonate) and count how many of those are typical for winter conditions,” he said.
Scope & limitations
While the study finds broad spatial and temporal patterns of variability for summer and winter precipitation across the Harappan settlements, it acknowledges that it does not fully consider “local hydroclimate aspects”.
“For example, did the increase in winter rain during ENA lead to more snow accumulation in the Himalayas that affected the frequency and magnitude of floods along the Indus and its tributaries? Or did settlements in Kutch and Saurashtra, regions of relatively dense habitation during Late Harappan
times, also benefit from increases in winter rains despite the fact that modern climatologies suggest scarce local precipitation?” the study asks.
“The Indus story is important today because it provides us with a vivid example of what climate change could do to people. The Indus people were smart and had ways to cope with climate. They did migrate and adapt, but what did they sacrifice for that?,” Giosan said. https://indianexpress.com/article/india/climate-change-decline-in-indus-valley-civilization-harappan- society-5452640/
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Literacy levels in rural India suffer from migration of families’- Vikas Pathak #GS2 #Governance
Literacy levels in rural households of India dip with seasonal migration, the UNESCO global education monitoring report 2019 has observed, bringing out the educational challenges thrown up by migration.
“In India, 10.7 million children aged 6 to 14 lived in rural households with a seasonal migrant in 2013. About 28% of youth aged 15 to 19 in these households were illiterate or had not completed primary school, compared to 18% of the cohort overall,” says the report.
“About 80% of seasonal migrant children in seven cities lacked access to education near work sites, and 40% are likely to end up in work rather than education, experiencing abuse and exploitation.”
The report says that the construction sector absorbs the majority of short-term migrants. “A survey in Punjab state of 3,000 brick kiln workers in 2015-16 found that 60% were inter-State migrants. Between 65% and 80% of all children aged five to 14 living at the kilns worked there seven to nine hours per day. About 77% of kiln workers reported lack of access to early childhood or primary education for their children.
Inter-State migration rates have doubled between 2001 and 2011. “An estimated 9 million migrated between States annually from 2011 to 2016. It also warns of the negative impact on education for children who are left behind as their parents migrate: “Test scores were lower among left-behind children aged 5-8.
Q- What does report says about?
The report, however, acknowledges that India has taken steps to address the issue.
“The Right to Education Act in 2009 made it mandatory for local authorities to admit migrant children. National-level guidelines were issued, allowing for flexible admission of children, providing transport and volunteers to support with mobile education, create seasonal hostels and aiming to improve coordination between sending and receiving districts and states,” it says.
The report says some State governments have also taken steps for migrant children’s education. It, however, observes that most interventions are focused on keeping children in home communities instead of actively addressing the challenges faced by those who are already on the move.
It also talks of a failed initiative: “A pilot programme used on brick kiln sites from 2010-2011 in Rajasthan to track the progress of out-of-school children did not improve learning in any substantial way. Teachers on the sites cited culture, language, lifestyle, cleanliness and clothing as major barriers between them and the kiln labour community. Teacher and student absenteeism were rampant.”
The report sees the growth of slums and informal settlements — where schools are often scarce — due to migration as a challenge. “18% of the students displaced by a riverfront project in Ahmedabad dropped out and an additional 11% had lower attendance,” it says, citing an example.
The report shows there is only one urban planner for every 1,00,000 people in India, while there are 38 for every 1, 00,000 in the United Kingdom. https://www.thehindu.com/todays-paper/tp-national/literacy-levels-in-rural-india-suffer-from- migration-of-families/article25543001.ece
Conservation, environmental pollution and degradation
Health and environment effects to be criteria for clearance to thermal plants #GS3 #Environment
In a first, the effects on human health and the environment will feature as part of mandatory clearances necessary to grant Environment Clearances (EC) for new thermal power plants.
The criteria will apply not only to coal- and lignite-based thermal power plants, but also to waste-to- energy plants that also pose a significant health burden on local population and communities.
A notification issued by Impact Assessment Division of the Ministry of Environment and Forests (MoEF) specified new conditions that now call for a baseline health status within the study area. These also seek mitigation measures to be taken to address endemic diseases.
The notification also prescribes a biannual health check up of all workers and instructions to study the effects of “chronic exposure to noise” which may lead to adverse health effect, and assessment of health impacts due to air polluting agents. These form part of “standard conditions” that are considered by the Expert Appraisal Committee at the time of considering proposals for grant of ECs.
The MoEF has also put in a condition to look into the impact of operation of power plants on agricultural crops and large water bodies once in two years and has asked that an institute of repute be engaged for the purpose. “The study shall also include impact due to heavy metals associated with emission from power plant.
The MoEF stipulates “specific and general conditions” while granting EC, which are recommended by the expert appraisal committee. “To standardise these conditions, the Ministry has initiated the exercise for revision of these conditions across all the sectors,” the notification states.
Q- Any example for showing the situation before this notification?
In Chhattisgarh, we looked at communities who lived in a five km radius from coal mines and thermal power plants and found that several complained of respiratory problems, skin conditions and mental health issues. We also found contaminants in the environment and heavy metals in the air, water, soil and sediments,”
While this notification is an important first step, it is still short of a full health impact assessment that is needed before granting environmental clearances https://indianexpress.com/article/india/health-and-environment-effects-to-be-criteria-for-clearance-to- thermal-plants/
Effect of policies and politics of developed and developing countries on India's interests
Navy makes formal request for multi-role U.S. copters #GS3 #Defence
India made a formal request to the U.S. for the purchase of 24 MH-60R Multi-Role Helicopters (MRH) for the Navy in a deal estimated at $2bn. This is among a series of defence procurements and inductions from the U.S. and Russia in the last two months.
The Navy is presently facing a critical shortage of helicopters and several frontline warships are plying with empty helicopter decks. These helicopters are being procured as replacement for 15 Sea King ASW helicopters de-inducted from service in 1991 and one Sea King 42B MRH lost in accident. The current MRHs in service, Sea King 42Bs, were inducted in the 1980s.
In August, ahead of the inaugural India-US 2+2 dialogue, the Defence Acquisition Council (DAC) accorded he Acceptance of Necessity (AoN) for the procurement.
The LoR was signed and sent after the Navy received the pricing and availability details from the U.S. Now the U.S. will get back with the price quote, following which contract negotiations would begin to conclude the final deal. As the deal is through the FMS route, the process is expected to be completed in a short time-frame.
Given the urgency for helicopters, the U.S. is likely to take some MH-60R helicopters off the flight deck of their newest aircraft carrier USS Gerald Ford. In July, the USS Gerald Ford went for year-long upgrades and fixes.
https://www.thehindu.com/todays-paper/tp-national/navy-makes-formal-request-for-multi-role-us- copters/article25561758.ece
Conservation, environmental pollution and degradation
A virtual climate summit to cut carbon footprint #GS3 #Environment
World leaders will participate in an innovative climate change summit on Thursday that will take place entirely online so it is carbon neutral.
The eco-friendly event stands in stark contrast to many other international political summits, which involve thousands of delegates jetting across the world to a venue where they stay in air-conditioned comfort.
The Virtual Climate Summit is the brainchild of Marshall Islands President Hilda Heine, whose low- lying Pacific island nation will drown beneath rising seas if global warming continues unabated.
It will consist of a rolling, 24-hour livestream that will begin in the Marshalls’ capital Majuro, then include addresses from leaders and panel discussions before delivering a declaration.
Ms. Heine said the cutting-edge setup was designed to show that even small nations such as the Marshalls could make a big difference on the world stage using creative, climate-friendly solutions.
The virtual summit’s main aim is to encourage the international community to keep global warming to 1.5 degrees Celsius above pre-industrial levels. A UN report warned last month that threshold could be reached as early as 2030 unless there was unprecedented global action to rein in emissions.
The latest round of UN climate talks, COP24, will open in the southern Polish city of Katowice on December 2 with the aim of reinvigorating the Paris agreement reached three years ago.
By contrast, organisers of the UN’s COP21 talks in Paris in 2015 estimated it generated 43,000 tonnes of carbon dioxide, although much of this was later offset through carbon-credit schemes. https://www.thehindu.com/todays-paper/tp-life/a-virtual-climate-summit-to-cut-carbon- footprint/article25561696.ece
Indian Economy
After MSME, Govt will flag real-estate sector stress to RBI #GS3 #Economy
After red-flagging shrinking credit to Medium, Small and Micro Enterprises (MSME), the government is likely to underline — at the RBI’s Central Board meeting on December 14 — the stress in the real estate
sector that threatens job losses. And make a strong pitch for providing liquidity to non-banking financial companies (NBFCs).
Q- What is the situation of NBFC and real estate sector?
Over the last 3-4 years, as banks exercised extreme caution in lending, it was NBFCs that stepped in to provide loans not just to retail home buyers but also housing firms. Several real estate companies have knocked on the government’s door with the RBI refusing to entertain any special dispensation for a particular sector.
The real estate sector is in a mess with developers finding it tough to raise funds and being forced to stall development and cut their workforce. RBI can always find ways beyond opening a special window, which it feels creates a moral hazard.
The RBI data on sectoral deployment of funds shows that while the commercial real estate (CRE) witnessed significant slowdown in bank credit availability post-demonetisation, the credit outstanding for CRE witnessed a contraction for the first time in 13 months.
Q- What is CRE and how it has impacted?
In September, it contracted 0.8 per cent over the same period last year. CRE comprises loans extended to builders for construction of housing buildings, hotels, shopping malls, industrial parks, office blocks and hospitals — classified as commercial real estate by RBI.
The September figure holds relevance as it coincides with the IL&FS default that created a liquidity crisis in the financial market. In July and August, however, bank credit outstanding to CRE grew by 2.4 per cent and 6.3 per cent respectively. It is important to note that the bank credit outstanding to CRE in the calendar years 2013 and 2014 grew in excess of 15 per cent every month. Since demonetisation, the credit outstanding to CRE has not witnessed a double-digit growth in any month.
Even large builders that have lot of ready inventory are finding it difficult to secure funding. As NBFCs are caught in repaying their earlier debt obligations, fresh lending has come to a standstill. This has caused enormous stress in the realty sector. https://indianexpress.com/article/business/banking-and-finance/after-msme-govt-will-flag-real-estate- sector-stress-to-rbi-5458233/
Effect of policies and politics of developed and developing countries on India's interests
EU strategy paper to strengthen ties with India #GS2 #IR
Develop military-to-military relations, consider deploying an EU military advisor in the EU Delegation in New Delhi and vice-versa, consider negotiation of a broader Strategic Partnership Agreement, intensify dialogue on Afghanistan and Central Asia, strengthen technical cooperation on fighting terrorism, countering radicalisation, violent extremism and terrorist financing — these are some of the key proposed actions in the European Union strategy on India.
For long, India-EU ties have been guided by the economic relationship, but the India strategy has come after 14 years — last such strategy was put in place in 2004. This will now be discussed in the European Parliament and the European Council.
The strategy paper, which will now be discussed in the European Parliament and the European Council, says that India occupies an important place in a complex geo-strategic space. “Situated at the centre of key Europe-Asian trade routes, and a factor of stability in a complex region, India’s diplomatic and security posture towards its neighbours and major regional powers have important consequences for the EU,” it said, as one of the reasons for EU’s strategic engagement.
The key proposed concrete actions are the following:
* The EU-India relations are currently governed by the 1994 EU-India Cooperation Agreement. To be able to match the ambitions set out in this Joint Communication and tackle the global challenges of today, the EU and India should consider the negotiation of a broader Strategic Partnership Agreement.
* Upgrade the yearly dialogue between the High Representative / Vice President of the EU and the Indian Minister for External Affairs to a regular Strategic Dialogue.
* Intensify dialogue on Afghanistan and Central Asia in the appropriate settings.
* Join forces on post-conflict institution building and reconciliation processes in third countries.
* Strengthen technical cooperation with India on fighting terrorism and countering radicalisation and violent extremism and countering terrorist financing.
* Exchange expertise on cyber security and hybrid threats.
* Conclude working arrangements to foster cooperation between Europol and Indian law enforcement institutions.
* Identify common actions with India both at policy and operational levels to enhance maritime security. Work with India and other key regional players such as South Africa to help build the capacity of maritime nations in the Indian Ocean and East Africa. https://indianexpress.com/article/india/eu-strategy-paper-to-strengthen-ties-with-india-5458276/
Indian Economy
How global oil prices fell, and impact on India #GS3 #Economy
With global brent crude oil prices having fallen significantly over the last six weeks from $86.29 to $63.3 per barrel, Indian petrol and diesel prices have seen some correction while the rupee has strengthened against the dollar.
Between October 3 and November 21, while brent crude prices decreased by 36.31% to $63.3 per barrel, the prices of petrol and diesel in Delhi decreased by 8.9% and 5.28%, respectively. Petrol, which was selling at Rs 83.85 per litre on October 3, was at Rs 76.30 on November 21. The price of diesel, Rs 75.25 on October 3, was down to Rs 71.27 on November 21.
During the same period, the rupee became stronger against the dollar by 2.64%. One dollar was equivalent to Rs 71.30 on November 21.
Various factors led to the decline in crude prices. These include:
* Saudi Arabia and other major oil producers, which have been holding back production of oil since 2017, started to produce oil in ample amounts in order to ease consumer worries and placate United States President Donald Trump, according to a report in The New York Times.
* At the same time, production in the United States has been rising faster than expected. “Output has also risen in Libya, despite continuing warfare, and it has held up better than expected in another troubled country, Venezuela. Volumes of oil held in storage tanks around the world are beginning to build again, raising fears of a renewed glut, analysts say,” the New York Times report added.
* Trump’s sanctions on Iran have not had a huge impact on the latter’s oil production. This may be because Trump has permitted Iran’s largest customers — Japan, China and India — to continue buying oil temporarily. The market was quite surprised to see that waivers were granted. https://indianexpress.com/article/explained/how-global-oil-prices-fell-and-impact-on-india-5458128/
Oil swings and the economy- K. Bharat Kumar #GS3 #Economy
What factors influence crude oil price?
Global demand for oil, decisions by major producing nations to raise/ cut supplies and the global political environment are key to oil prices.
Why are crude oil prices falling now?
Prices have swayed from above $160 per barrel in June 2008 to about $35 in January 2016. After breaching $85 a barrel in early October, they plunged 8% last Friday to reach their lowest in more than a year. They have since recovered to above the $60 level.
The recent fall has been attributed to two main factors: higher supply and volatility due to uncertainty about the global economy. Fears of the consequences of a full-fledged trade war between the U.S. and China have rattled speculators. However, oil prices are estimated to regain some lost ground and stabilise above $75 next year, according to an S&P Global Platts survey of top bankers and oil traders.
Key support factors for oil prices would be anticipated production cuts as well as U.S. sanctions against Iran. Also, automobile demand has risen globally, and as internal combustion engines still rule the roost, demand for oil is not expected to plummet yet.
Media reports cite the International Energy Agency pegging non-OPEC output at 2.3 million barrels per day (bpd) this year, while demand was expected to grow to 1.4 million bpd next year. OPEC is expected to cut production after a meeting on December 6 in Austria. It may push for a cut of as much as 1.4 million bpd.
What’s the Indian basket of crude?
It is the weighted average of Dubai and Oman (sour) and Brent (sweet) crude. It’s the indicator of the price of crude imports for India and the index has a bearing on price rise in the country, in general. The price of the Indian basket averaged at almost $70 for April this year, and had risen to breach $80 in October.
How does crude oil price affect the rupee?
India imports more than 80% of its crude oil requirements, and it has to pay for these imports in foreign currency, mainly dollars. If international crude prices rise, refiners in the country need to spend more in dollars. If there is volatility and uncertainty about which way prices will sway, refiners tend to buy more oil and stock up. As rupees are exchanged for the U.S. currency in this exercise, it generates a demand for the dollar, thereby weakening the rupee. On October 1 this year, the Indian basket price was $82 and the rupee rate was 72.8 to a dollar. By November 20, the Indian basket had eased to $64.8 and the rupee, almost in tandem, strengthened to 71.3.
How do fuel prices influence inflation?
Prices of goods are determined as much by their supply as by the cost of transportation. Apples from Himachal Pradesh are eaten in Kerala, for instance. Rise in fuel costs are passed on by truck fleet owners down the chain to consumers. Accelerating inflation influences the central bank to raise rates thereby making it costlier to borrow. Higher interest rates keep supply of money in check and hence control inflation.
https://www.thehindu.com/todays-paper/tp-opinion/oil-swings-and-the-economy/article25618734.ece
Conservation, environmental pollution and degradation
Greenhouse gas amounts in atmosphere hit record high #GS3 #Environment
The amounts of greenhouse gases in the atmosphere have hit yet another record high, the World Meteorological Organisation (WMO) said in its latest Greenhouse Gas Bulletin. The WMO is the weather agency of the United Nations, and publishes its Greenhouse Gas Bulletin each year; this year’s report covers data for 2017.
In a statement, the WMO said that there is no sign of a reversal in the trend of rising levels of greenhouse gases in the atmosphere, which is driving long-term climate change, sea level rise, ocean acidification and more extreme weather. “The science is clear. Without rapid cuts in carbon dioxide and other greenhouse gases, climate change will have increasingly destructive and irreversible impacts on life on Earth.
The window of opportunity for action is almost closed,” WMO Secretary-General Petteri Taalas said in the statement. “The last time the Earth experienced a comparable concentration of carbon dioxide was 3-5 million years ago, when the temperature was 2-3°C warmer and sea level was 10-20 metres higher than now.
Carbon dioxide: Concentrations of the gas reached 405.5 parts per million in 2017, 146% of the pre- industrial era (before 1750). The increase in carbon dioxide from 2016 to 2017 was about the same as the average growth rate over the last decade. It was smaller than the record leap observed from 2015 to 2016 (from 401.1 ppm to 403.3 ppm) under the influence of a strong El Niño event; there was no El Niño in 2017.
Methane: Atmospheric methane reached a new high of about 1859 parts per billion in 2017 and is now 257% of the pre-industrial level. Its rate of increase was about equal that observed over the past decade.
Nitrous Oxide: Its atmospheric concentration in 2017 was 329.9 parts per billion. This is 122% of pre- industrial levels.
CFC-11: The GreenHouse Gas Bulletin has a special section devoted to CFC-11 (trichlorofluoromethane). This is a potent greenhouse gas and a stratospheric ozone depleting substance regulated under the Montreal Protocol. Since 2012, its rate of decline has slowed to roughly two-thirds of its rate of decline during the preceding decade. The most likely cause of this slowing is increased emissions associated with production of CFC-11 in eastern Asia, the bulletin says.
Lunar lander faces crucial test-Madhumathi D.S. #GS3 #SnT
The Chandrayaan-2 lunar lander’s sensors are set to undergo a crucial test in the next few days as the mission races towards a planned take-off in around two months.
The Indian Space Research Organisation (ISRO) plans to fly the sensors on an aircraft over its artificial lunar site at Challakere to see how they will function and guide the Chandrayaan-2 landing craft when it starts descending on the lunar terrain.
The test on ground, called the Lander Sensor Performance Test or LSPT, will be conducted at ISRO’s new R&D campus in Chitradurga district, about 200 km from here.
Q- How Lunar probe will work?
The highly autonomous or pre-programmed mission uses a large number of sensors. Among them are those that help the lander to precisely assess its height from the landing spot; decide its speed and help it to steer clear of any boulders or uneven surface.
For the test, a prototype module carrying the sensors will be flown on one of ISRO’s two small aircraft. As the plane descends from around 7 km to about 1 km over the artificial terrain, the sensors must show how they will guide the soft landing of the lunar craft at the right spot, speed and position.
About two years back, ISRO had started readying a part of the Challakere site to resemble lunar craters and had conducted a few preliminary sensor tests. Features of the lander have since been modified and the upcoming tests will also validate the new design.
“The development and testing of the orbiter are over. Lander-related activities are going on. We will then add the rover also [to tests.] Until the mission is launched, we would be testing all systems continuously after every integration.
The recent success of the GSLV-MkIII-D2 launch vehicle has given us the confidence to go ahead for its operational vehicle which will launch Chandrayaan-2. We are confident about the spacecraft as well as the launcher for this mission.
The test of sensors comes on the heels of another test, the LAPT (Lander Actuator Performace Test), to prove the working of the lander actuators. https://www.thehindu.com/todays-paper/tp-national/lunar-lander-faces-crucial- test/article25582190.ece
Conservation, environmental pollution and degradation
Water flow in Ganga ‘woefully inadequate’- Jacob Koshy #GS3 #Environment
Former Union Water Resources Secretary Shashi Shekhar has said that “minimum flow” in the Ganga notified by the government on October 9 is “woefully inadequate.”
Additionally, an analysis by Professor Vinod Tare of the Indian Institute of Technology, Kanpur of the actual water flow at barrages downstream of Haridwar and using data provided by the Central Water Commission, suggests that actual flow today already exceeds the government’s prescriptions.
While the government has promised to reduce pollution in the Ganga by 70% by March 2019, environmentalists say that this relies on setting up sewage plants rather than ensuring that the natural flow of the river isn’t blocked. The blocks in the river hobble its propensity to clean itself.
Q- What does critics says?
Among the sharpest critics of the government’s approach — led by the National Mission for Clean Ganga — was the late G.D. Agrawal, a seer and formerly a scientist, who’d undertaken a fast since June. His key demands were to stop all under-construction dams in the upper reaches of the Ganga, and modify the design of existing ones to ensure that flow in the lower reaches was at least 50% of the monthly average flow
However, the notification said that the upper stretches of the Ganga — from its origins in the glaciers and until Haridwar — would have to maintain 20% of the monthly average flow between November and March, which is the dry season; 25% of the average during the ‘lean season’ of October, April and May; and 30% of monthly average during the monsoon months of June-September. https://www.thehindu.com/todays-paper/tp-national/water-flow-in-ganga-woefully- inadequate/article25589280.ece
NCCS: Mass bathing during Kumbh Mela alters bacterial load, diversity #GS3 #Environment
Bacterial populations in the river undergo huge loss in diversity but a steep increase in bacterial load when millions of people bathe at designated bathing sites during Kumbh Mela, a team of researchers has found. The loss in microbial diversity was nearly 37.5% while the increase in bacterial load was about 130-fold during the event.
The team led by Dr. Avinash Sharma from the National Centre for Cell Science, Pune, found that bacteria belonging to certain phyla reduced significantly while the prevalence of bacteria belonging to phylum Firmicutes (known to be also associated with human skin, stools and many infectious pathogens) was nearly 95%.
The study was carried out in 2015 at five bathing sites in the Godavari River in Nashik and the results were published in the journal Microbial Ecology. Samples were collected prior to and during the Mela allowing the scientists to compare the spatiotemporal changes to water quality and bacterial communities.
Q- What type of infectious diseases seen?
Besides changes in bacterial diversity and load, the study found an increase in infectious diseases and drug-resistant microbes in the river water samples collected during the Mela. There were elevated levels of genes related to Helicobacter pylori, Salmonella and Staphylococcus aureus. Elevated levels of drug-resistant genes include antifolate resistance, beta-lactam resistance and vancomycin resistance, to name a few.
The water samples collected during the Kumbh Mela had much higher total dissolved solids and total suspended solids. The biological and chemical oxygen demand increased due to higher release of organic particles during the Mela compared with before the Mela.
As a result, there was “substantial reduction” in the concentration of dissolved oxygen. “The substantial decrease in dissolved oxygen while the COD and BOD increased could be due to increased bacterial load in the water.
While richness of bacterial species was higher upstream, at the bathing sites, the diversity dropped, and the bacterial community was dominated by few phyla. In all, 25 bacterial phyla were recorded and seven phyla (including Firmicutes) contributed to about 99% of the total bacterial diversity before the event. During the event, the diversity dropped by 37.5% and the diversity was restricted to just three phyla. The Fermicutes were the most abundant with over 90% at all the five bathing sites.
Though the diversity reduced, the bacterial load increased 130-fold in samples collected during the event. Skin and faecal microbiota increased 2.3-fold and 2.9-fold respectively during the gathering.
By comparing the water samples collected before and during the event, we found a huge increase in infectious disease and antimicrobial-resistant genes during the Mela. These genes could pose a serious threat to public health. Compared with skin microbiota, the faecal microbiota is predominant at one sampling site.
During the same study, the researchers discovered a new bacterium, which they named Corynebacterium godavarianum, that showed resistance to antibiotics like amoxycillin, augmentin, cefpodoxime and clindamycin.
Q- What is the awareness needed?
Our study highlights the need to create awareness among pilgrims to avoid open defecation and maintain personal hygiene to reduce the amount of microbes that get introduced into the river. A closed system for bathing prior to taking a dip in the river should be put in place to reduce contamination of human-associated skin bacteria.
Besides taking a dip in the river, pilgrims also drink the holy water. “Drinking this water containing infectious disease genes and antimicrobial-resistant genes could pose serious health issues. It might be preferable to drink the holy water much upstream where fewer people bathe. https://www.thehindu.com/todays-paper/tp-features/tp-sci-tech-and-agri/nccs-mass-bathing-during- kumbh-mela-alters-bacterial-load-diversity/article25589328.ece
Science and Technology- developments and their applications and effects in everyday life
IIT-M’s strategies to improve traffic efficiency- Shubashree Desikan #GS3 #SnT
Traffic signals have been in use ever since automobiles became the preferred mode of travel. Yet, little has been done to improve their functioning, in comparison with innovations in automobile design. A group at IIT Madras has studied Indian traffic conditions and come up with three counter-intuitive strategies to improve efficiency of oversaturated traffic flow through road intersections.
Observing vehicles at the traffic signals near three places in Chennai (Tidel Park, Tiruvanmiyur junction and Adyar depot), they found that the distance between two successive vehicles (headway) increases with duration of the green signal. This implies that longer the duration of green signal, there would be less throughput, thereby reducing the efficiency of the signal.
Q- What are the strategies proposed?
Developing on this study, Dr Ramadurai arrived at the first strategy: keeping the duration of green signals short enough that the headway reaches a saturation value.
The second strategy proposed in the paper is to have bottleneck metering along the lines of traffic control on expressways, near entry points and exits. Like highways, expressways have points where traffic leaves or enters through lanes, such as in T-junctions. These often experience bottlenecks because vehicles, not being in specific lanes, merge from different directions, thereby causing ‘turbulence’ in the traffic flow.
Taking such factors into account, they suggest that by placing signals separately for each lane that enters or leaves a bottleneck on an arterial road, and using green signals alternately, a higher throughput or a capacity gain can be engineered
The third strategy is based on the observation that two-wheelers have significantly lower headways compared with others; they also have negligible start-up delay. Also, in congestion, two-wheelers filter through the gaps and increase overall throughput. “We show that two-wheeler throughput can be increased significantly by providing them space upfront at a signalized intersection without affecting other vehicles significantly.
The idea is to have separate lanes for two-wheelers close to intersections and an exclusive two-wheeler storage space at the front where they can collect while waiting for the signal to change.
The complex interactions [between different types of vehicles] are broken down by physically separating two-wheelers from three-wheelers, cars, and heavy vehicles and this may be a reason for smoother flow resulting in reduction in overall delays. https://www.thehindu.com/todays-paper/tp-features/tp-sci-tech-and-agri/iit-ms-strategies-to-improve- traffic-efficiency/article25589330.ece
Awareness in the fields of IT, Space
InSight on Mars: where, how and why #GS3 #SnT
By the time this is published, NASA’s InSight spacecraft will have landed on Mars to explore aspects of the planet never investigated before. What makes the mission special?
What it will study
InSight won’t be looking for life on Mars. It will study its insides — what it’s made of, how that material is layered and how much heat seeps out of it. This is important because Earth and Mars used to be similar — warm, wet and shrouded in thick atmospheres — before they took different paths 3-4 billion years ago. Mars stopped changing, while Earth continued to evolve.
With InSight, scientists hope to compare Earth to Mars, and better understand how a planet’s starting materials make it more or less likely to support life.
Equipment
InSight (Interior Exploration using Seismic Investigations, Geodesy and Heat Transport) is on a 24-month mission. The landing site is Elysium Planitia, where InSight can stay still and quiet all through.
The lander (6m × 1.56m, deck height 83-108 cm) carries a robotic arm 1.8 m long. It is powered by two solar panels, and carries a seismometer, heat probe and a radio science experiment. Two complementary engineering cameras help with navigation and hazard avoidance. One is mounted on the arm; the other on the front of the lander.
How to know it’s landed
From Earth, NASA team will be monitoring radio signals using a variety of spacecraft — and even radio telescopes on Earth — to find out what’s happening 146 million km away. Signals will come from various sources — the lander during descent; two experimental briefcase-sized spacecraft called MarCOs that flying behind InSight; InSight itself after landing; the Mars Reconnaissance Orbiter (MRO) spacecraft during descent; the 2001 Mars Odyssey after InSight’s touchdown. https://indianexpress.com/article/explained/nasa-spacecraft-insight-on-mars-where-how-and-why- 5466020/
Achievements of Indians in science & technology; indigenization of technology and developing new technology.
ISRO’s imaging satellite HysIS is all set #GS3 #SnT
HysIS, the country's first hyperspectral imaging satellite for advanced earth observation, is slated for launch on Thursday from Sriharikota. About 30 small satellites of foreign customers will be ferried on the PSLV launcher, numbered C-43, the Indian Space Research Organisation has announced. They will go into an orbit different from that of HysIS.
Q- What is Hyperspectral imaging?
A hyperspectral imaging camera in space can provide well-defined images that can help identify objects on earth far more clearly than regular optical or remote sensing cameras. The technology will be an added advantage in watching over India from space across sectors including defence, agriculture, land use and mineral exploration.
Sources said the new ‘eye in the sky’ can be used to even mark out a suspect object or person on the ground and separate it from the background with applications in transborder infiltration etc.
The primary goal of HysIS is to study the Earth’s surface in visible, near-infrared and shortwave infrared regions of the electromagnetic spectrum.
HysIS will be ISRO's first full-scale working satellite with this capability. While the technology has been around, not many space agencies have working satellites with hyperspectral imaging cameras as yet.
The November 29 PSLV flight would last eight minutes short of two hours, making it the third longest, low-earth mission of ISRO. The satellites would be ejected in two orbits by restarting the rocket's fourth- stage engine twice.
The PSLV, flying in its core-alone format, will first release HysIS to an orbit at 636 km 17 minutes after launch. The engine of the rocket's fourth stage will be restarted twice — once an hour from launch and again 47 minutes later.
https://www.thehindu.com/todays-paper/tp-national/isros-imaging-satellite-hysis-is-all-set-for- thursday-launch/article25609890.ece
Indian Economy
Centre gives SFIO powers to stop defaulters from fleeing the country #GS3 #Economy
To rein in wilful defaulters and prevent high-profile economic offenders like Nirav Modi and Vijay Mallya from leaving the country, the Centre has allowed the Serious Fraud Investigation Office (SFIO) powers to request look-out circulars (LoCs) against loan defaulters.
The move comes in the wake of defaulters such as Mallya, Modi, Mehul Choksi and Jatin Mehta fleeing the country after obtaining foreign citizenship. In an official memorandum, the Home Ministry said, “…the request of Serious Fraud Investigation Office (SFIO), Ministry of Corporate Affairs, to include an officer of SFIO not below the rank of additional director (in the rank of director in the Government of India) in the list of officers who can make a request for opening a Look out Circular (LoC) has been considered and approved by the competent authority…”
The SFIO is a statutory body, under the Ministry of Corporate Affairs and investigates matters related to serious fraud in a company. The power to make arrests under Section 212 (8) of the Act by an authorised officer of the SFIO was granted in August last year.
The SFIO recently initiated a probe into the Infrastructure Leasing & Financial Services Limited (IL&FS) that is faced with a consolidated debt of Rs 91,000 crore and is saddled with a severe liquidity crunch.
Q- How does LOC works?
Earlier, an LoC to keep watch on the arrival or departure of Indians or foreigners could only be issued at the request of the Home Ministry, External Affairs, Custom and Income Tax, CBI, DRI, Intelligence Bureau (IB), Regional Passport Offices (RPOs) and state police authorities.
These LoCs were valid only for one year until the agency seeking the LoC specified a longer duration. The agency seeking the extension of LoCs after one year will have to inform Indian Check Posts (ICP) with valid documentation.
Recently, the Home Ministry empowered the chairman or managing director and CEOs of all public sector banks (PSBs) to request LoCs against bank fraud suspects and loan defaulters.
Giving the SFIO similar powers was the next step as it was argued that the LoCs sought by CEOs of public sector bank can be challenged in court in the absence of an FIR or investigations against the suspects, an
official said. According to the official, LoCs are broadly classified into three categories and can be changed by the agency at any stage.
Incidentally, the CBI had diluted the LoC against Mallya that later helped the liquor baron flee the country. The first LoC issued by the CBI on October 16, 2015, said that Mallya should be detained if he tried to leave India and was modified on November 24, 2015, when it said that the only action to be taken if Mallya reached any port to leave India was to simply inform the CBI and let the businessman travel.
The third LoC category is mostly used for terror suspects with immediate arrest, said the official. Sources said that an inter-ministerial panel was set up earlier this year to look into various issues and including methods to stop wilful defaulters from fleeing the country.
Later, Parliament passed the Fugitive Economic Offenders Bill, 2018, giving authorities powers to attach and confiscate the proceeds of crime and properties of economic offenders, like bank fraudsters or loan defaulters fleeing the country. https://indianexpress.com/article/india/centre-gives-sfio-powers-to-stop-defaulters-from-fleeing-the- country-5468015/
Disaster and disaster management
Lancet urges response to heatwave exposure surge #GS3 #DM
Indian policy makers must take a series of initiatives to mitigate the increased risks to health, and the loss of labour hours due to a surge in exposure to heatwave events in the country over the 2012-2016 period, the Lancet Countdown 2018 report recommends.
Q- What does report says regarding heatwaves?
From 2014-2017, the average length of heatwaves in India ranged from 3-4 days compared to the global average of 0.8-1.8 days, and Indians were exposed to almost 60 million heatwave exposure events in 2016, a jump of about 40 million from 2012, the report released on Thursday showed.
Heatwaves are associated with increased rates of heat stress and heat stroke, worsening heart failure and acute kidney injury from dehydration.
Children, the elderly and those with pre-existing morbidities are particularly vulnerable. Almost 153 billion hours of labour were lost globally in 2017 due to heat, an increase of 62 billion hours from the year 2000.
Observing that a recent report “places India amongst the countries who most experience high social and economic costs from climate change”, the study makes several recommendations.
These include identifying “heat hot-spots” through appropriate tracking of meteorological data and promoting “timely development and implementation of local Heat Action Plans with strategic inter- agency co-ordination, and a response which targets the most vulnerable groups.”
The report prepared jointly with the Public Health Foundation of India also urges a review of existing occupational health standards, labour laws and sectoral regulations for worker safety in relation to climatic conditions.
The India Meteorological Department had reported that from 1901 to 2007, there was an increase of more than 0.5°C in mean temperature, with considerable geographic variation, and climate forecasts by research groups project a 2.2-5.5°C rise in temperatures in northern, central and western India by the end of the 21st century. The number of hours of labour lost also jumped between 2000-2017 across India.
Q- How heatwaves influence farmers?
For the agriculture sector alone, this rose to about 60,000 million hours in 2017, from about 40,000 million hours in 2000. Overall, across sectors India lost almost 75,000 million hours of labour in 2017, from about 43,000 million hours in 2000.
The agriculture sector was more vulnerable compared to the industrial and service sectors because workers there were more likely to be exposed to heat. The findings are significant for India as agriculture makes up 18% of the country’s GDP and employs almost half the population.
A recent World Bank report on South Asia’s hotspots predicted a 2.8% erosion of the country’s GDP by 2050, accompanied by a fall in living standards due to changes in temperature, rainfall and precipitation patterns. https://www.thehindu.com/todays-paper/tp-national/lancet-urges-response-to-heatwave-exposure- surge/article25618763.ece
Indian Economy
When a bank becomes a PSU #GS3 #Economy
What has changed at J&K Bank?
On November 22, a day after Governor Satya Pal Malik dissolved the Assembly, the State Administrative Council under his chairmanship approved a proposal for treating Jammu and Kashmir Bank (J&K Bank)
Ltd as a public-sector undertaking. It will hence be accountable to the state legislature, and the Finance Department will be required to place the bank’s annual report before the Assembly.
The SAC approved a proposal that provisions of the J&K Right to Information Act, 2009, shall be applicable to the bank just like other state-owned undertakings. It will have to follow guidelines of the Central Vigilance Commission. The department has been asked to issue directions to the bank to follow the decisions of the SAC. The bank is yet to receive these directions.
What is the reason for the move?
The state government holds a majority stake of 59.3% in J&K Bank. A need was felt that it should have the character of a PSU, which is subject to general supervision and access for enhanced transparency in transaction of business to promote public trust.
Extension of the RTI Act and CVC guidelines is only aimed at promoting good governance and transparency in the functioning of the bank. The purpose of the SAC decision is not to question the day- to-day activities of the bank management but a step towards strengthening better corporate governance,” the government said in a press statement.
What does the Reserve Bank of India consider J&K Bank to be?
It was incorporated on October 1, 1938 as a limited liability company to offer banking facilities in the state. The bank is licensed as an “old private-sector bank” under Section 22 of the Banking Regulation Act, 1949. Classified as a state government company, it is registered with Registrar of Companies, Jammu.
It launched a public issue in 1998 and is listed on both the Bombay and National stock exchanges. While RBI as the regulator supervises J&K Bank, the Comptroller and Auditor General (CAG) audits the books of banks. RBI has been in communication with CAG stating that as the banking regulator, it is RBI’s prerogative to audit the bank, not CAG’s. CAG may stop auditing J&K Bank, it has argued.
What is unique about J&K Bank?
It is the only bank in India in which a state government holds a majority stake. In all public-sector banks, the majority stake is held by the Centre. As per the Banking Companies (Acquisition & Transfer of Undertakings) Act, the central government holding in public-sector banks cannot drop below 51%. Thought the state government holds 59.3% in J&K Bank, it is not considered a public-sector bank.
This unique status needs to be seen in the context of Article 370 of the Constitution, which gives special autonomous status to the state of Jammu & Kashmir. J&K Bank is the largest employer among all state- promoted entities with a workforce of 9,190 in 2015-16. Among the 10 PSUs out of 30 that earned
profit, J&K Bank accounted for Rs 416 crore (50% of the total profits of all PSUs), according to the CAG report of 2016-17. It has a record for posting uninterrupted profits.
Till 2011, J&K Bank was the sole banker to the state government. In fact, akin to RBI for all other states and the Centre, J&K Bank was the lender of last resort in the state. It provided overdraft facility to the state when required.
A former chairman of J&K Bank had once said that the bank performed the role of a commercial bank, a developmental financial institution, financial services provider, as well as a central bank. It lost some of this status in April 2011, when Omar Abdullah was Chief Minister; the state government gave RBI the mandate to carry out general banking business of the state and be the sole agent for investment of state funds.
However, it is still the only private-sector bank designated as RBI’s agent for carrying out banking business for the state government. It is the state’s collection agent for direct taxes, utility payments, and now GST.
Incidentally, the Sarfaesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) of 2002, which lets banks confiscate commercial and residential properties for recovering loans, was not applicable to J&K Bank for almost 15 years until the Supreme Court finally extended its applicability to the state in December 2016. The mortgaged property could, however, be sold only to state subjects under the Sarfaesi Act. https://indianexpress.com/article/explained/simply-put-jammu-kashmir-banks-become-psu-governor- satya-pal-malik-5469841/
Indian Economy
Rupee is now at 69.85 #GS3 #Economy
A weak dollar helped emerging market currencies to gain, with the rupee turning out to be among the best performing ones on Thursday, appreciating 1.1% against the dollar.
The rupee appreciated 78 paise to close the day at 69.85, hitting a three-month high. After depreciating about 15% in 2018, the currency has appreciated almost 5% this month, mainly on falling crude oil prices.
Lower crude oil prices will help contain the current account gap as well as inflation, as India imports 80% of its crude requirements. The dollar weakened against most major currencies after Federal Reserve Chairman Jerome Powell said that the central bank’s benchmark interest rate was likely near
a “neutral level” which led to expectation of slower rate hikes, relieving pressure on emerging markets.
Softening oil prices, which slipped below $60 a barrel, over speculation about a supply glut, also helped the Indian currency to gain on Thursday. Brent crude, the international benchmark, was trading 1.04% down at $58.15 per barrel.
“The rupee remains firm on account of a sharp decline in the crude oil prices in the international market. Mr. Maru expects the near-term range for the rupee to be between 69.50 and 71.
“Focus will now shift to India’s GDP data, RBI monetary policy meeting, OPEC meeting and outcome of State election results. These data and events will provide further discussion to the rupee,”
The rally in the rupee, in addition to firm global cues and short covering, led to the benchmark equity indices gain ground for the fourth consecutive session and close at the highest levels in nearly two months.
The 30-share Sensex gained 453.46 points, or 1.27%, to close at 36,170.41, with stocks such as Bajaj Auto, Kotak Mahindra Bank, M&M and Vedanta gaining between 3% and 5% each.
In all, 21 of the 30 stocks gained ground, as the broader market breadth just managed to stay positive. On the BSE, 1,310 stocks advanced as against 1,305 declines. The broader Nifty settled the day at 10,858.70, up 1.21% https://www.thehindu.com/todays-paper/tp-business/rupee-is-now-at-6985/article25627995.ece
Indian Economy
This back series, that back series #GS3 #Economy
In new GDP back series data, average growth during UPA regime is down from previous estimates while growth during NDA is pegged higher than during UPA. Why do findings differ from one report to another?
Why the back series?
When the Central Statistics Office (CSO) moved to a new base year of 2011-12 for national accounts in January 2015, it was faced with a peculiar situation. The CSO faced issues in evaluating GDP with the new base year for years preceding 2011-12 due to lack of availability of the MCA-21 database.
MCA-21, an e-governance initiative of the Ministry of Company Affairs was launched in 2006, to allow firms to electronically file their financial results. With the shift to the new base year 2011-12 from 2004- 05, wherein the CSO did away with Gross Domestic Product (GDP) at factor cost, and adopted the
international practice of valuing industry-wise estimates as gross value added (GVA) at basic prices, the MCA-21 database also got used in addition to the volume index of Index of Industrial Production (IIP) and establishment-based dataset of Annual Survey of Industries (ASI).
On Wednesday, three years after the shift to the new base year of 2011-12, the CSO and NITI Aayog, in a join press conference, released the back series detailing growth numbers for 2005-06 to 2011-12.
What were the findings of the newly released back series?
The back series released Wednesday has trimmed the growth numbers for the UPA government’s nine years (2005-06 to 2013-14), with the Indian economy growing at an average 6.7% in four years of the UPA’s first term (2005-06 to 2008-09) as well as the UPA’s second term (2009-10 to 2013-14), which are lower than the earlier estimates of 8.1% and 7.0% (2004-05 base) respectively.
These growth rates compare with an average 7.4% growth rate (2011-12 base year) seen during the first four years of the present NDA government.
Barring two of the years, 2012-13 and 2013-14, the back series data released for years preceding 2011- 12 scaled down growth rates for 2005-06 to 2013-14 by 0.8 to 2.1 percentage points. For 2012-13, the back series based on the new base year (2011-12) revised the GDP growth rate upwards to 5.5% from 4.7% estimated earlier (2004-05 base year), while for 2013-14, the GDP growth rate was revised up to 6.4% from 5.0% estimated earlier.
Sharp downward revisions were seen particularly for two years, 2007-08 and 2010-11. For 2010-11, the growth got revised downwards from a double-digit rate of 10.3% to 8.5%. The 8.5% cent growth in 2010- 11 is the highest growth rate in the back series dating back to 2005-06.
Was there not another report on growth submitted recently?
Three months ago, the Committee on Real Sector Statistics submitted its report to the National Statistical Commission (NSC) offering an alternative. It stated that the economy grew at a faster pace under the UPA government from 2004-05 to 2013-14, compared with the average growth during the first four years of the current government.
The average GDP at market prices was 8.37% during UPA-I (2004-05 to 2008-09), and 7.69% during UPA- II (2009-10 to 2013-14), the Committee had said. The government had, at that time, termed the estimates as “unofficial”.
The Committee had carried out an econometric exercise using the production shift method to convert the old GDP series consistent with the new series, wherein a quantum correction factor was used instead of the usual splicing method.
Simply put, the difference in output at 2011-12 between the two series occurred due to an upward or downward shift in the production curve, which included new economic activities and/or excluded older activities that became extinct.
To get the new back series on the base year 2011-12, it was assumed that this shift in production did not occur in a single year and the difference in output was then redistributed asymptotically backward with an annual declining rate up to the year 1993-94.
How was the new back series calculated?
The methodology for preparing the back series estimates for the years 2004-05 to 2011-12 is largely the same as the methodology followed in the new base 2011-12 series, the CSO said in its statement. “In certain cases, owing to the limitations of the availability of data, either splicing method or ratios observed in the estimates in base year 2011-12 have been applied,” it said.
In the secondary sector, the differences in rates was attributed to changed data sources and methodologies. The Annual Survey of Industries for 2011-12 was conducted in 2012-13 and finalised in 2015.
For 2004-05 to 2011-12, various components were re-estimated using a hybrid approach, it said. Changes in GVA growth rates of primary, secondary and tertiary sectors as against the earlier 2004-05 series were attributed to tweaking of data sources.
For instance, changes in the growth rates of the primary sector were attributed to agriculture and mining, where the growth rates were lower. In both the new and old series of Wholesale Price Index (WPI), the index for petroleum and natural gas mining used for deflating the output of the sector was lower in 2010-11 than in 2011-12, the CSO said.
In the secondary sector, the differences in rates was attributed to changed data sources and methodologies. The Annual Survey of Industries for 2011-12 was conducted in 2012-13 and finalised in 2015. “This revised data was not available during preparation of the 2004-05 series, but has been used in the computation of the back-series,” it said.
Several changes in data sources were also made in the tertiary sector: in unorganised trade, latest round of NSS, sales tax index and new series of WPI have been used for preparing the back-series as against usage of constant GTI (Gross Trading Income) Index in 2004-05 series.
In the communication sector, the new series was computed with minutes of usage rather than telecom subscriber growth. For financial services, the contribution of the Reserve Bank of India (RBI) has been computed by non-market approach as compared to considering the banking division of the RBI it as a market enterprise in the earlier series, reducing its contribution.
Are there any grey areas?
There is not enough explanation for the choice of datasets and proxies, especially those datasets that didn’t exist before 2011-12. Though the CSO release mentioned usage of several proxies, there were no details about why those were selected over other datasets. For instance, for years preceding 2006, when the MCA-21 database did not exist, the CSO has used ASI data for estimating manufacturing growth whereas economists say there could have been other indicators for the same metric.
The role of the NITI Aayog in the release of the statistical exercise of CSO, which comes under Ministry of Statistics and Programme Implementation (MoSPI), has also been questioned.
Also, the use of volume data for calculation of the back series, which could have potentially underestimated growth, has been questioned by economists. The current series is based on company data, MCA-21, which is the balance sheet data, whereas the back series is based on volume data.
So in the case of secondary sector, it was based essentially on the Annual Survey of Industries. We do know that ASI was underestimating growth in manufacturing, so I had expected to be revised upwards. But that has been revised downwards as well.”
He added, “The System of National Accounts prefers to go with volume indices, so if the new series had been volume index based then that would have been OK. Unfortunately, the new series is not. And the big difference between the volume index approach and the financial data approach is that the financial
data captures changes in quality which the volume approach does not. So if a substantial part of the growth has been coming from quality, then if you take the volume approach you would underestimate the growth.” https://indianexpress.com/article/explained/arun-jaitley-gdp-data-cso-back-series-5471729/