📰 Drug-smuggling route reveals itself again
Intelligence agencies say cartels have been exploiting vast seas off India and Pakistan
•One of the world’s biggest drug smuggling routes, spread across Afghanistan, Pakistan and the Indian Ocean, with recipients spread in several countries, has revealed itself yet again with the seizure of 1,500 kg of heroin worth over Rs. 3,500 crore off Gujarat coast on Saturday.
•For the past many years there have been several intercepts, occasional seizures and significant suspicious boat movements to reaffirm the intelligence assessment about the massive flow of drugs from Afghanistan into the Indian Ocean, and its distribution to the rest of the world.According to Indian intelligence agencies, drug syndicates have been exploiting the vast seas off India and Pakistan, which is easily accessible from several countries, for running their rackets. According to their assessment, heroin and other drugs come down from Afghanistan and is loaded into fishing trawlers in Karachi, Keti Bandar or other smaller fishing harbours on the Pakistan coast.
•“These boats are not part of the drug syndicates often, mostly they are couriers and get paid for each delivery,” says a source.
•The boats try to keep off Indian Coast Guard and Pakistan Maritime Security Agency, and reach mid-sea. They are guided by controllers from Bangkok, or other parts of Thailand, often with the use of satellite phones.
•The boats carrying drugs are directed to a particular location using GPS, and it is from there the supplies are picked up by incoming boats from other locations. Indian agencies suspect that the pickup boats are mostly coming from Southeast Asia, Sri Lanka, and could also be from larger ships. Once it is resupplied, these Afghan drugs find their way into international markets.
•In recent months, Indian intelligence agencies have regularly tracked satellite phones of these syndicates to gain significant clarity on their operation. However, it was not the case in the past. Many still believe that the purported terror boat that went up in flames after the Coast Guard intercepted it on News Year’s day in 2015 was probably part of the drug smuggling network.
•Sources also believe that the drug that was intercepted on Saturday was not meant for India. “We have not seen drugs being brought into India through this route. It is used for international markets,” one of them said.
📰 5 chemicals banned in firecrackers
Ruling follows inputs from CPCB and explosives safety body
•Ahead of the festive seasons of Dussehra and Deepavali, the Supreme Court on Monday prohibited the use of five chemicals, labelled as toxic by the Central Pollution Control Board (CPCB), in the manufacture of firecrackers.
•A Bench of Justices Madan B. Lokur and Deepak Gupta recorded in its short order that, “that no firecrackers manufactured by the respondents shall contain antimony, lithium, mercury, arsenic and lead in any form whatsoever.
•It is the responsibility of the Petroleum and Explosive Safety Organisation (PESO) to ensure compliance particularly in Sivakasi.”
•The order came after the court heard the submissions from officials of the CPCB and Petroleum and Explosive Safety Organisation’s (PESO) Firework Research and Development Centre at Sivakasi in Tamil Nadu.
•The court asked the CPCB to clarify on the use of strontium, another chemical branded toxic by the pollution body, in firecrackers. . Manufacturers however denied using these chemicals.
•Even as the court gave the CPCB time till September 15 to provide detailed information on the environmental impact, especially air pollution, caused by firecrackers, private manufacturers, who are suffering a court ban on sale of firecrackers in the Delhi and NCR regions, tried to reason that firecrackers is not the only source of pollution.
📰 ‘Methanol a clean, cheaper fuel’
NITI Aayog told to examine it as an alternative propellant
•Road Transport and Highways Minister Nitin Gadkari on Monday held a high-level stakeholders meeting to deliberate upon a strategy to use methanol as an alternative fuel in automobiles. The Minister has asked government think-tank NITI Aayog to study the automobile standards developed in China to use methanol as an alternative fuel.
‘Import substitution’
•“Methanol economy will help India use its vast reserves of coal while driving import substitution. Research in converting carbon dioxide to methanol is promising and can be a game-changer for methanol economy,” Mr. Gadkari said after chairing the meeting. Petroleum and Natural Gas Minister Dharmendra Pradhan, New and Renewable Energy Minister Piyush Goyal along with former union minister and Nationalist Congress Party (NCP) chief Sharad Pawar were also present in the meeting.
•“Mr. Gadkari stressed on the use of local or indigenous materials for production of fuel like making ethanol from agriculture produce or waste and from coal,” a Road Transport and Highways Ministry spokesperson said. In its presentation, Niti Aayog said methanol is a promising fuel for waterways as it is clean, cheaper than fossil fuels and a good substitute for heavy fuels. It suggested that ethanol could be made out of coal and informed that a pilot project was already underway in Talcher in Odisha.
•India imports methanol from Saudi Arabia and Iran at present, the think-tank said, adding that it is working on a roadmap for conversion from coal to methanol.
•The government think-tank also said that methanol can be produced from municipal waste as well.
‘Economic sense’
•“All stakeholders agreed that methanol is a promising fuel used in many parts of the world. While in most countries it is being made from natural gas, for India it makes much more economic sense to use locally available coal,” the spokesperson said.
📰 LPG prices to be hiked by Rs. 4 every month: Minister
Centre aims to end all subsidies by March 2018
•The government has ordered State-run oil companies to raise the price of subsidised cooking gas (LPG) by Rs. 4 a cylinder every month to eliminate all subsidies by March next year, Petroleum and Natural Gas Minister Dharmendra Pradhan said on Monday.
•The government had previously asked Indian Oil, Bharat Petroleum and Hindustan Petroleum to raise rates of subsidised domestic LPG by Rs. 2 a 14.2-kg cylinder per month (excluding VAT).
•Now, the quantum has been doubled to bring down the subsidy to nil, he said in a written reply in the Lok Sabha here.
•“Public sector oil marketing companies (OMCs) were authorised to increase the price of the subsidised domestic LPG cylinder by Rs. 2 per cylinder (14.2 kg) per month (excluding VAT) with effect from July 1, 2016,” the Minister said.
•Oil companies had hiked rates on 10 occasions since that go-ahead.
•“The government vide its order dated May 30, 2017, has again authorised OMCs to continue to increase the effective price of subsidised domestic LPG by Rs. 4 per cylinder effective June 1, 2017till the reduction of government subsidy to ‘nil’, or till March 2018, or till further orders, whichever is earliest,” he said.
•Oil companies have raised rates twice since then, the last being on July 1 when rates were up by a steep Rs. 32 per cylinder — the steepest increase in six years. This hike reflected the higher tax rates under the GST regime.
📰 Don’t shoot the messenger
Proposed amendments to the Whistle Blowers Act defeat the very purpose of the legislation
•More than 15 whistle-blowers have been murdered in India in the past three years. Parliament may have passed the Whistle Blowers Protection (WBP) Act in 2014, but this did not help save their lives as the government has doggedly refused to operationalise the law. The Act aims to protect people who bring to the notice of the authorities concerned allegations of corruption, wilful misuse of power or commission of a criminal offence against a public servant.
A wider definition
•Significantly, in defining who a whistle-blower is, the law goes beyond government officials who expose corruption they come across in the course of their work. It includes any other person or non-governmental organisation. The importance of such progressive expansion is underlined by the fact that in the last few years, more than 65 people have been killed for exposing corruption in the government on the basis of information they obtained under the Right to Information (RTI) Act. The RTI law has empowered the common man to have access to information from public authorities — which only government officials were earlier privy to — making every citizen a potential whistle-blower.
•The WBP law has provisions for concealing the identity of a whistle-blower, if so desired, following cases such as Satyendra K. Dubey’s, whose murder in 2003 led to demand for such legislation. In a letter addressed to the Prime Minister, Dubey, a manager in the National Highways Authority of India (NHAI) posted at Gaya, had highlighted corrupt practices in the NHAI and specifically requested that his identity be kept secret. But the information was leaked, leading to his murder.
•Most notably, the law affords protection against victimisation of the complainant or anyone who renders assistance in an inquiry. This is critical as whistle-blowers are routinely subjected to various forms of victimisation — suspensions, withholding of promotions, threats of violence and attacks. The law empowers the competent authorities to accord them protection, which includes police protection and penalising those who victimise them. Whistle-blowers Ram Thakur, Nandi Singh and Amit Jethwa were intimidated and sought police protection in vain, before they were murdered.
•Instead of operationalising the WBP law, an amendment Bill, which fundamentally dilutes the law, was introduced in Parliament in 2015 by the Bharatiya Janata Party-led government without public consultation.
Shooting the messenger
•The amendment Bill seeks to remove immunity provided to whistle-blowers from prosecution under the draconian Official Secrets Act (OSA) for disclosures made under the WBP law. Offences under the OSA are punishable by imprisonment of up to 14 years. Threat of such stringent penalties would deter even genuine whistle-blowers. The basic purpose of the WBP Act is to encourage people to report wrongdoing. If whistle-blowers are prosecuted for disclosing information as part of their complaints and not granted immunity from the OSA, the very purpose of the law would be defeated.
•Further, to ostensibly bring the WBP Act in line with the RTI Act, the amendment Bill says that complaints by whistle-blowers containing information which would prejudicially affect the sovereignty, integrity, security or economic interests of the state shall not be inquired into. In addition, certain categories of information cannot form part of the disclosure made by a whistle-blower, unless the information has been obtained under the RTI Act. This includes what relates to commercial confidence, trade secrets which would harm the competitive position of a third party, and information held in a fiduciary capacity. These exemptions have been modelled on Section 8(1) of the RTI law which lists information which cannot be disclosed to citizens.
Two laws, different objectives
•The amendments ignore the fact that the two laws have completely different objectives. The RTI Act seeks to provide information to people, while the WBP Act provides a mechanism for disclosures to be made to competent authorities within the government to enable inquiry into allegations of corruption and provide protection to whistle-blowers.
•Conflating the two laws is inappropriate and would preclude genuine whistle-blowing in several scenarios. For instance, what about government officials who come across evidence of wrongdoing in the normal course of their work and do not need the RTI Act to access relevant information? Again, should complaints exposing corruption in nuclear facilities or sensitive army posts not be inquired into just because they contain information relating to national security? Surely the country would benefit if such wrongdoing is exposed so that appropriate action can be taken.
•If the intention was to ensure that sensitive information pertaining to national security and integrity is not compromised, instead of carving out blanket exemptions the government could have proposed additional safeguards for such disclosures such as requiring complaints to be filed using sealed envelopes to the competent authorities.
•Concerns about these regressive amendments were brushed aside and the Bill pushed through the Lok Sabha in haste. The amendment Bill is listed for discussion and passage in the Rajya Sabha in the current session. To reconsider amendments that would fundamentally dilute the law, and provide an opportunity for public consultation, it is imperative that the Bill be referred to a select committee of the Upper House.
•There is no justification for not operationalising the WBP Act. It is the moral obligation of the government to immediately promulgate the rules and implement the law to offer protection to those who, at great peril, expose wrongdoing.
📰 The Manila envelope
India’s financial aid to the Philippines to fight the Islamic State signals a reworking of its Asean outreach
•In a significant development, India has decided to provide a financial assistance of $5,00,000 (Rs. 3.2 crore) to the Philippines to aid its fight against the Islamic State (IS)-affiliated terror groups in the troubled Mindanao province. This is the first time India is sending aid to another nation to help it fight terrorism, thereby becoming an important marker in New Delhi’s attempts to burnish its credentials as an emerging security provider to the wider Asian region.
•For a long time, India has been trying to convince the world that it remains one of the worst victims of terrorism. But its focus has largely been on Pakistan’s use of terrorism as an instrument of state policy. And where India viewed Pakistan as the epicentre of terrorism, the world remained reluctant to put adequate pressure on a nation that was seen as a close ally in its ‘war against terrorism’. However, under the Narendra Modi government, India has taken a tough stand on Pakistan’s support for terrorism by underscoring its concerns at various international fora. In this context, India’s support to Manila shows a new-found sense of urgency in standing shoulder to shoulder with other victims of terror, even when the source of the problem is different.
Recapturing Marawi
•The siege of Marawi, about 800 km south of the capital Manila, began in May when the Philippine security forces launched an offensive to capture Isnilon Hapilon, leader of the IS-affiliated Abu Sayyaf group. Despite the military offensive, militants remain in control of Marawi which they view as key to their efforts to create an IS province. The civilian toll has been rising, with more than 500 people killed and nearly 4,00,000 civilians displaced. Philippine President Rodrigo Duterte has taken a hard line, vowing to “crush” the militants and declaring martial law over the entire southern Philippines. Yet, the end of the conflict is not in sight.
•India has expressed its concerns at the situation and used this crisis to enhance its anti-terror and deradicalisation partnership with the Philippines. India is also conducting cybersecurity training for the Philippine security forces, focusing on deradicalisation. And with this financial aid, India has emerged as the largest donor in efforts to contain the crisis.
•China has provided 15 million pesos (approximately $3,00,000) in aid compared to India’s 25 million pesos ($5,00,000). With the recent fall of Mosul and the fight for Raqqa intensifying by the day, there are suggestions that the days of the IS in its current shape are numbered. The IS of today may appear to be a pale shadow of its past menace when at its peak, since the end of 2014 through 2015, it controlled territory comprising roughly 1,10,000 sq. km, across both Syria and Iraq. But the underlying forces that gave rise to its emergence in West Asia remain as potent as ever and the ideological attraction of its ideology shows no sign of fading. In many ways, it is imperative for India to take a more proactive role in the global struggle against the IS.
•India’s engagement with the Philippines is also key to underscoring its growing role in Southeast Asia where China’s rise has already created serious challenges for the wider region. The regional states are looking at external balancers at a time when America’s commitment to regional security has come under a scanner under the Donald Trump administration. The regional security architecture there is under strain as China’s divide-and-rule policy has made it difficult for regional states to put up a united front. Many states have suggested that India needs to play a larger role. As India and the Association of Southeast Asian Nations (ASEAN) celebrate 25 years of their partnership this year, it is a politically opportune moment to upgrade India’s regional profile.
•The Philippines has also been trying to recalibrate its ties with China, under stress because of a suit brought by Manila to the Permanent Court of Arbitration in The Hague challenging Beijing’s claim to almost all of the South China Sea. Though Manila won the case last year, it has not been able to push Beijing to moderate its stance on the maritime dispute. Meanwhile, Mr. Duterte visited China last October and signed deals worth $24 billion in infrastructure investment and loan pledges. India cannot easily match China’s growing economic profile but it has other means to build partnership with a very important region in its foreign policy matrix. The recent outreach to Manila is an important step in that direction. Hopefully, it won’t be the last.
📰 The dilemmas of delimitation
The time has come to grapple with the implications of the freeze on parliamentary seats and seat allocations to States being lifted in 2026
•On Monday, Prime Minister Narendra Modi inaugurated a brand new Parliament Annexe building that will afford our lawmakers more space and enable better functioning. In a few years from now, we might actually need a new building for Parliament altogether due to the likely increase in number of seats in both Houses after the lifting of the freeze imposed by the Constitution (Forty-second Amendment) Act, 1976, which is due in 2026.
•But more than the need for a new building, the debate has to centre around issues with constitutional dimensions of far-reaching importance — how these additional seats will be allocated to the States, and how to address the concerns which necessitated the freezing of the allocation of seats on the basis of the 1971 Census figures.
Frozen in time
•According to Article 81 of the Constitution — as it stood before the Constitution (Forty-second Amendment) Act, 1976 — the Lok Sabha was to comprise of not more than 550 members. Clause (2) of Article 81 provided that for the purposes of sub-clause (a) of clause (1), there shall be allotted to each State a number of seats in the House of the People in such manner that the ratio between that number and the population of the State is, so far as practicable, the same for all States. Further, clause (3) defined the expression “population” for the purposes of Article 81 to mean the population as ascertained at the last preceding Census of which the relevant figures have been published.
•As result of this mandate, States which took a lead in population control faced the prospect of their number of seats getting reduced and States which had higher population figures stood to gain by increase in the number of seats in Lok Sabha. To allay this apprehension, Section 15 of the Constitution (Forty-second Amendment) Act, 1976 effected a freeze on the population figure with reference to the 1971 Census (which was 54.81 crore with a registered electorate of 27.4 crore) for the purposes of proviso to Article 81(3)(i) until the relevant figures for the first Census taken after the year 2000 have been published. Section 3 of the Constitution (Eighty-fourth Amendment), Act 2001 extended the deadline from 2000 to 2026.
•As a result of the freezing of the allocation of seats, the allocation done on the basis of the 1971 Census continues hold good for the present population figures. According to the 2011 Census, the population of our country stands at 121 crore with a registered electorate of 83.41 crore. Basing the 1971 Census figure of 54.81 crore to represent today’s population presents a distorted version of our democratic polity and is contrary to what is mandated under Article 81 of the Constitution. So when the first Census figure will be available after 2026 — that is, in 2031 — a fresh delimitation will have to done which will dramatically alter the present arrangement of seat allocation to the States in Parliament.
•Before addressing the problem of accommodating the increase in numbers, there are more important questions which require to be debated and answers found. First, the concerns expressed by the States in 1976 which necessitated the freezing of seat allocation on the basis of 1971 population figures would appear to hold good even today and have to be addressed to the satisfaction of all stakeholders.
•The second question that has to be addressed, which is equally if not more important, is how the Presiding Officers of the Houses/Legislatures will deal with such a large number of members jostling with each other to capture the attention of the Speaker to raise issues in the House. Even with the current strength of 543 members, the Speaker finds it extremely difficult to conduct the proceedings of the House. Members do not show much heed to the entreaties of the Speaker, thereby making smooth conduct of House proceedings a difficult affair. The Speaker’s directions and rulings are not shown proper respect, and disruptions of proceedings aggravate the problem. The sudden increase in numbers will render the task of the Speaker more difficult and onerous.
•Third, the Zero Hour, Question Hour and the raising matters of urgent public importance, which are warp and woof our democratic fabric, will be subjected to severe strain because the 60-odd minutes which are available in the morning before the normal legislative business of the House begins will require our Parliament and Legislatures to sit for a longer duration each day during the session as well as have more number of sittings in a year than at present.
•While 2026 is still a few years away, if we do not start a debate now on how to deal with the problems that are likely to arise, we will be forced to postpone the lifting of the freeze to a future date as was done in 2001. This will only postpone the problem for which we must find a solution sooner or later. Even the various proposals for electoral reforms which have been recommended by various Commissions over the past decade do not address these issues. These are challenges which our political leaders have to address in the immediate future.
📰 The Reserve Bank is off target
The idea that interest rates are the right way to tackle inflation in India needs a serious rethink
•“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” These lines from John Maynard Keynes come to mind when observing the recent performance of the Reserve Bank of India (RBI) with respect to the conduct of monetary policy. Strenuous effort has been made to lead the citizen to believe that one of the many significant actions of the government of the day is to have moved monetary policy in India onto a “modern” plane. The centrepiece of this claim is that the central bank will now be judged entirely in terms of its record on inflation. That is, the RBI has been reconfigured as an ‘inflation-targeting’ central bank. As part of this arrangement, it has been set an inflation target of 4%. Then, somewhat counter-intuitively, it has been given leeway in the form of a band within which the inflation outcome may lie. This band is wide, ranging from 2% to 6%.
Missing the point
•Since the move to inflation targeting, naturally, the RBI has been watched. In the early days it appeared to be coming out with flying colours with inflation not only well within the band but also declining. However, that the growth in the segment of the economy most directly under the control of the RBI, namely manufacturing, has been declining too has been noticed less. Under the new arrangement, the RBI cannot be held responsible for what happens to growth as it is to be judged entirely by what happens to inflation. But since June there is disruption and not in terms of the new vocabulary. Consumer price inflation has now declined to 1.5% in June; though only 0.5% below its lower bound, this inflation rate is far below the targeted 4%. Surely this is a case of missing one’s target by a long shot.
•Rather than waste our time shaming the RBI, we should fruitfully engage with the idea of whether inflation targeting is the right way to tackle inflation in India. That central banks are unable to control the inflation rate is evident from the record of the Bank of England. One of the first central banks to shift to inflation targeting, and endowed with intellectual capital of the highest class, the ‘Old Lady of Threadneedle Street’ has a dismal record of achieving its inflation target. Why is this so? Is it that the bank was also trying to accommodate other economic variables such as employment or the exchange rate? While the latter is possible of course, it is highly unlikely, as no group of high-profile professionals would want to fail so publicly in their mandated task. The reason why they fail is because ‘inflation targeting’ is based on a poor understanding of inflation.
A flawed model
•The model underlying inflation targeting is that inflation reflects output being greater than the economy’s ‘potential’. The task now is to bring output back to its potential level via an interest rate hike. A problem with the model is that the potential level of output is unobservable. Moreover, the potential is believed to be subject to change by the proponents of the model themselves. To these infirmities, the response given is that it does not matter, as we need only observe inflation to conclude that there is an output gap. The problem with this form of reasoning is that it is self-referential. This may be demonstrated in the form of a conversation that proceeds as follows: “Why is the inflation rate rising?” “Because unemployment is below its natural rate.” “But how do you know?” “Because inflation is rising!” Here, ‘natural rate’ refers to the level of employment corresponding to potential output. It appears that under inflation targeting, the policymaker must proceed on faith. This is not a sound basis for governance.
•Developing countries such as India have an economic structure different from the developed ones of the West for which inflation targeting was first devised. An aspect of this is that agricultural production is subject to fluctuation, and along with this the prices of agricultural goods. Now, when the relative price of agricultural goods rises due to slower growth of agriculture, the inflation rate rises. Such an inflation has nothing to with an economy-wide imbalance gap as visualised in the ‘output gap model’ underlying inflation targeting. Under inflation targeting, the response to rising agricultural prices would be to raise the rate of interest. This may have some desirable impact on inflation but it can come only at the cost of output loss in the non-agricultural sector. The output loss can only be rationalised as necessary by holding on to the assertion that inflation reflects actual output being greater than potential. But note that the whole process has been set off by a slowing of agricultural output. Now, the only way the output gap model can retain some traction in the context is by asserting that along with the reduction in agricultural output growth, the potential output is growing at an even slower rate. This is completely ad hoc and without a scientific basis.
Role of agriculture
•The role of agricultural prices in driving inflation in India is evident presently. Though the overall consumer price index is rising at 1.5%, that for agricultural commodities is actually falling, reflecting the fall in the relative price of agricultural goods we have referred to. Thus the RBI may have just got lucky over the recent past that commodity prices, which include domestically produced agricultural goods and imported oil, have grown at a slower pace. So, it is not at all clear that even when the inflation rate was within the band, it was the RBI’s handiwork rather than the hand of the weather gods in evidence. Champions of inflation targeting, observing the current decline in the inflation rate in India, are quick to claim victory for the RBI in terms of having anchored inflationary expectations, a claim for which the slightest evidence is given. It is to be recognised that even though the RBI cannot directly move agricultural prices, its response to their movement matters. As agricultural price inflation continues to fall, driving down the overall inflation rate, the real rate of interest rises. If the central bank does not respond by lowering the policy rate the real rate of interest will continue to rise, with negative consequences for non-agricultural output. This is exactly what we observe happening of late. We want to avoid a deflationary spiral.
•To end with some exegesis. So, who in the case of our ‘modern’ monetary policy might be the “defunct” economist of the quote we started out with? It is Milton Friedman who asserted — without argument, it may be noted — that inflation reflects an output gap. The idea itself he borrowed from the nineteenth century economist Knut Wicksell. Friedman had recommended money supply control, a policy aggressively adopted by Margaret Thatcher in England but also in most parts of the West. When this policy failed, it was replaced by ‘inflation targeting’. This choice of terminology was truly inspired, for its very use conveys the resolve of actually trying to do something about inflation. But it is also tendentious, bearing the suggestion that there is no other method of inflation control. Whatever you may say about Friedman, he was not a slouch when it came to inflation. Back in India, with the RBI off target by a wide margin, we can see that inflation targeting is not what it is cracked up to be. Inflation control here requires supply management. This is not rocket science.
