📰 UAE joins chorus of concern over Doklam
Any military escalation between India and China would be ‘potentially very disruptive,’ says Emirates Foreign Minister
•Any military escalation between India and China would be “potentially very disruptive” for the region, said Anwar Gargash, the visiting Minister of Foreign Affairs from the United Arab Emirates. Mr. Gargash discussed the current standoff at Doklam with External Affairs Minister Sushma Swaraj and National Security Adviser Ajit Doval in Delhi on Wednesday.
•“We were informed of the developments and the concerns (on Doklam) and I have also been following the issue through reports in the press,” Mr. Gargash told journalists about his meetings.
Troop build-up
•On Thursday, reports indicated that both India and China were strengthening troop deployments at the site of the standoff near the India-Bhutan-China tri-junction, with no indication in sight of a resolution to the two-month long dispute.
•Mr. Gargash joined other countries including Australia and the U.S. in expressing concern about the situation.
•“Any escalation between two great powers, India and China is potentially very disruptive for all of us. The more there is a way to resolve these issues between two great nations, the more stable we feel we are,” he added. Mr. Gargash was in Delhi on his fifth trip this year to discuss deepening bilateral ties, but also as a part of a diplomatic offensive by Gulf states following their economic blockade over what they call Qatar’s broken promises on ending support to “extremism, jihadism and terrorism”.
•The Minister said he had assured the Indian leadership that Indian expatriates would not “suffer” because of the blockade and “Indian economic interests in the region” would not be affected by the clash between Saudi Arabia, Bahrain, UAE and Egypt against Qatar that has dragged on since June 3.
Investment delayed
•Mr. Gargash accepted that movement on proposed investment from the UAE sovereign wealth fund (SWF) into Indian infrastructure projects had been delayed over procedural negotiations, and specifically the mandate of the governing body of the National Infrastructure Investment Fund (NIIF).
•The investment has been delayed despite two visits by UAE Crown Prince Sheikh Mohammed Bin Zayed al-Nahyan to India in the past two years, and a visit by Prime Minister Narendra Modi to the Emirates.
•“Governance is very important. The whole idea of [UAE] investment [in India] was an old model, and should have been more institutional... that is why things have taken more time because of the establishment of the NIIF,” he said. The minister wouldn’t confirm that the figure of $75 billion — announced during Mr. Modi’s visit — would flow into the NIIF’s coffers, saying only that “UAE has said we have a huge appetite for India.”
📰 Panel moots defence procurement fund
MoD goes back on its original demand
•The Ministry of Defence (MoD) has gone back on its demand for a non-lapsable capital fund for defence procurements, even as the Parliamentary Standing Committee (PSC) on Defence on Thursday asked the Ministry of Finance to work out the modalities for the creation of such a fund in consultation with the MoD.
•In its latest report presented in the Parliament, the Committee said: “Hence, the Committee would like the Ministry of Finance to work out the modalities for the creation of a 'non-lapsable defence capital fund account' in consultation with the Ministry of Defence and apprise the Committee of the progress made in this direction at the earliest, and not later than three months of the presentation of this report to Parliament”.
•However, it is surprising that the MoD is going back on its original demand for such a fund. It was earlier keen on such a fund to prevent the unspent amount in a financial year from being returned to the Finance Ministry as defence purchases generally tend to have long procurement cycles.
•On February 2 this year, the MoD had sent a proposal for obtaining an 'in-principle' approval of the Finance Ministry on the creation of the account. But according to the report tabled in Parliament on Thursday, its stand has changed after consultations with the Finance Ministry.
•The reasons for no longer seeking the fund are: the limited utility of such a fund, rules governing its creation that state the Government should have surplus funds (which is not so in the prevailing fiscal situation), and assurance from the Finance Ministry for additional funds, if required.
📰 Towards a clean-up
Clearer policies and investment in the right systems are needed to meet sanitation goals
•The Swachh Bharat Mission is a high-profile national programme enjoying extraordinary political and budgetary support. With its subsidy-based mass toilet-building programme, it has put up millions of individual house latrines in rural areas: a government-commissioned survey estimates that the coverage now extends to 62.45% of households, up from 39% in 2014. Among these households, nearly 92% of people who have access actually use the toilets. Big gaps exist, but these are encouraging trends, given the many positive outcomes that sanitation produces. The most important of these is reduced stress for women, who suffer silently in its absence. There are well-known gains to public health as well. Success can be measured, however, only through a rigorous assessment of how the new facilities fare over time. There is data from undivided Andhra Pradesh to show that household latrines built before the current Swachh programme lapsed into disuse because many rural households did not have a water source. The newer ones may meet the same fate without access to water. Also, Dalit houses tend to have lower coverage, hinting at structural difficulties in accessing schemes. Rural housing also needs stronger policy support, without which it cannot wipe out the deficit of about 60 million units that are needed to plan for universal toilet access.
•In the Centre’s assessment, Bihar, Jammu and Kashmir, Odisha, Uttar Pradesh and Telangana have particularly failed to upgrade rural sanitation, while Sikkim, Himachal Pradesh, Kerala, Uttarakhand, Haryana and Gujarat have exceeded the goals. Given the substantial funding available from the Centre, State governments cannot have a convincing reason for a poor record. The Union Ministry of Drinking Water and Sanitation, which has introduced a new district-level ranking, should persuade the more backward States to bring about infrastructure improvements. Yet, total Swachh will remain elusive, because even urban India has no comprehensive waste management plan, leave alone the less affluent rural areas. Nearly 60% of sewage generated in the cities currently flows untreated into rivers, waterways, lakes and the sea. The rules on segregation of waste remain on paper even in the bigger cities. It is now left to environmentally conscious citizens to adopt green practices, compost and sort their waste. The big metros generate a few thousand tonnes of garbage every day, and city managers focus their energies on transporting refuse to landfills. Many Indians do not see the waste they generate as their problem, and consider it to be someone else’s responsibility. Mahatma Gandhi saw in this attitude the pernicious roots of societal divisions, and campaigned against it. Achieving his vision for a clean nation will take more than symbolism — it needs clear policies and investments in the right systems.
📰 Note ban dents RBI income
Surplus transfer to Centre lowest since 2011-12
•Costs incurred due to the demonetisation exercise dented the Reserve Bank of India’s (RBI) income resulting in the central bank transferring less than half the funds — known as surplus — to the government compared with the previous year.
•For the 12 months ended June 30, 2017, the RBI will transfer a surplus of Rs. 30,659 crore to the Government of India, sharply lower than the previous year’s Rs. 65,876 crore. The RBI’s central board, which met on Thursday, approved the amount to be transferred.
•This is the lowest-ever surplus transfer by the RBI to the Centre since 2011-12 when it transferred Rs. 16,010 crore. RBI transferred about 80% of its income as surplus in the previous three years.
•“There could be a couple of reasons for this decline,” said Soumya Kanti Ghosh, chief economist, State Bank of India. “I think one reason is the cost of seigniorage, - which is higher the more the RBI printed notes.”
•There were costs of printing a huge amount of new notes to replace the notes rendered invalid following demonetisation.
New notes
•In November, the Centre had announced that Rs. 500 and Rs. 1,000 denomination currency notes were invalid and subsequently issued a new series of Rs. 500 notes and Rs. 2,000 notes.
•“It is quite possible that RBI has printed more small denomination notes like Rs. 100,” Mr. Ghosh said.
📰 Amended Banking Regulation Bill gets elders’ nod
It empowers the Reserve Bank of India to issue instructions to PSBs to act against major defaulters
•The Rajya Sabha on Thursday passed the Banking Regulation (Amendment) Bill, which empowers the Reserve Bank of India to issue instructions to the banks to act against major defaulters.
•The Bill, earlier passed by the Lok Sabha, will replace the Banking Regulation (Amendment) Ordinance, 2017.
•Replying to a debate on the Bill, Finance Minister Arun Jaitley said there was nothing wrong in banks giving out loans and trying to recover them. It was only on the strength of the banking finance that businesses expanded, jobs were created and the economy moved on.
•Responding to demands for making the names of big defaulters public, Mr. Jaitley said it was being done in the case of wilful defaulters. Only in cases of normal commercial transactions were the names not made public. Asked about the Panama cases, he said action had been taken pertaining to all foreign account details that had come.
Bad debts
•On the concerns raised by Congress member Jairam Ramesh about rising non-performing assets (NPA), Mr. Jaitley said they stood at Rs. 6.41 lakh crore by March this year. They were growing because of accumulated interests. Along with the stressed assets, they amounted to over Rs. 8 lakh crore.
•Some members wondered why the government was extending such powers to the RBI, to which the Finance Minister said the RBI was not merely a regulator.
•It also performed other functions like public debt management.
•Mr. Jaitley said after the insolvency law, which provides for a window of 180 days for debtors to settle the matter or face eviction and subsequent takeover of management by debt reconstruction companies, things had started improving. Debtors were now coming forward to settle unresolved issues with lenders.
•Earlier, in his opening remarks, the Finance Minister identified Steel, Infrastructure, Power and Textiles as the sectors with the most NPAs. Public sector banks were hit the most as big industrial and infrastructure programmes were supported by them in the hope that there would be further expansion.
•Due to the import of steel from China, domestic businesses had suffered. However, things were now looking up with the government introducing customs duty and minimum import price. The road sector had also started showing good results. Mr. Jaitley said the earlier rules for debt recovery were time-consuming. The new parallel mechanism was more effective.
‘Hasty legislation’
•What was the urgency to pass the Bill, he was asked. “It is already too late,” Mr. Jaitley said. “The capacity of banks to lend money to small creditors is being impacted, the growth is impacted.”
•Among those who participated in the debate were Samajwadi Party’s Naresh Agrawal, AIADMK’s N. Gokulakrishnan, TMC’s S.S. Roy, JD (U)’s Harivansh, CPI(M)’s Tapan Kumar Sen, BSP’s Veer Singh and BJD’s Sarojini Hembram.
📰 Britain seeks investments from India in housing, realty sector ‘beyond London’
Opportunities also exist in energy infrastructure, says U.K. minister Greg Hands
•The British government is pushing for Indian investment into the country’s real estate sector, beyond London, to support its drive to create more affordable housing across the country, among other things.
•“We have a diverse set of opportunities for inward investment from India,” Greg Hands, the Minister of State for Trade and Investment told The Hindu on Thursday. “We are particularly keen on getting investment beyond London as well — there are opportunities in real estate, infrastructure, particularly energy infrastructure.”
Affordable housing
•“I think that Indian investors could play a big role in our affordable housing agenda,” he added.
•While foreign investors including from China and Qatar have made big inroads into the U.K. real estate market, the country has seen limited investment (beyond private investments in housing or hotels) from India. The exception is the Lodha group, which has two luxury housing projects in London and has expressed its confidence about moving to new price categories and beyond the residential sector.
•At an event at the House of Lords for delegates of the Confederation of Real Estate Developers’ Associations of India (CREDAI), the Department for International Trade highlighted infrastructure and property development opportunities in northern England and the Midlands, including in and around Birmingham.
•“Real estate trends across the U.K. continue to be strong from offices in London to logistics in the Midlands to urban regeneration projects in Edinburgh,” Mr. Hands told the meeting. “Investors from across the U.K. are seeing stable and profitable opportunities and we are determined to see businesses seize these opportunities as we move forward towards Brexit.”
•With the next round of the U.K.-Indian joint economic and trade committee (JETCO) talks due to take place in London later this year, Mr. Hands expressed confidence in efforts to boost bilateral trade and investment.
•“JETCO is a very practical way of reducing obstacles to each other’s markets…we go through a series of specific sectors and the actual obstacles to doing trade and investment between our two countries,” he said.
•“We’d like to focus on the services industry and getting access. India is an enormous market and getting U.K. financial services and U.K. legal services better access is hugely important to us,” the minister said.
•“These issues will be a key part of those talks as well as the trade working group,” he said referring to the joint working group on trade set up to look at opportunities and obstacles to post-Brexit trade, including an FTA.
📰 No more vehicle insurance without pollution certificate
This will help in curbing emissions: SC
•In a decision with far-reaching consequences, the Supreme Court on Thursday directed that vehicles without valid pollution under control (PUC) certificates would not be eligible for the annual insurance.
•A Bench of Justices Madan B. Lokur and Deepak Gupta accepted the recommendations of the Environment Pollution (Prevention and Control) Authority (EPCA) for mandatory linking of PUC certificates with annual insurance.
EPCA recommendation
•This recommendation was made by the EPCA in its report on assessment of the Pollution Under Control programme in Delhi and the National Capital Region. This report was submitted in the Supreme Court in April this year.
•The court passed the order on a petition for stringent steps to curb air pollution.
•The Union Ministry of Road Transport and Highways was a party in the case and had responded positively to the EPCA report.
•The court agreed with the EPCA that the linkage between PUC certificates and vehicle insurance would go a long way in ensuring compliance and a subsequent dip in vehicular emission levels.
‘Important step’
•“This is an important step forward. The EPCA investigation has shown very poor level of compliance with the PUC programme. In Delhi, only 23% of vehicles come for PUC tests. With mandatory linking of annual vehicle insurance with valid PUC certificate, the compliance level can improve significantly — especially as the Supreme Court has directed its enforcement nationwide,” Sunita Narain, director-general, Centre for Science and Environment, said.
•The court also directed the linking of PUC centres with an online network and data centres to prevent manual tampering. It asked the State governments to audit PUC centres and set up a strong oversight system to ensure credible tests and emission results.
📰 By ’20, petroleum subsidy bill to halve
Food subsidy bill estimated to shoot up to Rs. 1.45 lakh crore by FY’20: Centre’s expenditure framework
•The government expects to more than halve its petroleum subsidy bill over the next three years, from Rs. 25,000 crore this year to just Rs. 10,000 crore by 2019-20. While fertiliser subsidies are expected to stay flat, the food subsidy bill is estimated to shoot up sharply from Rs. 1.45 lakh crore this year to Rs. 2,00,000 crore by 2019-20, as per the medium-term expenditure framework tabled by the finance ministry in Parliament on Thursday.
•Indicating a continued thrust on public spending to spur the economy, the finance ministry expects government’s capex to rise by 25% to Rs. 3.9 lakh crore by 2019-20, driven largely by greater spending on defence, Railways, road transport and urban development.
•Significantly, the finance ministry has asserted that any shocks to tax collections due to the introduction of the Goods and Services Tax (GST) will be absorbed in the current financial year itself, so the tax to GDP ratio may persist at the same level this year as last year — 11.3%.
•But in the next two years, the government is betting on an expansion of the tax base, citing gains from GST and increased surveillance efforts post-demonetisation. “The tax-GDP ratios are projected to be 11.6% and 11.9%, in 2018-19 and 2019-20, respectively,” the finance ministry statement said.
Subsidy management
•Food, fertiliser and fuel subsidies for which the Centre has budgeted over Rs. 2.4 lakh crore are expected to rise to Rs. 2.8 lakh crore by 2019-20, but the government expects the overall proportion of subsidies to GDP to come down from 1.4% to 1.3% over the same period.
•Following the abolition of price controls over diesel and petrol prices, the government has set its eye on rationalising kerosene and LPG subsidies, with a March 2018 target for eliminating the LPG cylinder subsidy altogether by raising prices by Rs. 4 each month. Efforts are also underway to bring kerosene subsidies under the direct benefit transfer regime or while making some States ‘kerosene-free.’
•“Going forward, the subsidy on petroleum products is likely to see a declining trend,” the medium-term expenditure framework statement noted.
•On the food subsidy due to about 80 crore beneficiaries under the National Food Security Act, the government said reforms have been initiated with six States automating all fair price shops and 72% of Ration cards being seeded with Aadhaar numbers.
•“One of the main reasons for an increase in food subsidy is to meet the repayment obligations of FCI (Food Corporation of India) to the National Small Savings Fund,” the statement explained.
•Interest payments amounting to Rs. 5.23 lakh crore this year, which constitute the largest component of the government’s revenue expenditure, are expected to rise nominally to Rs. 6.15 lakh crore by 2019-20, but the government is confident that there will not be any ‘upward pressure on interest rates’ owing to its borrowings.
•Citing a substantial Rs. 12,000 crore saving from interest payments estimated for 2016-17, it said this is indicative of ‘the economy moving towards a more benign interest rate cycle.’
📰 Army advances winter exercises in Sikkim
Defence sources deny reports of village being evacuated
•The Army’s 33 Corps, responsible for the security of the Sikkim border, has advanced its annual exercises to August-end. However, Army sources denied reports of a border village being evacuated.
•The Indian Army was tight-lipped about the move, even as some reports spoke of China beefing up its military presence in the vicinity of the standoff site in Doklam in recent days.
•According to sources, Sukna headquartered 33 Corps has already issued an operational alert for troop movement to hold its annual exercises before the end of August. Troop movement towards their areas of possible action during a conflict is already under way. The exercise would last two weeks.
•Traditionally, the annual exercises are held in September, sources said, before snow sets in. During the exercise period, troops will be exercising in their likely areas of operation during a conflict.
China’s warning
•The development comes even as the Chinese side continues to up its rhetoric. State-run China Daily on Wednesday warned: “The countdown to a clash between the two forces has begun, and the clock is ticking away the time to what seems to be an inevitable conclusion.”
•Meanwhile, reports had emerged from the border that residents of Nathang village, 35 km from Doklam, where the two sides are on a military standoff, have been asked to vacate. Rejecting the reports, defence sources said that “neither any village has been evacuated nor proposed by the Indian Army to be evacuated in Sikkim.”
📰 It’s time to focus on the toxic air we breathe
NITI Aayog’s draft energy policy ignores the health impacts of energy choices
•On June 27, 2017, the Niti Aayog released the draft National Energy Policy. It invited comments from the public to help strengthen its perspectives on some of the complex issues surrounding energy security. Several public policy research and civil society organisations partook in the process and critiqued the policy from various standpoints.
Public health and growth
•An important aspect that the draft policy ignores is public health, especially in the context of the energy mix envisaged under the NITI Ambition Scenario. The Ambition Scenario is a tool to arrive at a range of possible energy futures for the energy sector till 2040. The range presents the scenarios which India may follow if it were to follow a business-as-usual path versus if it were to transition to an ambitious pathway which is cleaner and more sustainable.
•In the document, there are 14 references to health, of which only five relate to public health in the context of household cooking fuel. The rest are analogies to describe the health of the coal sector and discoms. The World Health Organisation (WHO) reports that air pollution is the number one environmental health risk. In 2012, about three million premature deaths were attributable to ambient air pollution. The cumulative toll in terms of illness and impairment is likely to be greater.
•According to environmental health researchers, children represent the subgroup of the population most affected by air pollution and will be the primary beneficiaries of policies to reduce fossil fuel emissions. Moreover, research has also established links between public health and a nation’s economic growth. The estimated cost of ambient air pollution in terms of the value of lives lost and ill health in OECD (Organisation for Economic Co-operation and Development) countries, India and China is more than $3.5 trillion annually. Similarly, a joint study by the World Bank and the Institute for Health Metrics and Evaluation found that the aggregate cost of premature deaths due to air pollution was more than $5 trillion worldwide in 2013 alone. In East and South Asia, welfare losses related to air pollution were the equivalent of about 7.5% of GDP.
•Given that every sector’s decisions, including the energy sector, can have repercussions on determinants of health, the WHO’s Health in All Policies (HiAP) framework was established wherein health considerations are made in policymaking across different sectors, such as power, transport, agriculture and housing, that could influence health. In keeping with HiAP, the Health and Family Welfare Ministry (MHFW) established a steering committee with the aim to garner multi-sectoral commitment to address the issue of air pollution in India. Furthermore, the National Health Policy of 2017 views reducing air pollution as vital to India’s health trajectory. However, the National Energy Policy neither reflects nor supports the commitment outlined by the MHFW.
•Vision documents like the National Energy Policy have to strive to minimise the unavoidable health impacts of energy production, and their associated health costs, especially given the policy’s stated objectives of sustainability and economic growth. The policy should include a health impact assessment framework to weigh the health hazards and health costs associated with the entire life cycle of existing and future energy projects and technologies. For instance, there is no method under the current policy regime, as proposed by the NITI Aayog, to evaluate the health impacts of coal’s contribution to mercury and fine particulate pollution, or the risk of radiation with envisaged increase in nuclear power, or the occupational exposures to silica and cadmium during photovoltaic panel manufacturing.
•The WHO’s initial findings from an expert consultation on Health Indicators of Sustainable Energy provide a good outline to kick-start a similar exercise in India. It lays out a few core and expanded indicators that can help monitor the progress of a nation’s energy policy. The core indicators address issues related to health equity where health impact assessments become an integral part of energy policy design and implementation. The expanded indicators stress on the need to develop baseline data by generating emission inventories and source apportionment of urban air pollution that can inform mitigation and intervention policies. A nation’s energy policy can have a huge bearing on society and health. It is thus important to ensure that policies directed at energy security are compatible with public health goals.
📰 Failing India’s children
Dropping the no-detention policy in primary and middle school is retrogade
•The government’s proposal to amend the Right to Education Act and allow States to drop the no-detention policy at the primary and middle school levels will have far-reaching consequences for the education scenario. The proposal, which will give States the choice to detain children in classes 5 and 8, does not consider socio-economic factors and the state’s limitations in providing education, especially for the weaker sections.
•According to the Ministry of Human Resource Development, the dropout rate in elementary school was about 4% in 2014-2015. Detaining children on the basis of examinations will lead to an increase in the dropout rate. Parents may feel the child will be better off going to work as he/she can help bring additional income to the family and learn a skill for survival. Economically disadvantaged groups do not have access to private tuitions to train their children to perform better the following year in the same class. This will mean more youngsters out of school with no prospects of a productive future.
•Detention will become an added disincentive particularly for girls. They face numerous challenges including puberty (many drop out of school because they do not have access to low-cost sanitary napkins and toilets in schools), lack of schools closer home, and the burden of siblings and early marriage. There will be an increase in the number of child marriages and teenage pregnancies. In a society that considers the girl child a burden, and a country which has the second highest number of child marriages, parents will only find another reason to marry the girl off rather than send her to the same class for the second consecutive year. Cutting a girl child’s education short in the name of improving learning levels is certainly not in the best interest of ‘Beti Bachao, Beti Padhao.’
•The government’s latest proposal goes against the spirit of the RTE, which is a fundamental right guaranteeing free and compulsory education till the age of 14. According to the Right to Education Act: “The overall objective of age appropriate admission for these children is to save them from the humiliation and embarrassment of sitting with younger children. When older children are forced to sit in a class younger than their age, they tend to be teased, taunted, suffer lower self-esteem, and consequently drop out.” This logic also holds good for children who are made to repeat the same class while their classmates are promoted to the next class.
•Teacher shortage and quality of teaching and learning continue to be huge challenges in a country that depends on the private sector to deliver on the education front. Given teacher absenteeism and shortage of skilled teachers in many state-run schools, and the level of competition children from disadvantaged groups face in private schools, it is unfair to evaluate children in an examination and deny them promotion based on their performance.
•The RTE should not be curtailed for any reason. Many children from weaker sections have benefited from this right. Taking away the guarantee the Act offers up to the middle school level is retrograde.
