📰 HC asks U.P. for details on child deaths
Five PIL petitions seek independent probe into Gorakhpur hospital incident
•The Allahabad High Court on Friday directed the Uttar Pradesh government to explain and present before it the findings of its probe into the death of children at the B.R.D. Medical College Hospital in Gorakhpur.
•The government has dismissed allegations that 30 children died due to disruption of oxygen supply in the hospital on August 10 and 11.
•Hearing a bunch of five PIL petitions seeking high-level, independent probes into the deaths, a Division Bench of Chief Justice D. B. Bhosale and Justice Yashwant Varma directed the government to file a counter-affidavit.
•The court has fixed the next hearing for August 28.
•In a connected development, the Lucknow Bench of the Allahabad High Court also directed the State government and the Director General of Medical Education, U.P., to file a counter-affidavit within six weeks on a PIL petition filed by Lucknow-based social activist Nutan Thakur.
•Ms. Thakur has sought a judicial inquiry into the deaths, arguing that the Chief Secretary-level probe would be an “eyewash” as “the Chief Minister and various Ministers have already formulated their opinion about the matter to be enquired and have made it public.”
•A Division Bench, consisting of Justices Vikram Nath and Daya Shankar Tiwari, passed the order after hearing Ms. Thakur, U.P. Advocate-General Raghavendra Singh and Medical Education counsel Sanjay Bhasin.
AG opposes plea
•The Advocate-General opposed the petition, saying the government had taken every possible measure in the matter and shall take all possible actions as per the report submitted by the Chief Secretary.
•Saksham Srivastava, one of the petitioners in the Allahahad High Court, had prayed for a court-monitored, time-bound CBI probe into the deaths. The court said it would wait for a “satisfactory” answer from the State before considering the demands for higher-level probes, said Mr. Srivastava.
📰 No data from China on Brahmaputra this year
No information since May 15, says MEA
•Hinting at China’s responsibility for the current spate of floods across the northeastern States, India on Friday said Beijing had not shared any water-related data about the Himalayan rivers in the current year. The Ministry of External Affairs said under an agreement, China had committed to share annual hydrological data with India but the same has not been shared this year.
•“There is an existing mechanism named India-China Expert-Level mechanism... started in 2006 to share hydrological data during the flood season for Brahmaputra and Satluj rivers. Under the MoUs, the hydrological data is to be shared between May 15 to October 15 every year but from May 15 till now, we have no data from China. The last meeting of the mechanism was held in April 2016,” said Raveesh Kumar, spokesperson of the Ministry of External Affairs.
Cooperation necessary
•The spokesperson hinted at the necessity for regional cooperation to control floods and explained that the responsibility of sharing data is with China as it hosts the points of origin of the Brahmaputra and Satluj.
•Mr. Kumar also flagged Nepal’s role in controlling floods in Bihar, saying External Affairs Minister Sushma Swaraj had discussed the issue with Nepal’s Deputy PM.
•The spokesperson also addressed the ongoing India-China standoff at Doklam and declined to give a timeline to the standoff adding, “I am not an astrologer and since I am not an astrologer so I will let it pass.” He however noted a racially motivated skit that appeared in the Chinese official media earlier in the week and said, “I will not dignify this with an answer.”
📰 NHRC issues notice on Rohingyas
They are no doubt foreign nationals but they are human beings, it tells Centre
•The National Human Rights Commission on Friday issued a notice to the Union Ministry of Home Affairs over the planned deportation of about 40,000 Rohingya immigrants from Myanmar, asking for a detailed report within four weeks.
•Taking cognisance of media reports, including The Hindu’s on Thursday about the government’s plan to deport the Rohingyas by setting up “detention centres”, the NHRC observed that the “refugees are no doubt foreign nationals but they are human beings.”
‘They fear persecution’
•“Before taking a big step, the Government of India has to look into every aspect of the situation, keeping in focus the fact that the members of the Rohingya community, who have crossed into India and are residing here for long, have a fear of persecution once they are pushed back to their native country,” it said in a statement.
•While stopping short of commenting on the plan, the NHRC highlighted the Supreme Court’s decisions that say the Right to Life and Personal Liberty under Article 21 of the Constitution apply to all, irrespective of their citizenship.
•It observed that its intervention in the matter was appropriate given the potential implication on the human rights of the Rohingyas.
•The NHRC said that though India was not a signatory to the 1951 Convention on Refugees and the 1967 Protocol, it was a signatory to many United Nations and world conventions on human rights. “Till today, the country has evolved a practical balance between human and humanitarian obligations on the one hand and security and national interests on the other,” it said.
📰 Doklam crisis echoes loudly in South and South-East Asia
Japan’s support to India irks China but countries — from Nepal to Philippines — keenly watching the subtle power shifts without taking sides.
•From Nepal to the Philippines, countries in South and South-East Asia are keenly observing the Doklam crisis, wary of taking sides, but also keeping a close eye on subtle power shifts that the unfolding crisis embroiling China and India may reveal.
•As expected, Pakistan has thrown its weight behind China, its “iron brother.” During a carefully choreographed visit to Islamabad by China’s Vice Premier, Wang Yang, on the occasion of the 70th anniversary of Pakistan’s Independence, the Pakistani side backed all positions adopted by China, ranging from Doklam to the South China Sea (SCS), and anything that fell in-between.
Pak rues ‘Indian intrusions’ into China
•The Associated Press of Pakistan (APP) reported that during talks with the visiting leader, Pakistan’s President Mamnoon Hussain “expressed concern over the reported Indian incursions into the Chinese territory and said that Pakistan fully supports the stance of China on the issue.” He also lauded Beijing’s “adept handling of the issue and reiterated that Pakistan stands by China on the issues of Tibet, Sinkiang (Xinjiang) and South China Sea.”
•On the other end of the spectrum, in the Asia-Pacific, Japan has become the first G-7 country to support India’s position on the Doklam issue. In New Delhi, Japan’s Ambassador to India Kenji Hiramatsu acknowledged that the Doklam area “is disputed between China and Bhutan,” countering Beijing’s claim that the stand-off was taking place on Chinese sovereign territory. His remarks drew a sharp rebuke from the Chinese Foreign Ministry spokesperson Hua Chunying, who asserted on Friday that she wanted to “remind him [the Japanese Ambassador to India] not to randomly make comments before clarifying relevant facts.”
Nepal plays it safe
•In South Asia, Nepal, sharing common borders with India and China, has expressed neutrality on the Doklam standoff, and called for a diplomatic and peaceful solution to the crisis. But in the Asia-Pacific, the Doklam face-off is being conflated with regional contests between China and several members of the Association of South East Asian Nations (ASEAN), including the SCS.
•“The escalating tensions [in Doklam] may have culprits on both sides of the fence, but for many in East Asia it underscores the fact that China is embroiled in multiple territorial disputes across the Eurasian landmass and rim land, “says Richard J, Heydarian, a Manila-based scholar with the De La Salle University. In an emailed response to The Hindu, he points out that that the Doklam crisis puts to test “the whole thesis of a ‘stable, multipolar’ post-American world, since Asia’s two giants are now at loggerheads with no side seemingly willing to back off.”
•The Hong Kong-based South China Morning Post (SCMP), quoting foreign policy specialists is reporting that the protracted border dispute between China and India in the Himalayas “has created a ‘spillover effect’ as China’s neighbours become unsettled by its tough handling of the escalating conflict between the two Asian giants.”
ASEAN positive over Indian presence
•The daily points out that the ASEAN “ generally regards a robust Indian presence in the region as a useful deterrent against China, which has been increasingly assertive in its approach to handling territorial issues, as has been the case in the Himalayas.”
•The newspaper quoted Thitinan Pongsudhirak, an international relations scholar at Bangkok-based Chulalongkorn University, as saying that Thailand “would see the benefit of China being challenged in the South Asia theatre.”
•“India’s standing up to China can only be a boon for South-East Asian countries even when they don’t say so openly,” he observed. “Any major power keeping China in check can only yield geopolitical benefits to South-East Asia as the region is wary of China’s growing assertiveness.”
•The daily quoting analysts says that the recent developments “have wide strategic implications — pointing to how Asia is increasingly defined by the China-India rivalry and the renewed tensions between the two Asian giants.”
📰 Bengal not for central recruitment of judiciary
It’s against federalism principle: Bengal
•The West Bengal government on Friday advised the Supreme Court against evolving a central selection mechanism for appointing judicial officers in State subordinate judicial services, saying it is against the principle of federalism practised in Indian democracy.
‘Proper legislation’
•“Don’t rush into an area that is uncertain and unknown... first fully understand the implications. If at all, such a mechanism should come through proper legislation,” senior advocate Rakesh Dwivedi addressed a Bench led by Chief Justice of India J.S. Khehar.
•Mr. Dwivedi said a central mechanism would usurp the constitutional duty of the State High Courts under Article 233 of the Constitution.
Constitutional duty
•The Article provides that the Governor should appoint district judges in consultation with the High Court concerned.
•Mr. Dwivedi said this constitutional duty was the cornerstone of independence of State judiciary.
•“There is federalism at work... Judiciary is not a monolith,” he submitted.
📰 Getting charged up
Research and smart trade agreements are needed to realise India’s ambitious electric vehicles target
•Piyush Goyal, Union Minister of State with Independent Charge for Power, Coal, New & Renewable Energy and Mines, recently announced that only electric vehicles (EVs) will be sold in India from 2030. The current National Electric Mobility Mission Plan (NEMMP) has set a sales target of only 5-7 million EVs and hybrid electric vehicles annually by 2020. On the other hand, the Indian automobile market, which includes two-, three- and four-wheelers, is expected to clock an annual sales figure of around 23 million by 2030. Replacing these with EVs would require a significant push as far as vehicle-charging infrastructure and batteries are concerned.
Vast opportunities
•The transition would require a battery capacity of about 400 GWh (gigawatt hours) each year, equivalent to increasing the current global EV battery production by a factor of five, just to cater to the Indian EV market. This gigantic demand for batteries is an ideal opportunity for the domestic manufacturing industry and job creation. However, India has missed many such opportunities to be integrated in the global value chain for solar cells and wafers and electronics manufacturing due to a lack of suitable policy support. This has led to an ever-increasing import bill for electronics products, currently the highest after oil and gold. The annual EV battery market is expected to be around $30-55 billion and India cannot afford to fulfil the demand solely through imports.
•Different variants of lithium-ion batteries are predominantly used in electric vehicles. Manufacturing lithium-ion batteries would require critical minerals such as cobalt, graphite, lithium and phosphate. Among them, lithium is of particular importance.
•The resource endowment is limited to only nine countries and 95% of global lithium production comes from Argentina, Australia, Chile and China. The recent demand surge in the electric mobility market has already resulted in a twofold increase in lithium prices from $4,390 per tonne (in 2013) to $9,100 per tonne currently. It is estimated that India would require about 40,000 tonnes of lithium to manufacture EV batteries in 2030, considerably higher than the current annual global lithium production of 32,000 tonnes. To meet India’s demands amid a global surge in electric vehicle demand, the entire mineral supply chain needs to be overhauled and expanded.
China and U.S. in the lead
•China and the U.S., which have ambitious electric mobility targets, are way ahead in the race to secure lithium supplies. China, with the second largest reserves of lithium, is making strategic moves to control the majority of international lithium mining assets. China’s Tianqi Lithium holds a majority share in the expansion of the Talison Lithium plant in Australia, which would make it the single largest producer of lithium globally upon completion. Also, its equity investors are planning to buy stakes in Chile’s lithium mining companies.
•Similarly, U.S.-based lithium mining companies have already secured mines in Chile and also hold significant shares in several upcoming mining projects in Australia. Tesla, which plans to manufacture half a million EVs annually by 2020, is investing in R&D to reduce supply risks. It has partnered with Pure Energy Minerals to extract high-purity metal from Nevada, using radically different and cost-efficient production technology.
•In order to avoid a scenario like the one that played during the oil crises of the 1970s and the price shocks of 1980s and 2000s, it is imperative that India secure mineral supplies for its domestic industry by acquisition of overseas assets such as mineral reserves and the associated production.
•India has long-term trade relations with lithium-producing countries in Latin America through preferential trade agreements (PTAs). A recent extension of the PTA with Chile provides India some tariff concessions for lithium carbonate imports. India needs to further diversify the supply risk by including lithium in existing PTAs or establishing new PTAs with other lithium-producing countries. However, the move will only enable and not ensure risk-free mineral supplies to India.
Trade links, R&D, recycling
•There is a need to formulate policies incentivising domestic public and private mining companies to invest in overseas lithium mining assets.
•Simultaneously, India must focus on creating a vibrant battery research and development ecosystem domestically. Currently, the domestic battery market is largely dominated by lead-acid battery technologies. Research should focus on developing alternative technologies containing minerals with low supply risks and battery recycling techniques to recover associated minerals and materials. Recycling lithium batteries present in the waste stream will significantly reduce the burden in procuring fresh resources.
•Mr. Goyal has repeatedly highlighted ‘fuel security’ as a key driver in the push for electric vehicles. However, given India’s limited hold on critical lithium reserves and concentration of production in the hands of a few, fuel security concerns could still be the same with ‘white gold’ lithium, replacing ‘black gold’. Policies that incentivise domestic manufacturing, address the need for virgin resources and recycling of used batteries, while constantly pushing R&D for substitutes and alternatives are vital to secure electric mobility.
📰 Cause for caution, not gloom
Macroeconomic stability has been a hard-won battle. We must remain mindful of the lurking dangers
•The much debated Economic Survey II presents a mixed picture of the Indian economy. It highlights some obvious strengths but “optimism about the medium-term is moderated by a gathering anxiety about near term deflationary impulses”. How valid is this?
•This year’s Economic Survey is innovative in more ways than one. This is the first time that a second volume is being presented containing a “backward looking review” and “historical data tables”, and it subsumes the mid-term economic analysis usually presented in December. Some key chapters included in this volume on agriculture, industry, infrastructure should normally have come in Volume I itself. These were displaced by the dominance of more preferred themes like Universal Basic Income, and “India on the Move”. Over the years both the presentation and the format of the Economic Survey have under gone fundamental changes. For most of us, the Economic Survey was a document presented on the eve of the Annual Financial Statement. It was, by and large, an analytical underpinning and precursor of the Budget. There was a meaningful connection between the Economic Survey and the Budget proposals.
•For some time, this relationship has ceased. The Economic Surveys have come to increasingly reflect the predilections and preferences of its authors, raising the question whether Economic Surveys are designed to trigger intellectual debate and become incubators of nascent ideas. However, seeking a congruence and connect between the prognosis and prescriptions for the economy with the budgetary proposals would not be inappropriate. That said, this Economic Survey has transparency and candour. The Preface has a disclaimer to say that the update in the State of the Economy chapter in this volume “can be attributed to the CEA, with the Economic Division taking the lead for other chapters”. This can lead to contradictions and asymmetry between the different segments of the report.
Rate of growth
•Leaving aside these issues, what are some key conclusions?
•One, on the growth rate, while adhering to the forecast in Volume 1 for real GDP growth of 6.75%-7.5% this year, it suggests that the balance of risk has shifted to the downward side of the range. In plain language, this means a sub-7% rate of growth.
•Just one day prior to the Economic Survey, the Finance Minister presented to Parliament the Medium-Term Expenditure Framework statement in pursuance of the Fiscal Responsibility and Budget Management Act, 2003. This was “essentially a vertical expansion of the aggregates of expenditure in the fiscal framework presented with the Annual Financial Statement to provide closer integration between Budget and FRBM Statements”.
•In this statement, some of the subsequent developments both on the revenue and expenditure side like the Goods and Services Tax (GST) and the Seventh Pay Commission have also been factored. This framework assumes that nominal GDP growth for the current (2017-18) and subsequent two years would be 11.75%, 12.3% and 12.3%, respectively. Assuming inflation to be in the acceptable range of about 4%, the expected growth would be 7% plus.
•No doubt, the savings and investment ratio has declined in recent years. To sustain the projected rates of growth, the savings-investment ratio would need to be increased, which is contingent on continuation of structural reforms, reducing public dissavings through privatisations such as Air India and other measures to boost savings to earlier high figures in the mid-thirties. The demand boost inevitably comes from domestic consumption which accounted for about 96% of GDP growth in FY 2017. This is likely to continue.
•The projections also implicitly accept the fiscal deficit of 3.2% in the current year and 3% for the subsequent two years.
Inflation targets
•Two, on inflation, the Economic Survey seeks to demonstrate that for sustained 14 quarters the actual inflation (WPI-CPI) has undershot the projections made by the Reserve Bank (RBI). It argues that India has moved to a low inflation trajectory, given supply-side elasticity in agriculture and long-term softening of global oil prices due to alternatives such as shale and increasing competitiveness of renewable fuels, particularly solar. It concludes that in the Indian context real neutral interest rates hover around 1.25-1.75% and that the present rate is about 25-75 basis points above the neutral rate. In short, a deeper cut in the interest rates would be warranted, given that current inflation at 1.5% is running well below the 4% target.
•On monetary policy, the central bankers have all over made calculations (based on conservative assumptions) and undershot inflation targets. It is equally ironic that the data in the last two days suggest that both the consumer price index (CPI) and the whole-sale price index (WPI) have risen quickly in July primarily led by food inflation and the housing index reflecting the 7th Pay Commission recommendations, and so did the core index. Analysts now expect the underlying inflation to rest at the 4% ballpark figure, which also happens to be the RBI target.
•It is said that in politics a week is too long a time. This could be equally said in economics, for events in the last one week have questioned the inflationary projections made in the Survey. At any rate, monetary policy cannot be on a roller-coaster ride. Prudence would prompt adherence to the analysis of the Monetary Policy Committee and judgment on interest rate calibration. Besides, multiplier benefits from low interest rate regimes are contingent on deeper structural reforms.
•Three, regarding the exchange rate, real effective interest rates have appreciated significantly. The RBI has the unenviable challenge of managing significant inward capital flows with exchange rates which do not penalise domestic industry through a premium on cheaper imports. However, export competitiveness needs interventions which go beyond dependence on the exchange rate by way of improved logistics, infrastructure and altering the mix of commodities and destinations to meet new demand preferences.
•Four, fiscal tightening by States due to Ujwal DISCOM Assurance Yojana (UDAY), farm loan waivers, declining profitability of some key sectors like power and telecom, the shadow of unresolved twin balance sheet problems and transitional issues of the GST are contributory to deflationary pressures. Normally understood, farm loan waivers, by reducing the indebtedness of farmers, enhance their income with a positive impact on consumption and demand. The constriction of capital expenditure for adherence to fiscal limits is somewhat mitigated by past experience. The quantum of actual farm loan waivers inevitably turns out to be somewhat smaller than the initial estimate; but more importantly, their impact on State finances is spread over a typical three-year cycle.
•Equally, UDAY is designed to clean up the balance sheets of electricity boards in the short run and is expected to improve management of electricity boards. Appropriate action on tariff fixation, regular billing cycles, monitoring timely collection by distribution companies is an integral part of the UDAY package. This would also benefit States’ finances. In a complex federal polity, States in financial distress may need hand-holding. Cooperative federalism entails amelioration of the transient financial distress experienced by States. While these issues would need to be holistically addressed by the 15th Finance Commission, their recommendations are two years away. Short-term State-specific measures would need to be innovatively conceived. The recent initiatives to improve the fertilizer mix through extensive soil-testing along with the Pradhan Mantri Fasal Bima Yojana will prove beneficial to stabilise farm incomes. Nonetheless, the prescriptions contained in the chapter on agriculture by way of extending assured irrigation benefits, better market linkages for producers to prolong the shelf life of perishable commodities, improving the sale of commodities deserve priority action.
Rekindling investment
•The Economic Survey II cautions policymakers of a possible deflationary cycle. Faster resolution of the twin balance sheets is critical to rekindling private investment. Equally, accelerating the pace of agricultural reforms, targeted capital expenditure, improving ease of doing business and the multiple infrastructure initiatives, particularly in roads and power, are integral to any coherent action. Similarly, stressed sectors like telecom and power need speedier resolution.
•Macroeconomic stability has been a hard-won battle. The centrepiece lies in continued fiscal rectitude and inflation targeting. No doubt, macroeconomic stability must also spur growth and the two objectives need constant recalibration. It has been famously said, “the basic prescription of preventing deflation is not to get into it in the first place.” These lurking dangers and the cautionary note of the Economic Survey II are a valuable contribution.
