📰 For China, ’64 n-test was meant as a ‘head-on blow’ to India
K. R. Narayanan, as China Division head, warned that the test, coming after 1962 war, would further weaken India’s position on border claims
•Beijing believed that it had delivered a “head-on blow” and sent shock waves through India after its first-ever nuclear test conducted on October 16, 1964 — two years after the border war fought by the two countries.
•A cable sent from the Chinese Embassy in New Delhi to Beijing at the end of October 1964 said the “success” of its nuclear test had led Prime Minister Minister Lal Bahadur Shastri to get various countries to “censure” China, but they refused to go along with him.
•India, the cable said, was engaged in an internal debate on how to respond to China’s nuclear test.
•“The current issue for India is not whether it should produce nuclear weapons but whether it can do so,” the communication said, concluding that Delhi would actively strive to do this to enhance its international status. The cable is available at the Wilson Centre’s Digital Archive.
Countering U.S. presence
•The Chinese also believed that the United States was engaged in exerting its influence on a weak India after the 1962 war.
•“But now the United States wants to control India and manage its relationship with Pakistan at the same time, thus it is unwilling to help India manufacture atomic bombs.”
•The Embassy also believed that China’s newly acquired nuclear status would also enhance the chances of regaining its permanent seat on the United Nations Security Council from Taiwan, clearly linking the two. “As we [China] now had a bigger chance of regaining our place in the United Nations, India is hoping to become a permanent member of the United Nations Security Council with Soviet support,” the cable added.
•In the Indian assessment, the Chinese nuclear explosion would “alter the political balance in Asia and disturb profoundly the status quo in the world”.
•As Director of the China Division in the Ministry of External Affairs, K.R. Narayanan, who went on to become President of India, linked the Chinese nuclear test with India’s options relating to the border dispute.
📰 Will Nirmala break glass ceiling in military?
Facts show that the Services are the last bastion of male dominance, with women even denied a permanent commission
•Despite the latest move by the Army to induct 800 women into its ranks, cold facts show that the Indian military is the last bastion of male dominance in the government. Many women in uniform are hoping that the country’s first full-time woman Defence Minister will take bold decisions against what they allege are systemic discrimination against women.
•Though Indian military has only a minuscule number of women in service, a noticeably large number of them are fighting court cases or complaints against discrimination in various forums.
•By information given in Parliament as on early 2017, there are 3,578 women officers in the three services. This broadly represents about 3.64% in the Army, 4.49% in the Navy and 13% in the IAF.
•Besides, about 5,000 Military Nursing Service members are also in uniform.
•Over the past three years, with the government’s focus on women’s empowerment, the three services have taken some steps for expanding the avenues for women, but several issues still remain. However, recruitment numbers of the past few years are almost at the same level with a decline in women joining the Army.
•While the issue of women in combat roles gets traction often, another aspect mostly neglected is the issue of permanent commission.
Permanent commission
•“With the new Defence Minister being a woman, I hope something beneficial for the women fraternity will come. We will request time from her once she takes charge,” said Commander Prasannaa Edayilliam, an Air Traffic Control officer who retired from service in 2008 and since 2010 has been fighting a legal battle for permanent commission, which is now in the Supreme Court. The case is likely to come up for hearing before the Supreme Court on September 15.
•The Navy has since opened up seven streams for women. These include law, logistics, air traffic control, education and Naval Armament Instructor (NAI).
•“These were opened for permanent commission prospectively from 2009 onwards. NAI was opened up this year. These are areas where one doesn’t have to go to sea and they can get promoted,” a senior officer said.
•The Navy is now taking women as pilots and observers on fixed-wing aircraft. This is the Short Service Commission (SSC) because they cannot be promoted as they cannot do sea service.
Bigcatch
•The biggest catch is that women officers are taken under the SSC which is up to 14 years. Due to this, those leaving are left without any pension as pensionable service is 20 years.
•Commander Edayilliam stated that the ATC officers’ course that they had undergone at the Air Force Academy in Dindigul was not recognised at par with the civil course at the Civil Aviation Training College, Allahabad. “So it is extremely difficult to get a second career based on it,” she told The Hindu .
•“Navy is a wonderful service. We want more and more qualified people to join it,” she added, longing for the uniform she once donned.
•This is where there would be great expectations from Ms. Sitharaman to understand the intricacies and open the services. A group of Military Nursing Service members have been fighting the government for over a decade, demanding that they be treated as full officers.
•The Supreme Court has taken a firm stand, asking the military to ameliorate their condition. They are also hoping that the new defence minister will appreciate their plight.
Parrikar’s promise
•Former Defence Minister Manohar Parrikar had stated that the three services would induct women in combat roles in a phased manner as infrastructure had to be created.
•The Indian Air Force has long had women pilots in transport and helicopters streams and last year commissioned three women fighter pilots on an experimental basis.
•Similarly, the Army gives permanent commission for women only in education, law and medical streams. But given the operational conditions and spread, the Army has been the most reluctant to take women in combat roles.
📰 78% of PM’s package sanctioned: officials
•The Centre sanctioned 78% of the Rs. 80,000-crore development package for Jammu and Kashmir announced by Prime Minister Narendra Modi in 2015, Home Ministry officials said on Saturday.
•Home Minister Rajnath Singh reviewed the progress of the implementation of the projects under the package at a meeting with Chief Minister Mehbooba Mufti, Deputy Chief Minister Nirmal Singh, Chief Secretary B.B. Vyas and officials from his Ministry here.
•The Centre has already sanctioned Rs. 62,599 crore which amounts to 78% of the total cost of the package, officials said after the meeting.
•The total cost of the package is Rs. 80,068 crore for 63 projects. The package includes assistance for rehabilitation of flood- affected people; Rs. 1,200 crore were given for the purpose and the project is complete now, they said.
•The project also includes the four-laning of the Chenani-Nashri section of the National Highway, which has also been completed. The cost of this project, including the longest road tunnel in India, was Rs. 781 crore.
📰 Is India’s GDP growth falling?
What happened?
•As per the estimates released by the Central Statistics Office on August 31, India’s economy, as measured by the gross domestic product (GDP), grew by 5.7% in the first quarter of 2017-18, compared with 7.9% in the same quarter a year ago. This is the slowest pace of GDP growth recorded since the NDA came to power in May 2014. India grew by a strong 9.1% in the quarter from January 2016 to March 2016. The growth recorded in the subsequent quarters was 7.9%, 7.5%, 7% and 6.1%. So this is the fifth quarter in a row that the growth has slipped, with the pace of decline picking up momentum in the last two quarters. The gross value-added (GVA) in the economy grew at 5.6% between April and June, the same pace as the previous quarter, but sharply lower than the 7.6% growth in the first quarter of the last year.
Is this surprising?
•Most economists didn’t expect a sharp uptick from the tepid 6.1% mark recorded in the January-March quarter this year, yet few anticipated a decline to 5.7%. The government has sought to divorce the growth trend from the impact of its decision to demonetise Rs. 500 and Rs. 1,000 currency notes last November, but economists believe the lingering effects continue to jolt sentiment. Growth, the government has argued, had begun to slow even before the move to suck out 86% of the currency notes in circulation. With the currency levels reverting close to the pre-demonetisation ‘normal,’ the bigger disruptive force affecting the latest GDP growth numbers was the introduction of the Goods and Service Tax (GST) from July 1. Businesses nationwide whittled down production in the April-June quarter and focussed on off-loading the existing stock, thanks to the uncertainty about how the new indirect tax regime will treat earlier tax credits on inputs.
•This also impacted GVA numbers, as a lot of the inventory that was off-loaded had already been accounted for in the value of production in the earlier periods. Moreover, while firms saw a healthy growth in sales, their margins were dented by a spurt in commodity prices spiking input costs. Lastly, wholesale price inflation turned negative at this time last year, so growth numbers appeared higher as a result of their statistical impact, which is no longer the case, the government has argued.
Which sectors are hit?
•The manufacturing sector, as a sub-set of industry, led the growth tumble, expanding by just 1.2% in the quarter, compared with 5.3% in the previous quarter and 10.7% a year ago. This was the worst quarter for Indian manufacturing in five years. Overall industrial output also collapsed to 1.6% growth from 7.4% a year ago and 3.1% in the previous quarter.
•The construction sector that has been the bulwark of job creation grew by just 2% (in GVA terms) as it grapples with the headwinds of a new regulatory regime (RERA), the GST and leveraged balance sheets of developers. Mining GVA shrank by 0.7%, compared with a 0.9% dip last year.
•The services sector offered some semblance of stability, growing at 8.7% compared with 9% in the same quarter last year, but a deeper look suggests this was driven by a rise in trade-related GVA to 11.1% (from 8.9%). This is proof of sorts that the destocking in manufacturing was reflected in higher volumes (often discount-driven) in the trade segment. Agriculture GVA dipped from 2.5% in the first quarter of last year to 2.3%, though crop output increased healthily. Low prices for crops apart, it appears that other agriculture-related activities, such as animal husbandry, have dragged down the sector’s overall growth.
What lies in store?
•The Statistics Office hopes that growth will rebound in the current quarter, “subject to how efficiently companies adapt themselves to the GST.” The new NITI Aayog Vice-Chairman Rajiv Kumar said growth would return to 7%-7.5% between July and September. Analysts are reworking their growth hopes for the full year — rating agency Crisil has curbed it from 7.4% to 7%. Finance Minister Arun Jaitley has admitted that the latest growth print poses a challenge for the economy and the government needs to work harder in the coming quarters to spruce up growth. Watch out for policy actions to spur investment and job creation.
📰 India, Sri Lanka talk on bilateral issues
•Continuing the discussion on crucial bilateral projects, a delegation-level meeting was held in New Delhi on Saturday between the newly appointed Sri Lankan Foreign Minister Tilak Marapana and India’s External Affairs Minister Sushma Swaraj. The visiting Minister, who took charge on August 15, also met Prime Minister Narendra Modi.
•“The two sides discussed the entire gamut of bilateral relations and ways to further deepen the historically close and friendly relations between the two countries,” said a statement issued by India’s Ministry of External Affairs (MEA).
•Saturday’s discussion is significant as in recent weeks India has been seeking faster implementation of bilateral projects. During her visit to Colombo last week to attend the Indian Ocean Conference, Ms. Swaraj held discussions with Sri Lankan President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe. A top source in Colombo told The Hindu that she urged the government to swiftly finalise the Mattala airport project near Hambantota — which India is interested in running — as well as a container terminal at the Colombo Port.
📰 Will the BRICS thaw create a new bond?
•Amid flight delays owing to a typhoon, nearly 3,000 journalists from across the globe trickled into the coastal hub of Xiamen, the venue of the ninth summit of the Brazil-Russia-India-China-South Africa (BRICS) grouping, held earlier this month.
•For the next few days, a sprawling media centre would be their home. Every half an hour, shuttle buses from designated hotels brought them to their new workplace. The last bus would leave the venue at 10.30 p.m., long after the sun had gone down in the neighbouring South China Sea.
•The Chinese had ensured that all the arrangements were spot on, to the last detail. Journalists could access 700 work stations connected with high-speed Internet, plug-in audio links, and two electric points. Giant screens in the media hall showed the opulent red-carpet welcome for the heads. No effort was spared to ensure that messages coming from the top leaders were relayed to the media in near-real-time.
•The hosts had also ensured that a vast dining area, serving a wide variety of food, was in full swing right from the crack of dawn. It met the expectations of most of the media assemblage, though the vegetarians may justifiably have had something to complain.
Impact of Doklam
•For the Indian media, the Doklam stand-off naturally coloured the coverage of the BRICS summit. With the convergence of the five emerging economy heads, a new door in India-China ties seemed to be opening, as word was out soon after the conference began that a meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping had been confirmed. But how wide would this door be set ajar by the two principals? Would it be tightly shut once again by new headwinds that may be brewing, but were yet beyond perception?
•China’s decision not to object to the listing of Pakistan-based outfits — like the Jaish-e-Mohammad (JeM) and the Lashkar-e-Taiba (LeT) — on the list of international terrorist groups imparted guarded optimism ahead of the Modi-Xi parleys.
•Critics are right in pointing out the similarity in the statement on counterterrorism read out at the BRICS summit and the language used in slamming extremism in the closing document of the Heart of Asia conference in Amritsar.
•But there are crucial differences between the two. First, the Amritsar declaration was at a ministerial level. The one at BRICS in Xiamen was from the heads of state, imparting weight to the document. Second, the Chinese had earlier rejected the listing of the JeM and the LeT on the world terror roll. But, in Xiamen, the Chinese relented, marking a clear shift in their stance. How durable this shift would be is a pertinent question. Will it translate, with China’s endorsement, into a much-sought-after ban on Masood Azhar, head of JeM, when his status is debated at the UN 1267 committee in October?
•Next month, China is heading into a party congress, which will change the leadership complexion in Beijing — a development that is likely to impact the future course of India-China ties.
•Pakistan’s response to the signals emerging from Xiamen will also be crucial. A mode of denial will be unhelpful. But in case Islamabad undertakes a “clean break” from its past as advocated by its Foreign Minister Khawaja Asif, the BRICS summit may prove crucial in rebooting India’s ties not only with China, but possibly with other countries in its neighbourhood, including Pakistan.
📰 The curse of necessity
Defeating a culture of abuse will involve a judicious and fearless use of words
•Having just spent two months in a foreign city where I don’t speak the local language, I realise I often can’t tell whether two people are shouting insults at each other or just talking loudly. This is especially the case when I hear voices from the street and can’t see the faces of the people involved. The other day I realised that I would have no idea if someone were to abuse me in Tamil, Telugu, Malayalam, or Kannada, especially if they kept a straight face or even said the most nasty things with a smile. On the other hand, my linguistic radar is equipped to catch all sorts of abuse and abusive intonations in the Indian languages I do know.
Where abuse is taboo
•Another interesting thing about abuse and curse words is that in India they used to be closely related to class. This has changed radically in the last few decades, but it was not uncommon for children in a vast chunk of our society, across different middle classes, to grow up in a culture where strong abuse was as taboo as eating some proscribed food. As a child growing up in a certain Gujarati Vaishnav, Sanskrit-loving ‘middle’-class, it was almost hardwired into me that you didn’t utter even the mildest ‘bad word’. The worst I heard from my parents was the word for donkey, and ‘ mala ’ which was a euphemism for ‘ saala’. As far as English was concerned, I remember being seriously ticked off for using ‘gosh’ and then later ‘damn’, with the b-word that implies illegitimate birth being the outer limit of imaginable abuse. If I argued that our family was verbally repressed, I was told the story of Nagar Brahmins who were far more extreme — they would walk all the way to the garbage dump outside the village to whisper any abuse welling up inside.
•As I grew older, I realised that both the working classes and some of the extremely rich were far freer in their expression. Growing up with people from different backgrounds, my vocabulary quickly expanded to include a lot of spicy words. I also realised that the abuses and insult-phrases were just delivery vehiclesl; the real payload lay in the tone and context of the utterance. The same incest-implying word could be a deadly epithet leading to fisticuffs or an expression of the greatest brotherly love. A corollary of this was the understanding that words don’t necessarily need to be abuses to cause humiliation or pain. In fact, it was often the powerless person who would ineffectively spray you with a limited curse-filled vocabulary whereas the powerful actor could cause you real harm by simply quoting from a rule book, deploying a number from the IPC code, by just a look or a small, grunting noise directed at his subordinates.
Increasing acceptability
•Over the last fifteen years or so, the Indian urban middle class has become much more accepting of abuses that were once considered unutterable or ‘lower class’. This has come about due to several factors. For one, Hollywood opened up its language a little earlier and this has had an effect on our own commercial cinema. Parallelly, the more freely cursing north Indian culture has colonised many parts of the country, eliciting other languages to also bring their choice abuses into public discourse. Whereas Indian news channels and print media still stick to certain restrictions, the very different ‘international’ rules applicable to social media such as Facebook and Twitter have also contributed to a nation with a highly weaponised vocabulary.
•While a good cursing session in certain contexts can be harmless, or indeed even necessary and very freeing, this increase in the acceptability of abusive language has fed into the rising level of physical violence in our society. Politically this means that a leader or Minister doesn’t herself or himself need to use violent language; they can use innocent-sounding ‘signal’ words or imply with their tone that their followers have the license to do the exact opposite of what they are saying. Once the signal is given, there is enough violent thought and emotion churning around in their followers for things to take their ‘own’ course. Couple this with a few precise, planned bits of bloodshed and you get the desired situation: a nominally clean-spoken leader, who from time to time gives lip-service to peace and amity, presiding over a populace agitated by constant fear.
•I don’t know who shot Gauri Lankesh. But I do know which politician of which regional party smashed a photo-journalist friend in the head with a motorcycle helmet last year. We do know that it’s not just one party or one leader who uses the formula described above.
•To repeat: create an atmosphere that encourages violence, paper it over with noble-sounding words that your followers know to ignore, let your foot soldiers do the actual cursing, beating and shooting, make sure your police do nothing to bring them to book, let your remote-controlled trolls carry on the abuse, feeding into further violence. I don’t exactly know how we can challenge this formula, but I do know that defeating it will involve a mindful, judicious and fearless use of words.
📰 Which secularism is it anyway?
Revisit the country’s past to understand how a particular kind of secularism, with its own unique shape and colour, took form
•For much of independent India’s history, the formally ‘secular’ state has been ‘stress-tested’ by its religiously minded citizens. From the small population of Jehovah’s Witnesses to Hinduism with millions of followers, the state has been asked to intervene and regulate various aspects of religious life. This intervention seemingly spans two dimensions. One, the state is asked by a specific religious group to provide exceptions in the name of ‘obligations of conscience’. Conversely, the state whittles away any exceptions provided to religious groups by expanding the legality of claims made by a citizen so that in the final reckoning the individual can more fully define his or her own personhood. Straddling between the Scylla of traditional conservatism and the Charbydis of all-domineering group identities, the Indian state tilts and lurches to protect its formal self-description as a secular state. Despite this much bandied about descriptor, asking what does it mean to be ‘secular’ leads one into a wilderness of mirrors where answers are plenty, self-referential, and often illusory.
As a form of ‘equidistance’
•Any putative answer about ‘what is secularism’ reveals more about the questioner than the phenomenon under investigation. That said, in its most conventional taxonomy, as Amartya Sen writes, there are two popular interpretations of what it means for a state to be ‘secular’. One, the state maintains an arms-length distance fromallreligions. Two, it assiduously refuses to interact with any form of religious life. The result of framing secularism in this manner, as a dichotomous either-or, is that secularism becomes a theory of equidistance that the state must subscribe to and operationalise. The moment you think of secularism as a form of ‘equidistance’, other concepts such as ‘fairness’ and ‘justice’ , which also rely on the state’s ability to maintain symmetry among its citizens, become equivalent. Thus the doctrine of secularism becomes indistinguishable from a game of picking and choosing other end goals: fairness, justice, etc. Since these other end goals often operate via non-religious dimensions (through gender, income, education, caste) and are historically contingent, secularism becomes a principle that must jostle to be first among equals. The result of such a view is that instead of offering up secularism as a non-negotiable principle, we rely yet again on the state’s capacity to pick and choose what principle is necessary for which moment. What follows in an electoral democracy is all too familiar: natural charges of hypocrisy, examples of political opportunism, reactionary majoritarianism, and a delegitimisation of ‘secularism’ itself as a founding virtue.
•In contrast to such theoretical exercises where we end up, perhaps unintentionally, deflating secularism into a virtue of convenience, the other approach to understanding the question of ‘what is secularism’ is by asking how many secularisms there are. One immediate virtue of framing the question thus is that of epistemological humility: we end up asking how secularism works in the world rather than asking how a secular world ought to be. The search for the answer to this question will not just free us from thinking our version is sacrosanct, but also allow us to recognise that there is as much diversity in the practice of secularism as in the varieties of religious experience.
•Even amidst the small area of the European landscape, the scholar, Anna Triandafyllidou, at the European University, finds enough diversity to classify otherwise liberal European countries into the following: “absolute secularism” (France), “moderate secularism” (the Netherlands), “moderate religious pluralism” (England and Germany) and “absolute religious pluralism” (no European country fits this in her schema). Globally, if we were to seek examples of ‘secularism’ in multi-ethnic, multilingual, and multireligious societies, we must look for countries with a long history of engagement with secularism — not just as an originary myth but as a site of debate from which burbled up their national self-descriptions.
Shape-shifting idea
•One possibility is that we could understand secularism better by studying the experiences of four countries — France, the U.S., China, and India. These countries aren’t just laboratories that offer up insight on how the theory and practice of secularism works today, but these countries also discovered their own early stirrings of ‘secularism’ in four different centuries. After the 17th and 18th century, when philosophers such as Denis Diderot midwived the Enlightenment, the French state settled upon laïcité — a melange of anti-clericalism, scientific reasoning, and religious equality under law — during the Third Republic in the late 19th century. Meanwhile, secularism arrived in America in the 19th century when legal and social challenges erupted in face of efforts to impose a generic form of Protestantism. By the late 19th and mid 20th century, China began to see secularism as a prerequisite to be modern, which in turn meant to throw out the decrepit old dynastic and ecclesiastical powers. And finally India in the 20th century, with all its the post-colonial bells and whistles, began to nurture through electoral democracy an elaborate archipelago of group identities, constructed differences, and formalised secularism. By relying on these four countries, one can begin to see secularism as a shape-shifting intellectual idea which refracted its contents when passing through the prisms of other global phenomena such the Enlightenment, abolitionism, colonialism, and globalisation.
•To think better about where our secularism — wobbly and fraught as it often seems — can go from here, perhaps we need to look back and ask, how did our secularism acquire this particular shape and colour?
📰 Risks and returns
Can the humanities be used to humanise finance?
•You do not really need a reason to reread Jane Austen, as most of us know after a summer of revisiting her novels to mark her 200th death anniversary. Now Mihir Desai, a professor at Harvard Business School, has chosen to nudge us back to her work again. Extracting life hacks from Pride and Prejudice is an ongoing project, and the title of William Deresiewicz’s recent and riveting A Jane Austen Education: How Six Novels Taught Me About Love, Friendship, and the Things That Really Matter sums up the the nature of this popular subgenre. But who’d have thought Austen was on to the basics of risk management that keep financiers going? In The Wisdom of Finance: Discovering Humanity in the World of Risk and Return , a book that expands on a lecture he delivered to a graduating class, Desai focuses on what he calls, understandably, “the most cringeworthy marriage proposal ever” to explain risk-aversion, or risk-exposure.
Lizzy versus Charlotte
•When the fortune-less Lizzy Bennet turns down a marriage proposal from the insufferable Mr. Collins, he tries to persuade her to change her mind not by affirming his affection, but by explaining what she is losing: “It is by no means certain that another offer of marriage may ever be made to you. Your portion [of income] is unhappily so small that it will in all likelihood undo the effects of your loveliness and amiable qualifications.” The spunky Ms. Bennet stands her ground undeterred by “further risk exposure”, as Desai terms it, and lives to find true love, Darcy, another day. Her amiable friend Charlotte, however, limits such exposure and accepts Mr. Collins’s proposal when it comes her way.
•Such dilemmas come our way all the time, Desai says — when we weigh the expense of further education, or the pros and cons of accepting a job offer as opposed to waiting for a better fit, for instance. “These questions implicitly consider risk and return and require you to think about how to allocate your time, energy, and resources given a set of choices in the face of an uncertain future,” he writes. “This allocation problem is precisely the problem at the heart of finance.”
•Desai’s focus, however, is not on Austen — her book is just a small part of this project, which is no less than to take “the unorthodox position that viewing finance through the prism of the humanities will help us restore humanity to finance”. The book has a dual objective: to use the stories we know well to introduce the layperson to the core, and ennobling, mission of finance, and to use these stories to remind the practitioners of finance of a higher mission — that their profession is part of a larger tapestry, and to presumably thereby keep them bound to an honourable code. So, the reader is taken on a whirlwind tour, though the work of Dashiell Hammett, Wallace Stevens, Austen, Anthony Trollope, Leo Tolstoy, Willa Cather, among others — and also of the American artist, Jeff Koons, and the 1980s hit film Working Girl.
•He cites the example of George Orwell retreating to solitude of the island of Jura to finish his masterpiece 1984 to explain the low-leverage life, and to make the sweeping statement: “Artists who choose the low-leverage life find the alternative extremely difficult.” Saul Bellow, he says, wrote great novels, but found his “imagination... mediated into mediocrity” when he sought to take up collaborative tasks that involved dealing with lots of people, such as writing plays. This is contrasted with the leverage Koons used to finance his dreams, and ultimately has the reader seeking pen and paper to work out an answer to the question, “So, who are you, Koons or Orwell?”
Two cultures again?
•For those like me worried that we’ll never understand the world of finance, The Wisdom of Finance is a reassurance that there may be hope yet, beyond the reminder that no matter how much an old classic may be committed to memory, it can yet be mined for fresh insights. Whether it will trigger thinking about “the chasm that exists between finance and the humanities today”, along the lines of C.P. Snow’s 1959 lecture “The Two Cultures” on the divide between the humanities and the sciences, is not so clear. But in using the great stories to explain the core ideas of finance, as too the instance of greed and fraud that give it a bad name, this riveting slim book does make you wonder, why did nobody think of this before?
📰 GST to affect GDP growth in Q2
Recovery to start in October, says economist who accurately predicted slower Q1
•Hugo Erken , senior economist at Rabobank’s RaboResearch Global Economics & Markets, had accurately predicted India’s first quarter gross domestic product (GDP) would decelerate to 5.7%. In an email interview, Netherlands-based Mr. Erken, who is also the firm’s country analyst for North America, Mexico and India, discusses what drove his forecast and the way forward for India. Excerpts:
What factors drove your predictions?
•In my Q1 forecasts, two important factors drove its accuracy. First, we expected private consumption to be well below trend growth due to demonetisation. Second, growth of bank loans has been negative for three subsequent quarters and I received signals from India that companies have been very reluctant to invest. So, ultimately, the contribution of private investment was very subdued.
•You have used the NiGEM model of forecasting. Can you explain the model?
•At Rabobank we use different tools for forecasting. First, NiGEM is an econometric world trade model which is the leading instrument for our economic forecasts. There are two major benefits in using NiGEM.
•First, it ensures that global trade flows add up and possible economic shocks in other countries are accounted for.
•If, hypothetically, India’s most important trading partner, the U.S., would face a crisis or implement trade barriers and this leads to lower imports, it directly affects Indian exports and thus the economy.
•Second, NiGEM is an error-correction model, which ensures that short-term deviations of GDP from a country’s growth potential are made up eventually. Ultimately, growth is driven by structural capital formation, structural employment and labour-augmented technological change. Using NiGEM has its upsides, but one can’t solely rely on it. It doesn’t take into account, for instance, demonetisation or GST. So, we use satellite models to break down and forecast expenditure components of GDP.
•India moved to a new GDP series. Many questioned the methodology when it showed high growth. But now there is concern around the fall.
•It is comforting to see that the Central Statistics Office is continuously improving their methodology to produce statistics. Moreover, I’m not the one to criticise the CSO, as I’m not a statistician, so I’m a bit reluctant to say too much about this.
•However, it is well known that before the revision in 2015, GDP data was biased as the factor used to scale up the information collected from the sample of firms was unreliable due to the large number of shell firms.
•The MCA database is supposed to produce better corporate sector data. However, there are still some worries about the scaling factor the CSO uses. In 2016, two India researchers, Nagaraj and Srinivasan, said that the number of firms in the MCA was the actual number of firms and no scaling was needed. By using a scale factor on top of registered companies, the private sector is again overstated.
•Second, there are some doubts about measurement of the informal economy, which is proxied by the CSO.
•If the informal economy is not correctly represented in the national accounts, one would suspect even more pain from demonetisation than the national account data reveals, as the informal sector is much more cash based. For now, we believe that the CSO is producing statistics at the best of its abilities and are comfortable with these data.
Your views on the RBI stating that 99% of demonetised notes had returned to the system?
•This would suggest that the government failed to purge black economy in the economy. However, we feel that it is far too early to draw conclusions about the failure or success of demonetisation. First, the Finance Minister said that a lot of people that had handed in deposits are still being questioned. It is interesting to see the outcome of these investigations. And, demonetisation served several goals, one of which was to lower the velocity of cash in the economy and pull a part of the untaxable informal into formal territory. We still have to wait and see what money velocity will eventually will turn out to be. And, we still have limited data about post-demonetisation tax revenues.
You have predicted that growth would be slower at 5.9-6% in Q2 and accelerate to 8% in Q3.What will change?
•In Q2, we think especially the GST roll-out will weigh on growth. Sentiment indicators in July collapsed (and did rebound in August), with the manufacturing PMI declining to 47.9 from 50.9 in June and the services PMI dropping from 53.1 to 45.9. Many analysts regard this July slowdown as transitory, reflecting mostly initial adjustment costs for small firms in particular. However, our take is that we’ll also see GST disruptions beyond July — a result of stalling working capital cycles and systemic failures to seize tax credits caused by incomplete digital tax filings by firms, starting in September.
•The flooding in India, including the Mumbai area, will have an effect on economic activity as well. In comparison, the severe Mumbai flooding in 2005 resulted in an estimated damage of $1billion.
•For Q3 and Q4, after the GST and demonetisation pain peter out, we expect the Indian economy to recover and even see faster than trend growth on the back of higher private consumption spending and recovering private investment. Moreover, government investment in infrastructure will continue to support growth. Ultimately, we expect India’s growth potential to lie somewhere around 8%.
📰 Tigers use corridors to traverse India-Nepal border
At least 11 tigers have re-colonised Nepal
•Borders don’ faze these tigers: over a decade, at least 11 tigers moved from India into Nepal’ protected areas through the Terai, a landscape comprising agricultural areas and protected forest-grasslands in the Himalayan foothills. This reaffirms that tiger conservation requires not just protected areas but corridors too — especially across large landscapes — to ensure habitat connectivity and in turn, population growth.
Habitat loss
•With protected areas becoming isolated due to habitat loss and conversion, large mammals including tigers have to now traverse human-dominated areas to disperse to new territories. North India’ Terai Arc Landscape, which shares a 700-km border with Nepal, spreads across more than 50,000 sq. km and has one of the world's highest human population densities. Apart from agricultural fields and rural settlements, it also comprises 16 protected areas (five in Nepal and 11 in India) and six major trans-boundary corridors which connect Indian wild habitats with Nepal's.
•To test how effectively these corridors aid tiger movement, scientists from WWF-India and WWF-Nepal camera-trapped tigers for 38,319 days in the protected areas, covering an area of more than 9,000 sq. km in multiple surveys between 2005 and 2016. Identifying individual tigers, they found that at least 11 tigers used these corridors to re-colonise Nepal, thus aiding the recovery of tiger populations which had declined drastically in the mid 2000s due to severe poaching pressures.
•Growth rates of the tiger population in Nepal’s Suklaphanta and Bardia national parks show that tiger numbers were far higher than would have been possible from just reproduction by the existing population. Connecting the locations that individual tigers were photographed from, the team found that one tiger had moved across an area of 248 sq. km, as opposed to the usual 20-sq. km-area in the Terai.
•“This speaks volumes about the need to protect large landscapes, even agricultural ones which serve as crucial corridors,” says Pranav Chanchani, National Coordinator for Tiger Conservation, WWF-India. “Till the 1930s and 1940s, the now-fragmented protected areas were contiguous. But with increasing human settlement large parts of the Terai were cleared and patches that would have been corridors destroyed.”
•Planned development near the protected areas — including two roads — could endanger the already-fragmented habitat, say the authors. They suggest that the tiger populations need to be conserved as a ‘metapopulation’, that is, populations that are physically separate, but interact with one another as animals migrate between them, helping populations persist over the years.
📰 IGIB team discovers skin bacterium with antimicrobial activity
Synthetic peptides with antimicrobial activity make microbe culturing redundant
•Bacteria found on the skin are known to harbour a large repertoire of antimicrobial agents. A new bacterial strain of Staphylococcus capitis identified by scientists at Delhi’s CSIR-Institute of Genomics and Integrative Biology (CSIR-IGIB) has a strong antibacterial activity against Gram-positive bacteria, including Staphylococcus aureus. The work reconfirms the growing understanding that bacteria found on the skin may be a “rich source” of novel antimicrobial molecules. The results of the study were published in the journal Scientific Reports.
•The bacteria were isolated from the skin surface of a healthy human foot; the bacteria are specifically found near the toes. Different bacteria are found in different niches of the skin. For instance, bacteria found in the arm pit are different from those found on the feet.
•The antimicrobial activity helps the bacteria to secure their niche environment by preventing other bacteria, including pathogenic bacteria, from colonising. “The new bacterial strain identified by us and S. aureus are closely related and can thrive in the same niche on the skin. And this drives the competition between the two bacteria,” says Dr. Rakesh Sharma from CSIR-IGIB and one of the corresponding authors of the paper.
•Staphylococci are common colonisers of human skin and the third largest genera identified in human skin microbiome.
Seven new peptides
•The team led by Dr. Bhupesh Taneja and Dr. Sharma sequenced the genome of the bacteria and identified all the possible peptides that have antibacterial activity. In all, the new strain of bacteria has nine antimicrobial peptides, of which two (epidermicin and gallidermin) have already been characterised from other bacteria. “The other seven new peptides have been found to have antimicrobial activity,” says Dr. Sharma.
•“To be absolutely certain about the antimicrobial activity that we see is from the peptides and not from any other biological material as a result of contamination, we tested the seven purified synthetic peptides against a set of select microbes. It was a qualitative test,” says Dr. Taneja from CSIR-IGIB and other corresponding author of the paper.
Synthetic peptides
•Synthetic peptides with sequences identical to the natural ones isolated from the bacteria were synthesised by the team. The synthetic peptides were found to possess antibacterial activity, opening the window to developing new antimicrobial compounds. “Since the purified synthetic peptides are inhibitory, it not only confirms the antimicrobial activity but also shows that the synthetic peptides can be used directly without actually culturing the microbes,” says Dr. Taneja.
•The researchers would next study the minimum inhibitory concentration (the lowest concentration of an antimicrobial that will inhibit the visible growth of a microorganism) required by the peptides and test it against more species of Gram-positive bacteria and specifically against drug-resistant S. aureus.
•Besides isolating the peptides responsible for antimicrobial activity, the researchers have identified the genes responsible for other functions such as adhesion, acid stress tolerance, colonisation and survival on human skin. “We studied the bacteria to understand the different adaptation strategies and unique features that allow them to thrive on the skin,” says Dr. Sharma.
•The team has been isolating bacteria from the skin and studying their roles. The researchers had earlier reported another bacteria from human skin with antimicrobial activity. And in a paper published in May this year, they reported the discovery of a new Gram-positive bacterial genus — Auricoccus indicus. The bacteria were isolated from the external ear lobe of a healthy individual.
