📰 India, U.S. in talks for C-17 deal
The aircraft will be handed over within a month of signing the contract
•India is in talks with the U.S. for buying another Boeing C-17 Globemaster transport aircraft to be added to its fleet of 10.
•Since induction in 2013, the aircraft has become the mainstay of India’s humanitarian assistance and disaster relief efforts.
•On June 26, the State Department notified Congress of a possible sale, approving it under the Foreign Military Sales programme. “The validity of the Letter of Acceptance for the sale expires in mid-October and India has to conclude the deal before that or ask the U.S. for an extension,” an official said.
•The aircraft, along with associated equipment, technical support and warranty, is estimated to cost $366.2 million.
•“The aircraft will be handed over within a month of the contract having been signed after some routine checks and maintenance. The handover will be done in the U.S. itself, and it will be flown to India by Indian pilots,” Pratyush Kumar, president, Boeing India, told The Hindu .
•The Defence Acquisition Council (DAC) gave its approval for the purchase in December last.
Big push
•“The proposed sale will improve India’s capability to meet the current and future strategic airlift requirements ... India lies in a region prone to natural disasters and will use the additional capability [aircraft] for humanitarian assistance and disaster relief,” the Defence Security Cooperation Agency (DSCA), which manages the Foreign Military Sales programme, said in a statement in June.
•In 2011, India purchased 10 C-17s under the Foreign Military Sales programme worth $4.1 billion, which had a follow-on clause for six more aircraft. However, the delay in decision-making in the Defence Ministry meant the IAF missed out on the opportunity. The last C-17 aircraft left Boeing’s Long Beach plant in California in 2015.
•While the C-17 assembly line was shut down, Boeing made 10 additional aircraft without any order and offered them to all existing customers, including India. New Delhi’s silence meant nine pieces were picked by the existing users and one is left with Boeing.
📰 Dhaka plea made MEA shift stand
The aircraft will be handed over within a month of signing the contract
•India is in talks with the U.S. for buying another Boeing C-17 Globemaster transport aircraft to be added to its fleet of 10.
•Since induction in 2013, the aircraft has become the mainstay of India’s humanitarian assistance and disaster relief efforts.
•On June 26, the State Department notified Congress of a possible sale, approving it under the Foreign Military Sales programme. “The validity of the Letter of Acceptance for the sale expires in mid-October and India has to conclude the deal before that or ask the U.S. for an extension,” an official said.
•The aircraft, along with associated equipment, technical support and warranty, is estimated to cost $366.2 million.
•“The aircraft will be handed over within a month of the contract having been signed after some routine checks and maintenance. The handover will be done in the U.S. itself, and it will be flown to India by Indian pilots,” Pratyush Kumar, president, Boeing India, told The Hindu .
•The Defence Acquisition Council (DAC) gave its approval for the purchase in December last.
Big push
•“The proposed sale will improve India’s capability to meet the current and future strategic airlift requirements ... India lies in a region prone to natural disasters and will use the additional capability [aircraft] for humanitarian assistance and disaster relief,” the Defence Security Cooperation Agency (DSCA), which manages the Foreign Military Sales programme, said in a statement in June.
•In 2011, India purchased 10 C-17s under the Foreign Military Sales programme worth $4.1 billion, which had a follow-on clause for six more aircraft. However, the delay in decision-making in the Defence Ministry meant the IAF missed out on the opportunity. The last C-17 aircraft left Boeing’s Long Beach plant in California in 2015.
•While the C-17 assembly line was shut down, Boeing made 10 additional aircraft without any order and offered them to all existing customers, including India. New Delhi’s silence meant nine pieces were picked by the existing users and one is left with Boeing.
📰 Refugees go to SC against Article 35A
They migrated from West Pakistan
•Some refugees from West Pakistan, who had migrated to India during Partition, have moved the Supreme Court challenging Article 35A of the Constitution relating to special rights and privileges of permanent residents of Jammu and Kashmir.
•The petition said nearly 3 lakh refugees had arrived from West Pakistan, but those settled in Jammu and Kashmir had been denied the rights guaranteed under Article 35A.
•A Bench of Chief Justice Dipak Misra and Justices A.M. Khanwilkar and D.Y. Chandrachud tagged the plea of the refugees, who are settled in Kathua district of Jammu and Kashmir, with similar matters pending before it. The court had, on the request of the Jammu and Kashmir government, posted the matters challenging the Article for hearing after the Deepavali holidays.
•Earlier, a Kashmiri Pandit woman, Charu Wali Khanna, had approached the court challenging the provision.
•Petitioners Kali Das, his son Sanjay Kumar and one other, in their plea, said they were raising issues seeking conferment of basic natural and human rights.
📰 Fall in GDP figures structural, not transient, says SBI report
‘Govt. must not cut spending as growth drivers are missing’
•India’s GDP growth was expected to decline in the first quarter of the current fiscal, but the “free fall” in the numbers shows that the problem is more structural than transient, said a report.
•India’s economic growth slipped to a three-year low of 5.7% cent in April-June, underscoring the disruptions caused by uncertainty related to the GST roll-out amid a slowdown in manufacturing activities.
•According to the report, the negative impact of the Goods and Services Tax (GST) on growth has been “majorly emphasised”.
•“Though there has been a lot of talk about manufacturing destocking ahead of GST and its impact on GDP, a significant destocking in both consumer as well as investment intensive sectors was already taking pace in 2016-17,” said SBI’s research report Ecowrap.
•With fiscal deficit touching 92.4% of the budget estimate by the end of July, the government may cut expenditure to meet the 3.2% target, the report stated.
•In absolute terms, fiscal deficit — the difference between expenditure and revenue — was Rs. 5.04 trillion of budget estimate till July, against 73.7% in the same period last fiscal. The report was quick to point out that with uncertainties involving GST and monetary policy support to growth not forthcoming, it would not be prudent for the government to reduce spending as other growth drivers are missing.
📰 ‘NPAs: challenge is to avoid delays’
Bankers worry that appeals to other courts and the workload at NCLT may push deadlines out further
•On June 13, the Reserve Bank of India (RBI) came up with an advisory asking banks to file insolvency and bankruptcy proceedings for 12 loan accounts, in which banks had an exposure of more than Rs. 5,000 crore each. This constituted about 25% of the system’s bad loans whose total is estimated at Rs. 7 lakh crore.
•The central bank had asked banks to file bankruptcy cases with the National Companies Law Tribunal (NCLT) within June 30. The RBI had also advised banks to make higher provisions for these accounts to be referred to the Tribunal under the Insolvency and Bankruptcy Code (IBC). According to RBI deputy governor Viral Acharya, the move was intended to improve bank provision coverage ratios and to ensure that banks are fully protected against likely losses in the resolution process.
•In the last week of August, RBI sent banks another list comprising 26 accounts, which they must resolve by December 31, failing which those cases have to be taken up for bankruptcy as well.
•NCLT is expected to admit or reject a case within 14 days of a case being filed. However, bankers said the time taken by NCLT in some of the cases was beyond 14 days.
•“It is still early days, but the number of bankruptcy cases which have been filed by operational as well as financial creditors is encouraging. Many cases have been admitted and the 180-day clock (extensible by a further 90 days) for these cases to resolve has already started,” Mr. Acharya said in a speech last week.
The bell tolls
•The clock starts ticking once a case is admitted. After a case is admitted, insolvency resolution professionals (IRP) are put on the job to find a resolution process. In case no resolution is possible within six months, another three months’ extension can be given. However, if no resolution is reached even in extended period, the company goes for liquidation.
•“Swift, time-bound resolution or liquidation of stressed assets will be critical for de-clogging bank balance sheets and for efficient reallocation of capital,” RBI governor Urjit Patel had said recently at seminar on insolvency and bankruptcy.
•The IBC, 2016 — which Mr. Patel describes as a watershed towards improving the credit culture of the country — was aimed at time bound resolution (or liquidation) of stressed assets.
•The NCLT was constituted on June 1, 2016 with 10 benches and one principal bench. More than 1,000 cases have already been filed with the NCLT, of which more than 220 cases have been admitted. Over 900 insolvency professionals (IPs) have registered with the Insolvency and Bankruptcy Board of India (IBBI).
•One of the key aspects of time-bound resolution is the infrastructure of the NCLT. Bankers and insolvency professionals said there is a need to beef up the infrastructure of NCLT as many cases apart from bankruptcy are also being filed at NCLT.
•“The staff in NCLT is very limited,” said Ankur Srivastava, insolvency professional, Ezy Laws.
Separate bench needed
•“Bench is under pressure because there are not enough number of Judges. The same bench will be hearing IBC matters, other company law matters, other merger matters, conversion of private limited company to public limited company — all issues are going to the same bench,” he said.
•According to Mr. Srivastava, a separate bench for for insolvency and bankruptcy cases is the need of the hour.
•“We need to have a separate bench for IBC matters. If... [we do], then this could solve the problem,” he said.
•A recent report by Assocham and EY, titled ‘Experiencing the Code — Corporate Insolvency in India’, said that more than 200 proceedings are now ongoing with the National Company Law Tribunal and more than 900 insolvency professionals (IPs) have registered.
•Among sectors, metals and mining is at the top with over 50 cases, followed by engineering and construction (35), food, beverage and hospitality (27), power and electricity (20) and healthcare (7).
•Observing that ‘a major challenge foreseen for the Code was the tidal flow of cases to the NCLT’, the report said, “In addition to new cases filed for resolution under IBC, there was a significant backlog of cases that were transferred from the CLB. Also, winding up cases with high courts, corporate recovery cases with the debt recovery tribunals (DRTs) and rehabilitation cases with the BIFR [Board for Industrial & Financial Reconstruction] were transferred to the NCLT.”
•There are discussions currently to increase the number of benches and change single-member benches to double-member benches.
‘Clock should not stop’
•There could be other issues that add to the delays. Essar Steel filing a plea in the Gujarat High Court challenging the initiation of bankruptcy proceedings against the company, is an example.
•“There is no provision under the code for going to the high court, but under the constitution of India the high court has the inherent power to accept the writ. But the good thing that happened in the Essar case is that the Gujarat High Court has not touched upon the provisions of the insolvency code. They just touched upon the issue as to whether the RBI is right in targeting just 12 accounts..., which should not lead to discrimination. The high court has not commented on insolvency per se ,” Mr. Srivastava pointed out.
•The recent Supreme Court order which stayed the insolvency proceedings against real estate firm Jaypee Infratech is also worrying bankers.
•“The fact that the NCLT proceedings are stalled..., anything that stops the time clock is not a good thing,” said Abizer Diwanji, partner & national Leader, Financial Services, Restructuring & Turnaround Services, EY.
•According to Mr. Diwanji, one of the key challenges in insolvency proceedings is dealing with the insecurity of all the stakeholders.
•“The challenge is the level of insecurity of all the stakeholders — financiers, promoters, banks and even IPs,” he said.
•“To deal with it, we need to develop a different set of capabilities. What is lacking is capability and not quantity.
•“This is applicable for everyone — IPs, courts, NCLT judges — who need to be more pragmatic about decision-making. It will come with time. The quality that is required is not industry knowledge but managing all these people facing insecurity,” Mr. Diwanji said.
The road ahead
•The important question is whether the stakeholders will find a resolution within the required time frame, that is within six months plus another three months after the case has been admitted. If time-bound resolution does not happen, companies will go for liquidation. Most companies going into liquidation is a scenario that no one wants.
•“Till now the timeline that was put out has been maintained. The tougher piece is ahead of us,” Arundhati Bhattacharya, chairman, State Bank of India, the country’s largest lender, told The Hindu .
•“Because that is when we have to ask for bids and then the bids have to be evaluated and put up. The major piece is ahead of us,” she said.
•When asked if cases could be resolved in six months, Ms. Bhattacharya said, “Very difficult to say. At this point, we will keep our fingers crossed.”
•The Assocham-EY report also said the real test for IBC timelines would be to get cases resolved within a period of 180/270 days with all necessary approvals.
📰 GST: efficiencies have risen in manufacturing
Council must constantly watch developments, give directions
•India’s manufacturing sector gives a major thrust to economic growth, contributing to the GDP, creating employment opportunities and attracting foreign investments.
•The Industrial Policy Resolution of 1956, known as the economic constitution of India, laid down the structure of the manufacturing sector. Subsequent policies have continued to give importance to the sector.
•The share of manufacturing in the GDP was 16% at the beginning of the 12th Five Year Plan. While the service sector’s share is predominant, it is pertinent to note that the manufacturing sector is a major consumer of services.
•Till recently, the manufacturing sector was burdened with multiple indirect taxes viz. central excise, service tax and VAT. In addition, non-availability of tax credit for central sales tax increased the cost. Introduction of GST, in the backdrop of the ‘Make in India’ initiative, does away with multi-layered taxation.
•For major sectors, tax rates are mostly in line with the present effective tax incidence. Sectors such as consumer durables, construction material and FMCG, GST rates have seen a marginal difference.
•State-border check posts, established to scrutinise documents and location-based compliance, adversely impacted the overall production and logistics time, which reduced the efficiency of Indian manufacturers.
•These check-posts have been abolished with the introduction of GST. The new tax regime will unify the Indian market and help smooth the flow of goods within the country. Prior to GST, the inter-state sale was subjected to 2% CST without input credit, whereas GST on inter-state supply is available for input credit. This would lead to removal of an extra level of warehousing in the supply chain resulting in cost benefits.
•GST contemplates input credit of tax on supply of goods or services. The GST Act provides a list of services for which input credit is not available. Thus the system intends to provide seamless input credit. This welcome change helps businesses plan well on product pricing and estimating cash flows.
•Anti-Profiteering rules mandate that any reduction in the tax rate or the benefit of input tax credit needs to be passed on by way of commensurate price reduction. Standing committees, both at the Central and State levels, will examine complaints and refer cases for investigation based on merit.
•After investigation, the Directorate General of Safeguards will report to the anti-profiteering authority. The authority will review the report before taking a decision.
•The authority, which has a sunset period of two years, has powers to debar an assessee from conducting business, to levy penalty, or to enforce refund of proportionate price reduction.
•The GST system excludes certain petroleum products. Natural gas, a clean fuel, is one of them. Certain industries which use them as key input were allowed input credit under the erstwhile VAT system. Keeping natural gas out of the GST system would increase the production cost. The GST Council, which is considering this aspect, has to take quick, positive action in this regard to avoid cost increases.
•Another important issue is how exemptions and incentives granted under the erstwhile excise and VAT system would be continued under the GST regime. Central and State governments are yet to come out with a concrete proposal. It has to be ensured that what was intended, while granting the incentive, is continued under the GST system.
Going forward
•The GST System contemplates seamless input credit. Administrative machinery has to ensure this is implemented in letter and spirit. The GST Council has to constantly watch developments and give suitable directions to achieving the objective of seamless input credit.
•The Council should also ensure that actions taken by the anti-profiteering committee are genuine and not arbitrary. This will boost the confidence of the industry in the GST system and embolden them to concentrate on business development.
•The Council has to take a pragmatic view in making changes to the tax rate for certain goods and services about which select industries are concerned.
•Both the Central and State governments have to be congratulated for implementing the GST system in a smooth manner, without disrupting businesses. The manufacturing sector has always extended its support to the initiatives taken by the Government. Now too, this sector has accepted the GST system and is working well with the governments.
📰 The disaster next door
India’s stance on the Rohingya refugees undermines its ties with Bangladesh and its regional leadership
•In a span of two weeks, almost 300,000 Rohingya have crossed over to Bangladesh from the northern Rakhine state in Myanmar, putting Bangladesh under immense strain and compelling the refugees to find shelter in squalid, unsanitary camps scattered along the Myanmar-Bangladesh border. Excluded from the 135 officially recognised ethnic groups, the Rohingya have been harassed and hounded by the Myanmar authorities for decades. The latest surge follows attacks on police posts by an extremist Rohingya group in late August and military action. While the Myanmar authorities claim that 400 lives have been lost, advocates cite double this number.
Where is the spirit?
•The flight of the Rohingya has quickened in the past two weeks, but Rohingya refugees have been trying to find a home outside their native Rakhine for years now, braving human traffickers and fraught conditions on rickety, overcrowded boats. The Rohingya have also sought refuge in India where they have been shunned, denied basic public services and deemed by authorities as ‘the undesirables’.
•While the government has called them to be illegal immigrants and trespassers, the fact is that India, throughout its history, has been generously accommodative towards refugees in the neighbourhood fleeing persecution, which includes Parsis, Tibetans, Afghans, Sri Lankan Tamils, and Bangladeshis during the war of liberation in 1971. India has prided itself in its tradition of Atithi Devo Bhava (the guest is equivalent to god).
•The stance on the Rohingya issue by Prime Minister Narendra Modi, during his recent visit to Myanmar, has been disappointing and is contradictory to the values of hospitality and inclusiveness that India stands for. South Asia, particularly Bangladesh, which has been most affected by the crisis, was hopeful that Mr. Modi would express concern about the humanitarian crisis with Myanmar’s State Councillor and Nobel Peace Prize winner Aung San Suu Kyi. Instead, he was seen empathising with Myanmar, and the joint statement at the end of the visit said: “India stands with Myanmar over the issue of violence in the Rakhine state which has led to loss of innocent lives.” In doing so, he overlooked the atrocious crimes committed in the neighbourhood and almost turned a blind eye to both the untold sufferings caused to the refugees fleeing persecution and the resulting difficulties that a resource-constrained country such as Bangladesh has been put to — a country which Indian politicians and officials frequently refer to as a role model of friendship in India’s neighbourhood.
Bangladesh’s burden
•International relief agencies in Bangladesh such as the office of the UNHCR and the World Food Programme are struggling to attend to the large number of refugees arriving each day on foot or by boat ( picture shows refugees at the border, at Teknaf, Bangladesh ). Bangladesh, itself one of the world’s most densely populated nations, has hosted more than 600,000 Rohingya compared to 40,000 by India. Initially, hesitant to open borders along the Naf river, Bangladesh has now started allowing in refugees.
•Through the International Committee of the Red Cross, Dhaka has proposed that Myanmar secure areas in Rakhine under international relief agency supervision, but there has been no response so far from Myanmar. Bangladesh has plans of making another 607 hectares of land available near the Myanmar border for camps to accommodate refugees. It has also urged the international community to put pressure on Myanmar to take back the refugees and stop the violence against them. Bangladesh Prime Minister Sheikh Hasina recently said: “It affects a country’s dignity when tens of thousands of its own nationals are fleeing home to take refuge outside.”
On the other side of the fence
•Last Friday, India’s move to dissociate itself from the Bali Declaration adopted at the World Parliamentary Forum on Sustainable Development in Indonesia, and which called “on all parties to contribute to the restoration of stability and security ... respect human rights of all people in Rakhine State regardless of their faith and ethnicity, as well as facilitate safe access for humanitarian assistance”, puts into question its respect for human rights and the treatment of minorities. It weakens India’s moral authority to speak for minorities in other parts of its neighbourhood. Interestingly Nepal, Bhutan and Sri Lanka joined the declaration.
•In his 2015 visit to Bangladesh, Mr. Modi used eloquent phrases to describe the India-Bangladesh friendship. Since 2009, Bangladesh has emerged as one of India’s most trusted neighbours, with Dhaka addressing almost all of New Delhi’s security concerns. This includes cracking down on cross-border terrorism and insurgency conducted against India from Bangladeshi soil. The India-Bangladesh border today is one of the safest for India, enabling massive redeployment of its vital border resources for other purposes. Despite this, Bangladesh has neither received water from the Teesta or support in times of humanitarian crisis from its biggest neighbour.
•Ironically, when Bangladesh procured two submarines from China, indicating the growing economic and defence ties between the two countries, New Delhi rushed its then Union Defence Minister, Manohar Parrikar, to Dhaka to elevate military cooperation. Such promptness is missing when it comes to supporting Bangladesh when it is overcome by helpless refuges persecuted at home and accepted by none. The world does not expect Myanmar’s other big neighbour, China, to be vocal about the atrocities being committed, but as the upholder of democratic values, India has a unique opportunity to demonstrate statesmanship and regional leadership by mediating a solution to the Rohingya crisis on the basis of a report of the Advisory Commission on Rakhine State headed by former UN Secretary General Kofi Annan and set up by none other than Ms. Suu Kyi.
•While Myanmar is an important factor in India’s ocean diplomacy and a valuable stakeholder in its ‘Look East’ Policy, India’s nonchalant attitude towards the humanitarian plight of the Rohingya reflects inadequate moral leadership and an inability to rise to the occasion as expected from a regional power vying to enhance its influence in the neighbourhood. One of the reasons why India, despite its enviable soft power and formidable hard power, fails to generate confidence in the region, including with friends such as Bangladesh, is its complex geopolitics based more on political opportunism and economic interests as opposed to principles and values, practised consistently. This must be food for thought for India.
📰 Search for quality
SEBI’s proposed rules may not necessarily improve the quality of credit rating services
•Credit rating agencies may be in for a tough ride as the Securities and Exchange Board of India continues to tighten the screws on them. The market regulator has released a consultation paper seeking feedback on a new set of rules drafted to improve “market efficiency” and enhance “the governance, accountability and functioning of credit rating agencies”. Among them are provisions to restrict cross-shareholding between rating agencies without regulatory approval to 10%, and increase the minimum net worth requirement for existing and new agencies from Rs. 5 crore to Rs. 50 crore. Another mandates at least five years’ experience for promoters of rating agencies. SEBI has proposed disclosure norms to improve investor awareness about the operations of rating agencies. The spin-off of non-core operations of rating agencies will allow SEBI to focus on regulating just their credit rating operations. SEBI has spelt out its rationale for proposing each of the rules. SEBI’s predominant concern, apart from improving the information available to investors, seems to be to prevent rating agencies from resorting to collusion in reaching decisions. This effort is in line with SEBI’s crackdown on the agencies after the default in 2015 of a highly-rated debt issued by Amtek Auto.
•The new rules, if they come into force, may not have any substantial impact on the quality of credit rating in India. Prima facie , the intended effects of the rules sound convincing. What is unclear are their unintended effects on competition in the rating space. Also, how the rules will address the problem of “rating shopping” that plagues the business of credit rating in the country is unknown. The present business model of rating agencies is seen to allow considerable room for issuers of securities to shop for a favourable rating or avoid negative ratings by severing their ties with these agencies. Prudential regulation is thus justified to tackle this problem. This criticism, however, ignores the reputational damage these agencies suffer after each corporate default. Repeated failures have not affected the business of rating agencies, primarily due to the lack of alternative service providers who can help out investors. Individual creditors have thus had to trust the ratings of the existing rating agencies at their own peril, even after repeated crises. As is well-known today, the Indian credit rating market is an oligopolistic one due to the high barriers to entry. SEBI’s proposed move to impose further quality requirements on rating agencies is unlikely to change things for the better, or raise further barriers. The way forward lies in making it easier for new players to enter the credit rating space and compete against incumbents. This will go a long way towards making credit rating agencies actually serve creditors rather than borrowers.
📰 A forest policy on today’s terms
The National Forest Policy must be refreshed as it contains concepts that have been long discarded
•The Union Ministry of Environment, Forest and Climate Change as well as all State Forest Departments are guided by the National Forest Policy, 1988, which states: “The basic objectives that should govern the National Forest Policy are the following: Maintenance of environmental stability through preservation and, where necessary, restoration of the ecological balance that has been adversely disturbed by serious depletion of the forests of the country.”
•This laudable aim is obscured by the unfortunate fact that there is no such thing as an ‘ecological balance’. The term originated as ‘the balance of nature’ in ancient Greece and was quoted off and on through the Middle Ages. However, with a better understanding of the functioning of natural systems, the concept was completely rejected by the beginning of the last century and does not find mention in textbooks of ecology. Similarly, the concept of ‘environmental stability’ is questionable because it is evident that natural processes are never stable or stagnant but are always in the process of change and succession. Therefore, environmental stability is a myth.
Defining a forest
•It is interesting that there is no official definition for the term ‘forest’ yet, despite ministries and government departments being named after it. In order to couch the laudable goals of the 1988 National Forest Policy, in valid terms, we would first need to define the term ‘forest’. This is not a difficult task, since a forest is a self-sown and self-regenerating community of plants that supports a community of creatures dependent on those plants, and on each other, for food and shelter.
•The ‘self-sown’ bit is important in the Indian context, since vast amounts of public money have been spent on ‘planting forests’, which is an oxymoron. Naturally there are no results to show for these ‘planted forests’, and Haryana has recently shown the way by practically stopping ‘forest plantation’ in favour of protecting and permitting existing vegetation to grow.
•Having defined a forest, we can now state the primary aim of the 1988 National Forest Policy in the following valid terms: “Maintenance of a healthy natural environment through preservation and, where necessary, restoration of the original natural ecosystems that have been adversely affected by over-exploitation of the forests and other natural resources of the country.”
•It may be noted that the term ‘original natural ecosystems’ refers to the state of affairs prior to their exploitation by humans.
•The second point of the policy states: “Conserving the natural heritage of the country by preserving the remaining natural forests with the vast variety of flora and fauna, which represent the remarkable biological diversity and genetic resources of the country.”
•Perhaps this should include grasslands, wetlands, and other ecosystems, and could therefore be stated as follows: “Conserving the natural heritage of the country by preserving natural forest and other ecosystems with their vast variety of flora and fauna, and encouraging such ecosystems to expand into areas they had formerly colonised, but from where they have been extirpated.” This would suggest that degraded lands be protected so that original ecosystems can re-establish themselves on those lands. When land has been thoroughly degraded, the usual succession is grasses, shrubs, bushes and, finally, trees. By planting trees directly in such areas, we try to jump the gun, but the build-up of top soil and soil microorganisms that proceeds from a succession is missing, hence the large-scale failure of such plantations.
•The third point needs some modification, too. It states: “Checking soil erosion and denudation in the catchment areas of rivers, lakes, reservoirs in the interest of soil and water conservation, for mitigating floods and droughts and for the retardation of siltation of reservoirs.”
•It does not suggest how this is to be done and why this point fits in, in the policy. Perhaps if it were stated in this way: “Protecting the catchment areas of rivers, lakes, reservoirs to enable natural vegetation to grow back unhindered to conserve soil, help groundwater recharge, for mitigating floods and droughts and for retardation of siltation of reservoirs.” The justification for this wording is that the natural vegetation of an area has evolved over millennia to adjust to the rainfall regime, soil conditions, and the subsurface water systems of an area. In places where catchment areas have untouched natural vegetation, rainfall percolates into the soil and is released over a period of months, resulting in perennial streams and rivers. Where this has been damaged, the streams, rivulets and rivers have become seasonal, as in peninsular India.
•The final point that needs modification is 2.2 of ‘basic objectives’: “The principal aim of Forest Policy must be to ensure environmental stability and maintenance of ecological balance including atmospheric equilibrium which are vital for sustenance of all lifeforms, human, animal and plant. The derivation of direct economic benefit must be subordinated to this principal aim.”
•This is a laudable point, but the terms of reference are not valid. Therefore, it might be better to state this in the following terms, so that the spirit of what is being stated is not lost: “The principal aim of Forest Policy must be to ensure a healthy natural environment and the maintenance and healthy functioning of life-support systems, including the water cycle and nutrient cycle, by protecting natural forest and other ecosystems native to the area. The derivation of direct economic benefit must be subordinated to this principal aim since the indirect economic benefit of healthy life-support systems is incalculable.”
•The remainder of the Forest Policy document is stated in valid language and needs no modification.
A vital national goal
•Couched in these terms, the Forest Policy document develops an overarching responsibility for the Ministry of Environment, Forest and Climate Change towards restoring and maintaining the health of India’s surface and sub-surface water systems, since both are largely governed by forests and other natural ecosystems. The protection of healthy natural ecosystems in catchment areas should be a vital national goal, given the challenges of failing freshwater systems facing the nation at present. The State Forest Departments are the entities that can do the most in this context, by stopping invalid practices like planting forests and instead use that money in sensible ways to directly and indirectly protect natural ecosystems in sensitive areas like watersheds, catchment areas, and coasts, as has already been envisaged in the National Forest Policy, 1988.
•What is worrisome, however, is that in the 30 years since it was formulated, no officer of the Indian Forest Service has pointed out these shortcomings. There is clearly an urgent need to review the curriculum of the Indian Forest Service since it seems to rely on concepts that have been discarded more than a century ago.
