📰 Speed up trial of politicians, says SC
Asks Centre to frame scheme by Dec. 13 to set up special criminal courts to deal with their cases
•The Supreme Court on Wednesday asked the government to frame a central scheme for setting up special courts across the country to exclusively try criminal cases involving ‘political persons.’
•In a determined effort to cleanse politics of criminality and corruption, the apex court said it takes years, probably decades, to complete the trial against a politician.
•By this time, he or she would have served as a minister or legislator several times over.
Rejects argument
•Countering the Centre’s argument that setting up such courts would depend on the availability of funds with the States, the apex court said “the problem can be resolved by having a central scheme for setting up of courts exclusively to deal with criminal cases involving political persons on the lines of the fast track courts...”
•A Bench of Justices Ranjan Gogoi and Navin Sinha ordered the government to place the scheme before it on December 13, the next date of hearing. It said the scheme should provide details of the funds required to set up such courts.
•The Bench said the Supreme Court would directly interact with the State governments on issues like the appointment of judicial officers, public prosecutors, court staff and other requirements of manpower and infrastructure for the special courts.
Seeks report card
•Giving no quarter, the apex court directed the Centre to submit a report card by December 13 on the status of the 1,581 criminal cases pending against Members of Parliament and State Legislative Assemblies at the time of the 2014 elections.
•The court said it wanted to know whether its March 10, 2014 order to complete the trial in all these cases within a year’s time had been complied with or not.
📰 India, Bhutan security indivisible: President
Kovind conveys India’s deep appreciation of the personal involvement of the King in addressing the Doklam standoff
•The security of India and Bhutan is “indivisible and mutual”, President Ram Nath Kovind said here on Wednesday. The first such statement on the subject since the Doklam standoff with China ended in August indicates a closer engagement between India and Bhutan after the months-long episode.
•Mr. Kovind, who issued the statement after meeting Bhutan’s King Jigme Khesar Namgyel Wangchuck in Delhi, thanked the King for his “personal involvement” in addressing the Doklam crisis, the first time a reference has been made to the King’s role during the tensions between Indian and Chinese troops.
•“[The President] conveyed deep appreciation for the King of Bhutan’s personal involvement and guidance and the support provided by Bhutan in addressing the recent situation in the Doklam area. He added that the manner in which both India and Bhutan stood together to address the situation in the Doklam area is a clear testimony to our friendship,” said a press release issued by Rashtrapati Bhavan after the King and Queen of Bhutan met Mr. Kovind.
•However, neither the External Affairs Ministry nor the Bhutanese embassy responded to queries from The Hindu about the nature of the King’s role.
•Officials said the King, who is on a four-day visit to meet the President, Prime Minister Narendra Modi and senior Cabinet Ministers, will return to India for a formal “state visit” next year, which marks the golden jubilee of the establishment of diplomatic relations between the two countries.
•The Rashtrapati Bhavan statement is significant as it seeks to end speculation over India’s decision to send troops into land caught in a dispute between Bhutan and China.
•While Indian officials said the Indian troops went into Doklam at the request of the Royal Bhutanese Army, Bhutan’s government has never said so officially.
•In two statements issued on June 29 and August 29, the Bhutanese Foreign Ministry had said China was in violation of its agreements, but gave no statement on the Indian Army’s role there.
Clearing the air
•The visit by the Royal couple to Delhi this week is therefore being seen as not just a personal one, but one that signals a tacit endorsement of India’s actions during the Doklam crisis, as well as a reaffirmation of ties, analysts said.
•President Kovind’s comment that “security concerns of India and Bhutan are indivisible and mutual”, is also likely to be analysed closely for whether the two are considering a new formulation in their ties post-Doklam.
•Although Article 2 of the India-Bhutan Friendship Treaty of 1949 had said Bhutan would be “guided by the advice” of India on its external relations, the treaty was amended in 2007 to a less entwined “close cooperation on various issues relating to their national interests.”
📰 Nirmala flags Indian Ocean issues
Says extra-regional nations building naval outposts in the region raises tension
•Defence Minister Nirmala Sitharaman on Wednesday expressed concern at the increased militarisation in the Indian Ocean and the extra-regional nations setting up a “near permanent presence” in the region, in an apparent reference to the expanding Chinese presence in the region.
•“We have also witnessed extra-regional nations maintain near permanent presence within the region on one pretext or the other. In order to sustain such a presence through operational turn around, these countries which are extra-regional are creating naval outposts as well as dual-use infrastructure in the region,” Ms. Sitharaman said.
•She was addressing the first Goa Maritime Conclave of Navy Chiefs of Indian Ocean littoral states hosted by the Indian Navy at the Naval War College in Goa.
•Stating that there is an “incremental yet steady” increase in numbers of warships operating in the region, Ms. Sitharaman said this militarisation “increases the complexities for the countries of this region.”
•The GMC is intended to be held every year and aims to “bring together like-minded countries to evolve collective responses to challenges in the maritime domain.”
Maritime challenges
•Ms. Sitharaman said that land-based disputes and riparian issues which are predominantly a legacy of colonial rule are a key cause for conflict. “As international behaviour in the maritime domain is influenced considerably by land-based imperatives, cordiality or latent hostility prevalent among nations on land tends to get reflected in the seas too,” she stated.
•In the last few years, China has set up or acquired stakes in a series of infrastructure facilities in the region and has recently opened its first overseas military base at Djibouti in the Horn of Africa.
•The Chinese Navy has also maintained a steady presence of warships and submarines in the Indian Ocean under the garb of anti-piracy operations in the Gulf of Aden.
•To counter this, the Indian Navy has now put in place a new concept of ‘mission based deployment’ to maintain round the clock surveillance on India’s vital areas of interest across the length and breadth of the Indian Ocean Region (IOR).
📰 Mass bathing in Ganga aggravates anti-microbial resistance woes
Reason behind a broad spectrum of antibiotics becoming ineffective, finds govt.-commissioned study
•Mass-bathing in the Ganga during pilgrimages may be contributing to anti-microbial resistance (AMR), says a government-commissioned report on the threat from AMR. Such resistance —previously acknowledged to be widespread in India — is said to be the reason for certain key antibiotics becoming ineffective against diseases, including tuberculosis.
•Some years ago, researchers from the Newcastle University in the United Kingdom and the Indian Institute of Technology-Delhi sampled water and sediments at seven sites along the Ganga in different seasons.
•In 2014, they reported in the peer-reviewed Environmental Science and Technology that levels of resistance genes that lead to “superbugs” were found to be about 60 times greater during the pilgrimage months of May and June than at other times of the year. The researchers had then said preventing the spread of resistance-genes that promote life-threatening bacteria could be achieved by improving waste management at key pilgrimage sites. The report of the Ganga as a reservoir for AMR genes sits alongside a 2016 study by the Council of Scientific and Industrial Research — still not made public — that portions of the the river had “anti-bacterial” properties.
•The government report —— Scoping Report on Antimicrobial Resistance in India —made public on Wednesday cites this study too along with a compilation of all scientific studies done in India on the threat from AMR, causes and sources that aggravate it.
•The report was commissioned by the Department of Biotechnology and the UK Research Council and prepared by the Centre for Disease Dynamics and Economic Policy. It notes, like previous studies, that India has some of the highest antibiotic resistance rates among bacteria that commonly cause infections in the community and healthcare facilities.
•Resistance to the broad-spectrum antibiotics fluoroquinolones and third generation cephalosporin was more than 70% in Acinetobacter baumannii, Escherichia coli, and Klebsiella pneumoniae, and more than 50% in Pseudomonas aeruginosa.
•In 2014, India was the highest consumer of antibiotics, followed by China and the United States. However, the per-capita consumption of antibiotics in India was much lower than in several other high-income countries.
•Other than ‘cultural factors’ such as bathing in the Ganga, the drivers of AMR included excessive use of antibiotics in the livestock industry and unchecked discharge of effluents by the pharmaceutical industry. However, in spite of the challenge, too little work had been done so far to understand it. “This mapping exercise indicates that AMR research studies in India were of limited scope in all areas, ” the researchers noted.
📰 UN says carbon emissions gap could affect climate target
Paris Agreement pledges leave deficit that could raise temperature by 3°C
•The UN Environment Emissions Gap Report 2017 warns that a big carbon emissions gap exists between the levels that can be achieved in 2030 with present climate commitments, and what needs to be done using set pathways to limit increases in global average temperature to less than 2° Celsius or a more ambitious 1.5° C by the year 2100.
•The report says full implementation of the unconditional Nationally Determined Contributions (NDCs) and comparable action afterwards “could result in a temperature increase of about 3.2° C by 2100 relative to pre-industrial levels”, while full implementation of conditional NDCs would marginally lower that projection by about 0.2°C.
•The breaching of the safe limits that is possible even with current climate commitments — the NDCs that form the core of the Paris Agreement — indicates that governments will need to deliver much stronger pledges to cut greenhouse gas emissions when they are revised in 2020, said the report released ahead of the 23Conference of the Parties to the UNFCCC in Bonn, commencing on November 6.
•Fossil fuels and cement production account for about 70% of greenhouse gases, the report noted. The alarming number and intensity of extreme weather events in 2017, such as hurricanes, droughts and floods, add to the urgency of early action, it said.
Several green options
•The report reveals a large gap between targeted 2030 emission levels and those consistent with least expensive pathways to the 2°C and 1.5°C goals. The 2°C emissions gap for the full implementation of both the conditional and unconditional NDCs for 2030 is 11 to 13.5 gigatonne CO2 equivalent (GtCOe). The gap in the case of the more ambitious 1.5°C target is 16 to 19 GtCO2e. Should the U.S. follow through with its threat to leave the Paris Agreement in 2020, the picture could become bleak.
•The Paris accord pledges only a third of what is needed to avoid climate catastrophe, and adopting new technologies in key sectors, at investments of under $100 per tonne of emissions, could cut them by up to 36 gigatonnes per year by 2030, which is more than sufficient to bridge the current gap.
•A large part of the potential to close the emissions gap lies in solar and wind energy, efficient appliances and passenger cars, afforestation and stopping deforestation. These six factors hold a total potential of up to 22 GtCO2e per annum, the report says. Strong action on plugging other greenhouse gases, such as hydrofluorocarbons, through the Kigali Amendment to the Montreal Protocol, and other short-lived climate pollutants such as black carbon, could contribute.
•“One year after the Paris Agreement entered into force, we still find ourselves in a situation where we are not doing nearly enough to save hundreds of millions of people from a miserable future,” Erik Solheim, head of UN Environment, said in a media release.
•CO2 emissions have remained stable since 2014, driven in part by renewable energy, notably in China and India.
•This has raised hopes that emissions have peaked. But, the report warns that other greenhouse gases, such as methane, are still rising, and a global growth spurt could send CO2 emissions upward.
📰 India mulls national e-commerce policy
Says premature to talk with WTO now on global e-com rules as benefit unclear
•India is considering drafting a comprehensive national e-commerce policy to develop an ecosystem that would support exports and protect consumer interests, said a senior government official.
•However, the country is of the view that starting negotiations on World Trade Organisation (WTO) rules in e-commerce would be premature at this stage as it was still unclear how they would benefit developing nations, including their companies and consumers, said Sudhanshu Pandey, Joint Secretary, Ministry of Commerce and Industry.
•Addressing an interactive session on ‘e-commerce, digital infrastructure, trade rules and WTO,’ organised by industry body FICCI and Centre for WTO Studies, Mr. Pandey said several countries were enthusiastic about negotiating multilateral rules to govern international trade through e-commerce. However, such rules could hurt the interests of most developing countries, including India, he said, adding India needed time to study whether it was prepared to take on obligations that would bind its stakeholders to an international policy in a sector like e-commerce, which was still evolving.
•He said the Ministry of Electronics and Information Technology (MeitY) was working on a paper on e-commerce, which will soon be put in public domain for debates and comments. Inputs from the feedback could form the basis for a national e-commerce policy, he indicated.
•Mr. Pandey said about 24 papers had been submitted to the WTO for international rule-making on e-commerce. India would also engage in discussions with other developing nations on the issue for support for its stance.
Global e-com market
•Global e-commerce market was estimated at $25 trillion of which trans-border component was a minuscule 5% — meaning the remaining 95% was domestic e-commerce trade, he said.
•The size of the Indian e-commerce market was just $30 billion, he said. Mr. Pandey said national rule-making for e-commerce was also a daunting task as there were many issues which were overlapping. Thus, the varied arms of the Centre were trying to address the issues pertaining to their domain to help in formulating an overarching national policy for e-commerce.
📰 The war on TB
India registers a few successes butthe surveillance systems remain inadequate
•There is a glimmer of hope with India registering a slight drop in the number of new tuberculosis cases and TB deaths in 2016 compared with 2015. From an estimated 2.84 million new cases in 2015, the number dropped marginally to 2.79 million in 2016, according to the World Health Organisation’s Global tuberculosis report, 2017. Incidence estimates for India are considered interim, pending a national TB prevalence survey scheduled for 2017-2018. In terms of mortality, the drop was from 0.51 million in 2015 to 0.43 million in 2016. The number of deaths and the incidence rate have been falling both globally and in India. The targets set in the End TB strategy are global reduction of 20% in incidence and 35% in mortality by 2020, taking 2015 as the base year. To reach that target, the global drop in incidence has to be 4-5% a year — currently it is about 2% a year. Also, the percentage of deaths should come down from the current 16% to 10%. With India accounting for the highest TB incidence (23%) and mortality (26%) globally, success in realising the End TB targets hinges largely on the country strengthening its systems. The first step in defeating the disease and achieving the targets is to record every diagnosed patient through case notification (that is, when a person is diagnosed with TB, it is reported to the national surveillance system, and then on to the WHO). There was a 34% increase in case notifications by health-care providers in the private sector between 2013 and 2015. It improved from 61% in 2015 to 69% in 2016. But much work remains to improve case notifications as only 1.9 million TB cases in the public and private sectors were notified in 2016, leaving a 25% gap between incidence and notification, the largest in the world. Though notification was made mandatory in 2012, multiple surveys and surveillance data still show large under-reporting of detected TB cases, especially in the private sector.
•With a higher number of people with TB being tested for drug resistance, the percentage with resistance to the drug rifampicin alone more than doubled to 0.58 million in 2016 over the previous year. Also, the number of estimated multi-drug-resistant TB cases increased marginally to 84,000. But the number of people with MDR-TB enrolled for treatment improved marginally between 2015 and 2016 (from 26,996 to 32,914). For the first time, baby steps have been taken to offer preventive TB treatment to a small (5%) number of people who are HIV-positive, and 1.9% of children below five years who are household contacts of people recently diagnosed with pulmonary TB. Notably, domestic funding (74%, $387 million) for anti-TB work has been more than that from international sources (26%, $124 million). While better funding might help India inch closer to its stated goal of ending TB by 2025, much more is needed in terms of funding and commitment on all fronts.
📰 The stimulus and after
The recapitalisation of public banks is a welcome move but will be a lost effort without accompanying reforms
•The Financial Times of London described the recent recapitalisation of public sector banks in India as collecting used tiffin boxes. It said banks are like intermediaries, not unlike the dabbawalas of Mumbai who deliver home cooked meals to offices, and return used tiffin boxes back in the evening. Banks collects savings from depositors and give it to borrowers. The intermediaries have not been collecting their deliveries back (that is, the bad loans), and the clean-up is as messy as uncollected used tiffin boxes!
Low credit offtake
•The metaphor is a bit mixed up but catches the imagination. A better metaphor would be “cleaning the carburettor” of the credit pipeline. Bad loans have clogged the pipes, and new credit has stopped flowing.
•One of the most reliable leading indicators of economic growth is the growth of non-food credit. High growth in credit foretells healthy growth of GDP, since credit goes mostly into investment and building of new capacity. India is predominantly a bank finance-led economy, so when bank lending slows down, it surely impacts future growth. Bank credit growth has been at nearly a 60-year low. Even the growth of money supply is at a 55-year low. This stark metric tells us about the growth slowdown. Of course, there are many proximate causes as well, such as demonetisation and the roll-out of the goods and services tax (GST).
•Credit offtake slowed down because of both demand and supply side factors. On the demand side is the fact that industry has low capacity utilisation rates (factories lie idle); domestic industry is losing market share to low cost imports, made worse by GST, which has tilted the field in favour of imports, and also by the strong currency. The corporate sector is also deleveraging and paying off its past high debts. All this means demand from the private sector for large-scale new credit is muted.
Burden of bad loans
•On the supply side, the big constraint on fresh lending is the burden of non-performing assets (NPAs). The NPA ratio has been deteriorating for more than six years, and worse is yet to come. The diagnosis of worsening NPAs reveals five different causes, not all caused by the bankers themselves. The first is the disproportionate share of loans that went to infrastructure. These projects are of long gestation and long payback period, so unsuitable for bank lending. That creates an asset liability mismatch for banks, since the liability side is of a short-term nature. During the UPA regime, public-sector banks were under pressure to fund the ambitious $1 trillion infrastructure vision. Normally such projects ought to be funded by long-term bonds or developmental organisations like the World Bank or the Asian Development Bank, or the IDBI in its original avatar. But in the absence of those options of development finance, it fell to public sector banks to provide infrastructure finance. This led to over-exposure.
•The second reason for deterioration of loans could be the impact of key judicial decisions like abrupt cancellations of coal mines and spectrum allocation. When the same were re-allocated through expensive auctions, it proved to be a fatal burden on respective business models of power, steel and telecom. The third reason for worsening NPA ratios could be the delays caused by land acquisition and environmental clearances. This reason for NPAs was adequately documented in the Economic Survey. The fourth reason is the Asset Quality Review mandated by the Reserve Bank of India (RBI) in 2015. This was much needed, since it put a stop to the “extend and pretend” culture around worsening credit.
•To be fair, the RBI showed great regulatory forbearance in allowing lenders to work out remedies for genuine cases which faced a business cycle downturn. Various options were made available, including extending duration of loans, debt restructuring, swapping equity for debt and so on. But it does not seem to have made any significant difference. The NPA recovery process has since got a boost due to the new insolvency and bankruptcy law. The government too announced the Indradhanush scheme focused on banking reforms and recapitalisation of NPA-burdened banks. Two instalments of infusion in the past two years proved woefully inadequate as the NPA ratio continued to mount.
•The fifth reason for worsening NPA is an omnibus called “malfeasance”. This includes cosy relationships between banker and borrower, crony capitalism, political interference in lending decisions (a legacy of the past), a less than vigorous attempt to recover past dues, careless due diligence, etc.
•There may be other reasons as well. The fact is that 10% of all loans have gone bad. No wonder that after provisioning, for many public-sector banks their net worth would be completely eroded. Hence the days of piecemeal and feeble remedies are gone.
More reforms needed
•In the light of this background, the decision to inject Rs. 2.11 lakh crore of capital into public sector banks is a welcome boost. This was also evident from the reaction of the stock market as some bank stocks soared by as much as 35%. It is somewhat a moot point that this injection could have been done at least one year ago.
•The injection is clever because it has been done without busting the promised fiscal deficit target. It has been financed by the sale of recapitalisation bonds. Banks are currently flush with cash which was deposited after demonetisation. Much of that same cash will be used to buy those bonds. The proceeds of the sale of these bonds will be put back into the bank as fresh equity by the government. It’s a neat roundtrip of depositors’ cash coming back as capital. To that extent it is taxpayers who are funding this equity injection. More details are awaited. For instance, since banks are listed entities, should not other shareholders apart from the government also be asked to make a matching equity infusion? What about the windfall gains that arose as a result of this equity infusion? How will the bonds be repaid by the government? What will be their duration? Will they be traded? Would they instead be converted into perpetual bonds, never to be repaid, as was done to the 1992-93 bonds?
•Suffice to say that this capital infusion provides banks with the much-needed room to make fresh loans. In the coming days of Basel-3 where much capital is needed for risk provisioning, the NPAs are a millstone which prevent fresh lending.
•With this big bang recap effort, we can expect the growth pipes to be unclogged. Of course, the recapitalisation effort is useless without accompanying reforms which can prevent a recurrence. Those reforms are mostly about governance, meaning granting genuine autonomy to banks in their functioning, including all aspects such as lending, recovery, and recruitment decisions. Banks have to be accountable to shareholders, including the government, through their respective boards. That’s the fourth crucial “R” that was part of this recap package – recognition, recapitalisation, resolution and reform. Without reform of credit functioning, culture, treatment of delinquencies and even ownership structure in banking, this recap effort will only be stopgap. Assuming reform is coming (witness the huge increase in India’s global rank in ease of doing business), let’s raise a toast to the bank recap.
📰 Moving up
India moves up the doing business index,but the challenges remain formidable
•India’s surge in the latest World Bank report on “the ease of doing business” around the world — from the 130th position last year to the 100th — could not have come at a better time for the government. Facing sustained criticism of late over its handling of the economy, it was not entirely surprising that Finance Minister Arun Jaitley held a press conference just to discuss the findings of the Bank’s report. He reiterated the commitment to pursue more reforms, especially in areas where the Index still rates India poorly among 190 countries. Prime Minister Narendra Modi has set for his government the target of entering the top 50 in the Bank’s index, from the 142nd rank India was placed at in 2014 soon after he assumed office. Specific steps to cut red tape seem to be paying off, with the Bank recognising India as one of the top 10 countries that have made improvement over the past year, and the only large country to see a significant shift. The introduction of the new insolvency and bankruptcy resolution process, simplifications in the payment of statutory dues such as provident fund contributions and corporate taxes and easier access to credit are among the key changes that spurred India’s latest ranking. It is also notable that India is now the fourth best placed in the world for minority investors, well ahead of several developed nations.
•The Bank’s report, based on executive actions and ground-level feedback from businesses in Mumbai and Delhi till June 1 this year, however, does not take into account the impact of the goods and services tax launched a month later. The quality and pace of course correction on the GST in the coming months will determine if India can hold its 100th position or move up further. Talking up the Modi government’s approach, Mr. Jaitley sought to contrast the UPA era with the NDA’s tenure by saying that the ease of doing corruption has been replaced by the ease of doing business. While the government has valid reasons to be upbeat, it must not lose sight of the larger challenges. The enforcement of contracts now takes longer than it did 15 years ago, while procedures to start a business or secure a construction permit remain cumbersome. As the country’s largest urban agglomerations, Mumbai and Delhi cannot host the kind of large factories that India needs to generate adequate employment. It is critical that such procedural reforms reach the hinterland and a road map be drafted for the larger legislative changes needed in matters such as land acquisition. Lastly, while foreign investors are important, they often take their cue from the mood of domestic businesses. Last week, for instance, Sunil Bharti Mittal said the ease of doing business remains a concern despite the government’s best intentions, and mooted a structured dialogue between India Inc. and policy-makers on the irritants to investment. The government, with great orators in its ranks, could perhaps be a better listener.
