📰 India, Myanmar seal deal
Foreign Secretary Jaishankar signs agreement for development of Rakhine state
•Highlighting the need to repatriate displaced Rohingya refugees, India on Wednesday signed an MoU with Myanmar.
•Foreign Secretary S. Jaishankar, during his ongoing visit to Myanmar, signed the MoU that will help create conditions for the return of the displaced Rohingya and held discussions with State Counsellor Daw Aung San Suu Kyi and other senior officials at Nay Pyi Taw.
•The MoU will include building of pre-fabricated homes for the displaced population.
📰 Wait and watch: on U.S. security strategy
India should be wary of being drawn too tightly into the U.S. security embrace
•India has unequivocally welcomed U.S. President Donald Trump’s announcement of the National Security Strategy (NSS) for his country during his tenure. To be sure, the positive words used in the international section of the 55-page strategy paper represent an affirmation of India’s stature, and acknowledge “India’s emergence as a leading global power”. It mentions plans to “encourage Indian economic assistance in the region”, and outlines U.S. support to India’s “leadership role in Indian Ocean security and throughout the broader region” as a priority. Mr. Trump’s views of China’s assault on the “sovereignty” of South Asian nations and of Pakistan’s continued support to terror groups are closely aligned with India’s concerns in the neighbourhood. It is significant that the U.S. has highlighted them. In its response, New Delhi has “appreciated the strategic importance” given to India as well as the common objectives that India and the U.S. now share. Predictably, the five countries singled out by the U.S. for criticism have not been as warm in their response. China has accused the U.S. of pursuing what it calls a “cold war mentality and the zero-sum game”. Russia has said that the strategy reeks of “imperialism” as the NSS accuses China and Russia of using their military might to deny America access to what it calls “critical commercial zones”. Pakistan, Iran and North Korea have also been dismissive.
•India must be mindful, therefore, that in welcoming the U.S.’s categorisations of its security threats, it doesn’t unthinkingly get swept into an American clinch. To begin with, the U.S. articulation of its perceived challenges has swung wildly over the past year of the Trump administration. It would be wise to await a stabilisation in Mr. Trump’s policies, or at least concrete action to back its words. For example, while the U.S. has talked of countering China’s influence in South Asia, it has not backed this with actual financial assistance for infrastructure critical to the region. Equally, while Mr. Trump’s words on Pakistan and terrorism are sharp, the U.S. has yet to show its hand, either in terms of military action or withholding of coalition support funds. While the U.S. strategy deals with global concerns, the past year has seen American withdrawal from pacts ranging from the Trans-Pacific Partnership to the Paris agreement on climate change. A tough U.S. security strategy can only be realised through cogent policymaking — whether it is on Israel-Palestine, North Korea, Iran or Afghanistan, Mr. Trump has been publicly at odds with his key advisers. A watch-and-wait stance is still India’s best option to preserve the autonomous and pluralistic nature of its engagement in areas where the U.S. faces its greatest challenges.
📰 Pakistan issues visas to Kulbhushan Jadhav’s wife and mother
They will be allowed to meet him, accompanied by an Indian embassy official, on December 25
•The Pakistan High Commission in New Delhi on Wednesday issued visas to the wife and mother of alleged Indian spy Kulbhushan Jadhav to allow them to meet him on December 25, Foreign Office spokesman Dr Mohammad Faisal tweeted.
•Earlier this month, Pakistan said that it would allow them to meet him on humanitarian grounds. Islamabad also allowed them to be accompanied by an Indian embassy official as requested by New Delhi.
•On November 10, Pakistan had offered to arrange a meeting between Mr. Jadhav and his wife. A Note Verbale to this effect was sent to the Indian High Commission in Islamabad. But India insisted that Mr. Jadhav's mother be included as well, with an Indian High Commission official present during the meeting. Pakistan accepted both demands.
•Mr. Jadhav, who India claims was a former Navy official, was arrested by Pakistan law enforcement agencies on March 3, 2016 after he allegedly crossed over into Pakistan from Iran.
•His video confession was released by Pakistani military last year in which he stated that he was tasked by RAW to plan, coordinate and organise espionage, terrorist and sabotage activities aimed at destabilising and waging war against Pakistan. India rejected the allegations that Mr. Jadhav had any connection with RAW.
•Mr. Jadhav was sentenced to death by a military court, and his clemency appeal is pending with the Army Chief General Qamar Javed Bajwa for the past four months. Pakistani officials said that there are still two forums of appeal left for Mr. Jadhav even if the Army Chief refuses his mercy appeal.
•India went to the International Court of Justice against the conviction, and secured a stay on May 18. Pakistan earlier this week filed a counter-memorialin the ICJ.
📰 Lobbying intensifies for India’s UNGA vote on Jerusalem
The draft resolution on the status of Jerusalem to be presented on Thursday expresses deep “regret” on the US’ stated position on Jerusalem and calls for “the final status of Jerusalem to be resolved through negotiations.”
•International lobbying has intensified to get India on board for the session of the United Nations General Assembly (UNGA) on Thursday where the biggest platform of the UN is likely to adopt a resolution in opposition to U.S. President Donald Trump’s recognition of Jerusalem as the capital of Israel. The meeting of UNGA comes in the backdrop of a similar meeting of the Arab League which has asked for reversing of the decision even as Indian diplomats indicated that they will maintain that third parties do not decide Indian “foreign policy postures”.
•“We have met with Minister of State for External Affairs M.J. Akbar ten days ago to discuss the US decision and the Indian position in support of the Palestinian case and the peace process,” said a senior Arab diplomat indicating that a diplomatic team representing Arab concerns on Jerusalem held consultation with the officials of the Ministry of External Affairs on Wednesday. However, there was no indication from the MEA if India would support either party.
•“Third parties don’t decide our foreign policy postures. For us this is all par for the course,” said a senior Indian official in response to a question on whether India will vote with the Arab countries or support President Trump’s decision.
•The draft resolution on the status of Jerusalem to be presented on Thursday expresses deep “regret” on the US’ stated position on Jerusalem and calls for “the final status of Jerusalem to be resolved through negotiations.” A similar resolution was vetoed by the US at the UN Security Council although the US found itself isolated with all other members voting in favour.
📰 Capital crisis — on U.S. recognising Jerusalem as Israel’s capital
By recognising Jerusalem as Israel’s capital, the U.S. has endangered the peace process
•U.S. President Donald Trump’s decision to recognise Jerusalem as the capital of Israel, despite warnings at home and abroad, will worsen the Israel-Palestine conflict. Jerusalem, which houses holy places of all three Abrahamic religions and is claimed by both Israelis and Palestinians, is at the very heart of the dispute. Israel built its seat of power in West Jerusalem decades ago and occupied the East during the 1967 war, and later annexed it. Palestinians insist that East Jerusalem should be the capital of their future state. Even though there is a Congressional resolution in the U.S. urging Washington to relocate its embassy from Tel Aviv to Jerusalem, previous American Presidents avoided doing so given the legal, ethical and political implications of the issue, besides their commitment to a negotiated two-state settlement. By breaking with this consensus, Mr. Trump has in effect endorsed the Israeli claims to East Jerusalem. The decision will likely help him bolster his image among the Jewish lobby in Washington as well as American evangelical groups, his social base. Israel is obviously happy. Though Arab countries have voiced protest, they are unlikely to challenge an American decision. Mr. Trump’s move raises vital questions about U.S. diplomacy in the region besides putting new roadblocks in the peace process. It could be viewed as illegal as the Israeli claim that Jerusalem “complete and united” is its capital has been declared “null and void” by UN Security Council Resolution 478, which also asks member-countries to “withdraw diplomatic missions from the Holy City”. The U.S. is now acting against the spirit of this resolution.
•The Jerusalem gambit risks triggering another cycle of protests and repression in the Occupied Territories. In 2000, Ariel Sharon’s visit to the al-Aqsa compound in the Old City sparked the second intifada. Palestinians are expressing similar distress today. The peace process is not going anywhere, while Israel has gradually been tightening its occupation and building new settlements. Hamas has already called for a third intifada. In the longer term, Mr. Trump has just made the two-state solution more complicated. The Israeli-Palestine conflict can be settled only after an agreement is reached on the status of Jerusalem. The city was not part of Israel in the original 1947 UN plan to partition Palestine. Jerusalem, which was supposed to be ruled by an international trusteeship, was conquered by Israel. This is why the UN has not recognised it as Israel’s capital. With his latest announcement, Mr. Trump has endorsed the occupation. And in doing so, he has undermined the U.S.’s position as a neutral broker in Israeli-Palestinian talks. In short, he has dealt a blow to the peace process.
📰 Sri Lanka is keen to introduce an Aadhaar-like initiative
Colombo also wishes to launch an app like UMANG
•Sri Lanka will explore launching an application similar to the Unified Mobile Application for New age Governance (UMANG) in India, and it is in talks with New Delhi at the highest levels, said Minister of Telecommunication and Digital Infrastructure Harin Fernando. “We can save $2 million a day if we digitise all our operations,” Mr. Fernando told Colombo-based foreign correspondents on Wednesday.
•Sri Lanka is also keen on adopting a mass digital initiative like the Aadhaar in India, he said. Union Minister for Electronics and Information Technology Ravi Shankar Prasad will undertake a two-day visit to the island next month for discussions on bilateral cooperation and possible Indian investment in the sector, he said.
Investment possibilities
•“Indians see a lot of potential in Sri Lanka, especially in the IT sector. The environment here is very conducive for investment,” Mr. Fernando said, adding that the government would soon form a new digital secretariat to streamline initiatives pertaining to information and technology.
•In a separate initiative, the government has also been pushing for digitising the national identity cards of Sri Lankans with biometrics, a move that has made privacy advocates in the country concerned.
•Mr. Fernando said the Ministry aims to give Sri Lankans a unique identification number each, linked to their biometrics, to enable easier access to government schemes and services. He said such initiatives would not only help citizens access schemes and funds meant for them, but also help keep a check on corruption. The Ministry, he said, would liberalise the sector and opt for a highly privatised model.
•Recognising the importance of connectivity in digitisation, the government is focussing on creating at least 30,000 public wi-fi spots, including in 10,000 schools to enable students to use technology, he said. “Prime Minister Ranil Wickremesinghe is keen that school students be given tablets, and he has also discussed the initiative with the Indian Prime Minister,” said Mr. Fernando.
📰 SSB enhances security next to Doklam area
Plans to set up new border posts
•Political changes in Nepal and the growing Chinese influence in the neighbouring country are some of the major challenges for the Sashastra Seema Bal (SSB), the Central armed force deployed along the Nepal-Bhutan border.
•The SSB said it was “more alert” and was enhancing its strength and establishing new border posts in Sikkim along the Bhutan frontier, next to the Doklam region that recently saw a standoff between Indian and Chinese forces.
Porous Nepal border
•SSB Director General Rajni Kant Mishra, while interacting with journalists on the occasion of the force’s 54th Raising Day, shared a presentation on “operational challenges” which said 27% of pillars were missing along the Nepal border.
•“We are [deployed] just below the tri-junction (India-Bhutan-Tibet), on the southern part of it. On the Bhutan border, in Sikkim, we are more alert and there is going to be a slightly increased strength on that border. We are going to get some BoPs (border outposts) and a battalion headquarters is coming up there,” Mr. Mishra said when asked about the SSB’s preparations in view of the 73 day-long military standoff between India and China in Doklam last summer.
•Mr. Mishra added that the location and land for the new BoP that would come up in Yuksom in Sikkim had been cleared by the government and it should not be seen as a development coming in the aftermath of the Doklam standoff. “We have the sanction to establish a total of 734 BoPs along both the Nepal and Bhutan borders and we have 635 now on the ground,” he said.
•With the establishment of the battalion headquarters and the BoP, almost 1,000 more troops would be deployed in the area.
📰 Finding used copters for Kabul
India is planning to buy aircraft from other countries for Afghan forces
•In a bid to bolster Afghanistan's air capabilities, India is considering buying several second-hand Russian-made Mi35s for the Afghan National Defence Security Forces (ANDSF) from other countries, a move that signals closer cooperation between New Delhi and Moscow on Afghanistan, Indian and Afghan officials confirmed to The Hindu.
•The proposal comes after a request from the Ghani government, including during a visit to Delhi by Afghanistan's National Security Advisor Hanif Atmar in October, and follows several visits to Moscow by Indian officials to discuss the logistics.
•An Indian Defence Ministry team is also expected to travel to an East European country, possibly Serbia or Ukraine, that still operate Soviet-era aircraft, and an Afghan defence team is expected in Delhi "shortly" to follow up on the discussions, a diplomat said.
•Officials also said that there was heightened urgency for the helicopter transaction, as all seven of the old Mi-25/35 attack helicopters and Cheetal utility helicopters transferred by New Delhi to Kabul in 2015-2016, have been grounded and need repairs.
•Asked about the proposal, Afghanistan's Ambassador to India Shaida Mohammad Abdali said that he was "looking forward" to closer India-Russia cooperation that will benefit Afghanistan.
•“The Afghan forces are in a much better situation now and things will happen soon to help with the transition process [from Soviet-era to U.S. hardware]. India has been very helpful to fill the gap that exists for helicopters, as well as in getting the existing aircraft off the ground.”
•The helicopters and the promise to repair hardware for the ANDSF is part of a larger strategic tightrope India is walking, given traditional ties with Russia, and increasingly close ties with the United States as a part of U.S. President Donald Trump's South Asia policy.
•Effectively the plan will see New Delhi cooperating with Russia on military support for Afghanistan, with the U.S. on development support, and with Iran on trade cooperation for goods to Afghanistan.
•India is already training military officers including a batch of women officers at its military academies, and Afghan officials said they are hopeful that India would scale up the training for more "strategic-level" officers, as well as training the Medical corps of the ANDSF.
•Afghanistan is in the midst of a full transition from its old hardware, and Soviet–era generals, to U.S. hardware, and a next-generation NATO-model Army by 2022.
•By 2019, the ANDSF will begin to receive the first of a total 159 American Black Hawk helicopters, and the Mi-35 (Hind) series India is procuring will be integral to anti-terror operations in the country in the interim period.
📰 Cleaning up: on reviewing laws in India
A permanent mechanism is needed to review laws and weed out the obsolete ones
•If law-making is a long and tedious process, it appears that unmaking existing laws is an equally arduous task. How else does one explain the fact that until three years ago, a huge number of obsolete Acts remained in the law books despite losing their relevance and utility? It has been only in the last three years that nearly 1,800 obsolete laws have been repealed. In the latest round, 235 outdated Acts and nine pre-Independence Ordinances have been repealed. These pieces of legislation may have been relevant and necessary at the time they were introduced, but in the absence of a periodic review they continue to burden the statutory corpus. These laws are archaic mainly because the social, economic and legal conditions that required their enactment does not obtain today; they are also not in tune with the progress of democracy since Independence. Among the Acts repealed are the Prevention of Seditious Meetings Act, 1911, the Bengal Suppression of Terrorist Outrages (Supplementary) Act, 1932, and the Preventive Detention Act, 1950. The country still has a body of ‘anti-terror’ legislation as well as preventive detention laws. Although such laws remain in the statute books, these particular enactments are redundant. Other questionable legal provisions, for example, those on ‘sedition’ or exciting disaffection against the state, remain; so do ‘adultery’ and ‘sex against the order of nature’. Such obsolete concepts and notions that underlie law-making also require an overhaul.
•In a 2014 interim report, the first of four such reports on obsolete laws, the Law Commission noted that the panel had been identifying Acts for repeal in many of its reports in the past. Its 96th and 148th Reports recommended a good number of such laws. In 1998, the P.C. Jain Commission recommended the withdrawal of a large body of legislation, and also noted that as many as 253 Acts identified earlier for withdrawal still remained on the statute book. Nine ordinances issued by the Governor-General between 1941 and 1946, covering subjects such as war injuries, war gratuities and collective fines, are being removed from the statute book only now. It is odd, even amusing, that the Howrah Offences Act, 1857, the Hackney-Carriage Act, 1879, and the Dramatic Performances Act, 1876, have been in force well into the current century. The problem with not removing archaic laws is that they could be invoked suddenly against unsuspecting and otherwise law-abiding citizens. It is a welcome sign for good governance that the present government is updating and trimming the statute book. Given that legislation is quite a prolific activity, especially in the State Assemblies, it would be advisable to have a permanent commission to review the existing body of law and identify those that require repeal as often as possible.
📰 Ryan student to be tried as an adult
•The 16-year-old student of the Ryan International School, apprehended in connection with the murder of his schoolmate Pradhyuman Thakur, will be tried as an adult, the Juvenile Justice Board said here on Wednesday.
•Pronouncing its judgment around noon, the court said the juvenile in conflict with the law would be produced before the sessions court on December 22.
•The court had reserved its verdict on the application of Pradhyuman’s father, Barun Thakur, seeking the trial of the accused as an adult in the last hearing on December 15.
‘Historic order’
•Mr. Thakur’s lawyer Sushil Tekriwal said it was a “historic” order and a “turning point” in the high-profile case.
•“The juvenile will now be produced before a sessions court and the judge will then assign the case to the relevant Child Sessions Court,” said Mr. Tekriwal.
📰 No plan to take away J&K’s special status, says Centre
Article 370 gives autonomous status to Jammu and Kashmir
•The government informed Parliament on Wednesday that there was no proposal as of now for abolition of Articles 35A and 370 which give special status to Jammu and Kashmir.
•The reply came in response to the question posed by Akali Dal MP Sukhdev Singh Dhindsa.
•“No proposal regarding abolition of Article 35A and Article 370 in respect of Jammu and Kashmir is at present under the consideration of the government,” Minister of State for Home Hansraj Ahir said replying to a written question.
•Abrogation of Article 370, that gives autonomous status to Jammu and Kashmir, continues to be a part of the core ideology of the ruling BJP, but the party maintains that it does not have enough numbers in Parliament to do away with it.
•In case of Section 35A, a writ petition was filed in the Supreme Court by an NGO seeking its abrogation.
•The PIL said the Jammu and Kashmir government, under the guise of Articles 35A and 370, was discriminating against non-residents who are debarred from buying properties, getting a government job or voting in the local elections.
•Article 35A was added to the Constitution by a presidential order in 1954 and it empowers the State legislature to define the State’s “permanent residents” and their special rights and privileges.
📰 Another tool of resolution
The Financial Resolution and Deposit Insurance Bill does not take away from the government’s implicit guarantee to depositors
•The reason we need bank resolutions and also a special law to deal with the demise of a bank is simply because banks are special. They have become a repository of public faith in the financial system. So long as consumers have unrestricted access to deposits, their faith in the banking system is maintained. The fractional reserve system works on this faith. Thus, a failure of a bank has repercussions that go well beyond savings and lending; it has an impact on the systemic stability of a country. To this effect, Meera Nangia (Editorial page, “Banking on legislation”, November 9) is on point when she says that “the rules for bankruptcy of a regular business cannot be applied to bank failures.” The Financial Resolution and Deposit Insurance Bill is exactly that — an attempt to make the system more credible, less chaotic, and systematic in times when credibility is at risk, by treating banks differently from regular corporations.
•However, at the outset, she assumes that a bank is at the helm of decision making at a time the bank itself has failed. The Bill brings in a system of risk-based monitoring of financial institutions. At the stage of ‘critical’ risk to viability, when the proposed Resolution Corporation takes the decision to use a particular method of resolution which includes the tool of a ‘bail-in’, it is the Corporation that takes all decisions, and not the bank. A bare reading of the relevant provisions of the Bill shows that the Resolution Corporation can use this tool only in consultation with the regulator. It is an exaggeration to suggest that the Reserve Bank of India (RBI), along with the Resolution Corporation, will ‘bail-in’ depositor’s money to recapitalise the bank, especially when the Bill is designed to take away power from the failed financial institution at the stage of failure. This is exactly what happened during the global financial crisis, when tax-payer money was used to recapitalise the banking industry. Large financial institutions and their managements took unprecedented risks. When the crisis hit and bankruptcy loomed close, the risk-takers were not penalised. Instead, governments across the world panicked and recapitalised using public money. ‘Bail-in’ was an attempt to break this cycle of moral hazard and distributional inequity associated with ad hoc government hand outs.
Safeguards in the law
•On the larger issue of a bail-in and the threat to depositor money, among the most ignored provisions of the Bill are the safeguards to the use of bail-in tool. The Bill makes it explicitly clear that only such liabilities may be cancelled where the liability/instrument contains a bail-in provision. It makes it abundantly clear that the Resolution Corporation will specify the liabilities to be bailed in. These will be specified in regulations that will be put up in the public domain before finalisation. Creditors/depositors will need to consent in advance to have their liabilities bailed-in. Even when liabilities are being bailed in, the Bill makes it incumbent upon the Resolution Corporation to follow the prescribed route. Here, uninsured depositors are placed higher over unsecured creditors and amounts due to the Central and State governments.
•Lastly, the Bill gives aggrieved persons a right to be compensated by the Resolution Corporation if any of the safeguards have not been followed during a bail-in or in the conduct of any other resolution action.
•Before terming this a draconian law, it should be noted that the law provides for an ex-ante consent for certain liabilities to be bailed in. Some of the most developed resolution regimes in the world have a more stringent, mandatory regime in place. For instance, the EU Bank Recovery and Resolution Directive and Single Resolution Mechanism empowers authorities to impose mandatory restructuring of shareholder and creditor claims. This is not the case in India.
•In 2010, an article in The Economist article focussed on how a bail-in could have changed the outcome for Lehman Brothers in September 2008. Of course, in 2008 the only option was to choose between widespread systemic failure and a hurried taxpayer bail-out. Almost a decade later, when the rest of the world is finding ways to make its financial system more robust, we seem to be continuing with public discourse using incomplete information. The Bill simply adds another tool of resolution without taking away from the government’s implicit guarantee to depositors.
📰 No systemic risk due to bitcoins as yet: Tyagi
‘Panel looking into virtual currency’
•Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said that while bitcoins could not be ignored, the cryptocurrency had so far not posed any systemic risk and the government has formed a panel to look into it.
•Regulators, both domestic and global, have been closely watching the swift surge in the price of the virtual currency. Recently, the price of a bitcoin zoomed from $10,000 to more than $19,000 within a few days.
•“On the issue of bitcoins, the government is looking into it in consultation with the RBI and the SEBI. The panel, also comprising finance and information technology ministries, is looking into what to do about it,” said Mr. Tyagi, while speaking at a summit organised by industry body CII.
•Currently, bitcoins do not come under the purview of any regulator in India though the RBI, on December 5, issued its third warning to investors on concerns relating to investing in bitcoins, reiterating concerns conveyed earlier in December 2013 and February 2017.
•Last week, the I-Tdepartment had conducted surveys at many Indian start-ups that offer a platform to buy and sell bitcoins.Such start-ups have seen a significant rise in the number of Indian individuals wanting to trade in the virtual currency. However, he added that there should not be any regulatory oversight on blockchain technology, used to deal in cryptocurrencies such as bitcoin, ethereum and litecoin among others.
•“Blockchain technology that everyone uses and is useful, should not have regulatory oversight and that’s something which needs to be encouraged and we are also encouraging it,” he said.
📰 Rising crude oil prices, fiscal slippage a concern, says Patel
Uncertainties persist on fiscal, external fronts: RBI Governor
•Reserve Bank of India Governor Urjit Patel voiced concern over rising crude oil prices and fiscal slippage, during the meeting of the fifth bi-monthly monetary policy review held earlier this month.
•“The recent upturn in crude oil prices has emerged as a source of concern,” Dr. Patel said. “Several uncertainties, especially on the fiscal and external fronts, persist. It is, therefore, important to be vigilant,” he said, voting for a status quo. The central bank released the minutes of the monetary policy committee meeting, on Wednesday.
•RBI maintained status quo for the second straight meeting, which was voted by five out of six members.
•Only R.H. Dholakia had voted for a 25 bps rate cut. The key policy rate or the repo rate is currently at 6%.
•“Fiscal slippage concerns linger on. Should this risk materialise, it would have implications for the inflation outlook,” Dr. Patel said.
•While the RBI has maintained a neutral stance on interest rate, one of the members of the committee, M.D. Patra, said the time had come to be ready to go on the front foot. “Price pressures are no more confined to vegetables alone, as in previous readings; they are getting diffused across petroleum products, services, and into underlying inflation,” Mr. Patra said. Deputy Governor Viral Acharya, said “There seems little scope for accommodation or for change of stance at the present juncture.”
📰 The outlook for oil in 2018
How did oil fare in 2017?
•The price of oil rose this year as the supply-cut agreement signed by the Organisation of the Petroleum Exporting Countries (OPEC) in 2016 managed to survive despite a lot of speculation otherwise. Brent crude oil trades at around $64 a barrel currently, which represents a gain of over 12% year to date, after dropping to an intra-year low of just below $45 in June. It is notable that the price rise this year looks quite subdued compared to the rally last year which saw prices almost double after dropping below $30 in January. Still, the current price of oil is far from the historic highs, of well over $100, that lasted until the latter half of 2014.
What is oil’s nemesis?
•Like in the case of any other commodity, supply and demand determine the price of oil.
•On the supply side, shale oil producers in the United States, who killed a multi-year bull market in oil by ramping up global oil supply, are still the biggest threat to any significant rise in oil prices. Another problem that is likely to crop up as the price of oil slowly heads up north is the rising threat of OPEC members cheating on the supply-cut agreement. This could push down oil prices down as some rogue producers, wanting to exploit higher prices, will increase their investment and output.
•On the demand side, the shrinking of world money supply as central banks, particularly the U.S. Federal Reserve which supplies dollars used as currency in the oil market tighten monetary policy, will exert a downward pressure on the price of oil.
Where will oil go in 2018?
•As 2017 draws to an end, analysts have come up with varied targets for oil prices in 2018.
•Their estimates mainly depend on their judgment of whether OPEC will seize back control of the oil market. Last month, OPEC agreed to extend its supply-cut agreement until the end of 2018, which has led some analysts to stay bullish on oil. Agencies such as the International Energy Agency and the U.S. Energy Information Administration, however, foresee shale production rising in 2018 and beyond. If so, this should cap any significant rise in oil prices unless there is an equally strong response from OPEC to cut supply.
•In all, a secular bull market in oil looks unlikely given the stiff resistance offered by U.S. shale producers, who have shown their ability to cut costs at quick notice and survive in a bearish environment, against OPEC. Geopolitical tensions, however, may offer OPEC some brief respite at times.
📰 ‘PSBs not meeting recap target’
•The Finance Ministry on Wednesday said it had not provided the entire amount towards capital infusion in public sector banks as most of them failed to meet the performance target.
•As part of the Indradhanush Plan to revitalise state-owned lenders, the government had proposed to infuse Rs. 70,000 crore out of Budgetary Allocations in them. The plan envisaged Rs. 25,000 crore each in 2015-16 and 2016-17 and Rs. 10,000 crore each in 2017-18 and 2018-19.
•So far, it has infused Rs. 51,858 crore in public sector banks (PSBs).
•These include State Bank of India, Punjab National Bank, Canara Bank and Bank of India.
📰 Raise social security budget, Jaitley told
Economists for higher widow pension
•Sixty of India’s leading development economists wrote to Finance Minister Arun Jaitley on Wednesday asking for a big increase in the budget allocation for social security pensions and maternity entitlements.
‘Measly sum’
•“The Central Government’s contribution to old-age pensions under the National Old Age Pension Scheme (NOAPS) scheme has remained at a measly ₹200 per month since 2006,” the letter said. “This is extraordinarily stingy. It is also a missed opportunity: NOAPS is a good scheme (with low leakages and administrative costs) that reaches some of the poorest members of society.” The economists, who included Jean Dreze, Dilip Abreu, and Dilip Mookherjee, said that the Central Government’s contribution should be immediately raised to at least ₹500, which would require an additional allocation of about ₹8,640 crore, based on the current NOAPS coverage of 2.4 crore pensioners.
•“Similarly, widow pensions should be raised from ₹300 per month to ₹500 at the very least,” they said. “This would cost just another ₹1,680 crore.”
•“Maternity benefits of ₹6,000 per child are a legal entitlement of all Indian women (except those already covered in the formal sector) under the National Food Security Act 2013,” the letter added.
•“For more than three years, the central government did virtually nothing about this. On December 31, 2016, Prime Minister Narendra Modi finally announced that maternity benefits would be provided very soon. One year later, however, (1) the new scheme framed for this purpose (Pradhan Mantri Matru Vandana Yojana) is yet to be operationalised, (2) the provision made for it in the Union Budget 2017-18 (₹2,700 crore) is barely one third of what is required based on NFSA norms; and (3) in flagrant violation of the Act, PMMVY restricts the benefits to ₹5,000 for just one child per woman.”
•The economists asked for the Union Budget of 2018-19 to provide for a full-fledged implementation of the maternity entitlements as per the National Food Security Act, which would require at least ₹8,000 crore, based on a 60:40 ratio for Centre and state contributions.
•“Along with this, it is very important to streamline payment systems so that pensions and maternity benefits reach the recipients on time every month, e.g. by the 7th day of the month as directed by the Supreme Court in its order of November 28, 2001,” the letter said.
📰 ‘2017 may be among top 3 hottest years’
U.N. agency warns of long-term trend
•The year 2017 will likely be among the three warmest years on global record, according to the World Meteorological Organization (WMO).
•The first 11 months of 2017 were the third warmest on record, behind 2016 and 2015, with much-warmer-than-average conditions engulfing much of the world’s land and ocean surfaces, researchers said.
•Arctic and Antarctic sea ice coverage remain at near record lows.
•2017 may also be the warmest year without an El Nino — a climate phenomenon that causes global temperatures to shoot up.
•Data from NASA and the European Centre for Medium Range WeatherForecasts (ECMWF) shows that the past meteorological year (December 2016 to November 2017) is the second warmest on record.
•“What is more important than the ranking of an individual year is the overall, long-term trend of warming since the late 1970s, and especially this century,” said Omar Baddour, senior scientist at WMO.
Socio-economic impact
•“Along with rising temperatures, we are seeing more extreme weather with huge socio-economic impacts,” Mr. Baddour said.
•WMO will combine datasets from U.S. National Oceanic and Atmospheric Administration (NOAA), NASA’s Goddard Institute for Space Studies (GISS), and the Met Office Hadley Centre and Climatic Research Unit in the U.K. for a consolidated temperature ranking for 2017.
•According to NOAA, the month of November was the fifth warmest on record, whilst NASA and ECMWF Copernicus Climate Change Service both said it was the third warmest.
•During November 2017, warmer-than-average temperatures dominated across much of the world’s land and ocean surfaces, with the most notable temperature departures from average across the Northern Hemisphere.
•Parts of the western contiguous U.S., northern Canada, northern and western Alaska, western Asia and far eastern Russia had temperature departures from average that were 2.0 degrees Celsius or greater, according to NOAA.
•As an indication of swift regional climate change in and near the Arctic, the average temperature observed at the weather station has now changed so rapidly that it triggered an algorithm designed to detect artificial changes in a station’s instrumentation or environment and disqualified itself from the NCEI Alaskan temperature analysis.
•The omission was noticed by the National Centers for Environmental Information (NCEI), which realised that data from Reykjavik, Alaska had been missing for all of 2017 and the last few months of 2016.
📰 Reconsider the Rules: on 2017 Wetland Rules
The 2017 Wetland Rules limit monitoring and omit important wetland types
•Earlier this year, a judgment by the Uttarakhand High Court, stating that Ganga and Yamuna rivers are “living entities”, captured the national imagination. It is worth noting that wetlands, the other major water-based ecosystem apart from rivers, are at a moment of policy transition in the country. This year, a new legal framework for wetlands was passed, the Wetland (Conservation and Management) Rules, 2017, replacing the earlier Rules of 2010. Also this year, the Supreme Court passed an order directing States to identify wetlands in the country within a stipulated timeframe.
Going forward
•The 2017 Wetland Rules have been criticised for doing away with strong wetland monitoring systems and omitting important wetland types. At the same time, the Supreme Court order directs States to come forward and notify wetlands. What then could be the way forward?
•The 2010 and 2017 Rules for wetlands both emphasise that the ecological character of wetlands ought to be maintained for their conservation. ‘Ecological character’ refers to processes and components which make the wetland a particular, and sometimes unique, ecosystem. For example, as lagoons like Chilika (Odisha) and Pulicat (Tamil Nadu/Andhra Pradesh) are characterised by a mix of saline and fresh water, the flows of each type need to be maintained; river flood plains contain wetlands that require conservation so they can re-fuel the river with fish and other aquatic life during flooding.
•In the 2010 Rules, some related criteria were made explicit, such as natural beauty, ecological sensitivity, genetic diversity, historical value, etc. These have been omitted in the 2017 Rules. There are a few reasons why this is problematic. First, there is multiple interest around wetlands. Multiple interests also have governance needs, and this makes it absolutely necessary to identify and map these multiple uses. Leading on from this, and second, it is crucial to identify ecological criteria so that the wetlands’ character can be maintained. The key to wetland conservation is not just understanding regimes of multiple use — but conserving or managing the integrity of the wetland ecosystem. Finally, restriction of activities on wetlands will be done as per the principle of ‘wise use’, determined by the State wetland authority. Whether wise use will include maintaining ecological character remains to be seen. Under the new Rules, no authority to issue directions, which are binding in nature to desist from any activity detrimental to wetland conservation, has been prescribed to State wetland authorities.
•Salt pans are an example how one use (of making salt) has trumped the other (of environmental balance). Salt pans as ‘wetlands’ have been omitted from the new Rules. They were identified as wetlands in the 2010 Rules, as they are often important sites of migratory birds and other forms of biodiversity. The omission in the 2017 Rules suggests that while saltpans do exist as wetlands, they do not require any conservation or ecological balance. The inference can also be that it would be acceptable to tip the environmental balance or integrity of such a wetland, which could lead to damage and pollution.
The case of Deepor Beel
•The issue of wetlands being multiple-use areas — and subsequently being abused due to clashes of interest — found centre-stage this year with the observations of the National Green Tribunal (NGT) in the case of Deepor Beel.
•Deepor Beel is a Ramsar site and a part of it is also wildlife sanctuary in Guwahati, Assam. (‘Ramsar Sites are designated because they meet the criteria for identifying wetlands of international importance.’) This wetland harbours a wide variety of biodiversity, and also suffers from intense man-made pressure — the city’s municipal waste is dumped close to the Beel. Large, meat-eating storks (Greater adjutant storks) are ironically found eating from the mountains of garbage at the site. Potential impacts of contamination or poisoning from the garbage are still unknown. This January, 26 storks died. The fact that Deepor Beel (Beel means water body) exists as a wetland does not prevent garbage dumping; this is a fate faced by many wetlands. The NGT’s observations on Deepor Beel are interesting and symptomatic of what is happening in several wetlands. In an inspection done by the judicial member of the Tribunal, it was noted that waste was being dumped “not beyond the site but within it,” and “demarcations are made by drying out areas or cutting off water sources”. These are classic ways of killing a wetland and turning it from a wet to a dry ecosystem; or from a lake to a garbage dump or cesspool. The Tribunal has now asked for the “traditional” spread of the wetland.
•Given all the modern uses of wetlands, or the use of the wetland only for its land, looking at traditional cartography may be one way to understand catchments of wetlands. It may also be a way of restoring some modicum of ecological character, identity or ‘rights’ to wetlands, as the river judgment suggested. There are challenges ahead in identifying wetlands – multiple and competing use is just one of them. Understanding the historic spread and ecological character will be an important bulwark for the way forward. Setting clear governance systems would be the next. Without either, we are looking at a complete dilution of wetlands in the country.
