📰 Willing to talk to Kim: Trump
Mr. Kim has got the message that he was “no messing around,” and this could lead to a peaceful solution. “..if we can come up with a very peaceful and very good solution …that would be a great thing for all of humanity,” he said.
•U.S President Donald Trump said talks between North Korea and South Korea scheduled for next week was an outcome of his “firm stance” and he could talk to North Korean leader Kim Jong Un on the phone. “Absolutely I would do that. No problem with that at all,” he said, when asked whether he was “willing to engage in phone talks” with Mr. Kim. Mr. Trump was interacting with reporters at the Camp David Presidential retreat on Saturday.
•The North and the South are scheduled to talk next week, which is likely to pave the way for the North’s participation in the Winter Olympics in the South next month. The first formal diplomatic talks between the two Koreas in two years is taking place against the backdrop of furious public exchange of insults between Mr. Trump and Mr. Kim over Pyongyang’s nuclear capability that now threatens mainland America. Mr. Trump’s position on talking to the North has changed many times. He had once said his negotiating skills could lead to a resolution of the conflict with North Korea, but in recent times, he dismissed Secretary of State Rex Tillerson’s diplomatic efforts as a “waste of time.” Addressing the UN in September 2017, he threatened to “totally destroy” the North and America continues to maintain that it would not accept Pyongyang’s possession of nuclear weapons.
•On Saturday, he said it was his efforts that led the North to the negotiating table. “Look, right now they’re talking Olympics. It’s a start, it’s big start. If I weren’t involved they wouldn’t be talking at all right now,” Mr. Trump said. Mr. Trump said South Korean President Moon Jae-in thanked him for his tough stance. “He said -- and a lot of people have said, a lot of people have written -- that without my rhetoric and without my tough stance -- and it's not just a stance -- I mean, this is -- this is what has to be done, if it has to be done,” he said, in an oblique reference to this threats earlier.
•Mr. Kim has got the message that he was “no messing around,” and this could lead to a peaceful solution. “..if we can come up with a very peaceful and very good solution …that would be a great thing for all of humanity,” he said, adding that Mr. Tillerson and others were working on it.
📰 U.S. couldn’t foresee North Korea’s strides
Its intelligence underestimated Pyongyang’s access to technology and expertise
•At the start of Donald Trump’s presidency, U.S. intelligence agencies told the new administration that while North Korea had built the bomb, there was still ample time — upward of four years — to slow or stop its development of a missile capable of hitting a U.S. city with a nuclear warhead.
•The North’s young leader, Kim Jong-un, faced a range of troubles, they assured the new administration, giving Mr. Trump time to explore negotiations or pursue countermeasures.
•One official who participated in the early policy reviews said estimates suggested Mr. Kim would be unable to strike the continental U.S. until 2020, perhaps even 2022.
•Within months, those comforting assessments looked wildly out of date.
•At a speed that caught U.S. intelligence officials off guard, Mr. Kim rolled out new missile technology and in quick succession demonstrated ranges that could reach Guam, then the West Coast, then Washington.
•The U.S.’s inability to see the North’s rapid strides over the past several months now ranks among its most significant intelligence failures, current and former officials said in recent interviews. That disconnect — they saw it coming, but got the timing wrong — helps explain the confusion, mixed signals and alarm that have defined how Mr. Trump’s untested national security team has responded to the nuclear crisis.
•Senior intelligence officials acknowledged that they made two key assumptions that proved to be wrong.
•They assumed that North Korea would need about as much time to solve the rocket science as other nations did during the Cold War, underestimating its access to both advanced computer modelling and foreign expertise. They also misjudged Mr. Kim, 33, who took control of the regime in late 2011 and made the weapons programme more of a priority than his father did.
•The shakiness of intelligence on North Korea casts a shadow over Mr. Trump’s options going forward. If Mr. Trump attempted to destroy the arsenal, or if the North Korean government collapsed, the challenge would be to neutralise the weapons without any launch taking place or any warhead falling into the wrong hands. The more there are, the more difficult that task becomes.
•Siegfried S. Hecker, a former director at the Los Alamos National Laboratory, recently argued that North Korea needs “at least two more years and several more missile and nuclear tests” to perfect a weapon that can threaten U.S. cities.
•There is still time “to start a dialogue,” he said, “in an effort to reduce current tensions and head off misunderstandings that could lead to war.”
📰 Sushma Swaraj urges NRIs to come back
Asks people of Indian origin to take advantage of connectivity projects
•Setting the tone for the government’s outreach to the Indian diaspora, External Affairs Minister Sushma Swaraj on Sunday urged people of Indian origin to take advantage of India’s projects for connectivity to Southeast Asian countries.
•Speaking in Hindi at the ASEAN-India Pravasi Bharatiya Divas in Singapore, she said her Ministry prioritised the welfare of Indian citizens living abroad, and urged them to return home to take advantage of the economic opportunities.
•“Today, 16 Indian cities are connected to Singapore, a trilateral highway project from India to Thailand is making progress, and we plan to extend this further to connect India with other ASEAN countries. India has become a dominant power in the world, and that influence and that sense of power reaches every Indian,” she said.
•Referring to the challenges such as piracy in the high seas and the armed conflicts that Indians living abroad often encountered, she said her Ministry was committed to helping the crisis-struck Indians at a “supersonic speed”.
•She held talks with her Singaporean counterpart, Vivian Balakrishnan.
•Ms. Swaraj said Southeast Asia remained an inseparable part of the plan to convert the 21st century into the Asian century.
ASEAN summit
•Her comments came days before India hosts the heads of states of the Southeast Asian countries in Delhi on January 25 for the ASEAN-India Commemorative Summit, a high-profile display of its “Act East policy”.
•Ms. Swaraj, who was in Indonesia on January 5 and 6, had announced that President Joko Widodo would be one of the guests of the summit and the Republic Day parade.
•The push for ASEAN ties will be on display on January 9 when India hosts the first global meeting of parliamentarians of Indian origin.
📰 On triple talaq bill: Re-examine the Bill
Concerns about the triple talaq Bill must not be dismissed as an attempt to sabotage it
•The winter session of Parliament saw more political positioning than appraisal of a legislation to make instant triple talaq a criminal offence. With the Muslim Women (Protection of Rights on Marriage) Bill pending in the Rajya Sabha, the best option would be to refer it to a select committee to help bring about a consensus on how to address the problem of talaq-e-biddat, as there is no serious opposition to the principle that it is morally abhorrent and legally impermissible. The core question is whether resorting to an illegal and arbitrary form of divorce should necessarily lead to a prison term for the offending husband. A three-year prison term, besides a fine, also raises the issue of proportionality. The Opposition has raised three concerns: whether a civil wrong, mainly a breach of a marriage contract in an arbitrary manner, ought to be treated as a crime; whether it is not a contradiction of sorts for the law to jail a husband for pronouncing instant talaq and also mandate that he pay a subsistence allowance to the wife; and whether making it a cognizable and non-bailable offence would lead to it being misused against Muslim men. Further, some see an internal contradiction in the way the law is sought to be framed. On the one hand it says instant triple talaq in any form is void, thereby declaring that the marriage continues to subsist; but it also talks of issues such as the custody of children and maintenance, which would arise only after a divorce. These are valid concerns and cannot be dismissed by the BJP as arguments aimed to sabotage the Bill.
•The Bill is now in the Rajya Sabha, where the BJP and its allies do not have a majority. Some of its key allies, such as the AIADMK, the Telugu Desam Party and the Biju Janata Dal, are against the penal provision. The Congress, the main Opposition party, let the Bill sail through in the Lok Sabha, but has taken the position that referring it to a parliamentary committee may help remove some lacunae. Initially the party appeared to question the prescription of a jail term, but it has raised a new question. It wants to know whether the government would take care of the sustenance of the woman concerned if her husband is jailed for uttering triple talaq. The dilemma before the Congress is that it cannot be seen as reprising the role it had played over 30 years ago in the Shah Bano episode, when it brought in legislation to scupper a Supreme Court verdict in favour of a Muslim woman’s claim for maintenance. However, hasty legislation passed in the commotion of a divided House may not help the cause. A sound legal framework to deal with all issues arising from instant talaq ought to be crafted after deeper consideration.
📰 Standing up for human rights
•In his new year message, UN Secretary-General António Guterres referred to the pervasive and large-scale infraction of human rights across the world as a global challenge that defies our vision of a humane and just world order. The message is particularly relevant for us. This is because the torture of individuals in state custody remains a brazen human rights abuse that mocks our governance even as we claim human dignity as the end objective of the Indian state, with the Supreme Court affirming it as “an intrinsic value, constitutionally protected in itself” (Puttaswamy, 2017, M. Nagaraj, 2006).
Cause for concern
•As we move into the new year with hope in the future, we must pause to reflect on whether in our approach towards eliminating torture as an affront to human dignity, we have been caught between legislative lassitude and judicial abdication. I do confess to a disappointment while propounding the necessity of a purposive and comprehensive anti-torture legislation through a public interest litigation. The necessity to move the highest court arose because even years after India became a signatory to the Convention Against Torture in 1997, we have not been able to ratify it or have in place a domestic legislation to effectuate the right to life with dignity read into Article 21 of the Constitution. In a departure from judicial precedents established in Vishakha (1997), D.K. Basu (1997), Vineet Narain (1997), Association for Democratic Reforms (2002), Swami Achyutanand Tirth (2016) and the Triple Talaq (2017) case, the Supreme Court refrained from exercising even its limited nudge function to prompt the government into bringing the necessary anti-torture law. Acts of custodial torture continue to defy constitutional diktat and mock the Supreme Court’s declaration of torture as “...synonymous with the darker side of human civilization, is a naked violation of human dignity...” (D.K. Basu, 1997). The recent Constitution Bench judgment in Puttaswamy (Supra), citing its earlier judgments, reaffirmed that torture infringes on human dignity which is “inalienable and inseparable from human existence”.
Baffling stand
•The court’s disinclination to exercise its expansive review jurisdiction for enforcing the non-negotiable right to dignity in the face of legislative and government inaction is inexplicable given the court’s activism as sentinel on the qui vive qua enforcement of constitutional rights. And this despite the 2010 recommendation of the Select Committee of the Rajya Sabha supported by the National Human Rights Commission, the Law Commission of India and repeated assurances given on behalf of the Indian government at the UN Universal Periodic Review. The court remained impervious to its own jurisprudence expounded in Puttaswamy and NALSA (2014), among others, that unless there is a manifest intent expressed to the contrary, domestic laws should be aligned with the international legal regime on the subject. Those facing criminal trials and extradition proceedings abroad including Abu Salem, Kim Davy, Jagtar Singh Johal and others have questioned the country’s investigative and criminal justice system in the absence of an effective and enforceable law against custodial torture. The damning slur on the nation’s trial process and commitment to the rule of law itself was also not enough to move the court to exercise its “suggestive” jurisdiction. It seemed legitimate to expect the highest constitutional court to inspire legislation that would vindicate the ethic of human rights as it has done so often in the past. Its decision, to the contrary, in a petition seeking a comprehensive legal framework against torture betrays, with respect, judicial inconsistency and an irrational flexibility destructive of legal certitude necessary for law to serve a stabilising function in our polity.
Walk the talk
•The Prime Minister must surely know that when the dignity of a large section of its citizens is denuded, a diminished nation in default of its international commitments cannot expect to have its voice heard with respect in the chanceries of the world. The Vice President and Chairman of the Rajya Sabha, M. Venkaiah Naidu, who believes that human rights are guaranteed “...because of being a part of our DNA… ”, must walk the talk, also because a 2010 unanimous recommendation of the Rajya Sabha’s Select Committee proposing an anti-torture law remains unimplemented. The Attorney General likewise owes a moral responsibility to the nation in supporting the proposed dignitarian legislation against torture which is unburdened by a partisan political agenda. After all, it was his assurance to the court that the government was seriously considering the October 2017 recommendation of the Law Commission in support of a standalone anti-torture law which persuaded it to dispose of the petition without suggestive observations that would have strengthened a compelling constitutional cause with the court’s moral authority. Parliamentarians who are privileged to represent the concerns of the people must keep faith and ensure the passage of a humanitarian law.
•Whether or not the court was right in abdicating jurisdiction to enforce a dignitarian constitutional value in the premises aforesaid is best left to be determined at a later date, considering that the court itself has repeatedly disavowed any claim to infallibility. In the meanwhile, we must strive to set higher standards of accountability for our constitutional functionaries in 2018. I wish to be able to remember this year as one in which we invested our democracy with dignity in an inseparable coalescence, when hope triumphed over despair and sensitivity prevailed over apathy. This year should be the year of a fulsome affirmation of our right to question, lest our silence be seen as acquiescence in constitutional aberration. Let us keep digging in for the values that define our nation.
📰 Don’t divest AI, give it 5 years to revive: panel
‘Must not be evaluated solely from business point of view’
•This is not the appropriate time to divest government stake in Air India (AI), which should be given at least five years to revive and its debt written off, a Parliamentary panel is likely to tell the government.
•The panel is also understood to have concluded that the equity infusion in the national carrier, as part of the turnaround plan (TAP), was made on a “piecemeal basis,” adversely affecting its financial and operational performance and “forcing” the airline to take loans “at a higher interest rate to meet the shortfall.” The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest AI and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride.”
•Observing AI has always “risen to the occasion” at times of need like calamities or political unrest in India or abroad, the Committee said “it would be lopsided to assess and evaluate the functioning of AI solely from business point of view, as has been done by NITI Aayog.”
📰 INS Arihant left crippled after ‘accident’ 10 months ago
Nuclear submarine was damaged after water entered its propulsion chamber
•Indigenous nuclear submarine INS Arihant has suffered major damage due to ''human error'' and has not sailed now for more than 10 months, say sources in the Navy.
•Arihant is the most important platform within India’s nuclear triad covering land-air-sea modes.
•Arihant’s propulsion compartment was damaged after water entered it, according to details available with The Hindu. A naval source said water rushed in as a hatch on the rear side was left open by mistake while it was at harbour.
•The Ministry of Defence did not respond to questions from The Hindu.
The accident
•Since the accident, the submarine, built under the Advanced Technology Vessel project (ATV), has been undergoing repairs and clean up, the sources said.
•Besides other repair work, many pipes had to be cut open and replaced. “Cleaning up” is a laborious task in a nuclear submarine, the naval source said.
•The Arihant issue rose soon after INS Chakra, the Nerpa class nuclear submarine leased from Russia, was reported to have suffered damage to its sonar domes while entering the Visakhapatnam harbour in early October. However, INS Chakra has only a peripheral role in the nuclear triad, for both training and escorting, and Arihant is the one that will carry nuclear missiles.
•The absence of Arihant from operations came to the political leadership’s attention during the India-China military standoff at Doklam. Whenever such faceoff takes place, countries carry out precautionary advance deployment of submarine assets. Arihant (Code name S2) came into the limelight on July 26, 2009, when Gursharan Kaur, wife of Prime Minister Manmohan Singh, broke a coconut to mark its launch in Visakhapatnam.
•After that, the submarine was towed to an enclosed pier for extensive harbour trials from the dry docks at Ship Building Centre, away from public view. Arihant was quietly commissioned into service in August 2016 and its induction is still not officially acknowledged. It is powered by an 83 MW pressurised light-water reactor with enriched uranium.
•Senior naval sources maintain that Arihant has faced problems from the start. Initial delays could be just teething trouble, glitches at various stages of getting the reactor to go critical and during harbour trials; major differences between the Russian-supplied design and indigenous fabrication are said to have left many issues unaddressed satisfactorily.
Top gun for second strike
•Arihant , the country's only operational Ship Submersible Ballistic Nuclear (SSBN) asset, can stay undetected deep underwater for long periods, range far and wide. It is the most dependable platform for a second strike, given the country's “no first use” on nuclear weapons. The other options, land-based and air-launched, are easier to detect.
•The submarine is manned by 100 men with extensive training from the School for Advanced Underwater Warfare in Visakhapatnam and further hands-on training on INS Chakra.
•The second ballistic missile submarine, Arighat, was launched on November 19 for sea trials. The launch was kept a low-profile event, attended by Defence Minister Nirmala Sitharaman and senior Navy officers.
•A high-profile launch, to be attended by the Prime Minister, was put off.
Key to nuclear triad
•Arihant and other nuclear launch platforms are operationally handled by the Strategic Forces Command, and report to the Nuclear Command Authority chaired by the Prime Minister.
•However, the over 100 nuclear warheads are not mated with missiles or bombs and remain in civilian custody of the Atomic Energy Department and the Defence Research and Development Organisation.
Ambitious plan to build SSBN fleet
•India has an ambitious plan to build a SSBN fleet, comprising five Arihant class vessels.
•The naval sources say the plan hinges on Arihant’s success. It has taken 30 years to build it, at a high cost. “It was initially estimated to cost about ₹3000 crore for three boats — now the cost of Arihant itself seems to have gone over ₹14,000 crore,” a former high-ranking naval officer said.
•The Eastern Naval Command plans to operate its nuclear sub fleet from an independent Naval Operational Alternative Base (NOAB) being constructed on 5,000 acres at Rambilli, for direct access to the sea. The base is located about 50 km from Visakhapatnam, and jetties are under construction.
📰 UIDAI under fire for FIR against scribe
Reporter exposed breach in Aadhaar database; no gag on media: Authority
•The Unique Identification Authority of India (UIDAI), which has filed an FIR against a journalist who exposed a breach in its Aadhaar database, denied that it was trying to gag the media or whistleblowers.
•Facing widespread criticism for filing a criminal complaint naming a journalist of The Tribune among others, the Authority said on Sunday that it was “duty bound” to place all facts before the police and criminal proceedings have been initiated for the act of unauthorised access as it takes “criminal violations seriously.”
•In a statement on Sunday, the UIDAI, said “An FIR… has been registered in Cyber Cell of Delhi Police against Anil Kumar, Sunil Kumar, Raj, Rachna Khaira, The Tribune and other unknown persons for violations of Sections 36 and 37 of the Aadhaar Act, 2016, Sections 419 [punishment for cheating under impersonation], 420 [cheating], 468 [forgery] and 471 [using a forged document] of the IPC and Section 66 of the IT Act, 2000/8.”
•“UIDAI’s act of filing an FIR with full details of the incident should not be viewed as UIDAI targeting the media or the whistle-blowers or ‘shooting the messenger’,” it said.
Editors Guild condemns
•The Editors Guild of India, opposition parties and the local press clubs have condemned the action.
•Expressing serious concern over the FIR, the Editors Guild of India said, “It is clearly meant to browbeat a journalist whose investigation on the matter was of great public interest. It is unfair, unjustified and a direct attack on the freedom of the press.”
•“Instead of penalising the reporter, UIDAI should have ordered a thorough internal investigation into the alleged breach and made its findings public,” the Editors Guild said.
•Mr. Raj Chengappa, President, Editors Guild of India, said, “The Guild demands that the concerned Union Ministry intervene and have the cases against the reporter withdrawn, apart from conducting an impartial investigation into the matter.”
•According to the police, on January 4, 2018, a complaint was received from Deputy Director UIDAI B.M. Patnaik stating that an input had been received through The Tribune newspaper, dated January 3, 2018, mentioning that they had purchased a service being offered for ₹500 by anonymous sellers over ‘WhatsApp’. The service provided unrestricted access to details for any of more than one billion Aadhaar numbers.
•In a statement on Sunday, the UIDAI said it was “duty-bound” to “disclose all the details of the case and name everyone who is an active participant in the chain of the events leading to commission of the crime, regardless of whether the person is a journalist or anyone else. It does not mean that all those who are named in the report are guilty or being targeted. Whether one is guilty or not will be decided after police investigations,” the statement said.
📰 Arun Jaitley bats for electoral bond scheme
The electoral bonds are being pitched as an alternative to cash donations made to political parties.
•Stressing that the electoral bond scheme is a “substantial improvement” in transparency over the present political funding system, Union Finance Minister Arun Jaitley on Sunday said the government is open to suggestions to further cleanse the process.
•Mr. Jaitley said in a Facebook post that India had not been able to evolve a transparent political funding system, despite being the largest democracy and strengthening institutions for the last seven decades.
•“The conventional practice of funding the political system was to take donations in cash and undertake these expenditures in cash. The sources are anonymous or pseudonymous. The quantum of money was never disclosed. The present system ensures unclean money coming from unidentifiable sources. It is a wholly non-transparent system,” he said.
•“I do believe that donations made online or through cheques remain an ideal method of donating to political parties. However, these have not become very popular in India since they involve disclosure of donor’s identity,” he said.
•The electoral bond scheme, Mr. Jaitley said, envisages total clean money.
•A donor can purchase electoral bonds from a specified bank only by a banking instrument. He would have to disclose in his accounts the amount of political bonds that he has purchased.
•The life of the bond would be only 15 days and it can be encashed only in a pre-declared account of a political party.
•Every party in its returns will have to disclose the amount of donations it has received through electoral bonds to the Election Commission.
•As against total non-transparency in the present system of cash donations, some element of transparency would be introduced.
📰 Food poisoning, a common outbreak in 2017
Incidence high in areas where food is cooked in bulk
•Recent data put out by the Union Health Ministry’s Integrated Disease Surveillance Programme (IDSP) has indicated that food poisoning is one of the commonest outbreaks reported in 2017. This is apart from acute diarrhoeal disease (ADD).
•According to the data, 312 of the 1,649 outbreaks reported till the third week of December 2017 were due to ADD and 242 were due to food poisoning.
•The IDSP has interpreted that the incidence of ADD and food poisoning is high in places where food is cooked in bulk, such as canteens, hostels and wedding venues.
Same trend
•A.C. Dhariwal, Director of the National Centre for Disease Control (NCDC), the nodal agency under the Union Health Ministry that documents outbreaks and brings out data under its disease surveillance programme, told The Hindu that the trend had been the same over many years.
•“It is not just this year. Acute diarrhoeal disease and food poisoning have been common outbreaks since 2008. This is followed by chickenpox and measles,” Dr. Dhariwal said.
•Food poisoning, also called food-borne illness, is caused by eating contaminated food. Infectious organisms including bacteria, viruses and parasites or their toxins are the most common causes.
•Dr. Dhariwal said it was important to follow safety measures and maintain hygiene while handling food. “It is a matter of concern for all as food poisoning outbreaks have increased from 50 in 2008 to 242 in 2017. Similarly, ADD cases have increased from 228 in 2008 to 312 in 2017,” he said, quoting the IDSP data.
Overall mortality
•Pointing out that the increase in the number of cases was due to better and increased reporting of cases, he said the good thing was that the overall mortality was not alarming.
•K.K. Aggarwal, who recently stepped down as the national president of the Indian Medical Association, said infectious organisms or their toxins could contaminate food at any point of processing or production.
•“Contamination can also occur at home if food is incorrectly handled or cooked,” he said.
•“While it is known that raw meat, poultry and eggs can also harbour diseases, in recent years most outbreaks of food-borne illnesses have been due to contaminated fresh fruits and vegetables,” he said.
📰 Evidence of fragility: on underwhelming growth estimates
Underwhelming growth estimates come amid worrying data on agriculture
•Five months after Chief Economic Adviser Arvind Subramanian predicted that economic growth was likely to be closer to 6.5% in the current fiscal year, the Central Statistics Office has forecast that the gross domestic product (GDP) would expand at precisely that pace in the 12 months ending in March. The headwinds that had been flagged by Mr. Subramanian at that time are proving to be the crucial factors dampening momentum. For one, gross value added, or GVA — which excludes taxes that feature in the GDP number — is projected to grow by 6.1%, slowing from a provisional 6.6% in 2016-17, as manufacturing and the agriculture, forestry and fishing components of GVA decelerate. Second, the key investment metric of gross fixed capital formation, though estimated to show faster growth, is expected to shrink in terms of proportion to GDP: to 29%, from 29.5% in the provisional estimates for 2016-17 and 30.9% in 2015-16. With the Index of Industrial Production (IIP) data released in mid-December also reflecting a sharp slowdown over the seven-month period from April to October, there are signs that the rebound seen in the second quarter may be far more vulnerable to unravelling than previously considered. With agriculture struggling for traction, despite a ‘normal’ monsoon, the prospect of private final consumption expenditure regaining vigour in a hurry seems remote, especially since rural households make a sizeable contribution to aggregate demand. The forecast for consumption spending posit both a slowdown in growth to 6.3% in 2017-18, from 8.7% a year earlier, and a marginal contraction in share of GDP.
•That softer growth estimates have come at a time when the government’s fiscal deficit has already crossed the budget estimate for the full year, and GST collections are underwhelming, is a particular cause for concern. With Brent crude hovering around $67 a barrel, oil prices are now well above the $60-65 range that the Economic Survey had flagged as having the potential to undermine both consumption and public and private investment. Data on kharif foodgrain production used by the CSO in computing GVA in agriculture, while provisional, project an almost 3% drop in output in 2017-18. This raises the possibility of stronger inflationary pressures on food prices in the coming months. With consumer price inflation having accelerated in November to 4.88%, the fastest pace in 15 months, monetary authorities at the Reserve Bank of India will have little to no leeway to mull interest rate reductions to support growth. On their part, policymakers must bank on building on the measures taken to unclog the credit pipelines, including the recent steps to recapitalise state-owned lenders. Other initiatives must include moves to re-energise the export sector: there may be no better time to make the most of the ‘fair winds’ of a strong global economic rebound that are blowing.
📰 On way to insolvency, firms scout for fronts
Whistle-blowers alert authorities
•A number of insolvency-bound companies, reeling under huge unserved loans, are scouting for front entities to buy them out in a distress sale under an ’asset reconstruction’ model with the help of ‘friendly’ IRPs, but have landed themselves under the regulatory scanner.
‘ARC start-ups’
•According to top regulatory officials, some of these firms are approaching senior NBFC executives, with a good reputation in the market, with a novel idea of setting up their own ‘asset reconstruction (ARC) start-ups’ and then bidding for the assets being sold under the insolvency process.
•They are also trying to rope in some ‘friendly’ IRPs (Insolvency Resolution Professionals) to help achieve their motive of a ‘front entity’ acquiring the assets on sale, but the regulators and the government agencies have got a whiff of the whole design, including with the help of some whistle-blowers, a senior official said.
•The companies which are currently under the scanner include those from the steel, power and textile sectors, the official said, but refused to divulge the names as an investigation is currently underway.
📰 FRDI: depositor trust is key to banking
‘Banks should concentrate on loan recovery; proposed law may come later when depositors are less apprehensive’
•The banking system of any country is built on an edifice of trust that depositors have in their banks. The confidence that money is safe, keeps depositors away from withdrawing their funds unless they really need it. Meanwhile, it allows banks to lend out the money to borrowers which generates interest income for the depositor, profit for the bank and larger economic growth.
•However, the ‘bail-in’ clause in the government’s Financial Resolution and Deposit Insurance (FRDI) Bill has created confusion. Section 52 of the Bill allows the proposed Resolution Corporation to cancel the liability owed by a failed bank. Since the main liability of a bank is the ordinary depositor’s money, it naturally causes concern whether depositors stand to lose their money beyond what is insured in the event of a bank failure. Unless nipped in the bud, a panic reaction could destabilise the banking system.
•Why should depositor liability be cancelled at all? When a failed bank does not have any assets left to pay its creditors, it is natural that depositors will not get back all or part of their money.
‘Guard against signals’
•The government can never commit to pay out all depositors in such an event. “Such a commitment would signal to banks that it is acceptable to take more risks because, in case they go belly-up, the government will pay out depositors; the level of risk in the banking system would simply explode,” said Dr. Rudra Sensarma, Professor of Economics, Indian Institute of Management, Kozhikode. Hence, “depositors have to take some hit if a bank fails.” This is formalised in the Bill’s bail-in clause.
•“The intentions are good,” said Dr. K. Cherian Varghese, former CMD of Union Bank of India and Corporation Bank. “The new provision of ‘bail-in’ is welcome. However, when the banking system is struggling with the larger issue of non-performing assets, it is better to concentrate on recovery and also encourage bankers grant fresh loans for that the economy grows at faster pace.
•“The proposed law may be taken up later when there are no apprehensions in the minds of depositors,” he said. Yet, it is important for the depositor to believe that the need for a bail-in will never arise. Here lies the role of trust in the banking system. How can banks convince depositors that their money is safe? One way is through prudential regulations such as capital requirements and supervision. The other way is to guarantee through an insurance scheme that the insured part of deposits will be paid out to depositors by an insurance company.
Comparison with income
•In India, up to ₹1 lakh of a depositor’s money is protected by insurance provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India. However, this insurance limit has not been changed since 1993 even while income and deposit levels have grown substantially.
•Many countries revised their deposit insurance limits after the global financial crisis of 2008 but India did not do so. Deposits up to $250,000 are protected by insurance in the U.S. while the figure is $1,15,000 in the U.K. But the accurate comparison should take into account the average income in a country. Deposit insurance limit is 3-4 times the average income levels in the U.K. and the U.S. In the case of emerging countries like Brazil and China, the insurance limit is 9 times the per capita income. Compare that with India where the insurance limit is actually a little less than its per capita income.
•“Perhaps the government may review the present limit of insurance cover for deposits and enhance it,” said Dr. Varghese, who was also former Chairman of the Board for Industrial & Financial Reconstruction. Anil Gupta, vice president, Sector Head - Financial Sector Ratings, ICRA, said that the government should increase the deposit insurance limit under the Bill, considering that at about $1,600, it is at a much lower level than some of the other developing or larger economies.
•Further, there should be provision for a periodic review to raise the quantum of deposits covered by insurance. “With private sector banks gaining market share in loans and deposits, a higher deposit insurance amount in the Bill goes in favour of depositors; otherwise the precedence reflects that the failure of a private bank has put the onus of bail-out on the regulator rather than the shareholders.”
Banking supervision
•The current elevated level of non-performing assets and mounting losses of banks indicate that the RBI could have been more proactive in its supervision, said Mr. Gupta. “More frequent audits with public disclosure of audit findings would improve transparency... Further, depositors should also evaluate performance of banks at least on a yearly basis and take informed decisions.”
•So far, it has been up to the RBI to act in the instance of a bank failure as it deemed fit. The FRDI is meant to formalise the existing process and improve it further. “But tactless wording in the Bill and inadequate clarifications have created confusion in the minds of depositors,” said Dr. Sensarma.
•People were taken by surprise at the explicit recognition of a bail-in process which was thus far implicitly present. The government tried to soothe nerves by talking about implicit guarantees for deposits in PSU banks. There are two problems with this clarification. First, the implicit guarantee cannot be emphasised beyond a point lest it creates a moral hazard in the form of risky behaviour by banks and lazy monitoring of banks by depositors. Second, what about private banks who hold 25% share of total deposits in the country? Are their customers not deserving of the same protection from the government?
•“The government must increase deposit insurance limits immediately or at least give a firm commitment that it will happen,” he said, adding that deposit insurance can also generate moral hazard by creating a false sense of security among banks and depositors as in the case of a government guarantee.
•One option, he said, was to make riskier banks pay a higher insurance. premium. But the aim must be to ensure that the relatively less affluent have 100% insurance coverage and the affluent investors diversify across asset classes. However, Mr. Gupta disagree with this suggestion. “It’s not [the point] about affluent or less affluent which needs to drive the deposit protection; rather it’s the faith which needs to be built in the system about the safety of the deposits. Else, the financialisation of our savings will be impacted and the savings will get channelised to less productive assets like gold, real estate etc and as a country we will remain starved of capital for investment.”
📰 A sum of contributions
Routine engagement of the States is crucial to India’s climate action commitments
•The Emissions Gap Report 2017, released last year ahead of the UN Climate Change Conference, underlined that fulfilment of national pledges related to carbon emission reductions under the Paris Agreement would be inadequate to keep global warming below 2°C. Thus, a renewed focus on climate governance is imperative.
•The Talanoa Dialogue of the UN Framework Convention on Climate Change, beginning this month, will facilitate the parties to take stock of progress post-Paris. As a key player in international climate governance, India could set the precedent in deepening the dialogue process through an action-oriented, inclusive, bottom-up approach, involving extensive participation and collaboration of its States.
•In a federal democracy like India, subnationals or States are a vital part of the grand coalition between the Centre, civil society, businesses, and key climate stakeholders. India’s State Action Plan on Climate Change supports the integration of national climate change goals into subnational policies. India has committed to meet its current target of 33% reduction in emission intensity of the 2005 level by 2030, by generating 40% of its energy from renewables. States are important for the realisation of this goal.
•Enhancing climate actions is expected to involve routine engagement of the States in the international process. The Under2 Coalition, a Memorandum of Understanding by subnational governments to reduce their greenhouse gas (GHG) emissions towards net-zero by 2050, is generating a unique precedent for bold climate leadership, with its member states and regions surpassing 200 in number. Currently, Telangana and Chhattisgarh are signatories to this pact from India, as compared to representations from the other top emitters: 26 subnational governments in China and 24 in the U.S. Greater representation of Indian States is crucial.
•It is equally imperative to examine the progress of subnational actions in meeting national climate targets. Towards this end, both national and State plans would need to be periodically reassessed and reviewed. A transparent framework for review, audit and monitoring of GHG emissions is needed. As State capacities vary significantly, the principle of common but differentiated responsibilities should be applied to allocate mitigation targets in different States, based on the principle of equity.
•States have enormous mitigation potential, but the evidence pertaining to its effectiveness is still scarce. Therefore, India must look towards creating knowledge action networks and partnerships under both national and State action plan frameworks. Kerala has taken the lead to build such a knowledge network funded by the National Mission on Strategic Knowledge for Climate Change.
📰 Boost to gravitational wave study
India to set up observatory which is expected to start functioning by 2025
•India’s role in studying gravitational waves — touted as one of the most important discoveries of the recent past — will increase once the proposed gravitational wave observatory is set up in the country, said David Reitze, executive director of Laser Interferometer Gravitational-Wave Observatory (LIGO).
•The observatory is expected to start functioning by 2025.“The more detectors we have and depending on where they are, the more accurately we are able to point in the direction in the sky. India having a detector improves that dramatically and that’s going to be a big mission,” said Mr. Reitze.
•Gravitational waves are ‘ripples’ in the fabric of space-time, caused by some of the most violent and energetic processes in the universe such as merger of black holes or neutron stars. Its discovery saw three scientists get the Nobel Prize for Physics in 2017.
•Already, several physicists from Bengaluru-based International Centre for Theoretical Sciences (ICTS) are an active part of the LIGO project. In an interaction with The Hindu on the occasion of the 10th anniversary of ICTS, Mr. Reitze said after having announced the fourth successful detection of gravitational waves in September 2017, focus will now be on expanding their reach within the universe.
•“We know we have binary black holes and binary neutron stars, so there must be a neutron star and black hole merger. We want to detect that. Our detectors are not very sensitive to supernovas because the amount of energy released by supernova in gravitational waves is very tiny, may be a billionth of what comes out of a black hole merger,” Mr. Reitze said, hoping that they would be able to make a breakthrough in the coming years.
•One way was to make the detector at least 40% more effective, allowing them to be more sensitive.
•At present, the LIGO detectors are sensitive to about 70 to 80 megaparsec (280 million to 300 million light years) for binary neutron stars and for binary black holes, the sensitivity is about 2 gigaparsec (approximately 3 billion light years). With improved sensitivity, these detectors will be able to fetch information from farther distances in space.
