📰 New book claims Netaji died in 1945
•Reports by Japanese and other international authorities have conclusively proved that Netaji Subhash Chandra Bose died in an air crash on August 18, 1945, a new book has claimed.
•Author Ashis Ray’s findings in Laid to Rest: The Controversy over Subhash Chandra Bose’s Death have been endorsed by Netaji’s only living child and heir Anita Pfaff, who has urged Japan and India to conduct DNA testing on the remains at the Renkoji shrine of Tokyo for final confirmation.
•The air crash has long been at the centre of speculations as it was reported initially to be the cause of his death. However, mystery persisted over Netaji’s final moments and it was felt that he might have fled the crash site to avoid being arrested by the victorious Allied powers of the Second World War.
No frank conversation
•“There ought to have been no mystery about what happened to Bose after September 15, 1945, or four weeks after his demise, since on that date, the Japanese government confirmed the tragedy in an interim report to the American general Douglas MacArthur, whose forces occupied Japan after its surrender in the Second World War,” Mr. Ray states in the book, which claims that the tension between Netaji’s older brother Sarat Chandra Bose and Prime Minister Jawaharlal Nehru might have played a role in preventing a frank conversation about the heartbreaking truth of Bose’s death.
•Following the Japanese report of September 15, 1945, ten more reports were produced to probe Netaji’s fate.
Irrational behaviour
•Mr. Ray says that the continued speculation about Netaji’s fate indicates irrational behaviour by some sections of Indians.
•“Two of these inquests were commissioned by the Indian government and their findings wholly accepted by it. Yet, New Delhi has pandered to a motley section of Indians who have been irrationally in denial or have opposed the truth for political reasons, or worse, for financial benefit, by perpetrating outright fraud,” says Mr. Ray.
•Sarat Chandra Bose, a prominent Congress leader in his own right, was a Cabinet Minister in the pre-Partition interim government led by Jawaharlal Nehru and Sardar Vallabhbhai Patel. However, the writer says that neither Nehru nor Patel shared the reports by the Japanese government or the subsequent reports by the British authorities with Mr. Bose.
•The author indicates that lingering doubts over Netaji’s death in the air crash might have resulted from the early death of Sarat Bose himself in 1950 as he alone could have made a public declaration on his brother’s death.
•As Sarat Chandra Bose died, so did the possibility of presenting the tragedy to the Indian public through an authoritative family member.
📰 Analysis: could a jail term for Khaleda Zia spell unrest in Bangladesh?
Weeks before the verdict, the BNP has warned that it would launch an agitation
•As the February 8 court verdict in a graft case against the Bangladesh Nationalist Party (BNP) leader Khaleda Zia approaches, Bangladesh’s mostly peaceful political environment risks turning volatile. The BNP, backed by its Islamist allies, has warned that it would take to the streets if the verdict goes against their leader.
•Ms. Zia, her son Tarique Rahman, who has been living in London for nine years, and four others are the accused in the case, which concerns the alleged embezzlement of Tk. 21 million in foreign donations meant for the ‘Zia Orphanage Trust’.
•Ms. Zia, who faces life imprisonment if found guilty, held a crucial party meeting on Saturday to discuss the next course of action. BNP secretary general Mirza Fakhrul Islam Alamgir said the party urged the people to “launch a democratic movement” against the “government’s conspiracy in the name of trial”.
•Many senior BNP leaders said that if their leader is convicted, “a disastrous situation” might be created in the country, no matter whether the BNP announces any protest programme or not. However, independent analysts do not foresee any major unrest as the BNP’s organisational strength has abated after the party was reduced to the status of a non-parliamentary opposition following its boycott of the 2014 general election.
•In response to BNP’s threat, Home Minister Asaduzzaman Khan Kamal warned of stern action if anyone tried to create anarchy after the verdict.
•The ruling Awami League and its secular allies, it is understood, are determined to preserve the peaceful political environment until the next general election due later this year. On the other hand, the BNP’s leadership looks divided: hardliners are for street agitation while others are for appeal against the verdict. Party’s vice chairman, Shamsuzzaman Dudu said: “Our decision for now is to counter the issue through legal means”.
•Meanwhile pro-BNP political analysts have stressed the importance of an effective contingency plan so that the party can be given a direction if Ms. Zia is incarcerated.
📰 Plea to exclude SC/ST creamy layer from quota
‘Deserving and impoverished biting the dust’
•The Supreme Court will hear a petition to exclude the affluent members, or the creamy layer, of the Scheduled Castes and Scheduled Tribes from the benefits of reservation.
•A Bench, led by Chief Justice of India Dipak Misra, will hear the petition which argues that the rich among the SCs/STs are “snatching away” the benefits, while the deserving and impoverished continue to “bite the dust.” It is this lack of percolation of benefits to the poor and really backward among these communities that has led to social unrest, Naxalite movements and perennial poverty, it says.
•This is the first time a petition has been filed urging the Supreme Court to introduce the creamy layer concept for the SCs/STs. In 1992, a nine-judge Bench of the court in the Indra Sawhney case, or the Mandal case as it was popularly known, upheld the caste-based reservation for the OBCs as valid. The court also said the creamy layer of the OBCs (those earning a specified income) should not get the benefits of reservation. The ruling, however, confined the exclusion of the creamy layer to the OBCs and not the SCs/STs. Now, the petition filed by Samta Andolan Samiti, which represents the poor strata of the SCs/STs in Rajasthan, wants the creamy layer of the SCs/STs excluded from the benefits.
•The petition, filed by advocate Shobhit Tiwari, refers to the Constitution Bench’s 2006 judgment in the M. Nagaraj case that the “means test [a scrutiny of the value of assets of an individual claiming reservation] should be taken into consideration to exclude the creamy layer from the group earmarked for reservation.”
•“The uplifted/affluent and advanced sections of the SCs/STs snatch away the maximum benefit and the 95% members of these communities are at a disadvantage. The affluent among the SCs/STs are siphoning off the reservation benefits given to them by the State government as well as the Central government... The benefits of the reservation policy are not percolating down to the people who are in actual need of them,” the petition argues. This lack of percolation of quota benefits to the poorest of the poor ensures that the “weak always remains the weak and the fortunate layers consume the whole cake.”
•The petition argues that no class or caste remained homogeneously backward across time. Only the backward portion of castes included in the list of SCs/STs alone are constitutionally entitled to the benefits of reservation.
📰 A vote for state funding
Electoral bonds cannot clean up campaign finance
•Indian elections are the world’s biggest exercise in democracy but also among the most expensive. India’s campaign spend is only rivalled by the American presidential race, the world’s most expensive election. Parties and candidates need large sums of money for voter mobilisation, advertising, consulting, transport, propaganda and printing of campaign materials to reach voters in constituencies. Corporate donations constitute the main source of election funding in India which is awash with black money, with business and corporate donations to political parties commonly taking this form. The public disclosure system that exists is limited. Only in 2008, using the provisions of the Right to Information (RTI) Act, the Central Information Commission allowed disclosure of income tax returns of political parties, though it is an open secret that actual expenditure is much, much higher than what is disclosed.
Best practices elsewhere
•India’s privately funded election campaign stands in contrast to the trend in most countries, which have partial or full public funding or transparent regulation and financial accountability of political finance as in the U.S. Corruption in election finance and the flawed party funding system drive political parties to misuse government’s discretionary powers to raise funds for election campaigns. The combined effect is the absence of a level playing field which has reduced the effectiveness of our democracy.
•In his 2017 Budget speech, while emphasising the absence of transparency in funding, Finance Minister Arun Jaitley noted that even 70 years after Independence the country had not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections. But the concern for transparency in political funding is at complete odds with the electoral bonds scheme notified by the government this month to clean election finance. Simply put, anybody can buy electoral bonds in the form of bearer bonds from specified branches of the State Bank of India and donate it anonymously to a political party of their choice; the party must cash the bonds within 14 days. All donations given to a party will be accounted for in the balance sheets but without exposing the donor details to the public. Donors continue to prize anonymity as they fear disclosure could invite adverse consequences from political opponents. As a result, the Election Commission (EC), the Income Tax department and the voter would remain in the dark about it. However, the ruling dispensation at the Centre, if it wants, can ferret out information on who’s funding whom from banking authorities on some pretext or the other.
•The most significant aspect of the electoral bonds scheme is that it will not carry the name of the payee as there is reluctance to donate to parties through bank instruments citing loss of anonymity. Bonds will allow corporate houses to make anonymous donations through banking channels to the party of their choice. This would lead to further opacity in the funding process and further limit oversight and accountability. Transparency is a global norm while opacity of election funding is an area of existential concern for democracies. Subversion that such anonymity affords is perhaps one of the biggest threats to our democracy today; it is the very wellspring of institutionalised corruption.
•Far from reducing the large-scale corporate funding of elections, the introduction of electoral bonds does not even address this issue. The government’s principal aim is to reduce the role of unaccounted cash in the electoral process and not the corporate control of politics. Sure enough, the bonds scheme imposes no restrictions on the quantum of corporate donations. Consequently, electoral bonds cannot address the problems that arise from the corporate control over politics and corporate capture of government policies and decisions. Rather, electoral bonds will result in unlimited and undeclared funds going to certain political parties which will be shielded from public scrutiny as the balance sheets will not show which party has been the beneficiary of this largesse.
Three steps back
•Electoral bonds must be seen in conjunction with: (1) lifting of the maximum limit of 7.5% on the proportion of the profits a company can donate to a political party, thus opening up the possibility of shell companies being set up specifically to fund parties; (2) amendment of the Foreign Contribution (Regulation) Act (FCRA) opening the floodgates of foreign funding to political parties, especially those which have a foreign support base; and (3) the refusal of political parties to come under the RTI Act in order to conceal their sources of funding. These three things will end up strengthening the business-politics nexus. It goes against the position taken by various electoral reform committees that the existing pattern of political funding encourages lobbying and capture of the government by big donors. Far from making the funding process transparent, the bond scheme could provide a backdoor to corporates and other lobbies for shaping public policy to benefit their interests. There is thus a legitimate fear that policy decisions of political parties and politicians after being elected may be biased in favour of groups that fund them.
•Moreover, these bonds are likely to reverse the small steps towards transparency of political finance that came as a result of RTI-driven public disclosure of income tax returns of political parties arguing that these disclosures were a matter of public interest and should be available to citizens. Furthermore, all registered parties were required to disclose to the EC the identity of individuals and private entities donating more than ₹20,000 every year. Proposed amendments to the Income Tax Act and the Reserve Bank of India (RBI) Act will exempt parties from keeping records of donations made through bonds. However, the decision to reduce cash contributions from ₹20,000 to ₹2,000 is a step in the right direction, but the net effect is debatable, since it could prompt parties to take smaller cash donations, and therefore not declare their source. This would not decrease the drift towards non-transparent funding reported by the Association for Democratic Reforms which found that nearly 70% of party funding over an 11-year period came from unknown sources; nearly ₹7,900 crore donations came from unknown sources in 2015-2016. Electoral bonds will not change this. In fact, political parties don’t need to reveal the donor’s name for a contributions above ₹20,000 provided these are in the form of electoral bonds.
•Elections that work well are essential for democracy; conversely, money power can corrode the entire process. A major concern associated with the high cost of elections is that it prevents political parties and candidates with modest financial resources from being competitive in elections. Whilst the bond scheme can be an attempt to burnish the anti-corruption credentials of the Narendra Modi government ahead of the 2019 general election, it is clearly a regressive and flawed move. A number of government committees have outlined reform proposals to contain the negative effects of the high cost of elections. These include strong disclosure norms, strict statutory limits on election expenses and ceiling on corporate donations to political parties. The rules to limit and restrict the campaign expenditure of parties are largely inoperative because it is easy to circumvent them.
Staring at the solution
•State funding of elections (in various forms) is a potential solution to this problem. The Indrajit Gupta Committee on State Funding of Elections had endorsed partial state funding of recognised political parties and their candidates in elections way back in 1998, but the lack of political will has prevented any serious discussion on this. The mechanics of this process need to be carefully worked out to establish the allocation of money to national parties, State parties and independent candidates, and to check candidate’s own expenditure over and above that which is provided by the state. Based on the experience of countries that have total or partial state funding of elections, it will not be difficult to work out a formula that is both efficient and equitable to ensure that democracy works for everyone and not just for the wealthy few.
📰 ‘Trans-pacific pact could hurt India’
If India joined FTA, norms may hit agriculture and manufacturing, says book
•If India were to join the mega-regional Free Trade Agreement (FTA) called the Trans-Pacific Partnership (TPP) and adopt its norms, they would severely hurt the country’s agriculture, manufacturing, services and the generic pharma industry, according to a new book.
•Titled “Trans-Pacific Partnership Agreement: A framework for future trade rules?” the book — co-edited by Abhijit Das, Professor and Head, Centre for WTO Studies (CWS), Indian Institute of Foreign Trade (IIFT) and Shailja Singh, Legal Consultant, CWS — has done an analysis of the almost the 5,544 pages of the TPP text. Released on January 27, the book comes in the backdrop of U.S. President Donald Trump’s statement at the World Economic Forum that he was open to the pact provided it offered substantially benefits for his country.
•It was under his orders that the U.S. had withdrawn from the TPP early last year. The other 11 countries (Japan, Australia, Canada, New Zealand, Singapore, Malaysia, Brunei, Mexico, Peru, Chile and Vietnam) that were part of the agreement are now expected to ink an amended version in March.
Stiff competition
•According to the book, if India were to conform to the TPP template of rules on market access in goods, it would pose severe challenges to India’s manufacturing sector. The domestic industry may not be able to face import competition in a duty-free regime, it added.
•On the agriculture front, the farmers will be continuously exposed to the risk of being knocked out of the market by cheap and subsidised exports, particularly from the U.S., Australia and New Zealand. The TPP template may pose severe challenges to the government in regulating services in the future, the book claimed.
•Ms. Singh said the TPP also “would severely restrict the entry into the market, or the reimbursement for use, of generic medicine. If India were to adopt [TPP] rules, it would require significant changes in the domestic regulatory regime…” She added India’s export prospects in government procurement markets may continue to below, if it entered the pact.
📰 Banking on good faith: on efforts to recapitalise PSBs
More structural reforms are needed to maximise the bank recapitalisation effort
•About ₹1 lakh crore is expected to be pumped into India’s 21 public sector banks by March, which the Centre hopes will enable them to extend fresh credit lines worth over ₹5 lakh crore to spur economic activity. Of the capital injection — the first half of an ambitious ₹2.11-lakh crore recapitalisation programme for ailing public sector banks announced last October — about ₹8,100 crore is from the government’s budgetary resources. Banks are expected to tap the markets for ₹10,300 crore, while recapitalisation bonds worth ₹80,000 crore are to be issued to finance the rest. Leaving aside the market-raising efforts by banks, over half the fresh capital of over ₹52,000 crore is being directed to the 11 public sector banks that the Reserve Bank of India has placed under the prompt corrective action, or PCA, framework. The RBI deploys the PCA to monitor the operation of weaker banks more closely to encourage them to conserve capital and avoid risks. For these entities, this capital offers a fresh lease of life as it will help meet regulatory requirements under the Basel-III regime as well as cushion them to an extent from possible haircuts on stressed loans that are going through the insolvency resolution process. State Bank of India, the country’s largest, and the nine others that are out of the RBI’s PCA net will receive nearly ₹36,000 crore in order to strengthen their lending capacity.
•While announcing this package, the government has described each of the banks as “an article of faith”. Its assertion that no public sector bank will fail and that depositors’ money will remain safe should allay customers’ worry about the safety of their savings under the proposed Financial Resolution and Deposit Insurance legislation. Rating agencies have given the move the thumbs up, but remain unimpressed about governance reforms packaged with it. These include tweaks to existing systems for closer monitoring of big-ticket loans, identifying niche areas where a bank has strengths, restricting corporate exposure to 25%, and a new performance management system. Actual capital inflows will depend on their performance on these fronts and their ability to meet the government’s service priorities, including smoother credit flows to small businesses. More structural reforms may well be on the anvil in the second half of this recap plan, which RBI Governor Urjit Patel had described as providing a real chance to meet the banking sector’s challenges for the first time in a decade. Yet, the absence of any reference to consolidation through mergers is glaring. Moreover, while the government has repeatedly ruled out privatisation of these banks, the only one where it intended to offload its majority stake, IDBI Bank, has got the largest allocation of ₹10,610 crore. At best, this sends out mixed signals.
📰 Where intent overrides impact
Strict enforcement of e-way bill rules, and lack of clarity, may cause disruption, warns industry
•The e-way bill, set to be introduced across India from February 1 as part of the Goods and Services Tax (GST) regime, could lead to ‘large scale’ disruption in the transportation of goods, transporters caution.
•While the bill is intended as a mechanism to prevent leakage of GST by tracking the movement of goods from one party (and place) to another, transport industry officials said it would have been better to have addressed ‘several key issues’ before migrating to the new system.
•Lack of preparedness and possible harassment by tax officials citing compliance issues could hinder movement of trucks. They cited the initial confusion witnessed after demonetisation and more recently the introduction of GST.
•“The Central Goods and Services Tax (Sixth Amendment) Rules, 2017, requires every person causing the movement of goods worth more than ₹50,000 from one State to the other to generate an e-Way or electronic Way bill for each such movement,” said Rohit Chaturvedi, CEO, Transport Hub.
•Though e-way bill forms are easy and intuitive and could be generated through a variety of platforms including a mobile app, SMS, web platform and API-based integration, multiple issues have been raised by the industry.
•“There are several practical and operational problems that have not been addressed,” said Abhishek Gupta, treasurer, Bombay Goods Transport Association. “The transportation industry is predominantly an offline industry. Expecting them to go online suddenly is difficult to cope with. The general feeling in the industry is that it will be impractical to roll out the e-way bill from February 1,” he said.
•“At a recent meeting, 450 members of the BGTA raised 25 issues with GST officials who did not have answers for half of the issues,” Mr. Gupta said. “The government is adamant [on going ahead] and the decision will adversely impact the industry even as it is coping [with] GST,” he added. Transporters fear that unintended lapses on their part could lead to the imposition of heavy penalties. Also, consignments could end up getting stranded mid way due to drivers’ inability to pay the fine at remote locations.
•“Transporters and other taxpayers will not be required to visit any tax office or checkpost under this system and the e-way bill can be generated electronically,” said Prakash Kumar, CEO, Goods & Services Tax Network. The transporters can manage sub-users and allocate roles to them. Large transporters can declare their various offices as sub-users. There is provision for cancellation of an e-way bill within 24 hours by the person who generated the e-Way Bill. The recipient can also reject the e-way bill within 72 hours of generation. The validity of an e-way bill is fixed as one day for every 100 km or part thereof.
Slow moving cargo
•Movement of project cargo or heavy cargo, which takes months to reach the destination, could suffer as a result of the e-way bill rule that mandates 100 km per day movement. Such cargo generally does not travel more than 20 km a day, transporters said. “We are expecting the return of the Inspector Raj as the RTO and sales tax check posts are still there,” said Nitesh Bagadia, director, Premier Logistics, a leading heavy lift project cargo firm. “The e-way bill will create documentation problems and harassment citing non-compliance.”
•“In our type of business, it takes a long time to transport heavy lift cargo due to logistics issues and requirement of multiple permissions while in transit. If, for some reason, the e-way bill would lapse, it would invite penalty.” The government must issue a blanket order to officials not to harass truck drivers in transit. If the driver has an e-way bill then [it is clear] there is no intention to cheat,” Mr. Bagadia said.
•Transporters have urged the government to ensure officials differentiate between errors in the e-way bill and intentional tax evasion.
•“Eighty lakh trucks transport goods across India,” said Ramesh Agarwal, chairman, Agarwal Packers & Movers. “It is not possible to make everyone understand the way the e-way bill works. There will be errors and the government will levy penalty. So we need a platform that should address the errors and establish evasion.”
Plugging evasion
•M.S. Mani, senior director, Deloitte India, said while it would have been ideal not to have had an additional document in the form of an e-Way Bill, the government was keen on introducing it in order to plug suspected evasion of GST.
•“The lower revenue collections encountered during the past few months despite an enhancement of the taxpayer base could possibly be due to the fact that some taxpayers are not paying the appropriate tax,” Mr. Mani said.
•“While the e-way bill existed in some States even earlier, the countrywide introduction across all sectors is likely to pose documentation and system challenges initially to smaller businesses,” he added. Low literacy levels and poor technology awareness among a majority of truck owners could also create a stumbling block.
•“One major issue highlighted by transporters is increased financial burden due to filing of e-way bills,” said Mr. Chaturvedi of Transport Hub. “A majority of the small transporters who are driver-owners will find it difficult to generate e-way bills as the process requires comfort with using electronic medium such as apps,” Mr. Chaturvedi said. Seeking professional help would only cost them more, he added.
•The stipulated time limit for delivery of goods is also causing jitters.
•In case of a breakdown in hilly areas or remote villages with no mobile connectivity, the e-way bill will not be easily updated. There is no clarity on the resolution of such issues in the rules, he said. “There is lack of clarity on the issue of vehicle detention in the case of mispresentation of details such as price of goods. The responsibility should lie with either the consignee or the consignor without detaining the vehicle,” Mr Chaturvedi said.
•Moreover, rules also give the right to inspect the vehicles at random(138 B) which increases the chances of harassment by inspectors, transporters fear. Inspectors have the right to unload the entire consignment to check compliance. There is no guidance provided for genuine randomness as against “targeted” checks, industry players said.
•However, the rules provide for redressal against any such harassment. Still, implementation would be the key. “Going by historical antecedents, discretion leads to harassment and corruption, and rules could have done better by defining discretionary measures more tightly,” Mr. Chaturvedi said.
•Pirojshaw Sarkari, CEO Mahindra Logistics, said, “With just the e-way bill number, all transactions can now be tracked and average waiting time for vehicles will now reduce, as verification processes will be online. The compulsory introduction of e-way bill may face initial glitches, but in the long-term, it will benefit not only the logistics industry, but the country as a whole.”
📰 Conservative banking, not bail-in, will bail us out
•Risk is in-built in banking. If, one day, all the customers of any bank turn up demanding their deposits, the bank would be unable to repay them. Banks don’t face a run on their deposits because customers trust banks. Governments often bail out banks, and don’t liquidate them, because they support the business of banking.
•The Financial Resolution and Deposit Insurance (FRDI) Bill 2017 now pending before the joint committee of Parliament contains a new method for saving a failing bank — a ‘bail-in’ of customers deposits instead of a ‘bail-out’ by the government.
•It sees no moral hazard in recapitalising a bank with customers’ deposits while the owners of banks are granted immunity by the ‘limited liability’ of a corporate identity. The bill aims at financial stability through the lens of an accountant.
•The Resolution Corporation (RC), the proposed super regulator (the Reserve Bank, SEBI and IRDAI would all report to the RC) and the government are empowered to use uninsured deposits of customers to set off bank losses. The bankrupt bank carries on with its business but with ‘good’ assets and insured deposits. Subsequently, the RC would bring in new management that infuses fresh capital by buying the equity of the now ‘healthy’ bank!
•The ‘bail-in’ owes its origin to the 2008 bankruptcy of the ‘too big to fail’ Lehman Brothers that spooked central bankers in G7 countries. Lehman Brothers was forced to file for bankruptcy due to its inability to pay $3 billion to its creditors.
•This triggered a chain reaction among banks and insurance firms financially interconnected with Lehman Brothers. As a consequence, the Financial Stability Board was set up and it proposed the ‘bail-in’ as a key attribute to cope with bank failures wherein the price for ‘financial stability’ is paid by the customer. The government argues that deposit insurance protects 93% of the depositors who keep up to ₹1 lakh in their bank accounts. This is a half truth. These depositors account for only 30% of total bank deposits. Deposit insurance can never be adequate protection for the remaining 7% retired or aged customers who have deposited their life savings in a bank.
Stress test shocker
•It is naive to believe that ‘bail-in’ shall never be applied. The unstable character of banking is highlighted in the routine stress tests conducted by the Reserve Bank. According to the December 2017 Financial Stability Report, if customers of 54 commercial banks in India were to withdraw 15% of their uninsured deposits, 18 banks would fail to repay the deposits of customers.
•Similarly, if the top three borrower groups of each bank default, then six banks would fail to maintain their minimum capital requirement of 9%. In a severe economic downturn, one bank can trigger failure of 18 out of the 54 banks only because of financial interconnectedness. The safeguards in application of a ‘bail-in’ appear fragile.
•It would be difficult to categorise riskiness of a bank fluctuating rapidly among low, moderate, imminent and critical levels. Prioritising uninsured deposits over unsecured creditors is a marginal advantage since a bank is not likely to have too many unsecured creditors other than customers.
•Circa 2015, the official administrator of Lehman Brothers was left with a surplus of roughly £7 billion in hand! In the end, no one suffered a loss; not even retail customers.
•This raises a serious question on the raison d’être of ‘bail-in’. In 2008, if ‘bail-in’ had been law, customer deposits would have been needlessly appropriated. It is equally disturbing that ‘bail-in’ may be triggered for reasons unrelated to banking.
•In 2013, European creditors dictated a ‘bail-in’ on the Laiki Bank in Cyprus in addition to other austerity measures and reforms as a precondition to a €11-billion bail-out package by the European Union and the International Monetary Fund.
•Despite contentious credentials, ‘bail-in’ is the showstopper of the FRDI bill. If the ‘limited liability’ clause can protect the personal wealth of corporate borrowers despite the huge loans their bankrupt companies owe to public sector banks, the Centre must protect all retail customers from the ‘bail-in’ clause.
•Financial stability can be achieved by conservative, old fashioned banking instead of ‘bail-in or bail-out’.
📰 Electric vehicles: charging infrastructure needs a jolt to meet 2030 target
•Achieving the target of all-electric vehicles by 2030 will need a substantial push from the government and the private sector in terms of setting up the charging infrastructure, enabling cheaper availability of raw materials and incentivising mid-way measures such as hybrid vehicles.
What is the aim?
•Prime Minister Narendra Modi to Transport Minister Nitin Gadkari and erstwhile Energy Minister Piyush Goyal have all spoken about the target to achieve an all-electric fleet of vehicles by 2030, in line with the ongoing global push away from the internal combustion engine.
•What steps have been taken?
•Different departments and ministries have stepped up their engagement with the electric vehicle industry. Energy Efficiency Services Limited, a government firm, has put in motion plans to procure 10,000 e-vehicles and has already given out tenders to the likes of Tata Motors and M&M. EESL aims to lease these vehicles out to government departments so as to replace their existing fleets of petrol and diesel vehicles.
•The Government also notified the scheme for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME), as a part of its National Electric Mobility Mission Plan 2020. The scheme has four focus areas: technology development, pilot project, charging infrastructure and demand creation. The scheme has been extended till March 31, 2018.
Is the infrastructure ready?
•There are several initiatives, by both the government and the private sector, to enhance the required charging infrastructure. The Centre has begun pilot projects in this regard, having already installed 25 charging stations in Bengaluru, and planning to expand this to other metros.
•Last year, Fortum India inaugurated a 22 KW AC charger on a pilot basis in Delhi, and the company said it was looking to install up to 160 charging stations over a year in Delhi, Mumbai and Bengaluru. The parent company Fortum Oyj also signed an agreement with government-owned NBCC (India) to bring cloud-based back-end infrastructure for electric vehicles to India.
•Reliance Energy also has said it planned to install 15 charging stations across its distribution licence area in Mumbai over the next three years. “The company is also working on a third-party business model to provide charging station facilities for electric two-wheelers and four-wheelers in public places, parking plazas near highways, and offices and malls,” the company said. Tata Power has also installed two charging stations in Mumbai.
What are the roadblocks?
•There are several. The first is that very few global carmakers have brought their electric variants into India. The fact that the government has also made a distinction between EVs and hybrid vehicles under the GST regime is seen as a problem. While EVs are to be taxed at 12%, hybrid vehicles are taxed at 28% plus a 15% cess.
•The view among carmakers is that people are still sceptical about the shift to all-electric vehicles since they fear the charge duration of the batteries. As such, they are more likely to try hybrid vehicles, but that sector is not being encouraged by the current tax structure. The other issue has to do with the charging stations themselves.
•While sector specialists said that EVs can be charged at home using AC power, this would take about 5-8 hours for a full charge. DC chargers, on the other hand, can do the same in a fraction of the time. Most of the chargers being installed across the country, however, are AC chargers.
•Battery technology is yet another aspect that needs to be looked into. While the cost of batteries has fallen over the years — a Bank of America Merill Lynch report found the cost of battery cells fell 48% between 2011 and 2015 — their capacity has not changed as drastically.
•Yet another issue is that simply shifting the fleet to electric will not address the impact on the environment. This has to be accompanied with an even swifter change in the energy mix to renewable sources.
📰 Fresh capital, budget proposals to fuel economy: Federal Bank chief Shyam Srinivasan
Stability in West Asia is rising, which means remittances to India are increasing, says Federal Bank MD
•Private lender Federal Bank has been growing at more than 20% in the last few quarters. Shyam Srinivasan, MD and CEO, said he believed reforms in the last 4-5 years are expected to bear fruit in 2018 and growth momentum will pick up with capital infusion in public sector banks and budgetary proposals in the upcoming Budget.
What is the outlook for banking in 2018?
•There is positivity in many areas. Bigger geographies have registered growth. Every trading day, the indices register a new high. These are indicators that systemically things are looking more conducive for growth. However, higher oil prices are having a bearing on India.
•But structural reforms over the last 4-5 years in India have matured enough for action to commence, combined with capital coming into the banking system and reasonably elaborate resolution on bank credit, which would provide more risk appetite for larger public sector banks. In the last 4-5 years, large private sector banks like us has become really formidable. On balance, the outlook for 2018 looks a lot more encouraging. Everything depends on the capital that comes in and the tone of the Budget. Bias seems to be focused around growth.
•For a bank like Federal, when oil prices are good, it is good for banking. The stability in the West Asia market is increasing, which means remittances to India are increasing. When remittances rise, Federal Bank benefits.
Can you elaborate on the rise in remittances?
•If you see the remittances, we have 15% of India’s remittances; four years ago, we were at 7%. So we have more than doubled our share of remittances. Even if the remittance number were flat, we are gaining overall share. 92% of our book is retail deposits. In December, we crossed ₹100,000 crore in deposits. We are almost 1% of India’s deposits (market share); 40% of it is from residents and non-resident deposits are grown and in three years it doubled. Its growing at 20-22 per cent. Institutionally, we feel that we are equipped to face challenges.
•We are one of the top five banks [in terms of the least] NPAs. There are very few banks with better credit-deposit ratio than us. If we take the last 8-10 quarters, each quarter we have grown more than 20% and the quality of credit is good.
How has the merger of SBT with its parent SBI helped your bank?
•Certainly we got a good share. We want to dominate Kerala. In this geography, we have 14-15% share of the market. Earlier it was SBT, SBI, Federal and others. Now its has become SBI and Federal. SBI is still a giant, can’t ignore that. However, this merger benefited us. Any integration of any two institutions is a distraction for them. We are well capitalised with good credit appetite. We are an organisation willing to get business. So we are able to get a good share in this market.
Your bank is an important private sector bank in the country and many are eyeing for it. What is your opinion?
•We are big enough to be a standalone bank. Very soon we will be ₹200,000 crore [in total business]. We want to grow organically. Any healthy merger is welcome when both sides are willing and wanting. Otherwise it is antagonistic. We don’t want to do anything hostile also. I want to look at the organic opportunity. If we get a chance [to acquire] we will not say no. But we don’t have enough opportunities. We are open to explore any opportunity. We are looking, but [don’t see] any major opportunity. It should be meaningful and add value to us.I would focus on strengthening our currency. When my currency is strong we can make a stronger purchase.
But on several occasions, RBI has forced banks to take over other banks?
•That they will do when they find some inherent weakness in those banks. We are not in that league. Now we have 1,252 branches. At that time (2006), when we acquired Ganesh Bank of Kurundwad Ltd. [on RBI’s initiative], they had around 33 branches with presence in interior Maharashtra. We integrated them into our system. They were [too] small to make any impact. We are now growing at 20-25%. Why can’t we grow at 30%? Once we demonstrate that, investors will trust us and capital will be available. We are well capitalised. In last June, our QIP issue of ₹2,500 crore was subscribed within three hours. Our job is to ensure the faith [of investors] is not misplaced.
There is a proposal to reverse some of the Insolvency and Bankruptcy Code (IBC), like allowing failed promoters to participate in the resolution process. What is your suggestion?
•I feel if somebody has run the company in a manner in which it could not service its debt then for them to re-participate in the resolution process is not ethically correct. You clear the dues and run the company back. I think, I have an ideological difference. Even today the company have the right to pay the dues and take back the company. If you are not able to service your dues, whatever may the industry conditions, [as a lender] I cannot give a massive discount.
Which are the major NPA accounts of your bank?
•Thankfully, we don’t have any big names in stressed assets. I don’t have any residual major cases.
•From the second half of 2018, some recovery will come in. My view is that by March 2019, we will see some of these extremely large stressful cases find meaningful solutions. But public sector banks were facing disproportionate challenges in the last few months.
•Now [with IBC], people think twice or thrice before making any significant default and the chance of default would come down from the scale at which it was happening. Towards the second half of this year, recovery momentum will gather.
Are bank mergers likely to solve the NPA problem?
•To my mind, NPA and resolution is one and merger is another. One is not a solution for the other. Conceptually ‘big’ is good and, conceptually again, ‘strong’ is good. With size, you get scale, the ability to manage the right kind of talent, better utilisation of capital...
•Banking in India is a capital-hungry business. Here capital is not cheap and there is a need for judicial use of capital. Today investors are looking at 15-18% return on equity. But some larger public sector banks are yielding less than 10%.
What are the growth prospects of your bank? What is the roadmap?
•We have emerged as a meaningful player in major markets in India across business segments. We have a diversified portfolio of retail and corporate which are gaining share. We are positioned for good growth in geographies where we participate. We will double our share outside the home market. In the next 3-5 years, we can record good growth and want to deliver on capital. Digital is a big opportunity because digital is not any one person’s preserve. We have good capital, good distribution and a good team; with reasonable grit, we can go ahead. In the last 8-10 quarters we have grown more than 20%. That will strengthen our franchise. In remittances, SBI is the number one player in the country, but in the rate of incremental inflow, we are a formidable player. Particularly, as the economy is turning positive, we can grow faster.
Interest rate and inflation outlook for 2018?
•Interest rates may not go up too much nor will they trend down. The government and RBI agree they don’t want high inflationary environment. Rate cut will not be there in the foreseeable future. I think it is flattish for calender 2018.
In the FRDI Bill, do we need to raise deposit insurance?
•It’s an overreaction to an imaginary problem. Finance Minister has clarified that several times. Putting an inconvenience to the depositor will not happen. There is a debate on whether equityholder or the depositor should take the hit [if a bank fails]. But the Ministry had already clarified that. Deposit insurance is a commercial decision. If insurance goes up, somebody has to pay the premium. Once it goes up, the impact will only come back to the customer.
What suggestions do you have for the Budget?
•The government is likely to strengthen the architecture of the resolution mechanism [of NPAs] so that clearances happen faster. In 2018-19, strong recovery may happen. With availability of good capital in abundance, banks can lend; that can stimulate the economy.
•For a bank to generate money, it needs good growth and strong recovery. The Budget is likely to stimulate the economy by activating rural economy and agriculture. We are still an agrarian economy. Opportunities are plenty but are not fully leveraged to create one crore jobs in a year.
📰 Government may tweak insolvency law
•The insolvency law might be amended depending on recommendations of the panel reviewing issues related to the legislation, including those pertaining to home buyers, a senior government official said.
•While everything is time-bound under the Insolvency and Bankruptcy Code (IBC), Corporate Affairs Secretary Injeti Srinivas said the issue is how the interests of stakeholders are to be balanced.
•A 14-member panel, also chaired by Mr. Srinivas, is working to identify and suggest ways to address issues faced in the implementation of the IBC — which came into force in December 2016.
•“There is a feeling that this law is skewed a little too much in favour of financial creditors. It is not adequately addressing the requirements or expectations of other stakeholders. It is a serious area we have to look at. The committee is looking at all the issues,” Mr. Srinivas said.
•According to him, competition, regulatory clearances, tax liabilities and other aspects would also be looked at.
•“It was felt that there was enough reason to have a comprehensive stock taking even though it is a one-year old law... Based on recommendations of the Insolvency Law Committee, in the future there may be changes in the IBC,” Mr. Srinivas said.
•A large number of cases have been filed under the IBC, which provides for a market-determined and time-bound insolvency resolution process.
•“There are also apprehensions on whether this system [insolvency law] can be abused. Can somebody trigger this system for some sort of wrongful intent?” the secretary said.
•Among others, issues such as whether the insolvency process should be governed by liquidation value or enterprise value would also be looked into.
•“What are the rights of home buyers? What is the capacity of insolvency professionals? These are among the issues that has to be seen,” he said.
•In recent months, there have been concerns about incomplete realty projects and consequent hardships faced by home buyers. Some real estate firms are also facing insolvency proceedings.
•There have also been suggestions from certain quarters about having provisions that would help provide relief to home buyers.
•Responding to a query about home buyers’ rights in the context of the insolvency law, Srinivas said, “whatever you do, it has to be calibrated in a way that public interest is not affected. You maximise benefits and minimise losses“.
📰 Textiles sector seeks a leg up from the government
‘Stagnant exports, technology upgradation need attention’
•A couple of major issues have impacted the country’s textile and clothing sector in the past year. Expectedly, the industry’s aspirations for the Union Budget are related to the revival of exports and the GST.
•According to data available with the industry and the export promotion councils, readymade garment exports grew less than 1% between April and November 2016 in dollar terms and dropped 3.03 % in rupee terms.
•Fabric exports were to the tune of $230.37 million in April 2017 and slumped to $113 million in October. Yarn exports fared better in value terms at $267.33 million in April and $354.05 million in October last year. However, in terms of volume, yarn exports stayed almost flat. Apparel exports dropped 8% in December alone compared with a year earlier.
•“Between 2009 and 2015, the domestic market grew 10% every year for the Indian textile and clothing sector, and exports rose almost 8% year-on-year,” said P. Nataraj, chairman of Southern India Mills’ Association. “For the last three years, exports have almost stagnated. Countries such as Vietnam have overtaken India in yarn exports to China.”
•When the global economic slowdown hit the industry seven years ago, the Centre had come out with a time-bound stimulus package. The two major policy decisions of the government in the recent past, demonestisation and GST, have impacted the industry more than the economic slowdown, he said. “What the industry needs now is a stimulus package.” The Confederation of Indian Textile Industry (CITI) pointed out that according to a study of 600 SME units, the number of units under the SME 2 category rose from 54 to 191 between March and September and the number of NPA units went up from 18 to 32 during the same period.
•A stimulus package will give relief to the units,said Sanjay K. Jain, chairman, CITI. Rebate of State levies (ROSL) is critical for revival of exports. Towards this, the government should sanction adequate funds for ROSL and extend it to all products instead of just garments and made-ups, said Mr. Jain.
•According to data available with the ministry, the allocation for ROSL for 2017-2018 was ₹1,555 crore and it has been exhausted. However, according to the industry, garment exporters got ROSL only for April and May and made-up exporters received rebates till July this financial year. India exports garments and made-ups worth $23 billion annually. The average tax rate after GST for garments and made-ups is 1.8%; it was 3.7% before GST.
‘Allocations must rise’
•The industry estimates it needs about ₹2,100 crore to clear pending ROSL reimbursements and another ₹2,500 crore for the next fiscal. So, allocations need to go up substantially, sources said. The Centre should announce the drawback rates, restore the pre-GST level of incentives for exports and increase the import duty, said representatives of industry associations.
•The Apparel Export Promotion Council has said that under schemes such as Advance Authorisation and EPCG, applicants should get early approvals. This will lead to higher investments.
•Officials in the ministry said thrust areas now were going to be powerlooms, technology and export promotion.
📰 Prompt Corrective Action: Ministry to appraise bank heads
12 lenders under watch on NPA issue.
•The Finance Ministry would soon initiate a performance review of heads of public sector banks that are under the RBI’s Prompt Corrective Action (PCA) as part of the reform process, official sources said.
•So far, the Reserve Bank has put 12 public sector banks (PSBs) under watch in view of lagging on certain performance parameters like unexpected level of high non-performing assets (NPAs), low capital level, low return on assets etc.
•These parameters indicate weak financial health of lending institutions and a need to initiate remedial measures to put them on a right course.
•As far as capital is concerned, the government has committed adequate funds, they said, adding that now these banks have to prove their mettle on the NPA front.
•If these lenders “perform extraordinarily”, they will be rewarded, sources added.
•The banks include IDBI Bank, Central Bank of India, Indian Overseas Bank, Dena Bank, Allahabad Bank, Bank of India among others.
📰 Rebuilding our cities
It will take a brave government to revitalise Indian cities in an inclusive way
•Soon after World War II, Americans chose to align their cities not with European ideals but with places that reflected American conditions. That great swathes of cheap land and newer technologies for construction were available meant that the new American city could have denser civic centres, a large component of suburban homes, private cars to access long distances, and a new conception of city life.
Dynamic Indian cities
•The Indian city of the 21st century is a similarly dynamic entity, with palpable differences from its modern conception after Independence. Chandigarh, under Jawaharlal Nehru, began with a minuscule population of 20,000. This has grown to 1.2 million people today and the city’s construction has no allegiance to its original conception. Similarly, Delhi began its post-Independence life with less than a million inhabitants. Today, on a GPS map, the National Capital Region’s unhindered spread across three States resembles muddy water spreading from a broken drain.
•Delhi’s per capita GDP rate gives no indication of its true demographics. The city has the largest population of urban poor in the world. Its antiquated urban policies — by-laws, civic regulations and building parameters — that were drawn for a city of 750,000 middle-class residents are today out of sync for a population of 22 million, of which 80% are poor, homeless, or slum inhabitants. With similar statistics, a continual expansion northwards, and a system out of touch with ground reality, Mumbai is a close second.
•The liberalised economy of the last few decades has created two pockets of city life: a small exclusive elite that occupies urban space but remains cloistered and outside of its civic forces, and a majority of dispossessed who fill the empty crevices of the city with meagre possessions and rudimentary needs. A supposedly thriving middle class remains a figment of the bureaucratic imagination, while the overwhelming population is of the poor. What does this say about the future of civic planning and urban life?
Looking to West Africa
•If the bureaucrat and the politician wish to deal with the real city today, they must look closely at Lagos and Kumasi rather than Copenhagen or Shanghai. Like Delhi and Mumbai, West African cities are migrant towns whose development and future prospects are tied to the economy of day-to-day minor endeavours. To give civic space to people with nothing, to allow for a spread of temporary commerce, cattle fairs, public festivals and vegetable markets as the mainstay of civic life makes West African towns strikingly similar to Indian cities. A mix of agricultural town, rural outpost and cosmopolitan centre, the city’s migrant economy takes centre stage in civic life. Indian towns too rely on the surrounding farming economy or are artisan centres for small-scale — often illegal — industry.
•Consequently, the signals are all directed towards a future urbanity made up of rural inhabitants, where the more pressing needs of civic life will be addressed by informal associations. Norms of space occupation, building design, size and density have to therefore grow out of people’s own comfort and familiarity, not as an imposition of imaginary European models or even Indian middle-class values. Civic mayhem is created by persistent and erroneous calls for public space, cultural centres, stadia, etc., rather than open maidans and temporary bazaars where migrant patterns can be openly expressed in city life.
•Demographic changes in Indian cities occur much too fast to be acknowledged in government policy. In fact, perceptible changes in the city’s public disposition have already begun to project rural patterns. The wide open green space at Delhi’s India Gate — designed as ceremonial space for government monuments — now functions as an unselfconscious city ground for the capital’s poor. The northern fringe of hillocks outside Jaipur’s old city is a cataclysm of expanding tenements. Mumbai’s Marine Drive is public space without intent, as is Chennai’s Marina Beach.
Revitalising cities
•Unless there is a serious rethink of the value of urban life, the city will remain mired in its present muddled state of trial, error and miscalculation. Cities throughout India have to be revitalised, for which three serious approaches are available.
•First, given the trends of migration and the free-for-all approach to civic resources, land and facilities, the government’s inclination to appease the larger numbers should take precedence. The city’s overriding plan should be directed towards an accommodation of all migratory tasks — home, employment, entertainment, and commerce — in buildings and public facilities altered to suit their primary needs. This may radically change the overall structure of the city. But when bylaws and regulations are specifically and only written for a migrant city, it would be far more acceptable than the current city profile as desperate slum.
•The second idea could adopt a draconian model of restrictions similar to Chinese and some European cities, allowing entry and civic facilities only to those with either home or employment. Physical control and access to roads, parks, housing and utilities becomes a position of fewer people sharing a limited reserve of urban space and resources. As most social scientists now admit, only controlled undemocratic space can be a functioning model for a city.
•The third model, which is the most difficult and yet most sought-after, seeks a divergent and all-inclusive solution. It is what American urbanist Jane Jacobs described as ‘a cultural cohesion’ where the integration of economic disparities is so complete that it resembles a finely woven carpet. The design incorporates all the essential elements of habitation — home, commerce, recreation and institution — and merges them mysteriously in the carpet weave. The city and its neighbourhoods are no longer a visible intrusion of small private capitalist parts in a larger socialist city-state, or vice-versa, but an unconscious mixing of interdependence. People live blissfully unaware of the other’s presence, class or economic status. Hints of such places are visible in old European and American cities, in small medieval towns in western India, even in some long-established poorer city tenements. Such cities do not follow physical, statistical or design models, but are formed out of a deeper evolutionary social core — an intent that despises easy definitions of community, residence, commercial area and public space. It takes a brave government to believe these are worth doing, and an even braver one to attempt such coalescing.
•The extreme variation in all three approaches still demands decisive thought and implementation. It will take civic municipalities a serious commitment to a task so far given over to a decaying formless city — part slum, part farmhouse — born out of neglect and complacency.
📰 Red alert on the green index
India’s poor ranking in the Environmental Performance Index should force a policy appraisal
•Reports, late last year, on India’s improved ranking in the World Bank’s ‘Ease of Doing Business’ Index (from 130 to 100) have been cause for much celebration. As a follow-up to this, the government announced additional reform measures to further improve the ranking.
Low green score
•However, coinciding with this is the news that out of the 180 countries assessed, India ranks low in the Environmental Performance Index (EPI) 2018, slipping from rank 141 in 2016, to 177 in 2018. The EPI is produced jointly by Yale University and Columbia University in collaboration with the World Economic Forum. In comparison, emerging peer economies, Brazil and China, rank 69 and 120, respectively. The EPI ranks countries on 24 performance indicators across 10 issue categories. No index is perfect. But if an improvement in an index for ease of doing business is cause for celebration, then, equally, a drop in an index ranking environmental performance should be cause for concern and used as a context to examine our policy measures.
•A look at recent initiatives shows that the government has set ambitious targets for environmental protection. In December 2015, it notified new, strict environmental standards for coal-fired power plants, to be effective from January 2018. An aggressive target was set to implement Bharat Stage VI emission norms from April 1, 2020, skipping Stage V norms. In 2017, the Minister of State for Power and Renewable Energy said that a road map was being prepared so that only electric vehicles would be produced and sold in the country by 2030. In order to accelerate the transition to renewable sources of power, the government, under the National Solar Mission, revised the target for setting up solar capacity from 20 GW to 100 GW by 2021-22. The Centre has also assured the Supreme Court of India that the highly polluted Ganga will be cleaned up by 2018.
A gap
•What are we missing then? Unfortunately, there appears to be a big gap between policy goals and action. While we seem to be moving in the right direction on solar targets, we are seriously lagging behind in a number of other goals. For example, the government has gone back on its promise of implementing strict power plant emission norms by December 2017, and may even dilute the norms. The automobile industry has categorically stated that based on current estimates, full conversion to electric vehicles is realistically possible only by 2047. After setting electronics manufacturers a reasonable annual electronic waste collection target of 30% of the products sold in the market, the figure has now been relaxed to 10%. And late last year, the Comptroller and Auditor General, in a report, pulled up the government for not developing an action plan and for its poor utilisation of allocated funds in the clean-up of the Ganga. The list can go on.
•Should we ignore environmental degradation as being just a cost of development? It turns out that the costs are pretty high. A recent study by the World Bank and the Institute for Health Metrics and Evaluation, University of Washington, Seattle, U.S., showed air pollution to be the cause of an estimated 1.4 million premature deaths in India, which translated into a welfare loss equivalent around 8% of India’s GDP in 2013. In addition, the cost of lost labour productivity was 0.84% of its GDP. These estimates do not account for many other forms of environmental degradation and are quite conservative also because of our lack of scientific understanding of several other key ecological impacts. A significant concern is also the fact that the poor are affected disproportionately because of environmental degradation.
The right price
•Thus viewing environmental problems even from a purely market logic suggests that the solutions lie in recognising the environmental costs of development and “getting the prices right”. Rapid transition to solar energy can be accomplished not only by enabling subsidies but also by pricing the more polluting fuels correctly. The strict environmental standards for coal plants are expected to do precisely that — the price we pay for coal-based electricity reflect, at least partially, the true costs of producing such electricity. The failure to implement these standards would be a step backwards. Similarly, the transition to electric vehicle use would be aided by pricing petrol and diesel, and perhaps the vehicles that use these fuels, to reflect their external costs to society.
•It is of course not the case that the current environmental mess we are in is entirely because of our recent environmental policy failures. It is linked also to the lack of political will to implement even existing environmental laws and regulations. It is not possible to restore environmental quality overnight. However, we must ensure that we are moving forwards, not backwards, in meeting our environmental targets. Being among the four worst countries in the world in terms of environmental performance should hopefully serve as a wake-up call.
📰 All borders to be fenced, says Rijiju
Says BSF happy with smart-fence tech.
•By the end of 2018 or early 2019, smart fencing will be deployed all along the Indo-Bangladesh and Indo-Pakistan border to prevent infiltration and illegal migration, Union Minister of State for Home Kiren Rijiju said on Sunday.
•“Smart border fencing technology has been introduced in some pockets in Bangladesh and Pakistan border. The Border Security Force has been given the mandate, and they have tested the technology and found it to be effective,” he told presspersons during the sidelines of the passing-out parade of the second all-woman batch of Central Industrial Security Force constables at Regional Training Centre in Arakkonam.
•On the steps being taken to prevent infiltration, the Minister said the country had so many borders. “We have the coastal boundaries, the peninsular India which is around 7,500 kilometres long. We have the border with Pakistan on the western front where there are maximum cases of infiltration of extremist elements, especially in the Line of Control area. We have increased our vigilance,” he said.
•With China, there were no issues of infiltrations but only boundary issues, he said. Mr. Rijiju said the border was porous in Myanmar. “There is a visa-free regime along the Indo-Myanmar border due to a treaty,” he said.
Airport security
•He said the Home Ministry had decided to hand over charge of security at all airports in the country to the CISF. VIP security too would be given to the force.
•Asked about cybersecurity threats, he said a new division had been formed in the Home Ministry for counter-insurgency cybersecurity.
📰 What are we teaching the robots?
AI picks up racial and gender biases, which is a cause for concern
•Hearing ‘VR, AR, AI, Bitcoin’ in one sentence is like hearing ‘5GB, 512KB and Pentium’ in the late ’90s. It fires up your inner geek. But to the discerning, VR and AR are so 2017 that they are almost retro. And at the moment, Bitcoin is looking bubblier than a bubble bath.
•But AI is a different story. The strides that are being made in the areas of machine learning, image processing, and natural language processing are on a scale that resembles the moon landing. And it is permeating into everyday life at several Mbps, aided by the smartphone.
•If Google Photos is able to positively identify you in photos that you yourself cannot, it is because it has been going through millions of images, pixel by pixel, and learning the patterns. If a Tesla car can apply brakes foreseeing a collision between the two cars in front, it is because it is doing its own calculations. If Google Assistant seems to be able to understand Punjabi English just as well as it does Malayali English, it is because it does not just listen; it learns.
•The most discernible impact of highly capable AI is in the tech field, particularly software development. The process of programming and testing will become increasingly automated, significantly reducing the number of people required in the supply chain. In fact, last year, Google’s machine-learning programme started generating machine-learning programmes that were better than what human programmers could code. And the best part: that mother code, AutoML, is now available for public use on the cloud. These programmes can study X-ray images for doctors and legal documents for lawyers.
•If ‘blue-collar automation’ could be cutting jobs on the factory floors with robots, AI-driven ‘white-collar automation’ will be cutting jobs in call centres, stock exchanges and even laboratories. In this scenario, any decision to get into photography, cooking or writing after an engineering degree is starting to look quite well informed.
•Beyond the more tangible questions of jobs and skills, AI also brings with it moral conundrums. There are basic questions such as ‘who should a self-driving car try to save: its driver or a pedestrian?’ and the more complicated ones such as ‘are we passing on our biases to machines?’
•In 2016, researchers at the University of Virginia published a paper that described how two massive image collections used to train programmes to process images that had gender biases, like associating images of cooking with women. These collections passed on the biases to their ‘students’, who not only reproduced the bias but even amplified them. Other research shows that AI also picks up racial bias from online text content, and gender bias from general news. If what singularity, that much-speculated-on churn of AI generating better AI, finally spits out is a version of our worst self, with a tendency for racist tweets and sexist memes, then there is much to be disappointed about.
📰 NASA keen on India-made technology for spacecraft
Satish Tailor’s thermal spray coating useful for gas turbine engine
•A new thermal spray coating technology used for gas turbine engine in spacecraft developed by a Rajasthan-based researcher has caught the attention of a NASA scientist, an official said.
•Expressing his interest in the research, James L. Smialek, a scientist from NASA wrote to Dr. Satish Tailor after it was published in the journal Ceramics International and Thermal Spray Bulletin, said S.C. Modi, the chairman of a Jodhpur-based Metallizing Equipment Company (MEC).
Cost-effective
•While working at MEC as a chief scientist, Research and Development, Dr. Tailor developed the controlled segmented Yttria-Stabilised Zirconia (YSZ)-Plasma sprayed coating technology, which according to him could reduce the thermal spray coating cost by almost 50%.
•“In simple language, vertical cracks (segmentation) in the coating are beneficial for gas turbine engine application used in spacecraft,” Dr. Tailor said.
•“At present, researchers are developing such cracks through very expensive processes (in several crore) and cracks are generated during the coating deposition process, and crack generation is not controllable,” he said.
•Dr. Tailor said he had shared his research papers with the NASA scientist who had written him an email regarding this. Scientists working at the country’s leading research organisations — the Council of Scientific and Industrial Research (CSIR) and Defence Research Development Organisation (DRDO) — are equally impressed with the new technology.
•Dr. R.M. Mohanty, the chief scientist at the CSIR headquarters in New Delhi, said that the outcome of the reported R&D presented an inexpensive solution for superior survival of current YSZ thermal barrier coatings produced by atmospheric plasma sprayed (APS) technique, and had a potential of wider industrial/strategic acceptability.
•DRDO scientist Dr. R.K. Satpathy said if it could be industrially adopted to make a strain-tolerant coating then it would definitely be more economical.
