📰 How the data sets stack up
Why measuring inequality is not the same as measuring changes in the level of poverty in India
•In recent years, there has been a lot of discussion on increasing inequality within several countries of the world, including India, particularly after the publication of Thomas Piketty’s book on inequality. It is true that rising inequality has adverse economic and social consequences. The Gini coefficient or other measures of inequality are being used to examine trends in inequality. In this column, we examine the trends in inequality and show that the poverty ratio is equally important as the Gini coefficient in analysing issues relating to growth and distribution.
•Consumption inequality
•Generally the Gini coefficient, which lies between 0 and 1, is used for measuring inequality. The Gini coefficient of consumption expenditure for rural areas declined marginally between 1983-84 to 1993-94 (from 0.304 to 0.286) while it recorded a marginal rise during the high growth period of 2004-05 and 2011-12 (from 0.304 to 0.311). In the case of urban areas, it stayed the same from 1983-84 to 1993-94 (0.344) while it increased modestly from 2004-05 to 2011-12 (0.376 to 0.390). Using long time series since 1951, a study shows that inequality in rural areas declined while it increased in urban areas in the post-reform period, particularly in the high growth period (Gaurav Datt, Martin Ravallion and Rinku Murugai, “Growth, Urbanization and Poverty Reduction in India”, 2016).
•One view is that inequality in consumption may be an under-estimate as National Sample Survey (NSS) data may not be capturing the consumption of the rich adequately. The difference between the consumption expenditure according to the National Sample Survey Office (NSSO) and national income could be partly due to this factor. However, there is no strong evidence that underestimation in NSSO is only relating to the upper-income groups. In fact, the Rangarajan Committee examined the issue of differences in consumption between NSSO and NSS. According to the committee, these two estimates of consumption (National Accounts Statistics, or NAS, and household survey based) do not match in any country, and India is no exception. What is alarming in India is that the difference between NAS and NSS is widening over time. For example, the difference was less than 10% in the late 1970s; it rose to almost 50% in 2009-10. Some adjustments made in the report reduced the difference from 45.8% to 32.5%. But still the differences are high.
Income inequality
•Income and wealth inequalities are much higher than consumption inequality. According to some estimates, consumption Gini coefficient was 0.36 in 2011-12 in India. On the other hand, inequality in income was high with a Gini coefficient of 0.55 while wealth Gini coefficient was 0.74 in 2011-12. Thus, income Gini was about 20 points higher than consumption Gini while wealth Gini was nearly almost 40 points higher than consumption Gini. Thus, inequality in income and wealth is much higher than that of consumption.
•The data base for computing income inequality is not as solid as the base for consumption expenditure. NSSO surveys have been studied for long and have gone through critical analysis. The reasons for sharp differences between consumption Gini coefficient and income Gini coefficient have to be analysed. In some other countries, such differences are no more than 5-10 points. Also, using income tax data for computing income distribution has many problems. In India, only 3-5% of people come under the income tax net.
Trends in poverty ratio
•There are many approaches for poverty measurement. Human beings need a certain minimum consumption of food and non-food items to survive. However, the perception regarding what constitutes poverty varies over time and across countries. Generally the approach is to look at it in terms of certain minimum consumption expenditure on food and non-food items. Any household failing to meet this level of consumption expenditure can be treated as a poor household.
•We examine here the trends in poverty based on NSS Consumer Expenditure data for the period 1983 to 2011-12. In the pre-reform period, overall poverty declined marginally during 1983 to 1993-94. The rate of decline in poverty was 0.8 percentage points per annum. In fact, the number of persons below the poverty line stayed almost the same at 320 million during this period. The number of persons below poverty declined by 5 percentage points during 1983 to 1987-88 but rose by 4 percentage points during 1987-88 to 1993-94.
•Poverty declined faster in the post-reform period, particularly in the 2004-2012 period as compared to 1993-2005. In the post-reform period, overall poverty as defined by the Tendulkar Committee declined faster from 45.3% in 1993-94 to 21.9% in 2011-12 – an annual decline of 1.3 percentage points. Within the post-reform period, the first sub-period 1993-94 to 2004-05 recorded a decline of 0.75 percentage points per annum. But, poverty declined by 2.2 percentage points per annum during the period 2004-05 to 2011-12. This was the period of highest economic growth since Independence. It is the fastest decline of poverty compared to earlier periods.
•There are two conclusions on the trends in poverty. First, as the World Bank Study (2016) mentioned above shows, poverty declined by 1.36 percentage points per annum post-1991 compared to 0.44 percentage points per annum prior to 1991. This study shows that among other things, urban growth is the most important contributor to the rapid reduction in poverty even in rural areas in the post-1991 period.
•The second conclusion is that within the post-reform period, poverty declined faster in the 2000s than in the 1990s. The official estimates based on Tendulkar poverty lines show that poverty declined much faster during 2004-05 to 2011-12 as compared to the period 1993-94 to 2004-05. Around 135 million people were lifted above the poverty line in the post-reform period.
•On the cut-off line for determining poverty ratio, there are controversies. Some people think that the Tendulkar poverty level is low and needs to be raised. As far as reduction in the poverty ratio is concerned, it holds good even if we raise the poverty cut-off to 1.5 times the Tendulkar cut-off. The annexure to Chapter 2 of the Twelfth Five Year Plan gives details of reduction in the poverty ratio for different levels of poverty cut-off.
Growth and distribution
•The trends in poverty show that the pace of reduction was much higher in the post-reform period particularly during high growth period. The impact of higher growth on poverty reduction can also be seen from the decile-wise growth in per capita consumption expenditure. A comparison of the growth rate of per capita consumption (in real terms) during the periods 1993-94 to 2004-05 and 2004-05 to 2011-12 shows that the average growth of per capita consumption of the top five deciles is more than that of the bottom five deciles.
•However, the ratio of the average growth rates of the two periods is higher for the bottom five deciles as compared to the top five. It implies that the expansion of consumption of the lower deciles of the population was more than the upper deciles.
•To conclude, there has been lot of discussion in recent years on inequality. There is no doubt that inequality in itself has several undesirable consequences. It was Simon Kuznets who had argued in a famous paper in 1955 that in the early period of economic growth distribution of income tends to worsen, and that only after reaching a certain level of economic development an improvement in the distribution of income occurs. In this context, measuring inequality is not the same as measuring the changes in level of poverty. Even if the Gini coefficient remains the same or picks up, the poverty ratio can be declining. This has been true of India. The decline in poverty is much higher particularly in the period 2004-05 to 2011-12 in spite of rise in inequality. Thus the changes of the poverty ratio is an equally important indicator to monitor.
📰 The pawns in international disputes
Among the many diplomatic devices countries possess to express outrage, expulsion is the least disruptive
•Among the many hazards that diplomats face today, the most ancient one is expulsion, also known as declaration of a diplomat as persona non grata. It is the most effective bloodless punishment as the person concerned is removed lock, stock, and barrel from the scene, never to return. The diplomat concerned may not be guilty of omission or commission or even aware of the reason why he is being expelled. He becomes a mere pawn in international disputes or he may even be a victim of a symbolic protest or a reciprocal action.
The Russia example
•Russia now, like the erstwhile Soviet Union, may well be the country whose diplomats have perhaps suffered the largest number of expulsions. The recent coordinated expulsion of over 100 Russian diplomats by more than 20 countries is huge even by the standards of the coldest days of the Cold War. Basically, it was an act of solidarity by the U.S., the European Union and some others with the U.K. after an alleged attempt by Russia to murder a former Russian spy and his daughter. Russia had denied any hand in the attempted murder, but responded with expulsions symmetrically in accordance with diplomatic practice. Generally, the countries involved do not go beyond these diplomatic gestures. Slowly and gradually, the vacant posts in the Russian embassies will be filled and diplomats will return to their posts in Moscow.
•Austria did not join some of the other EU members to expel Russian diplomats because it felt that communication channels should be kept open, particularly during crisis. The Austrian Foreign Minister recalled the several occasions when Austria had organised historic meetings which paved the way for peace and understanding. Russia welcomed the Austrian position and even expressed willingness to hold talks on the issue of suspected poisoning of the former spy. But for the U.K., the Austrian decision was unfriendly as it revealed the chinks in the European armour.
•Russia gloated over the fact that a majority of nations in the world, including China and India, wanted concrete evidence about Russian complicity. It was also a relief for them that U.S. President Donald Trump did not tweet about Russian involvement even though he ordered the expulsion of 60 Russian diplomats.
•Russia has a tradition of assigning expelled diplomats to an agency called the UPDK, which takes care of the needs of diplomats posted in Moscow. Diplomats cannot function in Moscow without the UPDK which alone can maintain diplomatic residences. You cannot even drive a nail on the wall without the permission of the UPDK. Domestic staff have to be appointed by it and the same person will come back even if sacked by the diplomat. The Russians at the agency are good diplomats and they seem to have the capacity to relax rules to please Ambassadors.
India’s stand
•India takes recourse to expulsion of diplomats only in extreme circumstances when its has clear evidence of wrongdoing. When it expels diplomats, it does expect reciprocal action and accepts it as a necessary evil. India has expelled Soviet diplomats even during the heyday of India-Soviet friendship. In retaliation, Moscow had technically expelled Indian diplomats, who were already under orders of transfer from Moscow. In a rare case, one of India’s diplomats who was expelled in this manner was allowed to visit Moscow as a member of the delegation accompanying the Prime Minister of India. This violation of the code of conduct was later explained as a conscious decision not to hurt India-Soviet relations.
•I have the dubious distinction of being the only Indian Head of Mission to be expelled. We invited the expulsion after a military coup in Fiji ousted a Fiji-Indian dominated government in 1987 and changed the Constitution which effectively disenfranchised Fiji Indians. India refused to recognise the military government, imposed sanctions and got Fiji thrown out of the Commonwealth. Even in the face of such a position, I was allowed to remain in Fiji for two years before they asked me to leave in 72 hours. I left in 48 hours, saying that I would like to use the remaining 24 hours to go back on a holiday. As it happened, the wheel came full circle and I was invited back to Fiji after 25 years.
•Expulsion of diplomats is very often like shooting the messenger for the message. In modern times, expelling diplomats has become the instrument of weak nations to show displeasure to stronger ones even at the risk of facing retribution. Nauru, a little island nation in the Pacific, once expelled the only resident envoy of Australia over a petty quarrel, but restored its vital link in a short time.
•The expulsion of Russian diplomats should be seen as part of the emergence of a new Cold War, resulting from the assertive policies of Russian President Vladimir Putin and the aggressive posture of Mr. Trump and his love-hate relationship with Russia. Among the many diplomatic devices countries possess to express outrage, expulsion is the least disruptive, though it plays havoc with the lives of diplomats and their families.
📰 No affront to Dalit rights, says SC
Defends its ruling on SC/ST Act as it only protects an innocent person from arbitrary arrest
•The Supreme Court said its March 20 judgment, banning immediate arrest of a person accused of insulting or injuring a Scheduled Caste/Scheduled Tribe member, is meant to protect innocents from arbitrary arrest and not an affront to Dalit rights.
•The government, despite an urgent and open court hearing of its review petition, failed to convince a Bench of Justices A.K. Goel and U.U. Lalit on Tuesday to stay its direction, considering the massive protests across the country which claimed nine lives on April 2.
‘No terror’
•“An innocent should not be punished. There should not be terror in society... We do not want any member of the SC/ST to be deprived of his rights. We only want an innocent not to be punished,” Justice Goel observed.
•Justice Goel, who authored the verdict, said the judgment, in fact, fortifies the Dalit protection law - the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act of 1989.
•“Our judgment implements what is said in the Constitution. We are conscious of the rights of the underprivileged and place them at the highest pedestal... but at the same time, an innocent person cannot be falsely implicated and arrested without proper verification. We have not stopped the implementation of the Act. Does the Act mandate the arrest of innocent persons? Our judgment is not against the Act,” Justice Goel addressed Attorney-General K.K. Venugopal, for the Centre. He called the judgment a ‘balance’ between Dalit rights and right of an innocent against arrest in a false case.
•The judgment directs a “preliminary enquiry” to be conducted on whether a complaint filed by a Scheduled Caste/Scheduled Tribe member is frivolous or not. An FIR would be registered only after the probe officer, Deputy Superintendent of Police, authenticates the complaint of casteist slur or crime.
Verification of claims
•When Mr. Venugopal said such an enquiry would delay the grant of compensation mandated to victims under the Act, Justice Goel said grant of money from the public exchequer should be preceded by verification against false claims. This ‘preliminary enquiry’ serves that purpose.
•At one point, Justice Goel asked Mr. Venugopal how even the Attorney-General could function if made a victim of a false complaint.
•He said, “People who are agitating would not have read the order.”
•The court’s amicus curiae and senior advocate Amrendra Sharan indicated that vested interests were fuelling the protests.
📰 Ministry withdraws order on ‘fake news’
Decision follows directions from PM
•The Information and Broadcasting Ministry withdrew its order, issued on Monday, under which accreditation of any journalist found guilty of disseminating “fake news” could be cancelled.
•This came on directions of Prime Minister Narendra Modi, after outrage from the media and the Opposition.
Hands-off approach
•“The PM has directed that the press release on the fake news be withdrawn and the matter be addressed only by the Press Council of India (PCI),” a senior official in the PMO said. Mr. Modi was also of the view that the government should not interfere in the matter, the official added.
•Following the message from the PMO, the Ministry said in a statement that the guidelines “to regulate fake news...stands withdrawn.”
•Announcing the norms on Monday night, the Ministry, headed by Smriti Irani, said accreditation of a journalist could be cancelled if the news reported by him/her was found to be “fake.” The notification, which did not define the phrase “fake news,” said complaints would be referred to the PCI if they pertained to the print media and to the News Broadcasters Association if they related to the electronic media. The regulatory agencies would have 15 days to dispose of a complaint. During the period of probe, the journalist’s accreditation would be suspended, the note said.
📰 Court questions Centre’s flip-flop
It was the government which said provisions of the SC/ST Act were being abused: Justice Goel
•The Supreme Court on Tuesday questioned the government for shifting its stand in the court by first agreeing there is abuse of the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989 and now filing a review petition against the March 20 judgment.
•“The Union itself had said there was abuse,” Justice A.K. Goel, who headed the Bench comprising Justice U.U. Lalit, observed.
State view
•Amrendra Sharan, amicus curiae in the case, said the March 20 judgment was based on the government’s views about abuse of the 1989 law.
•“It was the government which gave the data, made the submissions and now they are challenging the judgment,” Mr. Sharan submitted.
•The judgment bans immediate arrest of those charged under provisions of the 1989 Act. A preliminary inquiry should be conducted first into the veracity of a complaint filed by a Dalit under the Act before registration of a first information report. The judgment led to massive protests even as the Centre rushed to the Supreme Court for its review on Monday.
•In open court, Justice Goel pointed out that it was the government which brought on record the Sixth Report of the Standing Committee on Social Justice and Empowerment (2014-15) on the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Bill, 2014. The report had rejected the stand of the Ministry that there was no need to act against false or malafide implications under the Atrocities Act.
•It was this report which became a deciding factor for the court to lay down the guidelines against arbitrary arrests or false implications under the Act.
•The judgment recorded Additional Solicitor-General Maninder Singh’s submissions for the Centre. Besides acknowledging abuse of the 1989 Act, the Centre agreed that Section 18 of the Act should be read down to allow anticipatory bail. The section forbids anticipatory bail.
•In the review petition, on the other hand, the Centre supported the ban on anticipatory bail and said it was not in violation of the fundamental right to personal liberty.
•Similarly, the judgment quoted the Centre reeling out statistics supporting abuse of the Act. For instance, the government said that in 2015, the police filed closure reports for 15-16% of cases filed under the Act and over 75% cases resulted in acquittal or withdrawal.
•In its review petition, the government did a flip. This time, it cited figures from 2016 to show how weakly the Act was implemented.
•It said that of the 47,338 cases registered across the country, only 24.9% ended in conviction and 89.3% were pending.
📰 SC to hear Cauvery case on April 9
Centre’s application to be heard along with contempt petition by Tamil Nadu
•The Supreme Court on Tuesday agreed to hear, on April 9, the Centre’s plea to extend the deadline for framing a scheme to implement its February 16 judgment in the Cauvery water dispute.
•Chief Justice of India Dipak Misra said the Centre’s application would be heard along with a contempt petition filed by Tamil Nadu.
•Tamil Nadu has accused the Centre of not “protecting the interests of the farmers and the larger interests of the State”. The February 16 judgment in the Cauvery appeals had directed the Centre to frame the scheme in six weeks.
•The deadline ended on March 29. On the eve of the deadline, the Centre had moved the Supreme Court for a three-month extension for implementation of the judgment as Assembly elections were scheduled for May 12 in Karnataka.
Seeks clarification
•The Centre has also sought clarification on certain points in the judgment.
•In its application, the Centre asked the court to clarify if it was open to framing a scheme “at variance” with the tribunal’s recommendations.
•For one, it wanted to know whether a Cauvery Management Board (CMB) could have an assemblage of administrative and technical expertise rather than be a purely technical body as envisaged by the Cauvery Tribunal in 2007.
‘Different functions’
•Secondly, the Centre asked whether it could accord the CMB with functions different from those recommended by the tribunal.
•Finally, the Centre has asked the Supreme Court for its opinion on the framing of the scheme under Section 6A of the Inter-State River Water Disputes Act of 1956, considering the divergent views expressed between Tamil Nadu and Karnataka.
•Tamil Nadu wants the CMB as per the 2007 tribunal order, while Karnataka wants a two-layer scheme, one headed by a committee led by the Union Water Resources Secretary.
•Tamil Nadu, which filed the contempt petition, reminded that the Supreme court has clearly banned any extension of time to the Centre for framing the scheme.
📰 ‘Minors can’t opt out of Aadhaar once they are 18’
Option not available under Aadhaar Act
•Minors, whose Aadhaar card has already been generated, cannot opt out of the Aadhaar scheme after becoming majors, the Unique Identification Authority of India (UIDAI) told the Supreme Court on Tuesday.
•Attorney General K.K. Venugopal was referring to written replies of UIDAI CEO Ajay Bhushan Pandey to queries posed by the petitioners opposed to the Aadhaar scheme and its enabling 2016 law, before a five-judge Constitution Bench headed by Chief Justice Dipak Misra.
•Mr. Venugopal said school authorities could act as introducers to get children between the age group of 5 and 15 enrolled for Aadhaar, with parental consent.
Locking facility
•Responding to a query on whether a child, after attaining the age of 18, could opt out, the top law officer told the Bench that it was not permissible under the Aadhaar Act, 2016.
•“However, residents have the option of permanently locking their biometrics and only temporarily unlocking it when needed for biometric authentication as per Regulation 11 of the Aadhaar (Authentication) Regulations, 2016,” he said.
📰 Anti-talaq Bill draconian: AIMPLB women’s wing
‘Govt. should focus on dowry deaths‘
•Demanding the withdrawal of the Muslim Women (Protection of Rights on Marriage) Bill, 2017 that makes triple talaq illegal, members of the All India Muslim Personal Law Board (AIMPLB) on Tuesday said that through the “anti-women” Bill, the government was targeting the community.
•“The provisions in the Bill have created pain and anguish among women from the community. This Bill is is being introduced to harass Muslim women. What is this selective obsession with triple talaq? There are other pertinent issues that the government can focus on, including dowry deaths, female infanticide and so on. Why is the government not looking into those aspects as well,” asked Dr. Asma Zehra, convener of the AIMPLB’s women’s wing.
•The Bill, which is currently pending in the Rajya Sabha, had made the pronouncement of triple talaq a non-bailable offence.
•Further, it laid down that a man using triple talaq to divorce his wife, would face a three-year imprisonment and a fine.
📰 Poor success rate in cases of atrocities
•As many as 47,338 cases of crimes against Scheduled Castes and Scheduled Tribes were registered across the country in 2016, the Lok Sabha was informed on Tuesday.
•Union Minister of State for Home Hansraj Gangaram Ahir said as per the information provided by the National Crime Records Bureau (NCRB), a total of 40,774 cases were registered under the SC/ST (Prevention of Atrocities) Act and other sections of law over alleged crimes against SCs and STs in 2016.
•Of these, chargesheets were filed in 78.3% cases, and the conviction rate was 25.8%, he said in reply to a written question.
•As many as 6,564 cases were registered over alleged crimes against the Scheduled Tribes in 2016, in which chargesheets were filed in 81.3% cases where the conviction rate was 20.8%, the Minister said.
•Mr. Ahir said in 2015, a total of 38,564 cases were registered for alleged crimes against the SCs in which charge sheets were filed in 73.8% cases and the conviction rate was 27.2%. He said altogether 6,275 cases were registered for alleged crimes against STs in 2015 in which chargesheets were filed in 74.3% cases, and the conviction rate was 19.8%.
•The Minister said Rule 3 (v) of the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Rules, 1995 specifies that with a view to prevent atrocities on members of Scheduled Castes and Scheduled Tribes, the State government, if deemed necessary, can provide arms licenses to members of Scheduled Castes and Scheduled Tribes.
•“Police’ and ‘Public Order’ are State subjects under the Seventh Schedule to the Constitution. The responsibilities to maintain law and order rest primarily with the respective state governments ,” Mr. Ahir added.
📰 Biometric failure is not related to age, says UIDAI
‘Many alternative processes for authentication are available’
•The Unique Identification Authority of India (UIDAI) claimed there is no “conclusive evidence” to say that biometric authentication success is dependent upon age.
•“Slightly higher authentication failure rates have been observed only for fingerprints for senior citizens above the age of 70,” UIDAI CEO Ajay Bhushan Pandey said in a written reply in the Supreme Court on Tuesday to a questionnaire from the petitioners challenging the Aadhaar scheme.
•The petitioners have argued that Aadhaar is prone to biometric authentication failure and results in financial exclusion of senior citizens and those employed in manual labour.
•Mr. Pandey said several alternatives to biometric authentication are available. Besides, an Aadhaar holder could always update his biometrics.
•“Authentication failures do not mean exclusion or denial of subsidies, benefits or services since the requesting entities are obliged under the law to provide for exception-handling mechani- sms,” the UIDAI response said.
•The authority said that out of 108,50,391 iris scans, 9,27,132 unique UIDs failed, that is, 8.54% of the total. Out of 6163,63,346 fingerprint scans, 369,62,619 failed. That is, 6% of the total. The UIDAI explained that in the “unlikely scenario” where both iris and fingerprint cannot be used for authentication, the mobile number can be used.
📰 Back on track
As the GST e-way bill system is scaled up,the authorities must remain flexible
•After an aborted attempt in February, the government has finally managed to successfully roll out the e-way bill system for tracking the movement of goods under the Goods and Services Tax net from April 1. No major execution challenges have been reported by businesses so far, and the IT backbone that generates the e-way bills — that are now required even before goods are loaded for transport — has so far held up without glitches. On the first two days of the e-way system, which included a Sunday, 5.5 lakh e-way bills were generated, and the GST Network has said that the system is now geared to cope with a much higher capacity. Equally heartening is the revival in GST collections, that had dipped to Rs. 83,716 crore in November 2017, after a fairly robust Rs. 90,000 crore-plus inflow for the first three months of the new indirect tax system. As per final data released by the Centre on Monday, collections for the three months since then are far healthier than initial indications suggested, with February recording Rs. 89,264 crore, the highest since September 2017. Finance Secretary Hasmukh Adhia expects collections to pick up further as the authorities get a better sense of who is regularly filing returns and paying taxes. His confidence reflects the government’s belief that analytics deployed on GST data compiled for nine months would deliver a bigger bounty, even as e-way bills make it tougher to avoid tax dues.
•Everyone’s fingers are crossed that the e-way bill portal, which now has over 20,000 registered transporters and 11 lakh taxpayers, will hold up, going forward. It is important to note that since the system for tracking inter-State movement of goods was launched at the beginning of a financial year, the actual load that the portal will have to bear on a normal business day may be much higher than the initial trends. This is because many businesses had already moved and stocked up goods by March 31, ahead of the system kicking in, and are still completing usual year-end processes such as recording closing stock. A staggered schedule for rolling out e-way bills for intra-State trade in a few States at a time is expected soon. Given that India’s transport sector is still largely unorganised and many vehicle drivers are not fully conversant with the technical nuances, it is important that anti-evasion squads deployed to check e-way bills operate with a light touch to start with, and limit the frequency of inspections for goods moving across States. Else, the system could end up creating a bottleneck for transporting goods in a country where goods movement already takes inordinately long due to infrastructure deficiencies. A similar approach would be ideal for other anti-evasion measures in the pipeline, including the matching of invoices from buyers and sellers, and the reverse-charge mechanism (expected by June-end) under which large businesses would need to pay tax on behalf of unregistered small suppliers.
📰 RBI didn’t audit PNB properly: CVC
CVC bats for more robust auditing system, says banks must conduct business in an ethical manner
•Apportioning blame to the Reserve Bank of India (RBI) over the PNB loan fraud, Central Vigilance Commissioner K.V. Chowdary on Tuesday there had been “no apparent audit” by the central bank during the period of the scam.
•Mr. Chowdary stressed the need to put into place a more robust auditing system. “They did not do this [an audit],” the head of the probity watchdog said.
•The CVC exercises superintendence over the CBI which is looking into the over Rs. 13,000-crore Punjab National Bank fraud case.
•The RBI had the regulatory responsibility for the banking sector but any lack of integrity would be looked at by the Central Vigilance Commission, he added. Mr. Chowdary said according to the RBI it had switched over from a periodic audit to a “risk-based” audit which is conducted when there is a financial risk involved.
•“To determine risk, they must have some parameters. Based on that they would have done that [auditing]. [But] there was no apparent audit by the RBI during this period [of fraud],” Mr.Chowdary said.
•Finance Minister Arun Jaitley had in February slammed regulators for failing to detect the fraud, saying that unlike politicians, regulators were unaccountable. Mr. Chowdary pointed out that the RBI issues general guidelines as a regulator and also when foreign exchange is involved.
•“They are not going to see from branch to branch and bank to bank what they are supposed to do.” It was primarily the responsibility of the banks to ensure that their business was conducted in a proper and ethical way, he added.
‘Systemic issue’
•“There is a systemic issue [here]. They [RBI] have decided instead of every year or every once in two, three or four years, they will do it [risk-based auditing]. “It is a good policy. But how they determine the risk parameters... and why this [fraud] did not come up are matters of detail,” Mr. Chowdary said. He, however, clarified that it was not just the PNB where an alleged fraud had taken place or that other banks were “100% correct“.
•On a bank’s role in checking frauds, he said, “There should be defined timelines. The preventive vigilance mechanism has to be strengthened. The guidelines and operating procedures have to be strengthened. It has to be ensured that they are followed.” On the PNB probe, he said what the CVC was doing in the case could not be disclosed now as “it is work in progress.”
•“There are so many issues that the CVC is examining both with reference to the PNB and RBI,” he said.
📰 All eyes on RBI’s inflation forecast: analysts
Central bank expected to hold rates in April 5 policy review meeting
•The six-member monetary policy committee (MPC) of Reserve Bank of India (RBI) is likely to maintain status quo on interest rates for the fourth straight policy review due on April 5, even though February retail inflation figures were the lowest in four months.
•Consumer price inflation in February slowed to 4.44% on the back of lower food prices, as compared with 5.1% in January. The central bank last reduced interest rates in August when the repo rate was lowered by 25 basis points to 6%.
•“The key focus for investors at this week’s RBI meeting is not the policy rate — because another pause is virtually assured — but the tone of its policy statement, and how the six-member MPC votes,” said Su Sian Lim, senior economist, APAC BNP Paribas.
‘One vote for increase’
•Only one MPC member, Michael Debabrata Patra, voted for an increase in the policy rate of 25 bps in the December policy meeting while others voted for a pause.
•In a note, Ms. Lim argued it would be imprudent of the MPC to ease up on its warnings on upside inflationary risks. “Although inflation has been cooling, upside risks emanate from higher state employee allowances as well as higher minimum support prices for crops,” she said.
•In December, RBI had estimated retail inflation at 5.1%, factoring in the rise in house rent allowance of the seventh pay commission. The RBI has a mandate of keeping retail inflation at 4%, allowing for 2 percentage points on either side.
•Economists at DSP Merrill Lynch, however, argued the RBI would continue with its balance tone of February policy.DSP Merrill Lynch estimates 4.6% inflation for the Jan.-March quarter— 60 bps below RBI’s — assuming March inflation at 4.05%.
•“Will the RBI MPC agree that inflation is peaking?” the economists asked. They also said RBI may commit to providing timely, durable liquidity to reassure the government securities market.
•DSP Merrill Lynch said it continued to expect a 25 bps rate cut in the August policy, assuming normal monsoons.
📰 India hails U.S. move against LeT arm
Says it’s a rejection of Pakistani ploy
•India has welcomed the U.S.’s decision to designate Milli Muslim League (MML), the political arm of Lashkar-e-Taiba in Pakistan led by Mumbai attacks mastermind Hafiz Saeed, a terrorist organisation, calling it a “vindication” of India’s position that Pakistan’s action against terror groups is ineffective.
•“[The US’s move] is also cognizance of the fact that terrorist individuals and entities are allowed to change names and continue to operate freely from territory under Pakistan’s control. The designation is a rejection of the attempts being made in Pakistan to mainstream terrorist individuals and entities,” MEA spokesperson Raveesh Kumar said on Thursday, a day after the U.S. announced its decision to declare the MML and the Tehreek-e-Azadi-e-Jammu and Kashmir (TAJK), an LeT front organisation working as a charity, terrorist organisations.
Appeal at global fora
•India had raised both issues at the global Financial Action Task Force plenaries in 2017 and February 2018, which also led to Pakistan’s grey listing.
•The U.S. order, designating the two organisations as Foreign Terrorist Organizations (FTO) under Section 219 of the U.S. Immigration and Nationality Act, and as a Specially Designated Global Terrorist (SDGT) under Executive Order 13224, came concurrently with designations for the main leaders of the organisations, some of whom expect to stand for elections in Pakistan in 2018.
•U.S. Coordinator for Counterterrorism at the Department of State said that they “take aim at Lashkar e-Taiba’s efforts to circumvent sanctions and deceive the public about its true character. Make no mistake: whatever LeT chooses to call itself, it remains a violent terrorist group. The United States supports all efforts to ensure that LeT does not have a political voice until it gives up violence as a tool of influence.”
•The U.S. move comes on the back of a number of decisions taken by the Trump administration to put Pakistan on notice on the issue of terror groups operating there. In November 2017, the U.S. had criticised the release of Hafiz Saeed, convicted in India on terror charges, after 10 months under house arrest in Lahore, as well as the Supreme Court order that allowed the MML to be registered for the upcoming general elections.
•In January, the Trump administration decided to withhold all Coalition Support Funding and some Foreign Military Financing to Pakistan because of its lack of action against terror groups, especially the Haqqani network. In February, the U.S. pushed through a proposal to greylist Pakistan at the FATF.
•The U.S. decision will give a fillip to talks between Indian officials and U.S. Principal Deputy Assistant Secretary for South and Central Asia Alice Wells in Delhi on Wednesday and Thursday. Ms. Wells was in Pakistan over the weekend for discussions on Afghanistan and the U.S.’s specific expectations on Pakistan actions against designated terror groups.
📰 Launch lessons
There is no such thing as total failure; ISRO should learn from its satellite launch problem
•The loss of communication between the ground station and the Indian Space Research Organisation’s latest satellite after its launch on March 29 is deeply disappointing. ISRO’s mission aimed to place the communication satellite, GSAT-6A, in space. However, shortly after the second orbit-raising operation, the ground station lost track of the satellite on March 31, when it was on course for the final firing. Understanding why this happened is crucial. A launch operation can be simplified into the initial three stages, during which the satellite is boosted to different heights by the launch vehicle and then placed in a geosynchronous transfer orbit. This is an elliptical orbit into which a satellite is placed initially before being transferred into a geosynchronous orbit where it maintains a position above a fixed longitude. During each of these stages, a part of the rocket completes its role and disengages from the bulk. Then the satellite moves towards its final and desired orbit. The GSAT-6A was first raised to the elliptical orbit marked by the following parameters: its perigee, or point of closest approach to Earth, was 5,054 km; and its apogee, or point of farthest approach, was 36,412 km. This was followed up by a second orbit-raising operation on March 31. It was after this and during the third such operation that the ground station lost contact with the satellite. This is why it is being conjectured that the failure occurred because of a flaw outside the launch vehicle, the GSLV, perhaps from a short circuit or power glitch within the satellite itself.
•The last word has not been said on the mission, as ISRO officials continue to try to establish contact with the satellite. Yet, in complex scientific feats such as ISRO’s projects, there is no mission so devoid of a learning aspect to it that it is deemed a total failure. The GSLV has had several successes in the past, and this is its 12th flight. For instance, it was used to launch the advanced communication satellite, GSAT-6, in August 2015. GSAT-6A’s predecessor, GSAT-6, provides S-band services for two-way communications as in the case of mobile phones. The present mission, launched on March 29, was endowed with additional features, such as the high-thrust Vikas engine that gave it the capacity to carry a heavier payload. It had been reported that the mission would be a testing ground for ISRO’s next moon mission. Given this background, ISRO should be open about the specific learning points from this launch exercise. Space science is exciting not just for the experts, but to many outside the field. Therefore, it is important that the agency presents itself more openly to the world.
📰 NASA spots farthest star
It takes nine billion years for Icarus’ light to reach Earth
•NASA’s Hubble Space Telescope has discovered the farthest individual star ever seen — an enormous blue stellar body nicknamed Icarus located over halfway across the universe.
•The star, harboured in a very distant spiral galaxy, is so far away that its light has taken nine billion years to reach Earth. It appears to us as it did when the universe was about 30% of its current age.
•Normally, the star would be too faint to view, even with the world’s largest telescopes.
Magnified view
•However, through a phenomenon called gravitational lensing that tremendously amplifies the star’s feeble glow, astronomers were able to pinpoint this faraway star and set a new distance record.
•“This is the first time we’re seeing a magnified, individual star,” said Patrick Kelly, who led the study as a postdoctoral fellow University of California at Berkeley.
•“You can see individual galaxies out there, but this star is at least 100 times farther away than the next individual star we can study, except for supernova explosions,” said Kelly, who is no at the University of Minnesota in the U.S.
•Located about 5 billion light-years from Earth, this massive cluster of galaxies sits between the Earth and the galaxy that contains the distant star. By combining the strength of this gravitational lens with Hubble’s exquisite resolution and sensitivity, astronomers can see and study Icarus.
📰 Study sounds the alarm for Arctic ice
2 degrees Celsius cap on global warming won’t save the ocean from going ice-free in some years
•Even if humanity stops global warming in its tracks at two degress Celsius, long seen as the guardrail for a climate-safe world, Arctic sea ice will still disappear in some years, scientists have warned.
•Holding the line at 1.5 degrees Celsius, however, would make a huge difference, according to two separate studies published on Monday in the journal Nature Climate Change .
•In a 2 degrees Celsius world, the Arctic Ocean would be ice-free roughly one-in-four years, whereas if warming does not exceed 1.5 degrees Celsius, the odds drop to one-in-40, the researchers concluded.
•“I didn't expect to find that half-a-degree Celsius would make a big difference, but it really does,” said Alexandra Jahn, author of one of the studies and an assistant professor at Colorado University in Boulder.
•The 197-nation Paris climate pact enjoins the world to halt warming at “well under” 2 degrees Celsius above mid-19th-century levels, and “pursue efforts” to cap the rise at 1.5 degrees Celsius. With one degrees of warming so far, Earth has already seen a crescendo of droughts, heatwaves, and storms ramped up by rising seas.
•The loss of Arctic sea ice is not only a consequence of global warming, but also an accelerant when millions of square kilometres of snow reflecting the Sun’s radiation back into space are replaced with dark blue ocean that absorbs it instead.
•Recent studies have also fingered dwindling sea ice as a likely driver of topsy-turvy winter weather that has seen days when the North Pole is tens of degrees Celsius warmer than Europe and North America.
Record low
•In 2017, summer sea ice shrank to 4.64 million square km in September. That was well above the record low of 3.39 million square kilometres set in 2012, but long-term trends are unmistakable: over the last four decades, minimum sea ice extent has dropped by about 40%. The Arctic Ocean is projected to become ice-free in summer — defined as less than one million square kilometres — by mid-century unless greenhouse gas emissions are rapidly and deeply reduced.
•After remaining flat for three years, global CO2 emissions in 2017 went up by 1.4%, dashing hopes that they had peaked, the International Energy Agency reported last week.
•Voluntary national pledges made under the Paris pact to cut CO2 emissions, if fulfilled, would yield a 3 degrees Celsius world at best. That would transform the Arctic, which has thus far warmed at double the rate of the world as a whole.
•“Under 3 degrees Celsius global average warming, permanent summer ice-free conditions are likely,” concluded the second study, led by Michael Sigmond, a researcher at the Canadian Centre for Climate Modelling and Analysis in Victoria.
Paris treaty
•The two modelling studies are among hundreds published since the Paris treaty was inked in 2015 exploring the feasibility and impacts of halting the rise in global temperature at 1.5 degrees Celsius, a goal some climate scientists say is likely out of reach.
•They are also the most recent to conclude that a 2 degrees Celsius world will not prevent severe impacts such as mass migrations due to rising seas, regional food and water shortages, and an increase in extreme weather, including heatwaves, droughts and floods. Only a few years ago, the 2 degrees Celsius target was upheld as the threshold for avoiding such consequences.
