📰 A race to save Hyderabad’s Ashoorkhana
Telangana government and Aga Khan Trust are working to restore the monument ahead of rains
•It is a race against the monsoon as Hyderabad’s 17th century Badshahi Ashoorkhana, famed for its resplendent tile work, is restored to its original finery.
•The sprawling structure, which turns into a house of mourning during Muharram, is located in a narrow bylane of the old city. On Sunday, workers were busy plastering a high wall with brownish lime mortar in the blistering sun, using the cover of a blue tarpaulin. .
•On another side of the wall where the restoration is taking place, framed by an arched entrance, is the 400-year old Ashoorkhana. It was built sometime in 1611 by Hyderabad’s founder, Muhammad Quli Qutb Shah.
•“We are consolidating the structure before the monsoon sets in. The documentation is also being done in parallel. Once that is over, we will decide on a conservation plan. The tile work has very fine detailing. At some points, the tiles have been painted over. This will require painstaking documentation,” says N. R. Visalatchy of the Telangana Department of Archaeology and Museums.
•The documentation is being done by the Aga Khan Trust for Culture with which the State government has signed a Memorandum of Understanding. “We have to do the work before the monsoon, because there are points from which seepage might occur and that will affect the tiles,” says Prashant Banerjee of AKTC. The restoration is a challenge, because materials must be moved through a narrow lane.
Heritage recovered
•The restorers are using a lime mortar mix for plastering, but that is not their only weapon. “Pulped and cured wood apple is injected into the gaps. It works like a silicone sealant that expands and contracts without letting the water in. Concrete sealants become rigid, and seepage happens,” says Mr. Banerjee.
•The Ashoorkhana, turns into a pilgrimage site when alams (battle standards) are installed to commemorate the battle of Karbala in 680 A.D. Ashoora or 10th day of Muharram is when the battle took place. The monument was lost for several decades when Emperor Aurangzeb’s forces turned it into a bandikhanato keep wheeled vehicles. Much later, the September 1908 floods caused havoc, washing away some tiles. In a shocking turn of events, it was turned into a garage and parking space at one time. A legal battle waged by the Moosavi family made the monument accessible again, and conservation moves followed the eviction of squatters.
📰 Rise in boys dropping out of madrasas in Bengal
However, number of girls in these schools is up
•On June 1, when the results of West Bengal Board of Madrasah Examination were declared, an unusually high number of girls had made it to the merit list. From Mehbuba Yesmin of Kaliachak in Malda district, who stood second, to Napisa Khatun of Murshidabad district, who ranked tenth, there were five girls who made it to the merit list.
•A close look at students who took the High Madrasa Examination in 2018 reveals that almost 70% are girls. Of the 52,502 students who took the examination this year, 36,565 are girls and 15,937 are boys.
•While the Madrasah Board authorities said schemes promoting girls education such as Kanyashree, the conditional cash transfer scheme, and Sabuj Sathi, the scheme of providing bicycles to school-going girls, are some of the reasons. But there is more to this phenomenon than encouraging girls to attend schools.
Migrating for jobs
•In a State with a skewed child sex ratio (960 females to 1,000 males as per 2011 census) 70% female students taking a board examination is indicative of a huge drop out among boys. Even the authorities of the Board agreed that boys were dropping out and were migrating to other States for work.
•“Most of the High Madrasas are located in Malda and Murshidabad districts and the boys in these districts have a tendency to drop out and migrate for jobs to other States,” Sheikh Abu Taher Kamruddin, president of the West Bengal Board of Madrasah Education, told The Hindu.
•The high number of girls writing the Class X board examination is also visible in the statistics of the West Bengal Board of Secondary Examination. Of the 11,02,921 candidates who had appeared for the examinations in 2018, the number of girls appeared stood at 6,21,266 (56.3%) while the number of boys appeared was 4,81,555 (43.66%).
•“These statistics clearly indicate that dropout of school-going boys is higher in certain pockets of the States, particularly in the minority-dominated districts of Malda and Murshidabad,” said Sabir Ahamed, chief researcher with Nobel laureate Amartya Sen’s Pratichi Trust.
Legal status
•Though the Madrasah Board was set up in 1927, it had no legal status till 1994, when an Act was passed in the West Bengal Assembly, giving it powers to affiliate institutions and conduct examination. There are 614 high madrasas in the State, which provide education in regular subjects like language, science, maths along with two optional subjects of Arabic and Islamic Studies (Islam Parichay). The Board also affiliates 102 senior madrasas providing religious education and conducting Alim (Class X) and Fazil (Class XII) equivalent examinations. Even in the Alim examination, more girls appeared. Of the 8,760 students who wrote the exams, 5,114 were girls.
📰 44% of Afghan children are out of school: report
Increase in violence is the main reason
•Nearly half all children in Afghanistan are out of school due to conflict, poverty, child marriage and discrimination against girls, the number rising for the first time since 2002, humanitarian organisations said in a report on Sunday.
•Spreading violence has forced many schools to close, undermining fragile gains in education for girls in a country where millions have never set foot in a class room. Some 3.7 million children between the ages of seven and 17, or 44%, are out of school, 2.7 million of them girls, Education Minister Mirwais Balkhi told a seminar, explaining a study conducted by UNICEF, USAID and the independent Samuel Hall think-tank.
•Without mentioning the Taliban or Islamic State, Mr. Balkhi said there were “many reasons” for children not going to school. In the worst affected provinces, up to 85% of girls are not going to school, the aid groups said. They did not give specific comparisons.
•In April this year, militants set ablaze two schools and widespread violence had led to closure of hundreds of private schools.
📰 Federalism that’s not cooperative
Indian public finance needs to be restructured to focus on local governance
•A reliable system of intergovernmental fiscal transfers is the key to a viable and stable federal polity. In India, the design of a sound intergovernmental transfer system that will balance the mismatches in resources and expenditure responsibilities of the various levels of government has been statutorily left to the Union Finance Commission (UFC). After the abolition in 2014 of the Planning Commission, which played a critical role in the Indian transfer system, the UFC has emerged as the principal agency to handle this delicate task. Article 280(3) and its first three clauses clearly spell out the core duties of the UFC: tax devolution, grants-in-aid, and augmenting the resources of panchayats and municipalities. Over the years, the open-ended subclause, 280(3)(d), that provides for “any other matter... in the interests of sound finance”, has been exemplified in the Terms of References of recent UFCs. The Terms of Reference of the 15th FC have attracted considerable public debate. Some States even held ‘conclaves’, and six of them submitted a memorandum to the President to alter clauses which allegedly violate constitutional propriety, long-standing precedents, and the “fiscal rights” of States.
Working out terms of reference
•The Terms of Reference controversy could have been averted under the dispensation of a truly cooperative federalism. The rationale of Article 280, which establishes the UFC, is derived from the acknowledged mismatches between the resources of the Centre and the expenditure responsibilities of the States. Although the Constitution borrowed heavily from the Government of India Act, 1935, it was not for a continuation of the past but for building a ‘holding together’ federation where joint action is avowedly the binding ethos. The Constitution-makers never asked pertinent questions like who should do what and who should tax where and used the principle of subsidiarity (what can be done best at a particular level should be done at that level and not at a higher level) or other criteria in functional and revenue assignments. Given this historical reality, the Terms of Reference of a UFC should have been a joint exercise rather than a Union diktat.
•In preparing the Terms of Reference for a quasi-judicial body like the UFC, it is important not to use it as a platform to impose the Union government’s agenda on the States. The Union governments up to the 10th FC were generally circumspect. The fiscal consolidation roadmaps that entail expenditure compression which ultimately reduce vital public spending on health, education, food security entitlements, drinking water, and so on disturb the finer fabric of India’s cooperative federalism — especially in the context of India’s lowest share of direct taxes in total taxes in the world, disreputable tax-GDP ratio, imprudent transgression into States’ autonomy, alarming growth of economic inequality, and so on. The litany of “fostering higher inclusive growth” guided by “the principles of equity, efficiency and transparency”, which was echoed by earlier Commissions too, has no operational significance when you go through the entire clause, particularly the requirement to “examine whether revenue deficit grants be provided at all.”
•Another important issue that has been deliberately omitted in the ongoing debate, as also in the memorandum to the President, relates to transfers to local governments. That, following the 73rd and 74th Constitutional Amendments, Article 280(3) was amended to incorporate the clauses relating to panchayats and municipalities underscores the organic link in Indian federal public finance. It is instructive to recall that Item No.6 of the Terms of Reference of the 11th FC wanted that commission to take into account constitutional mandates such as creation of institutions of self-government, planning for economic development and social justice, and so on. Later on, such clauses were discontinued. The Terms of Reference of the 15th FC introduces “performance-based incentives” which inter-alia want, “Provision of grants in aid to local bodies for basic services, including quality human resources, and implementation of performance grant system in improving delivery of services.” This subclause is not constitutionally neat because grants to local governments constitute a separate core mandate. Further, while including this among the “performance-based incentives”, the strategic efforts made by the 13th FC in this regard and the efforts to link local grants to the divisible pool via Article 275 are apparently ignored. Performance-based incentive clauses are valid only as a result-oriented accountability mechanism and also for ensuring constitutional mandates. Padding the Terms of Reference with questionable clauses under this rubric naturally invites resistance from subnational entities.
•The need for an integrated federal public finance that takes local governments into account in macro policymaking and in formulating strategies to ensure regional equity and for evaluating the revenue potential and fiscal capacity does not seem to have occurred to the decision-makers of the country. This omission is tantamount to tearing the web of a ‘holding together’ federation which seeks “inclusiveness” as a national goal. The Terms of Reference debate and the memorandum of the State Finance Ministers are silent on this vital issue. While we have a credible budgeting and financial reporting system at the Union and State levels, it is inexplicable why the financial accounting and accountability mechanisms at the local government level are left to fend for themselves.
The real issues
•In the Terms of Reference debate, population was the overarching concern. But the real issues are: (i) that there was a unilateral abrogation of an unwritten covenant or guarantee given to the States in June 1977 in Parliament (and endorsed by the National Development Council in 1979) that the 1971 Census population data will be used in computing devolution shares to the States; and (ii) in mandating the 2011 population, no alternate compensatory device has been envisaged. Interestingly, there was no strong protest when all the previous four commissions violated the 1971 population criterion in arriving at local government share. Actually, from a larger cooperative federalism perspective, the issue of population should refer to demographic dividend, inter-State migration, ageing population, and the like. For example, Kerala reaped its demographic dividend long back in 2001 and now accommodates nearly three million migrants from places like Odisha, West Bengal and Bihar. This takes a heavy toll on the State and local government resources. The whole issue of balanced regional development cannot be taken in a casual and illogical manner.
•The drawing up of a Terms of Reference of a constitutional body is a serious exercise to be handled with sagacity and skill, based on proper consultations in the true spirit of cooperative federalism.
📰 Post-democracy?
Populism and plutocracy may dilute the independent functioning of institutions in a democracy
•The experience of recent years suggests that basic trust in Indian democratic institutions is somewhat eroding. Examples to support this view include the Supreme Court coming under scrutiny, lack of transparency in the funding of political parties, debates around EVM tampering and on whether or not we should amend the Constitution. Notwithstanding the existence of a multiparty, parliamentary system, regular elections, freedom of the press, and an independent judiciary, doubts are raised with respect to the fairness of elections, alliances of the media, insufficient separation of the judiciary from the executive, populism, and plutocracy.
•A major characteristic of a populist regime is that it is influenced by a strong, popular mass leader who appeals to the linguistic, religious, regional, or community sentiments of a populace. Typically his campaigns throw up issues of cultural pride, adopt a pro-poor and anti-elite language, deify ideas of nationhood, aggrandise military might, glorify a golden past and assure a prosperous future.
•The current government has manifested most of these attributes in the past four years. Demonetisation was couched in anti-elite language, military aggrandisement came in the wake of the “surgical strikes” across the Line of Control, and statements by numerous Bharatiya Janata Party leaders hint at the glorification of the idea of Hindu nationhood. The 2014 election slogan of Achhe Din was nothing but the promise of a prosperous future. Alongside the rise of populism has been the deepening of plutocratic politics — governments of the rich, by the rich and for the rich. It is easy to find a positive correlation between the net worth of an individual and his likelihood of obtaining a ticket to contest elections. Given an open market of cash for votes, such individuals also tend to amass more votes.
•In India, a strong alliance of class interest and political power is apparent. At a broad level, massive tax evasion and multi-billion-dollar scams involving not only big corporates but also public banks demonstrate how profits are increasingly being privatised while the losses are being nationalised. Even during the United Progressive Alliance regime, mega scams such as those associated with the Commonwealth Games or the coal sector surfaced, in which political leaders were allegedly involved.
•There is a risk that the combination of populism and plutocracy, which prioritise personality and private interests over public good, may dilute the independent functioning of institutions that sustain a vibrant democracy. Any strategy to prevent such institutional erosion must aim to collectively reinforce faith in the principles and practice of democracy, constitutionalism and social justice.
📰 Waiver for India unlikely on Russia sanctions
At present, the rule gives a 180-day reprieve, asking New Delhi to scale back its relations with Moscow
•A clean legislative waiver for India from anti-Russia sanctions looks extremely difficult, if not impossible, several people lobbying lawmakers for changes in the law have told The Hindu.
•India is caught in the crossfire as a bipartisan law, Countering America’s Adversaries Through Sanctions Act (CAATSA), requires the administration to impose sanctions on countries that have “significant” defence relations with Kremlin.
‘Other routes’
•“Nobody in the Capitol Hill has the appetite to do anything that would be remotely seen as helping Russia, though in this case we are talking about helping India,” a Congressional staff member said. “A waiver appears out of reach. But there are other routes and we are hopeful of a resolution,” a business lobbyist working on the issue said, adding that there could be other means of ensuring that India’s defence ties with Russia does do not derail the expanding defence trade between India and the U.S.
•An attempt is being made to have language written into the National Defence Authorisation Act (NDAA) for 2019 that would enable the Donald Trump administration to protect India from sanctions. The U.S. House has passed NDAA 2019 already, the rules of which allows for waivers for 180 days, provided the administration certifies that the country in question is scaling back its ties with Russia.
•This formulation in inadequate to resolve the Indian situation, sources familiar with ongoing conversations involving Indian diplomats, U.S. defence companies and business bodies and lawmakers, told The Hindu. “A waiver linked to rolling back ties with Russia won’t be seen as helpful by India,” an executive with a U.S defence company said.
•Efforts are, however, still under way to insert provisions in the NDAA in Senate that might give the Trump administration more leeway in dealing with the situation, short of a clean waiver.
Mattis’s call
•Apart from India, Vietnam, Turkey and Indonesia are also caught in the same situation.
•Secretary of Defence James Mattis had called for waiver provisions at the Secretary of State’s level.
•“There are at least 2-3 different proposals under discussions with Senators still,” an official said. The Senate and House versions of the NDAA will be reconciled through a conference mechanism later.
•Rep. Mac Thornberry, chairman of the House Armed Services Committee, who was in India recently, has returned with an understanding that the proposed conditional waiver could be a dampener in ties with New Delhi, a source who interacted with him said.
Aggressive enforcement
•With the midterm elections scheduled for later this year, Democrats are trying to push the Trump administration to the corner on the Russia question.
•On May 24, during a hearing, Senator Bob Menendez pressed Secretary of State Mike Pompeo for aggressive enforcement of CAATSA. Mr. Pompeo, countered with a question of his own: “Will you help Secretary Mattis get the waivers that he needs to make sure that these sanctions does not hit folks that I think were not intended to harmed by these sanctions?”
•Mr. Menendez, the top Democrat in the committee, said he would consider the proposal.
•Mr. Pompeo was specifically asked what he was doing to stop Turkey from buying Russian missile defence system S 400, which India is also planning to buy. “We are imploring Turkey to not buy,” Mr. Pompeo said.
•Earlier last month, Mr. Menendez, and Senators Mark Warner and Sherrod Brown accused the Trump administration of lame enforcement of CAATSA and sought an inter-agency review. “In light of these apparent violations and the lack of corresponding sanctions actions, we are concerned about whether the sanctions implementation process within the administration is fulfilling CAATSA’s mandate and intent,” the Senators wrote in a letter.
📰 About a small Mauritian island
Why is India abandoning its commitment to secure the Indian Ocean as a zone of peace?
•Three hundred people live on the small Mauritian archipelago of Agaléga. They watch as their home is turned slowly into an Indian naval base. There is little that they can do. The government of Mauritius knows that there is far more to be gained from India than from the people of Agaléga. Mauritius is one of the main routes for foreign direct investment (FDI) into India. It earns Mauritius a considerable fortune in fees — money that is enough for Mauritius to renege on its pledge to its own citizens.
•In 2015, Prime Minister Narendra Modi and his Mauritian counterpart Anerood Jugnauth watched as Navtej Sarna (Ministry of External Affairs) and Sateeaved Seebaluck (Cabinet Secretary, Mauritius) signed an agreement that allows India to “develop infrastructure” on the islands. The phrase is a euphemism for the building of military bases, which India is doing not only on Agaléga but also on Assumption Island (Seychelles).
•Mauritius is the largest source of FDI into India, since multinational corporations have been able to take advantage of the India-Mauritius Double Taxation Avoidance Treaty and the lax tax regime to avoid paying taxes. After having given over Agaléga, Mauritius signed an amended treaty on taxes and by 2019 will effectively lose its status as the main funnel for FDI into India. Agaléga, which was the price for the extension of the treaty, will now be surrendered without benefit.
Ocean as peace zone
•On March 1, a group of Mauritians, Rodriguans and Agalégans met to form the Koalision Zilwa Pou Lape (Islanders Coalition for Peace). Solidarity with the people of Agaléga, as well as those in Chagos (Diego Garcia) and Assumption (Seychelles), animates this group. They have called for the Indian Ocean to be declared as a “zone of peace”.
•The “zone of peace” idea takes us back to the 1970 Non-Aligned Movement(NAM) summit in Lusaka, Zambia. Various NAM members called upon all states “to respect the Indian Ocean as a zone of peace from which Great Power rivalries and competition, as well as bases” be excluded. They had in mind the 1965 excision of the Chagos archipelago from Mauritian territory by Great Britain, which was then — in a 1966 treaty — handed over to the U.S. On Diego Garcia, one of the largest islands of the archipelago, the U.S. built a major naval base that quickly became essential in the Vietnam war. For the U.S., the “zone of peace” was a “very dangerous idea”. France, still a colonial power, did everything to stop this idea; La Réunion, south-west of Mauritius, became the centre of French naval military operations in the Indian Ocean after Djibouti won its independence from France in 1977. Nonetheless, the UN General Assembly voted a resolution in 1971 on the Declaration of the Indian Ocean as a Zone of Peace.
•The idea of the Indian Ocean as a demilitarised area is not anachronistic. In 2014, National Security Adviser Ajit Doval evoked the idea of the zone of peace in his speech at the Galle Dialogue in Sri Lanka. What did he have in mind? A Chinese submarine had docked in Colombo, which raised the hackles of India.
Keeping pace with China
•In its “string of pearls” policy, China has built significant relations across the Indian Ocean, from Gwadar (Pakistan) to Hambantota (Sri Lanka) to Kyaukpyu (Myanmar). A rattled India wants to exert itself in the same region and has developed reciprocal agreements with Australia, France and the U.S. to take advantage of bases as far flung as Cocos Islands (Australia) and La Réunion (France). Nuclear-armed ballistic missile submarines from India (Arihant) and from China (Song, Shang and Jin) will soon ply these waters. They will join the Ohio class (U.S.) and the Rubis class submarines (France) that already operate here.
•China and India are bit players in the Indian Ocean. The main naval facilities here are held by the U.S.; their own string of pearls runs from Bahrain to Singapore. In the middle of this arc is Diego Garcia, from where Afghanistan and Iraq were bombed. Focus on the rivalry between China and India misses the long-standing problem concerning the U.S., which was the focus of the Lusaka resolution. In Lusaka, the NAM resolution said this base constituted “a direct threat to the independence, sovereignty, territorial integrity and peaceful development of States of the region”. It remains a threat in exactly this way.
•The Koalision Zilwa Pou Lape’s statement evokes the full measure of the NAM statement but also goes beyond that. It speaks of the need to recognise the people of the Indian Ocean as one people with a “common past and a common destiny”; where the waters are treated as common property rather than as corporate and military property.
•Mr. Jugnauth left the office of the Prime Minister not long after he oversaw the deal over Agaléga. He has been a fierce defender of the rights of Chagos, the islands that house Diego Garcia. When Chagos was taken by the British, Mr. Jugnauth’s predecessor, Seewoosagur Ramgoolam, had essentially given up the island to win independence for Mauritius.
•Mr. Jugnauth has done the same with Agaléga, forfeiting it to India. India, which championed the zone of peace concept at Lusaka, has now fallen into old colonial habits. In a decade or so, the people of Agaléga will take their case, like the Chagosians, to the UN General Assembly. Like them, they will ask for their rights. India, like Great Britain, will then be in the dock.
📰 India successfully test-fires nuclear-capable Agni-5
The long-range ballistic missile has a strike range of 5,000 km
•Long-range ballistic missile Agni-5 was successfully test fired off Odisha coast on Sunday proving its reliability. This is the sixth successful test of the missile and the second in its pre-induction configuration.
•“Agni-5 missile was successfully flight tested today at 0945 hrs from Dr APJ Abdul Kalam Island [Wheeler Island]. All the radars, electro-optical tracking stations and telemetry stations tracked the vehicle all through the course of the trajectory. All the mission objectives have been achieved,” the Defence Research and Development Organisation (DRDO) said in a statement.
•Agni-5 can carry nuclear warhead weighing 1.5 tonnes to a distance of over 5,000 km and is the longest missile in India’s arsenal capable of reaching most parts of China. With a smaller payload, the range can go up much higher.
•The missile features many new indigenously-developed technologies, including the very high accuracy Ring Laser Gyro based Inertial Navigation System (RINS), and the most modern and accurate Micro Navigation System (MINS) which improves the accuracy of the missile.
•The first test was conducted on April 19, 2012 and after two tests, the missile was tested in canisterised configuration for improving its mobility, reducing launch time and improving safety and storage. The last test and the first in pre-induction configuration was conducted on January 18, 2018. Agni-5 is expected to be inducted into the Strategic Forces Command very soon.
•Last month, India celebrated two decades of the Shakti series of nuclear tests conducted in Phokran in May, 1998. India has since commissioned its first ballistic missile submarine completing the triad for nuclear delivery but is still sometime away from operational deployment. So far the Agni series of missiles remain the mainstay of nuclear weapons delivery.
•Hitting the target with speed and precision
•The missile has been programmed in such a way that after reaching the peak of its trajectory, it will turn towards the earth and continue its journey towards the intended target with an increased speed due to the attraction of earth’s gravitational pull. The path has been precisely directed by the advanced on-board computer and inertial navigation system.
•As the missile enters the earth's atmosphere, the atmospheric air rubbing the skin of the missile during the re-entry phase raises the temperature beyond 4,000 degrees Celsius, sources said.
•However, the indigenously designed and developed carbon-carbon composite heat shield continues to burn sacrificially, protecting the payload and maintaining the inside temperature below 50 degrees Celsius, the sources added.
All mission objectives met
•Finally, commanded by the on-board computer with a support of ring laser gyro- based inertial navigation system, the micro inertial navigation system, fully digital control system and advanced compact avionics, the missile hit the designated target point accurately, meeting all mission objectives, they said.
•The ships located in mid-range and at the target point, tracked the vehicle and witnessed the final event. All the radars and electro-optical systems along the path monitored all parameters of the missile and displayed in real time, they added.
•The first two flights of Agni-5 in 2012 and 2013 respectively, were in open configuration.
•The third, fourth and fifth launches were from canister integrated with a mobile launcher, in its deliverable configuration that enables launch of the missile with a very short preparation time as compared to an open launch.
•It also has advantages of higher reliability, longer shelf life, less maintenance and enhanced mobility, sources said.
India's armoury list
•At present, India has in its armoury the Agni series — Agni-1 with 700 km range, Agni-2 with 2,000 km range, Agni-3 and Agni-4 with 2,500 km to more than 3,500 km range.
•The first test of Agni-5 was conducted on April 19, 2012, the second on September 15, 2013, the third on January 31, 2015 and fourth on December 26, 2016. The last test was held on January 18, 2018.
📰 Fuel fractions: on petrol, diesel prices
Both the Centre and States must bite the bullet to cut taxes on petrol and diesel
•Last Wednesday, the public sector oil marketing companies cut the prices of petrol and diesel by one paisa a litre — the first reduction for a while in motor fuel prices that had been frozen for 19 days in the run-up to the Karnataka elections, only to creep up thereafter. Not surprisingly, the Centre, already under fire for persisting with high fuel taxes despite the rise in the global prices of crude in recent months, faced fresh flak over this cursory cut. The same day, the Kerala government approved a reduction in the sales tax on motor fuel products to effect a ₹1 cut in prices per litre in the State starting June 1. For the BJP-led government at the Centre, gearing up for several Assembly elections this year followed by the general election in 2019, the pressure to check pump-level fuel prices is intensifying. Several formulations are said to be under consideration to soften the blow to the consumer, including a reversion to old-fangled ways such as asking oil producers to bear some of the burden. But there still remains great reluctance to consider the option of reducing excise duties that were raised nine times between November 2014 and January 2016 when global crude oil prices had gone down. It is in this context that Kerala’s decision to slash the sales tax on fuel changes the narrative of the debate as States have also been raking in easy oil revenue.
•In all, the government raised central excise duties by ₹11.77 and ₹13.47 for a litre of petrol and diesel, respectively, followed by a ₹2 a litre cut announced in October 2017, when prices started rising. Additionally, States impose ad valorem duties on fuel products, which go as high as 39.27% (in Maharashtra) and average about 26% — so higher prices mean more tax revenue for them. To make matters worse, they levy value-added tax on the fuel price inclusive of central excise duties, not the base price, leading to double taxation and further price amplification. An SBI research report reckons that prices could go down for diesel by ₹3.75 and petrol by ₹5.75, a litre, if only this tax-on-tax-included-price anomaly was fixed. Giving up easy money is never easy, but the recent robust collections from GST should embolden both the Centre and States to bite the bullet now. Rising crude prices spike inflation and the trade deficit, putting pressure on the rupee and GDP growth. Industry has warned that domestic oil pricing policies are hurting the nascent recovery, and global rating agencies are already slashing India’s growth expectations for this calendar year, citing the oil issue. Two years ago, Petroleum and Natural Gas Minister Dharmendra Pradhan had said that the government was raising excise duties to protect the consumer. The logic: consumers could become vulnerable if exposed to low prices and feel a greater pinch when prices went up. The obvious corollary of that stance — that high taxes on fuel need to be cut when prices rise again — has been ignored so far.
📰 Fire without smoke: on chewable tobacco consumption
Both the Centre and States must bite the bullet to cut taxes on petrol and diesel
•Last Wednesday, the public sector oil marketing companies cut the prices of petrol and diesel by one paisa a litre — the first reduction for a while in motor fuel prices that had been frozen for 19 days in the run-up to the Karnataka elections, only to creep up thereafter. Not surprisingly, the Centre, already under fire for persisting with high fuel taxes despite the rise in the global prices of crude in recent months, faced fresh flak over this cursory cut. The same day, the Kerala government approved a reduction in the sales tax on motor fuel products to effect a ₹1 cut in prices per litre in the State starting June 1. For the BJP-led government at the Centre, gearing up for several Assembly elections this year followed by the general election in 2019, the pressure to check pump-level fuel prices is intensifying. Several formulations are said to be under consideration to soften the blow to the consumer, including a reversion to old-fangled ways such as asking oil producers to bear some of the burden. But there still remains great reluctance to consider the option of reducing excise duties that were raised nine times between November 2014 and January 2016 when global crude oil prices had gone down. It is in this context that Kerala’s decision to slash the sales tax on fuel changes the narrative of the debate as States have also been raking in easy oil revenue.
•In all, the government raised central excise duties by ₹11.77 and ₹13.47 for a litre of petrol and diesel, respectively, followed by a ₹2 a litre cut announced in October 2017, when prices started rising. Additionally, States impose ad valorem duties on fuel products, which go as high as 39.27% (in Maharashtra) and average about 26% — so higher prices mean more tax revenue for them. To make matters worse, they levy value-added tax on the fuel price inclusive of central excise duties, not the base price, leading to double taxation and further price amplification. An SBI research report reckons that prices could go down for diesel by ₹3.75 and petrol by ₹5.75, a litre, if only this tax-on-tax-included-price anomaly was fixed. Giving up easy money is never easy, but the recent robust collections from GST should embolden both the Centre and States to bite the bullet now. Rising crude prices spike inflation and the trade deficit, putting pressure on the rupee and GDP growth. Industry has warned that domestic oil pricing policies are hurting the nascent recovery, and global rating agencies are already slashing India’s growth expectations for this calendar year, citing the oil issue. Two years ago, Petroleum and Natural Gas Minister Dharmendra Pradhan had said that the government was raising excise duties to protect the consumer. The logic: consumers could become vulnerable if exposed to low prices and feel a greater pinch when prices went up. The obvious corollary of that stance — that high taxes on fuel need to be cut when prices rise again — has been ignored so far.
📰 Govt. mulls GST hike for farmers’ welfare fund
1% uniform raise proposed; Centre, States to share revenue
•Goods and Services Tax (GST) rates could rise by 1% to finance a Farmer Welfare Fund, according to a proposal under consideration of a Group of Ministers (GoM) set up by the GST Council.
•The hike is seen as an alternative to a sugar cess that had been proposed by the government to alleviate distress among sugar cane farmers.
•The ministerial group, tasked with considering the sugar cess and a reduction in the GST rates on ethanol, held its second meeting in Mumbai on Sunday.
To ease farm distress
•The proposal to hike GST rates entails sharing of the additional revenue between the Centre and States to finance a farmer welfare fund to benefit all farmers not just sugar cane farmers. However, a decision was deferred as the GoM is awaiting a legal opinion from the Attorney General on the original proposal to levy a sugar cess.
•On Sunday, the five-member GoM, led by Assam Finance Minister Himanta Biswa Sarma, also explored a reduction in the GST on ethanol to 5% from the existing 18% levy and increasing the government subsidy for export of sugar.
•Kerala Finance Minister Thomas Isaac told The Hindu that the possibility of a uniform 1% hike in GST across all slabs was discussed.
•“Out of it, 0.5% can be kept with the Centre and rest with the State. That money can be used to fulfil the needs of all farmers, not only sugar cane, by respective States in the form of welfare fund and even the Centre can chip in when necessary. But imposing a cess would mean betraying the very principle of GST,” Mr. Issac said. At present, the GST rate slabs are pegged at 5%, 12%, 18% and 28%, while certain goods are zero-rated.
•The fund would be to extend financial aid to farmers in case of situation that has arisen for sugarcane farmers and the States will have control over their share for disbursal .
Sugar cess opposed
•Kerala had already expressed dissent to the move to impose a sugar cess at the GST Council’s meeting on May 4. Apart from Mr. Sarma and Mr. Isaac, the GoM includes Ministers from Uttar Pradesh, Maharashtra and Tamil Nadu.
•Maharashtra Finance Minister Sudhir Mungantiwar said the GoM has decided to submit its report to the Council within a month, and is awaiting the Attorney General’s opinion on whether cess on GST can be imposed for welfare purposes, since it can only be imposed for compensation purposes.
•The Council will take a final call on the GoM’s report.
•“We also discussed the possibility of bringing down the GST on ethanol from 18% to 5%, which will help sugarcane farmers. Considering the massive sugar available with the country this year, we are also exploring the possibility to increase the export subsidy to sugar as our product is sold at much higher price than other countries,” said Mr. Mungantiwar.
•With approximately 20 kilogram per capita consumption, India’s annual need for sugar is around 250 lakh MT. This year the production has been around 320 lakh MT in addition to 45 lakh MT reserve from the last year.
📰 Odisha beach is Asia’s first to get ‘Blue Flag’ tag
12 more beaches in the country to be developed into plastic-free zones with international amenities
•The Chandrabhaga beach on the Konark coast of Odisha will be the first in Asia to get the Blue Flag certification — the tag given to environment-friendly and clean beaches, equipped with amenities of international standards for tourists.
•It will be awarded the honour on World Environment Day on June 5, Environment Ministry sources say.
•Twelve more beaches in the country are being developed by the Society for Integrated Coastal Management (SICOM), an Environment Ministry’s body working for the management of coastal areas, in accordance with the Blue Flag standards.
•Among them are the Chiwla and Bhogave beaches in Maharashtra and one beach each from Puducherry, Goa, Daman and Diu, Lakshadweep and the Andaman and Nicobar Islands.
•Arvind Nautiyal, SCIOM project head, said that to achieve the Blue Flag standards, a beach must be plastic-free and equipped with a waste management system. Clean water should be available for tourists, apart from international amenities. The beach should have facilities for studying the environmental impact around the area, he said.
•Mr. Nautiyal was speaking at a five-day conference held to commemorate World Environment Day, on making beaches pollution-free. He said that to achieve the Blue Flag standards, a beach had to strictly comply with 33 environment and tourism-related conditions.
•The standards were established by the Copenhagen-based Foundation for Environmental Education (FEE) in 1985.
•The Environment Ministry embarked on the Blue Flag project in December 2017.
📰 What’s driving the GDP revival?
Manufacturing, services and investments are looking up, but the government’s hand clearly stands out
•Economy watchers who were wallowing in gloom due to soaring oil prices, the wilting rupee and skittish foreign investors have been given some reason for optimism by the Central Statistics Office (CSO).
•The CSO’s provisional GDP estimates for FY18 suggest that growth revved up to a brisk 7.7% in the January-March quarter, the highest real GDP print in seven quarters. So, is this sustainable and what are the takeaways from the fine print?
A show of resilience
•The good news first. The quarterly GDP numbers show that the Indian economy has proved remarkably resilient to watershed events such as demonetisation and implementation of the Goods and Services Tax (GST). GDP growth, which was cruising along at 7.6% in the second quarter of FY17 decelerated sharply to 6.8% and 6.1% in Q3 and Q4 of FY17, after demonetisation vacuumed up a large chunk of money supply. Even as remonetisation proceeded at a sluggish pace, the rocky transition to GST, from July 2017, posed fresh challenges. Glitches in the GST Network, lack of clarity about transitory provisions and frequent changes to tariffs impeded business-as-usual in the transition months from April to August. This forced many firms to pare inventories and go slow on sales during these months. This slowed GDP growth to 5.6% and 6.3% in Q1 and Q2 of FY18.
•But economic activity has revived quite briskly thereafter. Real GDP growth accelerated to 7% in Q3 of FY18 and 7.7% in Q4, as per the latest GDP data, showing that the formal sector at least, has managed to successfully navigate the twin speed bumps of demonetisation and GST.
•Though FY18 has closed with the lowest real GDP growth in four years (6.7%), trends in recent quarters promise better times ahead.
•Economic commentators tend to focus exclusively on real measures of output to gauge economic activity, after stripping out the price effect. But it is nominal growth that truly drives income growth for households and top-line growth for firms.
Nominal growth returns
•Thanks to high inflation rates, India’s nominal GDP growth rates have historically held at double digits, with these growth rates hovering between 10.7% and 13% in the four years to FY17. But with inflation moderating and growth slowing abruptly in the first half of 2018, nominal growth rates dipped from 10.7% in Q4 of FY17 to 8.3% and 9.5% in Q1 and Q2 of FY18. But with inflation normalising and growth picking up, the last two quarters have seen nominal GDP growth return to 11%. That is good news for income earners as well as investors at India Inc.
•A sectoral breakdown of GDP numbers shows that job-creating sectors, which took a sharp hit in January to June 2018, are now on a turnaround path. Manufacturing, which saw GVA (gross value added) growth slip to 6.1% in Q4 FY17 has expanded by 9.1% in Q4 FY18. Construction which shrank by 3.9%, grew by a hefty 11.5% in Q4 FY18. Trade, hotels, transport and communication, which slipped to 5.5% in Q4 FY17 has rebounded to 6.8%. And financial services and real estate which flatlined in Q4 FY17 grew by 5% in the latest quarter.
•Yes, agriculture and mining have slowed. But given that manufacturing, trade, construction and services are the key employment generators for the Indian economy, their revival has a big impact on the feel-good factor.
•That is not all. For the last four years, analysts have fretted about stalled private investments holding back growth, with the two other legs — private consumption and government spending — doing much of the heavy lifting. This was attributed to high interest rates, excess capacities across industries and the high debt stockpile at India Inc. But the latest quarter has brought evidence of private investments coming back to life too, with Gross Fixed Capital Formation growth at 14.4%, improving steadily from 1% in Q1. Buoyant commodity prices, lower interest rates and dwindling corporate debt are likely to have driven this.
Silent stimulus
•Despite all these positives though, the economy’s Achilles Heel is its continued reliance on government spending for growth.
📰 Why is the MSCI mulling caps on emerging markets, including India?
What is MSCI?
•It is the world’s biggest index compiler, with more than $10 trillion in assets benchmarked to its products, with emerging markets alone accounting for $2 trillion.
Why are MSCI indices important?
•The indices are closely tracked by global investors. Inclusion in MSCI Inc.’s stock indices opens up investment interest from foreign investors in a particular country and brings a stamp of financial credibility.
Why has MSCI put India on notice?
•MSCI said it is placing emerging markets including India and Brazil on notice for limiting investor access. For instance, MSCI has cited the fact that international investors face a lengthy and burdensome mandatory registration process with the market regulator, the Securities and Exchange Board of India (SEBI) .
•In February, the National Stock Exchange of India (NSE) barred foreign bourses from trading in Nifty derivatives.
•NSE and Singapore Exchange Ltd. are in a legal tussle over the issue. MSCI has expressed concerns over the dispute.
•“It is expected that stock exchanges, which often have legal or natural monopolies, should not impose clauses in their provision of stock market data,” MSCI said. “The existence of these types of practices will lead to a negative assessment,” it added.
What next on the issue?
•MSCI said India and Brazil, along with Turkey and South Korea, are potential future examples of markets whose weights could be capped in its indices.
•MSCI said it will now consult its clients and announce the results by December 31.
What happens if MSCI caps India’s weightage?
•India currently has a weightage of 8.3% in the MSCI Emerging Markets Index. The weightage, which was 8.48% till last month, came down slightly following the partial inclusion of China A- shares on May 31.
•Since it is a widely tracked index, any changes in weightage would affect inflows from foreign investors.
📰 More breast cancer patients can skip chemo, says study
It focusses on the response of women with early-stage of cancer to gene therapy
•Some 70% of women with early-stage breast cancer and an intermediate risk of cancer recurrence can safely skip chemotherapy after their tumours have been removed, U.S. researchers said on Sunday.
•“This is a major finding,” said Dr. Larry Norton, a breast cancer expert at Memorial Sloan Kettering Cancer Center in New York, who helped organise the government-funded study more than a decade ago.
•“It means that maybe 100,000 women in the U.S. alone do not require chemotherapy,” Mr. Norton said.
•The research, presented at the American Society of Clinical Oncology (ASCO) meeting in Chicago, studied how to treat women with early-stage breast cancer that responds to hormone therapy.
•Women were deemed to have a medium level risk of the cancer coming back based on a 21-gene panel known as Oncotype DX from Genomic Health. The test predicts the likelihood of cancer recurrence within 10 years. Those who score low on the test — from zero to 10 —are already told to skip chemotherapy after their tumours are removed and they receive hormone therapy. Those who score high — 26 to 100 — receive both hormone therapy and chemotherapy.
•The study, dubbed TAILORx, was also published in the New England Journal of Medicine. It involved more than 10,000 women with breast cancer that had not spread to nearby lymph nodes and whose tumours respond to hormone therapy and test negative for the HER2 gene. Of those, 6,711 scored in the intermediate range of 11-25, and were randomly assigned hormone therapy alone or hormone therapy plus chemotherapy.
•The study found that all women over 50 with this type of breast cancer could skip chemotherapy, a group that represented 85% of the study’s population. In addition, women 50 and younger who scored between zero and 15 could be spared chemotherapy and its toxic side effects.
Some benefits
•However, chemotherapy did offer some benefit to women aged 50 and younger who had a cancer recurrence score of 16-25, researchers found. Dr. Steven Shak, chief scientific officer at Genomic Health, said about four in 10 women in the U.S. with early stage breast cancers are not tested for recurrence risk. He expects the study’s results will change that practice.
•“This is going to provide the highest level of evidence now for our test being indispensable in clinical practice,” Dr. Shak said.
•The company currently provides tests to more than 900,000 patients in more than 90 countries, Dr. Shak said. In the United States, the test costs $4,000 and is covered by Medicare and all major private insurers.
