📰 Revise relations with Iran: Nikki Haley tells Modi
The U.S. had clarified that India must comply with sanctions against Iran and bring oil imports to “zero” by November 4.
•Calling Iran a “threat” to the world, U.S. envoy to the U.N. Nikki Haley said she had raised concerns over trade with Iran during her meeting with Prime Minister Narendra Modi on Wednesday.
•“President [Donald] Trump has said we need to hold Iran to account,” she told an audience during an interaction hosted by the think-tank ORF in the capital, adding that Tehran’s violations of its nuclear commitments and alleged sponsorship of terrorism made it the “next North Korea.” “We are going to keep the pressure on [Iran] and we hope all other countries will join us… I did talk with Prime Minister Modi about this as well…the U.S. is going to work with our friends and allies to ensure that we are all pushing Iran to be an accountable neighbour.”
•In an interview to NDTV, Ms. Haley also called on India to “rethink its relationship with Iran.”
•“I think as a friend [of the U.S.] India should decide whether [Iran] is a country they want to continue doing business with,” she said adding that her conversation with Mr. Modi had been a “constructive” one. The comments by Ms. Haley appear to be a part of a concerted campaign by the U.S. to ensure that India, Iran’s second biggest oil-importer after China, cuts its oil trade.
•This is will prove especially tricky since New Delhi had committed to raising its imports from Tehran by as much 25% after a visit by Iranian President Rouhani in February this year. The U.S. strictures follow President Trump’s decision in May to pull out of the Joint Comprehensive Plan of Action (JCPOA) multilateral nuclear deal and subsequently bring in the Countering America's Adversaries Through Sanctions Act (CAATSA) law that sanctions countries dealing with the Washington’s “adversaries”.
•On Wednesday, a senior U.S. State Department official had clarified that India must comply with the U.S. sanctions against Iran and bring oil imports to “zero” by its November 4 deadline. “We have seen the statement made by the State Department official,” MEA spokesperson Raveesh Kumar said. “The statement was not India specific and applies to all countries.”
•“We have seen the statement made by the State Department official on this matter,” MEA spokesperson Raveesh Kumar said. “The statement was not India specific and applies to all countries. India will take all necessary steps, including engagement with relevant stakeholders to ensure our energy security,” he added, without specifying whether Iran supplies would remain unchanged.
•At a press conference in May, External Affairs Minister Sushma Swaraj had been more categorical about maintaining ties with Tehran, when she had said that India would comply only with UN sanctions, not U.S. sanctions.
•On the subject of Pakistan, Ms. Haley, who ended her three-day visit to India on Thursday, said the Trump administration had sent tougher message on support to terror groups than in the past.
•“In many instances, Pakistan has been a partner with us, and we value and respect that. But we cannot tolerate its government, or any other government, giving safe haven to terrorists. We won’t tolerate it. We are communicating this message to Pakistan more strongly than in the past and we hope to see changes,” she said.
📰 The deepening disconnect
Postponement of the 2+2 dialogue has come amid growing India-U.S. estrangement in South Asia.
•If there were any doubts about a ‘disconnect’ between New Delhi and Washington in the past few months, the U.S.’s decision to put off the first ‘2+2’ dialogue with India should put them to rest. The 2+2, as the enhanced engagement between the Ministers of Foreign Affairs and Defence is called, was an outcome of Prime Minister Narendra Modi and U.S. President Donald Trump’s first meeting last June in Washington. Exactly a year later, it is still to take off.
Differing on many fronts
•If the optics are bad, the messaging is worse. Since January, the U.S.’s Countering America’s Adversaries through Sanctions Act against those conducting business with Russia and Iran, as well as its decision to walk out of the Iran nuclear deal have come right up against India’s interests. India has, in turn, tightened its engagement with Russia, China and Iran, with Prime Minister Modi advocating a course of “strategic autonomy”. On bilateral trade, hardly a week goes by without the U.S. and India firing one salvo or another. And on their strategic relationship, upgraded to a ‘major defence partnership’ only recently, the two governments have failed to make progress on signing foundational agreements, which in turn has held up talks on defence procurement and technology transfers. Simply put, seldom in the past two decades since India and the U.S. rebooted ties have the two sides differed so publicly on so many fronts at the same time.
•Unfortunately, one of the areas they had made good progress on, the U.S.’s South Asia policy, also appears to be in trouble. According to the policy announced about ten months ago, India was to be central to the U.S.’s efforts in Afghanistan while Pakistan would be ‘put on notice’ for its support to terror groups, including those that target India. The year began with Mr. Trump’s tweet lashing out at Pakistan, followed by suspension of U.S. military aid. The U.S. also sought to “greylist” Pakistan at the Financial Action Task Force on terror financing. However, there are enough indications that Mr. Trump’s South Asia policy is veering towards the U.S.’s Af-Pak policy of the past with the U.S. engaging Pakistan to help with Afghanistan, and India consigned a more supplementary role.
Coordinated contacts
•The first indicator of this shift is the increase in U.S.-Pakistan engagement, in conjunction with a rapid improvement in Pakistan-Afghanistan ties. In March, the then Pakistan Prime Minister, Shahid Abbasi, met U.S. Vice President Mike Pence in Washington, and a few weeks later Afghan President Ashraf Ghani and Mr. Abbasi finalised the seven-point Afghanistan-Pakistan Action Plan for Peace and Solidarity. In June, Mr. Pence spoke with caretaker Prime Minister Nasirul Mulk. Next, U.S. Secretary of State Mike Pompeo spoke with Pakistan Army Chief Qamar Javed Bajwa, who then travelled to Kabul just ahead of the surprise Eid ceasefire between Afghan forces and the Taliban. During his visit to Kabul, General Bajwa also met the U.S. Commander for the Resolute Support Mission, General John Nicholson.
•None of these appear to be coincidental, and together point to coordinated contacts between Washington, Kabul and Islamabad-Rawalpindi. Admitting as much in Washington, Mr. Trump’s point person for the region, Lisa Curtis, said that the U.S. had formally requested Pakistan to help facilitate the three-day Eid ceasefire. Concurrently, the U.S. administration’s language on Pakistan with Afghanistan has softened, and Ms. Curtis said this month that the U.S. sought to “understand Pakistan’s own core security concerns and ensure that its (Pakistan’s) interests are taken into account in any peace process.”
•While the U.S. State Department has called for Pakistan to act against all groups operating in its territory, including the Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM), its own military actions have left many in Delhi bemused. To begin with, while the U.S. has carried out a number of drone strikes since Mr. Trump announced his new policy, the large bulk of them are on Afghan, not Pakistani, territory. According to the U.S.-based Bureau of Investigative Journalism, which tracks all reported strikes, American forces carried out more than 100 air and drone strikes in Afghanistan in 2017, and more than 40 till date in 2018. The corresponding figures for strikes in Pakistan are five and one, respectively.
To Pakistan’s advantage
•What’s more, among the most prominent “kills” were leaders of groups that Pakistan had called on the U.S. to target, most prominent of them being Tehreek-e-Taliban Pakistan chief Mullah Fazlullah. His killing in June is believed to be a direct trade-off for Pakistan’s assistance in bringing Afghan Taliban leaders to agree to the ceasefire, the first time they have done so. In an article in The New York Times on Wednesday, Mr. Ghani expressed his gratitude for the ceasefire, and the ensuing, albeit short-lived, peace that saw ordinary Afghans and Taliban fighters greeting each other. Extending another offer for talks, he wrote: “I will sit and negotiate with the Taliban’s leader, Mawlawi Haibatullah Akhundzada, anywhere he wants.”
•While the killing of terrorists anywhere as well as the cessation of hostilities must be welcomed by India, the contrast in terms of action it has demanded cannot be ignored. LeT chief Hafiz Saeed, the mastermind of the Mumbai 26/11 attacks, is now addressing political rallies in Lahore for parliamentary elections in which his son and son-in-law are candidates, and JeM chief Masood Azhar lives undisturbed in his Bahawalpur home. Last month, he issued threats against India during the Kashmir cease-ops.
The Chabahar factor
•Finally, there are India’s regional concerns that stem from Mr. Trump’s Iran policy, which has spurred new sanctions against all countries and companies doing business in Iran and imposed a November 4 deadline to reduce oil imports from Iran to “zero”. Regardless of India’s determination to go ahead with its dealings with Iran, the impact of American restrictions will be felt in Chabahar Port, once billed as India’s gateway to Afghanistan, and a key component of its role in the U.S.’s South Asia policy. During the previous U.S. administration’s sanctions regime, India was able to get a ‘carve out’ for its port project and the railway line to Afghanistan through Zahedan. But there is no indication that the Trump administration will offer any such exemptions. Besides, as India is made perforce to yield to the U.S. on cutting oil imports, the Iranian regime is likely to look with disfavour at India’s engagement in Chabahar as well.
•Clearly, none of these predicaments is new, and India has pulled the situation to its advantage in the past. The difference this time is that the India-U.S. dialogue is not as robust as before, while India’s planned engagements with Russia Iran and China in the next few months may render bilateral ties yet more difficult. Rescheduling the 2+2 at the earliest opportunity, in the face of the high stakes involved for both New Delhi and Washington, is crucial.
📰 Target incomes, not prices
Income support must be provided to at least the most vulnerable farmers
•Our farm policy is so bad, the proverb ‘you reap what you sow’ isn’t true any longer. A bumper crop is no different from a drought, for it too depresses farm incomes.
•Good rains, excessive sowing and the bumper harvest last year produced gluts in the market that sent the prices of many crops, and therefore farm incomes, crashing. None of the economic tools available for protecting farm incomes — the price support scheme, the price stabilisation fund and the market intervention scheme — was employed to the best advantage. Quick and precise adjustments to the export and import rules could have arrested the price fall by diverting the excess supplies to overseas markets. But the changes required were not carried out in time. Instead, inflows of imports were allowed to go on, which worsened the price situation.
The MSP issue
•This year’s Budget promised that the Minimum Support Prices (MSPs) would be at least 150% of production costs, a longstanding demand of farmers and recommendation of experts. Even if the market prices fall below the MSP, as they did for major kharif crops in 2017, the government will procure the produce on MSP. And if it does not procure, it will provide a mechanism to ensure payments, equal to the gap between the MSP and the market price, would reach farmers.
•The intention of assuring 50% profit margin over the cost of production is to make farming remunerative. On the formula for calculating production costs for plugging into the MSP formula, farmer groups and the government are not as yet on the same page. But howsoever production costs are calculated, simply announcing higher MSPs will not raise farmer incomes. The system is not geared for scaling up procurement.
•For several crops last year, the quantities procured were small portions of the total produce. Although MSPs are announced for more than 20 crops, noteworthy procurement is conducted for three: paddy, wheat and sugarcane (procurement by sugar mills, not the government, given cane must be crushed within a few hours of being cut, or it dries, impacting sugar recovery drastically).
•Further, procurement frequently takes places at prices below the MSP, as is happening this year, according to reports. Finally, small and vulnerable farmers usually do not get paid MSPs at all, as they sell their produce to aggregators, not directly in mandis.
•In these circumstances, and given an imminent general election, the government is likely to take recourse to payments compensating for the difference between market prices and the MSP to appear farmer-friendly. In principle, it is only right and fair that the government pay reparations to farmers. The gluts, depressed market prices and mounting farmer losses are a direct consequence of the malfunction in agri-pricing policies.
•But price differential payments, no matter what mechanism is used for calculating and distributing them, would be yet another example of economic policies that get drafted purely on political appeal, without full grasp of the underlying economic principle, and backfire badly.
Demand-supply mismatch
•A set of estimates of the price differential payments likely this year, premised on realistic assumptions, from agriculture economists led by Ashok Gulati projects that the MSP of paddy for the 2018-19 kharif season will have to be raised 11-14%, cotton 19-28%, and jowar 42-44%, if the MSP pricing formula of 1.5 times the cost is employed.
•A rational response of farmers looking at this menu of MSPs would be to sow more jowar in the next season. The promise of profits is greatest for jowar. The policy will unwittingly lead to increased jowar production. There’s no reason the demand for jowar would also rise. A demand-supply mismatch would be inevitable which would send the market prices for jowar way below the announced MSP, calling for significantly expanded jowar procurement at MSP.
•The trouble is, pricing policies distort market prices and send the wrong signal to farmers on what to produce and how much. Our inept policy system fails to correct such situations, which then spiral out of control. But if the problem is volatile incomes, the solution must target incomes, not prices. Income support payments, paid on a per hectare basis through direct transfers, offer an administratively neater, economically far less distortionary and politically more attractive solution.
The Telangana example
•Telangana has announced such payments for farmers at the rate of ₹10,000/ha (₹4,000/acre) per season. The cost projections for scaling up this model to the national level, excluding the procurement of sugarcane, wheat and paddy, and non-MSP crops, are roughly as much as the estimated bill for the price differential payments. For total gross cropped area of 1,978 lakh ha, income support payments would add up to ₹1.97 lakh crore, which is equal to about a fifth of the total gross non-performing assets of the banking system in March this year. At ₹5,000/ha, the tab for income support would be about ₹98,500 crore.
•The impression was that the farmers’ long march to Mumbai a few months back forced urban India to reassess its position on the severity of the agrarian distress. But advantaged Indians have begun questioning the logic of fiscal support for farmers on the grounds that it is unfair to make the majority pay to keep afloat a high-cost, low productivity, income-tax exempt sector that contributes just 17-18% of the country’s GDP. They forget that the agriculture sector engages more than 50% of the total workforce, and that agri-prices, and therefore farm incomes, are not free-market driven. They are kept artificially low, through use of pricing policy instruments, so that inflation does not erode the rest of the population’s purchasing power.
•The current farm crisis is purely because of policy failure. Fiscal space must be found for providing income support this year to the most vulnerable farmers at least. Over the longer term, there is no alternative to deep reforms.
📰 Sinking rupee
As the dollar puts emerging market currencies under strain, the RBI needs to have a plan.
•The rupee’s troubles just do not seem to end. On Thursday, the currency weakened past 69 intraday against the U.S. dollar, an all-time low. The rupee, which has lost almost 8% in value since January 1, is the worst-performing currency in Asia this year. It is, however, not the only currency to be in the doldrums. Emerging market currencies as a group have witnessed a sharp correction in their value against the dollar this year. The MSCI Emerging Markets currency index, for instance, is down about 6% since the beginning of April. The rise in international crude oil prices is one of the reasons behind the rupee’s decline as importers have had to shell out more dollars to fund their purchases. India’s current account deficit, which jumped to 1.9% of GDP in the fourth quarter of 2017-18 from just 0.6% a year earlier, is now expected to widen to 2.5% in FY 2019. This could spell even more trouble for the rupee as the demand for dollars could turn out to be overwhelming. The dollar index, which gauges the value of the dollar against a host of major global currencies, is up about 7.5% since February. The rise in global trade tensions amidst the ongoing trade war could be another factor behind the rout in emerging market currencies, but its impact on the rupee remains unclear as of now. But by far the most important reason behind the fall in the rupee and other emerging market currencies is the tightening of U.S. monetary policy.
•Investors attracted by higher yields in the United States have been pulling their capital out of India at an increasing pace over the last few months. Foreign portfolio investors, in fact, took out ₹29,714 crore in May, almost a doubling of outflow compared to ₹15,561 crore in April. Most of the foreign fund outflow this year has come out of the bond market, which explains the steep fall in Indian bond prices. None of this turbulence in emerging markets, however, is surprising. The tightening of monetary policy by the U.S. Federal Reserve has traditionally caused the turning of the global credit cycle, which eventually leads to various crises around the world. It is hard to determine if the worst is over yet for emerging market currencies. But the fact that the American central bank expects to raise interest rates further this year suggests that more pain could be in store. The government, as well as the Reserve Bank of India, which recently raised domestic interest rates in response to rising external economic risks, may need to think out of the box to avoid a crisis similar to the taper tantrum of 2013.
📰 Listening in
Setting up social media communication hubs to monitor digital chatter is a violation of the right to privacy.
•The Union government has proposed to set up a network of social media communication hubs to monitor the digital chatter of citizens. To be implemented by the Ministry of Information and Broadcasting, this initiative came to light when the Broadcast Engineering Consultants India called for bids to provide software and service support for the hubs. The bidder, once successful, would be required to monitor local editions of newspapers, cable channels, FM radio stations, and influential social media handles. Coming on the heels of the Cambridge Analytica investigations, this proposal raises serious questions about the surveillance state, right to privacy and data protection.
•With the proposed network of hubs poised to cover all 716 districts across India, we are reminded of George Orwell’s famous words in 1984: “Big Brother is watching you.” Today, big data analytical tools and machine learning can map user behaviour and predict trends. The modern-day Orwellian nightmare of a surveillance state is that the government can analyse your digital footprint to detect your sexual orientation or political preference. Combined with your Aadhaar data, the setting up of a totalitarian regime will be complete.
•The first casualty of this new regime will be the citizens’ right to privacy. In the Justice K.S. Puttaswamy (Retd.) v. Union of India judgment (2017), the Supreme Court of India held informational privacy to be “a facet of the right to privacy.” This case, decided by a constitutional bench, looked at whether privacy is a fundamental right. One of the nine judges of the Bench, Justice S.K. Kaul, described privacy as “an inherent right” and upheld the “individual’s right to control dissemination of his personal information.”
•While the European Union is moving towards a more secure data regime under the General Data Protection Regulation, private data and personal information in India are still exposed to serious risks from state and non-state actors. With the most number of Facebook users in the world, India has taken no effective steps to investigate the Cambridge Analytica data leak. In comparison, the U.S., the U.K. and Singapore have triggered high-level inquiries into Facebook’s operations. This reflects the fact that the present legal framework around data protection in India is grossly inadequate.
•The government should, therefore, focus on enacting tough data protection laws which ensure a balance between individual rights and legitimate concerns of the state like national security or investigation of crime. The decision of the government to administer social media monitoring tools goes against the privacy judgment and much of the global best practices in this field. Any move to persist with the monitoring of social media is likely to be seen with grave suspicion by the people and as contempt by the courts.
📰 Reducing plastic pollution
A look at the 2016 Rules to treat and recycle plastic waste
•The Plastic Waste Management Rules of 2016 are the sharpest prongs in India’s legal arsenal against plastic. The most significant aspect of the Rules is that they strengthen the concept of ‘extended producers responsibility’ whereby plastics manufacturers and retail establishments that use plastic are legally bound to introduce a system of collecting back plastic waste. As an environmentally friendly alternative to plastic does not exist yet, and plastic is too ubiquitous and useful, the country has to move towards a regime where plastic waste is treated and recycled rather than engage in rhetoric about banning the product. The Rules lay down the procedure to do that.
•The Rules direct that a plastic waste management fee be collected through pre-registration of the producers, importers of plastic carry bags/multilayered packaging and vendors selling the same, for establishing a waste management system.
•Producers, importers and brand owners who introduce plastic carry bags, multilayered plastic sachets, pouches or packaging in the market within a period of six months from the date of publication of these Rules need to establish a system for collecting back the plastic waste generated due to their products.
•The Rules envisage promoting the use of plastic waste for road construction, or energy recovery, or waste to oil, etc., and think up ways of gainfully utilising waste and addressing waste disposal.
•The Rules also mandate an increase in the thickness of carry bags and plastic sheets from 40 to 50 micron. This would likely increase the cost of plastic bags and restrict vendors from giving away bags for free, thereby reducing waste.
•Local bodies and gram panchayats are responsible for implementing and coordinating a waste management system. Retailers or street vendors who sell or provide commodities in plastic carry bags, or multilayered packaging, or plastic sheets or covers made of plastic sheets which are not manufactured, labelled or marked in accordance with these Rules will be fined, the Rules say.
•The 2016 Rules laid out that carry bags be explicitly priced but this was deleted via an amendment earlier this year. This amendment also provides for a centralised registration system. The Rules also lay down that any mechanism for registration should be automated and should take into account ease of doing business for producers, recyclers and manufacturers.
•The centralised registration system will be evolved by the Central Pollution Control Board for the registration of the producer/importer/brand owner.
📰 Is biodiversity treaty a hurdle to conservation research?
172 scientists from 35 countries have expressed support to a critique of the CBD
•It’s a case of a “cure that kills”: an international conservation treaty is hampering conservation research, claim scientists.
•In a communication published on June 28 in the journal Science , an international team of scientists — including professors at India’s Kerala Agricultural University and Ashoka Trust for Research in Ecology and the Environment (ATREE) – say that the Convention on Biological Diversity (CBD), of which India is signatory too, is hindering biodiversity research and preventing international collaborations due to regulations that have risen due to its implementation.
•The CBD is aimed at conserving biological diversity, sustainably using biological components and fair and equitable sharing of benefits (with local or indigenous communities) that may arise out of the utilisation of genetic resources. The latter was delineated in the Nagoya Protocol, which came into effect in 2014. But this has generated “unintended consequences” for research; due to national-level legislations instituted by countries under the CBD, obtaining field permits for access to specimens for non-commercial research has become increasingly difficult, write the authors.
Seed Treaty
•They suggest that the International Treaty on Plant Genetic Resources for Food and Agriculture or the “Seed Treaty”, which ensures worldwide public accessibility of genetic resources of essential food and fodder, could be used as a model for exchange of biological materials for non-commercial research. Another solution may be to add an explicit treaty or annex in the CBD to promote and facilitate biodiversity research, conservation, and international collaboration, said co-author of the policy critique, Dr. Priyadarsanan Dharma Rajan (ATREE).
•More than 170 scientists from 35 countries are co-signatory to the document and Dr. Jeyaraney Kathirithamby, University of Oxford, U.K, who studies tiny insect parasites, is one among them.
•“It is almost impossible to collect [specimens for research] in South America now,” she wrote in an email. “We bring back material for analysis and have always had a policy for [specimen] vouchers to be placed here and also in the country it was collected. But now it is difficult to get permission.”
•However, we should not see regulation as restriction, said a source in India’s National Biodiversity Authority (which primarily implements provisions of access and benefit sharing of India’s biological resources).
•Under government-approved international collaborative projects, material can be exchanged freely; there are also “facilitative processes” to send specimens for taxonomic identification to other countries, the source added.
•India is one of the 196 countries that has committed to the CBD and ratified it in February 1994.
