📰 Opening collegium to RTI will destroy judicial independence: Attorney General
AG submits before Supreme Court on behalf of its information officer
•Opening up the “highly-sensitive” correspondence of the Supreme Court’s collegium and its workings to the Right to Information (RTI) regime would make judges and the government “shy” and “destroy” judicial independence, Attorney General K.K. Venugopal submitted on Wednesday.
•Addressing a Constitution Bench, led by Chief Justice of India Ranjan Gogoi, Mr. Venugopal asserted that were the RTI to be applied to the collegium, its member judges would not be able to sit back and have a free and frank discussion for fear that their confidential views may later come into the public domain. Mr. Venugopal represents the Supreme Court’s Central Public Information Officer (CPIO), who is the authority tasked to respond to RTI queries related to the court.
•For the past decade, the Supreme Court has refused to divulge information under RTI about the collegium’s confidential communications with the government. The collegium recommends judges for the High Courts and the apex court. The Supreme Court, after losing legal battles before the Central Information Commission (CIC) and the Delhi High Court, finally had to appeal to itself to protect the collegium’s workings.
•After nine years, the appeal is now being heard by the Constitution Bench. The Bench is hearing the broad question whether it would be deleterious to judicial independence to bring the collegium under RTI.
•Mr. Venugopal asserted that pushing the collegium under the public spotlight through RTI would “destroy” judicial independence.
•“Mr. Attorney, you are saying that if information is given under RTI, various entities, from judges to the government, will feel shy to voice their opinions,” Justice Gogoi noted, by way of going over the AG’s argument. “Besides, the career, family and even continuance in office of a person against whom adverse remarks were made would be ruined,” he said, summing up Mr. Venugopal’s submissions.
•“A person has self-respect… Reputation is more precious than life itself,” the AG agreed.
•“But the information [sought under RTI] is used to make an appointment in a public office, is it not?” Justice Gogoi asked. To this, Mr. Venugopal responded, “It depends on the nature of the public office.”
•Elaborating on some of the reasons to exclude the collegium from the purview of RTI, Mr. Venugopal said: “If reasons for his rejection come into public domain, will a judge be able to function independently? The entire future of the judge is ruined. The public, litigants lose their confidence in him. A judge whose integrity has been questioned and overlooked for appointment or elevation, is handicapped. He cannot go to the press to clear the air.
•“Disclosure of highly sensitive communication under RTI will risk the very existence of the judicial way of functioning. So, the information should be kept confidential.”
•Acknowledging that the right to know was part of the right to free speech, Mr. Venugopal said the right to free speech was, however, subject to reasonable restrictions.
Disclosure of assets
•The AG said even disclosure of personal assets of judges under RTI was an “unwarranted intrusion” into their privacy.
•“Some judges may have submitted their assets. Some not. ‘Information’ under RTI means something in material form — like a document, memo or a circular — and something which is already existing in the possession of a public authority. Here, in cases of judges who have not submitted their assets, a third party is not asking for an existing document. In fact, he wants the judge to compute his assets and liabilities and arrive at a final figure,” Mr. Venugopal submitted.
The new privacy feature will allow its users to decide whether they want to get added to groups
•WhatsApp on Wednesday said it has introduced a new invite system on its platform that will enable users to decide who can add them to a group.
•“WhatsApp groups continue to connect family, friends, coworkers, classmates and more. As people turn to groups for important conversations, users have asked for more control over their experience,” the Facebook-owned firm said in a statement.
•The company has introduced a new privacy setting and an invite system to help users decide who can add them to groups. Currently, users can be added to a group without their consent. However, they can leave the group once they are added.
The method
•“To enable it, go to Settings in your app, then tap Account > Privacy > Groups and select one of three options: ‘Nobody,’ ‘My Contacts’, or ‘Everyone’. ‘Nobody’ means you will have to approve joining every group to which you are invited, and ‘My Contacts’ means only users you have in your address book can add you to groups,” WhatsApp said.
Three days
•It these cases, it added, the person inviting someone to a group would be prompted to send a private invite through an individual chat, giving the receiver the choice of joining the group. “You will have three days to accept the invite before it expires.”
•The company said with the new features, users will have more control over the group messages they receive. The new privacy settings will begin rolling out to some users starting Wednesday and will be available worldwide in the coming weeks to those using the latest version of WhatsApp.
Rumours and fake news
•WhatsApp, which counts India as one of its largest markets with over 200 million users, had faced flak from the Indian government after a series of mob-lynching incidents, triggered by rumours circulating on the messaging platform, claimed lives last year.
•Under pressure to stop rumours and fake news, WhatsApp had last year restricted forwarding messages to five chats at once. It has also been putting out advertisements in newspapers and running television and radio campaigns offering tips to users on how to spot misinformation.
•With ensuing general elections, the Indian government had warned social media platforms of strong action if any attempt was made to influence the country’s electoral process through undesirable means.
•One of the amendments being mulled in the IT intermediary rules (meant for online and social media platforms) will require them to enable tracing out of such originators of information as needed by government agencies that are legally authorised.
•However, WhatsApp has so far resisted the government’s demand for identifying message originators, arguing that such a move would undermine the end-to-end encryption and the private nature of the platform, creating potential for serious misuse.
📰 Supreme Court rejects EPFO plea against Kerala High Court verdict
The ruling had held it unrealistic to cap salary at ₹15,000 for quantifying pension
•The Supreme Court has dismissed a special leave petition filed against an October 2018 verdict of the Kerala High Court setting aside the Employees Pension (Amendment) Scheme (GSR609(E)) introducing various changes that have drastically reduced the pension eligibility of employees.
•“We find no merit in the special leave petition. The same is, accordingly, dismissed,” a Bench led by Chief Justice of India Ranjan Gogoi said, rejecting the appeal filed by the Employees Provident Fund Organisation in a short order on April 1.
•The Supreme Court’s order in this case would have an impact on a pending petition filed by retirees and members of the Employees Pension Scheme (EPS) 1995, against the government and the Employees Provident Fund Organisation (EPFO). That case was posted by the apex court for final arguments in May. In that plea, the petitioners have claimed that a 2014 amendment and a 2017 circular exclude thousands from receiving their rightful benefits under EPS 95.
•The April 1 order of the apex court related to the appeal against a Division Bench judgment of the Kerala High Court on petitions filed by various organisations and employees challenging the 2014 amendment.
•The petitioners in the High Court had pointed out that the amendment order issued in August 2014 limited the maximum pensionable salary to ₹15,000 per month.
•The High Court had held that it was absolutely unrealistic to cap the salary at ₹15,000 for quantifying pension. A monthly salary of ₹15,000 then worked out only to about ₹500. Even a manual labourer was paid more than this amount as daily wage. The amendment limiting the maximum salary to ₹15,000 for pensions would deprive most of the employees of a decent pension in their old age. Since the pension scheme was intended to provide succour to the retired employees, this objective would be defeated by capping the salary. The HC added that the PF authority had no right to deny pension legitimately due to the employees on the ground that the fund would get depleted.
•Further, the amendment calculated pension on an average of 60 months’ pay instead of 12 months. The High Court held that this stipulation would deprive employees of a substantial portion of their pension.
•“No scheme that defeats the purpose of enactment by reducing the pension payable to the employees in their old age to a ridiculously low amount, which is not sufficient even for ensuring a decent life to them cannot be sustained,” the October 2018 order had observed.
•Besides, the High Court had also held the requirement of additional contribution at 1.6% in the case of existing employees as legally untenable.
•The High Court set aside the orders of the Employees Provident Fund Organisation declining to grant opportunities to petitioners to exercise a joint option to remit contributions to the Employees Pension Scheme on the basis of actual salaries drawn by them.
📰 Proving a point on audit trail
Nizamabad has 185 candidates — it is an opportunity for the Election Commission to settle the EVM and VVPAT debate
•As the campaign for the 2019 general election builds up, so too with the debate on electronic voting machines (EVMs) and Voter Verifiable Paper Audit Trails (VVPATs). For example, as a result of a new development in the Nizamabad parliamentary constituency in Telangana, the Election Commission (EC) would have been forced to conduct elections using ballot papers — there are 185 candidates in the fray. This exceeds the capacity of an EVM, which can cater to 64 candidates (63 candidates and the None of the Above, or NOTA, option). The EC is now considering using special machines which can accommodate up to 384 candidates. These will use 24 ballot units connected in series. For this it will have to buy at an enormous cost 26,820 ballot units, 2,240 control units and 2,600 VVPATs. I wonder whether it is possible to acquire so many machines with technical changes in the short time available.
In the past, in A.P.
•The use of ballot papers to conduct elections is not new; they were used in the same State in 2010 in a near comic situation.
•In July 2010, the Telangana agitation was at its peak, and 12 MLAs of the Andhra Pradesh Assembly had resigned and were contesting the by-elections. This coincided with the Bharatiya Janata Party-led anti EVM campaign. After the EC turned down the request of political parties to go back to paper ballots, the parties resorted to a smart ploy. The Telangana Rashtra Samithi (TRS) decided to field more than 64 candidates in each constituency. So, there were 114 nominations in Yellareddy (then in Nizamabad district and 107 in Sircilla. Even after large-scale rejection of nominations, the numbers in six constituencies exceeded 64. The EC was forced to conduct elections in these constituencies by ballot paper.
•The EC took it as a great opportunity to showcase the relative strength of EVMs. While the EVM results were available in four hours, the ballot paper results took 40 hours. Adding to this were thousands of invalid votes. The other issues were the economic and environmental costs of printing ballots and prolonged drudgery for polling staff. Ironically, the results from both systems across seats were similar.
•Where did the political parties stand then? A media report said the TRS opposed EVMs “because it [had] reliable information that the Congress [would] try to manipulate the machines to win the polls”. The Telugu Desam Party president N. Chandrababu Naidu demanded that ballot papers be used in all 12 constituencies. Bandaru Dattatreya, BJP president in then undivided Andhra Pradesh, said, “We have been demanding that there should be a nationwide debate on EVMs. The TRS has used the right strategy.” A Congress spokesman said it was unfortunate that the parties had doubted the EC’s integrity, forcing it to incur additional printing expenses. So, while the issue remains the same, the characters have changed.
•It is pertinent to point out that the difference between the 2010 incident and this time (in terms of the number of candidates) is that a large number of farmers are contesting as independent candidates to highlight their problems. It has nothing to do with an anti-EVM movement.
Stringent trials
•Since the last general election, there have been allegations about the BJP hacking EVMs. The EC has repeatedly challenged conspiracy theorists to demonstrate that EVMs can be hacked but no party has accepted it.
•This debate should have ended in October 2010 when the EC called an all-party meeting which unanimously recommended the adoption of VVPATs, which was promptly accepted. The two factories manufacturing EVMs were asked to develop VVPATs, and an independent committee of professors from five Indian Institutes of Technology was requested to monitor the process.
•There were a series of trials, followed by two full-day election simulations in five cities across India (with different climatic conditions) in 2011-12. Only after the VVPATs passed all the rigorous tests (climatic endurance and technology) were they deployed, initially in 20,000 polling booths. As manufacturing progressed, all constituencies were equipped with VVPATs. In 2013, the Supreme Court lauded the EC’s initiatives, directing the government to release adequate funds for procurement for all booths for the 2019 elections. Since 2017, all elections have been held with VVPAT-attached EVMs. A total of 1,500 machines have been counted as per the present norm of counting slips generated by one VVPAT in each Assembly constituency. Not a single mismatch has been detected.
Sorting things out
•The only pending issue is of VVPAT audits. As many as 23 Opposition parties have moved the Supreme Court demanding that half the total slips be tallied. A group of retired bureaucrats and diplomats has also written to the EC regarding the sample size to ensure 99.9% public satisfaction.
•The EC has submitted to the court that the three-member expert panel comprising members from the Indian Statistical Institute, the Chennai Mathematical Institute and the Central Statistics Office has endorsed the current practice of counting one VVPAT per Assembly constituency, and that the sample size proposed by political parties would only serve to delay results by six days. The judgment is expected soon.
•I have also proposed an alternative. The top two runners-up in the constituency can choose any two VVPATs to be counted as they have the highest stake in the results. This would serve to do away with a large sample, as only four machines per Assembly would have to be counted to ensure public faith in the system. This is on the analogy of the highly popular and successful Umpire Decision Review System in cricket.
•EVMs have made India a proud global leader in elections. After incorporating VVPATs, the system is now foolproof. After the expert panel report, the EC’s initiatives in this regard stand vindicated. It should now clinch the EVM debate and utilise the opportunity in the Nizamabad constituency to demonstrate the relative superiority of the EVM as the wonder machine of Indian democracy.
📰 Turf issues in fighting corruption
How the Lokpal, the CVC and the CBI coordinate will be crucial
•The Lokpal and Lokayuktas Act, 2013 is complicated. This could perhaps not be avoided, given that what was being attempted was a new and bold experiment to pull the anti-corruption campaign out of oblivion. This law was badly needed, if only to lend a modicum of credibility to the process of enhancing the accountability of those in high places, who were cocking a snook at all efforts to demonstrate to the world that India is not second to any other nation in making its public administration clean and fair.
•Surprisingly, the appointment of India’s first Lokpal has not been received with great excitement. The preoccupation with the general election of all those likely to be affected by the Act may perhaps explain the apathy. Nevertheless, the working of the Act may be expected to be closely followed in the months to come, both by the polity and the legal fraternity, which is how it ought to be in a vibrant democracy.
•The corruption of public servants in India has become such a menace that something drastically new had to be tried, and appointing the Lokpal at least partially meets this crying need. There is guarded optimism in a few quarters, and considerable cynicism in others, over the likely efficacy of the Lokpal. However, any high expectations that the new mechanism against corruption will measurably transform the scene seem misplaced.
Actors against corruption
•There are now three principal actors at the national level in the fight against graft: the Lokpal, the Central Vigilance Commission (CVC), and the Central Bureau of Investigation (CBI). Some people have misgivings over the independence of the Lokpal. They wonder how it will work with the other two so that the objective of cleansing public life is achieved with reasonable satisfaction. Some critics allege that the Lokpal’s composition was dictated solely by the establishment led by the Prime Minister. But what about the Chief Justice of India, or his nominee, another important member of the Selection Committee? Casting aspersions on the neutrality of the highest judicial authority in the country is unacceptable unless one can prove with reasonable material that he acted in a biased manner in choosing the first Lokpal.
•The decision of the ‘special invitee’ to stay away from the process on the ground that he was a mere invitee and not a full-fledged member of the Selection Committee is regrettable. The accusation that the process of selection of the Lokpal was not transparent falls flat if someone in the Opposition abstains from participating in the Committee’s decision and denies himself and the nation the chance of knowing and evaluating how open-minded or not the other members were in choosing the members and chairperson of the Lokpal.
Jurisdiction issues
•To my mind, what is worrying is how well the CVC and CBI are going to play a complementary role in upholding the objective for which the Lokpal has been appointed. The Lokpal has jurisdiction over Group A and B public servants. This does not deprive the CBI of its own jurisdiction over these two groups. The Lokpal Act permits using the CBI (referred to by the Act as the Delhi Special Police Establishment, from which the CBI was born) for examining a complaint against a public servant for misconduct. Although the Lokpal has its own Inquiry Wing, it can nevertheless forward a complaint to the CBI for a preliminary inquiry, and thereafter for registering a regular case under the Prevention of Corruption Act, 1988. It is not clear what happens when such a complaint is already being inquired into by the CBI. Legally speaking, the government, in addition to the Lokpal, is competent to order a preliminary inquiry and permit the CBI to proceed with a regular case. What is also to be remembered is that the CBI can register a case even without the government’s nod in instances in which a public servant is caught red-handed while receiving a bribe. If an individual lodges a complaint with the government and the Lokpal, what should the Lokpal do? Does it have the authority to give direction to the CBI to keep its hands off the matter and wait for the Lokpal’s own Inquiry Wing to handle the matter?
•The Act creates a Prosecution Wing exclusively for the Lokpal. How will that body coordinate with the CBI’s Director of Prosecution in respect of a matter handled by both of them? It is a common practice for complainants in India to dash off their complaints to a host of agencies. There is a distinct prospect of a clash between the government (which has greater powers of superintendence over the CBI than the Lokpal) and the Lokpal over a wide spectrum of issues. The Act gives the impression that superintendency over the CBI is shared by the Lokpal and the government, and neither is in exclusive command of the former. Can the Lokpal order the CBI to suspend its inquiry in respect of a complaint and report on it to the exclusion of the government?
•The initial days are going to be difficult in terms of coordination. Everything will depend on how well the Lokpal and the government sink their egos and concentrate on the fundamental objective of striking at corruption without getting bogged down by technicalities.
•All these imponderables, however, do not reduce the utility of a highly placed ombudsman. It may finally boil down to Justice Ghose’s perception of what his role is. He can certainly shape the future of this experiment.
📰 U.S. State Department approves sale of 24 MH-60R copters worth $2.6 bn to India
The proposed sale will provide India the capability to undertake anti-surface and anti-submarine warfare missions, says the DSCA
•The United States Department of State has approved the sale of 24 MH-60R multi-mission helicopters to India under its Foreign Military Sales (FMS) program. The value of the potential is $2.6 billion, as per a statement released on Tuesday by the Defense Security Cooperation Agency (DSCA), the body that administers the FMS program. The principal contractor for the deal will be Lockheed Martin.
•The DSCA submitted its certification notifying Congress of the possible sale, kicking off a 30-day notification period. Congress is not required to approve or disapprove the potential sale. If it simply takes no action for the 30-day period, the sale moves forward.
•“The proposed sale will provide India the capability to perform anti-surface and anti-submarine warfare missions along with the ability to perform secondary missions, including vertical replenishment, search and rescue, and communications relay. India will use the enhanced capability as a deterrent to regional threats and to strengthen its homeland defense,” the DSCA said.
•In the case of India and most other non-NATO countries, Congress must be notified for sale of Major Defense Equipment (MDE) of $14 million and above, defence articles and services of $50 million and above and design and construction services of $200 million and above.
•The statement notes that India typically requires offsets and that any offset agreement will be defined between India and the contractor.
Associated requests
•Along with the hardware requested by the Indian government, there were requests for personnel training and training equipment, U.S. government contractor engineering, logistics and technical support services, the statement said.
•“This proposed sale will support the foreign policy and national security of the United States by helping to strengthen the U.S.-Indian strategic relationship and to improve the security of a major defensive partner, which continues to be an important force for political stability, peace, and economic progress in the Indo-Pacific and South Asia region,” the DSCA said.
•India was granted the unique Major Defence Partner (MDP) designation in 2016 by the Obama administration — a step towards India accessing U.S. military technology at a level on a par with those of the U.S.’s closest allies. India was then given Strategic Trade Authorisation-1 (STA-1) status by the U.S. in August last, the third Asian country after South Korea and Japan (and 37th country globally) to acquire it. This was to further facilitate the transfer of technology in the defence and space sectors.
Communications agreement
•India also signed the Communications Compatibility and Security Agreement (COMCASA) agreement with the U.S., providing a legal basis for the U.S. to transfer secure communication equipment to India, increasing military equipment interoperability and real time data sharing.
•The statement also said that the sale would not alter the “basic military balance in the region”. This is, however, common language for such process notifications and not India or South Asia specific. This is also language that is found in U.S law, such as the Arms Control Export Act.
•The sale comes on the heels of a few weeks of heightened tensions between India and Pakistan that began with an attack on an Indian security convoy in Pulwama, Jammu and Kashmir, on February 14, claiming the lives of 40 CRPF personnel.
•Once the process passes through the notification period without any hitches, the U.S. government will respond to India with a Letter of Offer and Acceptance (LoA). The LoA usually expires in 60 days (extendible), before which the purchaser, India in this case, needs to make an initial deposit, failing which the offer expires.
📰 China protests parallel initiative to block Azhar
•China on Wednesday raised its pitch against Washington’s parallel initiative to designate Masood Azhar as a global terrorist, insisting that its diplomacy within the 1267 committee of the Security Council was yielding “positive results”.
•In response to a question on Washington’s attempt to designate Azhar as an international terrorist through a separate resolution, Chinese Foreign Ministry spokesperson Geng Shuang said that most countries within the Council were not supporting the U.S.’s move.
•He stressed that Washington’s parallel initiative was needless as Beijing was making progress to build consensus to list Azhar as a global terrorist within the 1267 committee itself. The Associated Press reported that a draft resolution circulated to Security Council members on March 27 by the U.S. would impose a travel ban and asset freeze on him.
📰 Private forecaster Skymet predicts ‘below normal’ Monsoon
The key culprit, according to Skymet is El Nino—the warming of the central Pacific Ocean that is frequently associated with drying monsoon rains.
•A month after ruling out a drought, private weather forecaster Skymet said it expects the coming monsoon rains to be “below normal” and about 7% short of the 89 cm the country usually gets from June to September. Not only is the monsoon expected to begin sluggishly but rain in July — a key month for agriculture — is expected to be nearly 9% short, the company said at a press briefing on Wednesday.
•“In terms of geographical risk, Skymet expects that eastern India, along with a major portion of Central India, is likely to be at a higher risk of being rain deficient, especially during the first half of the season. The onset month of June is going to have a very sluggish start and deficit rains are likely to spill into July,” the company said in a statement. “The second half of the season would see better rainfall wherein August is expected to be a shade better than September.”
•There is a 15% chance of a drought (seasonal rainfall less than 90% of the average), 30% chance of normal (seasonal rainfall that is between 96%-104% of the long period average or LPA), and 55% chance of below normal (seasonal rainfall that is between 90%-95% of LPA).
•June was likely to post only 77% of its historical average of 164mm, July 91% of its average, according to Skymet.
•On a monthly scale, the precipitation is expected to be: June — 77% of its average of 164 mm; July — 91% of its average of 289 mm; August — 2% more than its average of 261 mm; and September — 99% of its 173mm average.
‘Key culprit’
•The key culprit, according to Jatin Singh, Managing Director, Skymet, was the El Niño — the warming of the central Pacific Ocean that’s frequently associated with drying monsoon rains.
•“The Pacific Ocean has become strongly warmer than average. The model projections call for 80% chance of El Niño during March-May, dropping to 60% for June to August,” he said. The consensus, as of March among global meteorologists, is that the El Niño would form from March to May and there was a “less than 50% chance” of a strong El Niño from June-August.
Normal rain
•An El Niño is declared when three straight months register a 0.5-1 degree C rise in sea surface temperatures in the Central Pacific.
•In February, Skymet had predicted normal rain on the back of projections that the El Niño was fading rapidly.
•“However, the scenario changed completely in February and presently, moderate El Niño conditions are prevailing over the Pacific Ocean. In fact, El Niño could be declared anytime now. By May-June-July, there is a 66% chance of El Niño,” said the statement.
•Officials from the India Meteorological Department (IMD) refused to comment on Skymet’s forecast.
•The agency, which is expected to announce its forecast on April 15, said on April 1 that it expects “weak El Niño conditions” (a heating of around 0.5 C) to prevail during May-June.
•“Any forecast of El Niño beyond that is premature,” an official told The Hindu.
•The IMD was still factoring in sea surface temperature data in their forecast models and, with the Model Code of Conduct in effect for the Lok Sabha elections, required certain clearances before publicising the forecast, the official added.
Favourable parameter
•Skymet said that another key parameter — the Indian Ocean Dipole, when the western Indian ocean is warmer and has more rain clouds than the east — appeared favourable to the Indian monsoon.
•In 2018, both Skymet and the IMD over-estimated monsoon rainfall in April, and India ended up with below normal rainfall of 91% of what it typically gets in a normal monsoon year.
📰 In India, air pollution is the third-highest cause of death among all health risks: report
Study claims poor air quality caused 1.2 mn deaths each in India and China in 2017
•The current high level of air pollution has shortened the average lifespan of a South Asian child by two-and-a-half years while globally the reduction stands at 20 months, according to a global study released on Wednesday.
•State of Global Air 2019, published by Health Effects Institute (HEI), said exposure to outdoor and indoor air pollution contributed to over 1.2 million deaths in India in 2017. The report added that worldwide, air pollution was responsible for more deaths than many better-known risk factors such as malnutrition, alcohol abuse and physical inactivity.
•In India, air pollution is the third-highest cause of death among all health risks, ranking just above smoking; each year, more people globally die from air pollution related disease than from road traffic injuries or malaria.
In China and India
•The study found that China and India together were responsible for over half of the total global attributable deaths, with each country witnessing over 1.2 million deaths from all air pollution in 2017. China has made initial progress, beginning to achieve air-pollution decline.
•Overall, long-term exposure to outdoor and indoor air pollution contributed to nearly 5 million deaths from stroke, diabetes, heart attack, lung cancer, and chronic lung disease in 2017.
•Out of these, 3 million deaths are directly attributed to PM2.5, half of which are from India and China together. The South Asian region — Bangladesh, India, Nepal and Pakistan — led the world as the most polluted, with over 1.5 million air-pollution related deaths according to the report.
‘Steps taken in India’
•“At the same time, India has initiated major steps to address pollution sources: the Pradhan Mantri Ujjwala Yojana Household LPG program, accelerated Bharat Stage 6/VI clean vehicle standards, and the new National Clean Air Programme. These and future initiatives have the potential, if fully implemented as part of a sustained commitment to air quality, to result in significant health benefits in coming years,” said Robert O’Keefe, vice president, Health Effects Institute.
•Meanwhile, for the first time, this year’s report and website include worldwide estimates of the effect of air pollution on life expectancy.
•Worldwide, air pollution reduced life expectancy by an average of 20 months in 2017, a global impact rivaling that of smoking; this means a child born today will die 20 months sooner, on average, than would be expected without air pollution.
•The report also highlighted that nearly half of the world’s population — a total of 3.6 billion people — were exposed to household air pollution in 2017. Globally, there has been progress: the proportion of people cooking with solid fuels has declined as economies develop.
•But in India, 60% of the population still uses solid fuels; in Bangladesh that number rises to 79%, underscoring the importance of achieving success in government initiatives to address the problem.
•The State of Global Air 2019 annual report and accompanying interactive website are designed and implemented by the Health Effects Institute in cooperation with the Institute of Health Metrics and Evaluation (IHME) at the University of Washington, the University of British Columbia, and the University of Texas, Austin.
📰 Serious setback: on SC setting aside RBI's ‘Feb. 12 circular’
Quashing of the ‘February 12 circular’ could undo credit discipline in the banking system
•The Supreme Court order quashing a circular issued by the RBI on resolution of bad loans is a setback to the evolving process for debt resolution. The voiding of the February 12, 2018 circular could slow down and complicate the resolution process for loans aggregating to as much as ₹3.80 lakh crore across 70 large borrowers, according to data from the ratings agency ICRA. The circular had forced banks to recognise defaults by large borrowers with dues of over ₹2,000 crore within a day after an instalment fell due; and if not resolved within six months after that, they had no choice but to refer these accounts for resolution under the Insolvency and Bankruptcy Code. Mounting bad loans, which crossed 10% of all advances at that point, and the failure of existing schemes such as corporate debt restructuring, stressed asset resolution and the Scheme for Sustainable Structuring of Stressed Assets (S4A) to make a dent in resolving them formed the backdrop to this directive. The circular was aimed at breaking the nexus between banks and defaulters, both of whom were content to evergreen loans under available schemes. It introduced a certain credit discipline — banks had to recognise defaults immediately and attempt resolution within a six-month timeframe, while borrowers risked being dragged into the insolvency process and losing control of their enterprises if they did not regularise their accounts. RBI data prove the circular had begun to impact resolution positively.
•It is this credit discipline that risks being compromised now. It is not surprising that international ratings agency Moody’s has termed the development as “credit negative” for banks. It is true that the circular failed to take into account the peculiarities of specific industries or borrowers and came up with a one-size-fits-all approach. It is also true that not all borrowers were deliberate defaulters, and sectors such as power were laid low by externalities beyond the control of borrowers. The RBI could have addressed these concerns when banks and borrowers from these sectors brought these issues to its notice. By taking a hard line and refusing to heed representations, the RBI may only have harmed its own well-intentioned move. That said, it is now important for the central bank to ensure that the discipline in the system does not slacken. The bond market does not allow any leeway to borrowers in repayment, and there is no reason why bank loans should be any different. The RBI should study the judgment closely, and quickly reframe its guidelines so that they are within the framework of the powers available to it under the law. Else, the good work done in debt resolution in the last one year will be undone.
📰 A ladder, not a crutch
Using behavioral science in the design of cash transfers can make them more effective in the fight against poverty
•There are many legitimate questions about the Congress’s Nyuntam Aay Yojana (NYAY) scheme, which promises to transfer ₹72,000 annually to 20% of families in the poorest of the poor category. But the fundamental soundness of the idea should not be in doubt. Evidence from dozens of cash transfer programmes around the world speaks resoundingly in favour of such schemes as a tool for sustainable poverty alleviation.
•Evaluations of cash transfers show that they usually lead to large increases in household consumption, improve health and education outcomes for beneficiaries and their children, and improve women’s agency and empowerment when paid to women. At the same time, common fears, such as that money will be squandered on alcohol or cigarettes, turn out to be largely unfounded. Neither does handing money to the poor make them reluctant to work or be entrepreneurial. Rather, behavioural economists have found that poverty itself makes it harder for people to do things like plan for a future beyond immediate survival. It’s hard to be ambitious on an empty stomach. By freeing people’s minds from having to fret about their next meal, a cash transfer can enable entrepreneurship or more productive employment.
•In fact, ideas from behavioural economics are increasingly being used to magnify the already positive effects of giving people cash. In Morocco, MIT economist Esther Duflo and her colleagues found that simply ‘labelling’ a cash transfer as an education transfer can push up school participation. In ongoing research with the World Bank and the governments of Madagascar, Kenya, Ghana, and Tanzania, my colleagues and I are exploring whether it is possible to use the ‘mental space’ that an infusion of cash enables to help beneficiaries use the money they get more productively.
•In Madagascar, we asked recipients to develop a plan for how they’d use the cash transfer amounts to further their goals. Eighteen months on, those who received this ‘nudge’ were more food secure, more likely to have invested in livestock, and had higher cash-crop incomes. In another study in Madagascar, we found that helping people visualise how much they needed to save for a goal (example, a new milch cow) and giving them a pouch to set money aside for it increased saving. These designs are now being adapted and piloted in Kenya and Tanzania.
•By helping parents invest in the next generation, cash transfers strike at the heart of persistent poverty. Incorporating small behavioural interventions makes the money go even further. If a programme like NYAY takes experimentation, design and evidence seriously, its impact on the lives of India’s poor could be transformative.
📰 ‘Ensure borrower discipline’
With SC quashing RBI’s 2018 circular, new norms needed, says NITI Aayog CEO
•With the Supreme Court quashing the Reserve Bank of India (RBI) circular on loan defaults, the central bank and the government will now have to sit together and bring a new regulation to ensure financial discipline among borrowers, said NITI Aayog Chief Executive Officer Amitabh Kant.
•“A lot of work has been done by the government and the RBI to bring financial discipline and good regulation to end crony capitalism in India,” Mr. Kant said, speaking on the sidelines of a capital market event organised by the World Federation of Exchanges and the National Stock Exchange.
•“It is important that we ensure discipline so that money borrowed from financial institutions is repaid. [With] the Supreme Court striking down [the RBI circular] as ultra vires, the issue needs to be relooked by both RBI and central government to arrive at a new regulation, which will ensure that the financial discipline from borrowers should continue,” he added.
•On Tuesday, the apex court struck down a February 2018 circular issued by the RBI that gave lender banks six months to resolve their stressed assets or move under the Insolvency Code against private entities who have defaulted in loans worth over ₹2,000 crore.
•Incidentally, one of the factors missing from the RBI circular, as per the apex court order, was an authorisation from the government.
‘Long-term growth’
•Mr. Kant, a 1980-batch officer of the Indian Administrative Services (IAS), further said that the regulation was essential for the long-term growth of the country, and hence the banking regulator and the government would have to come up with a new regulation.
•Earlier in the day, while delivering the keynote address at the event, Mr. Kant said that the Indian economy must grow rapidly at 9-10% even as the country faced four main challenges — manufacturing with a focus on exports, gender parity, agriculture, and transforming areas that have remained backward.
•He highlighted the fact that while India had demonstrated that it can manufacture on a huge scale, the focus had to be on exports that gave better value per unit of sales.
•He also said that agriculture needed radical reforms and outdated laws related to Agriculture Produce Market Committee (APMC) and Essential Commodities Act needed to be scrapped.
📰 News Analysis | Why a rate cut won’t help lower lending rates
Linking of floating loan rates to an external benchmark not operational yet
•With the first bimonthly review of the Reserve Bank of India’s monetary policy of this fiscal scheduled to be announced on April 4, there is an expectation of another rate cut as inflation continues to remain soft.
•Though retail inflation — the central bank’s main yardstick for policy making — rose to a four-month high of 2.57% in February, it is still below the RBI’s medium-term target of 4%.
•In the previous policy in February — which was the first one under Governor Shaktikanta Das — the central bank had reduced the repo rate by 25 basis points (bps) to 6.25%. [100 basis points = 1 percentage point]
•Despite the rate cut, the response from banks, in cutting lending rates, has only been partial. Only a few banks reduced their marginal cost of funds based lending rate (MCLR) — the benchmark lending rate to which all the loans are linked — by 10-15 bps.
•Bankers justify not passing on rate changes to end customers on two grounds: one, their cost of deposits has not fallen with a cut in the repo rate; two, monetary transmission comes with a lag. So, even if the RBI cuts lending rates again on Thursday, it is unlikely that banks will pass on the entire benefit to the customers.
•But banks have been prompt, and even ahead of the curve, when rates were rising. Many lenders, including State Bank of India and ICICI Bank, announced 20 bps MCLR hikes from March 1, 2018, while the RBI started the repo rate increase cycle only in June 2018.
•Monetary transmission has been an issue for the central bank for more than a decade and all the Governors tried to address it in the last 10 years. First, Duvvuri Subbarao replaced the then benchmark prime lending rate regime with the base rate in July 2010. His successor Raghuram Rajan introduced the MCLR regime, which replaced the base rate from April 2016.
•Both the base rate and the MCLR were a function of cost of funds of the banks.
•With both the regimes largely failing to address the issue of monetary transmission, Dr. Rajan’s successor Urjit Patel proposed a new regime in which the floating loan rates for small borrowers would be linked to an external benchmark. Four options were given to banks to choose the external benchmark, one of them being the repo rate. In his last monetary policy held on December 5, Dr. Patel mandated that this new system of external benchmark-linked lending rates will come into effect from April 1, 2019. The final guidelines were scheduled to be issued by the end of December 2018.
•The final guidelines are yet to be issued. Hence the new scheme was not made operational from the beginning of this month. Banks have opposed this system tooth and nail. They argue that the costs are not linked to external benchmark and lending rates should be a function of cost. But at the same time, SBI decided to link the savings account rate (for deposits over ₹1 lakh) to the repo rate from May 1.
•RBI is yet to clarify why there is a delay in implementing the scheme even after it was announced.
•In the February policy, when asked about shifting the lending rate to an external benchmark, Mr. Das said: “We have received comments from the public and the banks; they are currently under examination.” The Governor may choose to clarify the RBI’s position on the issue in the monetary policy review on Thursday.
