📰 Shah moots 1 card for all utilities
Home Minister says 2021 census will be digital and could prepare a base for it
•Announcing that the 2021 census exercise would be carried out digitally, Union Home Minister Amit Shah on Monday suggested one card for all utilities in future.
•Speaking at the foundation stone laying ceremony for construction of a new building of the Registrar General of India (RGI) that conducts census, he said the digital census had the potential to bring all cards such as Aadhaar, passport, bank account, and driving licence on one platform. “Why is it so difficult to link and update birth and death registration with census data,” he wondered.
No formal proposal
•He said there was no formal proposal for the common utility card, but digital census had the potential of preparing the base for it.
•The decennial census exercise will be undertaken in 2021 and, for the first time, move from paper to digital format. Mr. Shah said Rs. 12,000 crore would be spent on preparation of the National Population Register (NPR) and census.
•Mr. Shah said the NPR would be updated on a priority basis as it helps in tracking criminal activities, and better planning and execution of government schemes. The NPR links biometric and demographic details of any ordinary resident, thus making it a comprehensive database of residents.
•The exercise was conducted earlier in two phases in 2010 and 2015. The next round of recording biometric and family tree details of Indian citizens will be conducted in September 2020, a government notification issued earlier said.
•The NPR exercise is different from the census and is not linked to the National Register of Citizens (NRC). For the purpose of the NPR, an ordinary resident is defined as a person who has resided in a local area for the past six months or more or a person who intends to reside in that area for the next six months or more.
•Mr. Shah said the Census 2021 data would be the base for the country’s future planning, development initiatives and welfare schemes, and people’s wholehearted participation would be the key to the success of the exercise.
•“India’s 130 crore population should be informed about its benefits. The utilisation of census data is multi-dimensional, and will be a significant contribution in the nation’s progress,” he said.
•He said on the basis of the 2011 Census, the Modi government had planned 22 welfare schemes related to electricity, gas connections, roads, houses for the poor, toilets, bank accounts, and opening of bank branches.
•He cited the example of the government’s flagship ‘Ujjwala’ scheme of providing free LPG connections to poor families, saying it has been successful as the scheme was prepared on the basis of the 2011 census data.
•“By 2022, there will not be a family which will not have a gas connection,” he said.
•Mr. Shah also said the 2011 Census reflected the poor sex ratio in some States. That’s why the programme of ‘Beti Bachao, Beti Padhao’ was launched.
Haryana surges ahead
•“Under this scheme, the Haryana government has done so much work in the last five years that the State’s sex ratio is now among the best in the country,” he said.
•He said India’s population is 17.5% of the world’s, while the geographical area is just 2.4%.
•“So, naturallly, India has limited natural resources in comparison to the population. Therefore, to fill up this gap of inequality, we will have to work hard,” he said.
•He said the census would help in demarcating boundaries of municipal wards and the Assembly and Lok Sabha constituencies.
Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana which completed an year recorded 46.4 lakh hospital treatments.
•Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PM-JAY) which completed an year on Monday has recorded 46.4 lakh hospital treatments worth ₹7,500 crore with 60% of the amount being spent on tertiary care.
10 crore cards
•According to figures released by PM-JAY, this has resulted in saving of over ₹12,000 crore to the beneficiary families. Currently, 32 States and Union Territories are implementing the scheme and more than 10 crore beneficiary cards have been issued.
•Indu Bhushan, CEO, PM-JAY, said the aim of the scheme was high cost should not deter any person or family to avoid treatment.
•“Our focus is to ensure that more and more vulnerable Indians are being made aware of their entitlements, so that they can avail of the hospitalisation benefits during their illness. PM-JAY aims to ensure improved healthcare delivery, through a combination of government hospitals and strategic purchasing of services from private hospitals, in health care deficit areas,” he added.
Quality healthcare
•PM-JAY is the flagship scheme of the government with an aim to bring quality healthcare to around 50 crore poor and vulnerable Indians. The scheme gives annual healthcare benefits of up to ₹5 lakh for every entitled family.
•Highlighting the participation by the private sector, Dr. Bhushan said the uptake of PM-JAY by private sector providers had been very encouraging. “We have many private hospitals empanelled under PM-JAY. We are working on getting the top corporate hospitals on board, so that beneficiaries have maximum choices.”
•“More than 18,236 hospitals have been empanelled across India to ensure optimal accessibility to the eligible families. Out of the total hospitals empanelled, 53% are private, especially multi-specialty. There are 9 hospital admissions every minute across the hospitals in India. PM-JAY provides cashless and paperless access to services for the beneficiary at the point of service. Under PM-JAY, for the hospitals, vast majority [85%] of the claims have been paid within time,” said Dr. Bhushan.
Call centre
•A PM-JAY release noted that the website and call centre with toll-free helpline no. 14555 had significantly helped in guiding patients to seek healthcare as well as to send their feedback and grievances for timely redress. The multi-lingual call centre is providing round the clock support, answering 45 lakh calls. In today’s digital India, more than 1.5 crore people have used the mere.pmjay.gov.in website, to check their eligibility.
•“The scheme will continue to focus on reducing catastrophic out-of-pocket health expenditure, improving access to quality health care and meeting the unmet need of the population for hospitalisation care,” noted Dr. Bhushan.
📰 Healthy life a basic right, Prime Minister Modi tells UN meet
“The first pillar is preventive healthcare. We have laid special emphasis on yoga, ayurveda and fitness,” he said.
•India’s experience and capabilities in providing affordable healthcare is available for use to all developing countries, Prime Minister Narendra Modi told the first-ever high-level meeting on Universal Health Coverage in New York on Monday, underscoring that a healthy life is the right of every person.
•Addressing the meeting, Prime Minister Modi said, “Health does not simply mean freedom from diseases. A healthy life is everyone persons’ right.”
•“The onus for this is on our government to make every possible effort to ensure this,” Mr. Modi said at the meeting, which will launch new efforts to provide access for all to affordable, inclusive and resilient health systems.
•Mr. Modi said India’s efforts on affordable healthcare are not limited to just its own boundaries.
•“We have helped to provide access to affordable healthcare by way of telemedicine to several other countries especially African countries and we will continue to do so. Our experience and our capabilities are available for use to all developing countries,” he said.
•Mr. Modi began his engagements at the 74th Session of the UN General Assembly by addressing the Climate Action Summit hosted by Secretary General Antonio Guterres on Monday in the General Assembly Hall. This was followed by his speech at the Universal Health Coverage meeting.
•Mr. Modi told the world leaders and ministers at the summit that the global welfare begins with people’s welfare, and health is an important component of it and added that India has taken a holistic approach towards the health sector.
•He outlined the four main pillars of healthcare that India focuses on.
•“The first pillar is preventive healthcare. We have laid special emphasis on yoga, ayurveda and fitness,” he said adding that India is building more than 125,000 wellness centres and this focus has helped in controlling life style diseases such as diabetes, blood pressure and depression.
•Voicing concern over the harmful effects of e-cigarettes, Mr. Modi said the “craze for e-cigarettes is a mater of concern for us” due to which India has banned the commodity to “save the youth from this very severe problem”.
•Further, the Clean India Campaign has contributed towards saving millions of lives and the government has also paid special attention to immunization. Apart from introducing new vaccines, the government has also improved access to vaccination in far flung areas.
•The second pillar for India is affordable healthcare and under this the government has rolled out the world’s largest health insurance scheme — Ayushman Bharat. Under this scheme, 500 million poor people have been given the facility of free treatment worth up to 500,000 rupees every year and last year alone, 4.5 million people have availed of this facility.
•Mr. Modi told the high-level meeting that India has opened more than 5000 special pharmacies where more than 800 varieties of vital medicines are available at affordable prices.
•“The cost of stents for heart patients has been slashed by 80% and the cost of knee implants has been cut down by 50 to 70 per cent. Hundreds of thousands of kidney patients in India are also taking advantage of the free dialysis services provided by the government,”he said.
•For India, the third pillar is improvements on the supply side and the government has taken several “historic steps” for quality medical education and medical infrastructure development.
•Highlighting the fourth pillar of “mission mode intervention”, Mr. Modi said if mothers and children are healthy, this will lay the foundation for a healthy society.
•“We have started the National Nutrition initiative in mission mode.”
•While the United Nations has set a deadline of 2030 in its Sustainable Development Goals to ending the TB epidemic, Modi said the target year that India has set for itself to end TB is five years ahead of the UN deadline.
•“We have set this target in mission mode in 2025. I’m fully confident that we will be able to achieve this target,” he said adding that a campaign has also been started against diseases that spread due to air pollution and through animals.
•Mr. Modi ended his address with the Sanskrit saying, ‘Sarve Bhvantu Sukhin, Sarv Santu Nirmaya’ that translates into ‘wishing all happiness, wishing all a disease-free life.’
📰 India, Emirates discuss areas of future cooperation
Growth opportunities for Indian banks deliberated.
•India and the United Arab Emirates discussed areas for future cooperation, including growth opportunities for Indian banks, and the potential for private banks operating at the Abu Dhabi Global Market (ADGM) to offer private wealth services in India, according to a joint statement issued by the Ministry of Commerce and the Abu Dhabi Investment Authority.
•The joint statement comes following the seventh meeting of the UAE-India High Level Joint Task Force on Investments, which was co-chaired by Sheikh Hamed bin Zayed Al Nahyan, Managing Director of Abu Dhabi Investment Authority (ADIA), and Indian Minister of Commerce Piyush Goyal.
•“Areas for future cooperation were also discussed at the meeting, including growth opportunities for Indian banks, asset managers and technology companies at ADGM, and the potential for private banks operating at ADGM to offer high quality private wealth services in India,” the statement said. “In this regard, the UAE side further emphasised the strategic role that ADGM has played in fostering collaborations to enable sustainable trade flows and investments between the two economies.”
•The statement added that the Indian government had agreed to “give an early consideration and mutually beneficial solution” to the issue of tax treatment of the Abu Dhabi Investment Authority’s subsidiaries at the ADGM so as to facilitate the authority’s investments in India. “In the context of the Air Services Agreement between India and UAE and the memorandum of understanding with the Emirates of Abu Dhabi, Dubai, Ras-Al-Khaimah and Sharjah, both sides discussed the implementation of these bilateral agreements,” the joint statement said.
•“They further agreed that pending issues, interests and concerns expressed by both sides be taken up for mutual benefit of the carriers and civil aviation sectors of the two countries,” it added. “Both sides expressed their confidence in reaching mutually beneficial outcomes in the consultations that are planned to be held during the second half of October 2019.”
📰 Inequality of another kind
Why the right to Internet access and digital literacy should be recognised as a right in itself
•Recently, in Faheema Shirin v. State of Kerala, the Kerala High Court declared the right to Internet access as a fundamental right forming a part of the right to privacy and the right to education under Article 21 of the Constitution. While this is a welcome move, it is important to recognise the right to Internet access as an independent right.
Digital inequality
•Inequality is a concept that underpins most interventions focussed on social justice and development. It resembles the mythological serpent Hydra in Greek mythology — as the state attempts to deal with one aspect of inequality, many new aspects keep coming up.
•In recent times, several government and private sector services have become digital. Some of them are only available online. This leads to a new kind of inequality, digital inequality, where social and economic backwardness is exacerbated due to information poverty, lack of infrastructure, and lack of digital literacy. According to the Deloitte report, ‘Digital India: Unlocking the Trillion Dollar Opportunity’, in mid-2016, digital literacy in India was less than 10%. We are moving to a global economy where knowledge of digital processes will transform the way in which people work, collaborate, consume information, and entertain themselves. This has been acknowledged in the Sustainable Development Goals as well as by the Indian government and has led to the Digital India mission. Offering services online has cost and efficiency benefits for the government and also allows citizens to bypass lower-level government bureaucracy. However, in the absence of Internet access and digital literacy enabling that access, there will be further exclusion of large parts of the population, exacerbating the already existing digital divide.
•Moving governance and service delivery online without the requisite progress in Internet access and digital literacy also does not make economic sense. For instance, Common Service Centres, which operate in rural and remote locations, are physical facilities which help in delivering digital government services and informing communities about government initiatives. While the state may be saving resources by moving services online, it also has to spend resources since a large chunk of citizens cannot access these services. The government has acknowledged this and has initiated certain measures in this regard. The Bharat Net programme, aiming to have an optical fibre network in all gram panchayats, is to act as the infrastructural backbone for having Internet access all across the country. However, the project has consistently missed all its deadlines while the costs involved have doubled. Similarly, the National Digital Literacy Mission has barely touched 1.67% of the population and has been struggling for funds. This is particularly worrying because Internet access and digital literacy are dependent on each other, and creation of digital infrastructure must go hand in hand with the creation of digital skills.
The importance of digital literacy
•Internet access and digital literacy have implications beyond access to government services. Digital literacy allows people to access information and services, collaborate, and navigate socio-cultural networks. In fact, the definition of literacy today must include the ability to access and act upon resources and information found online. While the Kerala High Court judgment acknowledges the role of the right to access Internet in accessing other fundamental rights, it is imperative that the right to Internet access and digital literacy be recognised as a right in itself. In this framework the state would have (i) a positive obligation to create infrastructure for a minimum standard and quality of Internet access as well as capacity-building measures which would allow all citizens to be digitally literate and (ii) a negative obligation prohibiting it from engaging in conduct that impedes, obstructs or violates such a right. Recognising the right to internet access and digital literacy will also make it easier to demand accountability from the state, as well as encourage the legislature and the executive to take a more proactive role in furthering this right. The courts have always interpreted Article 21 as a broad spectrum of rights considered incidental and/or integral to the right to life.
•A right to Internet access would also further provisions given under Articles 38(2) and 39 of the Constitution. It has now become settled judicial practice to read fundamental rights along with directive principles with a view to defining the scope and ambit of the former. We are living in an ‘information society’. Unequal access to the Internet creates and reproduces socio-economic exclusions. It is important to recognise the right to Internet access and digital literacy to alleviate this situation, and allow citizens increased access to information, services, and the creation of better livelihood opportunities.
📰 PM Modi vows to more than double India’s non-fossil fuel target to 450 GW by 2022
“We must accept that if we have to overcome a serious challenge like climate change, then what we are doing at the moment is just not enough”
• India’s renewable energy target will be increased to 450 GW, Prime Minister Narendra Modi said at the United Nations Climate Action Summit here on Monday.
• “India today has come not just to talk about the seriousness of this issue, but to present a practical approach and a road map. We believe an ounce of practice is worth more than a tonne of preaching,” he said.
Comprehensive plan
• Speaking in Hindi, Mr. Modi reiterated India’s commitment to the creation of 175 GW renewable energy capacity by 2022 under the Paris Climate Agreement. “What is needed today is a comprehensive approach which covers education, values and everything from lifestyle to developmental philosophy... What we need is a global people’s movement to bring about behavioural change.”
• India would spend approximately $50 billion “in the next few years” on the Jal Jeevan Mission to conserve water, harvest rainwater and develop water resources, he added.
• Mr. Modi also said India planned to “considerably increase the proportion of the biofuel blend in petrol and diesel.”
• He said India had plans to make the transport sector green through the use of electrical vehicles.
• The Prime Minister highlighted his call from banning single-use plastics, the International Solar Alliance, an Indian-led initiative, and that India had provided 160 million families with cooking gas connections.
New initiatives
•He also announced two international initiatives. First, a platform with Sweden and other countries, for governments and the private sector to work together to develop low carbon pathways for industry.
•Second, a Coalition for Disaster Resilient Infrastructure. This initiative was approved by the Union Cabinet last month and ₹480 crore has been allocated for technical assistance and projects.
•The U.K., Australia and island nations such as Fiji and the Maldives will be part of this coalition.
•UN Secretary General Antonio Guterres had asked leaders to come with “concrete plans” rather than “beautiful speeches”, a message he emphasised at the start of the summit.
•Mr. Modi’s early slot, after New Zealand Prime Minister Jacina Ardern and Hilda Heine, the President of the Marshall Islands, was a recognition of India’s leadership in climate action, according to India’s UN envoy Syed Akbaruddin, who briefed the media a few days ago on the summit.
U.S. pulls out
•The U.S., Brazil, and South Africa are among countries that will not be speaking at the summit.
•U.S. President Donald Trump and Vice-President Mike Pence briefly attended the summit and listened to several speeches including Mr. Modi’s.
Highlights from PM Modi's speech:
>> World not doing enough to overcome serious challenge of climate change.
>> Need a global people’s movement to bring about behavioural change.
>> India will spend $50 billion on water conservation in next few years.
>> India will increase share of non-fossil fuel, will increase renewable energy capacity to beyond 175 GW by 2022 and take it to 400 GW.
>> India will inaugurate on Tuesday solar panels on the roof of the U.N. building, built at a cost of $1 million.
>> 80 countries have joined the International Solar Alliance initiated by India.
>> Called for a people’s movement to end the use of single use plastic and hoped that it will create an awareness at a global level about the harmful effects of single use plastic.
>> Need is a global people’s movement to bring about behavioural change.
>> India will spend $50 billion on his government’s ambitious ‘Jal Jeevan Mission’ for water conservation, rainwater harvesting and for the development of water resources.
>> India and China, which faced the highest burden of death from air pollution, will reap the biggest health benefits of a robust climate policy aimed at reducing carbon emissions.
>> Calls for comprehensive approach which covers everything from education to values, and from lifestyle to developmental philosophy.
📰 Climate justice through judicial diktat
The Supreme Court has erred in the Maradu case by placing the liability squarely on the apartment owners
•A Supreme Court order for demolishing a set of apartments in Maradu, a suburb in Ernakulam, has caused a legal and political crisis. The deadline for demolishing the four backwater-facing high-rise apartments ended last Friday. However, the 350-odd families residing there have refused to move.
•On September 11, while the rest of Kerala gorged the quintessential Onam sadhya, residents of these four complexes were on a hunger strike at the Maradu Municipality office. They have now gained wider support with all major political parties, including the Congress, the Communist Party of India-Marxist (CPI-M) and the Bharatiya Janata Party (BJP) opposing the demolition. After dithering initially, Chief Minister Pinarayi Vijayan has stated that his government will pursue all options to protect the residents.
•In 2006, the Maradu panchayat had granted building permissions for constructing the apartments. However, after a directive from the local self-government department, the panchayat issued a show-cause notice to the builders for violating Coastal Regulatory Zone (CRZ) rules. The builders got a stay order from the Kerala High Court in 2007 which allowed them to continue construction. The High Court ruled in favour of the builders stating that they can’t be held responsible for the failure of local authorities to comply with statutory provisions.
•After a Division Bench upheld this verdict, the Kerala State Coastal Zone Management Authority (KCZMA) approached the Supreme Court, which constituted a three-member panel to examine whether the buildings violated CRZ norms. Based on the panel’s report that the buildings fell within CRZ-III, the Supreme Court on May 8 ordered the demolition of the apartments. After dismissing the review petitions, the apex court on September 6 ordered the demolition to be completed by September 20.
•On Monday, during a suo motu hearing on the lack of action on the part of the State in carrying out its order, the apex court pulled up the Kerala Chief Secretary, accusing the State authorities of “playing with nature”.
Blind spots and concerns
•The case raises multiple concerns regarding environmental governance and adjudication. Even the key question of whether the apartments fall within CRZ-III, which would prohibit construction within 200 metres from the High Tide Line, or the less restrictive CRZ-II is unsettled. The three-member panel appointed by the Supreme Court stated that as per the CRZ notification of 1991 and the Kerala Coastal Zone Management Plan, 1996, the area in question came under CRZ-III. Maradu became a municipality in 2010 and consequently, the 2011 CRZ notification categorised it under CRZ-II, though the Union Environment Ministry approved this only in February 2019.
•The Court held that since at the time of construction, the area fell within CRZ-III, these were unauthorised constructions. The Court adopted a narrow view by merely examining the bureaucratic categorisation and ignored that the construction was based on permission granted by the local government and orders of the High Court. While the Kerala High Court held that permit holders shouldn’t be made liable for the regulatory oversight of local authorities, the Supreme Court did not address this question.
•The process of adjudication through a three-member committee also raises questions since it further delegated the task to another technical committee, which the residents allege, did not give them a fair hearing.
•This case reveals the court’s massive blind spot: the real-world implications of its verdict. The order cryptically states “let all the structures be removed forthwith within a period of one month from today” without clearly stating who should undertake the demolition.
•Alarmingly, the court is silent on the fate of the owners and residents of the apartments. Unlike most judgments on evictions, the court does not pronounce on the question of rehabilitation or compensation for those who would lose their homes.
A technocratic approach
•While the demolition is ostensibly for protecting the environment, the Supreme Court order doesn’t sufficiently explain how the constructions in question damage the environment. Instead of a jurisprudence on environmental justice, it adopted technocratic proceduralism for arriving at its verdict. Ironically, more serious environmental damage is likely to be caused by the demolition of the apartments. A report by IIT-Madras has highlighted that air pollution caused by the demolition would pose severe health hazards to those residing nearby, besides the long-term environmental costs of the debris generated. Fearing the “collateral damage” of the demolition, a person residing close to the apartments has filed a petition in the Supreme Court opposing the unplanned implosion/explosion of the buildings.
•The case highlights the pathologies of executive and judicial decision-making on environment and urban development in India. While State authorities and courts were complicit in allowing the buildings to be constructed in the first place, liability is now being placed squarely on the apartment owners. In some regards, it is a continuation of the jurisprudence based on court-appointed committees rather than hearing affected parties that resulted, especially in Delhi, in the demolition of numerous “illegal slums”. This logic has now come back to bite the middle class. For environmental justice, what we need is a strong environmental governance system that enables all stakeholders to prevent violations instead of the court becoming India’s new demolition man.
📰 Survey of dragonflies hints at impact of floods
Alarming fall in odonate population in Kerala
•A survey of dragonflies and damselflies held in the Silent Valley National Park (SVNP) has discovered eight new species, but reported an alarming decrease in the odonate population, raising concerns over the ecological impact of the successive floods in the State.
•The three-day survey, conducted last week jointly by the Silent Valley National Park and the Society for Odonate Studies, showed that several dragonfly species, including the Global Wanderer (Pantala flavescens), were missing from the national park. V. Balachandran, secretary of the Indian Dragonfly Society, said that the aberrant rain pattern and the successive floods in the State could have decimated the population of dragonflies and damselflies in the SVNP.
•“Odonates spend much of their lifetime as eggs and larvae under water. The floods could have washed them off. We need to conduct more studies in other parts of the State to get a clearer picture,” said Mr. Balachandran.
•However, eight new odonate species were found in the survey held in 11 camps across the buffer and core areas of the national park.
•“Our study teams came up with 75 species of dragonflies and damselflies, taking the total number of odonate species in the Silent Valley to 91,” said Silent Valley Wildlife Warden Samuel Vanlalngheta Pachuau.
•The new species found in the survey includes the Hemicordulia asiatica (Asian Emerald), which was reported from the Periyar Tiger Reserve in 2017. This rare dragonfly had gone unreported for over 80 years, and this was its second sighting from any protected forest in the State.
•Macrogomphus wynadiccus (Wayanad Bowtail ), Onychogomphus nilgiriensis (Nilgiri Clawtail), Epithemis mariae (Rubytailed Hawklet), Palpopleura sexmaculata (Blue-Tailed Yellow Skimmer) and Neurothemis intermedia (Paddy Field Parasol) were the other interesting finds among dragonflies.
•Agrocnemis splendidissima (Splendid Dartlet), Lestes dorothea (Scalloped Spreadwing), Onychargia atrocyana (Black Marsh Dart), Phylloneura westermani (Myristica Bambootail), Euphea disper (Nilgiri Torrent Dart) and Protostica gravely (Pied Reedtail) were some of the decorated findings among damselflies.
Biological indicators
•Mr. Pachuau said odonates were great biological indicators and studies on them would provide crucial information on the health of aquatic habitats and variations occurring in the climate. Odonates are good pest controllers, too.
•“Regular monitoring over a long period will help us assess the changes in our natural landscape. The Silent Valley National Park aspires to be the front runner in such initiatives,” said Mr. Pachuau.
📰 Making the grand Indian PSB mergers work
Only a visionary leadership can bring the efficiency parameters of the merged entities in line with those of private banks
•The initial enthusiasm of market analysts to the bank merger announcement is giving way to wariness and scepticism. There is a feeling that the potential benefits would take several years to show up and, meanwhile, the turbulence in the banks could take a toll on the real economy.
•The merger move demonstrates once again the lackadaisical approach of policy planners in implementing sensible banking reforms in Public Sector Banks (PSBs), first mooted by the Narasimham Committee more than a quarter century ago. While the committee had cautioned against merging weak banks, the government has ended doing precisely that. The consolidation should have been a gradual and calibrated exercise resulting in a smaller number of well-capitalised and professionally managed PSBs with a sound governance structure. Instead, what has come is a shotgun ‘reform’ decision at a time when PSBs are in deep malaise.
•A key concern about merging the ten PSBs into four in one stroke is a lack of clear articulation of the rationale behind bringing disparate and weak banks together, some of whom were still under the Reserve Bank of India’s Prompt Corrective Action (PCA). Further, such merger announcements generally trigger confusion, anxiety and insecurity in staff, leading to a slowdown in business. When decades-old brands are suddenly obliterated, there is widespread dismay. Poor communication within PSBs exacerbates the challenges. The smooth manner in which SBI merged five of its associate banks (ABs) in 2017 is not a relevant example in this regard. SBI had managed the ABs over the years with its own senior team, and all associates had already been functioning on common technology platform. In fact, left to its own, SBI would have preferred a gradual acquisition. The merger was forced upon it in the worst year of its history.
Reversing decline in returns
•The efficiency gains from the mergers for large PSBs would be largely illusory in the absence of a sound management with a vision for the future. The post-merger scale economies that large international banks seek to achieve with ruthless measures are not feasible in India. Our objective should be to create bigger PSBs that can mirror the efficiency parameters of leading private sector banks here. The chief goal should be to reverse the decline in the PSBs’ Return on Equity (RoE) after investing considerable sums in bringing them on a common technology platform, and introducing better risk management measures. The merged entities should become agile and capable of meeting the challenges in retail and mass market segments from private players and open banking sources.
•To smoothen the merger process, six measures may be worth considering. First, it needs to be ensured that there is no leadership vacuum in the anchor banks. Mergers require strong skills in thought leadership, results leadership and people leadership. The technical skills needed for integration planning, transforming business support functions and value build-up have to be cultivated. There is a strong need to revamp Human Resources (HR) practices and culturally integrate the expanded workforce through sustained training initiatives.
•It is vital to give the current heads of anchor banks a three-year term, or a tenure that lasts till the incumbents reach the age of 62 years, to avoid uncertainties in managing the transformation, and to enable the chiefs develop a second line. It is equally important that the top leadership comes from within the banks based on performance. The practice over the years of shuffling senior executives from one PSB to another has done more harm than good.
•Second, there is a need to recruit professionals from the market in key areas of technology, HR and risk management, in all of which PSBs are grossly under-equipped. Such recruitments should obviously be at market pay, which is the norm in joint ventures promoted by PSBs such as SBI.
Training the front-line staff
•Third, PSBs should not be found wanting when it comes to recruitment and training of front-line staff. There is a fear that the ‘merger wave’ may sink fresh hiring. While there will be rationalisation of headcount due to voluntary exits spurred by relocation and other compulsions, many staff members moved across their former banks may be less than suitable for the new roles. A buoyant exercise of recruitment and training is vital.
•Fourth, the government should actively plan steps to offset a possible slow expansion in bank credit in the near term. There is a decelerating trend in loan approvals by PSBs, as brought out in the last RBI report on Trend and Progress of Banking. More risk aversion on the part of bankers, coupled with their internal preoccupations, could further slacken credit growth. Loan melas and directed lending measures would not be the ideal solution. Instead Non-Banking Financial Institutions (NBFCs), which have a better understanding of the market needs, need to be tapped to ensure better credit flow. In terms of size, NBFCs are about 15% of the combined balance sheet of all banks. They should be enabled to step in more actively to fill the gap in funding Small and Medium-sized Enterprises, which are facing real issues as regards credit availability.
•Here, it may be good to consider expanding the scope of the partial credit guarantee scheme announced in this year’s budget to cover all NBFCs treated as Asset Finance Companies, instead of restricting it to the top-tier NBFCs, which any way have access to multiple sources. The proposed six-month guarantee could also be raised to two years to build a sustained momentum.
•Further, the Credit Guarantee Fund Trust for Micro and Small Enterprises managed by SIDBI may be revamped to assist more NBFCs. Drawings by NBFCs constitute just 7% of the disbursements made so far, and smaller firms are not even aware of this option.
Ownership tangles
•Fifth, the government should resolve the tangles in the ownership of the merging PSBs in insurance, asset management and other ventures. Some ventures involve foreign partners, and some are market-listed. The anchor banks should be free to take the best course that would optimise the value of such investments.
•Lastly, the government should consider converting a few ‘weak’ PSBs outside the merger into regional banks. This was one of the recommendations of the Narasimham Committee. Banks such as Bank of Maharashtra and Punjab and Sind Bank that have spread manpower, network, and resources thin could be turned into vibrant regional institutions to serve agriculture, trade and commerce.
•While such consolidation can result in handsome productivity gains, what matters is the quality of execution by a stable and committed leadership, aided by a shrewd and benign ownership.
