📰 Government to fast-track green nod
MoEF issues fresh guidelines to accelerate environmental appraisal of projects
•The Ministry of Environment and Forests (MoEF) wants to expedite the environment appraisal of industrial projects. These appraisals, as per norms, are conducted by independent panels of experts that have representatives from the government as well as from outside, trained in matters of ecology, wildlife and habitat preservation.
•The Expert Appraisal Committees (EACs) opine on whether a proposed project beyond a certain size ought to be commissioned and recommend ways to mitigate the potential environmental impact. Their advice is critical to the MoEF’s eventual decision to either clear or red flag a project.
•However, a November 11 letter from the Ministry’s Environment Impact Assessment division, that coordinates EAC meetings, issued fresh guidelines to accelerate the appraisal process.
‘Avoid delays’
•“During the review meetings held for streamlining the Environmental Clearances (EC) process, it has come to notice that the grant of EC is delayed due to various reasons which could be avoided... Member Secretaries of the various sectors may strictly adhere to the following guidelines to avoid unnecessary delay while granting ECs,” the letter said.
•The recommendations include ensuring that EAC meetings are held at least once in 15 days. All proposals that were placed for approval 10 days before a meeting ought to be considered (It is 15 days now).
•“The queries or issues, which the division may have, should be raised during the EAC meeting only. Member Secretary (MS) ought to ensure that the relevant queries of the division are also pointed out at the time of EAC meetings itself so as to avoid occasion for such queries before and after examination by Expert Appraisal Committee (EAC),” the missive notes.
•There are separate EAC committees for industrial projects, coal mining, non-coal mining, river and hydroelectric projects, each with its own independent chairperson and committee members. However, several members have full-time jobs independent of their commitments to EAC meetings.
•Environmental law specialist and researcher at the Centre for Policy Research, Kanchi Kohli said it was legally contentious if an office order could curtail the role of the EAC that requires detailed scrutiny of applications seeking environmental clearance.
•“What is even more concerning is the Environment Ministry’s approach to reading down its own mandate for environment protection. Accelerated approvals definitely don’t allow for good environmental decisions and do not necessitate that projects will be up and running to support an already sluggish economy. Our current approval rates are close to 100%, and yet there is an economic slowdown,” she told The Hindu.
•Environment minister Prakash Javadekar has said he's committed to bringing down the time required for clearance down to less than 100 days.
He has been on parole since November 9 and it was set to end on November 23
•The Supreme Court in Monday extended the parole period for Rajiv Gandhi assassination case convict A.G. Perarivalan by a week.
•He had been on parole since November 9. It was scheduled to end on November 23.
•Senior advocate Gopal Sankaranarayanan and advocate Prabu Ramasubramanian, for Perarivalan, informed a Bench led by Justice L. Nageswara Rao that the convict was not given police escort for a medical visit to the hospital. The court ordered that Perarivalan be given police escort.
Convict’s choice
•During the short hearing, the Centre raised a point of debate about the Tamil Nadu Governor’s power to grant remission to Perarivalan under Article 161 of the Constitution. Significantly, this submission comes on the heels of a CBI affidavit that said it was entirely up to the Governor to pardon Perarivalan.
•Mr. Sankaranarayanan objected to this, arguing that the convict was free to choose between the President and the Governor for pardon. The senior advocate referred to the Constitution Bench’s judgment in the Union of India versus Sriharan of December 2015, which said the “exercise of executive clemency” is “vested in the President or the Governor.”
•Mr. Sanakaranarayanan said the Centre’s rejection, in April 2018, of the Tamil Nadu government’s proposal to remit the sentence of convicts under Section 432 of the Code of Criminal Procedure (CrPC) did not stop them from separately moving the Governor for pardon under Article 161 of the Constitution.
•He said the power of State or Central governments to remit sentences under Section 432 CrPC and the clemency power of the President or the Governor could not be equated with each other. Section 432 was a “creature of the Code [CrPC].” Articles 72 (power of President to grant pardon) or 161, on the other hand, was a “high prerogative vested by the Constitution in the highest functionaries of the Union and the States.”
Sriharan judgment
•The constitutional power of pardon of the President or Governor was “untouchable and unapproachable and cannot suffer the vicissitudes of simple legislative processes,” Mr. Sankaranarayanan said quoting from the Sriharan judgment. The Constitution Bench, in a majority decision, had held that States could not unilaterally remit the sentences of life convicts in cases investigated by a Central agency under a Central law. The assassination case was probed by the CBI.
•In compliance with the 2015 verdict, the Tamil Nadu government had written to the Centre on March 2, 2016, proposing the grant of remission to the convicts. The State government wanted the Centre to concur. After a wait of over two years, the Centre, in April 2018, rejected the State’s proposal to release the convicts on remission, saying this was an act unparalleled in the annals of crimes committed in this country.
•Meanwhile, Perarivalan applied to the Governor for pardon on December 30, 2015.
•On September 2018, after the Centre’s rejection of the State’s remission proposal, the Supreme Court asked the Governor to decide the pardon plea as he “deemed fit.” Three days after this court order, on September 9, the Tamil Nadu Cabinet recommended to the Governor to remit Perarivalan’s sentence and release him forthwith.
•The pardon plea has been pending with the Governor for nearly five years now.
📰 China’s media show new Bhutan border village built in disputed territory
Global Times confirms that the village of Pangda had been newly built and residents moved there in Sept.
•Chinese media on Monday claimed that a new border village built by China near Bhutan was on Chinese territory, but released images of the village appearing to show its location on territory disputed by the two countries.
•The Global Times confirmed the village of Pangda had been newly built and residents moved there in September.
•An image released by the newspaper placed the village in disputed territory, a couple of kilometres inside what Bhutan sees as its territory.
•Last week, however, Bhutan’s officials denied the village was on their territory. Bhutan’s Ambassador in India Vetsop Namgyel told The Hindu, “There is no Chinese village inside Bhutan.”
•The Global Times said “according to open records, authorities in Yadong county of Southwest China’s Tibet Autonomous Region have confirmed that 27 households with 124 people voluntarily moved from Shangdui village of Duina prefecture of Yadong county to Pangda village in September 2020,” adding the village was was 35 km away from the county.
•Chinese media reported there were 27 households, and the village was covered by asphalt roads and “has a public square, village committee, health room, police room, kindergarten, supermarket, and plastic runway”.
Territorial claims
•China has in the past sought to bolster its territorial claims in disputed areas by building civilian settlements there, as on disputed South China Sea islands.
•According to China’s maps, the village is within China’s territory, but China’s border extends further south beyond where India and Bhutan say the border runs.
•The area is east of the India-Bhutan-China trijunction on the Doklam plateau, which was the site of a 72-day stand-off in 2017 triggered by China’s road-building up to where it sees its border.
•India moved in to stop the road, which was built a few hundred metres east of India’s border, saying China had entered Bhutanese territory and was unilaterally pushing the trijunction further south. The new village is located farther east, away from the trijunction.
•Chinese experts on Monday blamed India for the unsettled China-Bhutan border and stalled negotiations. “The border dispute between China and Bhutan is very minor, but it has not been formally demarcated because of India’s obstruction”, Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times.
•“Indian media hyped the issue to create the illusion that China is encroaching on Bhutanese territory and bullying the small” to sow discord between China and Bhutan,” he was quoted as saying. “However, based on Bhutan’s official response, the country has seen through India’s real intentions, and it values its friendly relations with China”.
📰 Overbroad, overboard: On Kerala’s law to curb abusive content
Kerala disregarded settled law while issuing an ordinance to curb abusive content
•Kerala has sought to make amends by keeping in abeyance its obnoxious proposal to abridge free speech by conferring unbridled powers on the police to arrest any one expressing or disseminating any matter deemed threatening, abusive, humiliating or defamatory to a person or a class of persons in any manner. But Chief Minister Pinarayi Vijayan should take heed of criticism and drop the measure altogether. It is worrying that such a draconian and ill-conceived ordinance was even promulgated. It is incredible that a State government crafted a law with elements declared unconstitutional by the Supreme Court, ignoring a major apex court verdict on the law of defamation, and which is repugnant to the provisions of the IPC, a central law, in two ways, besides going against one provision in the Cr.P.C.
•His defence that the amendment only targeted defamatory social media posts and would not curb reportage, political satire or expression of opinion is quite hollow, when seen in the light of the absence of any such narrow definition of the offence introduced by Section 118A in the Kerala Police Act. In Shreya Singhal vs. Union of India (2015), the top court struck down Section 66A of the IT Act. The section had criminalised the sending of any message through a computer resource that was grossly offensive, menacing, or caused annoyance, inconvenience, danger, insult, injury and intimidation. The Court found the offence was ‘overbroad’, that is, it was defined so widely that both innocent and offensive messaging could be brought under its ambit. The failure to define the offence narrowly fell foul of the constitutional protection for free speech and expression. The same judgment, for the same reason, also struck down Section 118(d) of the Kerala Police Act, which made causing annoyance in an indecent manner through verbal comments or on telephone an offence.
•The new offence is also vaguely defined, and is made cognisable, whereas criminal defamation under the IPC is non-cognisable. Moreover, while upholding the validity of criminal defamation, the Court made it clear that no police officer can register an FIR for the offence; it can only be prosecuted as a private complaint, for Sec.199 Cr.P.C. says no court shall take cognisance of defamation unless the aggrieved party files a complaint. Further, Section 118A lays down a three-year prison term; it is two years under the IPC. By making defamatory utterances cognisable and raising the prison term, the Kerala ordinance effectively amends the IPC and Cr.P.C., a move for which the Centre’s assent is mandatory, as it is in conflict with central laws. The ordinance itself required prior presidential assent. It is regrettable that the State sought to arm itself with extraordinary powers to deal with a problem that can be dealt with through other provisions relating to stalking, harassment, criminal intimidation and verbal abuse.
📰 A conspiracy against inter-faith love
Laws to curb intermarriages are part of a communal agenda
•In India, intermarriages between people of different regions, castes or religions have to a large extent been prevented by casteism, religious conservatism, and fear of parental authority. In a country as large and diverse as this, intermarriages are still a rarity. There are few inter-caste marriages and even fewer inter-religious ones. Surveys large and small confirm that the vast majority of Indians (between 95% and 99% depending on the State) have arranged marriages, which are, by nature, intra-caste and intra-religious. Between 70% and 80% of Indians across all age groups and religions disapprove of inter-caste or inter-religious marriage. Those of us and our forebears who married across caste groups or across religious communities are a very small minority of around 5% and about 2%, respectively.
•Yet, for decades, the Rashtriya Swayamsevak Sangh (RSS), through its affiliates, has kept up an attack on the 2%, trying to prevent or break up marriages between Hindus and people of other faiths, primarily Muslims. Despite all its very recent protestations to the contrary, the Sangh Parivar is known to hold that Muslims (and Christians), whose holy sites are outside India, are not truly “Bharatiya”. Groups owing allegiance to the Parivar scour court notices for marriages under the Special Marriage Act and use persuasion, threats, intimidation and even violence to try and stop marriages from taking place. When Muslim women marry Hindu men (even abroad), they try to have them “convert” to Hinduism.
No evidence of ‘love jihad’
•But it is only quite recently that they conjured up a conspiracy theory in support of their campaign. Starting in coastal Karnataka and northern Kerala in the mid-2000s, Sangh vigilantes claimed that Hindu-Muslim romances were a well-thought-out conspiracy to seduce Hindu women in order to convert them to Islam and produce Muslim children. It was among these vigilantes that the term ‘love jihad’ was bandied about. A Karnataka Criminal Investigation Department (CID) investigation into complaints of ‘love jihad’ in 2009 concluded that there was no ‘love jihad’, only love and marriage between consenting adults. But the conspiracy theory, and the term ‘love jihad’, were exported to north India in the run-up to the 2014 general election. Over the next few years, as the Bharatiya Janata Party gained political ground, the term gained currency, adding another dimension to the Sangh Parivar’s programme of communal polarisation.
•A National Investigation Agency (NIA) probe was ordered following continuing claims in Kerala in 2018. In Uttar Pradesh, whose current Chief Minister issued a public death threat to men he claimed were involved in ‘love jihad’, the police investigated 14 complaints. The NIA reached the same conclusion as the Karnataka CID did in 2009: there was no conspiracy to convert Hindu women, nothing called ‘love jihad’, all the women concerned had married and/or changed religions as independent thinking adults. The U.P. police have found that the majority of the cases probed were consensual. And in the cases identified as ‘suspicious’ by the police, neither is there evidence of forcible conversion nor of the fact that the women did not make their own choices.
•But keeping the conspiracy theory alive seems to be an important part of the RSS-BJP’s communal political programme. And so, under the guise of anti-conversion laws, a few BJP State governments have now announced their intention to make ‘love jihad’, a conspiracy theory, a crime punishable by imprisonment. The conspiracy theory has evolved along the way. Its central premise is that no Hindu woman will fall in love with a man she knows to be a Muslim; Muslims disguise themselves as Hindus to get their way with obedient Hindu women and having ravished them, force them to convert.
Exercising choice
•Characterising Hindu women as dim-witted and easily led is socially more acceptable than the idea that a woman can love outside artificial social boundaries and exercise choice. This is borne out by the many examples from across the country of parents using provisions of criminal law on rape and kidnapping to try and break up their daughter’s relationship or marriage, entered into by choice. There are also examples from across the country of families that have conspired to murder their daughter or her husband or both, because their falling in love is an affront to family authority and to the social order determined by caste and religion.
•The insidious linking of inter-faith relationships with ‘forcible conversion’, however, gives this campaign a powerful toxicity. The Supreme Court affirmed in the case of Hadiya (formerly Akhila) and Shafin Jahan that no one had a right to interfere in the marriage of consenting adults. What the BJP State governments are proposing is a law that overturns this premise, by making the validity of a marriage subject to investigation on the basis of third-party complaints. It makes every Muslim marrying a Hindu suspect. It characterises Muslims as conspirators in a project of proselytisation and colonisation of Hindu wombs. And it provides legal cover for Sangh organisations to carry on their decades-old campaign of harassment, and worse, against Hindu-Muslim marriages.
•To be sure, the RSS and its affiliates have been able to pursue their flagrantly anti-constitutional and unlawful methods in trying to prevent inter-religious marriages because their agenda feeds the casteism and religious anxiety of the majority of Indians. This is why, all these years, they have had the easy support of court officials, the police, and in too many cases also the families of young people who have dared to love.
•The changes in law proposed by a few BJP State governments, if they go through, will create a decidedly hostile legal environment for Hindus and Muslims to marry. What is already difficult, because of family, community and Sangh Parivar pressures, will become impossibly hard.
•Nazi Germany’s Nuremburg laws prohibited sexual relations and marriages between Jews and non-Jews. Violation of the law led to imprisonment and later, incarceration in a concentration camp. Segregationist U.S. and apartheid South Africa had laws prohibiting inter-racial marriages and sexual relations. In South Africa, the law was enforced through surveillance and police raids. In both countries, violations were punishable by imprisonment. In India, the Sangh Parivar can achieve the same ends without a law explicitly banning such marriages, so long as those who are unable to see beyond caste and religion conspire in its plan.
📰 Time for an Asian Century
India’s challenge is in securing an ‘Atmanirbhar Bharat’ in the emerging world order
•In an irreversibly more equal world, the Regional Comprehensive Economic Partnership (RCEP) has immediate geopolitical and economic implications, with the West adapting to Asian rules and marking the end of the colonial phase of global history. Will we see the world returning to the centrality of Asian civilisations sharing prosperity, with the U.S. adjusting to a triumvirate? Or will the Asian giants be irreconcilable rivals with the U.S. rules-based order maintaining peace and prosperity? India’s challenge is in securing an ‘Atmanirbhar Bharat’ in the emerging digital order, navigating the U.S.-China technology and supply chain clash.
Asian-led world order
•The mega trade deal was led by ASEAN, not by China, and includes Japan and Australia, military allies of the U.S., all opting for the Asian Century as they do not see China as a threat the way the U.S. does. ‘ASEAN centrality’ rejects the current frame of the West setting the agenda. RCEP’s principles and objectives allow individual countries to choose the scope and product categories for bilateral tariff schedules, and exclude divisive issues like labour and environment. The new frame goes beyond transfer of goods and services, focuses on integration and facilitating supply chains for sharing prosperity, requiring a very different calculus for assessment.
•RCEP’s new rules on electronic commerce could offset losses in declining trade in goods. ‘Atmanirbhar Bharat’ will leverage endogenous technological strength, data and population. Both China and India are breaking the monopoly of the West in wireless telecommunications, AI and other emerging technologies. India has also, in the UN, questioned Western domination calling for a “reformed multilateralism”. The dilemma for the West is that sharing power will mark the end of its primacy in global affairs. The dilemma for the U.S. is more acute. With China having developed the capacity to bridge the technological gap, the U.S. weaponised interdependence by banning export of semiconductor chips and forcing sale of innovative Chinese technology. China’s response is a ‘dual circulation’ strategy for self-reliance and military-technological prowess to surpass the U.S. The global governance role of the U.S. is already reduced. The U.S. Congressional Research Service report dated October 30 identifies four key elements of this role: global leadership; defence and promotion of the liberal international order; defence and promotion of freedom, democracy, and human rights; and prevention of the emergence of regional hegemons in Eurasia. The U.S. now exercises power with others, not over them. Despite its military ‘pivot’ to Asia, the U.S. needs India in the Quad, to counterbalance the spread of China’s influence through land-based trade links. India, like others in the Quad, has not targeted China and also has deeper security ties with Russia. With the ASEAN ‘code of conduct’ in the South China Sea, both the security and prosperity pillars of the U.S.-led Indo-Pacific construct will be adversely impacted.
Atmanirbhar Bharat
•No country has become a global power relying on others. India needs a new strategic doctrine and mindset. Strategic analysts ignore the severity of colonial exploitation that made the most developed country, India, among the less developed when they compare it with China. Military strategists’ excessive reliance on Western doctrines and equipment ignores why the 4th Infantry Division, described “as one of the greatest fighting formations in military history”, collapsed . We have drawn the wrong lessons on both the intentions and capability of China (the Henderson-Brooks Bhagat Report remains classified, but its conclusions are available). With the Rafale aircraft purchase, India has recognised that there will be no technology transfer for capital equipment. Military Theatre Commands should be tasked with border defence giving the offensive role to cyber, missile and special forces based on endogenous capacity, effectively linking economic and military strength. The overriding priority should be infrastructure including electricity and fibre optic connectivity; self-reliance in semiconductors, electric batteries and solar panels; and skill development. Leveraging proven digital prowess to complement the infrastructure of China’s Belt and Road Initiative will win friends as countries value multi-polarity.
•The RCEP already includes India’s priorities such as rules of origin, services and e-commerce. The time-bound upgradation of national capacity through ‘Atmanirbhar Bharat’ should enable agreements with individual ASEAN countries. RCEP members have expressed their “strong will” to re-engage India, essentially to balance China. There are compelling geopolitical and economic reasons for shaping the building blocks of the Asia-led order, which is not yet China-led, to secure an ‘Atmanirbhar Bharat’, and place in the emerging triumvirate.
📰 Banking health and the ‘K Curve’ dynamics
Focusing on trends in valuation metrics can provide clues; more stronger banks are needed
•As the financial ecosystem navigated one more pothole last week, with depositors in Lakshmi Vilas Bank Limited (LVB) getting bailed out, the implications of the Reserve Bank of India’s sleight of hand have got all stakeholders thinking about the way forward. Throw in the non-banking financial companies, or NBFCs, into this cocktail and you sense a lot of pieces are likely to move in this jigsaw puzzle. While different stakeholders may have their own opinions on the way forward for the financial sector, markets, to a large extent, incorporate those differing views and reflect it in the price performance of individual banks. Such price action of banks can give us very useful insights on how the financial system dynamics are likely to change in the coming years. Focusing on the trends in valuation metrics since the ILF&S crisis can give us some important pointers on how the system is likely to take shape. What is the market prognosis right now?
A key metric
•Any sector expert would tell you that the key metric for financial companies would be the ‘Price to Book Value’ ratio (P/BV). The P/BV holds the mirror on the two critical attributes the market values most: adequacy of current capital and runway available to the entity for profitable growth.
•A P/BVB ratio above 1 indicates that the market believes that the company can grow and generate Return on Equity (RoE) above the hurdle rate that investors expect. The faster it can grow or the greater the spread of the ROE above the hurdle rate, the greater the P/B multiple (above 1). A P/BV below 1, on the other hand, indicates that the market either does not believe the bank has recognised all its bad loans or has the business model to deliver returns above the hurdle rate. This may be because the bank does not have a good deposit franchise, has bad cost discipline or a broken lending model.
Private banks’ dispersion
•Now let us see what the market is telling us through prevailing P/BVs (need to look at a bank’s P/BV over a period). You have banks that have a P/BV above 4 while some others languish at much below 1, even at 0.25. With NBFCs, the P/BV range is even wider, with some NBFCs being valued in excess of 7. The growth trajectories of these entities with dispersed P/BV will be varied, resulting in a classic K Curve playing out. The K Curve depicts the inequality existing between different financial entities in terms of their attributes that determine their future growth and profitability. Widening of the arms of the ‘K’ would imply that the inequality is increasing, while narrowing of the span of the ‘K’ would mean the opposite.
•Looking at private sector banks, one can clearly see a couple of banks which have always had their P/BV above 3 on a consistent basis. Capital is available in plenty for these banks and the market is betting that these banks will grow much above system average and generate attractive RoE. This would imply that these banks will have disproportionate incremental market share on both assets and liabilities.
•Next comes the set of banks which have had P/BV of above 1.5 for most periods of time. The market insight on these banks is that they are long-term bets, have access to sufficient capital but have to demonstrate a business model that works across cycles. As comfort levels increase on the business model, the P/BV should climb as runway for growth is available for these banks. Both the above set of banks (‘Alpha banks’) would form one arm of the K, having adequate access to capital and the intrinsic ability to grow market share. The only constraint for these banks would be their ability to grow their liability franchise as changes in market share on deposits are much slower than changes on the asset side.
•The other private sector banks have a P/BV of around 1 or much below 1. For some of them which have demonstrated an ability to raise capital even through COVID-19 times, it is a business model issue and whether they have strengths to grow profitably in a sustained manner. The new generation banks amongst these have to demonstrate consistent growth and stability on the liability side to earn their stripes for a higher P/BV again. Quite a few of the old generation private sector banks have an issue with the credibility of their business model and their ability to generate above hurdle RoE through the cycle. While they may have a reasonably stable liability franchise, the market perceives issues with their lending practices and thereby, asset quality. That is the reason their P/BV is at very low levels. They need to transform themselves by upgrading technology, add skilled manpower and improve management quality and governance.
Road map for public banks
•Coming to public sector unit (PSU) banks, their current governance model depresses valuations. Their P/BV would better reflect their intrinsic strengths when the banks are run in a professional manner with an ability to decide their own destiny. The largest bank in the country is surely part of the Alpha banks as its ability to attract capital and grow profitably is well accepted. The other PSU banks are viewed by the market broadly as a homogenous set with similar business models and skill sets. Along with the government move to consolidate PSU banks into few large banks, a new vision needs to be drawn out for these banks to ensure that they have differing value propositions to offer to the economy and market. There needs to be a clear level playing field amongst all banks and the government should move to paying transparent and fair compensation for services rendered to various State-sponsored programmes to all players. PSU banks should be free to adopt human resource practices to on-board lateral talent to fill in skill set gaps and adapt to the new digital world. This, coupled with better governance, is the recipe for higher P/BV for PSU banks.
More Alpha banks needed
•So what happens from here on? The consensus opinion would be that the Alpha banks widen the gap with respect to the rest, thereby widening the K Curve even more and squeezing out the weak banks. If one looks at the financial performance of banks over the last few years, this trend is palpably seen, lending more credence to the widening K curve hypothesis. However, there is clearly more room for banks to migrate into the Alpha banks set. Vision, perseverance and consistent execution will make that happen. For the wheels of the economy to grind faster and higher, we need more than the current handful of Alpha banks to propel it and it is in all stakeholders’ interest to do their bit to make that happen. The multi baggers lie in spotting the bank that can straddle the K. The system can ill-afford another LVB.
•For NBFCs, it is a more scary thought. Would both arms of the ‘K’ remain is the moot question for them. Or, would the more valued NBFCs be the ones that become part of the Alpha banks in the long term?
