Scripting another Asian narrative (The Hindu Editorial)
Japan is filling the vacuum created by the U.S.’s withdrawal from the region
Japan no longer believes that a wholescale reliance on the U.S. for a defence umbrella is sufficient to secure its best interests
- Foreign Minister Tarō Konō said in October: “We are in an era when Japan has to exert itself diplomatically by drawing a big strategic picture.”
What needs to be done by Japan?
What Tokyo needs to is to use its strengths, its capital, its technological know-how and its democratic credentials to win friends and influence countries across the region and beyond. It needs to beat China at its own game
Initiative by Japan: Countering China
- Leading TPP: With US backing out of TPP, Japan has become the principal driving force keeping the deal alive. At November’s Asia-Pacific Economic Cooperation summit in Vietnam, Japan got the 11 countries still involved to agree on the “core elements” of a deal. It wants to lead rule-making on trade in the Asia Pacific, rather than let China set the agenda with alternatives to TPP such as the Beijing-backed Regional Comprehensive Economic Partnership (RCEP)
- Aid & investment: Japan is stepping up aid and investment in Southeast Asia
- A train line near Manila
- A seaport in Cambodia
- Assistance in the reconstruction of Marawi City in the Philippines. It has further committed 1 trillion yen ($8.7 billion) to the Philippines over the next five years, with a continued focus on infrastructure development.
- As the top source of development aid to Vietnam, it has helped construct a new airport terminal in Hanoi as well as the first subway line in Ho Chi Minh City
Japanese investment in major Southeast Asian countries is estimated to have averaged $20 billion per year, from 2011 to 2016, more than double the average annual flows between 2006 and 2010
Looking to India
- Asia-Africa Growth Corridor: In order to counter the $900 billion Belt and Road initiative (BRI), Japan with cooperation with India have announced an Asia-Africa Growth Corridor, aimed at creating sea corridors linking the countries of the Indo-Pacific to Africa
- Aim: The aim of the Asia-Africa Growth Corridor is to develop infrastructure and digital connectivity in Africa through Indo-Japan collaboration
- Based on 4 pillars: The Asia-Africa Growth Corridor is to be based on four pillars:
- Enhancing capacity and skills
- Quality Infrastructure and Institutional Connectivity
- Development and Cooperation Projects
- People-to-People partnership
- High Speed Rail: Japan has bagged the $17 billion contract to build India’s first high speed railway line, linking Mumbai and Ahmedabad
- Tokyo is also investing in development projects in the Northeast and the Andaman and Nicobar islands
- Japan-India civil nuclear energy deal: Japan’s Diet gave the go ahead to a Japan-India civil nuclear energy deal earlier this year
- Defence cooperation: The possibility of purchasing Japanese submarines and search-and-rescue planes to help the Indian Navy is being discussed
- Cooperating with India on 3rd country infra projects: Japan is cooperating with India in third country infrastructure projects such as Iran’s Chabahar Port, Sri Lanka’s Trincomalee port, and the possible joint development of the Dawei port along the Thai-Myanmar border
Creation of a Quad
A free and open Indo-Pacific, a phrasing that places India as a major actor in the Pacific, is an idea being promoted by Japan in conjunction with the U.S. This is a response to concerns over the expansion of the Chinese navy and Beijing’s territorial claims in the South China Sea, waters through which a huge majority of Japanese energy supplies transit
- It would be a grouping of 4 i.e. India, US, Japan & Australia
Tokyo wants to use the bilateral ties it is developing to create a multilateral architecture in the region.. However, without making genuine amendments for its past aggressions, Japan’s attempts to shape the future of the region will remain constrained
Unveiling his new role as a social reformer at a townhall and media event in Delhi, former United States President Barack Obama highlighted issues of religious tolerance, LGBT community rights, and the importance of Non Governmental Organisations (NGOs)
What did Obama say?
- Speaking on Friday at a townhall event of 300 youth leaders, activists and social entrepreneurs organised by the Obama Foundation, Mr. Obama spoke out about the importance of “finding a voice” for the Lesbian, Gay, Bisexual, Transgender (LGBT) community
- Referring to a “counter-narrative” to tolerance in the US, Europe and India, Mr. Obama also said, “For a country like India where there is a Muslim population that is successful, integrated and considers itself as Indian — which is not the case in some other countries, this should be nourished and cultivated.”
- Here in India the NGOs are necessary to help solve problems. NGO’s should be seen not as a threat, but a partner, and play a role in the solution
Navy alive to China threat, says Lanba (The Hindu)
Admiral Lanba responding to questions at the annual press conference ahead of Navy Day
China’s submarine deployment
China has deployed submarines in Indian Ocean for anti-piracy controls supposedly
Admiral’s response to the deployment
It is rather an odd task to give to a submarine as it is not the most ideal platform to do anti-piracy patrols
China has actively deployed ships and submarines in the Indian Ocean in the name of anti-piracy measures and the frequency has steadily gone up. Several U.S. military officers too have expressed similar views in the past
After much deliberation, the Indian Navy has decided to go ahead with a conventionally powered reactor instead of a nuclear-powered one for its second Indigenous Aircraft Carrier (IAC-II)
Third wheel (Indian Express)
Free trade agreement between Maldives and China is a warning to India: It needs to do more legwork in its neighbourhood
What has happened?
Maldives and China have inked a FTA (Free Trade Agreement) together
- The agreement was in the works for 4 years, yet India failed to take steps to counter it. Moreover, Maldives is the only South Asian country that Prime Minister has not visited yet — one scheduled visit in March 2015 was put off
- The entire process of approving the FTA, finalised in September, was similar to the quick amendment of the Maldivian Constitution in July 2015 to allow foreigners to buy land freehold in any of its islands. The move had raised concerns in India that it was aimed at giving China a strategic foothold in the Indian Ocean. The FTA is bound to heighten that feeling
What is covered under FTA?
The agreement covers both goods and services in several sectors, from legal, accounting and insurance, to health, telecommunications, education, off-shore oil exploration, and geological prospecting; in goods, the main export from the Maldives would be tuna fish
The People’s Majlis is the unicameral legislative body of the Maldives
The present political leadership of the Maldives seems to believe that an FTA with China is in its national interest. India clearly needs fresh ideas and must do more legwork in its neighbourhood
Indian Constitution and Polity:
Tiple talaq law: State’s views sought (The Hindu)
Latest development wrt issue of Triple Talaq
What has happened?
The Centre has written to the States asking for their views on a draft law that imposes a maximum of three-year jail term on a Muslim man for giving instant triple talaq — or talaq e biddat — to his wife
Introduction of the Bill
- Government was set to introduce the Bill in the winter session of Parliament, which starts on December 15
- Once the proposed Muslim Women Protection of Rights on Marriage Bill is approved by Parliament, it will cover all cases of instant triple talaq across the country, except in Jammu and Kashmir
3 years jail
- As per the provisions of the draft bill, a husband who resorts to instant triple talaq can be jailed up to three years and fined
Accident- prone (The Hindu Editorial)
The most effective measure to keep roads safe is enforcement of rules with zero tolerance to violations. But as anyone who uses India’s roads knows only too well, that is not an administrative priority
Road safety: not an administrative priority
As anyone who uses India’s roads knows that road safety via strict enforcement of rules is not an administrative priority
- Lax implementation of SC directions: Even the periodic directions of the Supreme Court in a public interest case, Dr. S. Rajasekaran v. Union of India, have not produced any dramatic change in the official attitude
- In spite of the court setting up the Committee on Road Safety and appointing an amicus curiae to help implement its recommendations, it is mostly business as usual for the police in enforcing road rules, for engineers tasked with forming roads and pavements, and transport officials in charge of licensing
The death of 1,50,785 people in accidents in 2016, which represents a 3.2% rise over the previous year, indicates the scale of the challenge
- Road Safety Action Plan: The most important among SC guidelines is the Road Safety Action Plan that each State and Union Territory must announce by March 2018, and roll out after giving due publicity. Police forces and transport bureaucracies should not wait for formalisation of the plan, and should start enforcing rules relating to lane-based driving, using CCTV cameras to penalise offenders, and conducting safety audits along with experts
- District Road Safety Committee: The orders of the Supreme Court provide a road map, and the direction to States to form a District Road Safety Committee headed by the Collector before January 31, 2018 should ensure that someone is accountable when citizens file complaints on hazardous conditions
Committee on Road Safety
- It bears pointing out that the court-appointed Committee on Road Safety has written to States on the need to prosecute every case of driving under the influence of alcohol and drugs, seeking imprisonment and fine, and to treat driving on the wrong side of the carriageway as an offence under Section 279 of the Indian Penal Code, which can lead to imprisonment, and not merely under the Motor Vehicles Act. Stringent penalties have a lower chance of being imposed, compared to fines that are proportionate to the offence. Yet, even the existing minor penalties are not being imposed, and road conditions remain hazardous due to poor engineering
Absence of scientific approach
Author states that absence of a scientific approach towards accident investigation remains a major factor in fixing responsibility as pointed out by the Sundar Committee of the Ministry of Road Transport in 2007
Things to know:-
Sundar Committee of Ministry of Road Transport (2007)
The main recommendations of the Committee include
- Creation of a National Road Safety & Traffic Management Board: It would be an Apex body at national level to promote road safety and traffic management in the country to be constituted through an Act of the Parliament with members and experts drawn from the various fields including road engineering, automobile engineering, traffic laws, medical care, etc. Board would also have powers to issue directions with regard to corrective measures and conduct safety audits
- Setting up of state level bodies: The Committee, in its Report, has also recommended setting up of the state level bodies namely State Road Safety Boards as the issue of road safety is required to be taken up vigorously at all-India level
Functions: The functions of the State Board would be to aid and advise State Governments on matters relating to road safety & traffic management, coordinate road safety & traffic management functions with State level agencies, specify minimum standards for design, construction and operation of roads other than National Highways, providing minimum standards for establishing and operating trauma care facilities, commission safety audits to monitor compliance with standards, specify minimum standards for design and manufacture of vehicles other than mechanically propelled vehicles, recommend measures for enquiry and redressal of complaints and grievance relating to road safety & traffic management, etc.
- Funding: To provide flow of funds, the Committee has suggested earmarking of 1% of total proceeds of cess on diesel and petrol for Road Safety Fund. Some part of the assistance to the State Board is proposed to be released on the basis of performance of the State in promoting the cause of road safety
- Decriminalization of road accidents: With regard to decriminalization of road accident, the Committee has observed that traffic accidents are registered as medico-legal cases and the private hospitals are reluctant to accept the road accident victim to avoid getting embroiled into medico-legal case. The problem is further aggravated due to the requirement that attending doctors have to spend considerable time in appearing in Courts/Tribunals when these cases come up for hearing
- Suggestion: It has been suggested by the Committee that these road accidents should be de-linked from the criminal aspect. It has been suggested that it should be the primary duty of the attending doctor to provide medical aid to the victim without waiting for registration of case
Committee on Road Safety
The committee, headed by retired Supreme Court judge Justice K.S. Radhakrishnan, was formed on April 22, 2014 by the apex court on the basis of a PIL to measure and monitor the implementation of road safety laws in the country
- The Justice Radhakrishnan committee states that 1,37,572 persons have been killed in 2013 according to statistics from the Union Ministry of Road Transport and Highways
- It said India has one percent of total vehicle population in the world and a “staggering” 10 percent road accident related deaths
- Committee has asked the Transport Ministry to introduce regulations for Automatic Headlights On (AHO) on two-wheelers and uniform crash test requirements for all category of vehicles
- The committee has so far submitted three reports to the Supreme from October last year to March 2015. It has pointed out serious lapses in implementation of safety laws by States, which has led to increasing number of road fatalities
- Directions: Some of its directions include,
- Tightening of road patrols on highways
- Establishment of road safety fund to which a portion of traffic fines collected would go to finance road safety expenses and remove encroachments on pedestrian paths
- Keep under temporary suspension the driving licence of drivers involved in fatal accidents
Steps being taken by the Ministry of Road safety & Transport
Ministry of Road Transport and Highways has taken a number of steps to prevent road accidents as per details mentioned under:
- National Road Safety policy: The Government has approved a National Road Safety Policy. This Policy outlines various policy measures such as promoting awareness, encouraging safer road infrastructure including application of intelligent transport, enforcement of safety laws trauma care etc.
- National Road Safety Council: The Government has constituted the National Road Safety Council as the apex body to take policy decisions in matters of road safety. The Ministry has requested all States/UTs for setting up of State Road Safety Council and District Road Safety Committees, and to hold their meetings regularly
- Identification of Black spots: High priority has been accorded to identification and rectification of black spots (accident prone spots) on national highways. A total of 789 such black spots have been identified for improvement
- Model driving training institutes: Setting up of model driving training institutes in States and refresher training to drivers of Heavy Motor Vehicle in the unorganized sector
- National Highway Accident Relief Service (NHARS): Providing cranes and ambulances to various State Governments under the National Highway Accident Relief Service Scheme for development on National Highways
United Nations & Road Safety
On 10 May 2010, the General Assembly adopted resolution which proclaimed the period 2011–2020 as the Decade of Action for Road Safety, with a goal to stabilize and then reduce the forecast level of road traffic fatalities around the world by increasing activities conducted at the national, regional and global levels
Brasilia declaration on Road Safety
Hosted by the Government of Brazil on 18-19 November 2015 in Brasilia, Brazil, and co-sponsored by WHO, the 2nd Global High-Level Conference on Road Safety represented a historic opportunity to chart progress at the mid-point of the Decade of Action for Road Safety 2011-2020
- At the close of the Conference, the 2200 delegates adopted the “Brasilia Declaration on Road Safety” through which they agreed ways to halve road traffic deaths by the end of this decade – a key milestone within the new Sustainable Development Goal (SDG) target 3.6
- SDG 3: Ensure healthy lives and promote well-being for all at all ages
- Target 3.6: By 2020, halve the number of global deaths and injuries from road traffic accidents
- It highlights strategies to ensure the safety of all road users, particularly by improving laws and enforcement; making roads safer through infrastructural modifications; ensuring that vehicles are equipped with life-saving technologies; and enhancing emergency trauma care systems
Court versus choice (Indian Express)
It’s a troubling question: Are courts in India becoming more ‘executive minded’ than the executive?
- In the first few paragraphs author states that SC judgment feels like as though it is that of a court directing that an under-trial may be removed from police custody and placed in “judicial custody” (that is, jail). Women’s hostels in India are notorious for their draconian restrictions on the freedom of movement of their residents and it is not surprising that the college itself seems unsure of its role in this case
- Far from respecting her choices about her religion or her choice of life partner, the Supreme Court seems to think that it is doing Hadiya a favour by sending her from one prison (her parents’ house) to another (college hostel)
Author states that many of the SC judges handling Hadiya’s case are the same who gave the historic privacy judgement in the recent past. This prompts two troubling questions:
- Does the Supreme Court consider the Puttaswamy judgement, a judgement or just a fine set of essays meant to be forgotten as soon as it is convenient?
- Does the judiciary understand that it is now seen as a threat to and not a defender of fundamental rights in this country?
What is the right thing to do?
Author states that complete justice in the matter requires the overturning of the Kerala High Court judgement, allowing Hadiya to be free to choose whom she wants to live with and ending the NIA’s communally-tinged witch-hunt
The missing healing touch (Indian Express)
State has failed both in providing quality healthcare and regulating private players
Article 47: Part of Directive Principles of State Policy
Author starts the article by mentioning the contents of Article 47
Duty of the State to raise the level of nutrition and the standard of living and to improve public health: The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavor to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health
From Article 47 it is clear that public health is a major responsibility of the government. Yet from around the time when India opened up its economy, the government has increasingly ceded space to the private sector in matters related to health — that is the root cause of the current controversy over billing methods in private hospitals
- The controversy erupted after a seven-year-old girl, Aadya, lost her life due to dengue-related complications in Fortis Hospital Gurugram last month
Public health system: Only a poor man’s choice
The growth of the private sector — largely unregulated — is, in fact, less a statement of its efficiency than a result of the government’s failure to provide affordable, accessible and equitable healthcare. As the demand-supply gap widened and the government found itself incapable of providing quality healthcare, the private sector moved in swiftly, becoming the health set-up of choice for all except the poorest
- A 2007 paper in the Economic and Political Weekly notes, “high absenteeism, low quality in clinical care, low satisfaction levels with care (clinical and with regards to courtesy and amenities) and rampant corruption plague the [public health] system
Observations of HLEG
A High Level Expert Group was constituted by erstwhile Planning Commission to look into how India could move towards universal health coverage
- From 8 per cent in 1947, the private sector now accounts for 93 per cent of all hospitals, 64 per cent of all beds, 80 per cent to 85 per cent of all doctors, 80 per cent of out-patients, and 57 per cent of in-patients
- Of the 1.37 million functional hospital beds in India, 8,33,000 are in the private sector, according to the report
International experience and countless academic papers have suggested that tax-based public financing is the ideal health finance option along with social insurance — or private insurance for those who can afford it
There have been sporadic and half-hearted attempts at regulation
- CEA 2010: The Clinical Establishments (Registration and Regulation) Act, 2010, intended by the Centre as a model legislation for the regulation of hospitals by state governments — health is a state subject — has had a low uptake
- Standard Treatment Guidelines that were drawn up for specific conditions and diseases, to obviate over-prescription of drugs or additional costs of diagnostics, remain documents that nobody takes seriously — few doctors have perhaps even read them, given that there is neither monitoring nor an enforcement mechanism that can pick violators
- The West Bengal Clinical Establishments (Registration, Regulation and Transparency) Act, passed earlier this year, and the Karnataka Private Medical Establishments (Amendment) Bill, 2017 — that was recently tabled in the Karnataka Assembly — have been criticised as draconian. The two acts have penal provisions against doctors who overcharge
What can be done?
Promote Health insurance: Check on false billing
Author states that health insurance can act as a check on false billing as insurance companies would not want to pay for false bills but health insurance has penetrated only 3-4 per cent of the country’s population
National health Policy
The National Health Policy 2017 cleared by the Union cabinet lays out a roadmap for public-private partnerships in healthcare
Major features of the policy that aims to transform healthcare in India:
- The policy aims for attainment of highest possible level of health and well-being for every citizen through a preventive and promotive healthcare orientation.
- It seeks to provide and deliver healthcare services, particularly to underprivileged and socially vulnerable groups of people in the country.
- Under the policy, every family will have a health card for access to primary care facility as well as to defined package of services nationwide.
- Health and hygiene to become part of school curriculum – Yoga would be introduced much more widely in schools and work places as part of promotion of good health.
- The policy envisages a three dimensional integration of AYUSH systems by promoting cross referrals, co-location and integrative practices across systems of medicines.
- The policy also seeks to address health security and promotes Make in India for drugs and devices.
- It seeks to establish a Public Health Management Cadre (PHMC) in all states.
- It also proposes rising public health expenditure to 2.5% of the GDP in a time bound manner.
Targets set under the NHP 2017
- Increasing life expectancy to 70 years from 67.5
- Reduce fertility rate to 2.1 (Replacement levels) by 2025.
- Reduce infant mortality rate to 28 by 2019.
- Reduce Under Five Mortality to 23 by 2025.
- Reducing premature mortality from cardiovascular diseases, cancer, diabetes or chronic respiratory diseases by 25% by 2025
- The policy seeks to achieve ’90:90:90′ global target by 2020 – implying that 90% of all people living with HIV know their HIV status, 90% of those diagnosed with HIV infection receive sustained antiretroviral therapy and 90% of those receiving antiretroviral therapy will have viral suppression.
- Reducing the prevalence of blindness to 0.25 per 1000 persons by 2025 and
- The disease burden to be reduced by one third from the current levels.
- Elimination of leprosy by 2018, kala-azar by 2017 and lymphatic filariasis in endemic pockets by 2017.
Positives of the Policy
- The broad principles of the policy is centered on Professionalism, Integrity and Ethics, Equity, Affordability, Universality, Patient Centered & Quality of Care, Accountability and pluralism.
- This Policy looks at problems and solutions holistically with private sector as strategic partners
- The Policy advocates a progressively incremental assurance-based approach for GDP allocation increase to 2.5% instead of a hollow rhetoric.
- It envisages providing a larger package of assured comprehensive primary health care through the ‘Health and Wellness Centres’ and denotes an important change from very selective to comprehensive primary health care package which includes care for major NCDs [non-communicable diseases], mental health, geriatric health care, palliative care and rehabilitative care services.
- It aims to ensure availability of 2 beds per 1,000 population distributed in a manner to enable access within golden hour [the first hour after traumatic injury, when the victim is most likely to benefit from emergency treatment].
- In order to provide access and financial protection, it proposes free drugs, free diagnostics and free emergency and essential health care services in all public hospitals
Criticism of the Policy
- The policy duplicates portions of the Health section 2017 Budget speech.
- It reiterates health spend targets set by the High Level Expert Group (HLEG) set up by the erstwhile Planning Commission for the 12th Five Year Plan (which ends on March 31, 2017)
- It also fails to make health a justiciable right through National Health Rights Act like the Right to Education Act 2005 did for school education.
- A health cess was a path-breaking idea in the Health Ministry’s draft policy; it has now been dropped out of the final policy
- The government through 2002 policy promised it would increase health spending to 2 percent of GDP, which never happened either under the National Democratic Alliance (NDA-1) or during 10 years of the United Progressive Alliance (UPA) administration.
- Old Targets and New Deadlines: Look at the Graphic below.
- The IMR in 2015-16 was 41.
- The MMR in 2015-16 is 167.
- The 2002 NHP had set the target of eliminating leprosy by 2005, kala azar by 2010 and lymphatic filariasis by 2015–none of which could be achieved yet.
M.P. has most number of repeat offenders (The Hindu)
Latest National Crime Records Bureau (NCRB) data
- The percentage of juveniles who repeat a crime at least once is the same as that for adult criminals
Stats: As per the NCRB, 44,171 juveniles were apprehended in 2016. Of them, 5.2 % were convicted in the past at least once. Last year, the total number of adults arrested was 37,37,870, which included 1,91,849 persons or 5.1% who had been convicted for the crime at least once
- Highest number of repeat adult offenders in Chandigarh percentage wise: Percentage wise, among the 29 States and seven Union Territories, Chandigarh with 38.1% reported the maximum number of repeat offenders among adults
- In absolute numbers, the maximum number of repeat offenders among adults was in Madhya Pradesh-35,320, Tamil Nadu-18,841, Assam-11,659, Telangana- 13,605 and Andhra Pradesh- 16,471
Sex offenders’ registry
The proposal to set up a registry was first mooted by the UPA government after the 2012 gang rape in Delhi
- The government plans to publicize photographs, addresses, PAN card details, Aadhaar card number, fingerprints and DNA samples of the offenders through this registry
- Details of sexual offenders even below 18 years of age would be included in the database
Goa ranks top, Bihar at bottom of Gender Vulnerability Index (Indian Express)
Article talks about the Gender Vulnerability Index released by NGO Plan India
Gender Vulnerability Index (GVI)
The GVI is a multidimensional composite index comprised of over 170 indicators, and ranks all the states in India across four dimensions of gender vulnerability –
- Education: The education GVI, for instance, is calculated with the help of more than just state literacy figures. The state’s school dropout rate, teacher to student ratio and existing school infrastructure are also accounted for in it
The Index has been developed with the aim of being used, first and foremost by Plan India, and by development practitioners, academicians and non-governmental organisations, among others, in addressing issues of gender equality.About Plan India National Campaign: Plan for Every Child – Leave No Girl Behind
Plan for Every Child – Leave No Girl Behind
Plan for Every Child – Leave No Girl Behind campaign is a movement to support the 2030 SDGs through children’s rights with special emphasis on equality for girls. Under the campaign, efforts are made to ensure that government and civil society come together to provide opportunities to scale best practices, design specialised schemes and advocate towards gender transformative changes at all levels, to address all needs for a more equitable world for girls in general and for girls in difficult circumstances, in particular
- Goa ranked top and Bihar featured at the lowest in Gender Vulnerability Index (GVI)
- In the ranking, Goa is followed by Kerala, Mizoram and Sikkim. Bihar ranked the lowest at 30, with Delhi faring only slightly better at 29 and Uttar Pradesh at 28. The highest ranking north Indian state is Himachal Pradesh at the sixth position.
You can access the full text of the report here
‘The Financial Resolution and Deposit Insurance Bill could undergo corrections’
What has happened?
The Financial Resolution and Deposit Insurance Bill, 2017, or FRDI Bill, is expected to be tabled in the upcoming Winter Session of Parliament. Together with the Bankruptcy and Insolvency Code, re-capitalization of PSU banks, and FDI in insurance, this Bill is touted to be a landmark reform in the the financial sector
- Strong opposition: But, it is facing strong opposition from the bank employees union. In August, banking employees went on a strike against the proposed legislation. The Bill has also raised concerns among depositors
Situation so far
The Bill was first introduced in the Monsoon Session but was referred to a joint parliamentary committee for review. The committee will submit the report during the Winter Session, after which an amended Bill is expected to be tabled
The FRDI Bill seeks to create a framework for resolving bankruptcy in banks, insurance companies and other financial establishments. It has recommendation for setting up of a resolution corporation. While India never had such a resolution authority before, the Reserve Bank and the IRDAI were handling these functions for the banking and insurance sectors
- Resolution Corporation: The Bill proposes to establish a ‘Resolution Corporation’ to monitor financial firms, calculate stress and take “corrective actions” in case of a failure. This Corporation will classify financial firms based on their risk factors as low, moderate, material, imminent, and critical. In case of critical firms, the Corporation will be empowered to take over and resolve issues within a year
- Power to take corrective action: The Bill empowers the Corporation to take corrective actions such as merger or acquisition, transferring the assets, liabilities to another firm, or liquidation
- Corporation would be under Finance Ministry: The Resolution Corporation will be under Finance Ministry with representatives from SEBI, RBI, IRDAI, and PFRDA
- Members would be appointed by: The Chairperson, two independent members and other members of the Board would effectively be appointed by the Union Government
- Banks will pay a sum to Resolution Corporation: Until now it was mandatory for banks to pay a sum to the DICGC as insurance premium. Though the Bill proposes the banks to pay a sum to the Resolution Corporation, it neither specifies the insured amount nor the amount a depositor would be paid. It is thus unclear how much a depositor would be paid in case of liquidation
- One year time: The Bill provides one year time for the Corporation to resolve issues in a ‘critical’ firm. It has provisions to extend this time frame to another year
- Scaling down of the employees: As a part of resolution the Corporation may scale-down the number of employees in the stressed firm, transfer them or issue pay-cuts. Beyond two years, the firm would be liquidated
- Bail–in Clause: The Bill proposes ‘bail-in’ as one of the methods to resolution, where the banks issue securities in lieu of the money deposited
- In the past, the bail-in efforts had largely worked against depositors. In Cyprus, depositors lost almost 50 per cent of their savings when a bail-in was implemented
- Closure of DICGC: The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, established in 1971 insures all kinds of bank deposits upto a limit of ₹1,00,000. In case a stressed bank had to be liquidated, the depositors would be paid through DICGC
- However, the proposed Bill seeks closure of the DICGC, as the credit guarantee will be taken care of by the Resolution Corporation itself.
Backdrop: Addressing the NPA crisis
The banking sector is reeling under stress due to bad loans. According the RBI’s Financial Stability Report released in June 2017, the gross non-performing advances (GNPAs) ratio of all banks stood at 9.6% as of March 2017. The RBI had recommended that banks initiate insolvency proceedings for 12 large defaulters, constituting 25% of the system’s NPAs
While the provisions of the Bill ensures the stability of financial sector and resolution of issues in time-bound manner, the ambiguities on how the depositors would be repaid needs to be addressed
Turning the corner (The Hindu Editorial)
Release of 2nd Quarter GDP data
A sigh of relief
Author states that there was a collective sigh of relief when the second quarter GDP data were released officially by the Central Statistics Office (CSO). The government officials were relieved that a declining trend of four consecutive quarters of growth had finally been reversed
GDP growth came at 6.3% for the quarter ending September, higher than 5.7% in the previous quarter, but still lower than 7.5% a year ago. The Finance Minister said that the effects of the demonetisation and initial rollout of the goods and services tax (GST) were behind us
- Industrial growth accelerated from 1.6% during the June quarter to 5.8% in this September quarter. Its subcomponent, manufacturing, too grew faster at 7% compared to only 1.2% during the previous quarter
- The services component of trade, hotels, transport and communications also grew smartly at 10.5% for the half year, as compared to 8.3% a year ago
Private sector investment: cause for worry
Author states that although industrial revival is an absolute must for sustained growth in employment and output but it should also be accompanied by an increase in private sector investment, which is still lackluster
- Decline in Gross Fixed Capital formation (GFCF): The portion of GDP growth coming from fixed capital formation (which stands for investment activity) declined from 27.5% in the first quarter to 26.4% now
Author points out that the CSO says that GST collections data are provisional, and could be an underestimate. To that extent an upward revision of the GDP data is possible in the future
Why did stock market drop?
So if the GDP trend is satisfactory, why did the stock market react so negatively?
Author mentions that the stock market today is swayed by a relatively small minority of deep pocket investors (and increasingly algorithms and bots), so its reaction is not representative of what’s happening to the broad-based economy. Even so, despite these caveats, it’s useful to pay heed.
- Fiscal deficit: Author states that the market was spooked by the data on fiscal deficit. At this stage of the fiscal year, the deficit is running at 96.1% of the annual target. Last year at this stage it was only at 79.3%
- Higher revenue spending: The revenue expenditure component (roughly salaries, pensions, interest payments, etc), which is not the productive spending on items like infrastructure, is growing at twice the rate as budgeted (10% against 5%). The higher deficit would have been acceptable had it been on account of higher capital spending, not higher revenue spending
- Options before the government: The government can either cut further into capital spending (which tends to be discretionary, or can be postponed to the next budget year) or it can increase its market borrowing to tide over this year. Either way it is not good news for the markets. That’s because the former implies lower economic growth, and the latter implies higher interest rates. This could be the main reason for the markets crashing
Slowdown in private sector investment
- It is constrained by low capacity utilisation, deleveraging of balance sheets (as companies are reducing loan burdens), insolvency resolutions and large influx of imports, especially manufactured goods
Slowdown in consumption spending
Consumption spending has started losing steam. Its growth went down a notch from the last two quarters.
- Nearly two-thirds of India’s GDP is consumption spending, and remains the key to sustaining the growth momentum. Its slowing means that purchasing power both in rural and urban areas is under pressure. Mounting inflation rates are not helping. The situation on job creation is still bleak. Large job creating sectors like construction, agriculture, textiles, leather and tourism need to exhibit more energy
Author states that when the world economy does well, India’s exports should be flourishing. The exporting sector’s fortunes are closely linked with the manufacturing sector. Exports create jobs, especially in small and medium enterprises
- Why can’t India’s small enterprises sell on global portals like Alibaba and Amazon? What are the hurdles?
- Is the GST framework (with delayed refunds) inhibiting the growth of exports?
- What are the policy and other bottlenecks?
- These are the issues that we need to grapple with to sustain an upward growth path.
Cabinet gives nod to nutrition mission (The Hindu)
Launch of National Nutrition Mission
What has happened?
The Union Cabinet has approved the launch of National Nutrition Mission with a target to reduce malnutrition and low birth weight by 2% each year. The government has budgeted ₹9,046 crore for the mission for a period of three years
The core idea behind the mission is to converge all the existing programmes on a single platform as one ministry working in isolation cannot achieve this. More than 10 crore people will be benefited by this programme. All the states and districts will be covered in a phased manner; to begin with the worst affected 315 districts will be targeted this financial year
Bringing down stunting: The mission targets to bring down stunting in children. As per the National Family Health Survey, 38.4% of children in India have stunted growth. The mission plans to bring this down to 25% by 2022. It also aims to bring down anaemia among young children, women and adolescent girls by 3% every year
Though it was mandatory, but no beneficiary would be denied benefits for the lack of Aadhaar card
National Nutrition Mission (NNM)
- The NNM, as an apex body, will monitor, supervise, fix targets and guide the nutrition related interventions across the Ministries.
- The proposal consists of
- Mapping of various Schemes contributing towards addressing malnutrition
- Introducing a very robust convergence mechanism
- ICT based Real Time Monitoring system
- Incentivizing States/UTs for meeting the targets
- Incentivizing Anganwadi Workers (AWWs) for using IT based tools
- Eliminating registers used by AWWs
- Introducing measurement of height of children at the Anganwadi Centres (AWCs)
- Social Audits
- Setting-up Nutrition Resource Centres, involving masses through Jan Andolan for their participation on nutrition through various activities, among others.
The programme through the targets will strive to reduce the level of stunting, under-nutrition, anemia and low birth weight babies. It will create synergy, ensure better monitoring, issue alerts for timely action, and encourage States/UTs to perform, guide and supervise the line Ministries and States/UTs to achieve the targeted goals.
Benefits & Coverage:
More than 10 crore people will be benefitted by this programme. All the States and districts will be covered in a phased manner i.e. 315 districts in 2017-18, 235 districts in 2018-19 and remaining districts in 2019-20.
An amount of Rs. 9046.17 crore will be expended for three years commencing from 2017-18. This will be funded by Government Budgetary Support (50%) and 50% by IBRD or other MDB. Government budgetary support would be 60:40 between Centre and States/UTs, 90:10 for NER and Himalayan States and 100% for UTs without legislature. Total Government of India share over a period of three years would be Rs. 2849.54 crore.
Implementation strategy and targets:
Implementation strategy would be based on intense monitoring and Convergence Action Plan right upto the grass root level
- NNM will be rolled out in three phases from 2017-18 to 2019-20
- NNM targets to reduce stunting, under-nutrition, anemia (among young children, women and adolescent girls) and reduce low birth weight by 2%, 2%, 3% and 2% per annum respectively
- Although the target to reduce Stunting is at least 2% p.a., Mission would strive to achieve reduction in Stunting from 38.4% (NFHS-4) to 25% by 2022 (Mission 25 by 2022).
There are a number of schemes directly/indirectly affecting the nutritional status of children (0-6 years age) and pregnant women and lactating mothers. Inspite of these, level of malnutrition and related problems in the country is high. There is no dearth of schemes but lack of creating synergy and linking the schemes with each other to achieve common goal. NNM through robust convergence mechanism and other components would strive to create the synergy
Give accountability a chance (Indian Express)
Author cites his views regarding bringing in accountability for RBI
What is to be done?
Author points out that the central bank is going against all known models of central bank policy. Therefore the question arises, in the immortal words of Lenin, “What is to be done”?
Author makes the following proposal, which as per him will preserve independence of the central bank and make the RBI more accountable
- Change the RBI Act, if need be, to require the RBI governor (as lead representative of the MPC), to testify to Parliament twice a year
- In separate testimony in both houses of Parliament, the lawmakers can ask questions of the RBI governor and the governor can respond
Cherry-picking of data by RBI
Author mentions that RBI may have cherry-picked data to suit its conclusion that the government policy on loan waivers will have a large impact on the consolidated state plus centre fiscal deficits. This expansion of fiscal deficit of 1 per cent of GDP due to loan waivers (RBI estimate) will, the RBI concludes, lead to a large 0.5 per cent increase in CPI inflation
- At present we are in the wilderness about (i) the actual magnitude of loan waivers this fiscal year; and (ii) more importantly, the impact it would have on CPI inflation, the principal concern of MPC policy
What is the empirical evidence for the argument that an expansion of fiscal deficits leads to an increase in CPI inflation?
The table shows three-year averages of the — fiscal deficit and CPI inflation
- Looking at the period 1996 to 2004 (the data omitted by the RBI, and omitting the onion outlier year of inflation in 1998), annual inflation declined from around 6.6 per cent to 4 per cent. The fiscal deficit expanded from 8 per cent to 9.4 per cent of GDP. If the RBI had included the data from 1996 to 2005, as I show in my note, they would have found that there is no relationship between fiscal deficits and inflation for the long time-period 1996 to 2016
- Now let us look at the data considered by the RBI on fiscal deficits and inflation, 2006 to 2016. During this time-period, there is a sharp increase in inflation — from around 6.5 per cent to 9.9 per cent (year ending 2013), and then a sharp decline to 4.5 per cent in 2016. The trajectory of the absolute value of the fiscal deficit in the same period follows that of inflation — from 5.7 per cent to 8.3 per cent, and then a sharp decline to 6.6 per cent in 2016
Accountability is the way to go
Ignoring the 1996 to 2006 data is the clearest, and obvious, form of cherry-picking the data, an intellectual “crime” that the RBI seems to have willingly committed. Such actions will be rendered impossible if India were to introduce the policy of accountability
Author states that it is worthwhile to quote from our own Finance Act of 2016, the one that established the MPC: “And whereas the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth. The Central Government may, if it considers necessary, convey its views in writing to the Monetary Policy Committee from time to time.”
Author has mentioned Humphrey Hawkins testimony in the article. Let us see what it is.
Humphrey Hawkins Testimony
It is an old name given to a biannual event in which the Chairman of the US Federal Reserve Bank makes a report to the US Congress on the state of the US economy and monetary policy twice a year.
- This testimony session is named after the lawmakers (Sen. Hubert Humphrey and Rep. Augustus Hawkins) who sponsored the Full Employment and Balanced Growth Act of 1978, the law which made this testimony compulsory
- This testimony is televised. Author wants something on the same lines in India
Nissan has initiated international arbitration proceedings against the Indian government, seeking $770 million on the dispute
The Tamil Nadu government is working towards resolving the controversy over the payment of incentive refund with Nissan, a Japanese car maker, running a plant in Oragadam near here
Nissan has initiated international arbitration proceedings against the Indian government, seeking $770 million on the dispute, according to report
Dispute has two dimensions
- While one is over the refund of value added tax (VAT)
- Another deals with the pace of refund of VAT accruals
In March 2010, Nissan along with its joint venture partner Renault established the plant after signing a memorandum of understanding with the then ruling DMK government in February 2008
How did the dispute arise?
- The dispute arose about four years ago when the government felt that the company was attempting to “claim double benefits” out of the project. The government contended that the company, by promoting a marketing entity, had shown that all its sales had taken place with the marketing entity, for which it claimed refund of 14.5% VAT
- The refund would be allowed till the accruals reached the level of investment. The marketing entity was, in turn, also claiming input tax credit for its transactions, which the government found objectionable. Through this arrangement, the company, according to those who handled the matter in the recent past, could get back its investment faster than otherwise
- Company’s view: The company’s contention was that there was nothing illegal about the way it was carrying out its business and this was why its claims should be settled. Nissan has claimed the incentive of ₹ 2,900 crore in VAT refund, whereas the State government says it has paid ₹ 1,600 crore including ₹ 600 crore in the last six months
- VAT Rules amended: In 2015, the government, taking a cue from Maharashtra, amended rules on VAT, by which the claim on ITC was barred. The government’s order has been challenged in the Madras High Court
Concerns over investment climate
- Nissan taking the matter for international arbitration comes at a time when there are concerns in certain quarters about the investment climate in the state
- Last year, the state slipped to the 18th rank in the state-wise ease of doing business ranking released by the Centre’s Department of industrial policy and promotion (DIPP). It is to address this issue and attract greater investment that the State government, in late October, came out with an ordinance, envisaging single window clearance for industrial projects
Heavy rain continues in Kerala, South T.N (The Hindu)
Heavy rain continued to batter coastal areas of Kerala and south Tamil Nadu on Friday, crippling normal life, even as Cyclone Ockhi lay centered off the Lakshadweep islands. The death toll in the two States in rain-related incidents rose to 11
Developments on Cyclone Ockhi
- The tropical cyclone developed into a very severe storm, even as it veered off towards the Lakshadweep islands on a path predicted by weathermen
- By evening, the storm lay centred 90 km north of Minicoy and 220 km south-southeast of Amini island
- Flooding & High waves in Kerala: Though the strong winds unleashed by the cyclone over Kerala abated, the rain picked up in strength by Friday noon, leading to flooding of low-lying areas. High waves pounded the entire Kerala coast, swamping large tracts of land and displacing hundreds of families
- Death toll rises: The death toll in incidents related to the storm went up to seven, with Thiruvananthapuram accounting for the highest number of five casualties
- Fishermen rescued: As many as 218 fishermen who had put out to sea during the cyclone were rescued and brought to land, the Kerala government claimed on Friday night. Navy ship had been deployed to search for 22 fishing vessels spotted off the coast of Kollam
- Relief camps: As many as 2,759 persons in Thiruvananthapuram, Kollam, Alappuzha, Ernakulam and Thrissur were relocated to relief camps
- NDRF deployed in TN: In Tamil Nadu, while the authorities said four persons had died due to the cyclone, unofficial sources put the figure at 10. Close to 70 personnel from the National Disaster Response Force (NDRF) were deployed in many pockets to assist the needy and evacuation drive was on at many locations
- Power outage in Kanyakumari: Schools and colleges remained closed in Kanniyakumari district, where power lines were not yet restored in many pockets. As a result, mobile communication was affected. Many residents relied on boat services as low-lying areas were inundated. However, authorities were able to move essential commodities during the forenoon
- Though the intensity was not that heavy in neighbouring Tirunelveli and Thoothukudi districts, continuous rain resulted in Papanasam dam recording 451 mm rainfall
- Dams at max storage level: Out of the 11 dams in Tirunelveli district, six had reached the maximum storage level