Science and faith

Source: By Manu Joseph: Mint

I used to think that no one really believes in God because if people did, as they claimed, wouldn’t they be in a perpetual stupor, stunned by the existence of such a magical force? However, I don’t hold that view anymore after observing how people have responded to recent claims of extraordinary scientific discoveries that are almost as mystical as God and more photogenic.

Why don’t people faint and the traffic stop when scientists announce that they have proof that gravity alters time, that they now know where mass comes from, or that they have conclusive evidence of the existence of black holes—objects so dense that a whole star is compressed into a blob just a few hundred metres across and where the gravitational force is so strong nothing will ever escape it, not even light?

The last pronouncement, about visual evidence of the black hole phenomenon, occurred on 10 April 2019. A black hole is now a scientific truth because of three main reasons:One, people with great authority, who have monopoly over a narrow field of study, have said so after an arcane process that is widely believed to be very rigorous; two, other people like them have endorsed it; three, most people in the world, including scientists in other fields, do not have enough information to challenge the assertion. Also, the kind of people, such as journalists, writers and politicians, who usually seed doubt in the minds of people even in areas like genetics and climate do not believe they can challenge scientists on theoretical physics.

Theoretical physics thus also demonstrates qualities of medieval religion. In a world where everything has become political and every claim is questioned, many branches of science have not survived. But theoretical physics leaps from claim to claim with the ease of an ancient religion at its peak.

What I enjoy the most about science as a lay person is that it is a simulation of religion for me. I have no choice but to accept what is told to me by an authority that has the right halo. In every other sphere of knowledge, my reading is punctuated by constant arguments with ideas. But in the presence of scientific knowledge, even when I find it hard to believe in black holes, I cannot help but quieten my mind.

The black hole has a familiar arc in the recent history of knowledge. First, an entertaining idea emerges from a mathematical equation; a purely theoretical structure is created when the variables in the equation are pushed to the extreme. Then a group of influential scientists believe it really exists in the physical world. They popularise its exotic properties by dumbing down language. The world is fascinated, including a whole generation of children. Artists then “render" stunning images. Some people then make films that feature the exotic phenomenon. Funds pour into the search for proof of the phenomenon. Eventually scientists find it, and it is remarkably almost exactly what they had hoped to find; it is very close to artistic renderings, too. And “a scientific truth" is born. Then it becomes religion, more powerful than conventional religion because it has the halo of knowledge, information, rationality and proof. Theoretical physics is probably one of the best funded religions.

Twenty-four hours after the news broke about the black hole in the heart of the Messier 87 (M87) galaxy, it was already blasphemous to ask, “But do black holes really exist?" The idea of the black hole emerges from Albert Einstein’s equations that define his general theory of relativity. He never liked the idea. Even though his concepts led to much of today’s exotic science, he himself was suspicious of esoteric things. But in time scientists began to take black holes seriously.

Regular people, when they were not watching “sci-fi", did not care much about black holes. Even on 11 April 2019 what contributed to the transmission of the news was not the power of science but of politics—of feminism.

In 2016, the computer scientist Katie Bouman, who is a key member of the team that photographed the M87 black hole, delivered a TED talk on a technique she developed to take the image. But that technique was eventually not used in the mission. Yet, hours after the image of the black hole was revealed, she emerged as the face of the project. As The New York Times reported, “In their eagerness to celebrate her…many non-scientists on social media overstated her role in what was a group effort by hundreds of people, creating an exaggerated impression…"

It is not surprising that people can argue about the exact role of a young woman in a scientific breakthrough, but not the scientific phenomenon itself. The image was created by a technology that used an array of radio telescopes located in various parts of the Earth to form a virtual telescope that could, “read a newspaper in New York from a sidewalk café in Paris", according to an official release. The process is too complicated for lay people to challenge. Theoretical physics today is where most spheres of human intellect were just a few years ago: what a group of experts said was the truth.

It will be fascinating to watch what happens when one day theoretical physics, too, ceases to be a religion, and the amateur heretics are able to transmit their ideas widely. It would be hilarious if in the end cow urine turns out to be good for health, and there are no black holes.

 

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Fix bugs in anti-defection law

Source: By Dr KK Paul: The Statesman

Defections emerged as a challenge to our Parliamentary democratic system for the first time in 1967, but it was only seventeen years later in 1985 that our Constitution was amended to address the problem. It is not as if efforts were not made, as almost every Lok Sabha from the fourth (1967-70) onwards did take up this matter but for various reasons could not take it to a logical end. The 52nd amendment of the Constitution introducing the Anti-Defection law as the Xth Schedule was passed in February 1985. In 2003, an amendment was made but certain vital issues continued to remain unaddressed. Since then several developments have taken place not only exposing the chinks in the legislation but also widening them, indicating that time is now ripe for a review of the Anti-Defection Law.

The fourth General Election held in 1967 was a landmark event in our electoral history. It was the last occasion that Parliamentary elections were held simultaneously with all State Legislatures. This pattern was broken due to some states going to the polls in mid-term after brief spells of President’s rule and the dissolution of the Lok Sabha ahead of its time in December 1970. Another important feature of the 1967 election was that the Congress party was able to form the government at the Centre with greatly reduced majority besides losing in several states across the country. These states had wafer-thin majorities in their legislatures leading to governments with very weak foundations. Sometimes the MLAs could not resist tempting offers from rival camps resulting in frequent changes in loyalty. The term Aya Ram Gaya Ram was much in use during this period with some MLAs changing their parties even twice in a day. Initially such conduct was laughed at but soon it came down to levels which could only be described as disparaging.

Disturbing as these developments were, it was also seen as a great challenge to our democracy. Parliament being already seized of the matter rose befittingly to the occasion, and in all seriousness while adopting a resolution on 8 December 1967. This resolution enabled the constitution of a high level committee to go into all aspects of the issue while recommending suitable measures. This committee chaired by the then Union Home Minister Y. B. Chavan had the best of constitutional experts and representatives from political parties, notable amongst them being H.N. Kunzru, M.C. Setalvad, C.K. Daphtary, Mohan Kumaramangalam and above all Jayaprakash Narayan. Union Law Minister P. Govinda Menon was also a member and had made submissions on behalf of the government.

With JP making significant contributions to the proceedings, the committee recommended amendment of Articles 102(1) (e) and 191(1) (e) of the Constitution, for the disqualification of defectors from the membership of the Parliament or the State Legislatures. But during discussions in Parliament this was diluted to debarring of the defector for a period of one year or till such time as he resigned his seat and got himself re-elected. This matter could not be taken to a logical conclusion as the fourth Lok Sabha was dissolved before its term in December 1970.

The matter was, however, taken up afresh in 1973 when the 32nd constitutional amendment bill was moved which included the original proposal of disqualification. As this bill had also lapsed, another bill was moved in 1978 after the government led by Janata party came to power.

After such a long journey of more than seventeen years, finally Articles 101 and 102 besides 191 and 192 were amended through the 52nd amendment in February 1985. But considering the importance of the matter, the Provisions as to Disqualification on Ground of Defection were appended as integral to the Constitution as its Xth Schedule.

A path-breaking feature of this Act was that for the first time an essentially political person, the Speaker or the Chairman of the House was made to adjudicate and administer this Act. Rajiv Gandhi defending this new role for the Speaker said in the House “we also thought that the operation of the bill should be quick so that there is no time in which horse trading can take place and there is no time for a problem to arise. That is why we have assigned this to the Chairman or the Speaker”.

The Supreme Court also lent its support to this role of the Speaker as in the Kihota Hollohon case they observed this to be a appropriate forum and said “Accordingly, we hold that the vesting of adjudicatory functions in the Speakers/ Chairmen would not by itself vitiate the provision on the ground of likelihood of political bias is unsound and is rejected. The Speaker/ Chairmen hold a pivotal position in the scheme of Parliamentary democracy and (are) guardians of the rights and privileges of the House. They are expected to and take far reaching decisions in the functioning of Parliamentary democracy. Vestiture of power to adjudicate questions under the Tenth Schedule in such constitutional functionaries should not be considered exceptionable.”

On the other hand the minority view in this case thought that assigning powers of adjudication to the Speaker was against the basic structure doctrine and the separation of powers between the Judiciary, Legislature and the Executive. Further it was contemplated that adjudication of such disputes should be by an independent authority outside the House, namely President/ Governor in accordance with the opinion of the election commission, all of them being high constitutional functionaries.

Chief Justice Venkatachaliah had upheld the cause of the Speaker in his majority judgment in this case while a few years later as head of the Commission to review the working of the Constitution he supported the Election Commission route for the Xth Schedule, which, however, remained unaccepted.

In line with the separation of powers, Articles 122 and 212 of the Constitution restricts the Courts from judging the validity of proceedings in Parliament or the State Legislature on grounds of alleged irregularity of procedure. However, for the purpose of the Xth Schedule, as per the Supreme Court in Prakash Singh Badal’s case the proceedings under the Anti- Defection Law were not to be treated as proceedings of Parliament or the State Legislature and were justiciable. While assigning the Speaker this responsibility under the Act, he was placed on a very high pedestal and also subsequently supported by the Supreme Court. However, as the later events would show in certain cases they have been far from unbiased and their conduct has been influenced by politics.

The ground situation is such that till the time actual proceedings under the Xth Schedule are not initiated, the matter of defection virtually remains a function of Articles 212 and 122, where courts have virtually no jurisdiction. The moment the proceedings under the Schedule are taken up, the role of the Speaker changes to that of an adjudicator and can be taken cognizance of by appropriate courts. The result is that in certain cases proceedings have got inordinately delayed only to circumvent the judicial process. In a case where the Speaker had not acted, the court refused to issue a mandamus for expeditious disposal of the matter.

There have been several instances where the role of the Speaker has come under scrutiny. Amongst the recent ones are the continuing imbroglio in Tamil Nadu from 2017 onwards and the cases of Andhra and Telengana where proceedings against the defectors had remained pending for a very long time. While Andhra is now going to the polls, a new Telengana Assembly was constituted in December last year, in a way making the proceedings against the defectors virtually infructuous. In fact this trend had begun in UP more than a decade ago, where sufficient breathing time had been given to the government by delaying proceedings under the Anti Defection Law.

Such aberrations can be easily addressed by a radical amendment in the law. Besides covering defections these could also include the other variants mentioned in the Act viz, expulsions, voluntarily giving up membership and even splits and mergers. Firstly, fixing a time limit within which such proceedings have to be mandatorily disposed of by the Speaker would be a major step forward. Secondly, an amendment needs to be brought in to provide for all types of defectors, whether singly or in groups, to resign from their seats and contest fresh elections. They also need to be debarred from holding public office of a minister or any other office of profit, till their fresh election. Also, as recommended by the National Commission to Review the Working of the Constitution, the vote cast by a defector to topple a government or to repose confidence in a new dispensation may be treated as invalid.

 

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Privacy is a right

Source: By Ritesh Kumar Singh: The Financial Express

Post the Supreme Court’s decision in the Puttaswamy vs Union of India case (2017), the right to privacy has clearly been established as a fundamental right under Article 21 of the Constitution. The judicial decision has been applauded by citizens and privacy activists alike, given the rampant data leaks and unauthorised use of users’ personal data.

While the law is settled, people feel strongly about privacy. A recent research by AudienceNet, a social and consumer research company noted that for as many as 92% of the urban Indian respondents irrespective of age or gender, privacy is a priority in their use of social media. They depend on relatively safer encrypted platforms such as WhatsApp to communicate on a day-to-day basis and expect encryption across social media platforms, which is viewed as critical to the public as it protects users and their personal data from the prying eyes of unintended recipients.

However, critics argue that fully encrypted platforms are prone to misuse and a tool to spread fake news and political propaganda that may be used during elections to influence electoral outcomes. Thus, we all agree that something needs to be done and social media platforms are increasingly taking steps to mitigate such risks.

The existing privacy framework under the IT Act 2000 and Telegraph Act 1885 is seriously inadequate when it comes to providing protection to personal data or remedies in case of data breach. Besides, there are no effective safeguards against excessive state surveillance under existing rules. On the other hand, the draft data protection Bill 2018 emphasises on the need for data localisation to ensure data privacy and to prevent foreign surveillance of Indian citizens.

No doubt, the draft Bill provides far greater protection to privacy than what’s available under the IT Act; its grievance redressal mechanism is better and punishment for data breach harsher. Yet it has several shortcomings. For instance, the scope of non-consensual processing of data is too wide—consent will not be needed for data processing on grounds such as national security, legal proceedings, and research and journalistic purposes, or for any other reasonable purposes specified by the proposed Data Protection Authority.

Thus, the exceptions granted to the state by the country’s proposed data protection law do not inspire much confidence as it allows unwarranted intrusion into citizens’ privacy. The degree of data privacy will actually depend upon the effectiveness of the country’s data protection regime and not where the data is located. As things stand, it’d be wrong to argue that data localisation will ensure better privacy protection. Rather domestic enforcement agencies may pose a greater threat to an individual’s privacy than suspected foreign snoopers due to relative ease of applying coercive action within the country’s boundaries.

It’s safe to argue that India’s proposed data protection law, in its current form, is not effective enough to fully safeguard data principals/individuals against unchecked state surveillance. Thus, imposing a sweeping data localisation regime on the country without an effective mechanism to protect personal data may encourage intrusive data gathering by state agencies and will lead to lower rather than higher protection to privacy. Hence, it should be avoided especially when there are several adverse side-effects that are not being fully appreciated by the supporters of localisation.

For instance, localisation may drive up the infrastructure cost of IT companies, tech start-ups and SMEs that currently rely on storing data abroad that costs less. Besides, India’s software and IT-enabled services sector is export-driven and deals with data of non-national citizens and corporations. Thus, mandatory data localisation could be perceived as a protectionist trade barrier and may induce retaliation from other countries. That will create complications for the country’s IT industry. Moreover, consumers may have to bear the additional cost of storing data locally in the form of higher charges for digital services.

The way forward

Trust remains a major concern for users with even top names in the digital economy space accused of unauthorised sharing of personal data. So, tougher privacy norms (either self-imposed or enforced by government through legislative actions) are needed to improve ‘trust factor’ and help propel India’s digital economy.

Encryption by ensuring safety of the data will improve trust and is part of the solution. However, social media and messaging platforms must take responsibility to check the misuse of their platforms. In this context, WhatsApp has taken several proactive measures to prevent misuse of its platform and mitigate such risks. It has stopped forwarding of a message to more than five people in one go, in India. It has also started a helpline that a user can rely on to verify any message or news being circulated. These measures will rein in the possibility of spreading fake news and misinformation campaigns, and enhance users experience while protecting every Indian’s right to privacy.

Encryption strengthens privacy, while localisation may weaken it. There is a potential danger that allowing state unrestricted access to users’ data through regulatory moves such as data localisation will dilute privacy protection and may lead to unnecessary state’s intrusion into citizens’ personal lives. Moving towards a surveillance state is not the answer. Besides, it undermines the spirit of the Supreme Court’s decision in the Puttaswamy case. Then, there are side-effects of data localisation that can’t be ignored. A far better alternative to data localisation would be bilateral and multilateral data sharing agreements that will keep digital economy open and yet expedite criminal investigation without diluting protection to privacy.

 

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Biologicals: life-savers, if you can afford them

Source: By Dr Gopal Dabade: Deccan Herald

A new class of drugs has appeared in medicine and promises much better treatment for diseases like cancer, diabetes and other immune system-based conditions like rheumatoid arthritis, etc. These are called “biologicals” or “biopharmaceuticals” and are new in the sense that they differ from older medicines that were mostly of chemical origin as they have a different method of production, called “recombinant technology”, wherein there is joining together of DNA (deoxyribonucleic acid — the hereditary material) molecules from different species that are inserted into a host organism to produce new genetic combinations that are of value.

In 1977, for example, a research team had spliced (inserted) a rat insulin gene (DNA) into a bacterium that then produced a huge amount of insulin. This was indeed a major breakthrough, because earlier to this the only source of insulin for humans to treat diabetes was from cows and other animals.

Other drugs produced by ‘recombinant technology’ include growth hormone, erythropoietin, calcitonin and others. In addition, another technique that heralds a major breakthrough is “monoclonal antibodies” or briefly called “MAbs”. In this, the mice is injected with an antigen from a human, which then produces antibodies that are harvested and injected into cancer cells.

This fused cell is called hybridoma, which in turn produces identical cells (hence called monoclonal) that will produce a large quantity of antibodies. Subsequently, these antibodies are ‘humanised’ by genetic engineering, so that the immunogenicity of the mice component is removed and used as a drug. Biologicals are medicines produced in living cells and are structurally complex, unlike the chemically produced medicines, which are simple in structure, and are aptly called Small Molecule Drugs (SMDs).

It can be observed that biological medicines are extremely sensitive to manufacturing processes. So, for example, even a small change that is made in the initial cell, at the time of insertion, will eventually produce major changes in the final product. There has been much debate on this aspect. The drug manufacturing companies do not call the same biologicals manufactured by someone other than the originator company ‘generics’, as they call the equivalents of SMDs. Since it is impossible to make the same biological by two different manufacturers due to their process sensitivity, big drug companies prefer calling them “biosimilars”.

Earlier, whenever a drug was introduced in the market, the price of that would come down only when another company manufactured the same (generic) and thus induced competition. Unfortunately, this cannot happen with biological drugs. One wonders if this is a plan designed by the big drug industry for more profits as this creates absolute monopolies. This also explains as to why biosimilars’ entry into the European Union and the US markets has been very slow; biosimilars in 2014 accounted for less than 0.5% of the market for biological medicines.

In addition, biological drugs have another major limitation, and that is that some of these medicines can produce life-threatening reactions. Hence the need for the medicines to be administered in a proper hospital set-up by trained doctors. Both the above issues make access to important life-saving essential medicines a huge hurdle.

An analysis of the number of diseases for which biologicals have been developed shows that most medicines are for auto-immune conditions like ulcerative colitis, ankylosing spondylitis, Crohn’s disease and others. And indeed, the biologicals have improved the quality of life of the patients. But it is disheartening to note that there are hardly any biologicals for treating cancer, although major researchers are exploring this area.

The cost of biologicals makes it inaccessible to most people in developing countries. For example, one vial (injection) of adalimumab, manufactured by the US Company AbbVie under the trade name Humira, would cost $1,000 (about Rs 70,000). Globally, it has sales worth $16 billion. The Mumbai-based Glenmark brought out a biosimilar in 2014 at a cost almost one-fifth of that price. This drug is used for treating psoriasis (skin disease) and certain joint disorders (rheumatoid arthritis).

Additional burden

The regulatory guidelines have been so designed that they have become an additional burden on the consumer by pushing up the cost. The guidelines standards set by the World Health Organization (WHO) demand much more stringent regulation than required to make the biosimilars. There is an urgent need for member countries of WHO to relook at this aspect of the role of regulators and bring in harmonisation in the regulatory mechanisms. With this major intervention, there is no reason why biosimilars cannot be made affordable to the consumer.

Just last month, the government announced that there will be no capping of pricing on patented medicines and also medicines that are used for rare diseases for a period of five years. This notification has been released by the Department of Pharmaceuticals (DoP), which is under the Ministry of Petroleum & Chemicals. Paradoxically, this comes at a time when the union health secretary, just a few weeks prior to the circular, had expressed grave concerns about the high cost of medicines and its negative impact on the consumer. This confused status creates another set of new hurdles for the Indian consumer to access life-saving biologicals.

There is no doubt that the vast majority of Indians will not be able to access these life-saving medicines given the fact that they are all priced much beyond the buying capacity of most people. Why are they priced so high? Is it really because of expenses on innovation or are they all created to favour the big drug companies? It’s no surprise that the big companies have huge power to manipulate and arm-twist even governments.

 

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The Perils of Chasing Indicators

Source: By Emmanuel Thomas: The Financial Express

The NIRF 2019, the annual ranking of higher educational institutions using the National Institutional Ranking Framework of the ministry of human resource development (MHRD), was released recently. While India has about 900 universities and 40,000 colleges, the number of participating institutions stood at just 3,127, and hardly any of them are of global standards. In fact, there are no Indian universities in the top 100 of the QS World University Rankings 2019.

While the window of demographic dividend remains open for India, education remains a major bottleneck. It is an once-in-a-lifetime opportunity for nations. How much we will benefit will depend on the quality of human capital. But India ranks 130th out of 189 countries in the 2018 Human Development Index. And we were ranked 115th out of 157 countries in the first ever Human Capital Index released by the World Bank in April 2018. This index measures the human capital level and predicts the potential productivity of children. India had a score of 0.44, meaning that a child born today can expect to be only 44% productive compared to her potential with complete health and education. Subsequently, the government rejected the report!

Gross enrolment ratio (GER) for higher education in India is 26. It is 22 and 16, respectively, for scheduled castes (SC) and scheduled tribes (ST). This compares poorly with 51 of Brazil, 48 of China and 81 of Russia. While the quality of education remains poor and access highly inequitable, what we are witnessing in the background is a retreat of the state from the sector, especially higher education. Public expenditure on education was around 3.1% of GDP in 2012-13. It declined to 2.4% by 2015-16. And public expenditure on higher education has been around 1%. This is against the long-standing demand of 6% by the sector.

An urgency to reduce budgetary support and increase efficiency, reflected in the philosophy behind the New Public Management, prompted governments across the world to move towards a result-oriented approach, from the 1980s onwards. The disenchantment with the public sector led to the separation of the roles of service provider and regulator/policymaking of governments.

Competition between units operating in quasi market environments was expected to improve the outcomes leading to the achievement of policy goals. India is treading this path in education. The National Assessment and Accreditation Council (NAAC), an autonomous body under the University Grants Commission (UGC), evaluates, assesses and accredits institutions of higher education for a period of five years. The NIRF ranking is a yearly affair, basically an annual progress card. While it is important to evaluate performance, we should be aware of the unintended consequences of this approach.

That the assessment and ranking approach has intensified the rat race is a foregone conclusion. Institutions cannot ignore the ratings as financial assistance and choice of institutions by students depend on them. But the pertinent question is whether we could make any breakthrough in higher education by following this accreditation and ranking approach? Will orienting to the parameters used in the NIRF and the NAAC lead to further improvement of the quality of the best institutions? And will chasing these indicators improve the quality of the low performers?

Excessive emphasis on performance evaluation can result in performance paradox, a weak correlation between performance indicators and actual performance. The reasons are many. Performance evaluation will shift focus to activities that can be measured. For example, the number of programmes organised will increase without any attention to their quality or even relevance. But these quantifiable aspects increase at the cost of aspects that are difficult to quantify. Quality of teaching eludes quantification. But a shift away from this core activity in colleges will not augur well for higher education.

As emphasis shifts to indicators, more resources will be devoted to documentation and quality assurance mechanisms. Moreover, the organisation will become myopic in its approach, ignoring the medium- and long-term goals. Chasing of indicators also leads to laggards simply mimicking the outward appearance of the best performers. The fact that India leads in the number of publications in predatory journals is ample proof of this. There will also be perverse learning, which is an instance where an indicator is achieved in letter but not in spirit.

The NAAC assigns 25% and 15% weightage to research, innovation and extension for universities and colleges, respectively. The NIRF attaches a higher weightage of 30% to research and professional practices. Research requires faculty with a research bent of mind along with infrastructure and time, set in an environment that encourages critical thinking. But, unfortunately, most of the universities and colleges lack these. That only a handful of universities in India produce any useful or world-class research output speaks volumes about this. Teachers in colleges have a comparative advantage in teaching. If they have to produce one unit of output in research, they will have to give up many units of output in teaching, compromising their core responsibility. In fact, the NAAC attaches a weightage of 35% and 45%, respectively, for universities and colleges for curricular and teaching aspects.

Colleges form the ‘catchment area’ of universities. Only if colleges succeed in producing graduates with knowledge and skills will universities and other research institutions thrive on their ‘catch’. In a welcome step, the UGC has already initiated drafting of Learning Outcome based Curriculum Framework. And this is a continuum, with schools as feeder institutions for colleges.

The Economic Survey 2017-18 rightly pointed out that “no country can create a vibrant superstructure of R&D with weak foundations of primary and secondary education for so many of its young.” Learning outcome in our schools is pathetic. India had opted out of the Programme for International Student Assessment (PISA) in 2009 following disappointing performance of our children. They were ranked better only to Kyrgyzstan, the worst performer. Participating in such international ranking helps us to understand where we stand, which should inform policymaking. It’s reassuring that, in January 2019; the government has signed an agreement with the OECD for participating in the PISA 2021.

A holistic approach to education is the need of the hour. Education needs streamlining at all levels. We cannot build the superstructure of higher education on a weak schooling system. Higher education institutions that rank high are there only because of liberal funding, better infrastructure and a dynamic leadership that attracted the best faculty and students. If we have to create more such institutions, we will have to invest much more in education, especially in teacher training, recognising the paramount role of teachers in education. And their energies should be channelised into the right activities, undistorted by the spectre of indicators. Otherwise we will miss the bus.

 

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Illusion and Reality

Source: By Devendra Saksena: The Statesman

‘Interesting’ would be an understatement, if used for the direction that our economy has taken of late. From a basket case till the 1970s, we are now the world’s third largest economy. Yet umpteen anomalies mar our growth story. Our per capita GDP rank is a lowly 139. Despite the ‘socialist’ tag in our Constitution, according to the Global Wealth Report, India is now the world’s second most unequal country.

Till the liberalisation of 1991, we followed the Keynesian path of an agricultural economy slowly acquiring manufacturing capabilities. However, the 1990s saw us skipping the secondary stage; leapfrogging straightaway into the tertiary stage of development. Riding high on the tide of the digital revolution, we graduated to a soft power; providing manpower and backend services to the giants of the computer world. Our growth trajectory could not be arrested even by the meltdown of 2007-08 because the digital services we provided were essential for all the economies of the world.

The present decade has witnessed a different story. The momentum acquired in the preceding decade could not be sustained; credit-led growth has limits that were thoughtlessly breached. A mix of naiveté, which made banks and their clients assume that things would be always as rosy, combined with lack of scruples, which prompted businessmen to scoot after things went wrong, resulted in failure of businesses, which at one time had looked as secure and as well-entrenched as the State Bank of India.

Debt-ridden failing businesses, with banks holding nonperforming assets of Rs 12 lakh crore saw the pendulum swing to the other extreme. The watershed moment came with the issue of the infamous circular of 12 February 2018 by the Reserve Bank of India, which enjoined banks to take note of a single day’s default and to send the borrower into bankruptcy if the lending banks were not able to resolve the loan within 180 days. Now, with the Supreme Court striking down the circular all decisions and consequent actions taken by banks and investors under the Insolvency and Bankruptcy Code (IBC), stand nullified.

These policy flip-flops have had a very deleterious effect on investments. Ever rising share prices indicate that there is sufficient liquidity in the market, but long-term investments are hard to come by. Unsure of the way the wind is blowing, new capital is staying away. Instead of taking decisive steps to treat the malaise in the economy, the Government is resorting to shortcuts ~ only to keep alive the illusion of a well-performing economy.

Even before the end of Financial Year 2018-19, the Government grandly announced that its disinvestment target of Rs 80,000 crore had been surpassed. Looking into the minutiae, one finds that the Government had simply offloaded the liabilities of one PSU onto another. Thus, the Government’s stake in Rural Electrification Corporation had been taken over by the Power Finance Corporation; Life Insurance Corporation had taken over Industrial Development Bank of India and so on.

In fact, the government has been unsuccessful in privatising a single state-run firm during its entire tenure. Rather, the Government’s disinvestment drive has resulted in the creation of a host of paradoxical situations like a life insurance company managing an infrastructure bank. With elections around the corner, more anomalous financial decisions were taken. At the Government’s behest, State Bank of India is now the majority shareholder in Jet Airways. Can a bank run an airline which is on a downward spiral? Again, at the instance of the Government, State Bank of India has taken over NPAs of Rs 45,000 crore from the much-lamented IL&FS which are in addition to its own NPAs of Rs 2.23 lakh crore. Surprisingly, the RBI and Finance Ministry, which position them as watchdogs of banks’ finances, had nothing to say in these matters.

Consider the fiscal deficit for the financial year gone by. Optimistically projected at 3.3 per cent in the Union Budget, the shortfall in both direct tax and GST collections has resulted in the fiscal deficit going through the roof. Understandably but uncharacteristically, the revenue collection figures have not been officially released so far. The shortfall in revenue collection targets is estimated anywhere between Rs 1 lakh crore and Rs 2 lakh crore. The shortfall is surprising because this was the time when the evaders identified during demonetisation were to be taken to the cleaners.

A proper analysis of the economy is not possible because the real picture has been obfuscated by the suspect statistics being bandied about. GDP figures, even for earlier years, have been revised repeatedly leading to the unbelievable conclusion that our growth rate was highest in the financial year 2016-17 ~ the year of demonetisation. Official unemployment statistics have not been released; a set of statisticians are vehemently contending that we are faced with the highest unemployment in recent times while a set of reputed Chartered Accountants have taken a contrary view and branded the statisticians as putative deshdrohis and completely off the mark so far as their conclusions are concerned.

The public and serious students of economics are feeling confused by these developments. The new Government that will take charge after the elections will have a lot to do on the economic policy front. Keeping food prices affordable while ensuring that the agricultural sector does not slide into permanent distress would be a formidable challenge, another daunting task would be to finetune taxation policies so that the unchecked growth of Indirect Taxes, which make poverty more painful, is arrested and the ratio of Income-tax to GDP rises to acceptable levels. Then, the Government will have to reimpose taxes on wealth and inheritance so that inequality in our society is reduced. Imaginative solutions would have to be found to address the spectre of unemployment.

The NYAY Scheme of the Congress, which appears to have been first mooted in this column, would require a complete recast of the budget. A lot of thinking would be needed to identify the subsidies and schemes which could be subsumed in NYAY. Incidentally, the idea of filling vacant Government posts to kickstart employment generation is also part of the Congress manifesto.

The task before our planners can be well summarised in President Clinton’s words: “It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.”

The time for rhetoric and anodyne solutions is over. The challenges facing our economy have to be clearly identified, debated and addressed. Politics and good economics are almost always at odds. For our welfare, we have to ensure that good economics trumps politics.

 

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Making sense of NYAY

Source: By Jean Drèze: The Indian Express

Guaranteed minimum income is a powerful idea that has already made some headway in various countries. Some European countries, for instance, guarantee a minimum income to their citizens. This requires extensive data collection as well as an effective cadre of welfare officers and social workers tasked with enquiring into the circumstances of people who claim to need income support.

It would be nice if India could achieve something similar, but the obstacles are daunting. Starting with the financial burden, a recent brief of the World Inequality Lab by Nitin Bharti and Lucas Chancel presents some useful figures. The authors essentially estimate the “minimum-income gap”, that is, the gap between minimum income and actual income summed over all households with actual income below the minimum. With a minimum income of Rs 72,000 per year, the gap turns out to be 1.3 per cent of GDP. This information is helpful, but it does not tell us much about what it would cost to guarantee a minimum income of Rs 72,000 per year to everyone. All it says is that if this could be done through perfectly targeted and costless top-up transfers, it would cost 1.3 per cent of GDP.

In an earlier avatar, the Congress party’s minimum income guarantee (MIG) proposal was based on this sort of top-up model. The idea was that the government would simply fill the gap — if any — between minimum income and actual income, household-wise. This is impractical, if only because it requires household-specific income data that are virtually impossible to collect, at least for now. It also creates obvious incentive problems. One possible response is that the basis for calculation of the gap should not be actual income but some sort of “imputed income” — an estimate of what a household is expected to earn based on observable characteristics such as education and land ownership. Imputed-income estimates, however, are bound to lack precision, leading to large inclusion and exclusion errors.

For these or other reasons, the top-up formula was dropped and NYAY was announced: Uniform cash transfers of Rs 72,000 per year, equivalent to Rs 6,000 per month, to the poorest 20 per cent households — about 50 crore households based on 2011 census data. Initially, an impression was created that NYAY “guaranteed” Rs 12,000 per month, because most households earn at least Rs 6,000 on their own, but this is incorrect. In fact, Bharti and Chancel estimate that 33 per cent of households earned less than Rs 6,000 per month in 2011-12, and the corresponding proportion today may not be much lower. In short, NYAY is a targeted cash-transfer scheme that guarantees Rs 6,000 per month to the recipients — nothing more, nothing less. It can also be thought of as a massive non-contributory pension scheme.

Naturally, the NYAY proposal is more expensive than the top-up formula. It requires Rs 360,000 crore per year, or close to 2 per cent of today’s GDP. If NYAY is rolled out over five years, and India’s real GDP continues to grow at 7 per cent per year or so, the cost will be around 1.4 per cent of GDP at its peak. If that really goes to the poorest households, NYAY would seem like a good idea. How the NYAY recipients are to be identified, however, is an unresolved puzzle.

Identifying the poor used to be the main purpose of the so-called “below poverty line” (BPL) surveys. The record of BPL surveys, however, is dismal: Three national surveys suggest that about half of all poor households in rural India did not have a BPL card in 2004-5. In recent years, for the purpose of identifying the recipients of food subsidies under the National Food Security Act, some states have adopted a different approach, known as the “exclusion approach”. In this approach, well-off households are excluded using simple and transparent criteria, and everyone else is eligible by default. This approach seems to work much better than the BPL surveys, but mainly when the proportion of households to be excluded is relatively low — say 20 or 25 per cent. Excluding 80 per cent, as NYAY requires, is another matter.

The targeting problem is all the more serious as the income transfers being proposed under NYAY are much larger than anything ever delivered to BPL households. Shocking as it may sound, Rs 6,000 per month is the sort of salary that many informal-sector workers earn in the poorer states — say chowkidars or domestic workers. People struggle, bribe, cheat and fight for this sort of job. Selecting 20 per cent of households for an unconditional monthly pension of Rs 6,000 is likely to be a chaotic exercise.

Perhaps the way forward is to read NYAY as a political commitment to a massive pension scheme, equivalent to cash transfers of Rs 6,000 per month to the poorest 20 per cent households, and explore possible variants of this formula. To illustrate, one possible variant would involve individual pensions of Rs 1,200 per month for 25 crore persons, instead of Rs 6,000 per month for 5 crore households. The NYAY pensioners could include all elderly persons, single women and disabled persons who do not meet well-specified exclusion criteria. That would add up to something like 12 crore persons, leaving substantial room for other vulnerable categories. This would not be perfect, but it would have a chance to work at least.

Other variants are also possible, for instance a mix of household and individual pensions. Politicians need simple slogans, and “Rs 72,000 per year for the poorest 20 per cent” serves that purpose, but it is important not to let this slogan shut the door to other ways of redeeming the political commitment underlying the NYAY proposal.

 

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An apex court judgement that forces reflection on all sides

Source: By V. Anantha Nageswaran: Mint

The Supreme Court judgement on the circular issued by the Reserve Bank of India (RBI) on 12 February 2018 should be welcomed by all parties, including RBI. It enables all sides to reflect on the mistakes they made, and the steps that need to be taken to resolve the situation in a manner that facilitates not just the recovery of loans, but also economic growth, for the assets involved are mostly power generation assets.

In this newspaper, Mobis Philipose and Aparna Iyer wrote that the judgement was a healthy wake-up call for RBI. They call for better drafting of its circulars. One could add that the central bank should seek sound legal advice, too. In May 2017, when the government of India issued an ordinance to amend the Banking Regulation Act to insert sections 35AA and 35AB, I had written in a blog post (Thou shall fix banks, 6 May 2017) that the existing Section 35A conferred enough powers on RBI to issue directions to the bank, which included directing banks to refer non-performing assets (NPAs) to the insolvency and bankruptcy courts.

Quite why RBI was advised to request the government to issue that ordinance to amend the Banking Regulation Act when it already had sweeping powers is a mystery. It is a bit like this: “You are empowered to eat all the food in this restaurant. Upon my authorization, you shall be empowered to eat one masala dosa, too." First, in the presence of the first sentence, the second sentence is redundant. Second, what RBI had done is to eat too many masala dosas without authorization, and the Supreme Court has held it to be unconstitutional.

The judgement also highlights the redundancy of one of the recommendations of the Financial Sector Legislative Reforms Commission. This commission had recommended the formation of tribunals to hear appeals against decisions of the regulator. Many argued that India’s Constitution already provided for judicial review of the actions of all regulators with or without a special tribunal. The Supreme Court judgement has vindicated that argument. Redundancy has not been the sole prerogative of the central bank, even its baiters have been given to it.

Does the Supreme Court judgement represent a big setback to the country’s bankruptcy process? The initial reaction of many was that it was a big setback. But that has given way to more sober assessments that this is not so. In any case, this judgement is no more extreme than the court’s ruling that invalidated the constitution of the National Judicial Appointments Commission. The Supreme Court has simply ruled that the circular issued by RBI on 12 February 2018 is unconstitutional. RBI still has regulatory powers over banks and can issue directions to them. For example, RBI can ask them to make full provisions for NPAs 180 days into a default.

That would necessarily force banks to initiate insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) to recover their dues. Whether such a specific directive would work or other ways exist to achieve the same outcome is not an area of expertise of yours truly, but the short point is that there are ways out.

In the last few months, especially after the previous RBI governor resigned for “personal reasons", many had openly expressed a fear that the government was assaulting institutions of governance. It may be recalled that the conflict between the government and RBI had started precisely after the issue of the said circular in February 2018. Now, the Supreme Court striking down the circular vindicates the government’s view that it was excessive use of force. So, here is an opportunity for critics of the government to reflect on their reflexive criticism of “bad politicians" riding roughshod over “good technocrats".

On its part, the government should acknowledge the intractable problem of power sector assets. The economic non-viability of state electricity boards and their inability to pay an economic price to power producers is a big part of the problem. There are also problems with availability of coal and delays in environmental clearances. Such delays can be attributed to the attitude of the judiciary, too. It will be increasingly difficult for India to sustain coal-based power plants given the global concerns over emissions and climate change. In such a milieu, if governments, acting as buyers, balk at paying reasonable prices for power, then the problem of non-performing power sector assets will keep arising time and again.

Finally, there is the all-important question of whether the government intended RBI to issue directions to banks in respect of each and every default separately, or intended to give the central bank a blanket or general authorization to issue directions to banks on the issue of defaults, because the 5 May 2017 notification of the ministry of finance conveys the latter impression. In sum, there has been sloppiness all around on such an important matter. That should worry Indians.

 

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Article 35A, in fact

Source: By Haseeb A Drabu: The Indian Express

When the minions of the BJP promise abolition of Article 370 or Article 35A, especially prior to the elections, it is not to be taken seriously. In fact, the response, if any, should be to dare them to do it. Indeed, I had done so in 2014 in response to a rant by Jitendra Singh, a minister in the PMO, when he spoke out of turn (‘Dare them to do it!’, Kashmir Life, June 2, 2014). It has been almost five years since an Article 370 and 35A stand where they are even as Singh is sitting in the same chair!

But when an erudite political leader with the genteel and gravitas of Arun Jaitley goes public on it, it needs to be taken very seriously. In a blog, Jaitley has said that “Article 35 A was “surreptitiously” included in the Indian Constitution, terming it as a “historical blunder” committed by Jawaharlal Nehru.

One cannot pick a bone with Jaitley on his calling it a “historical blunder”. That is an opinion based not only on an ideology but a certain understanding of Indian history and a vision for Indian polity. But, the same cannot be said about besmirching Article 35A as a deceitful entry in the Constitution of India. Besides political, it has serious constitutional implications. It also makes the Constitution of India appear as if it were contaminated.

Article 35A empowers the government of Jammu and Kashmir to do two things: First, to define a class of persons as constituting “permanent residents” of the state and second, to allow the government to confer on these people’s special rights and privileges with respect to matters of public employment and acquisition of immovable property in the state. In addition, it grants immunity to such special rights and privileges legislation from being annulled on the ground that they infringe one or the other of the fundamental rights guaranteed by the Constitution.

Article 35A was included into the Constitution of India in 1954 by a presidential order made under Article 370 of the Constitution of India. The process followed in getting Article 35A is as constitutional and transparent as it can get. The basic principles committee of the J&K Constituent Assembly, which was set up in 1951, presented its report to the Constituent Assembly in February 1954. As a part of the report, an annexure which listed out the provisions of the Constitution of India, besides Articles 1 and 370, that should be made applicable to J&K. This annexure included, among other Articles, Article 35A.

It is an interesting factoid that it was Girdhari Lal Dogra (father-in-law of Jaitley), who proposed that the annexure be sent to the government of India for appropriate action. This was February of 1954 and three months later, the President’s order under Article 370 was issued, incorporating, among other provisions, Article 35A in the Constitution. The Article, through which Article 35A was brought in, i.e Article 370, was debated threadbare in the Constituent Assembly of India for more than five months before it was made a part of the Constitution as adopted in 1950.

It is important to note that while this constitutional process was being undertaken and concluded, a political process was running parallel to it. The Prime Minister of India, Jawaharlal Nehru, and Prime Minister of J&K, Sheikh Mohammed Abdullah, reached an agreement. Nehru recorded it in a note dated July 20, 1952. The terms of the agreement, where the sharing of sovereignty was detailed, were presented to the Lok Sabha. On his part, Abdullah briefed the J&K Constituent Assembly in what is a famous speech in the history of J&K.

While terming it as “surreptitious”, Jaitley probably means that Article 35A could not have been introduced through a process outside the ordinary amending procedure prescribed under Article 368. If this is indeed so, then the issue is a constitutional technicality.

On this, one can do no better than quote A G Noorani, the most authoritative voice on the constitutional relationship between India and J&K: “Article 35-A is not a mere executive order under Article 370 but is itself a constitutional provision, a compact recorded in both constitutions. No court can ignore this. As the Privy Council held, ‘parliament could as a matter of abstract law’ repeal the statute of Westminster recognising the independence of the dominions. But that is theory and has no relation to realities.”

Be that as it may, assume for a moment that Article 35A is repealed. Will it allow “Indians” to buy land in Kashmir? The answer is no. It will not alter the situation, for, as Noorani points out, the 1927 notification of the government of Jammu and Kashmir, which imposed restrictions on the employment of, and land ownership by “outsiders” (non-state subjects), is a part of the J&K Constitution.

If anything, if Article 35A is expended, it could pave the way for the rolling back of all orders extending India’s Constitution to J&K after November 17, 1956, when the state’s Constituent Assembly was dissolved. For, as a matter of legal construction, if the presidential order incorporating Article 35A, which was on the recommendation of the state’s Constituent Assembly, is without legal authority, then all subsequent presidential orders issued without the consent or concurrence of the Constituent Assembly are a bible of illegality.

This will take J&K back to a quasi-sovereign status, with its own prime minister and president. The state subjects of J&K will cease to be citizens of India and entry of Indian nationals into J&K will be restricted. The goods from India will have to pass through a customs barrier and pay an import duty. And above all, the people of J&K will not be legally obliged to uphold the integrity and sovereignty of India. The comic irony will be that separatists will become mainstream overnight!

For Kashmir and Kashmiris, Article 370, in its present emaciated form, or 35A is not an existential issue. But for India as a federation it is. If Article 35A is expended it will impinge on basic tenets of constitutional interpretation and will damage the most solemn promises, vis a vis other states, that lie at the heart of the Indian federation. It may well be the beginning of the end of federal India.

 

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Thwarting transparency

Source: By Shailesh Gandhi: Deccan

There are two matters being heard by the Supreme Court which have a major bearing on the fundamental rights of citizens under Article 19(1)(a). The right to free speech, publishing (media) and the right to information flow from Article 19(1)(a) of the Constitution.

Some restrictions can be placed on these only on the grounds given in Article 19(2) which permits “reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.”

From this, it is obvious that reasonable restrictions on the rights under Article 19(1)(a) to speak, publish or obtain information must be on the same grounds. This was recognised in the Bennet Coleman case, where it was clearly mentioned that the right to publish could only be restricted based on Article 19(2). This was recognised by a long list of Supreme Court judgements, starting with Justice Mathews famous judgement in the Raj Narain case in 1975. The Supreme Court took the same position in many judgements. In SP Gupta vs Union of India, it gave a landmark order in this respect.

One case before the court relates to the Reserve Bank of India refusing to abide by 10 orders of the Central Information Commission (CIC) which were upheld by the Supreme Court in December 2015. These involved disclosing the lists of defaulters, audit reports and inspection reports of banks and action taken reports against banks, etc. The Supreme Court had asked the RBI to explain why action should not be taken against it for contempt of the Supreme Court’s order of December 2015.

Instead of answering this or apologising, the RBI has challenged the decision of the court. It also contends that the orders to reveal the information will only apply to those specific cases and not to all requests for information. This is audacious and an attempt to defy the Right to Information (RTI) Act. The implication is that the RBI has the right to refuse similar information to others, unless they, too, approach the Supreme Court.

This attitude of RBI shows it has scant respect for the RTI Act, CIC and the Supreme Court. The top court has reserved its judgement, but I hope it will deal with this absurd contempt of the citizen’s fundamental right in a salutary way. The other set of cases relate to challenges to the orders of the CIC by the Supreme Court’s Public Information Officer. There are three matters before the court. One is regarding the disclosure of correspondence and file notes pertaining to judges’ appointments.

The second case pertains to disclosure of assets by the judges. The third is regarding copies of letters exchanged with the Chief Justice of India regarding a Madras High Court judge. In the landmark SP Gupta case, the judgement of the seven-judge bench stated, “We believe in an open government and openness in government does not mean openness merely in the functioning of the executive arm of the State. The same openness must characterise the functioning of the judicial apparatus...”

Attorney-General (A-G) K K Venugopal has stated that in the SP Gupta case, the view taken by the court is too idealistic! Does this mean that the ideals have been watered down or forgotten? He further stated that giving information about matters like appointment of judges would undermine the independence of the judiciary.

All instrumentalities of the nation must be independent to do their duty as per the law but sharing information with the citizen will not weaken them. But the A-G contends that revealing communications and correspondence of the judges will compromise and damage their independence. He claims that the SP Gupta judgement does not even apply to this case.

Expressing views

To show how absurd that is, I can do no better than quote from the judgement: “Correspondence exchanged between the Law Minister or other high-level functionary of the central government, the chief justice of the high court, the state government and the chief justice of India in regard to appointment or non-appointment of a high court judge or Supreme Court judge or the transfer of a high court judge and the notes made by these constitutional functionaries in that behalf cannot be regarded as a protected class entitled to immunity against disclosure.

“We do not think that the candour and frankness of these constitutional functionaries in expressing their views would be affected if they felt that the correspondence exchanged between them would be liable to be disclosed in a subsequent judicial proceeding. The constitutional functionaries concerned in this exercise are holders of high constitutional offices such as the chief justice of a high court and the chief justice of India and it would not be fair to them to say that they are made of such weak stuff that they would hesitate to express their views with complete candour and frankness if they apprehend subsequent disclosure.

We have no doubt that high level constitutional functionaries like the chief justice of a high court and the chief justice of India would not be deterred from performing their constitutional duty of expressing their views boldly and fearlessly even if they were told that the correspondence containing their views might subsequently be disclosed.”

Is the A-G now contending that the constitutional functionaries are now weak? He further claims that in view of the passage of years and the passing of the RTI Act, the SP Gupta judgement cannot apply to the present one. This is a dangerous attempt to deny the citizen’s fundamental right. The nation must oppose this. I am sure that for the sake of our democracy, the judges will not accept these pleas for opacity.

 

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The global challenge

Source: By PK Vasudeva: The Statesman

The sixth edition of the Global Environment Outlook (GEO-6) from the United Nations Environment Programme (UNEP) provides a detailed analysis of regional environmental challenges as well as key findings and policy messages for each of the six UNEP regions ~ Africa, Asia and the Pacific, Latin Americaand the Caribbean, North America, West Asia and the Pan European region. These are important for policy-makers working in the regions to provide solid evidence and policy options, which will help tackle environmental issues that the regions, including India, have to countenance.

The GEO-6 regional assessment recognises Africa’s rich natural capital, notably the diversity of soil, geology, biodiversity, water, landscape and habitats, which if judiciously managed, can enhance the region’s ecosystem, human health and wellbeing. It has observed that the economic growth of Africa hinges on the sustainable management of its natural capital. This involves reconciling efficient stewardship with human development both for the present population and future generations. This requires both the protection and valuation of these natural assets, as well as effectively communicating their importance. Africa’s natural capital is challenged by illegal offtake, weak resource management practices, climate change and pollution.

The Asia-Pacific region has experienced rapid economic growth, urbanization and lifestyle changes that are unprecedented. Scientific analysis, however, shows the current approach to development in the region inflicts a significant cost on health and the environment. Soon, development will start to undermine itself. The region is also highly vulnerable to climate change. If this is unchecked, its adverse effects can reverse the recent gains in development. The region has made significant commitments to mitigate climate change. Almost all the countries submitted their Intended Nationally Determined Contribution (INDC) targets to the United Nations Framework Convention on Climate Change before the Paris Conference.

The GEO report for Latin America and the Caribbean places emphasis on identifying some of the most worrisome and persistent threats to the region through an environmental perspective. It also dwells on the achievements, success stories and opportunities in the region. There is a distinct trend in Latin America and the Caribbean towards addressing pressing issues. These include improving access to water and sanitation, reducing poverty, phasing out ozone-depleting substances and expanding the network of protected areas.

The GEO-6 assessment for North America portrays a comprehensive picture of the environmental factors contributing to human health and wellbeing at the regional level. Backed by a large cache of recent scientific evidence, regional consultations and a robust intergovernmental process, the assessment demonstrates that regional and global multilateral environmental agreements have improved environmental conditions in North America. Its response to environmental challenges reflects the diversity, energy and ingenuity of the region. Largely focusing on individual sectors and applying a limited number of policy instruments have achieved notable success. The remaining and emerging environmental challenges will require further application of proven policy options along with continued innovation.

Sustainable growth in the economies of West Asia will give an impetus to progress in terms of food security, sustainable water sources and reduced vulnerability to natural and man-made disasters, reduced risks of climate change, permanent energy solutions and conservation of natural resources. The outlook calls for concerted efforts by governments, civil society and the private sector in West Asia to address environmental challenges in the region.

The GEO-6 assessment for the Pan-European region presents a comprehensive picture of the environmental factors contributing to human health and well-being at the regional level. Backed by scientific evidence, regional consultations and a robust intergovernmental process, the assessment demonstrates that regional and global multilateral environmental agreements have improved environmental conditions in the Pan- European region.

The GEO-6 has advanced a stark warning specifically that the world is unsustainably extracting resources and producing unmanageable quantities of waste. The linear model of economic growth depends on the extraction of ever-higher quantities of materials, leading to chemicals flowing into the air, water and land. This harms public health and may even result in premature mortality. It affects the quality of life, particularly for those unable to insulate themselves from these effects.

The GEO-6 report, covering the theme “Healthy Planet, Healthy People,” is particularly relevant for India. It notes that East and South Asia have suffered the highest number of deaths due to air pollution. According to one estimate, it killed about 1.24 million people in India in 2017. As the country’s population grows, agricultural yields are coming under stress due to the increase in average temperature and erratic monsoons.

The implications of these forecasts for food security and health are all too evident, more so for the 148 million people living in severe weather ‘hotspots’. Evidently, the task before India is to recognise the human cost of poorly enforced environment laws and demonstrate the political will necessary to end business- as-usual policies. That would mean curbing the use of fossil fuels and toxic chemicals across the spectrum of economic activity.

There are certain targeted interventions that only require the resolve to reduce air and water pollution, and which in turn promise early population level benefits. Aggressive monitoring of air quality in cities through scaled-up facilities would bring about a consensus on cutting emissions of greenhouse gases (GHG) and provide the impetus to shift to cleaner sources of energy.

It is significant that GEO-6 estimates that the top 10 per cent of populations globally, in terms of wealth, are responsible for 45 per cent of GHG emissions, and the bottom 50 per cent for only 13 per cent. Pollution can severely affect the poor. Combating air pollution would, therefore, require all older coal-based power plants in India to be shut down in favour of renewable energy sources. Transport emissions are a growing source of urban pollution, and a quick transition to green mobility is imperative. Stubble burning by farmers after harvesting is the worst form of GHG emissions, which must be curbed at all costs.

As regards water, the imperative is to stop the contamination of surface supplies by chemicals, sewage and municipal waste. As the leading extractor of groundwater, India needs to make water part of a circular economy in which it is treated as a resource that is recovered, treated and reused. But water protection is accorded a low priority, and State governments betray no urgency to augment rainwater harvesting and water conservation. New storage areas act as a source of supply when monsoons fail, and help manage floods when there is excess rainfall.

 

 

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The fading boundary between humans and machines

Source: By Kapil Viswanathan: Mint

To understand the future, it often helps to study the past, sometimes even the distant past. In fact, scientists draw parallels between the inflection point that humanity finds itself at today and a short window of time 500 million years ago, called the “Cambrian explosion", which was a defining moment in the evolution of life on earth.

For around 1,500 million years prior to the Cambrian era, living forms were largely simple organisms made up of single cells. Then, within a period of just 15-20 million years, complex organisms began to develop, and there was an explosion in the number of species. Most of the animal phyla we know today appeared during this period. One possible explanation for this explosion in the diversity of life is the evolution of vision. The ability to see meant that rather than float around in the ocean hoping to run into prey or mates, organisms could now actively seek them out.

Fast forward to today. Image recognition technology has developed to a point where in the near future, robots may be able to see, understand and interpret complex images and scenes in much the same way as humans. Once this occurs, scientists expect an explosion in the diversity of robots. Intelligent, mobile machines are likely to find their way into all aspects of our daily life. We will be at a Cambrian-esque defining moment in the evolution of machines on earth.

The evolution of machines itself began around 5,000 years ago with the invention of the potter’s wheel. From then until now, humans and machines have co-existed at the physical level. With the advent of intelligent machines, we are beginning to co-exist at the cognitive level. The boundary between humans and machines is blurring.

One significant difference between the evolution of life and the evolution of machines is that the latter is a human endeavour. As such, it is our job to shape Artificial Intelligence (AI) in a manner that it has a positive impact on humanity. Opinion is divided on how well or poorly we are doing this. AI, if guided correctly, can augment human capability and help solve many of the big problems of our generation.

On the other hand, Elon Musk recently referred to AI as “humanity’s existential threat". The question is no longer what role technology will play in human lives; rather, what role humans will play in an AI-driven world. AI certainly promises to replace a number of human jobs. And AI is known to amplify the social and gender biases of its creators, which may lead to greater inequality in the world.

What does this mean for the future of learning? Universities must not only prepare students to thrive in a world with no thick red lines between humans and machines, but must also ensure that machine intelligence develops to serve the needs of humanity. This can only be done with an inter-disciplinary approach that analyses AI from the perspective of not just technology, but a variety of other disciplines, including psychology, business, law, social sciences and the humanities.

A number of efforts in this direction are being made in universities around the world. Stanford University recently launched its Institute for Human-Centered Artificial Intelligence, with the intention of putting humans at the centre of AI. The institute is guided by three fundamental beliefs.First, AI should be inspired by human intelligence. Second, the development of AI must be guided by its human impact. Third, AI should enhance and augment humans, not replace them. The institute was inaugurated at a symposium earlier this month with a keynote address delivered by Bill Gates. A bevy of tech titans in Silicon Valley make up its advisory council.

All undergraduate students at Krea, for example, are required to take courses in data science, as the language of data emerges as a humanistic language. Students are also encouraged to pursue avenues of creative expression and aesthetic appreciation, which are essential human qualities. Leaders of the future must design human-centered AI that can understand human feelings, ambitions and behaviours.

Krea has partnered with Massachusetts Institute of Technology’s Dalai Lama Center for Ethics and Transformative Values to interweave ethics into all aspects of life at Krea. This partnership would explore contemporary ethical questions posed by AI.

For example, should a driverless car, in a potential crash scenario, run into a tree and put its occupant at risk? Or should it run into pedestrians instead, putting them at risk but keeping the occupant safe? While human drivers are forced to make spur-of-the-moment decisions behind the wheel, AI places on us the burden of programming in advance a decision framework that would come into effect in a crisis. Such a decision framework must be essentially human in its nature—and the stakes of getting it right are high.

We are venturing into a new world that we are building as we go along. Universities must take the lead in shaping Artificial Intelligence so that it has a positive impact on our planet, our nations, our communities and our lives.

Denuding forests, per law

Source: By K N Murthy: Deccan Herald

The Supreme Court recently directed eviction of forest encroachers whose claims have been rejected under the Forest Rights Act (FRA) 2005. This raised a public furore and the court itself was obliged to stay the operation of its order for the time being. Many people are strongly pleading for amending the FRA to facilitate regularisation of all forest encroachments.

This is a serious matter. We only have 21.5% of our geographical area under forest cover against our avowed national goal of 33%. If we lose forests, we will have more ecological disasters, like the recent Kodagu floods. Climate change is looming large and there is clamour all over the world to increase forest cover. India is also spending lot of taxpayers’ money to promote green cover but at the same time losing lakhs of hectares of wooded forests under FRA.

The FRA was conceived primarily to correct historical injustice done to tribal communities. But, somewhere along the way, “other traditional forest dwellers” (OTFD) also got into the Act. They now constitute the bulk of applicants for forest rights. Statistics are not forthcoming at all-India level for a break up of ST and OTFD count.

In Karnataka, the ST population constitutes 7% of the state’s total population. STs filed 48,652 applications, or 17.5% of the total 2.79 lakh applications received. The bulk (82.5%) of the applicants is OTFDs. When processed as per FRA Rules, it was found that more than 70% of the cases were ineligible. It is true at the all-India level, too.

As per Ministry of Tribal Affairs (MoTA) data, a total of 42.24 lakh applications were received as of November 2018 in 20 states. Of these, 38.33 lakh (91%) were examined and disposed by FRA authorities. Of the 40.77 lakh individual claims, 37.16 lakh were examined and 51% (18.94 lakh) could not be supported. Rights over 41.81 lakh acres of forest land was given to 18.22 lakh individuals. About 53% of community right claims did not have the required evidence. Still, 92.08 lakh acres were given for exercising community rights. Overall, forest rights have now been recognised over 134.90 lakh acres as per FRA.

This constitutes 7.7% of reserved forest land of the country. What is under encroachment is about 2-3 times more. If we enlarge the scope of FRA, extend its deadline or reconsider rejected claims, we will lose a quarter of our forests. Whether the nation can afford to is a point to ponder over. As for the tribal land holdings, the MoTA 2017-18 annual reports has some interesting information. As per NSS 70th round, conducted in December 2013, tribal households who constitute 11.3% of rural population in India are now holding 13.06% of cultivated land.

The average land-holding of ST household is 0.65 ha, compared to the national average of 0.6 ha. Part of this could be due to FRA. Giving more land will not help them. They have to be enabled to make better use of the land they already have. Nevertheless, no forest officer will grudge more land rights being given to forest-dependent tribes because they know the forests better. They have been the guardian angels in case of forest fires, theft of trees and poaching of wild animals, etc. The problem is surely with OTFDs. This is a political question being addressed wrongly under the cover of FRA.

FRA is a strange law, driven by MoTA. It has been embroiled in paradoxes of sorts from day one. The first paradox is that MOTA is set to distribute rights on land which does not belong to them. It is like my neighbour renting a part of my land property and warning the lawful custodians to behave. What do they lose? So, they can be, and have been, liberal with it. They have no mandate for forest protection and conservation. Somebody else has to answer for that.

Secondly, MoTA has no mandate for the OTFD, who constitute the bulk of applicants and encroachers. Jurisprudence in forest settlement is well laid out. Other communities are fully aware of their rights and they have claimed them, too. In fact, many of them hold chunks of forest lands under privileges like kane, bane, kumki, etc. Until the Forest Conservation Act, 1980, came into force, revenue authorities had the right to grant forest lands. Innumerable grants on forest lands have been made to OTFD. So, where is the ‘historical injustice’?

Nevertheless, FRA is concerned about OTFDs who could not get their rights recognised for three generations! Such cases are exceptions and records are difficult to come by. OTFDs are politically strong and well connected. They have other viable livelihoods. Very few are dependent on forests.

If we recognise forest rights for OTFD, because agriculture is uneconomic and susceptible to wildlife damage, these lands will end up as resorts, destroy the surrounding forests. FRA is a good smokescreen for destroying forests.

Rewriting forest laws

A third and bigger paradox is that MoTA is set to rewrite forest laws of the country. FRA has been taken to such an extreme that if anyone encroaches forest land today and submits an application to the local Grama Sabha, he/she can’t be evicted till the application has been considered by three different FRA committees over several years. This is what is actually happening today in the forests, courtesy FRA. Forest officers stand bereft of their powers.

Politicians strongly support FRA because people vote, not trees and animals. FRA has come in as a tool to demolish 150 years of conservation efforts in the country. Forest departments will be left with the glorious job of maintaining false statistics because the legal status of forest land will not change under FRA even if the entire forest land is lost!

New method to compute GDP

Source: By Sandipan Deb: Mint

The gross domestic product (GDP) of a country is often seen as the one statistic to end them all. Gigantic amounts of mindspace are devoted to this one number. But does the GDP give a fair monetary measure of the market value of all the final goods and services produced in a period of time in a country? This question has become extremely relevant as the world has grown more and more digitized.

The concept of GDP was invented in 1937 by US economist Simon Kuznets, who was awarded the Nobel Prize for Economics in 1971. In 1944, following the Bretton Woods conference that established the World Bank and the International Monetary Fund, GDP became the standard tool for sizing up a country’s economy. However, the world economy has changed spectacularly since then and that change is accelerating. In April last year, British bank Barclays in its annual economic report said that, quantifying the contribution of digital goods and services (which are often consumed for free) poses a challenge of “unprecedented scope and scale". After all, the economic indicators used to measure GDP are still stuck in the manufacturing age.

Basic economic theory sets the price of a good in demand at the marginal cost to produce it. Digital goods have a fixed cost at the start, but often there is zero or near-zero marginal costs. Digital products also don’t suffer from scarcity issues and are cheap or free to transport across large distances. The difficulty of pricing digital goods properly probably leads to an underestimation of GDP, Barclays says. What is the scale of the potential miscalculation?Hard to judge but the gap will keep getting bigger as the digital economy expands.

But there are some ideas being floated about new computational methods for GDP. One of them is “GDP-B", developed by MIT economist Erik Brynjolfsson. It aims to capture the financial value of the things we don’t pay for but still have plenty of value, such as social media, online maps, Wikipedia and so on. In an interview with qz.com, Brynjolfsson explained: “The problem is that, which relationship of more GDP leading to more welfare is not true for digital goods in the way it is for physical goods. And that’s because digital goods have zero price. So if there are twice as many people reading Wikipedia, it doesn’t really change GDP at all… According to the (US) Bureau of Economic Analysis, there’s a category of all information goods that was about 4.6% of the economy back in the early 1980s. Today, it is (still) 4.6%."

In the meantime, with the rise of zero-price online services such as YouTube, Spotify and Wikipedia, priced industries like music, media (CD, DVD) and encyclopedias—and their contribution to GDP—have shrunk dramatically. This is while consumers have access to better quality and much greater choice.

[GDP is] measuring what we spend," says Brynjolfsson. “[But] production and spending aren’t everything…You need a dashboard with different metrics. What we’re measuring are the benefits you get even when you spend nothing on the good. When you get a smartphone today, most of the value comes from all of the software and the apps that are on it. GDP is measuring [only] the hardware costs…If we don’t measure [the software value]; we’re going to completely misunderstand what we’re dealing with."

The key, obviously, is putting a price to these services—how much a person would be willing to be paid to give up a service. Brynjolfsson started his pricing quest with Facebook with a two-year study in the US. In fact, he has recently posited that welfare gains from Facebook would have added between 0.05 and 0.11 percentage points per year to US GDP since 2004.

Brynjolfsson and his team have now conducted a lab experiment in the Netherlands, mostly using students. They found that WhatsApp, Facebook and digital maps on phones were highly valued, requiring a median compensation for losing one month of access of $602, $109, and $66 respectively. The researchers admitted that the sample size was small and non-representative. However, as the study team put it, “Our overall analyses reveal that digital goods have created large gains in well-being that are not reflected in conventional measures of GDP. By periodically querying a large, representative sample of goods and services, including those which are not priced, changes in consumer surplus and other new measures of well-being derived from these online choice experiments have the potential for providing cost-effective supplements to the existing national income and product accounts." Clearly, lots more work needs to be done.

Brynjolfsson believes that using GDP-B alongside GDP will give a much more realistic idea of what creates value and what doesn’t. If the world finally accepts some form of GDP-B, it may change the ways governments invest. Says Brynjolfsson: “There will be an opportunity to be much more realistic about…how we are allocating our resources to benefit as many people as possible". GDP has been called one of the greatest ideas of the 20th century. For the 21st, we need a GDP 2.0.

Circular was designed to tackle India’s NPAs

Source: By V. Ranganathan: Mint

The imperfections of language and vocabulary are as lucrative to the legal practitioner as our physical frailties are to the physician," it has been said. The Supreme Court judgement on the Reserve Bank of India (RBI) circular of 12 February 2018, an attempt to clean up the Augean stables of commercial banks, is fundamentally misplaced and will have disastrous consequences for the non-performing assets (NPAs) of banks, especially India’s public sector banks (PSBs), which have the largest proportion of NPAs. The line between “wilful defaulters" like Vijay Mallya and other borrowers who cosy up with bank managers to get their loans rescheduled—and who sometimes get another loan to repay a previous loan—looks at risk of getting blurred. The example of diamantaire Nirav Modi in la affaire Punjab National Bank is still fresh in memory.

Inherent incentives exist for fudging that line. Firstly, PSB managers may go easy on borrowers at the behest of their political masters, who appointed them in the first place. Secondly, the evergreening of loans helps kick the can down the road to a future date, so that NPAs need not be reported under their watch. Thirdly, and more importantly, illicit money incentives also operate, brought into the picture by managerial discretion. This loophole in the Indian bankruptcy process is what RBI wanted to plug. However, at one stroke, all the good work of former governor Urjit Patel and his team to proof it against fudge has now come to naught. The system has been pushed back to being susceptible to prospects of corruption. After all, the banks themselves were reluctant to take the Insolvency and Bankruptcy Code (IBC) route, at least partly because they would then have to recognize losses right there and then.

A Credit Suisse report estimated a total of 14.5 trillion as stressed assets in the fourth quarter of 2016-17. Of this, infrastructure and construction contributed 20%; power utilities 17%; metals (mostly steel) 16%, and telecom 12%. Nearly half the amount had been lent to companies with an interest cover ratio of less than 1—that is, with earnings less than interest due—for eight successive quarters. Much of India’s corporate sector is in a debt trap. The total borrowings by firms with that ratio under 1 (and negative in many cases) are very high.

It is also important to analyse why firms have fallen into debt trap. First, banks are not the best placed to lend to infrastructure firms because this results in an asset-liability mismatch problem. The text book solution is that insurance and pension funds, with long-range liabilities, finance long-gestation infrastructure projects. Besides, commercial banks do not have the project appraisal expertise to evaluate such projects, especially those involving collateral-less finance. The power sector, for example, has many financially unviable renewable power projects, which private equity investors hope to turn viable by forcing their output down the throats of distribution companies through a policy mandate of the state or a subsidy from the centre.

We are witnessing the bizarre spectacle right now in this sector. Renewable power is considered a “must-run", while the plant load factor of coal-based generation units is in decline. In telecom, most firms are not doing well because Reliance Jio has changed the nature of the game from competition based on spectrum and voice to a business of cheap data services, in which the new entrant has an advantage on account of its fibre-optic cable network. In all these cases, excessive debt has meant that the risk of losses have been passed on from shareholders of companies to the banks that lent them money, and further on to bank depositors. This would amount to privatizing profits and socializing losses.

The cases of Kingfisher and Jet Airways pale in comparison with the above debt-trapped firms, which include the who’s who of the industry. The fact that Kingfisher’s promoter Mallya was hounded and Jet has been taken over, even while so many other companies unable to repay banks are basking in the sunshine of debt restructuring, shows the extent of managerial indiscretion available to PSBs and even private sector banks. The latest Supreme Court judgement could exacerbate this sort of behaviour.

I am beginning to see a worrying pattern in rulings of India’s apex court. When the Tata and Adani groups went to the Supreme Court over having power purchase agreements revised on the argument that the Indonesian government decided to determine coal export prices to India based on world prices, and not contract prices albeit Indians had bought the coal mines, resulting in higher costs for Indian power producers—an unanticipated risk which they argued was a force majeure, which it was not—in the first instance, the court correctly rejected their claim and preserved the sanctity of the contracts. But alas, on a revision petition, the apex court buckled and reversed its own judgement in favour of businesses that were bent on passing on their own business risk to consumers of distribution companies. This killed the very idea of a long-term contract.

In interpreting a section of the law in the Novartis intellectual property case, the judge went into details of the parliamentary proceedings to see what the purpose of that law was. That is what should be done, instead of just looking at the letter of the law and giving it paramount importance for jurisdiction. Context is critical in most such cases.

In the case of India’s bankruptcy process, given the overall task of cleaning up the system and ending this malaise of loan rollovers operating like ponzi schemes, RBI was well within its right to send out the circular it did.

 

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