📰 HC quashes Centre’s ban on oxytocin manufacture
Government had barred private firms
•The Delhi High Court on Friday quashed the Centre’s decision to ban the manufacture and sale of Oxytocin, a drug which induces labour and controls bleeding during child birth, by private firms.
•A Bench of Justices S. Ravindra Bhat and A.K. Chawla set aside the government’s April 27 notification imposing the ban, saying it was “arbitrary and unreasonable”.
•“The UoI did not adequately weigh in the danger to the users of Oxytocin, nor consider the deleterious effect to the public generally and women particularly, of possible restricted supply if manufacture is confined to one unit, to the pregnant women and young mothers, of a potentially life-saving drug,” the Bench said. It said the Centre’s decision to allow only a single, state-run entity — with no prior experience in manufacturing Oxytocin — to make and sell the drug, was “fraught with potential adverse consequences”. “The risk of such a consequence can be drastic: the scarcity of the drug, or even a restricted availability can cause increase in maternal fatalities, during childbirth, impairing lives of thousands of innocent young mothers,” it said.
•The Bench was not impressed with the Centre’s “far greater” reliance on the need to prohibit availability of Oxytocin from what was perceived to be widespread veterinary misuse. “Correspondingly there was no scientific basis, and insufficient data to support the conclusion that the drug’s existing availability or manner of distribution posed a risk to human life,” it added.
📰 Negative signals: on falling inflation rates
Falling food prices will intensify rural distress; the solution is meaningful agricultural reform
•The days when inflation could topple governments appear to be gone. It is now time for the government to worry about falling prices, especially of food.Retail inflation dropped to a 17-month low of 2.33% in November, as compared to 3.31% in October, primarily due to the fall in the prices of various essential food items. Food prices fell by a huge 6.96 percentage points compared to a year ago and, at minus 2.61%, are now in deflationary territory for the second successive month. The fall in inflation is obviously good news for consumers, particularly those in urban India who are happy to pay less for their purchases; also for the Reserve Bank of India, which will now have more room for manoeuvre in the matter of interest rates. But it is bad news for the producers of basic food items who are located in the distress-affected rural parts of the country, with falling farm incomes also impacting landless labour and rural demand. At the heart of this problem is the unpredictability of farm prices, which are known to exhibit extreme levels of volatility owing to various supply-side issues that plague the agricultural sector. Though farmer producer companies have stepped in with help and guidance to farmers to use hedging tools to minimise price risks, they are too few and far between to make a difference. And even when their produce finally commanded impressive prices in the retail market, the cartelised agricultural marketing system has made sure that farmers received little to nothing.
•Ahead of the general election next year, State governments across the country are likely to resort to short-term relief measures such as farm loan waivers to temporarily relieve farmers of their deep distress. Further, with the issue of rural distress now expected to significantly affect the general election verdict, the Bharatiya Janata Party and the Congress are already engaged in a competitive battle to offer the highest extent of loan waiver to farmers. There will also be pressure to announce higher minimum support prices for various agricultural goods. It is another matter that no government has ever had the wherewithal to deliver on such lofty promises. In fact, the poor implementation of MSPs is one of the reasons for farmers taking to the streets in protest. The Centre may prod the new RBI Governor to adopt a more dovish monetary policy stance in the run-up to the election citing falling inflation figures. But none of these measures will help farmers, who have increasingly taken the protest route of late to make their demands heard, in any meaningful manner in the long run. Real agricultural reform is crucial to enable farmers to freely make their own business decisions without the grabbing hand of the government.
📰 Farming in a warming world
Efforts to make agriculture climate-resilient must be scaled up and consolidated
•The pervasiveness of climatic aberrations and the associated socio-economic vulnerability are now widely recognised and experienced across the globe. The Sixth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) on “Global Warming at 1.5°C” distinctly propagates the need to strengthen and enhance existing coping capacity and to remain committed to the objectives of the Paris Agreement.
•The report establishes that the world has become 1°C warmer because of human activities, causing greater frequency of extremes and obstruction to the normal functioning of ecosystems. Climate-induced risks are projected to be higher for global warming of 1.5°C than at present, but lower than at 2°C (a catastrophic situation). However, the magnitude of such projections depends on in-situ attributes and the level of developments. Moreover, for such a change in global warming, indigenous populations and local communities dependent on agricultural or coastal livelihoods are very vulnerable to the climate impacts.
•India, with its diverse agro-climatic settings, is one of the most vulnerable countries. Its agriculture ecosystem, distinguished by high monsoon dependence, and with 85% small and marginal landholdings, is highly sensitive to weather abnormalities. There has been less than normal rainfall during the last four years, with 2014 and 2015 declared as drought years. Even the recent monsoon season (June-September) ended with a rainfall deficit of 9%, which was just short of drought conditions. Research is also confirming an escalation in heat waves, in turn affecting crops, aquatic systems and livestock. The Economic Survey 2017-18 has estimated farm income losses between 15% and 18% on average, which could rise to 20%-25% for unirrigated areas without any policy interventions. These projections underline the need for strategic change in dealing with climate change in agriculture.
Steps needed
•There is a need to foster the process of climate adaptation in agriculture, which involves reshaping responses across both the micro- and macro-level decision-making culture. At the micro-level, traditional wisdom, religious epics and various age-old notions about weather variations still guide farmers’ responses, which could be less effective. Corroborating these with climate assessments and effective extension and promoting climate resilient technologies will enhance their pragmatism. Climate exposure can be reduced through agronomic management practices such as inter and multiple cropping and crop-rotation; shift to non-farm activities; insurance covers; up-scaling techniques such as solar pumps, drip irrigation and sprinklers. Several studies indicate increasing perceptions of the magnitude of climate change and the need for farmers to adapt, but the process remains slow. For instance, the NSS 70th round indicates that a very small segment of agricultural households utilised crop insurance due to a lack of sufficient awareness and knowledge. Hence there is an urgent need to educate farmers, reorient Krishi Vigyan Kendras and other grass-root organisations with specific and more funds about climate change and risk-coping measures.
•Climate adaptation actions in agriculture are closely intertwined with rural developmental interventions, calling for a holistic new paradigm. At the macro-level, climate adaptations are to be mainstreamed in the current developmental framework (which is still at a nascent stage, as acknowledged in the Economic Survey 2017-18). Though programmes of the government document the likely consequences of climate change, they lack systematic adaptation planning and resource conservation practices. Mainstreaming adaptation into the policy apparatus has the potential to improve the resilience of several development outcomes. The approach demands coherence across multiple policy scales as required for developing possible synergy between micro-macro levels and addressing several cross-cutting issues. Moreover, this enables identification of several barriers that prevent up-scaling efforts and adaptation by farmers.
Key interventions
•Expansion of extension facilities, improving irrigation efficiency, promotion of satellite-enabled agriculture risk management, creating micro-level agro-advisories, providing customised real time data, and capacity building of stakeholders are some initiatives towards building greater resilience in agriculture. Interventions such as the Pradhan Mantri Krishi Sinchayee Yojana, Pradhan Mantri Fasal Bima Yojana, Soil Heath Card, Paramparagat Krishi Vikas Yojana, National Agriculture Market, or e-NAM, and other rural development programmes are positive interventions that can address the vulnerability of farmers and rural households. There are also exclusive climate and adaptation schemes being operationalised, such as the National Innovations on Climate Resilient Agriculture (NICRA), the National Mission for Sustainable Agriculture (NMSA), the National Adaptation Fund, and the State Action Plan on Climate Change (SAPCC). It is desirable to have a cultural change wherein some of the components under these schemes can be converged with major rural developmental programmes, which will further enhance their effectiveness at the grass-root level. A study by the Centre for Science and Environment provides insights into the development of SAPCCs across selected States.
•The SAPCC is an important platform for adaptation planning but it needs to evolve further in terms of climate-oriented regional analysis to capture micro-level sensitivity and constraints. Moreover, convergence of climate actions with ongoing efforts and several Central schemes with similar mandates is a must. Greater expertise and consultations are required for a systematic prioritisation of actions and fiscal prudence for building climate resilient agriculture.
📰 The plastic question is hard to crack
Is a total ban the solution? Making a choice appears difficult as alternatives are not as green as previously thought
•Bryony Drought was frozen in the fruit section.
•To her left on a recent shopping trip, the 26-year-old London school teacher saw “normal” bananas, grown using pesticides and chemical fertilizer. On the right were organic bananas — swaddled in clear plastic wrap. Ms. Drought was exasperated, torn between a desire for natural eating and a commitment to use less plastic.
•“What is the best option? It’s very difficult,” she says. “I follow lots of people on Instagram who are advocates for reducing plastic, and they are constantly coming out with statistics. I was reading one thing a few days ago, saying that in 2050 there is going to be more plastic in the ocean than fish...We need to stop what we’re doing.”
•A high tide of journalism, activism, and corporate public relations has made plastic a priority for people around the globe. In an Orb Media online poll of 42,000 people in 30 countries, a quarter said they were “extremely worried” about plastic’s impact on our world.
•But heightened awareness has also bred confusion over people’s responsibilities and options, and the role of governments and industry in reducing plastic pollution. Twenty-one percent of survey respondents said the answer to plastic pollution is increased recycling, and 10% favoured reducing consumption, answers broadly aligned with expert opinion. But thousands more suggested eliminating all plastic, or using alternative materials such as paper and glass, which studies show could be more harmful to the environment than plastic itself.
•“There is a great deal of stress that is felt with this increased information,” says Norah MacKendrick, an environmental sociologist at Rutgers University. “Consumers feel like they are on their own.”
•It’s conventional wisdom that the world has a plastic problem. Last month, the Collins Dictionary named “single-use” its Word of the Year, noting that use of the term for throwaway plastic has jumped 400% since 2013.
•Plastic is clearly an environmental crisis, with an estimated eight million animal-killing tonnes entering the oceans each year.
•“There is just a smothering, and an overwhelming sense that you can’t control it,” says Basil Pather, conservation warden at the coastal Beachwood Mangrove Reserve in Durban, South Africa, where volunteers haul out between one and five tonnes of plastic dinnerware and containers every week.
•Less prominent in the plastic narrative are emerging questions over microscopic plastic pollution in food, air, soil, and water, and the safety of chemical additives in plastic food packaging — areas where scientists are racing to learn the implications for human health.
•Proposals to make consumer brands and plastic producers responsible for the cost of plastic waste are slowly taking shape. So is a revolution in product design that would make more plastic items easier to recycle. Packaging comprises fully 40% of the more than 380 million tonnes of plastic produced globally each year.
•Try to go a day without touching plastic. Synthetic polymer is embedded in daily life, from clothing to furniture and medical care to your smartphone. It’s integral to a globalised food supply chain.
•“Plastic is a great material for that application because it’s a water barrier, it’s an oxygen barrier, it’s lightweight and it helps preserve food,” says Arturo Castillo, an industrial ecologist at Imperial College in London. “So we have a lot of food packaging, and we need it.”
•“Plastic is not a problem, but littering is a problem,” says B. Swaminathan, a veteran of the plastics industry in Asia and Africa. “You’re shooting the messenger.”
•Mr. Swaminathan’s messenger is taking a beating.
•Jurisdictions around the world, including the European Union, are moving to restrict disposable items such as plates and straws. At least 33 countries ban plastic bags, but enforcement is spotty. Kenya has one of the most stringent bans — five manufacturers and 70 distributors were prosecuted there in the first half of 2018. But banned disposable bags have been replaced with thicker, ostensibly-reusable, bags of polypropylene fibre — in other words, more plastic. These are now appearing as street litter, says Abel Kamau of the Kenyan Association of Manufacturers. Kenyan officials are aware of the problem, and are developing standards for sustainable bags, says Cyrille-Lazare Siewe of the United Nations Environmental Program.
Perfect solutions elusive
•Take compostable plastic bags. The name suggests gardens and mulch. But compostable plastic cannot degrade in nature; it has to be separated from other waste and heated to 70 degrees Celsius at an industrial facility. Others see bioplastics, made from plants, as an answer, but most bioplastics are molecularly similar to plastic made from petroleum, with the same environmental hazards, experts say.
•As much as 10% of Orb’s survey respondents recommended using glass containers. But studies show that making and moving glass bottles uses nearly five times more energy than plastic.
•Similarly, 73% of Americans surveyed by Gallup think paper bags are greener than plastic — a natural assumption. Analyses of both materials’ lifecycles, however, show plastic bag production causes significantly less air and water pollution.
•“You are in the plastic age,” says Indian plastics titan P. Marimuthu, who produces more than two billion forks, trays, yoghurt cups, and shampoo bottles each year. “What is the alternative to plastic? Nobody gives an answer to this.”
•Meanwhile, momentum is growing to force manufacturers to change product and package design to make reuse and recycling easier. Today, most packaging contains too many different materials to be easily recycled — a waste of waste, explains Ben Johnson of Suez Waste and Recovery UK.
•Many experts now say plastic producers or consumer brands should pay for the disposal of their packaging, instead of pushing the cost onto communities. “Shampoo, soap, cosmetics, groceries, shaving cream, toothpaste. They are discarded, right?” says Mr. Swaminathan. “Now, where are these coming from? These are coming from the brand owners, the large, big companies.” Industry organisations counter that new rules will hinder innovation.
•Under proposed “Extended Producer Responsibility” rules that are gaining traction in Europe and elsewhere, “if you’ve got a terrible material that is never going to be recycled, you pay a higher fee” for disposal, Mr. Johnson says over the clamour of conveyors and sorting machines at a plant in Avonmouth, England. Products with difficult packaging “would be more expensive fundamentally, and the good, better ones would be cheaper” for consumers.
The human factor
•Research by Sarah Whitley of Oklahoma State University shows how the mood of a community can affect recycling rates. At the University of Maryland in College Park, the average weight of campus recycling was nearly 50% higher after a college basketball victory than after a loss or tie. Further, Ms. Whitley’s analysis of municipal data found that the total mass of household recycling collected in the London borough of Kensington fell on rainy days by one kilogram for every millimeter of precipitation.
•With such complexity, it’s natural to pine for “a perfect solution to those floating islands of plastic out in the sea,” says Dominique Broussard, who researches science, media, and policy at the University of Wisconsin.
•Overlooked, for now, are issues that can’t be mitigated by recycling or resolved with a canvas shopping bag.
•One is microplastic. Since Orb Media first reported microscopic plastic contamination in bottled water last March, new studies have found these contaminants in German mineral water, South African tap water, and Italian soft drinks. No one knows if consuming microplastic is harmful or not. It’s an emerging area of research, one the World Health Organization is working to assess.
•Even in a future where improved product design and new regulations reduce plastic waste, questions over the safety of chemicals in food packaging will still have to be addressed. Researchers have found dozens of hazardous chemicals that are approved for use in plastic. For example, six chemicals the European Union has declared too toxic for use in plastic toys are nevertheless permitted for food packaging, according to a recent study.
So what’s London shopper Bryony Drought, or any of us, to do?
•Real changes will only come through government action, says Ms. MacKendrick, author of “Better Safe Than Sorry: How Consumers Navigate Exposure to Everyday Toxics.” “Make the best choice that you think you can make, but stop feeling guilty about it,” Ms. MacKendrick says. “Direct that sense of frustration [and] anxiety... at the organisations and institutions that are responsible for making the decisions about what ends up in our grocery stores in the first place.”
📰 RBI Board discusses governance
Agrees to examine the issue further; reviews liquidity, credit delivery, economic situation
•The board of the Reserve Bank of India (RBI), which met here on Friday, agreed to examine the issue of governance further.
•“The board deliberated on the governance framework of the Reserve Bank and it was decided that the matter required further examination,” the RBI said in a statement.
•This was the first board meeting under the chairmanship of the new RBI Governor Shaktikanta Das, who assumed charge on Tuesday.
•The statement also said the board reviewed various issues like current economic situation, global and domestic challenges, matters relating to liquidity and credit delivery to the economy, and issues relating to currency management and financial literacy.
•Mr. Das assured the board that he would discuss the deliberations on capital management and governance with the government for an early resolution, sources said.
•Mr. Das listened to all the points of discussions, including those which had caused discomfort within the RBI brass, they said.
•The four-hour meeting was very smooth and cordial, the sources familiar with the board deliberations said.
Patel lauded
•The board ‘placed on record its appreciation of the valuable services rendered’ by Mr. Patel during his tenure as Governor and Deputy Governor of the bank.
•RBI had imposed restrictions under the PCA framework for 11 public sector banks, which irked the government as it believed loan growth was impacted due to such restrictions.
•There is a possibility that a formal proposal on PCA will be brought before the board at its next meet in mid-January, which is likely to happen in New Delhi, according to sources.
•“The board may also come to a conclusion as early as at the next meeting itself,” they added.
Contentious issues
•The issue of liquidity and credit delivery were the two contentious issues between the government and RBI with the former wanting a special window for non-banking finance companies.
•“The draft report on Trend and Progress of Banking in India (2017-18) was also discussed,” the statement added.
📰 India Post launches e-com portal
•India Post on Friday launched its own e-commerce website to help sellers, particularly rural artisans and SHGs sell their products across the country. “The small and local sellers, who have been left behind in e-commerce space, will now be able to maximise their reach and retailing power by leveraging the vast physical and lT network of the Department of Posts,” an official release said.
•The products will be shipped through Speed Post. “India Post is open for registration of all vendors for e-commerce business. It will pick up products from vendor and deliver to doorstep of customers,” Minister of State for Communications Manoj Sinha said.
📰 Shun loan waivers, Rajan tells States
It often goes to the best connected rather than to the poorest, says the former RBI Governor
•State governments should resist giving farm loan waivers since they will create fiscal stress and not reach the farmers that need them, former RBI Governor Raghuram Rajan said on Friday.
•“Certainly, there is a reason to think about farmers’ distress, but the question that flows is whether loan waivers are the only solution,” Mr. Rajan said, speaking at a panel discussion about a report on ‘An economic strategy for India.’
•“Does it reach the farmers who actually need it?” the former RBI Governor and Chief Economic Adviser asked. “It often goes to the best connected rather than to the poorest. It also creates enormous problems for the fiscal of the State once the waivers are done.” Mr. Rajan’s comments assume significance at a time when speculation is increasing about a possible farm loan waiver from the Centre similar to those given by some State governments. “Government-imposed credit targets are often achieved by abandoning appropriate due diligence, creating the environment for future NPAs,” he said. “Loan waivers, as the RBI has repeatedly argued, vitiate the credit culture and stress the budgets of the waiving State or Central government. They are poorly targeted, and eventually reduce the flow of credit.”
Focus on agriculture
•That said, Mr Rajan did stress that the agriculture sector needed serious attention, and that an all-party agreement on this would be in the nation’s interest.
•Mr Rajan, along with economists Abhijit Banerjee, Gita Gopinath, Neelkanth Mishra, Karthik Muralidharan, Eswar Prasad and Sajjid Chinoy, released the report which is a five-year economic agenda for India covering a number of issues, including the macro economy, health, education, banking reforms and infrastructure.
•Mr. Rajan’s note pertained to banking reforms in which he argued that public sector bank boards are still not adequately professionalised and that the government’s role in deciding board appointments leads to “inevitable politicisation.”
•“The government could follow the P.J. Naik Committee report more carefully,” he wrote. “Eventually, strong boards should be entrusted with all bank-related decisions, including CEO appointment, but held responsible for performance. Strategic investors could help improve governance.”
•Mr. Rajan further said that the out-of-court restructuring process and the bankruptcy process both need to be strengthened and made speedier.
📰 ‘It’s still difficult to do business here’
The bureaucracy needs to improve, says the co-founder of KKR
•With $7 billion invested in India, Henry R. Kravis, 74, co-founder of Kohlberg Kravis Roberts (KKR), a global investment firm of which he is also the co-chairman and co-CEO, is betting big on India for further investments despite the difficulties in doing business in the country. Edited excerpts:
On areas that need improvement
•You have no capital market here. You have a stock market of sorts, but you have no bond market. If you don’t have a long-term bond market, you limit the growth because you’re putting the entire onus back onto the banks to basically be the provider of capital. When the banks run out of capital, you got to stop right now because you have got all these non-performing loans and we are not sure what the RBI wants us to do. Large companies here can always find capital alliances and others can find capital somewhere in the world.
•That’s easy, but it’s the mid sized and smaller companies who will struggle to find capital.
On India opportunity
•We have two non-banking financial corporations (NBFCs), one in real estate credit and one in corporate credit, because it’s a huge opportunity for us and we put to work a little over $7 billion in the last few years. We will put much more to work as we go forward in our credit business here as it’s a real opportunity for us. I am a believer that a country should have a broad and deep capital market. Having said that you’ve taken a very good step forward by having a bankruptcy law. Now, you have GST which makes a big difference. Then you have real estate regulations that have changed a lot. So, these are very positive steps.
On NPA issue
•If somebody says we only have 5% non-performing loans, I don’t know if that’s the case. If you did a really good stress [test], it will be significantly higher than 5%. I’m not in that business here but I have just seen it every time the bank says it’s not that bad, it is actually much worse than that. Everybody wants to push it under the rug and hope it is going to get better but it doesn’t.
On change in State governments
•You had an election, mid-term election as we call it in the [U.S] States. Yeah, Congress picked up a couple States and that’s great in the U.S. [where] the democrats took control of the House but not the Senate. Life will go on, so the more fundamental issues here is that you have a government right now, that is pro-business, it’s trying to do what needs to be done to improve business. Going forward, probably over the next five six months until your next general election, you’re probably going to have pretty large amount of liquidity put into the system to keep going.
On India’s position in U.S.-China trade war
•I was there in Southeast Asia in October and I watched what was happening there and see what’s happening in China. So, this (U.S.-China trade war) is very positive for Southeast Asia. And it’s very positive in my view for India. You’ve got to make the country user-friendly, ease of doing business [is] okay, you’re improving.. you are now 77 based on the World Bank [ranking], so that’s all positive.
On challenges in India
•It’s still difficult to do business here. I will give you an example. We put money behind somebody that wanted to build power plants. We give them the money. They finally got the approvals which took two years. They built the plant and they can’t get coal now and [in] the meantime, we got our money tied up there. Those kinds of things that stop foreign direct investment here is in the bureaucracy, so that needs to be improved.
