Gist of The Hindu: January + February 2013

Gist of The Hindu: January + February 2013
























The Palestinian bid to become a nonmember Observer State at the United Nations has been, as expected, approved by an overwhelming vote of 138 to nine, with 41 abstentions in the General Assembly. The vote implies global recognition of the relevant territory as a sovereign state and is a major step towards a two-state solution for historical Palestine. The new status amounts to less of an achievement than full U.N. membership, which the Security Council declined to consider in September 2011 on the grounds that the members were unable to make a “unanimous recommendation”, but the Palestinians can now participate in General Assembly debates. In sum, this is an important move towards Palestinian statehood, which 132 countries have already recognised. As for particular countries, one former colonial power, France, voted in favour, and the other state with a previous imperial connection to the region, the United Kingdom, abstained, as did Germany. Predictably, Israel’s biggest supporter, the United States, opposed the resolution, reconfirming its view that a negotiated settlement is the only way to establish a Palestinian state.

The U.N. resolution, however, could well be the first of many momentous changes for West Asia. The Palestinian Authority can now seek membership of several U.N. agencies and, above all, can apply to sign the Rome Statute of the International Criminal Court, with the clear implication that Israel may finally be held accountable for crimes committed against the civilian population of Gaza. Secondly, differences have emerged between Washington and major European countries over Israel-Palestine, even if some European officials call criminal charges against Israel a “red line”.

Thirdly, it is consistent with global public opinion; even U.S. opinion polls show majorities for a two-state formula. It also testifies to the increasing confidence of Palestinian representatives, who have said that continued exclusion would strengthen support for Hamas; the representatives, moreover, now know that the region’s peoples demand justice for the Palestinians and can no longer be ignored. The vote will be truly meaningful if it marks the start of a new international resolve to ensure the people of Palestine are able to exercise their right to statehood and self-determination, just as the people of Israel have been doing for years. The first order of business has to be to stop the Israeli stranglehold over occupied Palestinian territory, including the monstrous policy of building settlements. As long as the international community gives Tel Aviv a free pass on these issues, peace and security in Israel-Palestine will always remain elusive.


  • New HIV infections now show a declining trend globally. All 11 countries in the World Health Organisation’s (WHO) South-East Asia Region showed a decline by 34 per cent in the past decade.
  • The overall decline in the region is cause for increased optimism. However, complacency now could become our greatest enemy. Those most “at risk” of HIV are disproportionately affected by the disease and are also among the least empowered. They include youth, those who inject drugs, female sex workers, men who have sex with men (MSM), transgender people and migrants. Zero new HIV infections and zero AIDSrelated deaths by 2015 can be achieved through greater efforts directed towards “at risk” populations to encourage increased testing. HIV prevention services for these people need to be expanded to battle the concentrated epidemic found in this region.

  • In India, the estimated number of new HIV infections has declined by 56 per cent over the past decade and the total number of people living with HIV is estimated at 24 lakh (the range is 19.3- 30.4 lakh). This is good news but it remains essential to continue with public awareness programmes on HIV/AIDS and that messages are regularly conveyed to remind people on the importance to get HIV tested and to be aware of their HIV status.


Burgeoning gold imports to meet the seemingly insatiable appetite for the precious metal by Indian consumers, though not new, have grown to such major dimensions recently that policy-makers are forced to take note. A check on gold imports by way of physical controls over imports or through fiscal measures to restrain consumption (such as through a special consumption tax) are impractical, and out of question. Policy-makers are, therefore, forced to look at ways of harnessing this phenomenon — of unbridled gold imports and consumption — in ways that will benefit the economy while moderating its demand internally.

There are at least two important macroeconomic dimensions to this phenomenon of everrising gold imports even in the face of record gold prices.

One, the immediate impact is on the external economy as gold and energy imports contribute to a widening of the trade deficit, and, hence, the current account deficit, which was at a record high of 4.2 per cent on March 31. According to the World Gold Council, for April-June 2012, gold imports stood at 181.3 tonnes. The macro-economic problems associated with running such a high current account deficit have been highlighted several times before by many official reports, including those of the Reserve Bank of India (RBI). Needless to add, the twin deficits, the high fiscal is the other one, are a major threat to economic stability. Two, the lure for gold among consumers has a direct impact on the quantum of financial savings by households.

According to the Economic Advisory Council of the Prime Minister (PMEAC) (in its flagship publication Economic Outlook 2012- 3 released in August), net financial savings of households available for use by the rest of the economy fell below 11.6 per cent of gross domestic product (GDP) in 2007-08 to 10 per cent in 2010-11 and likely to go below 9 per cent in 2011-12. (Net financial savings are calculated by deducting financial liabilities such as mortgage and personal loans from gross financial savings.

Gross financial savings are measured as an increase in gross financial assets.) At around the same time as the Economic Outlook, the RBI released data which were even less upbeat: household financial savings fell to 7.8 per cent in 2011-12, the lowest since 1989-90. During the preceding three years, it averaged 11 per cent. Certain broad conclusions are possible from the above data:

  1. When the economy is faring well, households tend to put more money in financial savings instruments. The stock market is likely to be bullish and mutual funds will also look attractive.
  2. However, when the cycle turns and the environment is less optimistic, households tend to do the reverse — withdraw from organised financial savings such as bank deposits, shares and mutual funds. The availability of household savings for the industrial economy gets reduced.
  3. It is in that context that the significance of gold as an investment avenue and as a hedge against inflation becomes apparent.

Households withdraw money from financial savings, and, to a large extent, invest in gold, property and other physical assets. This is after providing for the higher living expenses that are characteristic of high inflation. Inflation outlook and hardened inflation expectations — prices of essentials are unlikely to come down — play a large role in apportioning available savings of households.

In that scenario, gold has emerged as a clear winner. In India, as in many other countries, the lure for gold is unmistakeable. The surge is partly explained by increased availability of gold and the growing realisation of its potential as an investment opportunity, especially in pessimistic times.

The task before the government is to find ways to integrate the physical market for gold with the financial market. Already this is happening.

The oldest and even now the most popular one is the gold loan, where banks/NBFCs (nonbanking finance companies) dispense money on the pledge of gold /gold jewellery. As propagated with great success by several Kerala-based NBFCs, gold loans have come under the scrutiny of the RBI, which has imposed some stringent conditions to safeguard the borrowers’ interests.

Setting an Example

Convinced that the International Thermonuclear Experimental Reactor (ITER) installation is safe, the French government recently granted the fusion project the necessary permission to start construction in Cadarache. There are many firsts to the project. Maintaining transparency has been one of ITER’s most significant features and organising an enquiry to give the public an opportunity to formulate its opinion has set a new benchmark for openness. Independent experts assessed the safety of the fusion project and the public was not just taken into confidence but made an integral part of the project construction approval process. In effect, the two-and-a-half-year effort fully met the requirements set forth by France’s own 2006 Nuclear Transparency and Security legislation. If the French government took a bold decision to bring about more transparency and public engagement before nuclear projects are cleared, the clearance given to ITER tells us that it is indeed possible to meet the stringent requirements laid down by the law.

The ITER approval highlights the fact that the public is not unreasonable or obstinate. All people want is to be provided with facts, made fully aware of the benefits and risks, convinced that complete transparency is being maintained, and that their opinion is being taken into account on an important decision. Internationally, the nuclear industry is well known for maintaining opacity and for refusing to take the public into confidence. In India, the situation is compounded by the excessive secrecy surrounding all things nuclear, and by the lackadaisical and hurried manner in which environmental impact assessments are often carried out. As for the mandatory public hearings for large projects, both nuclear and non-nuclear, these frequently descend into chaos if not farce. The sustained local opposition to the Kudankulam nuclear power plant continues unabated even days before the first two units are to become operational. While many valid questions concerning the safety aspects of the plant have not been clearly answered, public apprehension to a great extent has come from imagined fear, misconceptions and an improper understanding of the technology-intensive project. It is time the Indian nuclear establishment realised that it can no longer bulldoze its way. Winning public approval is not only important but necessary for two reasons — the Chernobyl catastrophe and the 2011 Fukushima disaster are fresh in people’s mind, and the government has major plans to construct many power nuclear plants across the country.

WHO Clearance Could Boost Vaccine Exports

  • In a major boost to the country’s private vaccine manufacturing pharmaceutical companies, the World Health Organisation (WHO) has said that India’s national regulatory authority — Central Drugs Standard Control Organisation (CDSCO) — and its affiliated institutions meet the prescribed international standards.
  • India is a major vaccine producer with 12 major vaccine manufacturing facilities. These vaccines are used for the national and international market, reaching nearly 150 countries. Every second child in the world is vaccinated for measles using a vaccine produced in India.
  • India is the first country in the 2012 round of assessment to have passed the strict levels of seven indicators which are made more stringent every time in a single round of assessment which is done by a team of 12 international experts headed by a WHO member.
  • Passing of this test means that 12 private vaccine manufacturing units from India are eligible and retain the pre-qualification status for supplying vaccines to international bodies like the WHO, UNICEF and the World Bank. WHO pre-qualification is a guarantee that a specific vaccine meets international standards of quality, safety and efficacy.
  • The clearance by the WHO is expected to boost investment in the pharmaceutical sector and push exports higher, which touched $13 billion last year and is expected to touch $26 billion this year. Two-thirds of the vaccines produced in India are exported.
  • The WHO has established benchmarks that define international expectations for a functional vaccine regulatory system.
  • It also conducts regular external audits of national regulatory systems and ensures they meet the necessary standards. The regulatory functions of India’s National Regulatory Authority (NRA) — the CDSCO — and its affiliated institutions were assessed for compliance against the WHO indicators and marketing authorisation and licensing, post-marketing surveillance, including adverse events following immunisation and so on.
  • In 2007, when the CDSCO had failed to meet the WHO-prescribed standards, it had led to the WHO suspending manufacturing licenses of three public sector vaccine manufacturing units — Central Research Institute (CRI), Kasauli; Bacillus Calmette-Guérin Vaccine Laboratory (BCGVL), Guindy; and Pasteur Institute of India (PII), Coonoor, on account of non-compliance of good manufacturing practices (GMP) norms.
  • India had made up for the deficiency in the 2009 assessment and the units were re-started.

RBI to Relax norms for Entry of Foreign Banks

  • The Reserve Bank of India is expected to relax norms soon allowing opening of more foreign banks.
  • At present, expansion of foreign banks in India is on a reciprocal basis.
  • India and Pakistan are negotiating issues with regard to opening of bank branches in each other’s territory to facilitate trade and commerce. As per the World Trade Organisation agreement, India allows opening of 12 branches of foreign banks in a year. Last year, the RBI in a discussion paper suggested that foreign banks should be incentivised to operate in India as wholly-owned subsidiaries, as against the present system of having presence through branch network.
  • At present, there are about 34 foreign banks operating in India, with five major banks, including StanChart, HSBC, Citibank and Deutsche, accounting for over 70 per cent of the total asset size of overseas lenders in the country.

Doha Dithers on Equity

  • The World Meteorological Organization (WMO) times the release of its provisional annual statement with the U.N. climate negotiations. This year, it dwelt on the Atlantic Basin experiencing an above-average hurricane season for a third consecutive year, with 19 storms, 10 of them achieving hurricane status, the most notable being Sandy.

  • East Asia was severely impacted by powerful typhoons, with Sanba being the strongest in 2012, causing destruction in parts of the Philippines, Japan, and the Korean peninsula. The years 2001–2011 were all among the warmest on record and the WMO’s statement highlighted the unprecedented melting of the Arctic Sea ice and multiple weather and climate extremes.

  • The WMO’s statement fell on deaf ears at the Doha climate talks. As 194 countries dragged on with negotiations, typhoon Bhopa was wrecking the eastern part of the Philippines.

  • The U.S., along with Japan, objected to the equity principle under the United Nations Framework Convention on Climate Change (UNFCCC) and also to equity being the basis of future negotiations.

  • While the Durban platform clung on to the principles of equity as enshrined under the UNFCCC, the U.S. made it clear that it was not going to accept it. The climate talks have delivered less and less since Bali where the two-track approach was mainly geared to bringing on board the U.S, which is not part of the Kyoto Protocol. Finances, adaptation, mitigation and technology transfer were the key issues under the Bali Roadmap. India, part of the G-77 group, plus China had to object vociferously to the removal of the key pillars of the talks from the Long-term Cooperative Action plan. A Philippine delegate quipped that this was meant to be a paperless conference, not a “textless” one.

  • Doha Gateway only urges the developed countries to scale up finance to reach $100 billion a year by 2020 and submit plans by the next round of talks in Poland. There also seems to be a complete lack of ambition in the second commitment period of the Kyoto Protocol, which is now eight years.

  • The issue of carrying forward surplus emissions was strongly objected to by Russia, which was unhappy with the proposal under the Kyoto Protocol to cramp the carry-over of carbon credits or surplus allowances which it had accumulated during the Protocol’s first commitment period. Money supply for the Adaptation Fund suffered due to the decline in the market prices of certified emission reduction, and as a result, $301.1 million was collected.

  • With funds dwindling, countries lobbied for a mechanism on ‘loss and damage’ since Cancun which finally was agreed upon at Doha. Crumbs are doled out as global temperatures rise and the poorest countries face disaster.

India could face crippling heat waves

  • The warning signs are already out there. Global air and ocean temperatures have risen in response to human-driven emissions, particularly of carbon dioxide. Oceans have become more acidic and the sea level has gone up; the Arctic Sea ice has melted faster than expected; rainfall and snowfall patterns have changed; and extreme weather events seem more frequent than in the past. Such changes, with the associated consequences, are likely to worsen considerably if emissions continue unabated.

  • At the Climate Change Conference in Copenhagen in 2009, the nations of the world pledged to avoid ‘dangerous’ climate change by reducing emissions. They would ensure that the average global temperature at the end of this century did not exceed that of the pre-industrial period by more than two degrees Celsius. But as emissions continue to soar and with no meaningful global agreement in place to drastically cut them, there is increasingly talk of a temperature rise during this century of four degrees Celsius.

  • “A four degrees Celsius world would be one of unprecedented heat waves, severe drought, and major floods in many regions, with serious impacts on ecosystems and associated services,” warned a World Bank-sponsored report published last month.

  • India has already seen its average annual surface air temperature rise by about 0.5 degrees Celsius during the past century. The warming had accelerated since 1971 and particularly so during the past decade, according to the country’s Second National Communication to the U.N. Framework Convention on Climate Change made earlier this year.

  • Although higher carbon dioxide levels and more rain can help crops grow better, higher temperatures and more erratic rainfall are often detrimental. For instance, the country’s wheat production could fall by about four million tonnes for every one degree Celsius rise in temperature during the crop’s growth period. Climate change, along with other environmental stresses, poses “significant challenges” for cereal production in China and India, according to a recent report from the U.S. National Intelligence Council.

  • Climate change will bring along it with new problems and challenges that must be faced.

India, Sri Lanka and the Maldives to sign agreement on maritime cooperation

  • India, Sri Lanka and the Maldives will soon sign a trilateral agreement on maritime cooperation to pool resources and share data for better control over territorial waters and detect suspicious movements.
  • India had also agreements with Royal Thai and the Indonesian naval forces to conduct coordinated patrolling in the east, around the region of the Malacca Straits.
  • In an effort at ensuring better coordination and shorten response timings during a crisis, India has posted a Military Attaché (MA) in the Maldives. So far, the MA based in Sri Lanka was also in charge of the Maldives. Captain R.S. Sunil, based at the Eastern Naval Command Headquarters at Visakhapatnam, took charge as MA last week at Male. He is the first MA to be based in the Maldives. India trains the Maldivian National Defence Forces and its police.
  • Only India, Pakistan, Sri Lanka, Bangladesh and China have diplomatic posts in the Maldives.

Astra missile test-fired successfully

  • As part of its developmental trials, Beyond Visual Range Air-to-Air Missile (BVRAAM), Astra was successfully launched from Chandipur, Odisha.
  • The launch was carried out against an electronic target, although Pilotless Target Aircraft Lakshya was used to check the effectiveness of systems such as the ground radar.
  • The 3.8-metre long Astra is the smallest of the missiles developed by DRDO.
  • It can be launched from different altitudes and cover 110 km when fired from an altitude of 15 km, reach 44 km when launched from an altitude of eight km, and 21 km when launched from the sea-level.
  • After completion of all developmental trials, Astra will be eventually integrated with combat fighter aircraft Sukhoi-30, MIG-29 and the Light Combat Aircraft.

South Korean Election

  • South Korea elected its first woman President, handing a slim but historic victory to conservative ruling party candidate Park Geun-hye, daughter of the former military ruler. As leader of Asia’s fourth-largest economy, Ms. Park will face numerous challenges: handling a belligerent North Korea; a slowing economy; and soaring welfare costs in one of the world’s most rapidly ageing societies.

Navy gets first of 8 P-81 Maritime Surveillance Aircraft from Boeing

  • As part of $2.1-billion deal inked with the American firm in January 2009. The Navy received the first of the eight P-8I maritime surveillance aircraft it is to get from Boeing.
  • The first plane was handed over to Indian personnel by the company in Seattle. It will be used for training the crew there, Navy officials said here. This aircraft, along with two more will arrive in India in May 2013.
  • P-8I is a derivative of Boeing 737-800 long-range maritime reconnaissance aircraft and anti-submarine warfare aircraft. It is expected to replace the Navy’s Russian Tupolev Tu-142M maritime surveillance turboprop. The plane is an Indian variant of the P-8A Poseidon that Boeing is developing for the U.S. Navy. India requires aircraft able to patrol the vast stretches of the Indian Ocean. The Navy’s contract with Boeing included an option for four additional aircraft along with warfare, intelligence and surveillance systems, as well as training and maintenance support.

Fighting the fibrous hazard

Even as the delivery of India’s second aircraft carrier, Admiral Gorshkov, has been pushed back towards the end of 2013 owing to repairs in the malfunctioning boiler section, activists and environmental advocacy groups have expressed concern over reported use of asbestos-based insulation in the warship.

Given the health hazards that asbestos poses and the fact that International Maritime Organisation (IMO), of which India is a member state since 1959, has banned installation of all types of asbestos-containing materials as of January 1, 2011, activists have expressed “shock and surprise” over India’s willingness to accept use of asbestos in the aircraft carrier’s insulation in the boiler section.

In a letter to Navy Chief Admiral D.K. Joshi, Occupational and Environmental Health Network of India (OEHNI) coordinator Mohit Gupta pointed out that IMO circular of 2011 was binding on all IMO member states.
Asbestos has been widely used in various types of naval ships, including warships, aircraft carriers, cruisers, destroyers, minesweepers, frigates and submarines. Ships repaired or built in the pre-1970 period were more likely to contain the toxic substance. The glass-like asbestos fibres were a major ingredient in many components of the ship, from pipe insulation to gaskets, in engine and boiler rooms, mess halls, navigation rooms and even in sleeping quarters.

Today, the U.S. Navy and civilian shipbuilders are eliminating its use and repair workers are making efforts to eliminate asbestos-containing materials found on current or older vessels.

Scientific studies over the past three decades have proved the dangers involved during asbestos exposure. Pleural mesothelioma is the most common form of cancer that attacks the lining of the lungs when unprotected workers inhale the asbestos fibres; they pass through the lungs and get embedded in the pleural mesothelium, a wall of tissue surrounding the lungs.

Great hope for Science

  • The recent decision of the United Nations General Assembly to grant ‘Observer status’ for the European Organisation for Nuclear Research.

  • CERN is highly commendable. CERN is the first physical sciences research organisation to become an Observer.

  • The development comes a year after CERN and the United Nations Office at Geneva signed a co-operation agreement.

  • Founded in 1954 under the auspices of Unesco, the research organisation has till date lived up to the U.N. agency’s prime objective of international co-operation in the science and technology sphere.

  • In fact, it has gone beyond its initial mission of restricting its co-operative activities to researchers from the “Allied countries and former Axis countries,” and has today taken on board other countries as members and observers, including India.

  • It has become a benchmark for other large-scale science collaborative projects involving many countries. The fundamental difference between CERN and other international projects is that CERN’s activities go beyond the core area. Not widely known is the important digital library tools it has been sharing with several countries in Africa for empowering and changing the way people access information. The new status and global platform will help the organisation direct and set a course so science and technology will ultimately benefit people.

  • The U.N. decision comes at a most crucial time when proprietary science is proving to be a great stumbling block in making the fruits of basic scientific research available to all. The wall that divides basic and applied science is getting replaced with a thin line, with certain promising fields coming up at the “intersection of basic research and application.” Molecular biology is one such field. U.S. federal agencies, universities and pharmaceutical companies had to go to great lengths to free up the human genome sequence data generated by the privately-funded Craig Venter team. This is one contentious issue that CERN can probably try to tackle. It was at CERN that the World Wide Web was invented, and an early WWW was initially made available to the small community of high-energy physicists. It also played a central role in developing the Internet in Europe. Today, it has the CERN Easy Access IP through which it makes available some of its technologies “free of royalties,” provided they are developed to “benefit the economy and society.” The latest is its pioneering effort to make the entire field of high-energy physics open access through the Sponsoring Consortium for Open Access Publishing in Particle Physics (SCOAP3) initiative.

Thorny issues in India-Russia engagement

Russian President Vladimir Putin’s visit to India should dispel speculation about hiccups in bilateral ties.

Russia was unhappy with India’s refusal to waive civil liability for units III and IV of the Kudankulam Nuclear Power Plant (KNPP) and failure to secure Russian telecom company Sistema’s massive investment in the joint venture, Sistema Shyam TeleServices Ltd (SSTL), while India was concerned over a year-long delay in the delivery of the Vikramaditya aircraft carrier.

Russia remains India’s most trusted and valuable defence partner. It reaffirmed its readiness to share cutting-edge weapons technologies, leasing out the nuclear submarine Chakra and offering to jointly develop the fifth-generation fighter aircraft. The coming summit may see the two sides seal multi-billion deals for the supply of Su-30MKI fighters, Mi-17 helicopters, aircraft engines and tank missiles.

Mr. Putin is also expected to endorse India’s efforts to expand its involvement in the Russian energy sector, with talks currently focusing on the development of new oil and gas fields in Russia’s Far East, Siberia and the Arctic region.

The perceived irritants in the relations have been blown far out of proportion by the media and interested parties. Informed Russian sources said the liability issue for Kudankulam III and IV will be resolved by somewhat raising the price tag for the Russian-built reactors. Problems with boiler insulation on the Vikramaditya are unfortunate, but should not obscure the fact that overall, the aircraft carrier demonstrated admirable seaworthiness, manoeuvrability and aircraft takeoff and landing capacity during the trials.

The cancellation of Sistema’s licences for CDMA services is a more serious problem. The company’s $3.1-billion investment, including $700 million of government funds, should have been a trail-blazing example of a successful foray by Russian business in India, but may end up discouraging other potential investors. That said, the Kremlin is not prepared to let the row mar Mr. Putin’s visit.

If the disputes over Kudankulam and Sistema have been pushed to the forefront of the bilateral agenda, it is only because of an unacceptably low level of commercial links: trade hardly exceeds the combined price of two reactors for Kudankulam, plus Sistema’s investment in Shyam Telecom.

This year, trade has posted a robust 30 per cent growth, but still amounts to just $11 billion, and, with some luck, could hit the $20-billion target set by the two governments for 2015. By that time, India’s and Russia’s trade with China will be well above $100 billion for each. Achieving a quantum jump in trade and economic ties will be the biggest challenge for Mr. Putin during his five-year term till 2018 and for India. Without a solid economic foundation, the two countries would find it hard to sustain the current high level of their “special and privileged strategic partnership”.

Risky Futures that Banks can do Without

Finance Minister P. Chidambaram proposed to add a new clause in the Banking Laws (Amendment) Bill which was not a part of the original amendments vetted by the Standing Committee on Finance last year. It allows the entry of banks in commodity futures trading in India. After strong opposition by political parties on the grounds of parliamentary impropriety, the government dropped it from the Bill on December 18.

However, this clause would be incorporated in the Forward Contract Regulation Act (Amendment) Bill which is likely to be tabled in Parliament next year. As allowing banks to trade in commodity futures signals a major policy shift in the banking sector with wider ramifications, it should be discussed in and outside Parliament. As per the existing regulatory framework, banks in India are allowed to trade in financial instruments (shares, bonds and currencies) in the securities market. But the Banking Regulation Act, 1949 prohibits banks (domestic and foreign) from trading in goods. Section 8 of the Act states: “no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it.”

However, banks are allowed to finance commodity business and provide fund and non-fund-based facilities to commodity traders to meet their working capital requirements. Banks also provide clearing and settlement services for commodities derivatives transactions. But banks cannot trade in commodities themselves.

In addition to banks, mutual funds, pension funds, insurance companies and foreign institutional investors (FIIs) are not allowed to trade in Indian commodity futures markets.

By and large, Indian banks (public and private) lack the market knowledge and the expertise to benefit from trading in commodity futures. The Reserve Bank of India (RBI) has also expressed concern at the risks posed by domestic banks that lack the expertise and skilled manpower to deal with such risky trading instruments.

The commodity exchanges are supportive of this move as higher trading volumes would boost their revenues. The real beneficiaries are likely to be big foreign banks that have considerable international experience and expertise in dealing with futures trading. Unlike small traders and hedgers, big foreign banks and FIIs could also benefit immensely from algorithmic trading and other advanced trading tools.

Already, foreign banks dominate the financial derivatives market in India. Most of these products are financial in nature with no actual bank lending involved. The off-balance-sheet exposure of foreign banks (e.g., currency forward contracts, interest rate derivatives) is currently very high in India and should be a matter of concern to policymakers. The off-balance-sheet exposure of foreign banks as a proportion of their on-balance-sheet exposure was 1,860 per cent in 2010-11. The entry of banks into commodity futures trading could turn out to be a risky proposition for several valid reasons. To begin with, the commodity futures market in India is still in a nascent stage of development. Therefore, the existing regulatory environment cannot handle the sudden entry of big financial players such as banks and institutional investors.

In addition, the existing penalty provisions are grossly inadequate and not in tune with the current trading volume in the Indian commodity derivatives markets. It may sound astonishing that the FMC — which regulates billions of dollars worth of commodity trade — does not have the power to directly impose a financial penalty on traders. Now, only a maximum penalty of Rs.1,000 can be imposed on market participants by the FMC — and through court orders on conviction. A financial penalty of a mere Rs.1,000 (enforced through a lengthy court process) does not deter potential offenders in the commodity markets.

Justice Kumar is NGT chief

  • Justice Swatanter Kumar has taken over as chairperson of the National Green Tribunal (NGT), to decide on cases relating to environmental protection, and conservation of forests and natural resources.
  • Though Justice Kumar’s tenure as a Supreme Court judge is due to end next week, December 14 was his last working day and he assumed charge of the new office on December 20. He is the first Supreme Court judge to preside over the Tribunal which was, till now, functioning without a full-time chairperson. Justice P. Jyothimani, a retired Judge of the Madras High Court, who has been appointed a judicial member of the NGT.

Primary Neglect

  • The large number of unfilled vacancies in Primary Health Centres in many States is proof that any plan to provide universal health coverage in India is going to be a major challenge.

  • Availability of human resources for health, be it doctors, nurses, or support staff, is far from optimal. In the WHO’s Global Atlas of the Health Workforce for 2010, India is 52 among 57 countries facing a critical HR crisis in health. A well-functioning health system should have at least 23 health workers per 10,000 people, while the statistic for India is 19. Even this national performance is not uniform, as the statistics on PHCs show. It is unconscionable that as per 2011 figures, some States have staggering levels of vacancies of doctors at the most basic access level. Chhattisgarh tops the list with 71 per cent; West Bengal, Maharashtra, Uttar Pradesh, Madhya Pradesh, Gujarat, Odisha and even Tamil Nadu have significant number of vacant doctor posts. These statistics strengthen the argument that many more medical and nursing colleges, and institutions for health worker training should be opened on a war footing. It is true that legislation in this regard is pending, and the Parliamentary Standing Committee on Health and Family Welfare has recently submitted its report. The Centre must now move forward through democratic consensus involving stakeholders.

  • The litany of human resource shortages is not peculiar to the PHCs. Vacant posts are found in the even more basic unit of Health Sub-Centres (HSCs), besides hospitals at higher levels. What this highlights is the patchy performance of the National Rural Health Mission in several States. Unfortunately, these States have failed to grasp the importance of PHCs and HSCs to reduce the country’s notorious maternal and infant mortality rates. Unless they act with determination, it will be impossible to achieve the growth in primary care so essential to cater to a much higher population just a decade from now. The Planning Commission’s High Level Expert Group on universal health coverage projects a need for 3.14 lakh HSCs (more than double the present number) and over 50,000 PHCs by 2022. To staff them with trained manpower, a robust plan to augment human resources must be pursued. Towards this end, the National Commission for Human Resources for Health Bill, 2011 provides an enabling framework. Yet, it can make progress only when all stakeholders, including the medical community and civil society, are agreed on the way forward. What is unarguable is the need for a rapid scaling up of training facilities for doctors, nurses and auxiliary workers, and filling up of vacancies in all States. Without this, universal health coverage cannot make much headway.

EU Promotes Potato to Replace Rice in Asia

  • The potato has a 12,000-year-old history but an even brighter future as a crop that is set to replace rice as a staple in the Asian rice-consuming countries.

  • It requires less amount of water compared to other basic food products, without compromising the nutrition value.

  • Potato, therefore, is increasingly being promoted, in the genetically modified organism-free European Union (EU), as the foremost solution for meeting the increased food demand for an estimated 6 billion world population by 2030.

  • Dutch researchers from the famous Wageningen University — dedicated to bio-based economy in food, feed and chemicals produced from renewable resources — told a visiting press delegation that if prepared in a healthy manner and consumed in the right proportion (balanced reduction of calories), consumers can benefit from the many nutrients and dietary fibres in the tuber.

Ammonium Nitrate, after Loose Imports, falls into Rebel Hands

  • The ambiguous rules governing the import of the chemical leave gaping holes in the system Amid a persisting terror threat, the handling of ammonium nitrate imports, and the ambiguous rules governing them, continue to leave gaping holes in the system which ultras keep exploiting. Even a naval base and an entire port are under threat.

  • Ammonium nitrate, used in fertilizers, is also one of the ingredients of improvised explosive devices (IEDs) that extremists rig up to perpetrate terror.

  • India imports a sizable amount of this explosive for use in its mines, but a portion goes missing.The Visakhapatnam Port, on the east coast, imports this material; it handled 3.4 lakh tonnes in 2011-12. But the chemical is imported unbagged, a practice that leaves ample scope for spillage, and possibly theft.

China Opens Longest High-speed Rail Line

  • China launched services on the world’s longest high-speed rail route, the latest milestone in the country’s rapid and — sometimes troubled — super-fast rail network.
  • The opening of the 2,298-km line between Beijing and Guangzhou means passengers will be whisked from the capital to the southern commercial hub in just eight hours, compared with the 22 hours previously.
  • China’s high-speed rail network was only established in 2007 but has fast become the world’s largest. The official Xinhua news agency said China now operates 9,300 km of high-speed railways.

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Courtesy: The Hindu