1. The FM’s call for industrial investment
Why did the Union Finance Minister urge industry giants to invest in manufacturing? Is private sector financing at an all-time low? Has government intervention to boost and spend aggressively on infrastructure come at an opportune time?
Last month, Finance Minister Nirmala Sitharaman asked captains of industry what was holding them back from investing in manufacturing. She said that, “This is the time for India… We cannot miss the bus”.
In an article in The Hindu, Pulapre Balakrishnan, argued that capital expenditure by the government is a precursor to private investment but that it would take a sustained trend in public spending, for about half a decade at least, to help kindle enthusiasm in the private sector.
Private companies invest when they are able to estimate profits, and that comes from demand. CMIE’s consumer sentiment index is still below pre-pandemic levels but is far higher than what was seen 12-18 months ago.
K. Bharat Kumar
The story so far:
Last month, Finance Minister Nirmala Sitharaman asked captains of industry what was holding them back from investing in manufacturing. She likened industry to Lord Hanuman from the Ramayana by stating that industry did not realise its own strength and that it should forge ahead with confidence. She said, “This is the time for India… We cannot miss the bus”.
Why did she urge them thus?
Clearly, the Finance Minister did not see investments happening at a pace she would have liked. In the hope of revitalising private investment, the government had in September 2019 cut the tax rate for domestic companies from 30% to 22% if they stopped availing of any other tax SOP (standard operating procedure).
Niranjan Rajadhyaksha, CEO of Artha Global, says that Indian private sector investment has been weak for almost a decade now. “If we look at drivers of economic growth right now, there are amber lights flashing. The export story will be under threat because of the global slowdown, the government’s ability to support domestic demand would also be limited as the fiscal deficit comes down. Because of the K-shaped recovery, private consumption is only concentrated in some parts of the income pyramid.”
What is the current scenario?
Let’s look at some indicators over the past few months; generally, changes in numbers are with respect to year-earlier figures, but when we have been through something as sudden and life-changing as a pandemic for at least two years, it is useful to see how figures from quarter to quarter or month to month have changed. This gives us an idea of how well or poorly we are recovering. In the GDP figures for the quarter ended June, gross fixed capital formation (GFCF) at 2011-12 prices rose 9.6% to ₹12.77 lakh crore, from ₹11.66 lakh crore in Q1 of FY20, which was the pre-pandemic period. This is in context of the overall GDP growth of 2.8% to ₹36.85 lakh crore in Q1 FY23 from ₹35.85 lakh crore in Q1 of FY20. Manufacturing GVA (gross value added) also rose 6.5% to ₹6,05,104 in Q1 FY23 from ₹5,68,104 in Q1, FY20. However, when one observes manufacturing growth from the immediately preceding quarter April-June vs January-March, we see that the sector has suffered a 10.5% contraction. While private final consumption expenditure, an essential pillar of our economy, climbed 26% year-on-year for the June quarter, the ₹22.08 lakh crore of private spending in April-June 2022 was a significant ₹54,000 crore, or 2.4%, less than that spent in the preceding quarter. And GFCF, which is viewed as a proxy for private investment, shrank quarter-on-quarter by 6.8%.
Industrial production has shown growth in each of the first five months of this fiscal year starting April, compared with a year earlier; but worryingly, monthly numbers as seen on the Index of Industrial Production (IIP) and the S&P Purchasing Managers’ Index (PMI) for Manufacturing have progressed in fits and starts. In an article in The Hindu, Pulapre Balakrishnan, argued that capital expenditure by the government is a precursor to private investment but that it would take a sustained trend in public spending, for about half a decade at least, to help kindle enthusiasm in the private sector. While the government’s intent to spend aggressively on infrastructure in its Budget for this fiscal is encouraging, he says this cycle should have started a few years ago. With the government having now announced intent, he says it must now focus on a couple of priorities; one that it must identify the right projects — investments must be made in productivity-enhancing infrastructure. Two, he warns that inflation could derail the best designed public spending programmes, and urges a step up in agricultural produce to help rein in food inflation.
What is happening to demand?
Private companies invest when they are able to estimate profits, and that comes from demand. The Centre for Monitoring Indian Economy’s (CMIE) consumer sentiment index is still below pre-pandemic levels but is far higher than what was seen 12-18 months ago. RBI’s Monetary policy report dated September 30 says, “Data for Q2 [ended Sept] indicate that aggregate demand remained buoyant, supported by the ongoing recovery in private consumption and investment demand.” It shows that seasonally adjusted capacity utilisation rose to 74.3% in Q1 — the highest in the last three years.
And this, along with household savings intentions remaining high, might hold the key to the investment cycle kicking in.
2. Why did the market regulator fine Bombay Dyeing?
Why is the real-estate vertical of the textile company under fire from the Securities and Exchange Board of India? What are the main allegations against the company?
On October 22, the Securities and Exchange Board of India (SEBI) barred ten entities, including Bombay Dyeing & Manufacturing Company Ltd (BDMCL) and its promoters Nusli Wadia, Ness Wadia and Jehangir Wadia from trading in the securities market for a period of up to two years.
SEBI found BDMCL guilty of abetting a scheme that would fall short of recognising Scal as an ‘associate’ and secondly, of using the premise of an indirect ownership scheme to incorrectly project profits.
The regulator noted that had the financial statements of Scal been consolidated, the inter se sales of flats from BDMCL to SCAL would not have been accounted for and therefore the ‘profit’ figures of BDMCL would have been reduced.
The story so far:
On October 22, the Securities and Exchange Board of India (SEBI) barred ten entities, including The Bombay Dyeing & Manufacturing Company Ltd (BDMCL) and its promoters Nusli Wadia, Ness Wadia and Jehangir Wadia from trading in the securities market for a period of two years. This was on account of alleged financial misrepresentation made by the entities with respect to their real-estate business. The market regulator also imposed a fine of ₹15.75 crore on the entities.
Bombay Dyeing has three verticals — home textiles, real-estate and polyester staple fibre (PSF). The investigation concerned their management of real-estate operations. The Wadia Group Company, Scal Services Ltd was engaged in the business of real-estate and trading. In February 2019, Scal’s real estate business was demerged and vested into the BDMCL. It was in March 2012 that BDMCL had sold a 30% stake in Scal — reducing its individual shareholding in the company to 19%.
SEBI’s conclusions are thus inter-related. Firstly, it found BDMCL guilty of abetting a scheme that would fall short of recognising Scal as an ‘associate’ and secondly, of using the premise of an indirect ownership scheme to incorrectly project profits. Accounting Standard-23 (or AS-23) requires a company to recognise its investments in an associate in order to ensure transparency for a retail investor who might invest in their company. Unless specifically established, an entity is to be categorised as an ‘associate’ to the main entity should the latter hold 20% or more shareholding in the former. As previously stated, BDMCL kept it at 19%, thus, allegedly escaping the necessity for regulatory disclosures. SEBI noted that Wadia Group’s other companies held the remaining shareholding of Scal.
To summarise, the regulator observed that BMDCL directly or indirectly held the entire share capital of all the entities which held share capital in Scal.
How was it to be executed?
In a nutshell, the scheme entailed BDMCL selling flats and allotment rights to Scal (whose ownership was allegedly retained by the group) and ensuring that it continued to recognise the revenues based on certain Memorandum of Understandings (MoUs), irrespective of whether or not the properties were further sold to retail customers by Scal. In other words, BDMCL could tell investors about having made a sale wherein in fact, it was allegedly just passing it on to an ‘in-house’ entity. The agreements recognised Scal as a ‘bulk purchaser’, and as per the formulated model, it was required to sell these apartments to retail customers and make payments to BDMCL. However, as noted by the regulator, while BDMCL recognised the sales made to Scal in its financial statements, this was not the case with Scal. The latter only recorded the difference between sales and purchase of flats, similar to a commission. Thus, SEBI concluded that Scal was “acting as an agent of BDMCL rather than acting on principal-to-principal basis”.
What were the consequences?
The regulator noted that had the financial statements of Scal been consolidated (with the main company), the inter se sales of flats from BDMCL to SCAL would not have been accounted for and therefore the ‘sales’ and ‘profit’ figures of BDMCL would have been reduced. As per SEBI, BDMCL was able to inflate its sales by ₹2,492.94 crore and consequently profit by ₹1,302 crore between FY 2011-12 to FY 2017-18. Thus, it was able to present itself as a profit-making enterprise.
This, advertently, helped maintain its share price.
3. GEAC gives its nod for commercial cultivation of GM mustard yet again
The Genetic Engineering Appraisal Committee (GEAC) that functions under the Union Environment Ministry has yet again cleared the proposal for commercial cultivation of genetically modified (GM) mustard. Though the GEAC cleared the proposal in 2017, the Ministry vetoed it and suggested that the panel hold more studies on the GM crop.
The GEAC had gone through the details submitted by the applicant, Centre for Genetic Manipulation of Crop Plants (CGMCP), and gave necessary approvals for the cultivation of GM mustard. This will be the second GM crop after GM cotton that can be commercially cultivated in the country now.
A GEAC meeting held on October 18 allowed the environmental release of two varieties of genetically engineered mustard, so that it can be used for developing new parental lines and hybrids under the supervision of the Indian Council of Agriculture Research (ICAR). “The environmental release of mustard hybrid Dhara Mustard Hybrid (DMH-11) for its seed production and testing as per existing ICAR guidelines and other extant rules/regulations prior to commercial release,” the minutes of the meeting said.
Considering the application of the CGMCP, the GEAC also set certain conditions for the clearance. It includes that the approval is for a limited period of four years and is renewable for two years at a time based on compliance report. External experts will visit the growing sites of the crop at least once during each season.
The applicant should also develop and deposit the DNA fingerprints of the approved varieties to the ICAR.
Activists questioned the decision of the GEAC. Kavitha Kuruganti of the Coalition for a GM-Free India warned the Centre against any such approval. She reminded Union Environment Minister Bhupender Yadav that he himself had written against GM crops earlier.
Genetically Modified Organisms (GMOs)-
- They are living organisms whose genetic material has been artificially manipulated in a laboratory through genetic engineering in order to favour the expression of desired physiological traits or the generation of desired biological products
- This creates combinations of plant, animal, bacteria, and virus genes that do not occur in nature or through traditional crossbreeding methods.
- Most GMOs have been engineered to withstand the direct application of herbicide and/or to produce an insecticide.
- However, new technologies are now being used to artificially develop other traits in plants, such as a resistance to browning in apples, and to create new organisms using synthetic biology.
Genetically Modified (GM) Crops
- They are that type of plants whose DNA has been modified through genetic engineering for embedding a new trait to the plant which does not occur naturally in the species.
- Genetic engineering aims to transcend the genus barrier by introducing an alien gene in the seeds to get the desired effects and the alien gene could be from a plant, an animal or even a soil bacterium.
- Across the world, GM variants of maize, canola and soybean etc , are available.
- It improves production and raises the farmer’s income.
- It reduces the use of pesticide and insecticide during farming that might be great moves for the betterment of the food supply.
- It can feed a rapidly increasing population because it shows dramatically increased yields.
- It can produce more in small areas of land.
- The production imposes high risks to the disruption of ecosystem and biodiversity because the “better” traits produced from engineering genes can result in the favouring of one organism.
- Hence, it can eventually disrupt the natural process of gene flow.
- It increases the cost of cultivation and more inclined towards marketization of farming that works on immoral profits.
- The transgenic crops endanger not only farmers but also the trade, and the environment as well.
GM crops in India:
- Bt cotton, the only GM crop that is allowed in India since 2002, has two alien genes from the soil bacterium Bacillus thuringiensis (Bt) that allows the crop to develop a protein toxic to the common pest pink bollworm and the other is Ht Bt cotton which is derived with the insertion of an additional gene, from another soil bacterium, which allows the plant to resist the common herbicide glyphosate.
- In Bt brinjal, a gene permits the plant to resist attacks of fruit and shoot borers.
- Previously, the government has put on hold the commercial release of genetically modified (GM) mustard due to stiff opposition from anti-GM activists and NGOs.
The legal position GM crops in India
- In India, the Genetic Engineering Appraisal Committee (GEAC) is the apex body that allows for commercial release of GM crops and works under the aegis of the Ministry of Environment, Forest and Climate Change (MoEF&CC).
- It is responsible for the appraisal of activities involving large scale use of hazardous microorganisms and recombinants in research and industrial production from the environmental angle.
- The committee is also responsible for the appraisal of proposals relating to the release of genetically engineered (GE) organisms and products into the environment including experimental field trials.
- Use of the unapproved GM variant can attract a jail term of 5 years and a fine of Rs 1 lakh under the Environmental Protection Act,1989.
Regulation of Imported Crops:
- The task of regulating GMO levels in imported consumables was initially with the Genetic Engineering Appraisal Committee (GEAC) under the Union environment ministry.
- Its role was diluted with the enactment of the Food Safety and Standards Act, 2006 and FSSAI was asked to take over approvals of imported goods.
4. ISRO to boost NavIC, widen user base of location system
Space agency chief says plans afoot to give it a global reach; increase the number of satellites; add bandwidth most used for civilian navigational use; and strengthen the safety of signals
The Indian Space Research Organisation (ISRO) is working on a series of improvements to NavIC, or India’s equivalent of the Global Positioning System (GPS), so that more people are motivated to install and use it. Plans are also afoot to give it a global reach, S Somanath, ISRO Chairman, said on the sidelines of the India Space Conference on Wednesday.
NavIC (Navigation with Indian Constellation), or the Indian Regional Navigation Satellite System (IRNSS), is a constellation of seven satellites akin to the U.S. GPS, the European Galileo and the Russian GLONASS, and can be used to track location.
Though available for use in mainland India and within 1,500 km around it, the system is not in wide regular use in India primarily because mobile phones have not been made compatible to process its signals. The Indian government has been pressing manufacturers to add compatibility and has set a deadline of January 2023, but media reports suggest this is unlikely before 2025.
Mr. Somanath told The Hindu that adding the L1 band into NavIC would be a major change. This bandwidth is part of the GPS and is the most used for civilian navigational use. “Currently NavIC is only compatible with the L5 and S bands and hasn’t easily penetrated into the civilian sector,” he said. “ Currently (NavIC) only provides short code. This has to become Long Code for the use of the strategic sector. This prevents the signal from being breached. This had been part of the original scheme for NavIC, but less work has gone into it,” he added.
There are five more satellites in the offing to replace defunct NavIC satellites that would be launched in the coming months. However, to make NavIC truly “global”, more satellites would need to be placed in an orbit closer to earth than the current constellation, said Somanath.
- It is an Indian Regional Navigation Satellite System or IRNSS.
- It was developed in India by Indian Space Research Organisation (ISRO) and its commercial wing ANTRIX.
- It consists of 8 satellites located at a distance of approximately 36,000 Km. Currently, 7 satellites are active.
- 3 satellites are in Geostationary Orbit (GEO)
- 5 satellites are in inclined Geosynchronous Orbit (GSO)
- The objective of the NavIC is to provide navigation, timing, and reliable positioning services in and around India.
- Working of the NavIC is very similar to the Global Positioning System (GPS) implemented by the United States.
- The NavIC is certified by 3GPP (3rd Generation Partnership Project) which is responsible for coordinating mobile telephony standards globally.
Indian Regional Navigation Satellite System (IRNSS)
- It is an independent regional navigational satellite system developed by India.
- It is being designed to give precise position data service to users located in India and also to users in the area out-spreading up to 1500 Km from India’s boundary.
- The two kinds of services provided by IRNSS will be:
- Standard Positioning Service (SPS) and
- Restricted Service (RS).
- The system can offer a position accuracy of more than 20 m within India which is the primary area of service.
The IRNSS is being constructed by the Indian Space Research Organisation (ISRO) and is wholly under the Indian government’s control. The need for such a system of navigation is that the availability of global satellite navigation systems like the GPS is not assured in hostile conditions.
Commercialization of NavIC
- Antrix, the commercial arm of ISRO has floated two separate tenders to identify industries that can develop dedicated NavIC-based hardware and systems.
- Suitable device manufacturers are being identified along with integrators of NavIC-based systems.
- NAVIC is being commercialized for the following reasons:
- Navigation (Aerial, marines and terrestrial)
- Maps (Charting, Plotting and Geodetic data capture)
- Disaster Management
- Fleet Management and Vehicle Tracking (important during mining and transport operations)
- Mobile phone integration
- Precise timing (useful for power grids and ATMs)
- The Ministry of Road Transport and Highways has mandated that all national-permit vehicles must have such tracking devices. As a pilot, many fishing boats have been fitted with these devices that have a unique texting facility.
- The 3GPP certification will allow multiple possibilities of further commercialization of NavIC.
NAVIC (Navigation with Indian Constellation) 2019
There are a few recent developments in the NAVIC (Navigation with Indian Constellation) according to ISRO:
- The leading semiconductor manufacturer Qualcomm Technologies Inc. developed and tested NavIC-friendly chipsets.
- This will help NAVIC support upcoming Automotive, Mobile and IoT applications and platforms.
- The collaboration will enable superior location-based services to India’s industries and technology ecosystem.
Countries with their own Navigation Satellite System
Some of the countries provide navigation systems on a global scale, some of them provide navigation on a regional scale. The following countries have their own navigation satellite system.
- The United States Global Positioning System (GPS) – World’s most used GPS system, operational from 1978. Constellation of 32 satellites.
- Russian GLONASS – It provides global coverage. It has a total of 26 satellites.
- European Union Galileo – Became operational in 2016, with a constellation of 30 satellites.
- Chinese BeiDou – Currently it provides regional coverage of the Asia- Pacific region, plans to provide global coverage by 2020. It has a total of 35 satellites.
- Japanese Quasi-Zenith Satellite System (QZSS) – It is a regional satellite system covering Japan and the Asia-Oceania region. It has a total of 4 satellites, 7 are planned.
- India (IRNSS-NAVIC) – Constellation of 8 Satellites.
5. Bats evicted from Manipur cave for tourism, says study
A colony of bats was evicted from a Manipur cave system with a Palaeolithic past to make it tourist-friendly, a zoological study that recorded new fauna in the State has said.
The Khangkhui, locally called Khangkhui Mangsor, is a natural limestone cave about 15 km from Ukhrul, the headquarters of Ukhrul district. Excavations carried out by Manipur’s archaeologists had revealed the cave was home to Stone Age communities.
The cave was also used as a shelter by the local people during the Second World War after the Japanese forces advanced to Manipur and the adjoining Nagaland. More importantly for conservationists, the cave housed large roosting populations of bats belonging to the Rhinolophidae and Hipposideridae families.
A study published in the Journal of Threatened Taxa by researchers from the Zoological Survey of India (ZSI) cited local guides as saying that the bats were killed and evicted from the Khangkhui cave after 2016-17 purportedly to make it “more tourist-friendly”.
The researchers — Uttam Saikia and A.B. Meetei, both from ZSI’s North East Research Centre in Shillong — recorded Blyth’s horseshoe bat in the Khangkhui cave during two extensive field surveys covering nine districts of Manipur in 2019 and 2021.
This bat was one of 12 new species added to Manipur’s mammalian fauna. The others included the ashy roundleaf bat, the intermediate horseshoe bat, the northern woolly horseshoe bat, the greater false vampire bat, the hairy-faced bat, Hodgson’s bat, Hutton’s tube-nosed bat and the round-eared tube-nosed bat.
Shanngam Shaliwo, Divisional Forest Officer, denied any planned extermination of the flying mammals. “No such killing of bats has been reported in our office,” he told The Hindu. He said the cave has been steeped in the folklore of the dominant Tangkhul community, whose ancestors believed it was the abode of a protective deity.
The study mentions places in Manipur where bats are eaten for “supposed medicinal properties or as a supplementary source of protein”.
“In Wailou village in Chandel district, we were informed that people do occasionally hunt bats in a cave though this practice is not widespread throughout the State. Another serious threat we noticed is the death of bats as unintended victims of illegal bird traps,” the study said.
6. Editorial-1: Colonialism and its discontents today
A popular theme at seminars this autumn is de-colonisation. The concept notes explaining the theme treat it like a new deodorant — much required, of course, and expected to cure a chronic problem for good. Not that earlier generations had ignored it, but perhaps they lacked determination and propitious circumstances. The urge to undo the various legacies of colonisation was always there. Why the previous struggles failed arouses little curiosity in today’s crusaders against the colonial mindset. There is something about the idea of fighting colonialism that it excites each time the call is made.
As an ideology, colonialism has an inbuilt device to deal with reactive moods of the colonised. These moods vary according to economic and political seasons. Citizens of former colonies typically feel more comfortable when they are passing through a good phase of their collective economic life. Conversely, they get twitchy when growth slows down. Another mood swinger is politics. The colonial phase of history is a great political resource. In a multi-party system, it is easy to invoke the ghost of colonial legacy. Once aroused, the ghost performs reliable tricks to attract public attention.
Stances and politics
The young often wonder why the freedom struggle did not suffice to de-colonise. Good history teachers know how to explain that the legacies of colonial rule include the strategies that helped attain freedom and some of the rights we enjoy today. It is a complex idea and its absorption depends on whether history is taught in order to develop historical sense rather than to demarcate periods. In a recent official presentation at an international forum, India tried to make a distinction between foreign attacks and colonisation. Though it is probably the first time that India took this position, the idea itself is not new. The temptation to privilege one historical phase over another is part of an urge to use the past as a political resource. And this urge is not confined to the colonised nations. India’s coloniser, Britain, has been doing this quite avidly in the recent years.
De-colonisation received a major official push in several African colonies after they attained freedom. In education, language was a focus area, but the choice did not prove wise. Entrenched social inequalities came in the way of ideal goals. In India, we have experienced this trajectory several times over, but the fascination of radical stances has not diminished. Removal of English is a big draw among political parties which promise to exorcise India’s mind, body and soul from the ghost of colonialism. Alas, among the youth, English shows no sign of becoming unpopular. As Snigdha Poonam has documented in her remarkable study of provincial youth culture, ‘spoken English’ has emerged as a major component of the coaching industry.
Several years ago, a colleague wrote an article, ‘De-Macaulaying Indian Education’ and asked me to comment on it. The title was a bit awkward, but that was hardly a problem, I assured him. What he did not appreciate was the critical point that Macaulay contributed little to the British policy on education in India. It would have been just the same even if Macaulay had not written his poisonous note. My colleague was not amused. Most people feel quite disappointed when they learn that the history of education in colonial India was not much affected by Macaulay’s famous minute. His racist ideas and the policies implied in his analysis of the Indian situation were far too flat to be of much use for British administrators in charge of education in different regions. Nevertheless, it is a fact that Macaulay resides in the hearts of examination paper setters for the B.Ed. degree. Take him out, and the syllabus of colonial education loses its favourite sting. Not just students, all lovers of simplified history depend on Macaulay to show off their shooting skills.
Colonisation was experienced differently across regions, classes and castes. That is a prime reason why de-colonisation remains so elusive. The various Indian discourses of the latter half of the 19th century show why it is difficult to paint colonial education in any single colour. Majoritarian nationalism has picked up English as a de-colonisation plank. Phule’s appreciation of English education was grounded in its potential to wipe out discrimination against the lower castes.
Nationalism is a fine guiding spirit of progress, but seldom proves accommodative enough to denounce the diverse legacies of colonialism. They evolved regionally in different time frames, creating complex contours of public perception. When a clarion call is made to overcome the ‘colonial mindset’, it seems inspired by colonialism itself.
Since Independence, enormous change has occurred in every social sphere, and some of it demonstrates the continued legacy of colonial history. No one-dimensional theory of colonialism and modernity can explain the changes that have occurred in different regions. Within education too, anti-colonial voices have taken so many twisted turns that a school-going child’s parent or teacher does not quite know whom to believe or follow. This is certainly one reason why valid, sincere calls to abandon English receive little attention from young parents.
Its stamp remains
Colonial rule is a faint collective memory now. Though many of its icons have been removed or replaced, its stamp on governance remains intact. The colonial citizen was an object of suspicion. The core pedagogy of colonial rule consisted of reaching out to the citizen with the state’s moral rhetoric. Colonial civics assumed that average citizens are docile and ignorant, that it is the state’s job to enlighten — and not just serve — them. That they must participate is a popular political and official rhetoric. It has become a lot louder in the digital age, without making much of an impact on the everyday reality of the citizenry.
It is never a good idea to fight with the past, no matter how old it is. Maturity lies in learning to live with the past, not in it — under the illusion that it can be changed. The past is the past, therefore inaccessible for human intervention. To study it with curiosity is a preferable option to quarrelling with it or harming the few tangible relics it has left behind. Colonised societies suffered similar consequences, such as drainage of wealth and the emergence of a state apparatus that the common people found difficult to identify with. Their fear of the state and the state’s distrust of the citizen ought to be the prime agenda for anyone pursuing de-colonisation.
7. Editorial-2: An unkind hike
Amid sticky inflation, small savings rates should have been pegged higher
The Government recently increased the returns on a handful of small savings instruments for the ongoing October to December quarter by 0.1 to 0.3 percentage points. Popular investment avenues for the middle class such as the Public Provident Fund (PPF) and the National Savings Certificate were left out. On paper, the returns on these instruments are to be reset on a market-determined basis, with a spread of 0 to 100 basis points (one basis point equals 0.01%) over the yields on government securities with comparable maturities. That this has not been adhered to is evident even at a cursory glance, given the long pause between rate changes. Following interest rate hikes this year to curb inflation, government securities’ yields have been shooting up. This month, the Reserve Bank of India (RBI) said that interest rates offered on various schemes in the current quarter are 44 to 77 basis points below the formula-implied rates. The PPF, for instance, should have been earning 7.72% this quarter instead of the 7.1% accruing now. It is noteworthy that the central bank, which usually publishes the formula-based small savings rates every month or two, had not spelt them out from May to September, although it did note in August that the spread between current rates and the formula-based rates had turned ‘negative for most’ schemes.
For households that have been grappling with 6%-plus inflation since January, punctuated by a few months of 7%-plus price rise, these meagre hikes are far from enough to lift sentiment. Bear in mind that this was the first change in these schemes’ rates in 27 months — after a sharp cut in the range of 0.5 and 1.4 percentage points across schemes introduced in April 2020. That political considerations still determine the trajectory of small savers’ nest-egg sizes can be gauged by the few recent occasions when rates were changed, or rolled back. The last time rates were hiked was in January 2019, just ahead of the Lok Sabha election. In March 2021, the Government had announced further cuts ranging from 0.4% to 1.1%, but withdrew the decision overnight, citing an ‘oversight’ amid a poll campaign for five States. However, even as a token gesture to voters in upcoming polls, this latest tweak in small savings rates does not make the cut. As the RBI’s top brass warned earlier, negative returns have serious consequences for the economy if households, which are the biggest lenders, stop parking their savings in such fixed income instruments and banks. The next quarter should see a fairer and healthier reset of returns to negate inflation’s dent on household savings.
8. Editorial-3: Despite crackdown, pollution spikes sharply in south and west
Along with PM2.5 pollution, there were increases in CO, NH3, NO, NO2 and SO2 levels
State governments across India announced various degrees of restrictions on bursting crackers this Deepavali. While the measures seem to have worked to an extent in eastern India and parts of the north, cities in the south and west reported record pollution levels on Deepavali.
Pollution during Deepavali spikes due to firecrackers. In 2016, the Chest Research Foundation of India, Pune, conducted a series of experiments on firecrackers to determine the quantum of PM 2.5 particles emitted. For instance, the snake tablet produced a peak PM 2.5 level of 64,500 μg/m3 (micrograms per cubic metre). PM 2.5 is particulate matter that has a diameter equal to or less than 2.5 microns. Graph 1 depicts the peak levels of other types.
The Tamil Nadu, Punjab and Karnataka governments announced a two-hour window to burst crackers. In West Bengal and Haryana, only green crackers could be sold. In Delhi, there was a complete ban on crackers. There were similar measures in other States. Graph 2 shows the PM 2.5 levels in μg/m3 recorded every hour between January 1, 2018 and October 25, 2022, in a measuring station across select cities. Each dot corresponds to the average PM 2.5 level in an hour. The higher the dot, the more the pollution. Deepavali days in the past five years are highlighted.
The restrictions in place combined with the effects of Cyclone Sitrang ensured that the PM 2.5 levels did not cross 50 μg/m3 in any of the measuring stations in Kolkata. It stayed below India’s 24-hour PM 2.5 limit of 60 μg/m3 during Deepavali hours.
While no other State recorded such a drastic drop in pollution this Deepavali, there was a general decline in the eastern and northern parts. Lucknow and Noida recorded the smallest Deepavali-day pollution spike in the last five years. Anand Vihar in Delhi saw a significant spike, but the level of pollution stayed below the levels seen in the last four years during Deepavali. In Amritsar and Gurugram, alarming levels of PM 2.5 pollution levels were recorded, but they did not reach the peak recorded in previous years.
On the other hand, in Andhra Pradesh’s capital Amaravati, at 10 p.m. on October 24, the PM 2.5 level peaked at 793 μg/m3 — the highest for any hour since the 2018 Deepavali spike. Bengaluru’s Silk Board station peaked at 633 μg/m3 — the highest in the last five years. Sanathnagar station in Hyderabad peaked at 731 μg/m3 — the highest since 2019. Chennai’s Velachery station peaked at 694 μg/m3 — the highest for any Deepavali day since 2018. Mumbai too recorded a spike during Deepavali though the levels paled in comparison to other cities. In Ahmedabad and Jaipur, the PM 2.5 levels reached nearly 999 μg/m3 on many Deepavali hours — the limit up to which the devices can record the pollution level.
Peaks in other types of air pollution can also be seen on Deepavali days. Graph 3 shows hourly levels of carbon monoxide (CO), atmospheric ammonia (NH3), nitrous oxide (NO), nitrogen dioxide (NO2), PM10 (particulate matter equal to or less than 10 microns) and sulphur dioxide (SO2) measured in the Velachery station in Chennai. There was a sharp spike in all these air pollutants during Deepavali hours. NO2 and SO2 levels peaked this year during Deepavali. NO and CO were close to the peak levels recorded earlier this year.
NO2 exposure affects lung function. According to the WHO, hospital admissions for cardiac disease and mortality increase on days with higher SO2 levels. Increase in CO levels is linked to congestive heart failures in the U.S.