[UPSC Newspaper Clips] June 12, 2020

UPSC Newspaper Clips


Date:12-06-20

Baghjan Inferno

Compensation must be sought to address massive ecological damage

TOI Editorials

The massive inferno at the Baghjan oil well in Assam’s Tinsukia district has unfortunately claimed the lives of two firefighters, one of them a former national level footballer. The fire broke out on Tuesday after the Oil India Ltd (OIL) well spewed gas for 14 days following a blowout on May 27. Although authorities were able to evacuate 1,600 families in the area, the fire has caused massive damage to surrounding biodiversity. The Maguri-Motapung wetland – an important bird and biodiversity area since 1996 – is just 500 m away from the damaged oil well, while the 340 sq km Dibru Saikhowa National Park is 800 m from the site. Ground reports suggest that the wetland – which hosted 80 fish and 300 bird species every year – has been completely destroyed, with the Dibru river that cuts through it full of dead fish and even river dolphins.

Meanwhile, falling oil condensate is posing a serious threat to biodiversity at the national park. Environmentalists believe it will take years to restore the eco zones. While two officials have been suspended for alleged negligence that led to the blowout and a probe is underway, there also needs to be accountability for the serious environmental damage. Often such industrial accidents ignore habitat destruction and focus solely on compensating affected people. But as the current Covid-19 pandemic and increasing extreme weather phenomena show, unbridled destruction of the environment can have serious long-term consequences.

Given the interconnectedness of the natural world, it’s time we lay greater emphasis on the ecological impact of human activities. This means transparent assessment of environmental impact of projects and built in provisions for environmental compensation in case of accidents. Given the scale of damage from the Baghjan inferno, an example needs to be set by holding OIL to account for biodiversity destruction.


Date:12-06-20

Why The Stimulus Won’t Work

Public sector banks are not equipped to implement Covid stimulus package

Hardayal Singh ,  [ The writer was additional secretary, Central Vigilance Commission ]

The Centre’s recent stimulus package of Rs 20 lakh crore to tackle the economic disruption caused by the spread of the novel coronavirus, point out critics, hardly puts any money in the pocket of the aam admi. The budgetary impact of the recent measures announced by the FM in five press conferences is only about Rs 2 lakh crore, or about 1% of the GDP. The remaining 90% of the package is directed largely towards making it easier for industry, MSMEs and even street vendors to borrow from banks.

The government appears to have its own justification for this strategy. Even before the present crisis broke out the finances of Centre and state governments were badly stretched; the actual fiscal deficit for the Indian economy stood at about 8% of GDP. The Centre wanted to avoid a repetition of the crises of 1991 and 2013, both of which were caused in part by unacceptably high fiscal deficits and inflation. Currently, when growth has crashed and inflation is by and large benign, the government felt it had space to provide only a large monetary rather than fiscal stimulus. Besides, it wants to keep some ammunition for the rest of the year.

PSBs are expected to play a key role in the execution of this strategy. And there lies the rub. Although the banking system has been awash with liquidity for some time now, PSBs are hardly lending. Over the past 20 years, they have oscillated between reckless lending borne out of irrational exuberance, and extreme caution borne out of the fear psychosis of four Cs – courts, CVC, CAG and CBI. At the moment they are in the latter phase.

The genesis of the problem can be traced back to the 90s. CVC was then flooded with cases relating to the Harshad Mehta scam. While this saga was taking place, all banks bent backwards to finance a small coterie of brokers who carried out speculation in shares, in violation of banking norms.

I dealt with these cases after I joined CVC as its additional secretary. The difficulty at that time was that the term “vigilance angle” was defined very subjectively. We often overruled banks and inferred ulterior motives when managers had flouted banking manuals to follow market practices. As a result many bankers, with promising careers, were handed out severe punishments, creating a scenario very similar to what exists today.

Bank managers often complained to the Commission that vigilance regulations devised for government departments were ill suited for commercial organisations. In 1998, they succeeded in persuading CVC to formulate a special chapter on vigilance management in PSBs. When we wrote this chapter, we tried providing some succour to bankers. The special chapter noted that risk taking formed an integral part of banking; it would therefore be unfair to use hindsight to question purely commercial decisions from a vigilance point of view.

The Commission also decided that, as laid down by the Supreme Court, henceforth it would limit the jurisdiction of vigilance officials to only those cases where malafides could be inferred from the facts of a case; where a bank manager was involved in a misdemeanour; or where he had caused wrongful loss to his organisation; or wrongful gain to a private party. Vigilance proceedings could also be instituted where a person had acted recklessly; exceeded his powers or jurisdiction; or had shown gross or willful neglect of his official functions.

In 2004, the Commission relaxed these standards still further and left it to internal committees of banks to decide whether a vigilance case existed or not when lapses came to light.

All these steps failed to help. In 2008, after the global financial crisis broke out, the finance ministry again goaded PSBs to lend liberally. As a result, they took on huge exposures to mega projects in the power, coal and steel sectors of the economy. Both the entrepreneurs as well as PSBs failed to anticipate the environmental and other regulatory hurdles which paralysed these projects; understandably, their costs soared.

By FY18, NPAs in the Indian banking system stood at Rs 10.35 lakh crore or 9.3% of all advances and loans. 85% of these related to PSBs. While some of these loans reflected bad commercial decisions; some reflected ulterior motives – attributable to the decision makers themselves, or the persons at whose behest they acted.

Under these circumstances, to expect PSBs to lend liberally again is a tall order indeed: They have had serious leadership and HRD issues for quite some time now. Most of their managers have risen from the ranks; and they have often been subjected to all kinds of political pressures. Their boards too are packed with political favourites and hardly any possess professional expertise.

Between FYs 09 and 19 the government has infused Rs 3.15 lakh crore of taxpayer funds into these entities, but without much success. In her press briefings, the FM should have discussed how she intends to make them more effective. Mergers per se are hardly a solution.

Our 50 year experience with government ownership of banks leads us to only one conclusion: Banks cannot run on political and bureaucratic directives. As suggested by the JP Naik Committee, government must transfer ownership of PSBs to a holding company and allow them to be run by fully empowered professional boards. Alternatively, while these banks still have some market value, the government should consider reducing its fiscal deficit by privatising these banks, as soon as possible. At the end of the day, they have to sink or swim on their own!


Date:12-06-20

Why India Should Have a New Bad Bank

ET Editorials

The proposal for a new bad bank has been doing the rounds at least since 2018, but has stalled on the vital question of who would own it. There already are 20-odd private asset reconstruction companies, and these have been unable to buy bad loans off the banks on any large scale. Why assume that one more private bad bank would be any more effective? On the other hand, if the State sponsors the new bad bank, it would amount to a State-directed shuffling of bad assets from one State-owned entity to another, with no clarity on the pricing of deals. The solution is to create a bad bank sponsored by the major banks, public as well as private. If such a bad bank buys assets cheaper than normal, its profits would be larger than normal but would go back to the banks themselves, making it more palatable.

The name bad bank is deceptive. It should serve more as an asset management-cum-project execution agency, to resolve the bad loans it buys from banks. Many of the bad loans on bank books are inherently viable projects, given a haircut to reduce bloated project costs. Many real estate projects got stuck for want of liquidity from a market without a supplier of long-term project finance, real estate depending on non-banking financial companies that rolled over commercial paper to finance their short-term loans. Power projects are victims of states’ reluctance to force consumers to pay for the power they consume. For the Indian economy’s post-Covid recovery, politics has to stop patronising power theft and power giveaways, and a bond market has to be created, so that long-gestation projects can finance themselves with long-term bonds. If these conditions are met, a bad bank will become feasible.

Banks must be free to lend, for growth to pick up. Burdened as they would be with bad loans running to Rs 13-14 lakh crore post-Covid, banks will not lend, unless they can park their bad loans with someone without being accused of selling the assets off too cheap. A bad bank collectively owned by the banks in proportion to their bad loans would blunt the criticism. It must be given a chance.


Date:12-06-20

Seize the Online Education Opportunity

ET Editorials

The closing down of classrooms due to the Covid-19 pandemic has given new impetus to online education and instruction. As universities, colleges and other higher educational institutions were forced to close campuses down, instruction had to move to the digital mode. This emergency shift has opened up an opportunity. Indian educational institutions and companies should seize this opportunity, global as well as national.

The economic contraction resulting from the pandemic will squeeze the fiscal room to step up public investment in education. This provides education entrepreneurs and institutions an opportunity to bridge the education deficit by creating content. Monetising the opportunity creates a revenue stream for educational institutions to improve their infrastructure and their brick-and-mortar and virtual offerings. Online education can supplement, not substitute, classroom education, and, in the process, transform the traditional offering. Online coaching will flourish but, that apart, going digital would help traditional educational institutions and educators to significantly augment their efficacy as well as teaching resources, whose nature would evolve as access to cloud computing increases, say, to make use of virtual or augmented reality for rich educational content.

This push to create quality content, to digitise classroom teaching, should be leveraged for the global market as well. This can be a critical tool to improve educational outcomes in countries of the developing south, particularly countries where the medium of education is English. India has an edge in science, engineering and mathematics, and the digital content that has been developed can help Indian educational institutions and companies access the overseas market for supplementary education.


Date:12-06-20

Inferno In Assam

Oil field blaze shows up ill-preparedness in disaster prevention and management. Accountability must be fixed

Editorial

By all accounts, the blowout and fire at the Baghjan oil field in Assam’s Tinsukia district appeared to have caught Oil India Limited (OIL), which operates the facility, off guard. Though OIL has been running oil/gas wells in Upper Assam for years, it appeared woefully short of expertise to contain the damage from the blowout. The gas leak has caused extensive devastation in the Dibru-Saikhowa National Park and Maguri-Motapung wetland and forced villagers in the neighbourhood to flee the area — over 7,000 persons are now lodged in relief camps. On Tuesday, two firefighters with OIL died, fighting the blaze.

The gas leak was first reported on May 27 from a well that was under renovation. When OIL could not contain the leak, a blowout control firm in Singapore was tapped, whose personnel, however, reached the site reportedly only on June 8. Two days later, on Tuesday, 14 days after the blowout, Baghjan 5 well caught fire. The blaze has since been contained, but it may take another four weeks for the situation to return to normal. A blowout at an OIL facility at Dikom, Dibrugarh, in 2005 could be contained only after 45 days and another accident at an ONGC facility in Sibsagar district was brought under control only after three months. The cause of the blowout at Tinsukia will be known only after a probe. But what appears already clear is that India’s second-largest hydro-carbon exploration and production PSU did not have an adequate safety and disaster management plan in place. The toll in Tinsukia may not be limited to the two brave firefighters. A biosphere reserve faces the prospect of extinction because of the accident. It may take a while to assess the whole impact on the lives and livelihoods of people living in the vicinity of the oil field — local residents have protested the delayed and tardy evacuation process.

The political economy of Upper Assam revolves around cash-rich companies like OIL — the nature of the oil and gas industry was one of the triggers of the Assam agitation four decades ago. Public safety and sensitivity to the local environment have to be an integral part of its managerial vision. In light of the Tinsukia incident, authorities need to review the running of these facilities and beef up safety measures or their very presence in the region will be increasingly questioned.


Date:12-06-20

Drawing the line

As Nepal paints itself into a corner on Kalapani issue, India must tread carefully

Shyam Saran , [ The writer is a former foreign secretary and is senior fellow CPR. He was India’s ambassador to Nepal 2002-04. ]

On June 10, Nepal’s House of Representatives unanimously approved the tabling of an amendment to the country’s constitution which will now formally depict nearly 400 sq km of Indian territory extending west from the Lipulekh Pass, and including it, as part of Nepal’s sovereign territory. While it remains to be passed by the Upper House and signed by the president, the die has been cast. In doing so, Nepal has etched its territorial claim in stone which would make any concession by this or any future government of Nepal virtually unthinkable.

After the vote, Nepal’s Foreign Minister Pradeep Kumar Gyawali declared: “We are for starting dialogue soon. The problem will be resolved through diplomacy.” Short of expecting India to accept the fait accompli determined unilaterally by Nepal, what will diplomacy achieve? India should be prepared to engage in a dialogue on this and other outstanding border issues, but Nepal’s brinkmanship has made it much more difficult to explore a mutually acceptable solution. Gyawali said that the dialogue will be carried out “on the basis of historical facts”. Perhaps that offers an opening although I doubt that any “facts” contrary to what have been adduced by the Nepali side will be countenanced. But let us review the “historical facts”.

One, Nepal bases its claim to the additional territory now included in its official map on the Anglo-Nepal Treaty of Sugauli of 1816, which determined the Kali river as the western boundary between British India and Nepal. An East India Company map has been produced from the archives to show that the British considered the tributary of the Kali River, the Limpiyadhura, as its main channel. But a map drawn up in 1879 after surveys had been carried out shows the boundary along a ridge just west of the Tinker Pass. As per this and later official British maps and what India claims, Kali River originates from a natural spring at Kalapani, where it is joined by a rivulet flowing down from Lipulekh Pass. This was not challenged then nor at any time subsequently until after 1990. In fact, Nepali maps have all along reflected the same alignment. Some Nepali journalists and scholars now argue that the monarchy, first under King Mahendra and later under King Birendra, was reluctant to raise this issue with India for fear of Indian reaction. This is laughable as both the monarchs thrived on a diet of anti-Indian nationalism.

Two, India had, in the early 1950s, set up, with the consent of Nepal, a string of military-cum-police posts along the Nepal-China border after the Chinese occupied Tibet. There were either 17 or 18 posts altogether and they remained in place until 1969. In that year, Kirti Nidhi Bisht, the Nepali Prime Minister, on the instructions of King Mahendra, asked Indira Gandhi to withdraw all these posts from Nepali territory. This was done but the Indian post at Kalapani was not in the Nepali list. When this is pointed out, the answer is that Mahendra was being sensitive to India’s security concerns vis-a-vis China and hence allowed an act of generosity to let India hold on to Kalapani and access to Lipulekh Pass.

Again, is this really believable? In 1969, China was in the thick of the Cultural Revolution. There was limited activity on the India-China border. The central sector where Kalapani lies and north of it, the pass itself, was the least disputed sector. Why would India plead for Mahendra’s generosity? When I was India’s ambassador in Nepal, Kirti Nidhi Bisht told me that one of the proudest moments in his life was when he “stood down” Indira Gandhi and compelled her to withdraw each and every military post from Nepal’s territory. He did not mention then that the Indian posts at Kalapani and at Lipulekh Pass continued to be on Nepali territory. To be fair, he did so later before his death in 2017. Three, China and Nepal reached a border agreement in 1961. Article 1 in the agreement describes the western extremity of the China-Nepal border and this conforms to the alignment claimed by India.

One should note the word “starts” which is important in view of what follows. In subsequent demarcation, Pillar No 1, which marks this starting point at the western extremity, is located at Tinker Pass, well east of Lipulekh Pass. This cannot be refuted as this is in the formal documents. Buddhi Narayan Shrestha, who has been responsible for putting out justification for the new claims against India, is unable to deny it either. But he now says that the trijunction at this end has not been determined and that notionally it would be pillar number zero on the boundary! This is the first time one has heard of the concept of a “number zero border pillar”! This is ex post facto justification and the dishonesty behind it is glaring. A Nepali diplomat has repeated this same specious argument, “Given the situation in 1961, Nepal and China fixed pillar No 1 at Tinker Pass with the understanding that pillar number zero (trijunction of Nepal, India and China) would be fixed later.” He has not adduced any evidence that this indeed was the “understanding” reached with China in 1961.

Four, India and China concluded an agreement in 1954 for trade and transit between India and Tibet and among the six border passes listed for the purpose, Lipulekh was included. There was no protest from the Nepali side. The first time that Nepal protested formally was in 2015 when India and China signed an MoU for conducting border trade between the two countries through Lipulekh Pass.

If facts are to be the basis for an eventual solution one hopes that they would not be used selectively. India-Nepal relations are far too important to be derailed by this unfortunate display of cynical brinkmanship by Nepal’s short-sighted leaders. India will need to tread carefully. While it should stand its ground on the territorial issue, it should be willing to look at ways in which Nepali sentiments could be assuaged. One could convey to Nepal that it may have privileged access to the Kalapani area for trade or pilgrimage. Nepali citizens may be permitted to use any infrastructure created in this or other border areas for easier access from one part of Nepal to another.

Most importantly, the Narendra Modi government needs to shed its fond expectation that Nepal’s affinity with India because of its Hindu heritage is sufficient to consolidate political relations with that country. Neither is that shared heritage sufficient to prevent Nepal’s penchant to wave the China card in India’s face whenever it seeks to advance its own interests. And putting all eggs in the Oli basket, and in the bargain alienating other important political constituencies over the recent past, has proved to be costly.


Date:12-06-20

Is work from home feasible in the long run?

It may bring more flexibility for some, while exacerbating the existing divides for others

The COVID-19 pandemic and the resultant lockdowns have made work from home an imperative for several industries. Having said that, some job profiles lend themselves to working from outside the office more than others do. In a conversation moderated by K. Bharat Kumar, Ashwini Deshpande and Ramkumar Ramamoorthy discuss whether work from home is likely to become a constant even in a post-COVID future. Edited excerpts:

Prof. Deshpande, you have said that the bigger question is how long the pandemic itself would take to exit our lives. Where do you see this going?

Ashwini Deshpande (AD): At least for the next two years, as we go through the cycle of lockdowns and containment, we will go in and out of work from home. What will happen once this is completely behind us? It’s a little bit hard to speculate, but yes, the possibility that some kinds of work can be done from home is now here to stay.

Ramkumar Ramamoorthy (RR):While much of the focus seems to be on work from home, it’s actually work from anywhere. In the last 12-18 months, for example, I have worked from the office, from home, from hotels, coffee shops, a hospital, beaches, marriage halls, moving cars and airplanes. We will get to a mode where people could potentially work from anywhere based on the job that they do at a given point in time. But, this is not new; this has been in vogue in the IT industry for many years.

[Speaking of the automobile industry] until recently cars were sold only through distributors with physical stores. When MG Motor launched the Hector brand in India, they attempted to sell cars largely online. Hyundai is attempting this. With uneven distribution of skills across the world, this phenomenon has been gaining momentum for the last few years. COVID-19 will accelerate and catalyse it further.

AD: A lot of the services are difficult to deliver from remote. Teaching, to a certain extent, can be done remotely. But it’s just not of the same quality as teaching inside the classroom. A lot of other services are not actually conducive to being delivered remotely. I don’t think that the traditional workplace is going to completely die out. It might undergo certain kinds of transformation. Maybe [there won’t be] thousands of people working in one building.

Post-COVID, would work from home aggravate the divides already present today — like gender, migrant vs. native, etc.?

AD: If a family has only one computer, who is going to get priority to use that computer? It’s highly probable that the man would get priority. [Work from home] will certainly worsen the gender divide; it will also worsen the older-versus-younger divide because youth unemployment is an issue and if that one computer in the household is going to be going to be monopolised by the father, then others are not going to be able to use it.

Third is the notion of Internet connectivity. We know that that’s heavily differentiated by where you live, rural-urban location, which State of India you belong to, the neighbourhood, etc.. The other part of the story is the combination with all kinds of household and domestic needs. And here, unless there’s a major change in social norms in the coming two years, women who are more responsible for delivering domestic work are going to be that much more hard pressed to combine it withr̥ workplace responsibilities.

As regards migrants, if there was enough work available in localities where they resided, not everybody would need to migrate. So, I think that there is the much larger issue of availability of jobs and the matching of the supply with the demand for workers. Certain States are more able to provide better quality jobs than other States. And if workers are not going to be able to migrate, it affects the overall distribution.

So, industry could be guilty of aggravating such divides…

RR: Unlike the prior waves of technology, which were largely monolithic, digital technologies today are democratising the way people use them. They create a platform for greater diversity and inclusion, with greater mobile and bandwidth penetration, more smart boards coming into classrooms and in rural areas. The question is, are we using it for greater inclusion or will we end up creating a deeper wedge in society? We have a great opportunity to become more inclusive. The government has a role to play. Some good steps have been taken, including last-mile connectivity taken to the villages through BharatNet. The implementation of some of these backbones could be very patchy across different States. At least in rural south India, they’ve made some meaningful investments in technology.

Companies also have a very important role to play. If you take the Cognizant example, we have about 2,00,000 employees in India with about 20,000 in tier-two locations such as Coimbatore and Mangaluru. About 38-39% of our India workforce comprises women but in our tier-two locations women constitute about 50% of the workforce. We have employees who volunteer to teach in schools in the hinterland of India. Our employees or their spouses who are in the U.S. actually teach English, Math and the basics of computing to students in villages over Skype. I do agree that we need to do this at scale. And we need to institutionalise some of these.

AD: So far, the tone of this conversation is implicitly assuming that work from home is a really good idea; that it’s something to hold on to and transmit to the future. I want to put a little bit of a question mark on that. Other than social divides, there are other dimensions to this problem also. There is something to be said for actual human-to-human contact. Yesterday, I was at a seminar online. Normally, a seminar would have tea/coffee breaks, we talk to each other, we bounce ideas off each other. [Part of] the joy of attending a seminar is [with respect to] the social angle. Work from home eliminates that almost completely. That’s a very big negative.

The second part is that the home is not always a very happy place for everybody. Homes can also be centres of abuse. That’s the elephant in the room that we never talk about, because we always focus on safety outside the home. For many women and children, the home is the most unsafe place. And by forcing people to be inside the home, we are really forcing them to be inside with their abuser. The pandemic has actually brought about this phenomenon which the UN Women has called a shadow pandemic.

Third, in education, one of the things that a college environment does is that it erases the socio-economic differences between the students when they come into the classroom; with online classes, we actually get a little glimpse of their homes, and suddenly the class divide becomes apparent.

Would it be too idealistic to expect industry to move to where the migrants are? It could be factories, R&D centres or labs moving to the hinterland…

AD: If that could happen, that might not be a bad thing. I’ve spoken against the problem, now let me say something in favour of it. All this time, because women would drop out of the job market either completely or would negotiate with their employers to have a more flexible arrangement, women were stigmatised for doing that, because it was seen as an insufficient commitment to their work.

Also, just as there can be discrimination within the home, there can be discrimination even at the workplace. Some people might say, ‘it’s better for me to work from home, because now I don’t have to face the daily insults that I used to face earlier in office’.

But I think on balance, human beings are social creatures. A lot of the work we do in the university is just, you know, sitting in the coffee house bouncing ideas, talking to each other, learning from each other. In education, a lot of the learning happens outside the classroom. Online teaching closes that channel completely.

RR: The real big topic is about greater flexibility. Sometimes, we tend to get a little binary and look at some of these structural shifts or changes in an ‘either-or’ mode, instead of an ‘and’ mode. The physical spaces won’t go away completely; we will see the proportion of office as a space and its usage undergo a change. But it’s too early to call out what the ratios would be. It will still be a physical-digital world. Multiple models will emerge. In some respects, we are shorting human imagination here. ‘Hoteling’ is a concept many large corporates have started, where people can dynamically book a seat, a cafeteria slot or a meeting room and use it as you do it with a concierge. Co-working spaces may emerge in interior places too. Some of these could potentially start creating satellite or small office-home office kind of an environment. Maybe it’s a big opportunity for realtors to start thinking about an entire block or an entire floor just being created for co-working. There could be all kinds of hub-and-spoke workplace models that could come up. This could be clusters based on a given industry.

In education, could we not have a common lab in every district or town just as we have a common library; wherein students can perhaps go home on short vacation, still use the labs locally? There are certainly going to be challenges; not everybody has a well-defined home office; there’s a big difference between corporate-grade Net bandwidth and home grid bandwidth.

If more work from home happens, would the perks enjoyed by employees actually come down?

AD: Flexibility and insecurity are two sides of the same coin. So what can be seen as flexibility in a good context can equally lead to vulnerability and insecurity in another context. For industrial workers, the changes in labour laws are completely in the direction of removing any protection for minimum wages or fixed hours of work… things that protect workers in terms of overtime work, etc. If employers say we will give you security, but also flexibility, that, of course, is great.

RR: Progressive employers will always lead the way and ensure they are employment-friendly. In India, about 92 million people are going to enter the workforce between 2020 and 2030. In the next 10 years, we need to ensure that the employment climate in the country is good for this to happen. And if we don’t create that framework, that could have far-reaching consequences. When the Prime Minister announced the ₹20 lakh crore relief package, he also spoke about making structural reforms in the country in four key areas: land, law, labour and liquidity. Labour is one area that needs a lot of attention. It’s a little too early for us to discuss the impact on perks in the medium to long term.