Feats on clay: On Rafael Nadal, Jeļena Ostapenko's French Open wins (The Hindu - 13 June 2017)

    While Nadal sealed his greatness at the French Open, Ostapenko announced her promise

    In sport, there aren’t many tests tougher than playing Rafael Nadal on Parisian clay. For over a decade, the Spaniard has reduced nearly every player, regardless of reputation, Roger Federer included, to an unrecognisable heap of dust. On Sunday, when he did the same to Swiss Stan Wawrinka to win an unprecedented 10th French Open title and his 15th major overall, it was just a reiteration of the same. Nadal lost only 35 games all tournament, a number second only to Bjorn Borg’s 32 in the 1978 French Open, and did not concede more than four games in any set he played. Coming as it did after two years of under-performance, troubled by a creaky wrist and stripped of his aura, it might well be his most significant title. This does not mean that Nadal’s status as the greatest of all clay-courters was ever in doubt. As the 31-year-old himself said after thrashing Dominic Thiem in the semi-final, “I think I don’t need to make more history. It’s enough. Nine are more than good.” Rather it should highlight, more vividly than ever before, that Nadal is no ordinary dirt-baller. When he won for the first time at Roland Garros in 2005, he was seen as yet another of those cautious, risk-averse, immovable objects the clay-court specialists were. Through 15 Grand Slam titles, including two Wimbledon titles, he has proved that his tactical nous and regenerative powers are second to none. The last fortnight perhaps offered a glimpse of what a devastating blend a happily married offence and defence is.

     On the women’s side Jeļena Ostapenko, the 20-year-old Latvian, sent out the same vibes with her triumph as a teenaged Nadal had done in 2005. If Nadal had won his maiden title in his first attempt in Paris, for Ostapenko the 2017 win was the first trophy of any kind and helped her become the first unseeded woman to win at Roland Garros since 1933. Like when Maria Sharapova, all of 17, mowed down Serena Williams at Wimbledon in 2004, Ostapenko played with a panache that belied her experience. She was up against Simona Halep, the favourite, in the final but so nerveless was her performance that even being a set and 0-3 down did not affect her poise. She lived by the sword, making 54 winners and as many errors in the final. It’s a tactic that does not always fetch the right dividend on clay but credit should go to Ostapenko for persisting with her attacking mindset. Admittedly, the women’s draw was shorn of stars with Williams, Sharapova, Victoria Azarenka all absent, Petra Kvitova just about recovering from a knife attack, and World No.1 Angelique Kerber anything but that. Regardless, the competitive quality on the women’s side was a notch above the men’s, and Ostapenko, playing five thrilling three-set matches out of her seven, was a testament to this.

Read More »

The rot in farming: on farmers agitation and sustainable pricing for their produce (The Hindu - 13 June 2017)

     We must enable a sustainable price discovery for agricultural produce

     To say it is a domino effect of the loan write-offs for small and marginal farmers by the Uttar Pradesh government may be simplistic, but farmers in different parts of the country have begun agitating for waivers. In Tamil Nadu, they have given the State government two months to meet their demand for a full waiver or face a fresh agitation. Maharashtra Chief Minister Devendra Fadnavis, in the face of protracted protests by farmers, has announced a blanket loan waiver for ‘needy’ farmers, with an estimated outgo of ₹35,000 crore. In Madhya Pradesh, Chief Minister Shivraj Singh Chouhan has resisted announcing a waiver, but unveiled a ‘package’ that includes a ‘settlement scheme’ to bring loan defaulters back into the credit net with interest-free loans. Farm groups in Punjab also began dharnas on Monday for loan waivers and other interventions. Finance Minister Arun Jaitley has categorically said States must generate their own resources to fund such largesse, and the Reserve Bank of India has warned of inflationary risks from fiscal slippages caused by large farm loan waivers. However, it would be short-sighted to see the rising angst in the farm sector as simply the desire of farmers around the country to keep up with U.P. There are deeper reasons that must be addressed holistically.

     The problem is price discovery. In fact, there is deflation in pulse and vegetable prices. The RBI has acknowledged that already falling vegetable prices dipped more sharply because of ‘fire sales’ following demonetisation, and pulses are cheaper because of high output on top of imports. Prices for eggs, oils, cereals and milk are moderating, and while the sharp fall in food prices has kept consumer price inflation tepid, rural distress has been aggravated. The new cattle trade rules threaten the viability of livestock and dairy farming. Banks are awash with funds since the note ban, but rural lending growth collapsed to 2.5% in the second half of 2016-17 and even shrank in several States, including Punjab and Maharashtra. Prices of fuel used by rural households have surged for three successive months. It is this squeeze on several fronts that seems to have pushed farmers to the brink. In consultation with the States, the Centre must reconsider whether it is prudent to narrowly target low food inflation. If India wants to be the world’s food factory, its farm policy needs to recognise farmer requirements for state support. If consumers and producers can benefit from a single national market in the GST era, farmers should also have the freedom to sell their produce where and when they want — with a predictable policy framework (no flip-flops in export-import stances, for instance) that enables farm-to-fork supply chains independent of local mandis and traders. Labour and land reforms also need to be revisited to create more opportunities beyond farming, and irrigation and other infrastructure projects speeded up to boost farm productivity.

Read More »

Holding the rate: On RBI’s monetary policy decision (The Hindu - 8 June 2017)

    The RBI has rightly opined that premature action risks ‘disruptive policy reversals later

     The Reserve Bank of India’s decision to keep the policy interest rate unchanged, and reaffirm its “neutral” policy stance, clearly indicates that policymakers at the central bank are singularly focussed on their primary remit of ensuring price stability while supporting economic growth. That the RBI’s Monetary Policy Committee has chosen to do so in the face of clamour for a rate cut, and Consumer Price Index data and the bank’s own survey of households’ inflation expectations appearing benign, points to the MPC’s determination to reassert the central bank’s independence, especially in the rate-setting realm. Laying out its reasoning for opting to remain “watchful”, the RBI has raised pertinent questions relating to the outlook for price stability, the foremost being whether the “unusually low momentum in the reading for April will endure”. It posits that the easing trend in inflation, excluding food and fuel, may be transient given its vulnerability to rising rural wage growth and strong consumption demand. And the elephant in the room, in the MPC’s opinion, is the real prospect of inflationary spillovers from the rising risk of fiscal slippages caused by farm loan waivers — Uttar Pradesh has set the stage, and Maharashtra’s government has vowed to come up with the State’s largest-ever. Observing that inflation has fallen below 4% only since November 2016, the RBI has reiterated its commitment to keeping the headline reading close to that figure on a “durable basis”.

     The MPC acknowledges that the latest monsoon forecast augurs well for the agriculture sector, and when viewed in conjunction with continuing robust government spending, it ought to help undergird overall momentum in the economy. The RBI’s business expectations index based on its industrial outlook survey of April points to upbeat prospects for the manufacturing sector in the second quarter of the current fiscal year, spurred by rising rural and overseas demand. However, on the growth front too the RBI’s policy panel has opted for caution given that the Central Statistics Office’s GDP and GVA (gross value added) data released last month suggest that the effects of demonetisation have lingered on. The RBI has accordingly cut its GVA growth forecast for the year ending in March 2018 by 10 basis points to 7.3% and flagged the risks that global political uncertainties, rising input costs and wage pressures and the twin balance sheet problem (an over-leveraged corporate sector and stressed lenders) pose to a revival in private investment demand and a more durable economic expansion. Spelling out the priorities, the MPC has said monetary policy can be effective only when private investment has revived, the banking sector’s health is restored and infrastructure bottlenecks are removed. To do otherwise “risks disruptive policy reversals later and the loss of credibility” of the RBI.

Read More »

The PM-in-waiting: On Leo Varadkar, Ireland’s new leader (The Hindu - 8 June 2017)

     Ireland’s new leader Leo Varadkar will have to oversee issues of Brexit and social reform

    Leo Varadkar, the son of an Indian immigrant, is set to be Ireland’s Prime Minister after he won an internal contest to lead the centre-right Fine Gael, the senior coalition partner in the Republic’s minority government. The outspoken Mr. Varadkar, the incumbent Social Protection Minister, is to take over the reins of the party and country from Enda Kenny, who is stepping down after heading the party for 15 years and the country for six. Mr. Varadkar will be Ireland’s first-ever openly gay Prime Minister with minority and immigrant roots. He is just 38 years old, and thus in a club of young world leaders with France’s Emmanuel Macron and Canada’s Justin Trudeau. While it is indeed remarkable that a person of Mr. Varadkar’s background has been elected to lead Ireland, what is even more striking is that during the ruling party’s elections voters focussed not on his background but on his policies. This speaks volumes for how far the country has come on its social attitudes. Ireland is deeply religious. Catholicism, the state religion, has a far-reaching influence on many aspects of Irish life, including birth, death and marriage. Abortions, except to save the mother’s life, are illegal; divorce, legalised in the 1990s, requires a four-year separation; and gay marriage was legalised just recently.

     As Prime Minister, Mr. Kenny steered Ireland out of the financial collapse of 2008-2010 and campaigned, successfully, for the European Union (EU) to recognise Ireland’s unique position during the forthcoming Brexit negotiations between Brussels and London. The Republic of Ireland is contiguous with Northern Ireland, and therefore the only EU country that shares a land border with the U.K. Mr. Kenny leaves office having convinced the EU to address the fallout for Ireland during Brexit negotiations. He also leaves Mr. Varadkar a vastly improved economy, with an unemployment rate close to 7%, about half of what it was in 2012. Mr. Varadkar will now have to build on his predecessor’s success and address his failures, including a severe housing shortage and a police service that has demonstrated an ability to collude with other public agencies to punish whistle-blowers and cover up corruption. As regards Brexit, Mr. Varadkar will have to ensure that the Common Travel Area, a mechanism by which British and Irish citizens can live and work in the two countries, is maintained, and that the border between the Republic of Ireland and Northern Ireland is not reinstated. He will also have to manage the economic impact of Brexit on trade and jobs in the event that the negotiations diminish Britain’s access to the European single market. Finally, as Prime Minister, he will be expected to shepherd further reforms in laws relating to divorce and abortion if he wishes to further align the Republic’s values with those of the EU and other liberal democracies.

Read More »

Maha farm crisis (The Hindu- 6 June 2017)

     Reforms that de-risk agriculture are required for a long-term solution to agrarian distress

   Astrike by farmers in Maharashtra continues to affect normal life, despite the State government’s announcement of an end to the strike last week. The farmers, whose demands include full waiver of farm loans, hikes in the minimum support price for agricultural produce and writing off of pending electricity bills, have been on an indefinite strike since June 1. As the strike nears the end of its first week, prices of essential goods such as milk, fruits and vegetables have risen steeply, causing distress to consumers. Some farmer groups agreed to call off their strike after Chief Minister Devendra Fadnavis promised that his government would waive farm loans of small and marginal farmers worth about ₹30,000 crore, increase power subsidies, hike the price for milk procurement, and also set up a State commission to look into the matter of raising the MSP for crops. He also promised that buying agricultural produce below their MSP would soon be made a criminal offence. Other farmer groups, meanwhile, have stuck to their demand for a complete farm loan waiver and continued with their protest. It is notable that the protests have come soon after the Uttar Pradesh government waived farm loans earlier this year, setting off similar demands in other States. Yet, while Maharashtra’s farmers have caught the attention of the government, the focus on quick fixes has pushed aside the real structural issues behind the crisis.

     At the root of the crisis is the steep fall in the prices of agricultural goods. The price slump, significantly, has come against the backdrop of a good monsoon that led to a bumper crop. The production of tur dal, for instance, increased five-fold from last year to over 20 lakh tonnes in 2016-17. Irrespective of price fluctuations, MSPs are supposed to enable farmers to sell their produce at remunerative prices. But procurement of crops at MSP by the government has traditionally been low for most crops, except a few staples such as rice and wheat. This has forced distressed farmers to sell their produce at much lower prices, adding to their debt burden. Not surprisingly, the whole system of agricultural marketing has led farmers to feel cheated, and it was only a matter of time before they organised themselves to protest. Going forward, any long-term, wide-scale procurement of crops at MSPs looks unlikely; even a one-time full loan waiver is considered unrealistic by the Chief Minister, given the State’s finances. The possible ban on buying produce below the MSP would just worsen the crisis by making it hard for farmers to sell their produce even at the market price. The only long-term solution is to gradually align crop production with genuine price signals, while moving ahead with reforms to de-risk agriculture, especially by increasing the crop insurance cover. Expediting steps to reform the Agricultural Produce Market Committee system and introduce the model contract farming law would go a long way to free farmers from MSP-driven crop planning.

Read More »

Diplomatic mayhem (The Hindu- 6 June 2017)

     The Saudi-led bid to isolate Qatar could have far-reaching economic-political consequences

     The dramatic decision by Saudi Arabia, the United Arab Emirates, Bahrain, Egypt and Yemen to suspend diplomatic ties with Qatar could have far-reaching economic and geopolitical consequences. Tensions were brewing within the Gulf Cooperation Council for the past six years ever since Qatar started actively supporting the Muslim Brotherhood, a political Islamist movement that the Saudis and their close allies see as a threat to stability in West Asia. In 2014, Saudi Arabia, the UAE and Bahrain had temporarily withdrawn their ambassadors from Qatar over this. But a suspension of diplomatic ties as well as air and sea travel to and from Qatar is unprecedented. Saudi Arabia, the UAE and Bahrain on Monday asked Qatari diplomats to leave their countries within 48 hours and Qatari citizens within 14 days. Saudi Arabia blames Qatar for “harbouring a multitude of terrorist and sectarian groups that aim to create instability in the region”. But such allegations can be raised against most Gulf countries. It is an open secret that both Saudi Arabia and Qatar back their proxy militant groups throughout West Asia. Take the case of Syria, where the Saudis back Salafi groups such as Ahrar al-Sham, while the Qataris bankroll the armed wing of the Muslim Brotherhood. Both share the same goal: to overthrow the regime of Bashar al-Assad. In Yemen, Qatar is part of the Saudi-led coalition that has been bombing the country for over two years.

     It is not immediately clear what drove Riyadh to take this extreme step. Emboldened by President Donald Trump’s open embrace and anti-Iran agenda, the kingdom could be making a renewed attempt to rally Sunni countries under its leadership against Tehran. Qatar has historically played off both sides of the Saudi-Iran rivalry. Even as it joined the occasional GCC outbursts against Tehran, it maintained sound economic and diplomatic ties. Qatar’s ruler Sheikh Tamim bin Hamad Al Thani, who had a phone conversation with Iran’s President Hassan Rouhani last week, is reportedly critical of the Saudi-led efforts to drive up an anti-Iran agenda. It is to be seen whether Saudi Arabia has overplayed its hand. If Qatar continues to resist the GCC line, it could trigger a wider crisis in the region. Qatar is an economic powerhouse in the Gulf and hosts the headquarters of the U.S. military’s Central Command. The air war command for the U.S.-led fight against the Islamic State in Iraq and Syria is also in Qatar. So any prolonged attempt to isolate the country would not only have economic consequences — oil prices fluctuated soon after the decision was announced — but also complicate the fight against the IS yet more. What West Asia requires is a united front against terror and lowering of Saudi-Iran tensions. Opening new fronts in the rivalry will only destabilise the region further.

Read More »

GST countdown (The Hindu - 5 June 2017)

     There is still no clarity whether the loose ends can be tied up in time for the July 1 deadline

     The Goods and Services Tax Council has finalised the rates at which tax will be levied for almost all products and services under the tax regime, just four weeks before the July 1 deadline for rollout. The decisions amount to a balancing act between competing demands. The Council has set the tax rate on gold, silver, diamonds and other jewellery at 3%, while uncut diamonds will attract a ‘notional’ duty of 0.25%; a credit can be claimed for exports of such diamonds after they are polished and cut in India’s gem clusters. Footwear and readymade textiles will have differential tax slabs based on sale price (with a concessional 5% for footwear below ₹500 and clothes below ₹1,000). But oddly, no such distinction has been made for mass consumption items such as glucose biscuits. Textiles, leather, diamonds and food processing already are, or have the potential to be, India’s biggest employment engines, and repercussions of tax structure anomalies can be felt hard and fast in a competitive global market. Though the low rates on gold and diamond can dampen smuggling opportunities, they introduce two more rates to an already complex GST structure of five rate slabs plus a variable cess on ‘sin’ goods. Taken together, with the exemptions for critical sectors such as real estate, electricity, petroleum and alcohol, GST in its current form is far from the ‘One Nation, One Tax’ it purports to be.

     Not surprisingly, fresh demands for differential tax treatment have begun already, including for bidis. States and sections of industry want a review of rates finalised earlier for products ranging from biogas, fertilizers and tractors to agarbathis, human hair and cashew. Actor Kamal Haasan has threatened to quit cinema as it has been included in the 28% ‘sin’ category, and States have backed the demand that regional cinema be treated differently. The Council is slated to meet again on June 11 to discuss these demands while taking a call on a few pending items such as lotteries, and finalise rules pertaining to accounting and e-way bills (to be generated to transport goods). An assurance of input credit on existing stocks with dealers and simpler rules for filing returns should help industry gear up for the transition. But in the absence of final accounting rules or clarity on the anti-profiteering framework, there is concern whether all the loose ends can be tied up this month. The government is sticking to the July 1 deadline despite reservations about the readiness of the administration and the GST Network that would have to manage billions of invoices. The Council must take a realistic and honest stock of ground realities at its next meeting. A sub-optimal GST design can be corrected over time, but a hasty beginning could prove costly.

Read More »

European variation (The Hindu - 5 June 2017)

     With global politics in a flux, India must make a careful choice of coalitions it forges

      Prime Minister Narendra Modi’s visit to Germany, Spain, Russia and France brings into sharp focus the shared dilemma India and Europe face with America’s shifting policies, and the resultant flux on the world stage. Mr. Modi’s first stop in Germany came a day after Chancellor Angela Merkel’s strong comments aimed at President Donald Trump, that Europe could no longer ‘depend’ on traditional partners. Europe’s disappointment with Mr. Trump at the G-7 and NATO summits was three-fold: his refusal to reaffirm NATO’s Article 5 on ‘collective defence’; his warning on the trade deficit with Europe; and his expected decision to pull America out of commitments in the Paris Agreement on climate change. For the past few months India has faced a similar disappointment as the U.S. has forged closer ties with China, indicating what Mr. Modi called a loosening of the world order, while the U.S. has targeted Indian professionals and businesses to protect American jobs. Another blow came from Mr. Trump’s comments on the Paris Accord when he blamed India and China for what he called an unfair deal. Mr. Modi’s meetings with Ms. Merkel and subsequently Spanish Prime Minister Mariano Rajoy and French President Emmanuel Macron saw those issues raised one way or another, as they tried to explore new ways to cooperate on multilateral issues, including terror, trade and climate change. In particular, Mr. Modi’s assurance in Berlin that the suspended India-EU free trade talks for the Broadbased Trade and Investment Agreement would resume soon has raised the hope that progress will be made before the EU-India summit in Delhi this year.

      However, while the EU and India have a clear convergence in many areas, a dependable alliance can only come from a concurrent worldview. It cannot be ignored, for example, that Chinese Premier Li Keqiang’s visit to Berlin and Brussels, also last week, saw the EU repose much more faith in Beijing than New Delhi would be comfortable with, given the current Sino-Indian tensions. European leaders praised President Xi Jinping’s leadership on connectivity and climate change. Europe perceives its single largest threat to be from Moscow, not Beijing. Mr. Modi’s attendance at the St. Petersburg International Economic Forum to unveil a new India-Russia vision statement for the 21st century along with President Vladimir Putin could cause similar discomfort in European capitals. This divergent worldview may be further highlighted this week as Mr. Modi travels to Kazakhstan to formalise India’s membership of the Shanghai Cooperation Organisation, seen as a counter-NATO coalition of Russia, China and Central Asian states. Standing at a crossroads few had expected at this stage, India will have to consider its options carefully as it decides which coalitions to forge as the U.S. overturns traditional ties in favour of transactionalism. The Centre must undertake a full review of India’s priorities and interests before Mr. Modi heads to Washington for a meeting with Mr. Trump at the end of June.

Read More »

We need Paris: on U.S pulling out of climate deal (The Hindu - 03 June 2017)

     The U.S. strikes a blow to the climate pact, but the rest of the world must step up the efforts

     In abandoning the Paris Agreement on climate change, U.S. President Donald Trump has chosen to adopt a backward-looking course on one of the most important issues facing humanity. Ignoring scientific evidence on carbon emissions, Mr. Trump has carried his contempt for environmental regulations to an extreme with the decision to pull out of a hard-won compact that seeks to make the world safer for future generations. His move is incongruent with economic reality, because the most valuable American companies in manufacturing, computing, banking services and retailing, ranging from General Electric to Apple and Tesla, all see a future for growth and employment in green innovation, and not in fossil fuels. Some of them have begun reaping the benefits. For poorer residents of various countries, though, weakening of the climate agreement and failure to progressively reduce carbon emissions by 2020 and beyond threaten to impose misery and deepen poverty. Every successive year is becoming hotter than the previous one, and the ice sheets in West Antarctica and Greenland, which hold the key to sea levels, have recorded a steady loss in mass. As a major legacy polluter, the U.S. has a responsibility to mitigate the damage. This is something that Barack Obama recognised, but Mr. Trump has abdicated.

     It is heartening, however, that there is strong support for the Paris Agreement among many individual States and cities in the U.S., while the European Union and China, which together represent about 39% of man-made emissions, now effectively lead the effort to cut greenhouse gases. Energy efficiency is having an impact, and has levelled off coal use in America; it has in fact fallen over the past four years, including in 2016, in spite of an overall rise in energy consumption. Mr. Trump’s assertion that he represents Pittsburgh, not Paris, is clearly misplaced. India, which he has unfairly blamed for seeking climate funds and building coal plants, should strengthen its pledge to cut the emissions intensity of GDP by 35% by 2030, based on 2005 levels, and expand its ambitious renewable energy programme. The wider challenge now is to maintain the momentum on climate finance for mitigation and adaptation, since the U.S. pledge of $3 billion to the Green Climate Fund made earlier is unlikely to be fulfilled. Funding is crucial for poorer countries in order to cope with extreme weather events and sharp variations in food production caused by climate change. The U.S. exit should not affect the overall goal, which is to keep the increase in global average temperature over pre-industrial levels to less than 2°C. Equally, the principle of common but differentiated responsibilities that underpins the UN climate framework, and casts a duty on industrial powers responsible for the world’s accumulated carbon emissions, needs to be strengthened.

Read More »

Gross misuse: on States using 'Goondas Act' (The Hindu - 03 June 2017)

       The Supreme Court’s caution against use of ‘Goondas Act’ for arbitrary detention is timely

       Preventive detention laws in the country have come to be associated with frequent misuse. Such laws confer extraordinary discretionary powers on the executive to detain persons without bail for a period that may extend to one year and courts tend to review them on the touchstone of strict adherence to the prescribed procedure. Sometimes they question the invocation of the draconian power when sufficient provisions are available in the ordinary laws of the land. Several States have a law popularly known as the ‘Goondas Act’ aimed at preventing the dangerous activities of specified kinds of offenders. In a recent order, the Supreme Court has questioned the use of words such as “goonda” and “prejudicial to the maintenance of public order” as a “rhetorical incantation” solely to justify an arbitrary detention order. It struck down the detention of a man who had allegedly sold spurious chilli seeds in Telangana, holding that the grounds of detention were extraneous to the Act. This detention order has captured what is wrong with the frequent resort to preventive detention laws. It stated that recourse to normal legal procedure would be time-consuming and would not be an effective deterrent against the sale of spurious seeds. Therefore, it claimed, there was no option but to invoke the preventive detention law to insulate society from the person’s evil deeds. The court rightly termed this as a gross abuse of statutory powers.

       The Goondas Act is meant to be invoked against habitual offenders, but in practice it is often used for a host of extraneous reasons. The police tend to use it to buy themselves more time to investigate offences and file a charge sheet. At times, it is used merely to send out a “tough message”. For instance, four persons seen in video footage of women being molested in Rampur in Uttar Pradesh were detained under the Act even though it was not clear if they were habitual offenders. And there are times when preventive detention is overtly political. The recent detention of four political activists in Chennai under the Goondas Act is a direct result of a pathological tendency in Tamil Nadu to crack down on any kind of political activity even remotely linked to the Sri Lankan Tamils issue. The detention of Thirumurugan Gandhi, leader of the ‘May 17 Movement’, a pro-Tamil Eelam group, and three of his associates under the Goondas Act is a brazen violation of their fundamental rights and another instance of abuse of the law. The case involved nothing more than violation of prohibitory orders to hold a candle-light vigil in memory of Sri Lankan Tamils who died in the last phase of the civil war in 2009. Those who authorise such preventive detention for flimsy reasons should understand that prevention of crime needs an efficient system of investigation and trial, and not draconian laws.

Read More »

Pharma lobby strikes: on the threat from e-pharmacies (The Hindu - 02 June 2017)

Pharmacies protest as they increasingly feel the heat of competition and regulation

Pharmacies across the country went on a one-day strike this week to highlight their concerns about the threat from e-pharmacies, and the cost that will be imposed by new regulations on the sale of medicines. The strike, called by the All India Organisation of Chemists and Druggists, had the support of well over eight lakh pharmacies. But perhaps the only thing clear from the AIOCD’s demands is its intention to protect the business interests of traditional brick-and-mortar pharmacies, even if it comes at the cost of the consumer’s interest. Traditional pharmacies have been knocking at the doors of the government for some time now as they face intense competition from e-pharmacies. Their profit margins and market share have faced pressure in recent years from e-pharmacies that often offer medicines at cheaper prices. While this has improved the accessibility of drugs to a wider population, the concern of traditional pharmacists too is easy to understand. The AIOCD has repeatedly accused e-pharmacies of a wide range of malpractices, including selling fake drugs and enabling self-medication. The organisation has been citing these issues to seek a ban on the sale of drugs online. At the same time, pharmacies too have been fighting the government as it tries to tighten the screws on the illegal sale of drugs.

In March this year, the Ministry of Health and Family Welfare proposed the setting up of an e-portal to track and regulate the sale of drugs across the retail chain. The aim was to prevent the sale of fake and substandard drugs, which are estimated to account for a substantial share of India’s drug market. The AIOCD has opposed the proposal, arguing that smaller pharmacies lack the necessary infrastructure to meet the stringent demands of the Ministry, even as the same rules apply to e-pharmacies. With the strike, pharmacists further upped the ante by temporarily halting the supply of an essential good. This is unfortunate. The Ministry’s proposal to bring both traditional and e-pharmacies under the ambit of the e-portal to track drugs is a welcome move. The risks associated with e-pharmacies, especially when it comes to the dispensation of prescription drugs without the necessary checks, cannot be taken lightly. However, the Ministry’s plan on regulating e-pharmacies is a rather outdated one. It has mandated that e-pharmacies must set up a “licensed brick and mortar facility” as part of their operations to comply with the new regulations. This seems like an indirect way of delegitimising the business model of e-pharmacies, rather than a regulation that aims to improve their transparency and regulation. The huge potential for e-commerce in the retail drugs industry is enough reason to avoid such unreasonably stringent standards.

Read More »

Back to basics: on the dip in GDP growth (The Hindu - 02 June 2017)

The dip in GDP growth in the January-March quarter points to the need for a policy reboot

India’s economy, measured by the gross domestic product, grew at 7.1% in 2016-17, the slowest pace since the National Democratic Alliance government came to office in 2014, and significantly lower than the 8% growth clocked in 2015-16 (revised data). On the face of it, this is in line with the estimates put out by the Central Statistics Office in early January and at the end of February. A top government economist has lashed out at ‘messiahs of doom’ who had predicted a 2% decline in growth due to the Centre’s decision to demonetise ₹500 and ₹1,000 currency notes last November. But scratch deeper, and those naysayers don’t appear to be too far off the mark. Growth in the final quarter of 2016-17 was just 6.1%, all of 1.8 percentage points lower than the 7.9% recorded in its first (which decelerated to 7.5% and 7% in the second and third quarters, respectively). In fact, the only reason the 7.1% estimate has held up is because growth for the previous quarters was revised upwards. Finance Minister Arun Jaitley is, however, right when he points out that growth had already been slowing down, so ascribing the entire downturn to demonetisation is not fair. Yet, whichever way one looks at it, the note ban seems to have exacerbated the problem, particularly for India’s large informal economy that the poor depend on, as even the World Bank has now noted.

Consider these underlying trends. Discounting the healthy growth in GVA (gross value added) from agriculture and government spending, real GVA grew by just 3.8% in the fourth quarter, down from 8.4% in the first — indicating that private spending and investment collapsed. Private consumption grew at the slowest pace in five quarters, even as construction (with a high dependence on informal/migrant labour) and manufacturing activities dipped sharply. Industry has renewed pleas for the Reserve Bank of India to cut policy rates and shift back to an accommodative stance. While lower inflation and growth may soften the RBI’s outlook, there is little that monetary policy alone can do at this juncture to revive animal spirits. Banks, the primary beneficiaries of demonetisation, are flush with funds but credit growth is at multi-decade lows — and the twin stress on banks’ and their borrowers’ balance sheets is spreading to other sectors such as telecom. With the direction of global headwinds remaining uncertain, growth in government spending budgeted to be lower this year compared to last year, and private investment virtually absent, these GDP numbers should serve as a reality check. Returning to the 8% growth mark is going to be a big challenge. While the government has vigorously underlined its reform achievements of the last three years, such as the Goods and Services Tax that rolls out in July, a mission-mode reforms reboot is urgently needed. And that can only begin if the problem is suitably acknowledged by policymakers.

Read More »

Uncertain times: on the security situation in Afghanistan (The Hindu - 01 June 2017)

The major terror strike in Kabul underlines a rapidly deteriorating security situation

Afghanistan is no stranger to terror attacks. Even so, the repeated strikes in the most fortified areas with mounting casualties demonstrate a steadily deteriorating security situation. In April, the Taliban had targeted an army base in Mazar-e-Sharif, killing over 100 soldiers. Now, at least 90 people, mostly civilians, have been massacred in a suspected truck bomb blast in Kabul. The Wazir Akbar Khan area where the blast occurred is one of the most secured places in the city, given its proximity to the presidential palace and embassies, including India’s. Still, a terrorist managed to drive in with a vehicle full of explosives and detonate it. It is not immediately clear who is behind the attack. The Taliban have denied any role, saying they don’t kill civilians. Afghanistan’s jihadist landscape has been diversified. There are multiple Taliban splinter groups that do not accept the current leadership of the insurgency. And then there is the Islamic State, which operates from eastern Afghanistan and had targeted civilians in the recent past. Amid all this, the Afghan government is struggling to win a modicum of public confidence that it can turn things around. Since most American troops withdrew from Afghanistan in 2014, terror attacks have been on the rise. Last year was particularly bloody, with over 11,500 people having been killed or injured even as the Afghan government’s writ shrunk to just over half of the country’s 407 districts.

The problem has political, diplomatic and security dimensions. Politically, the government is seen to be corrupt, incompetent, and unable to get its act together. Vice-President Abdul Rashid Dostum, who faces allegations of sexual abuse, has fled the country. President Ashraf Ghani and Chief Executive Abdullah Abdullah are reportedly not on the same page on key issues. Corruption is pervasive across government departments, and Mr. Ghani is yet to begin delivering on his promise to streamline governance. The diplomatic challenge before Mr. Ghani is to cut off the Taliban’s supplies from abroad. It is an open secret that Pakistan is supporting the insurgency. There were reports recently that Iran and Russia may also be arming them for geopolitical reasons. Unless the Taliban are cut off from their external backers, Kabul’s writ will remain circumscribed. The security challenge, perhaps the most important one, is that the Afghan army, after years of relentless war, is demoralised. Though Afghanistan has a 170,000-strong army, the main combat operations are overseen by a small U.S.-trained contingent. They are stretched on the battlefield, given the challenges from different militant groups. The question is, what is Mr. Ghani’s government doing in the face of these challenges? Do its international backers, including the U.S., have any plan to stabilise Afghanistan, and if so, what priority do they accord it? As things stand, the country is at risk of sliding back to the chaos of the 1990s.

Read More »

Politics and propriety: on Uma Bharti's continuance as Minister (The Hindu - 01 June 2017)

The framing of charges against Uma Bharti makes her continuance as Minister untenable

With the Supreme Court invoking its extraordinary powers under Article 142 of the Constitution — to pass decrees and orders to ensure complete justice — in the case relating to the demolition of the Babri Masjid, and reviving the criminal conspiracy charges against senior BJP leaders L.K. Advani, Murli Manohar Joshi, Uma Bharti and Vinay Katiyar, the CBI Special Court in Lucknow could not but have framed charges against them. Over the last 24 years, poor investigation and weak prosecution combined with inordinate judicial delays ensured they did not have to stand trial for making provocative speeches that allegedly incited kar sevaks to demolish the masjid. With the Supreme Court ordering this case to be clubbed with the one involving the actual demolition by unnamed kar sevaks, and directing day-to-day trials, there is hope that the years of delay are over. India has a poor record in finding speedy judicial resolution in instances of mob violence and communal riots; in that sense, the Babri Masjid cases are perhaps unexceptional. But given the historical importance of the case, and the impact of the demolition on communal harmony, it is vital to see them through to the end.

Both Mr. Advani and Mr. Joshi are in the twilight of their political careers, wielding little power or influence in the BJP. Ms. Bharti is, however, a Union Minister, and the Narendra Modi government cannot pretend that the development has no bearing on her continuance in the Council of Ministers. The BJP has tended to underplay the significance of the case on the ground that it is ‘political’ in nature. But this simply does not wash as the revival of criminal conspiracy charges against them was done at the instance of the Supreme Court. In opposition, the BJP had been quick to demand the resignation of ministers for much less than being chargesheeted. The argument that the standards of propriety that apply in corruption cases are different from those that apply in a criminal case of this nature is absurd. Even by the lax standards of today’s political morality, it is important to draw the line somewhere — and framing of charges is a good stage given that it is a formal document drawn up by a court of law. Rather than defend Ms. Uma Bharti, the Modi government would do well to consider the example set by none other than Mr. Advani himself, who resigned as a Member of Parliament in 1996 after he was implicated in the Jain hawala case, in which the court later held that there was no material to frame charges against him. For a government that makes much of standing for probity in public life, the application of different standards to one of its own is bound to damage its image. Ms. Bharti’s guilt or innocence is for the courts to establish. Political propriety demands that she be shown the door.

Read More »