The Hindu Editorials Notes (02 September 2019)- Mains Sure Shot

GS-3 Mains

 

Question – In the context of the recent announcement by the FM to reverse the economic downslide, analyse the possibility of the success of the reforms suggested.(250 words)

Context – The announcement by the FM.

Why in news?

• The economic growth has been declining for nearly two-and-a-half years by now.
• To bring the economy on track, the FM proposed three sets of announcements that pertain to concessions impacting three sectors – the automobile sector, the Income Tax department and the banking sector.

The analysis:

• Several questions being raised about the effectiveness of these reforms to bring any substantial change in the economy due to the following reasons:
• First, addressing the problems of only one sector while several other sectors are under stress is not fair governance. For example, there have been reports of severe stress in the packaged foods industry and also the agricultural sector has been troubled after demonetisation.
• Second, the concessions regarding the IT department, where it was announced that steps will be taken to revise the procedure of issuing IT notice to firms, does not address the issue of tax terrorism (i.e. undue exercise of power by the income tax officials to levy taxes using legal or extra-legal means. It creates a fear among firms of constantly being hounded upon by income tax authorities). Because it does not ease the pressure on the industrialists where they are under pressure to not speak out against high-handedness of income tax personnel.
• Third, the concessions regarding the banking sector are good but still there are some aspects that need to be rectified here too for the concessions to work i.e. fulfilling the government’s intention to reverse the slowing of growth.
• We will talk in detail about the banking sector.

The banking sector:

• Most significant among the measures related to banking is the infusion of capital upto ₹70,000 crore into the public sector banks.
• This is a major step in the direction of taking the banking sector to a more solid foundation.
• Further there is a proposal that the loan decision taken by bankers should be treated as economic decisions. So that when a loan goes awry (i.e. does not yield proper returns) then the banker who granted the loan is not charge con cases of corruption. This will help getting loans easier because right now the government is more concerned about boosting investment in the economy. And only when the people get loans easily, they will start investment i.e. new business.
• But the banking sector has other inherent problems that need to be addressed at the earliest for these reforms to actually work. Like they have to face continuous surveillance by the higher authorities which prevents the banks from taking spontaneous decisions. And also, the increasing number of NPAs points to the role of political pressure on banks.
• So, without addressing both these issues we can never transit to a strong banking sector. 
• So, the capital of ₹70,000 crore for the long-term infusion should have been accompanied by governance reforms.
• There have also been announcements that the banks will have to pass on the policy rate cuts by the RBI i.e. the banks will have to mould their lending rates i.e. the rate of interest at which they give loans.
• But even though the government’s frustration at this not having happened is easily imagined but is the proposal for an automatic adjustment by the banks according to the adjustments by the RBI sound by itself? Because when the banks lend to the customers, they take the risk premium into account and then decide their prime lending rate. 
• So the frequent adjustment by the commercial banks in tandem the RBIs changes in its repo rate (The discount rate at which a central bank repurchases government securities from the commercial banks, depending on the level of money supply it decides to maintain in the country’s monetary system) in toto is not advisable. Some flexibility should be left to the banks.
• Further, even if the banks reduce their lending rate according to the repo rate of the RBI and the loans become cheaper still there won’t be investment unless the investors have confidence in the economy and an urge to invest. So more than lowering rates, the government needs to build confidence among investors about long-term profit expectations.

Way ahead:

• Today we are experiencing a unique phenomenon where the government is depending on the private sector investment to increase the growth rate and the private investors are waiting for an improvement in growth rate before deciding to invest.
• So the government has to find an alternative apartment from private investment to boost growth otherwise it could be left waiting for a private investment that may not be forthcoming.
• Our experience of the five years of very high growth over 2003-08, when the economy grew at its fastest ever, tells us that three factors had played a role in it. These were unusually high rates of agricultural growth, record levels of public investment and buoyant exports. But the FM’s announcement did not relate to any of these.
• Though exports depend on factors beyond India’s control but the government needs to focus on the other two sectors. For example, an expansion of the Mahatma Gandhi National Rural Employment Guarantee Scheme, with attention paid to building assets that most strongly impact agricultural output can be considered. 
• Also, the government needs to step up public investment and not wait for private investment to happen. 
• Also, the article argues that by introducing an income scheme exclusively meant for farmers just before the elections and then expanding it soon after it returned to power has left the government with too little money to take up public investment. The government needs to take this into account too.

 

 

GS-1 Mains

Note: There is another article titled ‘A new ethics for sustainable planet’.

Here are the notable points:

1. The basic argument of the article is that we should not compromise the challenges of climate change because of nationalism.
2. The author justifies the point by saying that the USA, the world’s largest polluter, has pulled out of the Paris climate treaty citing national interest of the US. (President Trump argued that the treaty was hampering the USA’s economy).
3. Similarly, Brazil’s Amazon forests are ablaze with dozens of fires, most of them set intentionally by loggers and others seeking greater access to forest land. How long the fires can continue is unclear and they are paving the way for a global climate catastrophe. But the Brazilian President Jair Bolsonaro has stated that they are an internal matter.
4. In brief we can conclude that the burning of the world’s largest forest reserves, the withdrawal of the world’s leading polluter from a major international treaty and the U.K.’s isolationist policies may appear to be the triumph of nationalist ideology. But these actions have consequences that far transcend national boundaries and impact all creatures that share life on the planet.
5. And while all this is going on, the severity of the environmental degradation continues to increase. Many cities in Europe and elsewhere have seen high temperatures never before experienced. Heat waves have also accelerated melting of glaciers in Greenland at a rate that was not anticipated by scientific models until much later this century.

What are the main contributors to climate change?

1. Energy and transport are the main causes of accumulation of GHGs in the atmosphere but recently the contribution of changes in land use pattern has increased.
2. Deforestation, industrial agricultural systems and desertification are major drivers of climate change because agriculture, forestry and other land use activities accounted for a little less than a quarter (23%) of the total net anthropogenic emissions of GHGs between 2007-2016.
3. A special report on Climate Change and Land by the Intergovernmental Panel on Climate Change (IPCC), that covers factors like desertification, land degradation, sustainable land management, food security and greenhouse gas fluxes in terrestrial ecosystems, found that unless land is managed in a sustainable manner, the diminishing chance that humanity will survive climate change will become smaller.

What is the importance of land management to deal with climate change?

• Land use is interlocked with several aspects of life on earth. For example, as a result of decades of poor land management in the agricultural system soils have become depleted with heavy use of chemicals, farms have few or no friendly insects, monoculture has led to a reduction in the use of indigenous crop varieties with useful characteristics, groundwater is depleted and polluted farm runoffs are contributing to contaminated water bodies while destroying biodiversity.
• Managing land better for farming would entail implementing more sustainable agricultural practices. It would mean, for instance, reducing chemical input drastically, and taking the practice of food production closer to natural methods of agroecology, as these would reduce emissions and enhance resilience to warming.

What are some ways of managing land better?

• Avoiding conversion of grassland to cropland, bringing in equitable management of water in agriculture, crop diversification, agroforestry and investment in local and indigenous seed varieties that can withstand higher temperatures can help manage land better.
• Establishing sustainable food systems means reducing food waste, which is estimated to be a quarter of the food produced.
• Alongside these changes, it is important to put an end to deforestation, while conserving mangroves, peatland and other wetlands.

How can managing land better help to reduce inequality and poverty? 

• These changes can also reduce inequality and poverty because if land use policy incorporates better access to markets for small and marginal farmers, empower women farmers, expand agricultural services and strengthen land tenure systems then it will reduce multiple stressors on ecosystems and societies. It will also help societies adapt better to warmer climates and reduce their greenhouse gas emissions.

Way ahead:

• We need to stop viewing climate change from the narrow lwnse of nationalism. We need to understand that climate change affects both the developed and developing economies. So, compromising climate for a thriving economy is like having a short-term vision and digging a hole for one’s own self in the future.
• So, one needs to cultivate the growth of ecological sensibilities that supports pluralism, enhances the quality of life, shifts values away from consumerism and creates new identities and cultures that transcend conventional boundaries.
• There are civil society movements like La Via Campesina, The Transition Network, and Eco regionalism; Fridays for Future and Fossil Fuel Divestment which promote such evolving sensibilities. They strive to create a sense of solidarity across boundaries, instead of building fortress worlds.

To conclude Paul Raskin, in the Great Transition Initiative (an online forum of ideas and an international network for the critical exploration of concepts, strategies, and visions for a better planet), has said that seeing our place as part of the web of life, instead of at its centre, requires a Copernican shift in world views. Just as Copernicus changed the perception of the earth from the centre of the universe to being one among many planets, so too will our sensibilities have to shift. otherwise we will all go down as the planet degrades.