On the cusp of the southwest monsoon, several arid States are hoping to revive their rivers and reservoirs with bountiful rain. One of them is Gujarat, which is roiled by the long-tail effect of a deficit monsoon between August and November last year. The State government has embarked on a labour-intensive programme to desilt rivers and waterbodies ahead of the rains. Its predicament reflects the larger reality of drought in India, aggravated by heat waves and significant rain deficits in different regions. This year’s fall in reservoir storage levels to below-average levels has affected farmers who depend on the Sardar Sarovar dam, and 27 other reservoirs including those in Madhya Pradesh. A reinvigorated Congress in the opposition has turned the heat on the BJP government in Gujarat, which is hard put to defend itself against the charge that dam waters were depleted merely to fill the Sabarmati river for a visit by Prime Minister Narendra Modi in December, when he undertook a seaplane journey on the river. Its response has been to roll out a campaign to deepen waterbodies on the one hand, and arrange religious events to propitiate the gods on the other. But it has had to prioritise needs over farming, and suspend irrigation supply from the dam on March 15. This year, Delhi has been at loggerheads with Haryana over reduction of water released in the Yamuna, highlighting growing stresses over a vital resource. Urgent water management reforms must be undertaken to help citizens and avoid losses to the economy.
Quick and bold decisions are more often made during moments of crises than during periods of relative calm and quiet. After sealing a deal on a post-poll coalition in Karnataka even before the counting of votes drew to a close, the Congress and the Janata Dal (Secular) are unable to reach an understanding on Cabinet berths and portfolios almost a week after the coalition proved its majority on the floor of the Assembly. Other than on having H.D. Kumaraswamy of the JD(S) as the Chief Minister and G. Parameshwara of the Congress as the Deputy Chief Minister, the two parties have been unable to agree on the contours of the coalition government. The Congress, which was hurried into conceding considerable ground to the JD(S) by a fast-moving opponent in the Bharatiya Janata Party, is now driving a hard bargain on the strength of its own numbers. The reasoning is that the party, with twice as many members as the JD(S) in the Assembly, should have its choice of ministries such as finance, home, public works and energy as the bigger partner that had stepped back from the race for the chief ministership. Otherwise, this would leave the JD(S) as the recognisable face of the government, leaving little for the Congress. The JD(S) appears willing to concede more berths to the Congress, but would like to have some of the key portfolios, especially finance, for itself.
Officials in New Delhi are busy preparing to welcome representatives of the United Nations these days. People from various parts of the world will converge here on June 5 for the World Environment Day. This year’s theme is Beat Plastic Pollution. As the host, it is India’s responsibility to take a meaningful initiative on this issue. Though, plastic, in India, is only a part of the massive problem of pollution.
cological ruin is on a gallop across South Asia, with life and livelihood of nearly a quarter of the world’s population affected. Yet, our polities are able to neither fathom nor address the degradation. The distress is paramount in the northern half of the subcontinent, roping in the swathe from the Brahmaputra basin to the Indus-Ganga plain.
he spark for the week-long incidents of violence in downtown Shillong was a lie spread through WhatsApp, the ubiquitous messaging platform that has increasingly become an unfiltered medium for hate and rumour-mongering. A of the Mazhabi Sikh community, long-time settlers in the Punjabi Lane area of the city, and a Khasi youth and his associates over a local matter was amicably settled between representatives of the communities. But a fabricated story that the youth had succumbed to injuries sustained in the scuffle led to large numbers of Khasi protesters laying siege to Punjabi Lane, demanding that the Sikh residents move from the area. That the “settlers” have been in Shillong for more than a century and a half, having been originally brought there by the British colonials to work as manual scavengers, and have since integrated themselves within Shillong, has not insulated them from being described as outsiders. The administration did well to protect the dwellers of Punjabi Lane from physical harm, but mob violence persisted until and the Army put on stand-by. Spokespersons of the Khasi Students’ Union, whose members were part of the agitation, continue to insist that the Punjabi Lane residents be moved from Shillong’s commercial heart to its outskirts. Picturesque Shillong is no longer just an idyllic hill station; it is a bustling city that has grown in an unplanned manner and requires reforms such as zoning regulation. But the agitators’ demand to shift the Sikh residents is unreasonable and must be resisted. In fact, the Meghalaya High Court had stayed an order by the District Commissioner to evict the residents from Punjabi Lane (also known as Sweepers’ Colony) in 1986.
The board of ICICI Bank has finally acted on the allegations of misconduct against its CEO and managing director, . It had earlier maintained that she was on annual personal leave; now, she will stay away from the office till the completion of an inquiry into the charges levelled against her by a whistle-blower. Rather than allow the controversy to fester, the board of ICICI Bank, an institution that often sought to hold a mirror up to the inefficiencies of public sector banks, should have acted earlier. Till the inquiry is complete the bank will be steered by a new chief operating officer, Sandeep Bakhshi. The official version is that he will report to Ms. Kochhar, who herself took the decision to go on leave till the end of the inquiry — but this is at best a face-saving cover for a board that was reluctant to act since the controversy broke. Meanwhile, the tenure of M.K. Sharma, the chairman of the bank’s board, is set to end this month and there is still no clarity on his successor. This extended uncertainty in a crisis situation is unwarranted. ICICI Bank’s troubles are rooted in a 2016 complaint by an investor alleging a quid pro quo deal between Ms. Kochhar’s immediate family members and the Videocon group, which got a ₹3,250-crore loan from it. When this ‘conflict of interest’ complaint resurfaced in the public domain this year, Mr. Sharma said he had personally inquired into it two years earlier and found nothing amiss.
The worst is far from over for Indian banks. The financial stability report released by the Reserve Bank of India on Tuesday has warned that the gross non-performing assets (GNPAs) of scheduled commercial banks in the country could rise from 11.6% in March 2018 to 12.2% in March 2019, which would be the highest level of bad debt in almost two decades. This puts at rest the hope of a bottoming out of the NPA crisis that has affected the system and impeded credit growth in the economy. The GNPA of banks under the prompt corrective action framework, in particular, is expected to rise to 22.3% in March 2019, from 21% this March. The RBI believes that this will increase the size of provisioning for losses and affect the capital position of banks. In fact, the capital to risk-weighted assets ratio of the banking system as a whole is expected to drop from 13.5% in March 2018 to 12.8% in March 2019. The deteriorating health of banks is in contrast to the economy, which is on the path to recovery, clocking a healthy growth rate of 7.7% during the last quarter. The RBI, however, has warned about the rising external risks that pose a significant threat to the economy and to the banks. The tightening of monetary policy by the United States Federal Reserve and increased borrowing by the U.S. government have already caused credit to flow out of emerging markets such as India. The increase in commodity prices is another risk on the horizon that could pose a significant threat to the rupee and the country’s fiscal and current account deficits. All these factors could well combine to increase the risk of an economic slowdown and exert pressure on the entire banking system.
The Centre has announced the constitution of a committee to revisit several provisions of the Companies Act, 2013 that impose stiff penalties and, in some cases, prison terms as well, for directors and key management personnel. The 2013 law entailed the first massive overhaul of India’s legal regime to govern businesses that had been in place since 1956 and was borne of a long-drawn consultative process. Now, this 10-member committee appointed by the Corporate Affairs Ministry has been tasked with checking if certain offences can be ‘de-criminalised’. The panel, which includes top banker Uday Kotak, has been given 30 days to work out whether some of the violations that can attract imprisonment (such as a clerical failure by directors to make adequate disclosures about their interests) may instead be punished with monetary fines. It will also examine if offences punishable with a fine or imprisonment may be re-categorised as ‘acts’ that attract civil liabilities. Importantly, the committee has also been asked to suggest the broad contours for an adjudicatory mechanism that allows penalties to be levied for minor violations, perhaps in an automated manner, with minimal discretion available to officials. In fact, some of the provisions in the law are so tough that even a spelling mistake or typographical error could be construed as a fraud and lead to harsh strictures.
The decision by the Reserve Bank of India’s Monetary Policy Committee to raise benchmark interest rates again by 25 basis points is a prudent one. This is the second successive rate increase in as many months, a response to mounting uncertainties on the inflation front. Continuing volatility in crude oil prices, the recent softening notwithstanding, and its vulnerability to geopolitical tensions and supply disruptions is one of the main risks to the inflation outlook. Among the RBI’s other concerns are volatile global financial markets, possibilities of fiscal slippage at the Central and State levels, the likely impact of the increase in the minimum support price for kharif crops, and the staggered impact of upward revisions to house rent allowance paid by State governments. Rainfall has so far been 6% below the long-period average and deficient over a wider area than last year — more than a fifth of the country’s 36 sub-divisions have reported shortfalls. This has resulted in a drop in the total sown area under kharif. The monetary authority has flagged the need to keep a close watch on rain over the remainder of the season, given the risks regional imbalances may pose to paddy output and CPI inflation. The June round of the RBI’s own survey of household inflation expectations reveals that families see prices hardening even further over both the three- and 12-month horizons. Domestic economic activity having strengthened to a point where the output gap has ‘virtually closed’, manufacturers polled by the central bank have reported higher input costs and selling prices over the April-June quarter.
The portents could not be clearer. With retail inflation having accelerated to 5% in June, the RBI has revised its projection for CPI inflation in the second half of the current fiscal year to 4.8%, from the June forecast of 4.7%, and now sees price gains accelerating to 5% in the April-June quarter of 2019. Policymakers on the MPC have understandably spotlighted the risks to the domestic economic rebound from global developments. While rising trade protectionism threatens to impact investment flows, disrupt global supply chains and hurt all-round productivity, depreciations in the value of most currencies against the strengthening dollar have rippled through many major advanced and emerging economies, spurring inflation across these markets. The MPC’s primary remit is to ensure that retail inflation stays firmly within a band of 2-6%, and preferably anchored at 4% over the medium term. So there is no room to quibble over the committee’s majority decision to raise borrowing costs while retaining a ‘neutral’ policy stance. With inflation widely accepted as a hidden tax on the poor, the containment of price gains justifiably ought to be the raison d’etre of monetary policy