Daily News Mail - News of 06/06/2015

Poor rain may not hit grain output

• India’s foodgrain production is not necessarily severely impacted in years of deficient monsoons. Since 1976, nine years recorded a more than 10 per cent drop in rainfall over the previous year . However, of these, only two years saw food production falling by a corresponding amount. In the remaining seven, the fall in food production was minor, an analysis by The Hindu shows.
• The finding is in line with Union Finance Minister Arun Jaitley’s statement on June 4 that foodgrain production will not be affected in the event of deficient rainfall this year. This year, however, is a rarity — if the India Meteorological Department’s (IMD) prediction of a deficient rainfall this year holds, then this would be the second consecutive year of poor rainfall. “There could be a cause for worry…The effect on agriculture of two years in a row of deficient rainfall is much more disastrous — the detrimental effect can be more than double the effect of a single year of deficient rainfall,” former Planning Commission Member and Economist Abhijit Sen said.

Maggi taken off the shelves across India

• Hours after Nestle decided to take Maggi noodles off the shelves in India citing “unfounded confusions”, the Food Safety and Standards Authority of India (FSSAI) on June 5 ordered recall of all nine variants of the popular instant noodles from the market, terming the product “unsafe and hazardous”. The FSSAI served a show-cause notice on Nestle India to explain within 15 days why the product approval given to these variants should not be withdrawn.
• The company has been directed to submit a compliance report within three days and furnish progress reports on the recall daily till completion. Paul Bulcke, chief executive officer, Nestle, flew down to India in a bid to reassure customers and the authorities that Maggi noodles are safe for consumption.
• Madhya Pradesh and Bihar are the latest to ban the sale of the brand over food-safety concerns. The company said Maggi noodles would remain off the shelves till all doubts were cleared as the “environment of confusion” was not conducive to have the product in the market.
• “Unfortunately, recent developments and growing concerns about the product have led to confusion among the consumers to such an extent that we have decided to take the product temporarily off the shelves, in spite of it being safe,” Mr. Bulcke said.
• “We have been in India for over 100 years. Doing business in India is good and India is a good market for Nestle and that’s why I am here,” he said.

Suit against Karnataka for polluting rivers

• The Tamil Nadu government on June 5 moved the Supreme Court, accusing the State of Karnataka for dumping untreated sewage and industrial effluents in the Cauvery and Pennaiyar rivers, considered life-giving water sources for Tamil Nadu.
• In a suit for permanent and mandatory injunction, the government blamed Karnataka for “gross dereliction of duty as a welfare State under the Constitution” by denying the people of Tamil Nadu the right to access clean water.
• Its inaction has become a threat to lives and crops in Tamil Nadu, the government's suit, filed by advocate B. Balaji and re-settled by State Advocate General A.L. Somayaji, contended. The State has sought the right to claim damages from Karnataka for discharging polluted water into Tamil Nadu.
• The State government has made the Union also a party in the suit, saying it failed in its legal and constitutional duty to ensure that Karnataka complied with its social obligation and responsibility to comply with the prescribed standards before letting effluents into rivers.
• The Tamil Nadu government said no attempt was made by Karnataka to set up effluent treatment plants, reverse osmosis systems or drainage facilities to purify the polluted water discharged into the rivers.
• Pinpointing the rapidly industrialising and highly populated Bengaluru as a major source of water pollution, Tamil Nadu said Karnataka's capital city was growing at an astronomical rate and the projected population would be more than one crore by 2020, leaving the rivers even dirtier.
• The suit quotes Karnataka's own Minor Irrigation Minister as saying that around 889 million litres of sewage water enters Tamil Nadu through the Pinakini and South Pennar river courses and the remaining sewage water flows to Cauvery through the Arkavathi river on a daily basis into Tamil Nadu.

Konkan Railway

The Konkan Railway (Railway Symbol:KR) is a railway line which runs along the Konkan coast of India between Mumbai and Mangaluru. It was constructed and is operated by the Konkan Railway Corporation. It runs from Roha in Maharashtra till Thokur in Karnataka for a total distance of 741 km (460 mi), along the west coast of India and Western Ghats.

Opening	January 26, 1998; 17 years ago
Owner	Ministry of Railways, Indian Railways
Operator(s)	Konkan Railway Corporation

Line length	736 km (457.33 mi)
No. of tracks	1
Track gauge	1,676 mm (5 ft 6 in)
Electrification	None
Operating speed	120 km/h

Naidu to sow seeds of Amaravati today

• On the eve of the bhoomi puja for Andhra Pradesh’s new capital Amaravati, this once sleepy village on the banks of the Krishna bustled with activity on June 7, as it got decked up for a new future.
• Chief Minister N Chandrababu Naidu, his wife Bhuvaneswari, son Lokesh, Cabinet Ministers, MLAs, MLCs, MPs and senior officials will attend the programme, the rituals for which are scheduled to begin before dawn and stretch into the morning. The rituals will be in the Vaishnavite tradition.
• It’s not decided that Mandadam will be the exact location of the new capital, but its place in the history of the new city will be recorded. “This place will be a monument in future, as we have plans to develop the whole stretch into a park,” the official in charge of the ceremony, Joint Collector Cherukuri Sridhar told The Hindu on Friday. “We are contemplating to erect a pylon to mark this historical event. The Capital Master Plan has a provision for a museum where the names of all land owners who gave their lands for the capital will be embellished in stone.” As per schedule, Mr. Naidu will arrive by helicopter at 8.15 am and take part in the bhoomi puja, slated for the auspicious moment of 8.49 am.
• After the consecration, he will plough the field with a traditional ploughshare while his wife will sow ‘navaratnalu’ (the nine chief grains) in the soil.

Warm contact, lukewarm outcomes

• “Sampark, Samvad, Parinam… “Visits, [Contact], Dialogue, Results” was Union External Affairs Minister Sushma Swaraj’s three-word criterion for success when she recently outlined the ministry’s achievements on the completion of one year by the Bharatiya Janata Party-led National Democratic Alliance (NDA) government. She also recounted how the government had connected with 101 countries. Yet, of these countries the government has interacted with — 18 of which Prime Minister Narendra Modi has visited — none was as anticipated as his visit to China last month.

Fault lines

• Primarily, this visit was to repair the India-China relationship, because regardless of the optics, the past year has been a particularly bad one for the equation between the two neighbours along all the fault lines: on the Line of Actual Control (LAC), across the subcontinent, and in the South China Sea.
• On the LAC, a three-month long stand-off at Chumar in Ladakh cast its shadow on Chinese President Xi Jinping’s visit to India in September 2014. Next came another stand-off over the subcontinent, most visible in Sri Lanka, over the issue of Chinese submarines in “India’s ocean”. Other Indian initiatives such as relief efforts undertaken by both countries, among others, in Nepal after the earthquake there in April; Mr. Modi’s visit in March 2015 to the Indian Ocean island nations (Seychelles, Mauritius and Sri Lanka); or the extension of credit lines to Bangladesh and Afghanistan were, often erroneously, played up in the public narrative as India’s way of “countering China”.
• On the subject of the neighbourhood, Ms. Swaraj made it clear that India is upset with the $46 billion China-Pakistan Economic Corridor (CPEC) “through India”. That Mr. Xi made the announcement of projects in Pakistan Occupied Kashmir (an 870MW hydropower project and the Havelian-Thakot highway) just weeks before Mr. Modi’s China visit was in itself both puzzling and worrying.
• Finally, there was the fault line that upsets China the most — that of the South China Sea and India’s perceived shift towards the United States and Japan on the issue. Each of Mr. Modi’s references to Chinese aggression and ensuring the freedom of navigation — during his speech in Japan in September 2014, his discussions with the Vietnam Prime Minister during his visit to India in October 2014, his address at the East Asia Summit in Nay Pyi Taw (November 2014), the India-U.S. joint statement in Washington and the joint vision statement in Delhi — have all sent sharp ripples through Beijing.

People contact

• All this meant that Mr. Modi had his task cut out for him when he landed in Xian, China, to a grand reception and several hours of interactions with Mr. Xi, finally capped by a Tang dynasty style banquet. His interactions at the Tsinghua University, and Fudan University, on subsequent days, were equally friendly. As the Director of the Institute of China Studies, Alka Acharya, who visited China two weeks later said, “The visit has left a positive impact, especially at the level of citizens.”
• While the welcome accorded to Mr. Modi was unusually warm, eventually the visit will have to be judged, as Ms. Swaraj put it, not by the contact, but by the dialogue and outcome. And while the Modi visit has helped further people-to-people contacts a great deal, beginning with Mr. Modi’s foray on Weibo, the Chinese social media network, the visit didn’t appear to measure up to the government’s claims on the substantive issues.

Unresolved issues

• At her press conference, Ms. Swaraj listed these “substantive issues” as being: “Economic issues, i.e. the trade deficit, and political issues, i.e. LAC clarification, stapled visas, land boundary agreement (settlement) and the sharing of hydrological data”. All prior engagement with China, she said, had been “goodie goodie” and merely customary ( rasm-rivaaz ). While one may discount her casual dismissal of all boundary talks so far (including the 1993 Agreement on Maintenance of Peace and Tranquility along the Line of Actual Control in the India-China Border Areas, signed by Prime Minister P.V. Narasimha Rao; the Declaration on Principles for Relations and Comprehensive Cooperation Between the Republic of India and the People’s Republic of China by Prime Minister Atal Bihari Vajpayee in 2003; and the Border Defence Cooperation Agreement signed by Prime Minister Manmohan Singh in 2013) as the rhetoric of a government on its first anniversary, the fact is that this visit saw no new proposal on the boundary issue.
• On at least two occasions, Mr. Modi’s suggestion to China of a “clarification of the LAC” has been met with silence, and has received no mention in the joint statement. “In terms of an outcome this is a non-starter,” says author and Centre for Policy Research analyst Srinath Raghavan, adding that “we have tried this in the 1990s and even exchanged some maps of the Western sector.” Those attempts ended in an impasse when it became obvious that the perceptions of the LAC by the Indian and Chinese Armies, respectively, were far removed from each other. Changing tack, Mr. Vajpayee then agreed to set up the “SR [Special Representatives]-talks” to resolve the boundary issue once and for all, rather than to try and clarify the LAC.
• Therefore, it is significant that the latest Joint Statement (paragraph 11) also only records a commitment to the SR talks and the three-stage process, while agreeing to operationalise a new confidence-building measure, of hotlines between the militaries. Subsequent public exchanges between National Security Adviser Ajit Doval and the Chinese Ministry of Foreign Affairs officials over the McMahon Line and the LAC clarification only underline the gap in perception.
• The issue of “stapled visas” for residents of Arunachal Pradesh remains unresolved, as it is linked to the boundary issue, Ms. Swaraj said. Going forward, the government may find it useful to consult the interlocutors of the United Progressive Alliance (UPA) government (apart from Foreign Secretary S. Jaishankar who was Ambassador to China), when the Chinese Embassy stopped stapling visas for the residents of Jammu and Kashmir in 2011.
• On the sharing of hydrological data, the India-China joint statement records no progress either, and the paragraph on the issue (paragraph 27, Joint Statement, May 2015) mirrors the “appreciation to China for providing flood-season hydrological data and the assistance in emergency management” of trans-boundary rivers that the Singh-Li joint statement (paragraph 7, Joint Statement October 2013) did.
• Although Ms. Swaraj didn’t list it as a key issue, India’s concerns on cross-border terrorism were mentioned for the first time in the joint statement (paragraph 32) with a clear phrase on agreeing to “disrupt terror networks and their financing and stop cross-border movement of terrorists in accordance with UN and international laws”. This would be an important step, except that China’s actions have belied those strong words. As reported over the past few months, China has blocked at least three Indian requests against the terror elements, Hafiz Saeed, Zaki-Ur-Rehman Lakhvi and Syed Salahuddin, listed by the UN’s 1267 committee on monitoring Taliban and al-Qaeda entities.

Breaking down the MoUs

• Finally, the economic issues of bilateral trade and the growing deficit. Much has been made of the $22 billion in memoranda of understanding (MoU) signed during Mr. Modi’s visit. To begin with, such big figures can be misleading as only a fraction comes to fruition. Much like the figures of $46 billion announced by Mr. Xi for the CPEC in April, or the $50 billion announced by Chinese Premier Li Keqiang for Brazil in May 2015, this will have to be confirmed when the money actually comes in.
• Of the 26 MoUs signed in Mr. Modi’s presence, a chunk is between private entities, which includes the Adani group and Bharti Airtel, and for financing and credit facilities from the Chinese development banks, Industrial and Commercial Bank of China and China Development Bank. The Indian Embassy has refused to respond to a request for a break-up of all the MoUs, but an official conceded that at least half were straight loans. While the loans are an important precedent for Chinese banks, in terms of expressing confidence in Indian companies, these along with a few other MoUs signed on renewable energy are unlikely to have any impact on the massive $48-billion trade deficit between the two countries. According to a parliamentary written reply by Union Commerce Minister Nirmala Sitharaman, in 2014-15, India’s exports to China stood at $11.95 billion while imports were $60.39 billion. It remains to be seen how the newly set up joint working group on trade deficit will address the issue, even as the deficit has ballooned by another 34 per cent during a difficult year in bilateral ties. A more significant development that should have been highlighted is this: the State-to-State economic partnerships, with Gujarat, Maharashtra, Karnataka and Andhra Pradesh in particular, and which Chinese companies are eyeing as manufacturing bases.

Restart in ties

• As a consequence, Mr. Modi’s visit may not have been a gamechanger on the substantive issues outlined by Ms. Swaraj, but should be seen as a “restart point” for those ties, with fresh commitments from the leadership on both sides to address issues whose resolution has evaded them for decades. It has also put Mr. Modi centre-stage in China, where he is seen as a man who “means business” with the mandate to get that business done. Most significantly, it has brought Mr. Modi and the NDA’s foreign policy full circle in a year when he has engaged China early and often. Completing that circle of initial engagement is an important first step as they follow through on Deng Xiaoping’s idea, often repeated by Mr. Modi, of an “Asian century”, possible once the two countries resolve their differences.

Monsoon worries, real or not

• By downgrading the monsoon forecast for the year to ‘deficient’, the India Meteorological Department has pressed the panic button. The forecast now talks of 88 per cent of the long-period average, down from the preliminary figure of 93 per cent. The revised estimate is indeed cause for concern, as it holds the possibility of the country being pushed into a drought situation. These are forward-looking numbers no doubt. Yet the signals can hardly be ignored. Finance Minister Arun Jaitley has sought to talk up the sentiment by suggesting that the fears are exaggerated, and he may well be right. In his view, the geographical distribution of rainfall and its timing will matter more than the total volume of precipitation. Yet, policy-planners at the fiscal and monetary levels have not shied away from articulating their anxiety. The Centre has said it is ready to face a deficit monsoon. Union Agriculture Minister Radha Mohan Singh has made it clear that the situation is being monitored on a daily basis and that a ‘contingency plan’ is in place. The immediate worry, nay task, is to quickly devise an emergency plan to tackle the social and economic consequences of a possible drought. In the near-term, the government may do well to prepare a ready-to-roll out action programme to provide farmers a support system and fallback mechanism to ensure that they aren’t consumed by the severity of the impact, should there be a drought. This could well prove to be one of the toughest tests yet for the year-old Narendra Modi government. To minimise the annual concerns on this front, governments at the Centre and the States will have to go beyond mere mitigation strategies and work out a long-term irrigation plan in an integrated and holistic manner to optimise the groundwater potential as well.
• If the forecast does come true, however, India could be facing the 12th worst drought since 1950. Already hit by unseasonal rain during the rabi season, this portends further trouble during the kharif cycle. This could lead to serious problems on the food front with consequences on the price situation. Already, lack of rural demand is dragging the economy down. The inflation-focussed Reserve Bank of India will have no more leeway to cut the interest rate in such a situation. Three quick rate cuts by the RBI totalling 75 basis points this year have not really seen any major reduction in lending rates by banks at the ground level. With mounting stressed assets and poor credit off-take, the banking industry has so far chosen to be a reluctant actor in the play. The missing X-Factor has conspired with the existing shortfalls in capacity utilisation to make the industry look forlorn. The situation demands proactive action.