Click here to Download 9 PM Daily Brief PDF (21st Sept. 2016)
NATIONAL
[1]. Apex court doubles quantum of Cauvery water for Tamil Nadu
Context:- The Supreme Court has directed Karnataka to release 6000 cusecs of Cauvery water per day to neighboring Tamil Nadu from September 21 to September 27, the next date of hearing in the Supreme Court.
Severe blow to Karnataka
Committee had earlier ordered to Karnataka to release 3000cusecs of water daily. Karnataka had protested against this order also. Present court order will result in the creation of a Cauvery water management board within 4 weeks by the centre. Setting up of the board was envisaged by the 2007 verdict of the Cauvery Water disputes tribunal but was on hold due to Karnataka’s litigation.
Court’s observation
- The court said the dispute has been on the boil since 1892. It said a well thought-out expert solution was the need of the hour. The Bench remarked that the supervisory panel, set up in 2013, was only a “pro tem measure
- Supervisory committee had no authority to adjudicate on the dispute and order the release of water. Supervisory Committee’s role is as an expert to see that the final award of water is implemented and take a decision on how it is to be implemented when there are issues and allocation of water is not possible like in case of deficit or calamity.
Conclusion
Both states should display a sense of empathy towards each other and each other’s farmers. Water crisis in both states can be lessened if they mutually agree to share the burden, rather than politicizing the whole issue.
[2]. IIT-M’s cheap solution to make brackish water potable
Context:- Researchers at IIT-Madras have successfully demonstrated that brackish water can be converted to potable water by simply utilizing the potential difference of 1.8 Volts
Methodology
The researchers used a stack of tissue paper and carbonised it at high temperature to make graphene. Graphite electrodes were then coated with the graphene produced in the lab. When a small potential is applied to the electrodes, the brackish water gets de-ionised to become potable water.
Characteristics of electrode for de-ionisation
An electrode for such de-ionisation purposes should have
- high surface area
- high electrical conductivity
- high porosity
Note: – The graphene coating gives both high surface area and conductivity. The removal of silica makes the graphene porous while retaining its structural integrity.
Process
When the electrodes are dipped into brackish water and 1.8 volt potential is applied to the electrodes, the sodium and chloride ions move towards respective electrodes and get adsorbed.
- In about five minutes, the brackish water turns into potable water with less than 500 parts per million (ppm) of sodium chloride, which is less than the permissible limit for drinking water.
- Further reduction is possible to bring the concentration below 100 ppm
Reverse osmosis vs new method
Compared with reverse osmosis, which is energy intensive and causes 65-70 per cent of water of the water to be rejected as waste, the wastage is only 25 per cent in the case of capacitive deionisation (CDI) technology, and it can work independent of the grid using solar energy.
What is adsorption?
It is the adhesion of atoms, ions, or molecules from a gas, liquid, or dissolved solid to a surface
[3]. China caught in a corridor of uncertainty
Context:- China’s statement regarding the Uri attack reveals the fact that Beijing is willing to stake its diplomacy for the major projects in Pakistan-occupied Kashmir
Uri attack
The 2016 Uri attack was a terrorist attack by four heavily armed terrorists on 18 September 2016, near the town of Uri in the Indian-administered state of Jammu and Kashmir
What has China said regarding the Uri attack?
China’s Foreign Ministry expressed “sympathy” for the victims and asked for “relevant parties” to create a favorable environment which will secure CPEC (China Pakistan Economic Corridor) which passes through Pakistan-occupied Kashmir (PoK)
- China is more worried about its CPEC rather than making sure that Pakistan eliminates the terror activities going on its soil
- By tying up the Uri attack with concern for CPEC, Beijing has shown that its views on terror are based on its strategic interests in South Asian region
CPEC in a nutshell (Source: The Hindu)
Instead of being oblivious, China should also be worried by terrorism from Pakistan which has spread to the Xinxiang province of China
Conclusion
India’s proposal to blacklist Masood Azhar at the U.N. for the Pathankot attack of January 2 could not succeed due to China. India would require support from China if it wants to eliminate the cross-border terrorism.
[4]. National wastewater reuse policy sought
The Hindu
Context:- Indian cities suffer from a perennial water stress. A report by PwC has suggested that a National Reuse water policy should be framed to address the problem
As per the report titled “Closing the water loop: Reuse of treated wastewater in urban India”
- The country is expected to add approximately 404 million new urban citizens between now and 2050. This will result in higher industrial output and greater energy demand thus adding to the urban water stress
Remedy: Institutionalizing (establish as a practice or a norm in an organization) the reuse of treated wastewater could go a long way in helping utilities to address this challenge in an effective manner
- Sound policy and regulatory interventions by the Central and State Governments are a prerequisite for the launching of innovative reuse projects
- Making it costly: Groundwater usage should be made costlier so that reuse of the waste water is not rendered unviable. At present exploiting groundwater is so low that reuse seems a costly option
- Defining quality norms: Ministry of Environment and Ministry of Water Resources should work together to define quality norms for different grades of industrial water. This would help standardize the design of reuse systems nationwide
- PPP-mode: Infrastructure development in the water sector had been fully funded by the Central Government. For PPP (public-private partnership) structures to evolve in this sector, significant government interventions were required to create a favorable environment for private sector participation
EDITORIAL
[1]. Will the Paris pact succeed like Montreal protocol?
Context:- On September 21, United Nations Secretary-General Ban Ki-moon will be organising in New York a ratification ceremony for the Paris climate agreement, inviting countries that haven’t endorsed it till now to do so.
When will Paris agreement come to force?
When at least 55 countries, accounting for 55 per cent of the global GHG emissions, ratify it.
The Montreal precedent
The Montreal Protocol on Substances that Deplete the Ozone Layer,
- Montreal protocol was signed on September 16, by 197 member nations
- Success: The ozone layer, which at that time was discovered to have a big hole in it due to ozone-depleting chemicals being widely used, is now beginning to show signs of healing.Researchers believe that the size of the ozone hole has shrunk by around 4 million sq km since 2000 and is not as deep as it used to be pointing towards the success of the Montreal protocol
- Nations that are party to the Montreal protocol will get together in Kigali, Rwanda in October, to discuss the phasing down of hydrofluorocarbons (HFCs).
- According to the UN Framework Convention on Climate Change (UNFCCC), an HFC phase-down could prevent warming of up to 0.1°C by 2050 and warming of up to 0.5°C by 2100, offering one of the most cost-effective climate mitigation strategies available to the world today.
Focus areas: The Montreal Protocol had to address the use of ozone-depleting substances in select industries where they were widely used whereas the Paris Agreement has to address the challenge of reducing dependence on fossil fuels that continue to be the world’s primary source of energy
Lessons that can be learnt from successful implementation of Montreal protocol
If countries commit to achieve the Paris target, it can be done easily like in the case of Montreal protocol.
- No solid scientific basis: Unlike climate change, the science behind ozone depletion was contested at the time when the protocol was signed. It was only eight years after the Montreal Protocol came into being that the Nobel Prize in Chemistry to Paul J. Crutzen, Mario J. Molina and F. Sherwood Rowland brought global validation for their work on the formation and decomposition of ozone in the atmosphere.
But that did not stop the countries that were party to the protocol from taking necessary action.
- Scepticism and doubt: However, despite the scientific evidence in support of global warming and climate change, signatories to the Paris treaty have much doubt to overcome before meeting its goal of keeping global warming levels less than 2°C above pre-industrial levels
Political will
With presidential candidate Mr. Trump declaring that climate change is a hoax and if elected he will take US out of the Paris agreement, the world should be wary because in 1997 US senate didn’t approve of the Kyoto protocol and other GHG emitters followed the suit and didn’t approve the Kyoto Protocol. US can affect the climate talks at any point so author says that a strong political will is required to successfully implement the Paris agreement
Funding
Industrialized countries had committed in Cancun in 2010 to provide funds rising to $100 billion per year by 2020 for a Green Climate Fund (GCF) to help developing countries invest in green energy and prepare for extreme weather events.
- However, the GCF has so far raised only $10 billion, and allocated money to only about eight projects since it was first set up.
Conclusion
Even after ratification, the pledges made by signatories to the Paris Agreement would be insufficient to keep global warming levels below the danger threshold, as per the UN’s own estimates. SO it is high time that countries begin to implement green technologies with a pro-active approach & learn a lesson from the Montreal protocol.
[2]. An independent RBI is a chimera
Context:- Author says that in an emerging market economy like India’s where the main objective of macro policy is economic welfare, the central bank cannot work independently of the government
Author states that there are 4 dimensions to the question of independence of a country’s central bank,
- statutory independence from the state with respect to nomination, tenure and termination of the Governor
- independence of monetary policy instruments, implying managing of the interest rate or liquidity;
- independence of monetary policy objectives like inflation targeting, credit control, priority sector lending or any other objective which is stipulated by the government;
- financing of government deficit
Central Bank Autonomy
Author states that, central banking is still evolving.
- In 1900, there were very few central banks and each had been initially created to dispense some specific function of the government, mainly to issue currency and coinage or manage foreign exchange reserves. Regulation and supervision of banks came later, and later still inflation targeting and fixation of interest rates.
- The concept of an independent central bank evolved in advanced economies and finds its roots in the successful anti-inflationary policy of Paul Volcker in the U.S. between 1979 and ‘82.
- However, the most independent central banks are those of Latvia, Hungary, Armenia, and Bosnia. India, Saudi Arabia, Singapore, and the U.S. are the countries with the least independent central banks.
Author says that there is a clear distinction in the functioning of central banks in advanced and emerging market economies (EMEs)
- In advanced economies the transmission mechanism is efficient meaning benefits of rate cuts by the central bank are passed on to consumers
- In the U.K., independence evolved over a period of time and the Bank of England, set up in 1694, was offered operational independence only in 1997, implying that the interest rate was fixed by the Treasury until then. Even in case of the U.S. Federal Reserve, as is well known, independence is within the overall authority of Congress.
- In EMEs, characterized by underdeveloped financial markets, with inefficient transmission mechanism and government ownership of financial institutions, independence could rather be harmful.
- In practice, central banks in emerging markets have to ensure development of financial markets and carry out financial sector reforms. They have also to ensure that the financial system, including banks, is robust and stable
- In many EMEs, especially those transitioning from socialist economies, banks and financial institutions are owned by the government. The government-owned banks lend extensively to other government-owned companies, compromising standard commercial viability criteria. The central banks of EMEs also have to focus on macroeconomic variables like capital inflows and balance of payments because most of them follow a managed exchange rate system.
- To ensure that banking penetration is extensive, financial inclusion also becomes an important objective
Conclusion
If the central bank has a single objective, independence is understandable for a focussed approach, but if the central bank has multiple objectives, then there is an increased need for coordination with the government to jointly face challenges.
ECONOMY
[1]. No, free trade isn’t fueling inequality
Context:- Author discusses that Globalization isn’t perpetrating inequality, it is a lack of consolidated, documented knowledge that is doing the damage on a global scale
Globalization under attack
Every aspect of globalization is under attack from various corners of our world.
- free trade
- free movement of capital
- international migration
Who is leading the tirade against globalization?
- Populist political parties, separatist groups and terrorist organizations
- In Russia and Asia, anti-Western groups are at the forefront of the campaign against globalization
Why are such groups against globalization?
Because all they see are massive, unbending institutions and intolerable inequalities in wealth and income. Remedy as per them lies in closing the national borders to any kind of trade. This would hurt everyone
Author admits that inequality has risen but denies that it is due to globalization
- Author says that it is a lack of consolidated, documented knowledge, not free trade that is fueling inequality worldwide.
Problem with tackling such inequality
The lawyers and corporate elites who draft and enact the legislation and regulations that govern globalization are disconnected from those who are supposed to implement the policies at the local level.
[2]. The SBI merger: is bigger always better?
Context:- The merger of the State Bank of India (SBI) with its five associate banks and BharatiyaMahila Bank (BMB) is being pursued by the government in the belief that larger automatically means better.
Author says that such mergers take time but in the present case the formalities are being completed at an exponential rate.
Benefits of the merger as per the government
- The government, as shareholder, feels it will have six less capital-hungry banks to worry about.
- A larger institution will be better equipped to deal with Non-performing Assets (NPAs), thereby enabling fresh credit outflows to productive sectors.
- Productivity and efficiency gains are among other expected benefits.
Drawbacks
- SBI, without merger is in itself a very large bank & making it even bigger can lead to organizational problems making it unmanageable
3 issues merit concern as per author
Lack of shareholder democracy: Only those shareholders who have an at least 1% of either bank’s share capital (for example, that amounts to 77.6 million SBI shares) or support of 100 shareholders irrespective of their shareholding, can oppose this merger.
Too-Big-To-Fail (TBTF) – This theory posits that some institutions are so large and intricately interconnected with different parts of the economy that failure can create a systemic shock. This forced many governments to bail out large financial institutions with taxpayer money. It might also be instructive to note that many countries have been formulating preventive TBTF regulations. Australia, for example, has prohibited any merger between the country’s four largest banks. Switzerland, on the other hand, has the world’s most stringent capital norms.
- RBI has designed a risk mitigation framework for dealing with “domestic systemically important banks” or D-SIBs.
Once the merger is completed, SBI could become part of the G-SIB club, ending RBI’s discretionary approach.
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