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16 Dec 2015 editorials

16 Dec 2015 

editorials


The Hindu: Peace in the pipeline
After being called a pipe dream for decades, the Turkmenistan-Afghanistan-Pakistan-India pipeline
came one step closer to reality on Sunday, with the groundbreaking ceremony at the Turkmen town of Mary attended by leaders of the TAPI countries. The pipeline, that is set to cross over 1,700 km, through Herat and Balochistan before reaching the Indian Punjab border, and will draw from the world’s second largest natural gas field of Galkynysh, comes full of promise. To begin with, it will reopen a historic route that reconnects South Asia to Central Asia, in the way it was before the British Empire sealed it off. It will also bring India and its neighbours much needed energy at competitive pricing, and could easily supply a quarter of Pakistan’s gas needs, about 15 per cent of India’s projected needs, as well as Afghanistan’s requirements, by the time it is completed in the 2020s. This is a growing need, and even if India is able to source energy from other countries like Iran and further afield, both the proximity and abundance of Turkmenistan’s reserves, that rank fourth in the world, will make it an attractive proposition. At a time when China has already secured nearly half of its energy requirements from the region, and is working on the $400 billion Russia-China gas pipeline, India has no time to lose in securing its interest in Central Asia. Finally, the TAPI pipeline gives this fractured region a reason to work on a project together as well, and it is hoped the shared stakes in TAPI’s success will ensure that India, Pakistan and Afghanistan find ways of cooperating on other issues as well.

However, the project faces the challenge of terrorism today. Unless the pipeline is secured from the Taliban that operates on both sides of the Durand Line, and from militant groups operating in Pakistan, it is hard to see how the TAPI dream can go beyond the groundbreaking ceremony. “By coming this far, we are overcoming a history of doubt and scepticism,” said Afghanistan President Ashraf Ghani at the ceremony. Certainly, the fact that the TAPI, pushed by Turkmen President Gurbanguly Berdimohamedov, was able to bring leaders of three countries with relations as complicated as India, Pakistan and Afghanistan share is itself remarkable. To envisage a $10 billion project that traverses all three countries with all the bad blood between Afghanistan and Pakistan, and Pakistan and India, is ambitious as well. If it can manage to loosen the tight bonds between terror groups and their sponsors in Pakistan, who ought to see where their own interests lie, it will achieve the impossible; something no amount of pressure, cajoling and threat from India, Afghanistan and other countries has been able to effect in Pakistan thus far. The only way the project will be actualised is if the leadership of all four member-countries don’t just dwell on the world that exists today, but the region as it can be: connected, cooperative, peaceful and prosperous

a·field
To or at a distance

a·bun·dance
A very large quantity of something

frac·ture
Break or cause to break.

ground·break·ing
Breaking new ground; innovative; pioneering.

en·vis·age
Contemplate or conceive of as a possibility or a desirable future event.

ca·jole
Persuade someone to do something by sustained coaxing or flattery.

dwell
Live in or at a specified place.

pros·per·ous
Successful in material terms; flourishing financially.


The Hindu:Splendid decade, but miles to go
There is now no doubt that the last 10 years were a time of extraordinary human development in India. When the World Bank decided to raise its global poverty line from $1.25 a day (in Purchasing Power Parity, or PPP, terms) to $1.90 in October and update the data for countries, it showed among other things that India had witnessed the fastest-ever decrease in the percentage of its population below the poverty line between 2009 and 2011. The United Nations Development Programme’s Human Development Report released this week re-establishes this point. India’s Gross National Income more than doubled over the last 15 years, from $2,522 (PPP) to $5,497 between 2000 and 2014, putting it into middle income status. This economic growth translated into better human development outcomes as well; India’s Human Development Index value went from 0.462 to 0.609 between 2000 and 2014, a far higher increase than in the previous 15-year period. This was driven by improved economic growth and increase in life expectancy as a result of improved health care, and less so from improvements in educational outcomes, which have been harder to achieve, especially for women. Similarly striking is the story that emerges from India Health Report: Nutrition 2015 released by the Public Health Foundation of India last week. Child undernutrition, which had been declining slowly when data were last available in 2006, has begun to fall at historically high rates; between 2006 and 2014, stunting rates for children under five declined from 48 per cent to 39 per cent, translating into 14 million fewer stunted children, and declines in wasting translated into seven million fewer wasted children. These are extraordinary achievements.

Of course, India must not rest on these laurels. The UNDP report also showed that when inequality is factored in, India loses nearly 30 per cent of its HDI values, meaning that outcomes vary substantially by class, caste and gender. If India’s women were their own country, they would be 30 ranks lower on the HDI than the country as a whole is now, with far worse educational outcomes dragging them down. Indian women are at a particular disadvantage in the workforce; the high proportion (up to 39 per cent of GDP by one estimate) of unpaid care work that falls on women alone pushes them out of the workforce, resulting in one of the world’s lowest female labour force participation rates. The 2015 HDR, which is based on the theme of work, highlights just how vulnerable and ill-prepared for the future the majority of the Indian workforce is, and without a social protection blanket. The PHFI report also shows that India’s national successes mask massive inter-State variability; moreover, gender inequalities are possibly having an impact on children’s nutritional outcomes. Coming at a time when there is a fear of social sector budget cuts, these reports show that India must build on its human development successes with better redistributive justice.

splen·did
Magnificent; very impressive.

stunt
Prevent from growing or developing properly

lau·rel
Any of a number of shrubs and other plants with dark green glossy leaves, in particular:

var·y
Differ in size, amount, degree, or nature from something else of the same general class.

vul·ner·a·ble
Susceptible to physical or emotional attack or harm.


Business Standard:Debt blues
It is one of economics’ most basic laws that inflation benefits borrowers and hurts lenders. As the face value of debt declines thanks to inflation, borrowers find their debt easier to repay. There is an unfortunate corollary of this law that India’s government, and its private sector, are slowly discovering. India’s average wholesale price inflation in the four decades between 1970 and 2010 has hovered at 7.6 per cent and consumer price inflation in that period has been estimated at an average of over eight per cent. This has led to a certain complacency about borrowing. That is largely because even if the primary deficit (the excess of expenditure other than on interest over revenue) kept on adding to the face value of government debt, the debt-to-gross domestic product ratio continued to appear manageable. This is because the denominator, nominal gross domestic product (GDP), was constantly being inflated by six to eight per cent a year anyway.
But, in the recent GDP figures, something unusual happened: India’s nominal GDP growth, at just over six per cent, was considerably lower than real GDP growth of 7.4 per cent. If this is not a passing phenomenon – and commodity price dynamics may sustain it for some time – then attention hitherto focused on India’s fiscal deficit should also turn to the debt-to-GDP ratio. A path of fiscal consolidation premised on a comfortably growing denominator of nominal GDP may become more difficult if nominal GDP is instead growing less than expected. In other words, the government has been too sanguine about the positive impacts of fuel price decreases on its fiscal arithmetic. It has been considered a win-win – government revenues from taxes and the savings on subsidies have been boosted. This means the fiscal deficit target can be more easily met – as senior officials in the finance ministry have repeatedly insisted. However, the fiscal deficit target in a situation of lower nominal GDP growth is likely in general to become a little more tough. More importantly, the government’s task of ensuring that its debt is kept at a sustainable level will become more challenging. As has been argued on these pages by Business Standard columnist Ajay Shah, a less inflationary environment means the debt dynamics have changed – and the government will have to make deeper cuts in spending. It cannot, after all, afford to cruise on the windfall from oil without making any structural changes to revenue or expenditure. The government has to become more prudent in its management of public finances.

It is not just the government that has to alter its expectations. Several Indian companies, including many infrastructure majors that are supposed to lay the groundwork for economic recovery, have a significant debt overhang. Cleaning up their balance sheets has been made much harder by the move to a lower-inflation environment. Earnings growth has long been moderate in the corporate sector, while interest costs will remain high. Over time, this mechanism will begin to bite, and make India Inc’s efforts to gain financing even more difficult. For the government, this is a significant new threat to its attempt to get private investment moving again – an important component of returning to a high-growth trajectory.

cor·ol·lar·y
A proposition that follows from (and is often appended to) one already proved.

hov·er
Remain in one place in the air.

com·pla·cen·cy
A feeling of smug or uncritical satisfaction with oneself or one’s achievements.

phe·nom·e·non
A fact or situation that is observed to exist or happen, especially one whose cause or explanation is in question.


hith·er·to
Until now or until the point in time under discussion.

san·guine
Optimistic or positive, especially in an apparently bad or difficult situation

boost
Help or encourage (something) to increase or improve.

wind·fall
An apple or other fruit blown down from a tree or bush by the wind.

pru·dent
Acting with or showing care and thought for the future

o·ver·hang
Hang or extend outward over.

tra·jec·to·ry
The path followed by a projectile flying or an object moving under the action of given forces.

The Guardian
view on UK energy policy after Paris: Amber Rudd must flick the trip switch

When Laurent Fabius brought down his green gavel in Paris on Saturday, the atmosphere in the hall was said to be electric. The global great and good, even the not-so-good, were all smiles, tears of joy and arms around each other, all of them caught up, at least for that moment, in the hope that they might just have been part of saving the world. It must be hoped that Amber Rudd soaked up her full share of this euphoria, because the UK energy secretary is going to need to draw on deep inspiration if she is to close the yawning gap between the UK’s rhetoric at the summit, and the recent UK record back home.
The right sometimes complains that environmentalists are like watermelons – green on the surface but socialist red inside. It is, however, now clear that David Cameron’s one-time “vote blue, go green” pitch in opposition was no more than verdigris, a patina rapidly scratched off by the grind of being in government. Even under the coalition, where Ms Rudd’s brief was held by successive Lib Dems, George Osborne stoked anti-environmental sentiment by declaring to his party conference that he would never “save the planet by putting Britain out of business”, as if that were what those concerned with climate wanted. Today, six months into a majority Conservative government, the chancellor has been dictating the terms of environmental policy, to unremittingly destructive effect. On airport expansion the only question is where, not if. The next big idea for the green investment bank is privatisation, with ministers set to cede public control of the bank’s animating principles in order to bring in a little cash and get it off the Treasury’s balance sheet. Above all, the subsidies for renewables have been savaged, in some cases cut by 90%, and the damage to the sector has been redoubled by parallel tweaks to the planning regime.
Almost as bad as what has been done is the way the government has set about it. There has been indecent haste, with deep cuts announced two months after the election, and profoundly important changes being written straight into the energy bill, without ever having gone through the standard consultative green or white paper stages. There has been profound imbalance, too. The government gives the falling price of solar energy cells as a reason to cut solar subsidies, but there is no parallel move to raise petrol duties after the oil price freefall. This is in explicit contradiction of the “fair fuel stabiliser” approach propounded during the last parliament, when ministers explained why – time and again – they had cancelled planned petrol duty rises in the face of rising oil costs. We have now reached a pass where even the former chancellor and noted climate sceptic Nigel Lawson berates Mr Osborne for his failure to take the chance to recoup sorely needed revenue at the pumps.
Malign symbolism compounds the immediate practical effect of the early closure of the renewables obligation in respect of wind, and the withdrawal of “nationally significant” status from the construction of onshore turbines. The great battle in greening energy is to convince investors that, well, the wind will remain in their sails. But moves of this sort will do exactly the opposite, creating uncertainty and deterring new projects, which is no doubt why such moves appeal to big carbon special interests and anti-environmental obsessives.
Ms Rudd is emphatically not in the latter camp. She recently committed to phasing out coal power stations, and sounded serious about it too, emphasising the particular role of cleanish modern gas facilities. A few weeks later, however, came a UK capacity market auction, which awarded coal contracts, did nothing about constructing the mooted cleaner gas facilities, and most bizarrely sponsored the mushrooming of small generators which run off grimy diesel. So here’s hoping that the electricity of Paris will have given Ms Rudd the sort of shock that might jolt her from half-decent intentions into a real and lasting commitment to act.

gav·el
A small mallet with which an auctioneer, a judge, or the chair of a meeting hits a surface to call for attention or order.

eu·pho·ri·a
A feeling or state of intense excitement and happiness.

yawn
Involuntarily open one’s mouth wide and inhale deeply due to tiredness or boredom

ver·di·gris
A bright bluish-green encrustation or patina formed on copper or brass by atmospheric oxidation, consisting of basic copper carbonate.

.
scratch off – write quickly;

grind
Reduce (something) to small particles or powder by crushing

unremittingly
(unremitting) ceaseless: uninterrupted in time and indefinitely long continuing; “the ceaseless thunder of surf”; “in constant pain”; “night and day we live with the incessant noise of the city”; “the never-ending search for happiness”;

cede
Give up (power or territory).

sav·age
(especially of a dog or wild animal) attack ferociously and maul.

tweak
Twist or pull (something) sharply.

pro·found
(of a state, quality, or emotion) very great or intense.

ex·plic·it
Stated clearly and in detail, leaving no room for confusion or doubt.

on·shore
Situated or occurring on land.

em·phat·i·cal·ly
In a forceful way

moot
Raise (a question or topic) for discussion; suggest (an idea or possibility).

grim·y

Covered with or characterized by grime.

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