Sunday, 20 December 2015

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17 Dec 2015 editorials

 

17 Dec 2015 

editorials


 

The Hindu: Tactless raid, unsavoury fallout


There may be some questions of propriety arising from the CBI raids on Delhi Chief Minister Arvind Kejriwal’s office, but the development need not have been followed by the unsavoury political war that has broken out between the Aam Aadmi Party and the BJP — indeed, between the Delhi and Central governments. The agency could have displayed greater tact while conducting the searches in the Delhi Secretariat, aimed at Mr. Kejriwal’s Principal Secretary Rajender Kumar, as it has given the impression that the Chief Minister’s office was also searched. It is normal for a raided spot to be closed to the media, but by keeping Mr. Kejriwal out of his office the CBI has given room for speculation that his office was also searched. It may be difficult to fault the agency for conducting the search without any forewarning, but in a federal set-up, searching the premises of a serving Chief Minister will always be looked at with suspicion, especially when the incumbent is not the subject of a probe. In September, there was a CBI raid on Himachal Pradesh Chief Minister Virbhadra Singh, but he had been under investigation and there was no room for any oblique motive to be alleged, except by painting it all as political vendetta. Mr. Kejriwal’s claim that the documents seized included a ‘file movement register’ pertaining to the period November 15-December 15, 2015, if true, could give credence to his charge that the investigation is not confined to Mr. Kumar’s decisions during the period from 2007 to 2014. But his grievance that he is being targeted in the name of a probe against his Principal Secretary requires more proof. Meanwhile, perceptions of the use of the CBI for political ends by governments persists.

Mr. Kejriwal’s outburst against Prime Minister Narendra Modi, calling him a “coward” and a “psychopath”, was unbecoming of a serving Chief Minister. Such bluster makes one wonder whether he sees the irony of questioning an investigation, given the unlimited powers he had sought for a Jan Lokpal. There is, however, no doubt that Mr. Kejriwal has been quick to see the raids as an opportunity to nominate himself as a national face of the anti-Modi political coalition. Being in confrontation over a principle of governance with powers greater than himself has been part of Mr. Kejriwal’s strategy of giving his politics a mobilising edge. And now as the AAP looks to expand its electoral footprint in the Punjab Assembly elections, having politicians from other parties ranged behind him on a series of issues will certainly help. For its part, even if they had been unaware of the impending raids, the response of BJP spokespersons and Ministers could not have been more self-defeating. Politically, they have allowed Mr. Kejriwal to take the fight to them on his terms and put them on the defensive — the onus is now on them to explain the federal spirit that informs their equation with Opposition governments in the States.

tact·less
Having or showing a lack of adroitness and sensitivity in dealing with others or with difficult issues.

un·sa·vor·y
Disagreeable to taste, smell, or look at

fall·out
Radioactive particles that are carried into the atmosphere after a nuclear explosion or accident and gradually fall back as dust or in precipitation.

in·cum·bent
Necessary for (someone) as a duty or responsibility.

probe
A blunt-ended surgical instrument used for exploring a wound or part of the body.

o·blique
Neither parallel nor at a right angle to a specified or implied line; slanting.

ven·det·ta
A blood feud in which the family of a murdered person seeks vengeance on the murderer or the murderer’s family.

cre·dence
Belief in or acceptance of something as true.

cow·ard
A person who lacks the courage to do or endure dangerous or unpleasant things.

psy·cho·path
A person suffering from chronic mental disorder with abnormal or violent social behavior.

blus·ter
Talk in a loud, aggressive, or indignant way with little effect.

con·fron·ta·tion
A hostile or argumentative meeting or situation between opposing parties.

edge
The outside limit of an object, area, or surface; a place or part farthest away from the center of something.

im·pend
Be about to happen.

o·nus
Used to refer to something that is one’s duty or responsibility.


the Hindu: December 17, 2015 00:10 IST

Cautionary signals from the export slump


The protracted slump in merchandise exports, which rounded out a 12th straight drop in November, is a cause for serious concern. The sharp, almost 25 per cent, contraction in the overseas shipment of goods from a year earlier to $20 billion signals there is more to this extended contraction than just the global economic weakness that has cast its shadow across trade worldwide. While the slide in commodity prices, including that of oil and petroleum products, has contributed to the decline in the value of exports in dollar terms, of greater worry is the continuing fall in demand for Indian engineering goods, and leather and leather goods. The leather sector has been hurt by a combination of economic weakness in Europe, increased competition and poor infrastructure. The theme of infrastructure hobbling the country’s trade competitiveness has been an enduring one with the problems of power availability and inadequate road and port connectivity still continuing to dog exporters, especially the micro, small and medium enterprises (MSME) that together accounted for more than 44 per cent of India’s exports in the last fiscal year. The MSME sector also provides employment on a sizeable scale, including in semi-urban and rural areas, and the export slowdown is sure to result in widespread labour distress that can only weigh on savings and consumption in the broader economy. The slowdown also reflects on the low level of value-addition being achieved by India’s exporters, as is evident in the widening trade deficit with China — itself coping with declines in both exports and imports. While the main exports to the northern neighbour are low value-added commodities such as cotton, copper alloys and iron ore, the imports include machinery, electrical equipment and electronics that have resulted in the trade gap surging 32-fold to $48.5 billion in the decade through March 2015.

The export slowdown is at the same time both a symptom and a potential trigger for domestic economic weakness. Any effort to improve business competitiveness through reforms, including in areas such as labour and credit markets, especially for the MSME segment, can surely give a fillip to the overall environment. The Make in India programme, if pursued cogently, can also serve as a springboard for enhancing skills and technologies that can over time help reverse and possibly boost both volumes and the value of overseas shipments. Also, the monetary and fiscal authorities need to be mindful of the fact that the rupee — while having weakened against the dollar, thus appearing to offer a price advantage to exporters — has actually appreciated in real terms against a trade-weighted basket of 36 currencies, making India’s exports less competitive. For this reason, the Reserve Bank of India needs to continue its close vigil over inflation. Finally, even the pharmaceuticals sector, where exports have grown, can ill afford to be complacent as the U.S. and Europe tighten regulatory oversight of generics and manufacturing processes in India.

cau·tion·ar·y
Serving as a warning.

slump
Sit, lean, or fall heavily and limply, especially with a bent back.

pro·tract
Prolong.

hob·ble
Walk in an awkward way, typically because of pain from an injury.

en·dure
Suffer (something painful or difficult) patiently.

vig·il
A period of keeping awake during the time usually spent asleep, especially to keep watch or pray.

com·pla·cent
Showing smug or uncritical satisfaction with oneself or one’s achievements.

ge·ner·ic
A consumer product having no brand name or registered trademark.

Business Standard

Help with NPA clean-up


The governor of the Reserve Bank of India (RBI), Raghuram Rajan, said earlier this month that he expected banks to clean up their books in terms of stressed assets by the end of the next financial year – that is, by March 2017. Stressed assets – which include both bad loans officially classified as non-performing assets (NPAs) and those that are undergoing corporate debt restructuring (CDR) – accounted for a worrying 11.1 per cent of total advances as of last quarter. Non-performing assets rose over 20 per cent year-on-year in the quarter ended September, as a significant number of loans moved out of the CDR books. The RBI has insisted that it will examine bank balance sheets closely, and that proper provisioning for bad assets will have to be made.

The RBI, as regulator, has already taken several steps to help banks deal with the stressed-assets problem – including strategic debt restructuring, in which the debt is turned into equity. The latter move cannot be anything but an interim effort, however, given that banks do not have the managerial competence or resources to effectively become private equity firms. Another method the RBI has permitted to deal with problematic loans is what is called the “5/25” system, by which loans to infrastructure companies are extended in tenure. These too will have to be closely watched. Earlier, CDR assets did not have the onerous provisioning requirements associated with NPAs, and so there was concern that banks were playing around with the classifications to make their books look better. The RBI has closed that loophole. Thus, while NPAs may rise, several observers, including the ratings agency Fitch, expect that stressed assets as a whole may decline marginally in the ongoing financial year as compared to 2014-15.

It is worth noting, however, that the problem of bad loans is one that is particularly acute in public-sector banks (PSBs), and so significant matching action must be taken by their primary shareholder, the government. The RBI cannot be left doing all the heavy lifting. The problem is particularly acute in mid-sized PSBs like Indian Overseas Bank or UCO Bank. The former reported NPAs at 11 per cent in the quarter ended September. It has been reported that the government intends to use part of the proposed National Infrastructure Investment Fund (NIIF) to bid for stressed assets that it can then work to turn around, while simultaneously cleaning up bank books. This was not the original plan for the NIIF, which was meant to be a source of long-term infrastructure finance; however, if managed properly, using part of NIIF as, in essence, a “bad bank” could minimise the disruption involved in the clean-up process.

However, that is the government thinking as manager of the Indian economy and provider of basic infrastructure, not as bank owner. As the latter, it must also work with the regulator to ensure that banking practices improve in PSBs. For one, it should be wary of forcing multiple lending priorities on its banks – financing specific infrastructure or agricultural needs, or taking on the loans associated with the MUDRA Bank refinancer, or for that matter dealing with the Jan-Dhan Yojana accounts unless they are properly remunerative. Politically and administratively, the government should be aware that the state-owned banking sector is undergoing extreme fragility, and this is not the time to stress it further with various “nation-building” demands, particularly when it is reluctant to take bold steps that entail their fundamental restructuring. It should also work to ensure their structural and operational independence. A bank holding company as recommended by the P J Nayak Committee should not be long delayed, even though it would require legislative assent.

Stressed assets are the pnes. on the way to become NPAs, where interest has not been serviced for 1-2 quarters. NPAs have been classified as bad loans, and are up for securitization of assets, interest rebate discussions etc.

in·ter·im
The intervening time.

a·cute
(of a bad, difficult, or unwelcome situation or phenomenon) present or experienced to a severe or intense degree.

si·mul·ta·ne·ous·ly
At the same time.

dis·rup·tion
Disturbance or problems that interrupt an event, activity, or process.

re·mu·ner·a·tive
Financially rewarding; lucrative.

fra·gil·i·ty
The quality of being easily broken or damaged.

re·luc·tant
Unwilling and hesitant; disinclined.

en·tail
Involve (something) as a necessary or inevitable part or consequence.

as·sent
The expression of approval or agreement.



Indian Express
Action in Riyadh



The 34-state coalition announced by Saudi Arabia could help defeat Islamist terror groups if it translates intent into action. Saudi Foreign Minister Adel al-Jubeir, who made the announcement on Tuesday, said the alliance will share information and train, equip and provide forces, if necessary, for the fight against the Islamic State (IS). In the Saudi capital, deputy crown prince and Defence Minister Mohammed bin Salman spoke about international coordination with major powers and international organisations to battle terrorism in Iraq, Syria, Libya, Egypt and Afghanistan. A joint operations centre has been proposed in Riyadh to “coordinate and support” military action.
However, the exclusion of Iran limits the coalition to the coming together of mainly Sunni Muslim nations. Islamabad, whose dodgy record on fighting terror is no secret, has said the Saudis did not consult it before making the announcement. The differences within the coalition need to be addressed and a concrete action plan readied. Though a broad coalition is now battling the IS, the advent of a Saudi-led alliance with an emphasis on its Muslim identity could arguably change the narrative. It can help expose the hollowness of the terror platform’s claim to represent Islam. However, in the absence of concrete action, the scepticism that the Saudi coalition is mere optics to subdue criticism in the international community that enough is not being done by Muslim countries, especially Saudi Arabia, to defeat terror groups, will prevail.
Though the immediate concern of the alliance should be to reclaim territory, it will also need to reckon with the deeper reasons that fuelled the formation of the IS. The rise of religious extremism has been helped by the failure of West Asian regimes to address the social and political aspirations within. Though there are no easy answers, this coalition demonstrates, at the very least, that the region is willing to take ownership of its crises. The world will watch it closely.

co·a·li·tion
An alliance for combined action, especially a temporary alliance of political parties forming a government or of states.

ex·clu·sion
The process or state of excluding or being excluded.

dodg·y
Dishonest or unreliable.

ad·vent
The arrival of a notable person, thing, or event.

hollowness
The state of being hollow: having an empty space within

skep·ti·cism
A skeptical attitude; doubt as to the truth of something.

sub·due
Overcome, quieten, or bring under control (a feeling or person)

pre·vail
Prove more powerful than opposing forces; be victorious.


The Guardian

view on the EU summit: a chance to get it right on refugee policy



This week’s European Union summit in Brussels was once seen as being the crunch moment for David Cameron’s timetable to reform Britain’s relations with the EU in advance of the planned referendum. Recently, however, a combination of much more pressing Europe-wide issues, notably migration and terrorism, plus some stuttering progress in Mr Cameron’s discussions with fellow EU leaders, have pushed the timetable back. As Sir John Major put it on Wednesday, this summit is not high noon. Instead it could be yet another occasion for burning the midnight oil.

That’s because this summit is set to be dominated by another effort to rescue the credibility of the EU’s external and internal borders in the face of Europe’s refugee crisis. Britain’s grievances must therefore wait their place in the queue. February 2016 is now the date when Mr Cameron intends to obtain the “binding and irreversible deal” that he seeks in order to win the public’s backing for the UK to remain in the EU. That date would still allow the referendum to be held in June. After all, Greece organised its bailout referendum this summer at a week’s notice.

There is, though, an umbilical connection between the summit’s preoccupation with migration and borders and the continuing British focus on the UK’s relationship with the EU. When Mr Cameron originally proposed a referendum, back in January 2013, migration and EU borders were much further down the agenda than they are today, or than they are likely to be when the vote eventually takes place. The Bloomberg speech was principally about the eurozone crisis and the place of national sovereignty within a union of 28 states. Words like migrant and refugee did not appear in it at all. The word “border” appeared only once, almost as an aside.

A mere three years later, however, the context is utterly changed. The UK’s concerns about a multi-speed Europe, and whether the rights of non-eurozone member states are adequately protected within the union’s workings, remains an important issue for the committed on both sides but they are not, perhaps shortsightedly, a big popular anxiety. Arguments about national sovereignty remain intense, in Britain as elsewhere, but now because of the backdrop of the refugee crisis rather than of EU-wide fiscal disciplines, as in the aftermath of the eurozone crisis.

The referendum campaign, when it finally gets into gear, will inevitably reflect this new context. The shift against EU membership in recent polls may already do so. At a meeting organised by the Centre for European Reform this week, Conservative speakers from all wings of the party argued that, irrespective of what the pro- or anti-Europeans may want, the vote will in fact be shaped by the migration issue. It is hard to disagree with that.

To say this is not to say that the older fiscal and sovereignty issues of the Maastricht era or the four heads of Mr Cameron’s negotiating strategy are irrelevant now. In the end, the referendum will still turn on whether the pro-Europeans can marshal a confident case about the benefits of Britain’s future in Europe while also puncturing the many myths about a go-it-alone exit. But the case for Europe must also contain an effective and balanced argument about borders, migration and refugees too, as Angela Merkel has this week acknowledged in the German context.

That is why this EU summit is so important. Europe failed the test on refugees this year. Next year – referendum year, perhaps – the test will come again. This week’s summit, which will be asked to back European commission plans to get a humane collective grip on the EU’s borders, is central to the credibility of the union that UK voters will soon be asked to vote on. Britain has a massive interest in making sure the border control system works better. This is therefore a key summit. Mr Cameron should go to it not aiming to stop Europe being effective, as UK prime ministers often do, but aiming to make sure that EU action really works this time

crunch
Crush (a hard or brittle foodstuff) with the teeth, making a loud but muffled grinding sound

ref·er·en·dum
A general vote by the electorate on a single political question that has been referred to them for a direct decision.

no·ta·bly
Especially; in particular.

mi·gra·tion
Seasonal movement of animals from one region to another.

stut·ter
Talk with continued involuntary repetition of sounds, especially initial consonants.

burn the midnight oil
Fig. to stay up working, especially studying, late at night. (Alludes to working by the light of an oil lamp late in the night.) I have a bigexam tomorrow so I’ll be burning the midnight oil tonight. If you burn the midnight oil night after night, you’ll probably become ill.

um·bil·i·cal
Relating to or affecting the navel or umbilical cord.

mere
That is solely or no more or better than what is specified.

sov·er·eign·ty
Supreme power or authority.

af·ter·math
The consequences or aftereffects of a significant unpleasant event

back·drop
A painted cloth hung at the back of a theater stage as part of the scenery.







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