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1.Time for course correction (The Hindu)

2.Why Panaji is giving up decentralised waste management (Down to Earth)

3.Even bottled water can have microplastics (Down to Earth)

 

1.Time for course correction (The Hindu)

Synoptic line: It throws light on the issue what needs to be done for the Indian economy, so that it gets back to high growth rates. (GS paper III)

Overview

  • Recently he Central Statistics Office (CSO) has released the estimates of the gross domestic product (GDP) for the first quarter (April-June) of 2017-18. The numbers showed that in Q1 of 2017-18, GDP grew by 5.7%. Gross value added (GVA) at basic prices grew by 5.6%. For every measure the growth rate has fallen below 6%. In the corresponding quarter of the previous year, GDP grew at 7.9% and GVA at 7.6%.
  • These indicators raises questions like-  what are the chances of the Indian economy moving out of the current phase of relatively low growth? Or are we stuck at a new ‘Hindu’ rate of growth?

Hindu rate of growth

  • The term ‘Hindu rate of growth’ was coined by Professor Rajkrishna, an Indian economist, in 1978 to characterize the slow growth and to explain it against the backdrop of socialistic economic policies. The term came into being to show India’s contentment with the low growth rate, post independence.

The Indian economy’s current situation has striking parallels with that in 2002, there is macroeconomic stability amid weakening economic growth momentum and balance sheet stress. Further analysis leads to-

  • First, economic growth was coming down over many sequential quarters. There were calls for fiscal expansion to boost domestic demand even as the government seemed committed to keeping its deficit under control.
  • Second, inflation had come off its recent highs. There was a vibrant debate about whether India was flirting with deflation. The Reserve Bank of India was under pressure to cut interest rates.
  • Third, the costs of an investment boom funded by a credit bubble were being felt in private sector balance sheets. Banks were weighed down by bad loans as project economics went awry. A new law had given lenders teeth to go after loan defaulters.
  • Fourth, the economy was highly dependent on consumer demand for its incremental output. New investment activity by companies had almost collapsed. Public investment especially in road construction was an area of focus.

Decline factors

  • It has been argued that demonetisation and the destocking of goods which might have happened prior to the introduction of goods and services tax (GST) must have a negative impact.  But it might be inappropriate to attribute the entire decline of 2 percentage points to the two factors.
  • From the first quarter of 2016-17 when the growth rate of GVA was 7.6% and in the third quarter of 2016-17, the growth rate had declined to 6.7%. Since then it has fallen by another 0.9 percentage point. Given the growth rate of 5.6% in Q1, it is unlikely that the growth rate for the year as a whole will exceed 6.5%. For this to happen, the growth rate in the next three quarters will have to be 7%. The most disappointing aspect of the first quarter numbers is the steep fall in the growth rate of manufacturing to 1.2%. Because of the good monsoon, agriculture will do better. Since agricultural growth rate last year was also good, the increase may not be that much.
  • The low growth rate is also attributed to the poor performance of the external sector. Growth is fuelled broadly by two types of demand, domestic and external. High export growth has propelled the growth rate of many countries, including China’s. In India’s own experience, the high growth phase between 2005-06 and 2007-08 saw exports growing at an average annual rate exceeding 20%.
  • Export demand has been weak because of the tepid growth rate of the advanced economies. Both in 2014-15 and 2015-16, the export growth rate was negative. However, the export growth rate has become positive since the second half of 2016-17. But the sharp decline in growth rate noted in the last few quarters cannot be attributed to poor export performance, because as compared to the previous year, the export performance has improved.
  • There is a steady and substantial increase in foreign direct investment (FDI). FDI inflows in 2016-17 were at an all-time peak of $60 billion. In the first quarter of 2017, the inflows were $10.9 billion. With this type of inflow and if the investment rate has not grown, the one surmise that one can make is that much of the FDI has gone into acquiring old assets rather than going to Greenfield projects.
  • Also there is sharp fall in the investment rate, though the public investment rate has not shown any decline, it is the decline in private investment, both corporate and households. While the fall in corporate investment is steep compared to what was achieved in 2007-08, it has more or less stabilised at a lower level of around 13%. Household investment, however, has continued to decline even in recent years.
  • There is deep concern that the growth that we have seen in recent years has not resulted in an increase in employment. The current period has therefore been described as one of ‘jobless growth’. Though that data on employment are not very reliable as the firm data are available only for the organised sector.
  • In the case of unorganised sectors, very often the position is one of ‘underemployment’ rather than unemployment. Growth can occur because of two reasons. One, it results from better utilisation of existing capacity. Two, it can come out of new investment.

What need to be done?

  • For appropriate investment climate, reforms play an important role. Government had also done some noteworthy changes as the passing of the bankruptcy code and GST legislation, and modifications in FDI rules.
  • There is need to continue with the reform agenda and there is still a lot to be done in the area of governance. The sharp reduction in the flow of new credit has also put prospective investors in a difficult situation. To resolve the non-performing asset (NPA) problem there is need to bring banks back to good health, recapitalisation has become urgent. The government should go beyond the amount indicated in the Budget regarding disinvestment and fund banks through the money raised by disinvestment.

Way ahead

  • Whatever growth we have been seeing recently has come out of better utilisation of capacity rather than new investment. It is real growth spurred by new investment that generates more jobs. Though there has been a slight pick-up in public investment recently. That is not enough. Only when the two engines of public and private investment function at full throttle, the Indian economy will get back to high growth rates.

Question– What remedies are needed to correct the path of Indian economy? What are the prospects of world economy on Indian economy?

 

2.Why Panaji is giving up decentralised waste management (Down to Earth)

Synoptic line: It throws light on the issue of declining efficiency of Panaji’s waste management plan. (GS paper III)

Overview

  • In 2003, the capital city of Goa experimented with decentralised waste management system. This segregation of waste at source helped it become a zero-landfill, bin-free city within a decade.
  • In 2016, Panaji received a Clean City Award by Delhi-based non-profit Centre for Science and Environment (CSE). But one year later, the city’s decentralised waste management system is on the verge of collapse.

Decentralised solid waste management approach

  • Under decentralised solid waste management, Panaji’s residential colonies are divided into 12 waste management zones, each under a supervisor, who manages collection and transportation of segregated waste.
  • Households are required to segregate waste into five fractions: wet waste, plastic, paper and cardboard, metal and glass, and non-recyclables. Wet waste is sent to 100 composting units in the city, while dry waste is sent to 12 sorting stations (one in each zone) for further segregation.

Why such a collapse 

  • The current administration is disinclined to continue with the decentralised waste management. Instead, it plans to build a centralised waste management facility on the out- skirts of the city
  • As a result, while the decentralised waste management system is still in place, the municipal corporation’s apathy has made it inefficient.
  • The corporation has also not been able to keep pace with the growing quantum of waste. It should have taken steps to improve the waste-processing infrastructure and increase the workforce to ensure timely collection of segregated garbage. The collection system has also become weak due to shortage of municipal staff.
  • What’s worse, many households and commercial establishments have stopped segregating waste because inspections by CCP have reduced. Earlier, households were fined by CCP for giving unsegregated waste.
  • If a municipal worker refuses to collect unsegregated waste from the households, the residents dump waste in the open. Collecting this waste from streets is a huge challenge for CCP because the system was developed to handle segregated waste.
  • Although there has been an clear decline in the waste management system, CCP has continued to charge its annual sanitary fee of Rs 365 from households and Rs 300-10,000 from hotels. It is also still making money by selling segregated waste to dealers (who buy recyclables) and to cement processing companies in Karnataka (that buy non-recyclables). There have been no budget cuts or shortage of funds. The corporation’s efficiency and services have just gone down.

Way ahead

  • There is an urgent need to revive the earlier waste management practices of Panaji. Though Panaji’s community engagement was good earlier, it needs to be stepped up

Question– Why decentralised approach to waste management is better than the centralised approach?

3.Even bottled water can have microplastics (Down to Earth)

Synoptic line: It throws light on the issue of microplastics and its implication on human health. (GS paper III)

Overview

  • Microplastics are not just contaminating the ocean but drinking water as well. Of the more than 150 tap water samples collected from cities and towns of five continents, 83 per cent were contaminated with plastic fibres, minute particles of plastic which are invisible to the eye and can be dangerous to human health, said the study.

What are microplastics?

  • Microplastics are tiny particles which are present in many sources, including carry bags and pet bottles. These tiny particles easily pass through water filtration systems and end up in the water bodies, posing a potential threat to aquatic life. Microbeads, a kind of microplastic, are used as exfoliates in some cleansers and toothpastes. Even though banned in US and Canada, microbeads are still used in India.
  • Often called “salt sized” chips of plastic, microplastics don’t just resemble salt; they can be in it too. So if the sea contains plastics, so do the products we harvest from it. What is worse is that so far there are no water filter systems which can filter microplastics.
  • Although many studies have shown plastic pollution in the oceans, the 10 month observational study by Orb Media was the first to test tap water for the presence of microplastics, claim the authors.
  • India came third on the list after the US and Lebanon, with 82.4 per cent of India’s tap water contaminated with microplastics. In India, samples were collected only from Delhi. Of the 17 tap water samples collected from Delhi, 14 had microscopic plastic fibres. Bottled water in the US also had microplastics

How does plastic get into water?

  • These microscopic fibres originate in everyday activities such as abrasion of clothes, upholstery, and carpets. About 60 per cent of all our clothes are made from polyester, a form of plastic derived from fossil fuel.
  • Another kind of plastic, styrene butadine is released from vehicular tyres, which lands into sewers and water bodies. 

How harmful is it? 

  • Microplastics can migrate through the intestinal wall and travel to lymph nodes and other bodily organs, shows the Orb report.
  • Microplastics have also been shown to absorb toxic chemicals linked to cancer and other illnesses, and then release them when consumed by fish and mammals. So if plastic fibers are in your water, experts say they’re surely in your food. 

Way ahead 

  • The report suggests that the solution lies in making the producers responsible for waste management, and creating new non-polluting materials. Most of all, we need to make sure microplastic does not enter water and reduce plastic usage.
  • The most important thing is to understand individual plastic consumption. Not buying plastic bottles and carry bags, avoiding straws, washing synthetic clothes less often can bring about a difference not just to the environment but to our bodies.

Question– What are micro plastics? How can it be controlled? What steps have been taken by the countries in this regard?