The Hindu Editorial Analysis | 6th Nov ’19

Table of Contents

The economic slowdown may lighten India’s carbon burden

Carbon dioxide emissions are poised to grow at their slowest since 2001 due to a lower demand for coal in power and manufacturing sectors: study
There’s a silver lining to India’s economic slowdown. Carbon dioxide emissions are poised to grow at their slowest — a 2% rise from last year — since 2001, according to an analysis published in Carbon Brief, a site that tracks emission and carbon dioxide trends.
The rise in C02 emissions from India sees wild swings — from 7.7% in 2014 to 3.5% the next year and then back to 7.8% in 2018. This is the first time that emissions are expected to grow below 3% from the previous year.
“Our analysis, based on data from various Ministries responsible for electricity, coal, oil, gas and foreign trade, shows that emissions increased by 2% in the first eight months of the year, a lower rate than any annual increase since 2001,” said the research note by Lauri Myllyvirta, an energy and pollution analyst with the Centre for Research on Energy and Clean Air and Sunil Dahiya, analyst and campaigner with GreenPeace East Asia.
Mr. Dahiya told The Hindu that though the analysis was restricted to August, the remaining months were unlikely to change the year’s trend. “Coal generation trends are unlikely to change given the lack of demand and the contribution of renewables.
“Slower growth in coal-based power generation will also benefit the country’s air quality efforts, as essentially all coal-fired power plants lack pollution controls commonly required in, say, the EU and China,” the analysts projected.

Rise in renewable

Industrial coal use fell dramatically in 2017 because of a slowdown in the construction sector and bounced back in 2018. “The combined total of coal sales from state-owned mines to consumers outside the power sector and imports of coking coal and coke fell 14% in 2017 and rose 15% in 2018. But it increased by just 3% in the first eight months of 2019,” the analysis noted. Wind generation rose by 17% in the first six months of 2019 compared to the same period a year earlier, with solar up 30% and hydro increasing by 22%.
Last year, a report by the International Energy Emissions Agency said India’s per capita emissions were about 40% of the global average and contributed 7% to the global carbon dioxide burden. The U.S., the largest emitter, contributed 14%.
As per its commitments to the United Nations Framework Convention on Climate Change, India has promised to reduce the emission intensity of its economy by 2030, compared to 2005 levels. It has also committed to having 40% of its energy from renewable sources by 2030

‘Indian lungs under extreme stress’

Acute respiratory infections affect children the hardest, say experts
Acute respiratory infections (ARI) accounted for 69.47% of morbidity last year which was the highest in the communicable disease category, leading to 27.21% mortality.
Andhra Pradesh, Gujarat, Karnataka, Kerala, Tamil Nadu, Uttar Pradesh and West Bengal reported a large number of patients and fatalities due to ARI as per the National Health Profile-2019, which was recently released by the Union Health Ministry.
According to World Health Organisation, acute respiratory infection is a serious ailment that prevents normal breathing function and kills an estimated 2.6 million children annually every year worldwide. Indians face the double burden of heavy air pollution in addition to the high rate of ARI which hits children the hardest, said experts here.
“When you breathe in polluted air, particles and pollutants penetrate and inflame the linings of your bronchial tubes and lungs. This leads to respiratory illness such as chronic bronchitis, emphysema, heart disease, asthma, wheezing, coughing and difficulty in breathing. Children seem to be most vulnerable to the harmful effects of air pollution,’’ noted Samantha Castellino, consultant paediatrician, Surya Hospitals, Mumbai. Dr. Castellino said with the air quality deteriorating, parents should ensure their kids get minimum exposure to pollutants and are well protected to prevent respiratory issues.
Archana Dhawan Bajaj, gynaecologist, Nurture IVF Centre, said: “The current level of air pollution poses a high risk to pregnant women and the baby. The foetus receives oxygen from the mother, and if she is breathing polluted air, it can increase the health risk of unborn babies. Pregnant women in the first trimester need to be more careful as risk increases and pollution can cause a medical condition called intrauterine inflammation. Prenatal exposure to pollutants increases risk of pre-term delivery and low birth weight, factors that can lead to developmental disabilities later on.’’
Manav Manchanda, senior respiratory specialist, Asian hospital, Faridabad, explained that children are particularly susceptible as they “breathe through their mouths, bypassing the filtering effects of the nasal passages and allowing pollutants to travel deeper into the lungs.” “Children may ignore early symptoms of air pollution effects, such as an asthma exacerbation, leading to attacks of increased severity,’’ he said.

Ban proposed on sale, ads of junk food in schools

FSSAI releases draft regulations
Aimed at enabling children to eat and grow healthy, the Food Safety and Standards Authority of India (FSSAI) on Tuesday released draft regulations titled Food Safety and Standards (Safe Food and healthy diets for School Children) Regulations, 2019.
“At the heart of these regulations is a fundamental idea to make it clear what is healthy for children and what is not,” said a senior FSSAI official.
One of the important regulations proposed is that foods high in fat, salt and sugar (HFSS) cannot be sold to children in school canteens/mess premises/hostel kitchens or within 50 m of the school campus.
Schools should adopt a comprehensive programme for promoting healthy diets among children. The school campus should be converted into ‘Eat Right School’ focussing on local and seasonal food and no food waste as per the specified benchmarks.
According to studies, about 8% of schoolchildren are obese. FSSAI has also proposed that children have to be encouraged to consume balanced diet in the school as per the guidelines issued by the National Institute of Nutrition. “Nutritionists, dieticians may be engaged by the school to assist in the preparation of menu periodically. Also it has been proposed that there should be regular inspection of school premises where safe, healthy and hygienic food should be served to students,’’ noted FSSAI.
The FSSAI has invited suggestions and objections from stakeholders within 30 days.

Indian cow’s milk has gold, says BJP leader

The BJP’s chief in West Bengal, Dilip Ghosh, has said that the hump of Indian cows could produce gold. Speaking at an event on Monday organised by the Ghosh community in Bardhaman on the welfare of cows, he said, “Foreign cows are not mothers but aunties.
” “The special characteristic of Indian cow milk is that it has gold in it. The hump of cow has a blood vessel in it which can produce gold as sunray touches the hump. That is a reason why milk of desi cows is a little yellow,” he said. He further added that “foreign cows like Jerseys” produce impure milk unlike Indian cows and that the milk of such cows should not be used in Hindu rituals.

Safe, for now

India has its reasons to stay out of RCEP, but tariff walls cannot remain high
India eventually decided to play it safe by pulling out at the last minute from the Regional Comprehensive Economic Partnership (RCEP) which was finalised by 15 countries in Bangkok on Monday. The pressure mounted on the government and the Prime Minister by interest groups, ranging from farmers, small industries and traders, to political parties across the board, surely played a major role in the decision to stay out of the grouping.
The country had little choice but to exit after its safeguard requests were not conceded. On the one side was the looming figure of China in the group and that country’s desperate need to find newer markets for its products in the backdrop of its trade dispute with the U.S. That India runs a massive bilateral trade deficit of $53 billion with China and the fact that China has not taken satisfactory efforts to whittle down the deficit certainly were major inputs in India’s decision.
Second, India’s experience with countries with which it has signed free trade agreements till now is not exactly a happy one. Though trade has increased post-FTA with South Korea, ASEAN and Japan, imports have risen faster than exports from India.
According to a paper published by NITI Aayog, India has a bilateral trade deficit with most of the member countries of RCEP.
More importantly, while exports to RCEP countries account for just 15% of India’s total exports, imports from RCEP countries make up 35% of the country’s total imports. Given this, it is obvious that in the immediate context the country had more to lose than gain from joining RCEP.
India’s request for country-specific tariff schedules was rejected early in the negotiations. So was its suggestion of an auto-trigger mechanism to check a sudden surge in imports from particular partner countries.
India also argued for stricter rules of origin, and rightly so too, but this too failed to pass muster.
Movement of professionals was another area that saw an impasse. Given these, there was little chance of the political leadership agreeing to join the bloc. Policymakers must have reasoned that India has active FTAs with most members of the RCEP except China, Australia and New Zealand and there will be no economic impact.
However, the fallout of India’s decision is that it has burnished its image as a protectionist nation with high tariff walls. With a market of 1.3 billion people, there is bound to be more pressure on India to open its gates. The smart way to handle this is to initiate reforms on the export front, bring down costs in the economy and, simultaneously, increase efficiencies.
India cannot miss out on being a part of global supply chains and this can happen only if tariff barriers are reduced. And the best way to balance the effect of rising imports is by promoting exports. Tariff walls cannot be permanent.
India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) is a major victory for the farmer’s organisations, trade unions, associations of small and medium industrial producers and civil society groups, which had organized widespread agitations against the free trade agreement. The Indian government has bowed to their demands. In this article, I attempt to discuss why joining the RCEP would have proven suicidal for India’s dairy sector.
The key fear of the dairy sector was that tariff clauses for agriculture in the RCEP are much more severe compared to the existing World Trade Organization (WTO) agreement. While the WTO allows a country to fix tariffs up to a certain maximum, or bound tariff, for a given commodity line, the RCEP binds countries to reduce that level to zero within the next 15 years.
Currently, India’s average bound tariff for dairy products is about 63.8% while its average applied tariff is 34.8%.

A self-sufficient sector

India’s dairy sector provides a livelihood to about 70 million households. A key feature of India’s dairy sector is the predominance of small producers. In 2017, if the average herd size in a dairy farm was 191 in the U.S., 355 in Oceania, 148 in the U.K. and 160 in Denmark, it was just 2 in India.
Yet, due to Operation Flood after the 1960s, India’s contribution to world milk production rose from 5% in 1970 to 20% in 2018. Today, India is largely self-sufficient in milk production. It does not import or export milk in any significant quantity.
If we consider global milk trade, developed countries account for 79% of the total world export of milk. Major players are the U.S., the EU, Australia and New Zealand. A country like New Zealand exports 93% of its milk production. On the other hand, developing countries account for 80% of the world’s total milk imports. Though India is self-sufficient in milk production, China imports about 30% of its milk requirement.
Thus, some of the major players in the global milk trade are in the RCEP region. About 51% of the global trade of milk, 45% of the global trade of skimmed milk powder (SMP), 38% of the global trade of butter oil, 35% of the global trade of cheese and 31% of the global trade of butter takes place in the RCEP region. This is why Australia and New Zealand, deprived of the lucrative markets in the U.S. after the demise of the Trans Pacific Partnership (TPP), have had a deep interest in the RCEP agreement.

Growth of MNCs

Over the last 25 years, Indian policy has consciously encouraged the growth of private milk companies. Milk cooperatives, which played a major role during Operation Flood, are no more seen as engines of growth. Policy has also favoured the entry of multinational dairy corporations into the Indian dairy sector, through joint ventures, mergers and acquisitions.
Multinational milk firms have opened shop in India in the hope that the Indian dairy sector would soon be opened up. For instance, the Swiss firm Nestlé was the largest private purchaser of milk in India in 2019. The French milk firm Lactalis entered India in 2014 and has taken over Tirumala Milk Products in Hyderabad, Anik Industries in Indore, and Prabhat Dairy. Another French firm, Danone, has invested ₹182 crores in the yoghurt brand Epigamia. New Zealand’s Fonterra Dairy has a 50:50 joint venture with Kishore Biyani’s Future Consumer products.
In other words, multinational dairy firms had been building a strong presence in India even prior to the RCEP talks. At present, these firms are forced to buy milk from Indian farmers. The reason is that the applied tariff for dairy products in India is about 35%. The bound tariff would have fallen to zero if the RCEP had come into effect. It would have then been far more profitable for firms to import milk from New Zealand or Australia rather than buy it from Indian farmers. The sale price of milk received by Indian farmers would have fallen sharply.
The export price of SMP from New Zealand is about ₹150 per kg. The domestic price of SMP in India is about ₹300 per kg. An average dairy farmer in India receives ₹30 per litre of milk. According to estimations made by Amul, if free imports of SMP from New Zealand are permitted, the average price for milk received by an Indian dairy farmer would fall to ₹19 per L.
The unit cost of milk production is relatively low in countries like New Zealand because of extensive grazing lands (which reduce feed costs), mechanised operations and the advantages of economies of large-scale production, and the high productivity of milch animals (about 30 L/day). In addition, New Zealand government policy has consciously helped its major company, Fonterra, to become the dairy giant that it is. Fonterra, which controls 90% of the New Zealand milk market and one-third of world trade in milk, is feared even by large American and European dairy firms. A key demand of American dairy firms during the TPP negotiations was that New Zealand should break up and end the monopoly of Fonterra.
False arguments
Two arguments were raised in favour of India signing the RCEP. First, it was argued that India would soon become a milk-deficient country and be forced to import milk. Hence, it would be better if India enters the RCEP today rather than later. Forecasts from Niti Aayog show that this argument is wrong. In 2033, India’s milk production would rise to 330 MMT while its milk demand would be 292 MMT. Thus, India is likely to be a milksurplus country by 2033.
Second, it was argued that the quantity of milk imports from New Zealand to India are unlikely to exceed 5% of their total exports. As a result, its impact on Indian prices would be insignificant. This too is a false argument. As data put together by Amul show, 5% of New Zealand’s exports in this sector is enough to flood India’s domestic market. It is enough to account for 30% of the Indian market for milk powders, 40% of the Indian market for cheese, and 21% of the Indian market for butter oil. These numbers are significant, and enough to ensure that Indian dairy prices plummet.
If there are 70 million households dependent on dairy in India, the corresponding number is just 10,000 in New Zealand and 6,300 in Australia. The reasoned analysis shows the socio-economic costs of India becoming a party to the RCEP agreement. India’s farmer’s organisations did well to keep the government on a short leash this time. On its side, the government would do well to be guarded against the temptations of joining such free trade agreements in the future. It should also begin work on correcting the imbalances of existing free trade agreements.