As the U.S. continues to raise benchmark rates, India should take precautionary steps

The U.S. Federal Reserve continues to slowly pull away the punch bowl as the party gets going. This week the Fed raised its benchmark short-term interest rate by 25 basis points to 1.50-1.75%, the highest in a decade. While this is only the sixth rate increase since the financial crisis of 2008 — which pushed central banks to cut interest rates to historic lows — it portends further increases in global interest rates. Higher borrowing costs could squeeze both markets and the wider economy. If its dot-plot projections are considered, the Fed under its new Chairman Jerome Powell — who chaired the Federal Open Market Committee meeting for the first time on Wednesday — is expected to raise rates two more times in 2018. And with the American economy projected to grow at a fairly healthy clip amid quickening inflation, the increases in the Fed’s discount rate are expected to gather pace over the next two years. Now, as the Fed and other global central banks move towards normalising monetary policy, the impact on the wider credit markets is slowly beginning to show. This is particularly so in the case of the interbank lending market, which is directly influenced by central banks to affect interest rates across the board. The London Interbank Offered Rate, which is the rate at which international banks lend to each other and serves as a benchmark for lending rates, has risen for more than 30 consecutive sessions and is at its highest since the financial crisis. Its effect has spilled over into other markets, including the corporate debt market.

Rising rates amid improving global economic growth could adversely affect the capacity of private firms to service their debt. This risk of default by private borrowers has been flagged by various organisations, including the International Monetary Fund last month. It is, after all, no secret that private corporations attracted by ultra-low interest rates had heavily loaded up on debt over the last decade. Some companies borrowed heavily from across the borders, thus making them prone to exchange rate risks as well. Any widespread default on debt today would be reminiscent of the 2004-2006 period when the Fed’s raising of rates to tackle inflation led to a mass default on U.S. mortgage debt. Global markets on Friday witnessed a steep sell-off that was immediately linked to President Donald Trump’s recent decision to impose new tariffs on China. Trade wars clearly have a negative impact on global growth and corporate earnings. But the wider sell-off, under way since February, can also be linked to rising interest rates which adversely affect asset prices. India, which could be hit by fund outflows as overseas investors look homeward to benefit from the rising rates, would do well to take precautionary steps.

A first step — on NDA govt.'s Ayushman Bharat

The National Health Protection Mission requires a bold, holistic approach

The NDA government’s scheme to provide health cover of ₹5 lakh per year to 10 crore poor and vulnerable families through the Ayushman Bharat-National Health Protection Mission has taken a step forward with the Union Cabinet approving the modalities of its implementation. Considering the small window, just over a year, available before the term of the present government ends, urgent action is needed to roll out such an ambitious scheme. For a start, the apex council that will steer the programme and the governing board to operationalise it in partnership with the States need to be set up. The States, which have a statutory responsibility for provision of health care, have to act quickly and form dedicated agencies to run the scheme. Since the NHPM represents the foundation for a universal health coverage system that should eventually cover all Indians, it needs to be given a sound legal basis, ideally through a separate law. This could be on the lines of legislation governing the rights to food and information. Such legislation would strengthen entitlement to care, which is vital to the scheme’s success. It will also enable much-needed regulatory control over pricing of hospital-based treatments. The initial norms set for availing benefits under the NHPM, which subsumes earlier health assurance schemes, appear to make the inclusion of vulnerable groups such as senior citizens, women and children contingent on families meeting other criteria, except in the case of Scheduled Caste and Scheduled Tribe households. The government should take the bold step of including these groups universally; the financial risk can be borne by the taxpayer.

Universal health coverage is defined by the WHO as a state when “all people obtain the health services they need without suffering financial hardship when paying for them”. With its endorsement of the Sustainable Development Goals for 2030, India will have to constantly raise its ambition during the dozen years to the deadline. This underscores the importance of raising not just core budgetary spending every year, but paying attention to social determinants of health. Affordable housing, planned urban development, pollution control and road safety are some aspects vital for reducing the public health burden. Unfortunately, governments are paying little attention to these issues, as the quality of life erodes even with steady economic growth. In some of its early assessments on the road to universal health coverage, NITI Aayog advocated a State-specific approach rather than a grand national health system to expand access. But the NHPM has a national character, with States playing a crucial role in its implementation, and beneficiaries being able to port the service anywhere. It is a challenging task to make all this a reality, and the government will have to work hard to put it in place.

Karnataka invests in people’s welfare and Centre allows loot of people’s wealth, alleges Rahul Gandh

'Modi government, which waived Rs. 2.5 lakh crore for a handful of corporates, has refused to extend a similar gesture to farmers.''

Congress president Rahul Gandhi said on Saturday that in contrast to Karnataka Congress government's investments in people’s welfare, the Central government was allowing the ‘loot’ of the country’s wealth.

Addressing a rally at Chamarajanagar, Mr. Gandhi said the money looted by the likes of Nirav Modi and Vijay Mallya belonged to the people of the country. Half of the amount spent by the Modi government on Scheduled Castes' and Scheduled Tribes' welfare in the country was spent by the Siddaramaiah government in Karnataka alone,. The State government had distributed 5 lakh free cycles to students and books to 61 lakh students.

''The Modi government, which waived Rs. 2.5 lakh crore for a handful of corporates, has refused to extend a similar gesture to farmers. Though I requested the Prime Minister to waive farm loans, he has not even bothered to reply,” he said. ''In contrast, Mr. Siddaramaiah announced a waiver of farm loans within 10 days of my request to him.”

 

Demonetisation

Mr. Gandhi criticised Mr. Modi for demonetisation and accused him of allowing the rich people to convert their black money into white on the sly. “Did you see any crorepati standing in the queues in front of banks [to deposit the demonetised currency,” he asked.

Recalling his interaction with students of Maharani’s Girls College earlier in the day, he said a student told him that demonetisation brought no change or benefit to the country. A questioner also pointed out that the country's GDP was doing well and wondered why several slabs were needed for GST. “When 18-to-20-year-old girls can understand economics, why can’t our Prime Minister,” he said.

Earlier, Mr. Siddaramaiah said the BJP had no moral right to accuse the Congress government of corruption when its chief ministerial candidate B.S. Yeddyurappa and other BJP Ministers went to jail on corruption charges.

TDP’s exit from NDA ‘purely guided by political considerations’, says Amit Shah in letter to Chandrababu Naidu

BJP president Amit Shah has replied to Andhra Pradesh Chief Minister N. Chandrababu Naidu’s letter to him following the Telugu Desam Party’s exit from the National Democratic Alliance (NDA), saying the move was “purely guided wholly and solely by political considerations rather than developmental concerns.”

Mr. Naidu had cited neglect of his State’s demand for resources as the main reason for the exit.

The nine-page letter, dated March 23, was released on March 24 morning.

Mr. Shah’s general tone in the letter has been to point out how the BJP and the Central government had done its utmost to help the residual State of Andhra Pradesh but that Mr. Naidu and his party have ignored this for political calculations.

“You may recall that during the previous Lok Sabha and Rajya Sabha, when your party did not have adequate representation, it was the BJP that set the agenda and ensured that justice was done to hard-working Telugu people in both States,” he said.

After coming to power, the Centre has done more than its share of allotting funds and resources to Andhra Pradesh. “A perusal of these would reaffirm what you already know but do not admit — that the Central government has fulfilled its obligations and that the BJP is a genuine friend true well-wisher of the people of Andhra Pradesh,” he said. He then goes on to enumerate various allocations done for the State, including initiating action in five out of eight infrastructural projects mentioned in the Andhra Pradesh States Reorganisation Act.

Mr. Shah termed “fallacious” the Andhra Pradesh government’s claim of a revenue deficit of ₹16,000 crore for the financial year 2014-15 as it includes expenditure on farm loan waiver and pensions. “Our party-led State governments have made similar expenditure on loan waivers but from their own resources. The Central government cannot make these payments as they discriminate between States,” he said.

The BJP chief cited the recommendations of the 14th Finance Commission that precludes the granting of Special Category Status to any State. He pointed to the fact that despite this allocation, gaps were sought to be filled with regard to Andhra Pradesh. “It is regrettable that some political parties are whipping up sentiments instead of engaging in informed debate,” he said.

“But unfortunately the joint mandate received by our two parties for the development of Andhra Pradesh is being squandered for political reasons,” he concluded.

SPONSORED CONTENT| BRANDHUB Education and its role in a healthy future for India's kids

Sanitation is recognised as a basic human right. The UN General Assembly in July 2010 had adopted a resolution officially recognising sanitation – “access to, and use of, excreta and wastewater facilities and services” - as a human right. For most of human history, people defecated in the open. But in the last century, a lot has changed with toilets becoming an integral part of homes in most parts of the world. Increased access to sanitation is one of the sweeping changes in humanity's ‘Great Escape’ as Nobel laureate Angus Deaton put it. The simple flush toilet is often taken for granted in higher income homes, but a lot of low income homes in India don’t have access to toilets. Denying access to sanitation is denying basic human rights. This is the spirit and idea behind focussing on increasing access to sanitation as part of the Swachri Bharat Abhiyan.

Swachh Bharat Abhiyan was launched by the Prime Minister of India Narendra Modi on October 2nd, 2014. As of February 2018, we are nearing 80 per cent of the Swachh Bharat target in construction of toilets in rural India with more than 6.25 crores of toilets constructed. No country in world history has ever built so many toilets at one stretch and provided access to sanitation to its people at this scale. It is an achievement that every Indian can be proud of. According to the Union budget, the Swachh Bharat Mission has made tremendous progress; sanitation coverage has gone up from 42 per cent in October 2013 to 60 per cent now.

But while infrastructure solves a part of the problem, it cannot completely solve another-behaviour change. Open defecation in India is not just about toilet coverage, it is also about deeply inbuilt cultural practices. In a lot of homes in India's heartland, a toilet in the front yard of the home- an area earmarked for the holy tulsi plant- is considered an unholy idea and so, is detested. Toilets are considered impure and a reason for that can be found in India's millennia-old caste system. According to Diane Coffey and Dean Sears, authors of Where India Goes, the reason for this aversion to toilets comes from the tact that manual scavenging was traditionally the job of the oppressed castes. Even with many people in positions of power and responsibility-ministers and bureaucrats-showing the way by emptying toilet pits themselves, this hostility toward toilets remains in rural India. Deep-seated ideas about hygiene are not limited to just toilets. There is a very strong belief in the idea that water that looks clean is fit enough to drink. Water filters or boiling water is not considered to be a necessity. It may have been truer centuries ago when water sources were not polluted, but post industrialisation and population explosion, groundwater and other sources are polluted almost everywhere. Hand washing is another aspect where deeply ingrained belief systems stop people from adopting a healthy habit. Using soaps to wash hands is not considered essential in most of rural India. We are losing out as a nation because of these unscientific but deeply held beliefs. While the rest of the world is moving towards a healthier future, India may lose out. For the demographic dividend to be an asset, we need healthier young people, not unhealthy individuals.

To change millennium-old beliefs, we need to look at creating lasting change in the minds of people. And behaviour change works best when it is done early. If you are a keen observer, you’ll notice an interesting change taking place in many villages in rural India. First generation school goers are more likely to ignore caste boundaries.

Education holds the key to long-term change in sanitation behaviour change. The next generation must learn about the need for hygiene and sanitation at the place where they learn the other important lessons of life-school.

The schools have changed them for good. The old rules that prohibit inter-mingling and inter-dining do not hold up in schools where friendships extend beyond artificial boundaries like caste.

Education holds the key to long-term change in sanitation behaviour change. The next generation must learn about the need for hygiene and sanitation at the place where they learn the other important lessons of life-school. We need to build a generation that doesn’t hold on to mistaken beliefs on sanitation, but understands the need for toilets, clean water, hygiene, cleanliness etc. Hygiene is as important, if not more important than arithmetic, reading and writing.

The Swachh Aadat curriculum is a 21-day curriculum that is created to teach children, between the ages of 5 and 10 years, the importance of hygiene. The curriculum teaches children about germs and the three important habits-washing hands at five critical occasions throughout the day, drinking purified water and using toilets and keeping them clean. The curriculum is taught in classrooms with the help of teachers for approximately 20 minutes for 21 days.

To make the curriculum interesting for children, who are the target group for this intervention, characters like Chamatkari Sonu (a superhero) and Kitabyutor (Kitab + Computer), activities, games etc are used effectively. The curriculum combines classroom teaching with practical demonstrations to influence children positively. Children are not only encouraged to learn for themselves, but also transformed into change agents bringing a sanitation revolution in their communities. The curriculum is taught in schools through books or e-curriculum where the required technological infrastructure is already present.

The Swachh Aadat curriculum will create a generation of Indians that grows up understanding the importance of hygiene during their formative years ensuring the long term-success of the initiatives in water, sanitation and hygiene.

THE NEW TRICKS OF Yogi govt

The Uttar Pradesh Chief Minister added the BJP had learnt its “lessons” and exuded confidence that it will perform better in future polls.

The BJP’s defeat in the recent Lok Sabha bypolls in Gorakhpur and Phulpur cannot be termed a “referendum” on the policies and programmes of the party’s governments at the Centre or in Uttar Pradesh, Chief Minister Yogi Adityanath said on Sunday.

He, however, added the BJP had learnt its “lessons” and exuded confidence that it will perform better in future polls.

“I don’t see the results as a referendum,” he said at an event here.

He said the Samajwadi Party-Bahujan Samaj Party (SP-BSP) combine had not made any dent in the party’s vote bank. The SP-BSP understanding was not an alliance but a “political deal” and everyone knows how these two parties have “damaged” the state, he said.

During the campaign for the bypolls, the chief minister had launched a frontal attack on the two parties calling them “snake and mole”.

On Sunday, when it was suggested it was not appropriate for him (Mr. Adityanath is also a religious leader at the Gorakhnath temple) to use “foul words” against his rivals, the he said, “Whatever I have said is right, and I still stick to it.”

“Both the SP and BSP were private limited companies, one-man show and undemocratic, as these were family-based organisations,” he said.

To another question, he said Congress president Rahul Gandhi might ride the ‘elephant’ (BSP’s election symbol) after leaving the ‘cycle’ (SP’s election symbol).

On Saturday, BJP chief Amit Shah had also said the bypoll results were not a referendum on the party’s dispensation in the State. In his first reaction after the party’s loss in the by-elections, Mr. Shah said the UP government was one of the best among the BJP dispensations in the States.

The party has taken it (the bypoll outcome) seriously and will minutely analyse the results of these polls,” Mr. Shah had said in a television interview.

The hypocrisy of Darkest Hour

When Gary Oldman won the Oscar for playing Winston Churchill in Darkest Hour, it was no big surprise. He was heavily favoured to win. What was surprising though was that the win meant Darkest Hour returned to movie theatres in some parts of India for a second innings. In a country where we are happy to take offence at the drop of a hat, Darkest Hour has escaped unscathed. Yet here was a real-life villain far more deserving of umbrage than fictional characters in a novel, a character whose misdeeds are still in living memory unlike a 21st century film based on a 16th century poem about a 13th century princess who may or may not have existed.

Yet there was hardly a peep out of those always itching for a fight to protect our national honour. Winston Churchill should have been a man we could all rally around, united in our distaste.

Shashi Tharoor has listed Churchill’s sins in a scathing piece for Washington Post. He was a man who was in favour of “terror bombing”, who wanted to use “poisoned gas against uncivilised tribes” and decreed that all who resisted the superiority of the British race would be “killed without quarter”.

The statesman

Churchill reserved particular bile for Indians — “beastly people with a beastly religion” and as Madhusree Mukerjee has documented in her book Churchill’s Secret War, while millions starved during the Bengal famine, he diverted food supplies to replenish European stockpiles and complained about Indians “breeding like rabbits”. Infamously, when Delhi sent a telegram to Churchill about the famine, he wondered peevishly why Gandhi had not died yet. There have been quibbles about whether Mukerjee was too single-minded in her focus on Churchill, but none deny Churchill’s odious racism. Yet he remains the “greatest Briton of all time” according to a 2002 BBC poll, a leader whose state funeral was attended by representatives from 112 nations.

The embarrassing fact is that too many of us in India also swallowed that war hero hype hook, line, and sinker perhaps because we are such suckers for that grandiose “we shall never surrender” oratory. I think it’s some hangover from elocution contests in school. I remember as a boy choosing one of Churchill’s books as a prize for something at school. It was probably his memoir, My Early Life, and I remember nothing of it. That I chose that book feels embarrassing now, but what feels even more cringeworthy is that I went through my entire education in India without learning the truth about Churchill.

Post-Independent India was ready to knock many burra sahibs off their pedestals, but Churchill seemed unassailable. Otherwise why in this day and age, in independent India, would there be a gastropub called Churchill’s Restobar in Bengaluru which describes itself as “very British. Very cool. Very you”? Or the Churchill Bar, a “perfect place for your pubbing while you rendezvous with modern art” in an upscale Moradabad hotel? Or a Café Churchill in Colaba serving up grilled sandwiches, peach iced tea and nostalgia? Would anyone have dared name a gastropub after General Dyer, the man who ordered troops to fire in Jallianwala Bagh?

But Churchill is A-OK as a brand. India is not the only place with a Churchill bar. Churchill has had bars named after him in Guangzhou, Marrakesh and Dubai. The U.S. named a naval destroyer after him. As soon as Donald Trump moved into the White House, he returned a bust of Churchill to the Oval Office, telling British prime minister Theresa May “It’s a great honour to have Winston Churchill back.” Barack Obama, whose Kenyan grandfather had been imprisoned for two years without trial and tortured under Churchill’s watch, had quietly removed the bust.

Never surrender?

One can understand Churchill’s appeal, especially in a time of strongmen. His cigar-smoking, blunt-spoken ways personify a kind of gruff no-nonsense ““victory at all costs” leadership, the kind that could come with a 56-inch chest.

Instead of films like Darkest Hour about Churchill the hero, it’s surely time for films about that other Winston Churchill, the man who was as much an English bully as some beloved English bulldog. It is possible that some day someone in London or Los Angeles might make that film. Such a film should have a great box office showing in India if the success of Madhusree Mukerjee’s book or Shashi Tharoor’s An Era of Darkness is any indication.

Of course, it does not mean Indians have any appetite for a dispassionate warts and all look at their own heroes. Imagine anyone daring to show the darkest hour of an Indian icon, especially one currently in vogue, living or dead. Their bhakts will fight in the fields and in the streets, they will fight in the hills and they will never surrender.