Why India’s bad loan problem is really bad

Why India’s bad loan problem is really bad
The average bad loans of public sector banks are 75.53% of their net worth; for many, they have exceeded their net worth. This is why both RBI and govt are worried
Last week, Spain’s largest lender Banco Santander SA announced taking over struggling Banco Popular Espanol SA for a symbolic value of €1. Santander also plans a €7 billion ($7.88 billion) rights issue to infuse capital and provide for the bad loans of Popular, the country’s sixth biggest bank.

The European authorities, led by the European Central Bank, were behind the rescue act. Popular had been struggling under the burden of €37 billion of bad loans in the real estate sector but Santander feels that this deal will accelerate its growth and profit from 2019. Analysts also see an opportunity for Santander in Popular’s small and medium-sized corporate loan portfolio; besides, Santander can also sell off Popular’s property assets.

The sale, which was stitched at the speed of light, did not impact stock markets. In fact, bank stocks rose in Europe last Wednesday after it was announced at 0430 GMT in Brussels by the Single Resolution Board, an agency formed by the European Union to wind down sick banks.

Indeed, there are differences between the state of affairs in Popular and some of the state-owned Indian banks (Popular was facing a run on its deposits), but is the Santander-Popular deal something which can be emulated in India? Corporate assets have soured for many government-owned banks but they have their pockets of strength—retail loans, relatively low-cost savings and current accounts, non-core assets, a vast branch network.

How do we solve the bad loan problems? There are two distinct trends before us: Spain believes in swift action, while Italy allows the problem to fester for years. Should we go the Spain way or continue with our band-aid approach? It will be interesting to hear what India’s finance minister Arun Jaitley says when he meets the heads of public sector banks and financial institutions later on Monday to review their performance.

The new ordinance gives the Reserve Bank of India (RBI) powers to force banks to sort out issues in a time-bound manner by forming multiple oversight committees and encourages banks to take haircuts. Besides, RBI can now move the insolvency court against the bank defaulter on its own. However, it does not say how the holes in banks’ balance sheets will be filled in the aftermath of the cleanup drive.

Meanwhile, it may not be a bad idea to ask two key questions and seek the answers.

How did the Indian banking system get into the mess?

There have been multiple reasons behind this. The popular way of looking at this is the state-owned banks are inefficient—they do not have the expertise in credit appraisal and monitoring of loans. This could be an over-simplification of the real causes behind the pile of bad loans. Indeed, in relative terms, private banks are better off but in those sectors where both private and public banks have taken exposures, both have almost equally suffered. The private banks have much less bad assets because they have not given loans to certain sectors/corporate groups.

Why did the public sector banks take exposures to those sectors where private banks fear to tread? In some cases such as infrastructure, there was subtle and not-so-subtle nudge by the government, the majority owner of these banks. Besides, most of these banks also have a herd mentality. Once one bank gives a loan to one particular sector, others follow it almost blindly in search of balance sheet growth.

In the aftermath of the collapse of iconic US investment bank Lehman Brothers Holdings Inc. in September 2008, growth collapsed in the world, but India was almost insulated from that with the government unveiling massive economic stimulus programmes. RBI cut its policy rates to a historic low and flooded the market with liquidity and banks gave loans indiscriminately. The “boom” lasted for a few quarters but the “bust” that followed has been continuing for years. Most banks misread the economic scenario.

Also, post-Lehman collapse, the deposit growth for private banks slowed while the government-owned banks were flooded with money and that, in many cases, led to misallocation of capital.

How bad is the bad loan scene?

Well, it depends on through which prism do we want to look at it. Going by rating agency Icra Ltd’s latest analysis, gross bad loans of Indian banks in March 2007 has been 9.5% of their loan portfolio. After setting aside money, or making provisions, the net bad loans are 5.5%.

This is one way of looking at the problem but it does not tell us the real story. One needs to add to this the loans that have been restructured under different schemes and the many large accounts which are extremely vulnerable as the borrowers are over-leveraged and not in a position to service the loans regularly. If we add all these, then the total stressed assets could be close to 16% of bank loans.

Again, this does not reveal the full picture. We also need to add to these the loans that have been written off. Unlike in other parts of the world, in India, written off loans are taken out from banks’ balance sheets but they are parked in the branches of banks and as and when part of those loans are recovered, they add to banks’ profits. By taking them off from the banks’ balance sheets, an optical illusion of lower bad loans (in percentage terms) is created. If we add the written off loans to the pile, the overall stressed assets could be as much as 20% of banks’ loan assets.

Banks’ exposure to large corporations and infrastructure sector has been most affected. In this segment, bad loans could be as much as 35-40% while the retail loans are in fine health.

It’s needless to say that the private banks are much better off than the state-owned banks. For instance, in March 2017, public sector banks’ gross bad loans have been 11.4% versus private banks’ 4.2%; their net bad loans at 6.7% are more than three times the net bad loans of private banks.

Finally, bad loans as a percentage of overall loan portfolios of banks do not explain the enormity of the problem. We need to look at the bad loans against the backdrop of the net worth or capital and reserves of the banks. In March 2017, for the industry, it’s close to 50% and for private banks, around 13%. However, the average bad loans of the government-owned banks are 75.53% of their net worth; for many, they have exceeded their net worth. This is why both RBI and the government are worried. We need to address the problem now; there is no time to lose.

2D magnets discovered for first time

2D magnets discovered for first time
Scientists have for the first time discovered two-dimensional magnets that are formed by a single layer of atoms and may pave the way for more compact and efficient devices
Scientists have for the first time discovered two-dimensional magnets that are formed by a single layer of atoms and may pave the way for more compact and efficient devices.

Magnetic materials form the basis of technologies that play increasingly pivotal roles in our lives today, including sensing and hard-disk data storage. For smaller and faster devices, researchers are seeking new magnetic materials that are more compact, more efficient and can be controlled using precise, reliable methods.

A team led by the University of Washington (UW) and the Massachusetts Institute of Technology (MIT) in the US has for the first time discovered magnetism in the 2D world of monolayers, or materials that are formed by a single atomic layer. The findings, published in the journal Nature, show that magnetic properties can exist even in the 2D realm — opening a world of potential applications.

“What we have discovered here is an isolated 2D material with intrinsic magnetism, and the magnetism in the system is highly robust,” said Xiaodong Xu, a professor at UW. “We envision that new information technologies may emerge based on these new 2D magnets,” said Xu. Researchers have previously shown that CrI3 — in its multilayered, 3D, bulk crystal form — is ferromagnetic, that is, it has some magnetic properties.

However, no 3D magnetic substance had previously retained its magnetic properties when thinned down to a single atomic sheet. In fact, monolayer materials can demonstrate unique properties not seen in their multilayered, 3D forms. “You simply cannot accurately predict what the electric, magnetic, physical or chemical properties of a 2D monolayer crystal will be based on the behaviour of its 3D bulk counterpart,” said Bevin Huang, doctoral student at UW.

Atoms within monolayer materials are considered two- dimensional because the electrons can only travel within the atomic sheet, like pieces on a chessboard. To discover the properties of CrI3 in its 2D form, the team simply used Scotch tape to shave a monolayer of CrI3 off the larger, 3D crystal form. “Using Scotch tape to exfoliate a monolayer from its 3D bulk crystal is surprisingly effective,” said Genevieve Clark, doctoral student at UW.

The researchers detected magnetic properties in CrI3 using a special type of microscopy. In CrI3 flakes that are two layers thick, the magnetic properties disappeared, and returned in three-layer CrI3. The scientists will need to conduct further studies to understand why CrI3 displayed these remarkable layer-dependent magnetic phases.

“2D monolayers alone offer exciting opportunities to study the drastic and precise electrical control of magnetic properties, which has been a challenge to realise using their 3D bulk crystals,” said Xu. “But an even greater opportunity can arise when you stack monolayers with different physical properties together. There, you can get even more exotic phenomena not seen in the monolayer alone or in the 3D bulk crystal,” Xu added.

RSETI Diwas 2017

RSETI Diwas 2017

As part of multi-pronged strategy to address rural poverty, Ministry of Rural Development (MoRD) is undertaking two initiatives in skill development under the National Rural Livelihoods Mission (NRLM):

 

(i)         Placement linked skill development program called DDU-GKY which allows skilling and assured wage employment. 

(ii)        Skill development through 587 Rural Self Employment and Training Institutes (RSETI) in the country, which provides skilling, thereby enabling the trainee to take bank credit and start his/her own Micro-enterprise. 

 

The Ministry today celebrated 4^th RSETI Diwas in recognition of outstanding performance of RSETIs in various states. A total of 88 awards were given for the years 2014-15 and 2015-16 to best performing States, lead Banks administering RSETIs and Directors of RSETIs. Top performing States in different categories include Jharkhand, Karnataka, Andhra Pradesh, Odisha and Chhattisgarh. Amongst Banks the top performers are State Bank of India, Canara Bank, Syndicate Bank, ICICI and Andhra Bank.

 

Top performing RSETIs include training institutes of SBI Vijayanagaram, SBI Vishakapatinam, PNB Gaya, Canara Bank Halial and Davangere, Syndicate Bank Manipal and Meerut, Andhra Bank Srikakulam, ICICI Jodhpur and Udaipur, and RUDSETI Ananthapur and Bijapur.   

 

At present 587 RSETIs are functioning in the Country, covering 32 States/UTs with the participation of 37 Sponsor Banks. Over 22 Lakh unemployed youth have been trained by RSETIs and 13 Lakh of them are engaged in self-employment. Of these credit linkage has been provided to nearly 6 lakhs candidates.

 

RSETIs have aligned their curriculum with Common Norms for skill development courses. It offers skilling in 56 NSQF aligned courses specially designed for entrepreneurship development.

 

The 4^th RSETI Diwas celebration was chaired by Shri Narendra Singh Tomar, Union Minister, Rural Development, Panchayati Raj, Drinking Water and Sanitation. He emphasised the need for increase in rural entrepreneurship for sustainable livelihoods. He also emphasised on how rural livelihoods playing a strategic role in development of the rural clusters.  To carry forward this momentum he appealed to the Banks to give their cooperation. 

 

Dr. Santosh Kumar Gangwar, Minister of State for Finance, appealed to the Banks who have sponsored the RSETIs in their Lead Districts to develop these Centres as ‘Centres of Excellence’ in the field of Entrepreneurship development as also increase lending to the youth skilled in RSETIs.

 

Shri Ram Kirpal Yadav, Minister of State for Rural Development lauded the role of RSETIs in the nation building exercise by capacity building of the unemployed youth throughout the Country.

 

. 

The founder member of RUDSET Self-employment initiative, Dr D Veerendra Heggade, also participated in the event and blessed budding entrepreneurs’ success.

    

IIT-Delhi, IIT-Bombay, IISc among world’s top 200 universities

The rise of IIT-Delhi and IIT-Bombay is significant as Indian educational institutions had lost ground in the QS rankings last year

The Indian Institute of Technology (IIT)-Bombay has broken into the top 200 club in the latest edition of the ‘Quacquarelli Symonds (QS) World University Rankings’, to join IIT-Delhi and Indian Institute of Science (IISc), Bengaluru, in this group. With this, India, for the first time, is home to three of the top 200 universities in the world.

According to the ‘QS World University Rankings 2018’, released on Wednesday morning, IIT-Bombay improved its performance by 40 positions, from 219 rank last year to 179 this time. In another first, IIT-Delhi has replaced IISc as the best ranked Indian institution in the world. So, while IIT-Delhi has risen from 185 rank to 172 this year, IISc slipped over 30 places from 152 to 190.

The rise of IIT-Delhi and IIT-Bombay is significant as Indian educational institutions had lost ground in the QS rankings last year. But IISc’s performance could be a cause for concern as the institution, which dropped out of the top 150 club in the 2017 rankings, has slipped even further instead of recovering lost ground.

However, IISc is rated the sixth best institution in the world in terms of QS’s ‘citations per faculty’ metric. “This metric measures the research intensiveness and research impact of a university by dividing the number of citations that a university’s research acquires by the number of faculty members at that university. QS notes that IISc’s research papers were cited nearly 82,000 times over the five-year period QS used for this metric,” states the QS press release.

The HRD Ministry is currently working on a framework to encourage educational institutions to break into the top 100 club of any of the reputed world ranking metric.

The ranking table this year has provided a list of the world’s 959 top universities, which includes 20 Indian institutions — six more than last year. Jadavpur University (ranked in the 601-650 band), University of Hyderabad (601-650), Anna University (651-700), Manipal University (701-750), Aligarh Muslim University (800-1000) and Birla Institute of Technology and Science (800-1000) are the six new entrants.

Delhi University, for the first time, entered the top 500 group, moving up from the 501-550 category to the 481-490 category. IIT-Kharagpur improved its rank from 313 to 308, and IIT-Kanpur rose from 302 to 293 rank. IIT-Madras, however, lost a few places and moved from 249 to 264 rank. IIT-Guwahati moved from 481-490 band to 501-550 band. Banaras Hindu University, Panjab University, University of Mumbai and University of Pune are all ranked in the 801-1000 band.

“India is progressing in our global rankings. Five Indian universities feature among the global 100 for research indicator. However, there is still plenty of room for improvement, especially in the ‘employers reputation’ indicator, suggesting that a closer collaboration between the corporate world and the leading universities is essential. India is also less competitive than other countries in the international students and faculty indicators, which makes perfect sense given the huge internal demand for higher education,” Ben Sowter, Research Director at QS, has been quoted as saying.

In the overall rankings, Massachusetts Institute of Technology (MIT) continues its run as the world’s best university for the sixth consecutive year. Stanford University and Harvard University follow as the world’s second and third best institutions.

Despite the same electoral model, there are marked differences in how polls are conducted in Britain and in India

Their Westminster, and ours

Despite the same electoral model, there are marked differences in how polls are conducted in Britain and in India

The UK is all set for a mid-term general election on June 8, which could only be derailed if there is yet another terror attack. While the poll issues involved and the fluctuating fortunes of political parties are a matter of separate analysis, I will confine myself to the more mundane electoral system and its management issues. When the country had its last general election on May 7, 2015, I was an independent observer along with a sizeable international group, mostly election commissioners, many of whom were my old colleagues and counterparts. I was allotted three constituencies. Interestingly, two of these gave two successive prime ministers — David Cameron and Theresa May (I wonder if a third one is waiting in the wings!).

It is interesting to compare the system in the UK and India, which hold many similarities as well as significant differences. The first significant difference is that in India, the Election Commission of India (ECI) decides the dates for the elections keeping political parties, including the ruling one, guessing, whereas in the UK, the date was always decided by the prime minister, giving the ruling party a political advantage. This surely went against the principle of a level playing field. In 2011, therefore, the old system was changed to a fixed date election — May 7, every five years.

The 2015 election was the first under this system. But, in an article I wrote for this paper (‘Britain’s electoral plumbing’, IE, May 12, 2015), I raised a question as to what would happen to the fixed date in case of a mid-term general election. Who imagined that this question would come to haunt the British in less than two years?

The basic common factor is the electoral model itself that we both follow — the Westminster model. Our Lok Sabha and their House of Commons are counterparts to which voters directly elect their representatives. But the size of the house and the parliamentary constituencies differ enormously. The size of the Indian electorate is 20 times that of the UK which almost corresponds to the state of Rajasthan. Despite the small population, the House of Commons has a huge strength of 650 MPs as against 543 in India. The average number of electors for each of these MPs is about 70,000 while India has an average of 1.6 million electors. Campaign styles and logistics thus are worlds apart.

In the UK, campaigning is much cheaper, confined to door to door visits by candidates or agents, and TV debates. Paid political advertising on TV and radio is not permitted — this is unthinkable in India where mass media, despite the exorbitant costs, is the backbone of campaigns. Paid news, which is rampant in India, is unheard of in the UK. There is a cap on election expenditure of both the candidates and the parties in the UK, whereas in India, it extends only to the candidates. That’s a huge loophole that raises campaign expenditure to obscene levels.

The participation of voters in the UK was the same with a total turnout of 66.1 per cent against 66.4 per cent in India in 2014; however, over the years, it’s coming down in the UK and going up in India, thanks to the voter education programme started by the ECI in 2010. Youth apathy has been common to both, though the ECI’s efforts to increase youth participation have had a dramatic effect, especially since the launching of the National Voters Day, focussed on young persons, leading to an addition of nearly 120 million voters (three UKs!) between the last two elections.

India is also one-up using electronic voting machines (EVMs) since 1998 while the demand for electronic voting in the UK has never been very audible. The clamour for internet or online voting however is gathering slow momentum in both countries. The biggest plus for the UK is that their system is very clean, with no violence, booth capturing, no impersonation and no rigging. For us in India, this is a constant struggle. Their system is very trusting: The UK is the only country in the world where no identity proof is required. No photo on the electoral rolls. No marking of fingers. There are no party agents in the booth to verify the voter’s identity. There is no police near polling stations, whereas, in India, a booth has to be secured like a fort. We are accused of killing the festival of democracy; the British are happy with quiet, civilised polling.

A very significant difference is that poll day is not a holiday. To enable working class persons to vote, the voting hours are long — 7 am to 10 pm. They normally vote either early in the morning or late evening. Housewives and the elderly vote during the day. So, the scene is never chaotic. The UK has about 8 million foreigners, nearly two million of whom are from Commonwealth countries. The latter are entitled to vote. Of these, there are over 6,15,000 Indian voters who alone can influence the results in 30 constituencies. Voices are often raised against this anomaly.

Both countries follow the First-Past-The-Post (FPTP) system of election, where the candidate getting the highest number of votes is declared elected. Questions are often raised about the fairness of the system. In the UK, it snowballed to the extent that a referendum was held in 2011, though it failed with 68 to 32 per cent vote (with a low turnout of 42 per cent). Many questioned the fairness of the result as the government conducted only perfunctory publicity about it.

In India, the demand for replacing FPTP with Proportional Representation has become louder after the 2014 general election, when a party (the BSP) with the third largest vote share in the country ended up with zero share in parliamentary seats. In the end, questions have sometimes been raised about the logistics and management of elections in the UK. In the 2010 and 2015 UK election, there were complaints about postal ballots and some polling stations, even in London, falling short of ballot papers before the poll’s end, unthinkable in India. Our election management, despite its mind-boggling problems, like the Maoist insurgency, militancy, the constant shadow of terrorism, is quite fail-safe.

Brexit being at the heart of debate in this election, global interest in this poll is greater than ever. Let us now see how it plays out.

India’s Seafood Export at all-time High in 2016-17 :MPEDA

India’s Seafood Export at all-time High in 2016-17 :MPEDA

Riding on a robust demand for its frozen shrimp and frozen fish in international markets, India exported 11,34,948 MT of seafood worth an all time high of US$ 5.78 billion (Rs 37, 870.90 crore) in 2016-17 as against 9,45,892 tons and 4.69 billion dollars a year earlier, with USA and South East Asia continuing to be the major importers while the demand from the European Union (EU) grew substantially during the period.
Frozen shrimp maintained its position as the top item of export, accounting for 38.28 per cent in quantity and 64.50 per cent of the total earnings in dollar terms. Shrimp exports increased by 16.21 per cent in terms of quantity and 20.33 per cent in dollar terms. Frozen Fish was the second largest export item, accounting for a share of 26.15 per cent in quantity and 11.64 per cent in dollar earnings, registering a growth of 26.92 per cent in terms of value.
USA imported 1,88,617 MT of Indian seafood, accounting for 29.98 per cent in terms of dollar. Export to that country registered a growth of 22.72 per cent, 33 per cent and 29.82 per cent in terms of quantity, value in rupee and US dollars, respectively. South East Asia remained the second largest destination of India’s marine products, with a share of 29.91 per cent in dollar terms, followed by the EU (17.98 per cent), Japan (6.83 per cent), the Middle East (4.78 per cent), China (3.50 per cent) and other countries (7.03 per cent). Overall, exports to South East Asia increased by 47.41 per cent in quantity, 52.84 per cent in rupee value and 49.90 per cent in dollar earnings.
“Increased production of L. Vannamei, diversification of aquaculture species, sustained measures to ensure quality, and increase in infrastructure facilities for production of value added products were largely responsible for India’s positive growth in exports of seafood,” said Mrs. Nirmala Sitharaman, Minister for Commerce and Industry.
The overall export of shrimp during 2016-17 was pegged at 4, 34,484 MT worth USD 3,726.36 million. USA was the largest import market for frozen shrimp (1, 65,827 MT), followed by the EU (77,178 MT), South East Asia (1, 05,763 MT), Japan (31,284 MT), Middle East (19,554 MT), China (7818 MT) and other countries (27,063 MT).
The export of Vannamei shrimp, a major seafood delicacy, improved from 2, 56,699 MT to 3,29,766 MT in 2016-17, registering a growth of 28.46 per cent in quantity. In value terms, 49.55 per cent of total Vannamei shrimp was exported to USA followed by 23.28 per cent to South East Asian countries, 13.17 per cent to the EU, 4.53 per cent to Japan, 3.02 per cent to the Middle East and 1.35 per cent to China.
Japan was the major market for Black Tiger shrimp with a share of 43.84 per cent in terms of value, followed by USA (23.44) and South East Asia (11.33). Frozen shrimp continued to be the principal export item to USA with a share of 94.77 per cent in dollar value while Vannamei shrimp to that country showed an increase of 25.60 per cent in quantity and 31.75 per cent in dollar terms.
Vietnam, with a share of 76.57 per cent in value (US dollar), was the major South East Asian market for Indian marine products, followed by Thailand (12.93 per cent), Taiwan (3.88 per cent), Malaysia (2.60 per cent), Singapore (2.21 per cent), South Korea (1.50 per cent) and other countries (0.30 per cent). Vietnam alone imported 3, 18,171 MT of Indian seafood, the quantity being much more than that of any other individual markets like US, Japan or China.
The EU continued to be the third largest destination for Indian marine products with a share of 16.73 per cent in quantity. Frozen shrimp was the major item of exports, accounting for 40.66 per cent in quantity and 55.15 per cent in dollar earnings out of the total exports to the EU. Exports of Vannamei shrimp to the EU improved by 9.76 per cent in quantity and 11.40 per cent in dollar value.
Japan, the fourth largest destination for Indian seafood, accounted for 6.83 per cent in earnings and 6.08 per cent in quantity terms. Frozen shrimp continued to be the major item of exports to Japan with a share of 45.31 per cent in quantity and 77.29 per cent in value out of the total exports to that country.
Besides frozen shrimp and frozen fish, India’s other major seafood product was frozen squid, which recorded a growth of 21.50 per cent, 59.44 per cent and 57 per cent in terms of quantity, rupee value and dollar earnings, respectively. Export of frozen cuttlefish showed a decline in quantity terms, but increased in the rupee value and dollar terms by 18.85 per cent and 16.95 per cent, respectively.
Dried items registered a growth of 40.98%, 20.14% & 79.05% in terms of quantity, rupee value and dollar terms, respectively. Indian ports handled a total marine cargo of 11,34,948 tons worth Rs 37,870.90 crore (5,777.61 million dollars) in 2016-17 as compared to 9,45,892 tons worth Rs 30,420.83 crore (4,687.94 million dollars) in 2015-16. Vizag, Kochi, Kolkata, Pipavav and Jawaharlal Nehru Port (JNP) were major ports that handled the marine cargo during 2016-17. Exports improved from Vizag, Kochi, Kolkata, Pipavav, JNP, Krishnapatanam and Tuticorin as compared to 2015-16.
Vizag port exported 1,59,973 tons of marine cargo worth Rs 9,294.31 crore (1,401.94 million US dollars) in 2016-17 as compared to 1,28,718 tons worth Rs 7,161 crore (1,105.76 million dollars) in 2015-16.
Vizag port was followed by Kochi (1,55,989 tons, Rs 4,447.05 crore), Kolkata (1,04668 tons, Rs 4,451.67 crore), Pipavav (2,32,391 tons, Rs 4,217.45 crore), JNP (1,49,914 tons, Rs 4,084.96 crore), Krishnapatnam (62,049 tons, Rs 3,701.63 crore), Tuticorin (42,026 tons, Rs 2,220.52 crore), and Chennai (37,305 tons, 1,693.87 crore).

Genetically modified crops: Taking fear-mongering to new heights

Concerns over GM mustard impacting pollination and honey production have no empirical basis

Pollinators such as honeybees play a vital role in our agricultural production systems. Roughly a quarter of the world’s food is estimated to come from transfer of pollen, from the male to female organs of the flowers of plants, by bees. India alone is home to four major species of honeybees – Apis mellifera (European bee), Apis cerana indica (Indian bee), Apis florea (dwarf floral) and Apis dorsata (rock bee) – of which the two have been domesticated, whereas the others are wildly-occurring and found mainly in forests. The domesticated bees are maintained in manmade hives not only for production of honey, wax and other by-products; beekeepers sell honeybees from their colonies also to other farmers for improving crop pollination and resultant yields.

Unfortunately, honeybees are in the news today for an entirely different reason related to unsubstantiated fear-mongering by so-called environmentalists and NGOs claiming to speak for farmers. Cultivation of genetically modified (GM) mustard now awaiting regulatory clearance, it is alleged, will cause a 30-40 per cent reduction in production of nectar in flowers, thereby attracting fewer bees to collect and make honey from it. The end-result: lower production as well as export of honey from India!

We have heard such wild theories before; they surface whenever any new GM crop is ready for environmental release. Take Bt cotton. At the time of its commercial approval in 2002, many anti-GM activists claimed that the widespread cultivation of cotton hybrids containing gene(s) derived from the Bacillus thuringiensis soil bacterium would hugely reduce pollinator populations. Well, farmers did resort to widespread cultivation of Bt cotton, which, in 2016-17, covered 10.6 million hectares or 95 per cent of the country’s total area under the crop. But this caused no harm to either bee activity or honey production.

A recent study by entomologists at the University of Agricultural Sciences, Dharwad (Karnataka), investigating the impact of Bt cotton on pollinator fauna and honeybees, showed no hindrance to their foraging activity. The study even suggested relative abundance of natural insect predators in cotton fields, which may have had to do with the overall reduced insecticide sprays courtesy Bt technology. In fact, the higher yields from Bt cotton are themselves a result of conservation of pollinators and more number of honeybee colonies.

Against this background, it is surprising to see the same stories of “threat” to the beekeeping industry being repeated in GM mustard, which has been recommended for commercial planting by the Genetic Engineering Appraisal Committee (GEAC) in the Union Environment Ministry. In Bt cotton, it could be said, for argument’s sake, that the alien genes introduced into the crop codes for a protein toxic to insects – even if specific to the heliothis species, particularly the dreaded American bollworm. But in GM mustard, even that logic does not hold.

The GM mustard, developed by Deepak Pental and fellow scientists at the Centre for Genetic Manipulation of Crop Plants in Delhi University, contains no insecticidal protein gene. It has mainly two genes (‘barnase’ and ‘barstar’) that allow for cross-pollination and hybridisation in mustard, which is largely a self-pollinating plant because of its individual flowers containing both female and male reproductive organs. In addition, there is a third ‘bar’ gene, conferring tolerance to the herbicide glufosinate. This is basically a marker gene, used to identify those plants that have been genetically modified – the non-GM plants cannot withstand glufosinate application – and are necessary for large-scale hybrid seed production.

Now, it should be obvious that a crop expressing hybrid vigour – GM mustard has been shown to yield 20-30 per cent more than the existing popular ‘check’ varieties – will have more flowers per plant. Wouldn’t that attract more rather than less honeybees and other pollinator insects? The Assessment of Food and Environmental Safety report, prepared by a sub-committee of scientific experts constituted by the GEAC, has clearly established no difference in honeybee foraging behaviour between GM and non-GM mustard. This was based on field studies in six locations over three seasons (2010-11, 2011-12 and 2014-15) as part of biosafety research level (BRL-1 and BRL-2) trials conducted by Indian Council of Agricultural Research and state agricultural universities. Biosafety studies, moreover, concluded that the ‘barnase’ and ‘barstar’ proteins weren’t detectable in the GM mustard pollens, hence ruling out any exposure – even if not harmful – to honeybees.

As far as the ‘bar’ gene goes, the presence of its proteins at very low levels in the pollen has not revealed any adverse effect on bee foraging, colony health or the quality of honey produced. The ‘bar’ protein, produced in glufosinate-tolerant GM crops, has received regulatory approval in as many as 20 different countries (including in the European Union), as per a 2016 International Life Sciences Institute study. Glufosinate spraying, as already noted, is required only for seed production. Even assuming farmers apply this herbicide, they would do so only during the first fortnight after germination or, at the most, within a month after sowing. Flowering in mustard happens only after 45 days, when there’s no threat from weeds and no necessity for herbicide application. How can, then, glufosinate spraying impact honeybee visits during pollination? On the contrary, removal of weeds will boost plant growth and make it flower more, which would attract larger bee populations.

If at all anybody is aware about the role of honeybees with respect to mustard, it’s the breeders themselves. Honeybees are known to visit the crop during flowering to enhance pollination. Studies carried out at the Indian Agricultural Research Institute, New Delhi have demonstrated that the exclusion of honeybees can significantly bring down yields in mustard, despite it being a self-pollinated plant. Another study at the GB Pant University of Agriculture and Technology in Uttarakhand has found as many as 18 different insect pollinators visiting mustard. Our scientists should be credited with at least minimum intelligence; no breeding programme in mustard will pass muster without factoring in the predominant role of honeybees in enhancing seed setting necessary for higher yields!

In conclusion, the concerns over GM mustard “contaminating” our honey and compromising the livelihoods of beekeepers are sheer figments of imagination. GM mustard is no different from GM canola, which is also a brassica genus plant and whose oil is already being imported into India. When no adverse impact on pollinators, bees and honey production has been reported by GM canola-growing countries, including Australia, Canada and the US, in the last 20 years, why should different standards apply to GM mustard that Indian farmers will hopefully plant soon?