Speech of the President at Inauguration of Diamond Jubilee Celebrations of ECGC limited

Speech of the President at Inauguration of Diamond Jubilee Celebrations of ECGC limited

            It is indeed a pleasant occasion to me to be present amidst you on the inauguration of the Diamond Jubilee celebrations of ECGC. As the then Commerce Minister, I have had the privilege and opportunity earlier of closely observing the functioning of ECGC which is completing 60 years.

2.                  The world is becoming steadily more complex, challenging, inter-linked and inter-dependent. The economic and political dominance of Europe and the USA is retreating with a great degree of multi-polarity arising in the global geo-political scenario. The world trade is now dependent on larger emerging economies including China and India. 

3.                  The developed world has been facing crisis such as that of 2008, Eurozone crisis and now there are current commercial and economic risks, the reality of BREXIT, an influx of refugees leading to a migrant’s crisis etc. The risk landscape has turned adverse with non- trade barriers being progressively imposed by trading nations. The dissipation of trust between trading partners has necessitated a real time assessment of the credit standing of overseas buyers. Geopolitical instability, economic downturn, war and terrorism have further hampered growth of world trade.

4.                  Inspite of these global headwinds, our economy is performing well. With GDP growth rising to 7.6 percent in 2015-16 from 7.2 percent in the previous year, we are ahead of the rest of the major economic powers. A normal monsoon this year is expected to provide fillip to this year’s growth, unlike the last two years when below normal rains created an agrarian crisis and caused much rural distress. Our external sector remains steady while we are committed to prudent fiscal consolidation. This augurs well for our macro-economy but we must remain cautious on the trend of food prices.

5.                  Weak global demand has adversely impacted our exports as reflected by a fall of 2.1 percent in the first quarter of 2016-17. However at the same time, imports have declined sharply, by 11.5 percent over this period. A lower trade deficit has helped in reducing the current account deficit to 0.1 percent of GDP in the first quarter of 2016-17 from 1.2 percent in the corresponding quarter of last year. Reviving exports in a scenario of sluggish demand worldwide will remain a serious challenge for us. We must overcome by improving competitiveness of the domestic industry through better infrastructure and regulation.

6.                  In this context the role of an Export Credit Agency [ ECA ]  is of central importance in international trade and investment flows. These institutions are, in a manner of speaking, akin to policy instruments at the disposal of the sovereign  to ensure adequate and timely support to national exports by way of extending credit, insurance and guarantees. They develop the platform upon which exporters and bankers sustain existing markets in addition to exploring new markets. Absence of an ECA adds to the underlying political, economic and financial uncertainty. ECAs offer more than just trade credit insurance. Their role in an economy is multifaceted with protection against risks, enabling access to bank finance, information and expertise in trade finance.

7.                  Asia contributes one third of Global Merchandise Trade (GMT) but 22% of Trade Credit Insurance (TCI). In the economic progress of a country, the Property and Casualty Insurance     (P & C) business matures first and then the TCI expands once the economy becomes fully developed.  In contradistinction to this general trend, TCI in China and India is significantly ahead of Property and Casualty Insurance (P & C). The main driver for this is export credit insurance and the high level of penetration ECAs have  made in both countries.

8.                  It is a matter of pride that ECGC has played such a pivotal role in the country’s trade sector. During my tenure as Commerce Minister, I became aware of the various schemes and customer initiatives of ECGC. I recall that huge claims due to foreign exchange transfer delays were being paid to hundreds of exporters on account of defaults in Sudan, Tanzania, Zambia and Nigeria. These compensations by ECGC came in very handy then to exporters who had big exposures on Africa. The organization has grown over the years significantly and has contributed to stability in our trade sector.

9.                  The attitude towards ECAs changed substantially after the global financial crisis. ECAs then expanded their operations to help the banking system provide liquidity and restore lending. In India, ECGC had already been supporting export lending by banks for a long time. The role of ECGC during the global financial crisis was important and its efforts well directed. Commercial banks at that point of time restrained themselves from financing trade, with exposure to international markets, mainly because of a heightened risk perception. It was at that point of time that the importance and the relevance of the ECGC came to the fore given that there was an enhanced need for guarantees and insurance to facilitate the release of trade credit. Export credit insurance and guarantees in the spectrum of trade financing are of critical importance in today’s scenario of continuing high systemic risk.

10.              I am particularly glad to note that ECGC today is insuring banks whose share is almost 70% of the export credit disbursed in the country. The covers offered at various stages of lending bring a certain degree of comfort for banks in today’s uncertain times. ECGC has paid out record claims to banks by way of compensations particularly since 2007.  Banks under ECGC cover also enjoy substantial relief in the capital allocation for their export credit  outstandings.

11.              Internationally, ECGC is one of the oldest members of the Berne Union which is an association of ECAs and credit insurers from 73 countries. It  is amongst the top 5 agencies in value of  commitments, business covered and premium and has been making an active contribution in various committees including the management committee and in multilateral interactions.

12.               We today observe that several developed countries have consciously introduced special concessions and stimulus packages to manage the present downturn. We in India also need to ensure that our exporters are adequately supported through appropriate policy interventions. In particular, we need to be focused on the SME sector which has the potential for accelerated growth but is at the same time considered a high risk venture by commercial lenders. The ECGC also needs to respond appropriately in the light of the overall macro situation and the business practices followed by its counterparts all over the world.

13.               The Parliamentary Standing Committee on Commerce recently appreciated the commendable work and efforts undertaken by ECGC for overall growth of India’s exports. The Committee also recommended that for ECGC to play a greater role in export promotion, support in maximum liability and capital etc., needed to be extended by government. It also stated that in order to achieve the overall export target, the framework of export credit insurance and guarantee ought to be made more robust. I am confident that Government will examine these recommendations and take steps as are necessary to strengthen our institutional credit guarantee framework in the trade sector. 

14.               A robust, vibrant and well-functioning ECGC can be an enabler for putting the country back on a high export growth path. It is, therefore, necessary that all stakeholders in the ECGC provide the necessary leadership and direction for it to move forward.  With these words, I once again wish all of you the very best for your diamond jubilee celebrations and hope that you will continue to excel in the future also

Paris Agreement enters into force, but emissions continue to rise

UNEP says raising ambition before 2020 “is likely the last chance to keep the option of limiting global warming to 1.5C”.

As the Paris Agreement enters into force on Friday, November 4, a UN Environment Programme report released Thursday has shown that global emissions have continued to rise despite some signs of emissions from fossil fuels and industries stabilising. The “emissions gap” for 2030 is 12 to 14 GtCO2e (gigatonne CO2 equivalent) compared with 2°C scenarios, and for 1.5°C the gap is three GtCO2e larger, the report shows.

Emissions gap is the difference between the emissions levels in 2020 necessary to meet climate targets, and the levels expected that year if countries fulfil their promises to cut greenhouse gases. So, the emissions gap reveals how much more needs to be done by countries in order to meet the target of keeping global warming levels below the 2°C safe limit as agreed in the Paris climate accord last year.

The UNEP report further shows that even if fully implemented, the unconditional Intended Nationally Determined Contributions (INDCs) - the voluntary climate action targets of countries - are only consistent with staying below an increase in temperature of 3.2°C by 2100, which can have disastrous consequences for the climate.

Pre-2020 action

The report has therefore emphasised on pre-2020 action by countries. Raising ambition before 2020 “is likely the last chance to keep the option of limiting global warming to 1.5°C,” the report notes. This means that in the next three years countries must take sufficient emissions reduction action to aim for the more ambitious target of keeping temperature rise below 1.5°C in the Paris Agreement.

Urging countries to act ahead of the UN climate summit in Morocco that begins next week, Erik Solheim, head of UN Environment said in a statement, “If we don’t start taking additional action now, beginning with the upcoming climate meeting in Marrakesh, we will grieve over the avoidable human tragedy. The growing numbers of climate refugees hit by hunger, poverty, illness and conflict will be a constant reminder of our failure to deliver. The science shows that we need to move much faster.”

G20 countries’ progress

Given the emphasis on pre-2020 action, the UNEP report takes a closer look at climate action by G20 countries, which contribute significantly to greenhouse gas emissions. While the G20 countries are collectively on track to meet their Cancun climate pledges for 2020, these pledges fall short of creating a sufficiently ambitious starting point to align with the temperature target of the Paris Agreement, the UNEP report notes. In Cancun, Mexico, in 2011, nations had agreed to GHG emission cuts ahead of 2020.

Three of the G20 parties – China, the EU, and India – are on track to meet these pledges without purchasing offsets, according to available analyses, UNEP has said. Three more – Brazil, Japan, and Russia – are on track, according to most estimates, the report says.

Rulebook on climate action

With 94 countries of 197 UN member nations having ratified the Paris climate agreement till now, hopes are high that the treaty will be able to lead the way to a carbon neutral world. In a jointly authored editorial, UNFCCC Executive Secretary Patricia Espinosa and Salaheddine Mezouar, Minister of Foreign Affairs and Cooperation, Morocco, have said that the Marrakech climate summit will accelerate work on creating a rulebook, which will measure, account for and review global climate action, and to see emerge a definable pathway for developed countries to materialise the flow of USD $100 billion per year by 2020 in support of climate action by developing ones.

 

Four of the biggest givers

Bill Gates, Warren Buffett, George Soros and Gordon Moore lead the pack when it comes to philathropy and charity

Global and local icons are known for their charitable donations almost as much as they are known for excelling in their fields. Celebrities have often donated huge amounts from their personal wealth or through foundations for a noble cause. Mint takes a look at four such people.

Bill Gates

The former Microsoft chief has donated $29 billion towards his charitable organization, the Bill & Melinda Gates Foundation. The foundation works to improve healthcare, offer educational opportunities and access to information technology, among other things. The couple have pledged to donate 95% of their personal fortune.

Warren Buffett

Warren Buffett

Berkshire Hathaway’s CEO and chairman made donations to the tune of $2.8 billion in July to the Bill & Melinda Gates Foundation. He has also contributed $2 billion towards charitable causes and organizations. His biggest donation, however, is a pledge to the Bill & Melinda Gates Foundation, which will receive a whopping $37 billion after Buffett’s death.

George Soros

George Soros

The business magnate has donated around £5.1 billion to health and educational institutes around the world. He supported underprivileged students in apartheid-era South Africa and backed progressive institutions in Eastern Europe during the Cold War.

Gordon Moore

Gordon Moore

Following Gates, Buffett and Soros is technology giant Gordon Moore. The Intel founder reportedly donated about $6.8 billion to the Gordon and Betty Moore Foundation that he runs with his wife. According to its website, the foundation has interests in environmental conservation, scientific research and higher education.

Cleaning up India’s air pollution problem

It will require a comprehensive, synergized government approach that is currently lacking 

Anyone who ventured out at night in New Delhi in the past few days would have experienced something akin to one of Victorian London’s infamous pea soupers—the thick fogs caused by air pollution that proved lethal to more than a few of the city’s inhabitants. The onset of the haze blanketing the capital come winter has become an annual ritual. The governmental response, starting with deputy chief minister Manish Sisodia’s meeting to deal with the issue on a “war footing”, has a similar air of the routine.

The levels of particulate matter 10 and 2.5—the most dangerous components of air pollution—spiked severely after Diwali. The former was recorded at eight times the safe limit and the latter at 10 times. This is a no-brainer given the nature of the festival. But the problem, of course, extends far beyond this, and for that matter, beyond the capital. The World Economic Forum (WEF) rates Delhi as having the highest level of air pollution globally among mega-cities—but Gwalior, Allahabad and Raipur all have the dubious distinction of beating it out to rank among the 20 most polluted cities in the world.

The burning of agricultural waste in states like Punjab and Haryana, vehicular emissions, dust from construction sites and factory emissions, among other factors, combine in toxic fashion come the winter months when lower wind speeds and shallow inversion layers prevail across much of the Indo-Gangetic plains. Governments at the central and state levels have responded at various times and in various ways. The evolution of India’s road transport landscape—from the introduction of catalytic converters in cars and unleaded petrol in 1995 and 1998, respectively, to the reduction of sulphur content in diesel in 2000 and the steady progress of successive emission norms—is a case in point. So is the Punjab government’s ban on burning paddy straw and Sisodia’s purported road map that envisions everything from retrofitting crematorium chimneys to vacuum cleaning and sprinkling water on Delhi’s roads.

But these are patchwork efforts, lacking the cohesiveness that is necessary to tackle a multisectoral issue. The first and perhaps most glaring deficiency is the paucity of research to guide policy. There have been a number of studies in Delhi examining the effect of air pollution on respiratory functions and the associated morbidity, including a comprehensive one by the Central Pollution Control Board in 2008. But there has been little focus on the effects on cardiovascular health, an issue that is receiving increasing attention globally.
And as Hem H. Dholakia, Dhiman Bhadra and Amit Garg point out in a 2014 IIM Ahmedabad research paper, Air Pollution in Indian Cities: Short Term Mortality Impacts and Interactions with Temperature, there is a lack of epidemiological evidence in the broader Indian context; the studies they found examined the short-term impacts of air pollution on mortality only for Delhi and Chennai. As WEF rankings on 20 most polluted cities in the world show, the problem is far more widespread than that. From weather conditions to level of development and primary causes of pollution, the specific context of various cities and regions is unique; so too must be research-guided policy decisions. The lack of this leads to knee-jerk moves of dubious benefit such as the Delhi government’s odd-even experiment earlier this year.
The second problem is a lack of political will and imagination to implement proven methods. Congestion charges and restricted parking have been successful from London to Singapore. An emphasis on convenient, easy-to-access public transport has been similarly successful. And as The Hindu pointed out in its editorial on 3 October, there is a puzzling lack of effort to find a synergy between the rising demand for fodder and the agricultural waste that contributes to air pollution via biomass burning.
Thirdly, as in many other areas, there is a lack of adequate enforcement. There are 61 major construction sites in Delhi, for instance, that can be easily monitored, but a host of smaller ones violate most of the existing rules. Industrial emission norms and pollution under control certificates are other stress points where defaulters have it far too easy. China’s example is perhaps not the easiest to follow here given its political structure and the fact that global economic conditions have kick-started a downturn in its rust belt. But even so, Indian administrations could do worse than look to the comprehensive nature of Chinese government efforts to tackle air pollution and emphasis on enforcing regulations.
It took the Great Smog of 1952 bringing about the premature deaths of over 10,000 people in London for the British government to introduce the Clean Air Act 1956 and put an end to the pea soupers. India has it worse; according to the Global Burden of Disease report, outdoor air pollution was responsible for 620,000 deaths in 2010. It’s time, perhaps, for a similar clean-up effort.
Is the government doing enough to tackle India’s air pollution problem

Green farms and clean air

massive pollution cloud enveloping northern India every year is a good example of the disconnect between official policy and ground realities. It has been known for long that burning of agricultural waste in the northern States significantly contributes to the poor air quality in large parts of the Indo-Gangetic Basin, with local and cascading impacts felt from Punjab all the way to West Bengal. Harmful fine particulate matter measuring 2.5 mm in diameter (PM2.5) is among the pollutants released. Punjab responded to the issue with a prohibition on the burning of paddy straw, and the launch of initiatives aimed at better utilisation of biomass, including as a fuel to produce power. Yet, there is no mission mode approach to the annual crisis. The efforts do not match the scale of agricultural residues produced, for one, and fail to address farmers’ anxiety to remove the surplus from the fields quickly to make way for the next crop. The national production of crop waste is of the order of 500 million tonnes a year, with Uttar Pradesh, Punjab and West Bengal topping the list. Again, 80 per cent of straw from paddy is burnt in some States, impacting air quality and depriving croplands of nutrients.

It is an irony that the national capital and several other cities suffer crippling pollution in the post-monsoon and winter months partly due to biomass burning, when demand for fodder is rising and the surplus material could be used productively. Pilot projects to produce power using biomass demonstrated in Rajasthan, and mechanised composting and biogas production units of the Indian Agricultural Research Institute could be scaled up, and farmers given liberal support to deploy such solutions. Given the twin benefits of pollution abatement and better productivity, conservation agriculture needs to be popularised. This would encourage farmers to use newer low-till seeding technologies that allow much of the crop residues to remain on site, and curb the release of a variety of pollutants. Burning residues add greenhouse gases that cause global warming, besides pollutants such as carbon monoxide, ammonia, nitrous oxide and sulphur dioxide that severely affect human health. Sustained work is called for, given that higher agricultural productivity to meet food needs is inevitable, with a cascading increase in biomass volumes. The challenge is to identify measures to utilise it. By one estimate, if India can reach its own air quality standards for fine particulate matter from all sources, annual premature deaths can be cut by almost 10 per cent. A programme to cut pollution from waste-burning would be a good start.

NASA completes construction of largest space telescope

It’s 100 times powerful than the Hubble Space Telescope and may help in finding the first galaxies

NASA has successfully completed building the largest space telescope — one that is 100 times powerful than the Hubble Space Telescope and may find the first galaxies that were formed in the early universe.

The James Webb Space Telescope will be the successor to NASA’s 26-year-old Hubble telescope.

The Webb telescope’s infrared cameras are so sensitive that it needs to be shielded from the rays of the Sun. A five-layer sunshield of the size of a tennis court will prevent the heat from interfering with the telescope’s infrared sensors.

The layers work together to reduce the temperatures between the hot and cold sides of the observatory by about 298 degrees Celsius. Each successive layer of the sunshield, made of kapton, is cooler than the one below.

The U.S. space agency has also made the first important optical measurement of James Webb Space Telescope fully assembled primary mirror, called a Center of Curvature test.

“This is the only test of the entire mirror where we can use the same equipment during a before and after test,” said Ritva Keski-Kuha, NASA’s Deputy telescope manager for Webb.

“This test will show if there are any changes or damages to the optical system,” Keski-Kuha said.

The space telescope will provide images of the first galaxies ever formed, and explore planets around distant stars.

It is a joint project of NASA, the European Space Agency and the Canadian Space Agency.

GST rate structure finalised, majority of items in 12% and 18% tax slabs

On demerit and sin goods like aerated drinks, luxury cars, tobacco and pan masala, a cess will be levied by the centre over and above the 28% GST rate

d services tax (GST), the centre and the states managed to reach a consensus on the tax rates and the tax slabs under this ambitious tax regime.

The decision, arrived at by a consensus, proposes a multi-tiered tax system aimed at minimizing the inflationary impact on the common man, finance minister Arun Jaitley said at a press conference after the end of the first day of the fourth GST council meeting.

As per the rate structure agreed upon by the centre and the states, 50% of the items present in the consumer price index basket, including foodgrains like rice and wheat, will be exempted from the levy of GST.

The lowest tax slab will be 5% wherein items of mass consumption will be taxed. There will be two standard rates of 12% and 18% where a majority of the items used by the common man will be taxed. There will be a higher slab of 28% where items currently attracting a tax of 27-31% will be taxed. However, items used by the middle class like toothpastes, soaps and oil which currently have a high tax incidence of more than 27% will be brought down to the lower slab of 18%.

On demerit and sin goods like aerated drinks, luxury cars, tobacco and pan masala, a cess will be levied by the centre over and above the 28%. This amount along with the proceeds of the clean energy cess will be used to compensate states for losses arising from GST. However, this cess will have a sunset clause of five years.

A technical committee comprising of central government and state government officials will finalize the allocation of items into different rate categories. The tax rate on gold will be decided after this allocation of items.

.........................

Essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.

A four-tier GST tax structure of 5, 12, 18 and 28 per cent, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess, was decided by the GST Council on Thursday.

With a view to keeping inflation under check, essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.

The lowest rate of 5 per cent would be for common use items while there would be two standard rates of 12 and 18 per cent under the Goods and Services Tax (GST) regime targetted to be rolled out from April 1, 2017.

Announcing the decisions arrived at the first day of the two-day GST Council meeting, Finance Minister Arun Jaitley said highest tax slab will be applicable to items which are currently taxed at 30-31 per cent (excise duty plus VAT).

Luxury cars, tobacco and aerated drinks would also be levied with an additional cess on top of the highest tax rate.

The collection from this cess as well as that of the clean energy cess would create a revenue pool which would be used for compensating states for any loss of revenue during the first five years of implementation of GST.

The cess, he said, would be lapsable after five years.

Mr. Jaitley said about Rs. 50,000 crore would be needed to compensate states for loss of revenue from rollout of GST, which is to subsume a host of central and state taxes like excise duty, service tax and VAT, in the first year.

The four-tier tax structure agreed to has slight modification to the 6, 12, 18 and 26 per cent slab that were under discussion at the GST Council last month.

The structure to agreed is a compromise to accommodate demand for highest tax rate of 40 per cent by states like Kerala.

While the Centre proposed to levy a 4 per cent GST on gold, a final decision was put off, Mr. Jaitley said.