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Today’s Talk on Editorials November 10, 2017

Climate Change Meet- The Hindu

Background:  Paris Climate Agreement is an international climate deal to combat climate change. It facilitates enforcement of global GHG reduction measures in the post-2020 i.e. in post-Kyoto Protocol scenario. Under it, all countries must pursue to keep global temperature rising below 2°C by 2100 above pre-industrial levels with an ideal target for keeping temperature rise below 1.5 C. Following COP 21 in Paris, nations adopted Marrakech Action Proclamation for Our Climate and Sustainable Development.

  • In 2015, India made a Bonn Challenge commitment to place into restoration 13 million hectares (Mha) of degraded land by 2020 and an additional 8 Mha by 2030. India’s Nationally Determined Contributions (NDCs) have also pledged to sequester 2.5 to 3 billion tonnes of CO2 equivalent additionally by 2030 through enhanced tree cover.
  • However, neither the Bonn Challenge nor the NDCs is about large-scale plantations alone. The Bonn Challenge, for instance, lays emphasis on landscape approaches — a model aimed at improving the ecology of a landscape as a whole in order to benefit local livelihoods and conserve biodiversity.
  • Indias  NDC is comprehensive based on the fact that emphasis is not only on carbon sequestration but also adaptation to climate change, local community participation that is dependent on forests and agriculture for sustenance.
  • The nation practises at least 35 types of agroforestry models that combine different trees that provide timber, fruits, fodder, fuel and fertilizers with food crops. This diversifies income from farming and improves land productivity. Widening the forest conservation practice is integral to Indias NDC commitments.
  • To achieve success in large-scale tree-based programmes, it is necessary to have the security of tenure and land rights. India’s focus on right based approaches legislations like FRA Act are vital to climate change commitments.t is also important to have in place a performance monitoring system to quantify tree survival rates and the benefits to communities. This can be achieved through a combination of remote sensing, civil society organisations.
  • Alternatively, the tool called Restoration Opportunities Assessment Methodology (ROAM) is used in 40 countries to find the best methods for landscape restoration. Currently, India is implementing it on a pilot basis of Uttarakhand and Madhya Pradesh.

Indian Economy- Livemint

Background: India’s GDP growth has fallen linearly over the last six quarters, from a high of 9.2% in Q3-2016 to 5.7% in Q4-2017. However, World Bank opined that recent slowdown in India’s economic growth is an “aberration” and mainly due to a temporary disruption caused by preparations for the new national tax GST. Hence there is no sign of possible recession. however, the government must take right measures to revive the economy.

  • In late October, it announced a package of Rs9 trillion, made up of government investment in roads and recapitalisation of public sector banks although it includes some of the previously announced schemes as well.
  • The government has announced a new umbrella road building programme over the next five years with an expenditure of Rs6.92 trillion for 84,000km of roads. In this, Bharatmala Pariyojana will have an outlay of Rs5.35 trillion for 35,000km of roads to generate 142 million man-days of employment. The remaining 49,000km of roads will be under other current schemes with an expenditure of Rs1.57 trillion.
  • Sources of financing these projects come from Central Road fund, raising money as debt from the market and through a public-private partnership. budgetary support etc.
  • Building roads would ease supply constraints, provide much-needed connectivity, create employment opportunities, and stimulate growth in the economy through multiplier effects on the demand side.
  • however, implementation could prove to be a bottleneck because of the long gestation period, delays in land acquisitions etc.. The utilization of available resources is by no means assured.
  • The government has also announced a bank recapitalisation plan worth Rs2.11 trillion over the next two years equivalent of about 1.25% of gross domestic product (GDP). But there is no precise information, yet, about the proposed recapitalisation bonds about who will issue these bonds, about the market interest rates, about maturity period etc.
  • The infusion of equity capital into PSBs will help these banks to provision for their non-performing assets (NPAs), where borrowers have defaulted on interest or amortization payments that are due, which would eliminate toxic assets and clean up their balance sheets. This should make available capital for growth and revive lending.
  • It is basically done to keep India obliged to meet the Basel-3 norms and economic necessity to have a boost in investment and focus on an upturn in growth. The latest Financial Stability Report of the Reserve Bank of India (RBI) shows that for PSBs, gross NPAs as a proportion of total assets was 11.4% in March 2017 and would rise to 14.2% in March 2018, as compared with 9.6% and 10.2%, respectively, for all banks.
  • It is not obvious that there will be an immediate recovery. There cannot be a commensurate increase in the supply of credit. For one, there will be a time lag, since the details will be announced in the next quarter, while the recapitalisation will happen in 2018-19.
  • Also, even if there is an increase in the supply of credit, recapitalisation cannot ensure demand for credit. The demand for credit in the economy is sluggish because investment levels are low, investor confidence is weak, and interest rates are high. Thus, the recapitalisation of PSBs by itself, while essential, cannot suffice to revive the economy in time for any electoral dividend.