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The Hindu Editorial Analysis | PDF Download

Date: 26 February 2019

 

Before eviction

  • States must quickly determine if procedural lapses deprived forest-dwellers of their rights
  • The Supreme Court’s order to evict, over the next five months, occupants of forest lands who failed to make a successful claim for tenure under the Forest Rights Act, 2006, has once again highlighted the dilemma of reconciling inalienable tribal rights with biodiversity conservation. When the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act was passed, it was with the wholly welfarist goal of making these communities partners in conservation. They would be stewards of forests that have shrunk and become fragmented over the decades. It was another landmark, therefore, when the Forest Rights Act protected possession and conferred heritability of land to over 23 lakh out of 44 lakh claimants who are either specified Scheduled Tribes, or people who have lived in forests traditionally, relying on forest produce for at least 75 years prior to the cut-off year of 2005. But over 20 lakh other applicants who could not establish their claim through gram sabhas and appellate authorities have now been ordered to be evicted by July 12. The 17 State governments which have been asked to carry out the evictions must respond by quickly determining whether there were procedural lapses that deprived applicants of due process, notably in making appeals. This process may take time, more so in an election year, and the sheer scale of action required would necessitate an extension of the eviction date.
  • In the ideal scheme, as the Forest Rights Act envisages, forested areas and their biodiversity will be protected by communities, with individuals taking forest produce only for sustenance and livelihood. Such an approach is at odds with the colonial paradigm of forests being treated as a resource run by an opaque bureaucracy that replaced precious old-growth trees with monocultures such as teak. Today, forests have shrunk to about 5% of the land in terms of protected areas, while human pressures are growing: landscapes are alienated for resource exploitation, road and dam building, and a lot of wildlife is lost to poaching. Man-animal conflict is growing. Claims for tenure under the Forest Rights Act must therefore satisfy the primary test of whether they are legally unimpeachable, and even if they are, whether they would impose additional pressures on forests and wildlife. The answer in many areas may lie in resettlement. In some well-documented cases, such as in the Western Ghats, alternative land and cash compensation convinced tribals to move out of core areas. One example is that of the Nagarahole National Park, where the outcome has been good for both people and wildlife, as evidenced by the recovery of tiger density over three decades. State governments need to pursue such programmes in a humane and vigorous fashion. They must also come forward to declare critical wildlife habitats under the Act. This will aid in formulating resettlement schemes for tribal residents.

 

The correct prescription

  • Entry of e-pharmacies will bring down the price of medicine for Indian patients
  • Amid a slew of conflicting judicial decisions from different High Courts, the legality of e-pharmacies continues to be questioned by various trade associations such as the All India Organisation of Chemists and Druggists (AIOCD). It represents 8.4 lakh pharmacists who run the brick and mortar pharmacies in neighbourhoods across India.
  • E-pharmacies, which operate through websites or smartphone apps on the Internet, offer medicines for sale at a discount of at least 20% when compared to traditional pharmacists, with the added convenience of home delivery of medicines to one’s doorstep. For scheduled drugs, patients can submit photographs of prescriptions while placing orders. Despite operating in India for at least four years now, the legal status of these e-pharmacies is not clear because the government is yet to notify into law draft rules that it published in 2018.
  • The fiercest opponents of e-pharmacies are trade associations of existing pharmacists and chemists. They argue that their livelihoods are threatened by venture capital backed e-pharmacies and that jobs of thousands are on the line. Apart from these obvious arguments, these trade associations also spin imaginary tales of how e-pharmacies will open the door to drug abuse and also the sale of sub-standard or counterfeit drugs, thereby threatening public health. There is enough evidence on record to demonstrate how existing pharmacies contribute generously to drug abuse and sale of sub-standard medicine. There is no reason to suspect that e-pharmacies are going to worsen the situation in anyway.

A case of cartelisation

  • The more prudent way of looking at the entry of epharmacies is competition and the resultant effect it will have on lowering the price of medicine for Indian patients. Viewed from this perspective, there is virtually no doubt that e-pharmacies should be allowed to operate because the history of India’s trade associations of pharmacists is one of rampant, unabashed cartelisation that has resulted in an artificial inflation of medicine prices.
  • In a fully functional, competitive market, pharmacists would compete with each other for business. This competition could happen in the form of discounts or improving operational efficiency. For example, if two retailers buy a medicine from a wholesaler at ₹50 and the maximum retail price of the drug is ₹75, they are free to sell it at ₹70 or ₹65 or even ₹51. The seller with the lower price gets more customers and can make more profits. However, if both sellers enter into an agreement with each other to sell the drug at ₹75 and they also clearly define the geographical area within which they are operating, they both make higher profits but at the cost of the patient who now has to pay higher prices.
  • This practice of two competitors colluding to fix the sale price and area of operation is called cartelisation, and is illegal under India’s Competition Act. The premise of this law is that a free market is efficient only if all sellers are competing with each other to offer the lowest price to the customer.
  • Over the last decade, the Competition Commission of India (CCI) has had to deal with several complaints alleging that trade associations of pharmacists are providing platforms for cartelisation where pharmacists are basically rigging the market. In simple terms, this means that pharmacists, who should otherwise be competing with each other to offer lower prices for their customers, prefer to enter into agreements with each other to fix the price at which they will sell medicines to patients. Once all parties are on the same page, there is no reason to compete with each other and reduce prices.

 

Another barrier

  • A second, more insidious strategy is the practice of requiring pharmaceutical companies to apply for a no-objection-certificate (NOC) from the regional trade association before they appoint new stockists in a region to sell a particular drug. This has the effect of artificially restricting competition in certain markets because more stockists mean more competition. By creating such artificial, extra-legal barriers to the free trade of medicines within India, these trade associations create huge distortions in the Indian market. It is suspected that these practices continue despite multiple restraining orders by the CCI.
  • In its recent policy note on “Making markets work for affordable healthcare”, published in October 2018, the CCI noted, “One major factor that contributes to high drug prices in India is the unreasonably high trade margins.” One of the culprits for this phenomenon identified by the CCI was “self-regulation by trade associations [which] also contributes towards high margins as these trade associations control the entire drug distribution system in a manner that mutes competition”.
  • One of the solutions proposed by the CCI was encouraging more e-pharmacies. As stated by the CCI in its policy note, “Electronic trading of medicines via online platforms, with appropriate regulatory safeguards, can bring in transparency and spur price competition among platforms and among retailers, as has been witnessed in other product segments.”
  • Where the state has failed, it is possible that venture capitalist backed epharmacists will succeed in bringing back competition to the retail drug markets in India. There is no reason for India to continue indulging trade associations that have no taste for competition or fair business practices.

Coalition Of The Concerned

  • Multi-pronged diplomacy is vital to compel Pakistan to end its support for terrorist groups
  • In the wake of the Pulwama attack on February 14, the government has iterated once again its plan for the “diplomatic isolation” of Pakistan. The idea, which was first articulated after the 2016 Uri attacks, is a nonstarter, as was underlined by the visit of the Saudi Crown Prince Mohammad Bin Salman to both countries earlier this month, just a few days after Pulwama. In Pakistan, the Prince called himself “Pakistan’s Ambassador” in his country, and issued a joint statement praising Pakistan for its fight against terrorism. Clearly, a more considered diplomatic strategy, less full of rhetoric, must be chalked out by the government in response to crossborder terrorism.

Beyond isolation

  • To begin with, the government would do better to repackage its idea of “isolating Pakistan” into one of building a more inclusive ‘coalition against terrorism emanating from Pakistan’. In the past couple of weeks alone, Iran and Afghanistan have faced terror attacks on their security forces along the border with Pakistan — and several other countries, which have also faced such attacks or see the presence of Pakistan-based groups on their soil, would be willing to join ranks on this. The truth is, in today’s interconnected world, it is vainglorious to expect countries to join a unilateral plan for isolation.
  • Despite the U.S.’s considerable might, it has been unable to get most countries, including India, to sever ties with Iran and North Korea, for example. The impact of such a campaign is also doubtful: after years of trying to isolate North Korea, the U.S. is pursuing talks with its leader. While isolation might work as a campaign slogan for domestic audiences, it is quickly rebuffed each time a country engages with the nation one is trying to isolate. An inclusive coalition is more likely to move nations at the global stage as well. The success of the efforts led by the U.S. and other countries to ‘grey list’ Pakistan at the Financial Action Task Force or of French efforts for a United Nations Security Council statement on Pulwama points to that.
  • Second, India must focus on the case against Masood Azhar, which pre-dates the case against 26/11 mastermind Hafiz Saeed. In a first, the Jaish-e-Mohammed (JeM) claimed responsibility for the Pulwama attack in a suicide bomber video that has not thus far been disputed by its leader Masood Azhar. Azhar has been on the U.S.’s radar since 1992, when he was a leader of the banned terror group Harkat ul-Ansar, and worked with jihadi groups in Sudan and Bangladesh. His release after years in Indian prisons in exchange for hostages on board the IC-814 flight should on its own merit his banning and prosecution — not just in Pakistan, but in all the countries whose nationals were on board that Indian Airlines flight, as well as the stops that flight made: in Nepal, the United Arab Emirates and Afghanistan.
  • Third, India must prepare for a pushback from Pakistan, most likely in terms of internationalizing the Kashmir issue, and linking it to progress in Afghanistan. This is what Pakistan’s Ambassador to Afghanistan, Zahid Nasrullah, did when he said that any attack by India would “impact the momentum” of the peace talks in Afghanistan. His words were heard beyond Kabul, in Washington and Moscow. On February 18, members of the Taliban negotiating team were due to meet U.S. special envoy Zalmay Khalilzad in Islamabad. The talks were called off after Afghanistan objected to the Taliban team’s travel to Pakistan, and rescheduled for February 25 in Doha. It remains to be seen how much countries trying to negotiate with the Taliban will need Pakistan’s leverage to make progress on those talks. U.S. President Donald Trump sees them as the precursor for plans to pull out most troops in combat in Afghanistan before his re-election bid for 2020.

The American angle

  • Next, the government must prioritiseaction over words, when it comes to moves against Pakistan’s sponsorship and hosting of the JeM. The measures taken thus far — cancelling Most Favoured Nation status, maximising use of Indus waters, denying visas to Pakistani sportspersons, etc. — have little real impact on Pakistan and certainly none on the military establishment. Instead of priding itself on extracting statements of condemnation from various governments in the world, it is better for New Delhi to use India’s considerable diplomatic leverage to ensure action that would shut down the JeM and the Lashkar-e-Taiba (LeT) permanently and bring their leaders to justice. In this regard, mere statements and bans have not worked for more than two decades, and the government must consider other options, especially with the countries that carry the most leverage and access in Pakistan: China, the U.S. and Saudi Arabia.
  • It is puzzling that the U.S. has been able to carry out drone strikes on a whole host of terror group leaders on Pakistan’s western front, but never once targeted camps and infrastructure belonging to the JeM and the LeT, despite their well-established links to al-Qaeda. India must also press the U.S. to place travel sanctions on specific entities in the Pakistani military establishment unless visible action is taken against the JeM, whose leaders hold public rallies and issue videos threatening India.
  • Contrary to popular perception, the Trump administration’s moves to cancel funds to Pakistan last year is not the toughest action the U.S. has contemplated: in May 1992, then U.S. President George H.W Bush had directed his Secretary of State James Baker to send a stern letter to then Pakistani Prime Minister Nawaz Sharif threatening to designate Pakistan as a “State sponsor of Terror” for its support to Kashmiri and Sikh militant groups.
  • A similar line of talks must be pursued by New Delhi with Riyadh — which once was a donor to Pakistan’s Islamist institutions, but now is wary of funding extremism — to withhold any funds that may trickle down to charitable wings run by the JeM and LeT. With China, it is surprising that the issue of a simple ban at the UN Security Council has not been made India’s chief demand from Beijing. It is hoped that this will be rectified soon when the next proposal to ban Azhar is brought to the UNSC, and during Foreign Minister Sushma Swaraj’s visit to China this week for the trilateral Russia-India-China meeting. More than the ban, however, India must ask China for action against any entities dealing with the JeM in Pakistan, given that China is the partner with the most influence in Pakistan today, and one with the most to lose from terror groups in Punjab operating along the China-Pakistan Economic Corridor.

 

Steady dialogue

  • Finally, India must look to its own actions on the diplomatic front with Pakistan. Calling off a formal dialogue process for more than a decade has clearly yielded no desired outcome. South Asia as a region, and the South Asian Association for Regional Cooperation (SAARC) process too have suffered the consequences of this disengagement, without yielding any desired outcomes. A measured, steady and non-political level of dialogue is a more effective way of impressing India’s determination to root out terrorism than the present on-again, off-again policy. As the nation prepares for a possible military response to the Pulwama attack, it is important that New Delhi consider its diplomatic response carefully, particularly taking into account both the historical and regional context of its moves.

Pre-poll gambit

  •  Reduction in rates brings cheer to real estate sector, but unsettles the GST regime
  • On Sunday, the Goods and Services Tax Council recommended a dramatic reduction in the headline indirect tax rates payable on underconstruction properties. The GST rate payable on affordable homes, with effect from April 2019, will come down from 8% to 1%, and all other residential properties outside the affordable segment will attract 5% GST instead of the 12% levied at present. The new rate on affordable homes, defined as units that cost less than ₹45 lakh and have a carpet area of 60 square metres in metro cities and 90 square metres in non-metros, is far lower than the 3% rate mooted by a ministerial panel. The Council needs to meet again in March to clear the transition rules for the proposed rate cuts, and the conditions to be stipulated for housing projects to be eligible for the new rates. Days ahead of the expected announcement of the Lok Sabha poll dates by the Election Commission, the government is clearly keen on reaching out to different sections of voters. It has argued that the move will help meet the aspirations of millions of home-buyers, and revive the fortunes of real estate developers. Among the country’s largest employers in recent years, the realty sector has been marred by the debt overdose that has plagued much of corporate India; this has been compounded by high unsold inventory that hit cash flows. Properties that were already complete at the time of the GST’s adoption were spared the tax. But the introduction of 12% and 8% GST for underconstruction premier housing units and affordable homes, respectively, had come as a dampener for fresh bookings.
  • Finance Minister Arun Jaitley reckons that revenues will not be hit by the rate cut. The implicit assumption is that higher sales volumes will compensate the exchequer. Experts expect a 4-5% reduction in home prices, but the decision to deny input tax credits to builders could bring a twist in the tale. Developers may be forced to raise base prices as critical inputs, particularly cement (taxed at 28%), entail high levies that can no longer be offset. Buyers may still prefer to opt for unsold completed properties that don’t attract GST, instead of incomplete projects. Compliance as well as material costs could go up too, as the Council is likely to mandate that around 80% of a project’s inputs must come from formal sector vendors in the GST net. It is difficult to determine to what extent a proposed tax exemption on development rights will offset these costs for developers. Whatever the outcome of this pre-election ploy, the frequent structural tinkering ahead of electoral battles has emerged as the biggest challenge to the stabilisation of India’s fledgling GST regime.

Re-imagining Delhi

  • The governance structure is in need of a drastic remake
  • Notwithstanding the importance of the rural sector, it is the cities and towns, where citizens’ daily travails in terms of pani, bijli, sadak, housing, schooling, healthcare and sanitation play out, that extensively impact the public’s perception of a government’s performance. While the annual inundation of cities, daily loss of lives on roads, and frequent infernos highlight dysfunctional civic and municipal governance, the failure to create zones, which results in thickets of illegal buildings and structures, as revealed in the ‘sealing’ overdrive in Delhi, shows how the rot runs deep.
  • Urban problems are not urban in isolation; they are national problems. Cities are in need of duly empowered municipalities and institutional systems and processes for closely coordinated and accountable agencies that can deliver in areas such as sanitation, health, education, mobility and housing.
  • Too many cooks
  • With a plethora of elected and other agencies, the governance structure for Delhi is in need of a drastic remake.
  • In addition to 272 councilors in three municipalities, 70 MLAs, and seven MPs, there is the New Delhi Municipal Council for the cloistered Lutyens’ zone, and the Cantonment Board, not to talk of the Union government controlling land and policing. Too many intervening institutions, often with overlapping jurisdictions and sometimes contradictory goals, make for suboptimal outcomes.
  • The mega-scale migration is Delhi’s special challenge. Migration has steadily risen over the decades. With people pouring into the city and cars on to roads, the outlook for the environment looks grim. Delhi generates over 5,000 tonnes of refuse every day. In a way, Delhi is hailed as the country’s pampered child. Its annual per capita income of ₹3.29 lakh (2017-18), which is almost thrice the national average. According to the 2011 Census, of a total of 3.34 million households in Delhi, 3.31 million had electricity, 2.62 million had safe drinking water, and 2.99 million had toilet facilities. Even so, the city has more than 200,000 homeless people and almost half of its population is in slums and unauthorised colonies.
  • High wages with little accountability for actual service delivery make public sector agencies an obvious target for patronage hiring. It also results in massive over-staffing. We need privatization of civic delivery services like cleaning of roads and drains.

 

Use of technology

  • Conservancy services deserve a senior-level exclusive administration. Waste management demands professionalism and technology. The use of biotechnology should help in the treatment and disposal of waste; information technology in city planning and service delivery options; energy saving and cleaner technologies in urban transport; and high-tech, low-cost materials in building and housing. Technology can be used to implement userbased charges for access to roads, electricity and water. Economies of scale can be achieved by sharing service areas such as billing and tariff collections, cable laying and maintenance.
  • China envisions three big urban clusters — along the Pearl River, the Yangtze River, and the Beijing-Tianjin corridor — each with 50 million people or more. The National Capital Region, aiming to relieve pressure on Delhi, needs to be similarly treated as a Common Economic Zone, with a rationalized inter-State tax structure, uniform financial/banking services, telecom facilities and power supply, an integrated education and health policy, rail and road transport network, water supply and drainage system.