Environment ministry use bureaucratic loophole to ease ban

The Union environment ministry has, using a bureaucratic loophole, lifted a ban on expansion and setting up of factories in eight critically polluted industrial  belts. The moratorium was imposed based on the performance of the clusters on a Comprehensive Environmental Pollution Index (CEPI) developed by the Central Pollution Control Board and introduced by the United Progressive Alliance (UPA) government in 2009. It measures industrial belts on a scale of zero to 100.  A reading above 70 is termed “critically polluted”and a moratorium imposed on expansion. After imposing a round of moratoriums on many industrial belts, the UPA government continued to review improvements undertaken to reduce pollution. Industrial belts that improved with time were periodically taken out of the banned list.

But eight of these showed worsening trends: Ghaziabad (Uttar Pradesh), Panipat (Haryana),

Singrauli (Uttar Pradesh and Madhya Pradesh), Vapi (Gujarat), Indore, (Madhya Pradesh),

Jharsuguda (Odisha), Ludhiana (Punjab) and Patancheru-Ballaram (Andhra Pradesh). InSeptember 2013 the government noted, “The CEPI scores indicate (for the eight clusters) thateven after a period of two-and-a-half years of implementation of action plans, there is noimprovement in the environmental quality.” The moratorium on these eight industrial clusters remained.

With pressure building within the UPA to ease the moratorium, the environment ministry asked the Central Pollution Control Board to review the index itself and come up with another formulation within four months. Now, the NDA government has cited a delay in the review of the index to allow new factories and expansion in the polluted industrial zones on merit, practically doing away with the moratorium.

The government order of June 10 reads, “The report with respect to the entire CEPI concept i.e. taking into account all constituents as originally formulated in 2009, is yet to be received from CPCB. It is felt that re-assessment of CEPI  taking into account all its constituents as originally formulated in 2009 are a must before taking a view on re-imposition of moratorium in any centrally polluted area.”It adds, “It has, therefore, been decided to keep in abeyance until further orders…to the extentnit related to the re-imposition of moratorium in eight centrally polluted areas till CPCB reassessesthe CEPI taking into account all constituents of index as originally envisaged in 2009,” the order further stated.

Till the CEPI index is reviewed, the ministry will consider environment clearance of all the projects in these areas. The environment ministry has asked the CPCB to prepare a report on CEPI index within a year instead now which would permit the government to clear expansion and new industrial activity in these zones till the revised index is decided.

Source- Business  Standard

Monsoons likely to be Critical Factor for the Indian Monetary Policy

The  farm sector accounts for 14 percent of India's nearly $2 trillion economy, with two-thirds of its 1.2 billion population living in rural areas.  Half of India's farmland still lacks access to irrigation & depends on the vagaries of the monsoons.  

Poor rains generally hit summer crops such as rice, soybean, corn and cotton, raising food prices and pressuring economic growth that has nearly halved to below 5 percent in the past two years.  Rains are vital to rejuvenate  the  economy which is  battling its longest economic slowdown since the 1980s and to cool inflation that has averaged nearly 10-11 per cent for the past two years.

The Met Department has predicted  that the  rains will be 95 per cent normal this year and it is likely to revise its estimate later  in end June  according to the movement of the rainfall. If  official rain forecasts come true  then inflation  likely  to fall  below 8 per cent .

The likely fall in inflation, coupled with stability in the rupee and a slight pick up in growth    may lead RBI to be more balanced in its monetary policy making. The RBI has been repeatedly saying it will balance out concerns between the sagging growth and inflation even though it considers reining in the prices as a key objective. The RBI has raised its key rates three times  since  last September but took some growth-oriented measures like the decision to lower the SLR, which is likely to release an additional Rs 40,000 crore  ( $6.5B) for lending.

India's Factory output falls to the lowest level in over 2 years

India’s industrial production dropped an annual 1.9% in February as manufacturing contracted 3.7%, the sharpest drop in 28 months, while exports tumbled 3.2% in March, recording its second straight month of contraction. 

Rating agency Fitch affirmed India’s sovereign rating at “BBB-” with a stable outlook and it  expects the country’s economic growth to accelerate from 4.7% in FY14 to 5.5% this fiscal and 6% next year. Earlier this week, the International Monetary Fund had forecast India’s GDP growth to accelerate from 4.6% in FY14 to 5.4% in FY15 and further to 6.4% in FY16. 

In Q3 of FY14, the trade deficit stood at $28.6 billion against $29.9 billion. The reduction in trade deficit in Q3 suggests further improvement in the (current account deficit)  for  Q4.  If services exports, remittances and investment income remain broadly unchanged in Q4, CAD for fiscal 2014 could fall below 2% of GDP — for the first time since fiscal 2008-09. Exports for all of FY14 stood at $312 billion against the targeted $325 billion but higher than $300 billion in FY13, a growth of 4%. 

Importantly, given the prolonged slump in domestic demand, exports of goods and services as a share of GDP was projected to rise from 22% in FY11 and 24% in FY13 to 24.9% in FY14, as per advance GDP estimate released a few weeks ago. Imports, however, were projected to account for 28.8% of GDP in FY14, down from 30.7% in the previous year. 

As for industrial output, electricity generation grew at its fastest since September last year at 11.5% in February and mining posted a 1.4% expansion. These were, however, not enough to offset a 3.7% contraction in manufacturing, stoked by a demand collapse as the industrial production slumped from 0.8% growth in January. In six of the 11 months to February, industrial production witnessed contraction.