There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Forty Fifth Edition we are covering the following news:
- Brexit and Covid slash UK exports to the EU
- Alternative Smart Wall offered by Joe Biden
- What may have caused Uttarakhand flash floods?
- Four-day week likely for some firms as final rules of labour codes are set
- Access to G-secs directly by Retail Investors
Brexit and coronavirus have slashed the volume of surface freight leaving Britain for the European Union by 68 per cent from last January. The stark drop in goods carried on ferries and through the Channel, the tunnel was registered by lobby group the Road Haulage Association (RHA) after a survey of its international members. RHA chief executive Richard Burnett has sent a letter to minister Michael Gove warning that the new checks required since Britain fully left the EU’s single market on January 1 were deterring exporters from shipping to the continent. He said the government had only hired around 20 per cent of the extra border staff needed to process the extra paperwork. Britain sent around £294 billion ($403 billion, 335 billion euros) of goods to the EU in 2019, accounting for around 43 per cent of its total exports, according to official figures. The situation threatens to get worse in July when Britain implements its full range of physical border checks. Britain and Europe have imposed tight travel restrictions during the latest wave of the pandemic, with France temporarily imposing a total ban on vehicles entering from Britain shortly before Christmas. Truckers heading over the Channel to France now require a negative Covid test before making the crossing. While the consequences of Brexit and the pandemic were individually evaluated by everyone, the effects that both of them together made was always a variable which has not started to come out of the shadow. For once, we might think that the pandemic is almost over and everything is back to normal but cutting off a major partnership while half of the population struggles with an illness isn’t something a nation can recover from easily. The fall takes the country years back of the development and makes it difficult to come out of suddenly. At the same time, the worst struck are the poor ones who might have entered debt traps that could continue for their entire lives and maybe even to the next generation. One opinion has been that it would have been rather sensible to consider something so huge like Brexit maybe once the economies would have recovered from the pandemic fall but at the same time, we cannot ignore that such extreme measures don’t come with a pause and might be impossible to be voted on the next time.
In 2019, the USA declared a national emergency to fund construction of a border wall along the US-Mexico Border citing “invasion” of drugs and criminals from Mexico. The Mexico–US barrier is also known as the border wall is a series of vertical barriers along the border intended to reduce illegal immigration to the US. But the new US president Joe Biden stopped the construction of the much-published “border wall” between the US and Mexico as a brick and mortar wall between them presents a variety of logistical, environmental and operational challenges, many of which could be circumvented through the implementation of digital border security technology a “smart wall”. Hence, an alternative Smart Wall has been proposed to replace the physical and armed patrolling with advanced surveillance technology at the border. The concept is not new and the novelty of it cannot be directly associated with Biden. As the U.S.-Mexico border wall proposed by Donald Trump envisaged this concept. A technology firm was sought to be hired by the Trump administration, and it was indicated that artificial intelligence shall be used at a novel scale to complement the steel barrier i.e. border wall.
The concept of ‘smart wall’ technology could solve border security issues without the need for a physical barrier. It would use sensors, radars, and surveillance technology to detect and track border break-ins, and technology capable of performing the most difficult tasks dedicated to border security. Along with surveillance towers and cameras, thermal imaging would be used, which would help in the detection of objects. The system would even be capable of distinguishing between animals, humans, and vehicles, and then sending updates to handheld mobile devices of the patrol agents. Moreover, these technologies are cost-effective, less harmful to the environment, require a lesser amount of land, speedier deployment and overcome the limitations of terrain.
Hence, the concept of smart walls has been introduced in the US. India should also explore the possibilities of using smart walls to protect borders as it has been struggling to curb cross-border.
On February 7, 2021, the sudden flood in the Dhauli Ganga, Rishi Ganga and Alaknanda rivers triggered widespread panic and large-scale devastation in the high mountain areas which led to the Dhauliganga dam being completely obliterated and at least 31 people have died, 165 people are missing and many more are feared to have died, as the rescue operation continues in Chamoli district of northern Uttarakhand state. The deluge first smashed into a small dam, gathering more energy as it grew heavier from the debris it collected along the way. Then it smashed into a larger, under-construction dam and gathered even more energy. Two power projects – NTPC’s Tapovan-Vishnugad hydel project and the Rishi Ganga Hydel Project – were extensively damaged with scores of labourers trapped in tunnels as the waters came rushing in.
The reason for the flood remains unclear. Whether it was a GLOF (glacial lake outburst flood) or a cloud burst or an avalanche, the impact of climate change or “development”, scientists are not sure what triggered the sudden surge of water. An unusual reason the villagers suspect could be a radioactive device which was lost in the region years ago during a secret expedition to Nanda Devi, and the heat produced by that device could have led to the disaster as they noticed a pungent smell as well.
Whatever the reason maybe it is not just climate change but is human-induced as well. High-intensity stone quarrying, frequent blasting of mountains and digging of tunnels through the base of the fragile mountain system for the back-to-back under-construction dams, each on the Rishi Ganga and Dhauli Ganga rivers, have played havoc with the local ecology. There is no doubt that the impact would have been far less with more prudent development of projects in the region. Environmentalists who have observed and covered the region extensively said that the cascade of dams and developmental projects are the cause of the frequent disasters in the Himalayas.
Development was needed for the enhancement of the impoverished region, but experts said that the paradigm shift was necessary so that executing such projects take into account the ecological fragility of the mountains, and the unpredictable risks posed by climate change. This disaster may well be nature’s way of telling humans that it can strike back when the ecological balance is destroyed. If the present pace of Himalayan destruction continues, a future disaster will be devastating. Nature will strike back again. Damaging today and repairing tomorrow is not an option. India has only one option — save the Himalayas.
Companies will be able to provide even a four-day week to employees as the labour ministry would provide flexibility in this aspect in the final rules to be brought out under the labour codes. However, the working hours cannot go beyond 48 hours. Those who give a four-day week will have to provide three consecutive holidays after that. So, there would be flexibility for employers to give a four, five or six-day week. However, there must be an agreement between employers and employees over a four-day week, it cannot be thrust on employees.
The four labour codes were passed by Parliament in September. The ministry came out with the first draft of the rules in December and received comments in January. Most of the states are in the process of framing the rules. Some of the major states such as Uttar Pradesh, Punjab, Madhya Pradesh would be coming out with the draft of their rules by February end. It was also disclosed that concerns were raised during tripartite talks on draft rules regarding spread over time. The draft rules on the Code on Occupational Safety, Health and Working Conditions proposed 12 hours of spread overtime in an establishment in a day, up from 10.5 hours currently. The spread overtime refers to working hours, besides the time for lunch and other breaks. Labour secretary in his statement also mentioned some changes as follows. The number of people who are contributing more than Rs 2,50,000 a year to employees’ provident fund (EPF) is 1,23,000 out of total 65 million subscribers, which is a very small number. The Budget brought these people under the tax net. The decision will stop high net worth individuals from misusing a welfare facility and earn wrongfully tax-free income as assured interest return. The labour secretary also said that four major surveys have been commissioned by the labour bureau on migrant workers, domestic workers, transport workers and professional workers. These would-be household surveys to be conducted by the labour bureau. These changes introduced with the incoming flexibility for employers could also mean a better lifestyle for the employees and more time for personal growth and also the mentioned tax evasion would be removed thus higher revenue for the government.
In a monetary policy review, The Reserve Bank of India (RBI) said that it will give retail investors direct access to the government securities trading platform. It means retail investors can directly open their gilt accounts with RBI, and trade in government securities through the ‘Retail Direct’ facility and can access both the primary market and secondary markets without the help of intermediaries. Currently, direct G-secs trading is not popular among retail investors. Retail investors are non-professional investors who buy and sell securities or funds that contain a basket of securities such as mutual funds and Exchange Traded Funds (ETFs). The g-sec market is dominated by institutional investors such as banks, mutual funds, and insurance companies. These entities trade in lot sizes of Rs 5 crore or more. So, there is no liquidity in the secondary market for small investors who would want to trade in smaller lot sizes. However, in the current proposal, the RBI intends to make the whole process of G-sec trading smoother for small investors and hoping to create a market of small investors who will invest in these instruments. The Governor of the RBI Shaktikanta Das described this as a “major structural reform”. Let’s take a look at the significance of this reform.
Direct retail investment in G-secs will broaden the investor base and provide retail investors with enhanced access to participate in the government securities market. This structural reform will place India as the third nation in the world after the United States and Brazil, where retail participants can take direct exposure to the government bond market. And allowing direct retail participation will promote financialisation of a vast pool of domestic savings and could be a game-changer in India’s investment market. Most importantly, it will help the smooth completion of the government borrowing programme for 2021-22. The central bank has been tasked with managing a whopping Rs 12 lakh crore in government borrowing target next fiscal.
Moreover, this is not the first time that the RBI has moved to improve retail participation in government securities. It has announced several initiatives for this in the past but it has not enhanced much. But this move will likely change the dynamics of the bond market in India.