Huge loss! natural disasters cost India $79.5 billion in economic losses in last 20 years: UN
With global environmental organizations constantly warning dire consequences of climate change, a study released by the UN Office for Disaster Risk Reduction has revealed that disaster-related economic losses globally stood at about $3 trillion in the last two decades. India has been among the top five countries with absolute economic losses of about $79.5 billion between 1998 to 2017.
The US topped the list with $945 billion of disaster-related economic losses during the period, followed by China ($492 billion), Japan ($376 billion) and India ($79.5 billion). At least 91% of all major disasters recorded from 1998 to 2017 were climate-related, recording 7,255 events during the period, showed the report titled as ‘Economic Losses, Poverty and Disasters 1998-2017’, which evaluated total disaster-related economic losses and fatalities in last two decades.
While high-income countries posted losses from 53% of disasters between 1998 and 2017, low-income countries only reported them from 13% of disasters. Therefore, no losses data was available for about 87% of disasters in low-income countries, it added.
During the period disaster-hit nations registered economic losses of $2.9 trillion, of which climate-related disasters accounted for $2.2 trillion or 77% of the total, as per the report, which compared with the total losses of $1,313, due to climate-related disasters in the previous two decades (1978-1997). This is up from 68% of losses reported between 1978 and 1997. Overall, reported losses from extreme weather events rose by 151% between these two 20-year periods, it added.
Iran sanctions: India ups imports from Saudi
Indian refiners have sought additional four million barrel of crude oil from Saudi Arabia in November, a move that might partly compensate for any fall in their imports from Iran consequent to the US sanctions on the Persian Gulf country to be effective November 4.
India’s oil imports from Saudi Arabia have been to the tune of 25 million barrels per month in recent past.
While reports had said India might reduce oil imports from Iran to nearly zero due to the US sanctions, the government had said earlier this week that two state-run refiners — IOC and MRPL — have contracted 9 million barrel for crude from the country for November.
Reliance Industries, Hindustan Petroleum, Bharat Petroleum and MRPL are the companies which are looking to procure additional one million barrel each from Saudi Arabia, according to agency reports.
The development comes close on the heels of Saudi Arabia claiming it can replace Iranian oil which will be unavailable due to renewed US sanctions, a claim Iran has termed ‘exaggerated’.
Iran, which has emerged as the third largest exporter of oil in recent quarters, exported 8.1 million tonnes of crude to India in Q1FY19, compared with 5.6 mt in the year-ago quarter. Private refiners have been more aggressive in sourcing Iranian crude than the state-run firms.
US President Donald Trump had withdrawn JCPOA, also called the Iran Nuclear Agreement, which was agreed upon in 2015 with the UK, France, Germany, Russia, China wherein Iran was to curb its nuclear programmes in return of lifting financial sanctions. This also means that oil imports from the Persian Gulf country will be affected starting November 4. However, two Indian refiners have already placed orders of 9 million barrel of crude from Iran for November.
India has been hit by both rising crude oil prices and a weakening rupee which have also resulted in sharp spike in domestic retail auto fuel prices. While the retail fuel prices are determined taking into account international product prices, these prices move in tandem with crude oil prices.
To keep the Iranian oil flowing to India, a payment mechanism in rupee terms is also being explored as was done during the last sanction regime on Iran which ended in 2015. Last week, an inter-ministerial panel under commerce and industry minister Suresh Prabhu asked the ministry of petroleum and natural gas to explore payment mechanism to Venezuela, Russia and Iran in rupee terms in order to curb the currency’s volatility.
M&AS: CCI amends combination rules on withdrawal, refiling of notices for clearance
In a bid to provide faster disposal of merger and acquisition cases, the Competition Commission of India (CCI) on Wednesday amended the combination regulations with regard to withdrawal and refiling of notices seeking approvals.
In July this year, the fair trade regulator had invited comments for the amendments in the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations.
In case the notice is withdrawn, the fee already paid would be deducted from the amount payable in respect of the new notice given by the parties to the combination provided the new notice is given within three months from the date of withdrawal. With amendments coming into effect, the parties now can offer modifications to the combination even while responding to the show cause notice.
Previously, combination rules allowed parties offer modifications before CCI forms a prima facie opinion regarding the proposed merger and issues show cause notice.
Combinations beyond a certain threshold mandatorily require approval from the regulator, it said.
Experts urge GOM, GST council, to increase CESS on tobacco products
Public health groups along with doctors and economists have urged the Group of Ministers in the GST Council to increase cess on tobacco products to raise the much-needed disaster remediation revenue. Experts said global experience has shown that such a tax increase will decrease tobacco use and expand government revenue. Imposing additional cess on all tobacco products, including bidis, will be a huge win for public health and revenue generation, Bhavna B Mukhopadhyay, chief executive of Voluntary Health Association of India, said.
“This move will provide much-needed relief to the people of Kerala while motivating millions of tobacco users to quit and preventing youngsters from initiating tobacco use,” Mukhopadhyay said. WHO recommends that countries impose tobacco excise taxes that amount to at least 75 per cent or more of retail price to achieve the dual objective of reducing tobacco use and increasing government revenue.
The overall tax rate on all tobacco products in India is still very low compared to other middle-income countries, including those in South Asia. Tax burden on bidis post-GST is only 22 per cent compared to 53 per cent for cigarettes and about 60 per cent for smokeless tobacco. All of these are well below the WHO recommended rate of 75 per cent, Rijo John, economist and health policy analyst, said.
It is critical that the 28 per cent GST rate category be retained for demerit or sin goods such as tobacco. This serves two purposes, as it firstly sends out a strong public health message discouraging the consumption of sin goods. Secondly, having a separate sin tax category decreases the pressure on the other three rate bands which are applicable to essential commodities allowing the government to have a relatively lower standard GST rates for those items while still maintaining a revenue neutral position, John said.
According to John, “Compensation cess constitutes more than two-thirds of the total tax revenue from cigarettes. As these cesses were not revised for more than a year, cigarettes have become much more affordable compared to the time GST was implemented and it warrants significant upward revision of cess rates applied on cigarettes.”
Experts, however, rued that taxation levels on bidis have remained low based on the argument that bidis are a poor man’s pleasure and higher taxation will affect the livelihood of millions who depend on the trade for their sustenance. Bidis contribute to a majority of the 10 lakh deaths in India every year as well as the staggering economic burden caused by tobacco use and tobacco-related diseases.
“There is ample evidence about bidis being the killer and not the pleasure of the poor. It should be made unaffordable for the poor to save them from a lifetime of misery and suffering,” said Harit Chaturvedi, chairman, Surgical Oncology, Max Health Care. Since tobacco taxes are particularly effective in reducing tobacco use among vulnerable populations, higher taxes on bidis will protect India’s weakest strata.
Whopping Rs 1 lakh crore npa resolution of stressed power projects possible; banks’ haircut to be this much
A successful resolution of non-performing assets worth Rs 1 lakh crore in coal-based power projects is possible with a 40%-60% haircut, a report has said. India’s coal-based power projects are staring at least Rs 3.8 lakh crore worth of NPAs.
If lenders are willing to take 40-60% haircut, they can be able to resolve as much as Rs 1 lakh crore of debt stuck in coal-based power projects, rating agency Crisil said, adding that it will also enhance the viability of these projects on a sustained basis.
“The haircuts and safeguards, if implemented, would ease debt servicing for these capacities and will, in turn, lower their cost of generation by 30% to Rs 3.7 per unit for the next 5 years. That would be well below the current average cost of power procurement for state distribution companies (discoms),” Subodh Rai, Senior Director, Crisil Ratings said.
The Crisil analysis is based on the assessment of 16,000 MW power assets, which account for nearly two-thirds of stressed and operational coal-based capacities. Power projects, which became stressed due to several reasons including costs over-runs, inadequate PPAs and fuel supply agreements, aggressive bids etc, came under the strict scrutiny of the Reserve Bank of India (RBI) for timely NPA recognition and resolution.
As per RBI’s February 12 circular, banks were asked to take stressed accounts to National Company Law Tribunal under Insolvency and Bankruptcy Code (IBC) procedure if they failed to resolve NPA in these accounts in 180-days. On August 27, the RBI-mandated 180 day deadline ended for as many as 34 stressed power projects, many of which were staring at NCLT proceedings. These power projects turned NPAs on March 1.
However, the Supreme Court on September 11 provided interim relief to power companies and asked banks and the RBI to maintain status quo. The next SC hearing is scheduled for November 11. Meanwhile, lender of stressed Prayagraj Power Generation Company Limited (PPGCL) struck a deal with Tata Power, taking 50% haircut.
CAG Rajiv Mehrishi says 100% audit possible, but this needs to be done
CAG Rajiv Mehrishi Wednesday said the official auditor will be able to conduct 100 per cent audit of expenditures incurred and revenues earned by the government provided all the transactions are conducted on IT platform. Emphasising on the need for greater independence of the institution of the Comptroller and Auditor General of India (CAG), Mehrishi quoted B R Ambedkar saying that the father of the Indian Constitution had recognised the value of the institution and its independence.
Stating that at present the government is incurring huge expenditure on welfare projects, Mehrishi said it is essential that every rupee spent is properly accounted for. Speaking at the 29th Accountants General conference, he said the 158-year old CAG is constantly reviewing its systems, with a focus to improve audit effectiveness and changing paradigm of the government.
“If we can ensure that all transactions of the government are on IT platform, and are non-repudiable then you can conduct audit of 100 per cent of transactions and move towards a goal, that we have always aspired for, which is assurance.”Even the United Nations, who we audit, seeks assurance and we ought to, at some stage, be able to provide it to the government,” Mehrishi said.
He said Information Technology (IT) touches upon every aspect of people’s lives today either directly or indirectly and the government’s vision of ‘Digital India’ will further catalyse it. “It is more of a challenge than an opportunity for us in the audit and accounts department. The challenges are we have to now learn to audit IT systems for their safety, security, robustness and auditability,” he said.
Stating that the task before CAG though important is not always pleasant, Mehrishi said in accordance with the powers vested on him, the office of the CAG has to carry out the functions without fear or favour in the interest of the nation. “Our motto is ‘dedicated to truth in public interest’,” he said.