The IITs have lost their way

anurag mehra

The ambience within disregards basic science in favour of jobs in finance or software

The Indian Institutes of Technology were founded almost five decades ago with the objective of providing technological leadership to a new and resurgent India, driven by Jawaharlal Nehru’s deep commitment to science-led development.

Whether they provided technological leadership to India or not remains debatable given the large numbers of their (under)graduate students who have migrated abroad or shifted to non-technical careers.

India has deviated substantially from the Nehruvian vision. The undergraduate education at IIT and the academic culture inside the institutes are being reshaped to an unprecedented degree by factors that operate at points of entry and exit — the former related to the joint entrance examination (JEE), and the latter arising from placement patterns dominated by non-technical jobs.

Early start

The core challenge at the entrance level has to do with the overt and subtle effects of coaching factories. Children are often enrolled for four to five years of coaching, starting as early as middle school. The result is much greater burnout, loss of creativity, and eventual loss of interest in science and technical subject matter, though coaching helps overcome the multiple deficiencies of school teaching in India to some degree.

However, the negatives become apparent when students enter high school, and succeeding in competitive examinations becomes an all-consuming goal. At one level, the sheer volume of work leaves little time for other interests and the joys of a normal adolescent life. The regimentation of solving large ‘banks’ of problems leaves little room for creativity or curiosity.

Students become adept at learning how to answer questions but are at a loss on how to ask questions — especially ones that matter. The intense, competitive pressure creates an atmosphere ripe for generating severe anxieties, and often a deep sense of inadequacy and humiliation. To be sure, this hyper-competitive experience is not different from the ordeal that students in several other Asian countries undergo. Once they enter the IITs, many students desire to rediscover normalcy in some sense.

The initial question students confront is why and what should they learn. First, unlike in the past, almost everyone plans to take a job and not go to graduate school. Second, the jobs they aspire to are in finance, consulting, software, and more generally, ‘managerial’ positions. These jobs rarely have any subject-related technical content but their pay packages are substantially higher than for technical jobs. There are far fewer openings for core technical jobs.

Jobs and advice

Most job offers come from business analytics firms and finance companies where the role is to crunch numbers on spreadsheets. While companies in these service sectors are usually satisfied with their IIT recruits, students, especially ones with middling academic records, are happy to do this, and usually enrol in an MBA programme later on. They have a certain facility with maths (which IIT-JEE selects for), are tech-savvy, and fairly quiescent as long as the job pays well.

Out of the small number of students who end up taking core jobs in their technical branch, most are often embittered about the lower paying — and lower status — technical jobs. From a student’s perspective, there is little point in mastering technical material relating to, say, mechanical, chemical, or civil engineering, or even physics or chemistry.

As students make their way through the first year, they run into that great fount of established wisdom: seniors. They rapidly pick up tips on what kind of jobs pay best, the general irrelevance of scientific and technical material, how to traverse the academic system with minimal effort and the importance of participating in all kinds of personality development activities (the crowning glory being a ‘student festival’ manager).

The “greed is good” mantra that students pick up while dreaming about pay packages also comes loaded with ‘legendary’ tales about how an alumnus made so much money in his first job or which startup was sold for how many millions to a bigger software company. These legends merely serve as a rationalisation for shirking academic work and using unfair means. As a result, students in their second year are writing business plans or planning to do some project or short course in business school while developing a disdain for learning technical subjects and basic fundamental science material such as physics, chemistry, and mathematics.

Underwhelming institutions

In the end, only those few students who have, relatively speaking, not been affected by this discourse retain the ability to continue building their technical knowledge. Sadly, poor teaching and lacklustre faculty have also contributed to this apathy.

Viewed from the outside, the IITs have managed to retain a glow because every graduating student finds a placement; students rarely remain unemployed. However, that says more about the quality of the rest of Indian higher education than the IITs. The reality is that these institutions are producing engineers, using large amounts of public money, who rarely use the knowledge acquired in their IIT education.

One could argue that a large number of students graduating with engineering degrees in the US also end up in non-technical fields, prized more for their analytical skills than domain knowledge. However, unlike US institutions, the IITs have shown very little will and the means to tackle student disinterest and faculty apathy, and quell the entire academic malpractices syndrome.

India’s policymakers need to ask some hard questions. If the IITs are to regain an ambience that generates a zest and excitement for learning and knowledge creation, how many science and engineering graduates does India need in the classical engineering disciplines? Can a more interdisciplinary restructuring of the undergraduate programme reignite interest in academic work?

Over the long term, the questions are even harder: How does the country drastically overhaul primary and secondary education, given that what happens upstream is bound to affect the flow downstream? How does India build a more dynamic manufacturing sector that will facilitate better use of the immense technical talent the IITs were set up to provide?

This article is by special arrangement with the Center for the Advanced Study of India, University of Pennsylvania. The writer is a professor of chemical engineering at IIT-Bombay and a Summer 2014 CASI visiting scholar

A new index to measure social progress

K. Srinath Reddy 

Is Gross Domestic Product (GDP) an adequate measure of a country’s development across many dimensions? This has been debated vigorously in recent years. The discontent with GDP stems from the fact that it focusses exclusively on economic growth. Even there, it does not capture the level of inequity which can exist in a society despite overall economic growth. The inequity can in fact even be exacerbated by it. More importantly, it pays no attention to the social and environmental measures of development which are as important as economic development. Indeed, the United Nations has identified three pillars on which the post- 2015 Sustainable Development Goals (SDGs) must rest: economic, social and environmental. 

Alternate measures
Several alternative measures have been proposed to capture the social dimension of development, combined with or independent of economic indices. Bhutan has embraced and espoused the concept of Gross National Happiness. A World Happiness Report is now periodically published from the Columbia University which compares self-reported levels of happiness of people from different countries. A composite Wellness Index was proposed by noted economists Stiglitz, Sen and Fitoussi in response to a request from the then President of France, Nicolas Sarkozy, for a measure of development that looks beyond GDP. A Global Multidimensional Poverty Index was developed at Oxford to gauge inequity within and across societies.

However, none of these has really caught on because economists, industrialists and politicians alike are conditioned to place a high premium on economic development as the measure of progress and do not like to see the clarity of a single measure like GDP cluttered by a host of other indicators they view as imprecise or even irrelevant. So, an index of social progress is needed which does not try to displace GDP (not yet anyway) but has additive value. Such an index can be used to remind political leaders that their bifocal vision must accommodate both economic and social progress as being important for a country, recognising, of course, that these two tracks are closely interlinked and sometimes inseparable.

Such an index of social progress has recently been created by a group of academics and institutions constituting the Social Progress Imperative (www.socialprogressimperative.org). This index has three major domains: Basic Human Needs, Foundations of Wellbeing and Opportunity. Each of these has several clusters of specific indicators (as shown in the table).

The environmental dimension is partly incorporated into the Social Progress Index (SPI) as a cluster of indicators related to ecosystem sustainability. While there can be debates on which other indicators could have been included in any of the clusters, the SPI does provide a list of key areas which need to be tracked and acted upon to ensure a higher level of social progress. The index is still evolving, with validation studies being conducted on data from different countries. The authors have extended an open invitation to groups from anywhere in the world to use their data sets for validation and suggest refinements.

The designers of this index draw our attention to three overarching findings of their study so far: social progress is distinct from economic development, though correlated with it; some aspects of social progress are more closely related to the level of economic development than others; countries have relative strengths and weaknesses in social progress, both across the major dimensions and across components within the dimensions.

Of the three domains, Basic Human Needs is best correlated with per capita GDP, Foundations of Wellbeing being intermediate and Opportunity the least so. However, in each domain there is variability in the degree of correlation between the individual components and per capita GDP. As the developers of SPI affirm, the index offers a new tool to explore the complex two-way relationship between economic and social progress. At the same time, it provides a metric for comparison of countries, and States within a country. 

Inter-country comparisons
In inter-country comparisons, the top three countries were New Zealand, Switzerland and Iceland. Not surprisingly, Netherlands, Norway, Sweden, Finland and Denmark feature in the top 10. India scored lower than the other four from the BRICS group because of lags in areas such as water, sanitation and access to higher education. In specific indicators, there is variability across these countries. For example, China lags in personal rights and Brazil in personal safety. Costa Rica has an SPI close to that of far richer countries like Spain and Italy. Costa Rica’s outstanding health status and access to education may be related to investment priorities (it has no defence budget) and social harmony. For the present, India need not concern itself with comparisons with other countries or even debate on how accurately the individual components of the index measure social progress. It would help if the SPI indicators serve as a checklist to monitor our progress over time in each of these important areas of human welfare.

Even as the country commits itself to move on the fast track of economic growth, it must be mindful of the need to invest in improving the social indicators as well. We may continue to measure GDP if that is still considered the talisman of economic progress by the worlds of politics and finance, but we must also simultaneously measure social progress lest we end up as a soulless society characterised by gaping inequality and glaring social backwardness despite gaining wealth. Let GDP and SPI be the inseparable Gemini twins that herald our ascent to higher levels of balanced development.

(K. Srinath Reddy is president, Public Health Foundation of India. The views expressed are personal.)

Less activism, more research

Samar Verma and Anshu Bharadwaj

The recent Intelligence Bureau report on NGOs has generated a heated debate. The report claims that foreign-funded NGOs’ activism is a threat to internal security as it stalls projects and lowers GDP growth.

While millions of Indian NGOs continue to make contributions in multiple ways, in recent times the mention of an NGO unfortunately brings to mind the image of an activist organisation, which leads protests and is often perceived as obstructing building of coal, hydro and nuclear power plants. Several NGOs, for instance, actively campaigned against coal mining and coal power plants even as Delhi and Uttar Pradesh faced a major electricity crisis. The Kudankulam nuclear plant, built at a cost of nearly Rs. 17,000 crore, could not be commissioned for several months even as Tamil Nadu reeled under power shortage. 

Other options?
No doubt, citizens voices must be made to count and they reflect reason based on scientific enquiry. However, it is also important to provide alternative solutions rather than merely protest against public policies. For instance, India needs to increase its electricity generation by at least four times to ensure energy security. A legitimate question therefore to ask is: if we abandon coal, nuclear and even hydro power projects, what are the options to meet our soaring energy demands? Sadly, not many NGOs have offered feasible alternatives based on robust evidence. Raising concerns at construction sites of energy plants is the first step, but it is inadequate for a debate on energy policy.

While the distinction between an ‘activist’ NGO and a ‘think tank’ is not always clear, the latter is an institution with a stronger focus on research. Unfortunately in India, since all NGOs are required to be registered under the same set of laws, legally and in public perception think tanks and the more activist NGOs are often perceived to be the same. The goal of think tanks is to engage in evidence-based policy research in subjects of national importance. With that as basis, they provide pragmatic policy options. Of the over 3 million NGOs, only a handful would qualify as ‘high-quality think tanks.’ The fact that leading international think tanks recently commenced operations in India highlights the relative paucity of good Indian think tanks. The National Planning Commission was envisioned as a think tank to ensure that policymaking was backed by sound analysis and research.

The demand for good-quality evidence for decision-making is increasing because of a growing public scrutiny of government actions and demands for inclusive development. As our Prime Minister recently reminded us, India needs more organisations which can undertake objective, high-quality policy research. Such analyses often use sophisticated, multi-disciplinary tools in economics, mathematics and statistics. For instance, investigations into Game Theory by RAND Corporation, a leading U.S. think tank, led to strengthened mathematical basis and applications of the theory into areas such as auctions, international trade, and even war scenarios. The question then is: why has the supply of think tanks not matched the demand for good-quality information and analyses?

A major part of the answer lies in the quantum and nature of funding that is available to NGOs, including think tanks, and the related concerns around international funding. It’s a fact that several NGOs obtain funding from international sources. This inevitably causes public perceptions about the “motivations” and presence of a “foreign agenda.” However, it is important to distinguish source from influence — foreign funding by itself doesn’t imply the presence of an agenda. As a starter, the largest recipient of foreign funding is the government itself — from multilateral and bilateral sources — and yet the government can remain sovereign. As for NGOs, the funding received by them amounts to just about 0.5 per cent of the Government of India’s budget and 0.1 per cent of India’s GDP. It would be preposterous to believe that this paltry level of funding would influence India’s policy agenda. Moreover, it is wrong to assume that all foreign funding is “bad.” Some of the top institutions in this country have been set up using seed funding from foreign donors. For instance, the Ford Foundation and Rockefeller Foundation played an important role in heralding India’s Green Revolution. The multi-donor Think Tank Initiative (TTI) programme managed by the International Development Research Centre (IDRC) is a unique and bold experiment, which provides long-term, core and unrestricted support to 16 South Asian think tanks (including nine in India) to strengthen policy research.

The bigger question then is: why are Indian think tanks forced to seek funding from foreign sources? The simple answer is that they find it difficult to raise the desired support both from government and domestic corporate philanthropy. The government is the main customer of knowledge-based products from think tanks. There is ample evidence to demonstrate that the government is increasingly finding great value in research from good think tanks, especially in developing analytical models, data collection and analysis, and often puts it to good use through public policy announcements. However, government funding is severely constrained by rules and regulations and is inadequate to cover the total cost of undertaking high-quality research. It also has a high transaction cost, which think tanks are often unable to bear. On the other hand, corporates seem to prefer supporting direct intervention causes such as poverty, education, health and gender, which have tangible impact. They often don’t seem very comfortable in supporting think tanks, perhaps because the outputs are less tangible and have impacts only in the long run. As a result, think tanks are forced to rely on international funding. But that dependence has not necessarily led to foreign influence. In fact, especially in the case of core funding support, such as that provided through the TTI, such funding has fundamentally strengthened autonomy, operational and research capabilities in think tanks and has enabled them to be on the path of institutional sustainability.

A deeper malaise
Public concerns and government anxiety with foreign funding is therefore at best a symptom of a larger and deeper malaise that has structural roots. The government must begin to invest in building knowledge and research institutions significantly more than they have done in recent decades. And building institutions requires a bold rethink. As the Prime Minister has rightly said recently, the country does need outstanding think tanks, which can strengthen government hands for better-informed public policies. However, the government needs to come forward and invest long-term in think tanks. Building world-class institutions requires a consistent, systematic support to a research infrastructure as much as venture capital investment in think tanks. Can India create a national or regional venture capital/entrepreneurship fund to invest long-term and build home-grown global think tanks? The TTI model could be a useful guide.

Let’s therefore turn the question on its head. If foreign foundations can generously support select think tanks, isn’t it time for our own government and corporates to do the same? The IB would have at least one less report to write.

(Samar Verma is senior programme officer, International Development Research Centre, New Delhi, and Anshu Bharadwaj is executive director, Center for Study of Science, Technology and Policy, Bangalore. The views expressed are personal.)

Environment and Development

Ramaswamy R Iyer
There are some worrying signals from the new government in New Delhi that it could compromise on environmental concerns in the pursuit of more rapid growth: clearances could be given quickly (i e, environment protection requirements will be loosened), the Land Acquisition Act could be diluted and more.
It may be more useful if we shake ourselves free of the obsession with GDP growth rates and try instead to make India a caring, humane, compassionate, equitable, just and harmonious society.

With the advent of the Narendra Modi government, there is much talk of a quick approval of projects held up for environmental clearances. The big corporates, their champions among the economists, and those who believe that gross domestic product (GDP) growth and “development” ought to be our over-riding goals, are convinced that among the impediments to growth and development “green clearances” are the worst.

One View of ‘Clearances’

Let me present a caricature of a particular view: project clearances should be had for the asking; similarly land for industry should be had for the asking and should be taken by the government from farmers and other people and handed over to corporate houses (whether for high or low priority industries or for speculative investments in real estate). “Free, informed prior consent” for land acquisition, fair compensation for land acquired, and generous rehabilitation packages are luxuries that we cannot afford. “Social Impact Assessment” or SIA is a newfangled and dangerous idea. The society that we should aim at building is one in which the stock market soars to ever new heights and foreign investors want to invest: that is the ultimate test of success. This is in fact not too much of a caricature of the industry view and of neo-liberal alliance economic thinking. It carried much weight with the United Progressive Alliance (UPA) government – but not, one hopes, with the new government.

Unfortunately, there seems to be a strong continuity between the erstwhile UPA government and the new Bharatiya Janata Party government on an impatience with environmental concerns. The redoubtable Sunita Narain is reported to have said that what we need is not rhetoric but tough action on the environment. Tough action is very likely, but alas, not necessarily in the direction that we would approve of.

Returning to project clearances, please note that the focus is on “projects”. However, projects are only the embodiments of approaches and policies. When a new government comes into power, one would expect it to examine the approaches and policies – the kind of thinking – underlying the pending projects, and consider whether it wishes to persist with that thinking or would like to bring new thinking to bear on the matter. In the latter case, it may wish to abandon some projects, redesign some and push ahead with some. Instead, the call is to “clear pending projects quickly”. This unthinking preoccupation with projects prevents serious thinking about policies.

Further, any requirement of a clearance implies the possibility of a denial of clearance, but no one is talking about rejections. Let us suppose that the examination of projects and the processes of decision-making are speeded up, and that out of 10 projects six are promptly rejected and four are promptly cleared. Would the corporate world and the protagonists of development be happy? Hardly. When they talk about “quick clearances” they mean positive clearances, not negative ones. What they want is that the whole business of a clearance under the Environment (Protection) Act (EPA) and related Acts should be reduced to a formality to be got through very quickly, and that all projects should come through unscathed.

At the Cost of the Environment?

There used to be complaints about delays in clearance even earlier, when the examination was confined to techno-economic and financial aspects, but with the onset of what are called “green clearances”, i e, clearances under the EPA, the Forest Conservation Act, and other related enactments, the complaints have become shriller. The reason is that project proponents were willing to accept the need for a techno-economic-financial examination, but resent an environmental clearance as a needless imposition. Concern about the environment and ecology is limited to a small number of people. Most people are willing to pay lip service to the environment because that has become the prevailing practice, but have no real belief in it, and would be seriously upset if it interferes with what they consider to be development. That is also the attitude of big business, and this point of view is quite strong in the so-called “developmental” ministries in the government. The Ministry of Environment and Forests (MoEF) is unpopular with these ministries; it is regarded as a “negative” force impeding development. A development-environment dichotomy is posited, with the former being accorded primacy and the latter relegated to a secondary position. The holders of the “primacy of development” argument would say “yes, the protection of the environment is important, but not at the cost of development”. Let us reverse that proposition: can we really have development at the cost of the environment?

It is interesting that the ardent advocates of what they call “reform” (which means a full changeover to free-market capitalism) sometimes describe “green clearances” as a return to the discredited “licence-permit raj”. As no one is currently in favour of licence-permit raj, the use of that term functions as an argument-stopper. However, can any government function without permits and licences? A passport is a permit. A driving licence is a licence. Boilers have to be periodically certified for safety. Building plans cannot be passed without a clearance from the fire department. Vehicle exhaust has to conform to certain specifications. In that haven of free enterprise, the United States, there is strong anti-trust legislation and there are powerful regulatory agencies such as the Securities and Exchange Commission and the Federal Drugs Administration. In that country, dams can be built by private agencies but they need a licence; and if the conditions prescribed are not adhered to, the licence can be cancelled. It follows that if we wish to protect and conserve mountains, forests, rivers, wildlife, the air that we breathe and the water that we drink, and indeed our habitat, the Planet Earth, we must have laws and rules and these must be enforced. Large interventions in nature will necessarily have to be carefully examined for their impacts on these things. Describing this kind of examination dismissively as licence-permit raj indicates a mind disabled by ideological prejudice.

Disturbing Signals

Dare one hope that the negative attitude to environmental concerns will not continue in the new government? Unfortunately there are disturbing indications. The new environment minister is reported to have said that the environment ministry will not be obstructionist. That is a revealing statement. It implies that any minister who implements the EPA faithfully and effectively is being obstructionist and that he or she should moderate the implementation to avoid being so. It is also a defensive statement seeking to reassure everyone that he will try not to give trouble to anyone.

Why does such a reassurance become necessary? The reason is that the EPA seriously tries to protect the environment and contains provisions for the purpose, which means that if rigorously implemented, the Act is bound to bite in some cases. If it did not, the Act would be worthless. It follows that the bland statement often heard that there need be no conflict between the environment and development is not true. An effort needs to be made to reconcile the requirements of the Act and the demands of development, and it will not be an easy effort.

Compromise on the Environment

It is in that context that the advocates of development glibly talk about a “balancing” of environment and development. What they mean by balancing is of course a compromise on environmental concerns, never a moderation of developmental activities. The development chariot must roll on, and environmental concerns must be sacrificed.

There are reports that time limits will be set for environmental clearances, and that there might be a provision for an automatic clearance if the clearance is not forthcoming within a certain period. These are of course media reports and one does not know what the exact instructions will be. However, these indications show which way the wind is blowing and that is indeed worrisome. Please note that the onus is entirely on the MoEF. They are responsible for delays; they must abide by the time limits; if they do not, there may be clearances by default. What responsibilities are cast on those who submit for clearance projects which are simply not fit for clearance? Is there any recognition that the projects must be well-prepared, fully documented and supported, and ripe for a clearance in every possible way; that the vast majority of Environmental Impact Assessments (EIAs) are extremely poor and shoddy and many downright dishonest; and that EIAs need to be fully professionalised, distanced from project formulators, approvers and implementers, and placed under the supervision of the National Environmental Regulator (if one is established)? That is a rhetorical question that needs no answer. Under the circumstances, the only way in which the MoEF can abide by the time limits would be to reject promptly the vast majority of projects. Would that be acceptable?

Dilution of Land Acquisition Act

Another source of worry is in relation to land acquisition, displacement and rehabilitation. There is a tendency on the part of many commentators, particularly the champions of free-market capitalism (who hold a view similar to the old American slogan that “what is good for General Motors is good for America”), to regard the Land Acquisition and Rehabilitation Act of 2013 as extremely bad and a serious impediment to development. The thought that a national policy was needed on development-induced displacement and the rehabilitation of project-affected people, as also a drastic overhaul of the colonial Land Acquisition Act, emerged in the 1980s. After protracted debates and a series of drafts (repeatedly diluted), a weak Act was finally passed in 2013. Many feel that it is defective and deficient in several respects, but such as it is, it exists and offers some limited protection against unfair alienation of agricultural land, and a modest rehabilitation provision. In the drive for the quick implementation of “developmental” projects, one hopes that the government will not be unduly influenced by the neo-liberal economic view of this Act.

Going beyond project clearances, it has also been argued by some commentators that institutions of accountability such as the Comptroller and Auditor General (CAG) and institutions against corruption such as the Central Vigilance Commission (CVC) are responsible for the economic slowdown. The inference is clear. It would be wonderful if there were no CAG, no CVC, and no EPA, but if that ideal situation is not possible, we should at least render these agencies, laws and procedures as weak and innocuous as possible. Corruption, fraud and financial irregularities are no doubt regrettable, but reporting on them in detail in public documents such as the CVC’s or CAG’s reports makes them visible internationally and affects “investor confidence”. A bit of corruption, fraud or irregularity is a price we may have to pay for a better inflow of foreign direct investment (FDI). These things will exist, but must be hidden from public view. That represents the thinking of several commentators, though they may not say so explicitly. That view found much resonance in the UPA government. One must hope that it does not find an echo in the new government through some of its advisers. Prime Minister Modi is probably too shrewd a person to be unduly influenced by that kind of thinking.

Reports to the effect that the new government proposes to restore the Ganga to a pristine condition are encouraging, but one must hope that it will not be a cosmetic exercise like the “revival” of the Sabarmati in Gujarat. The Sabarmati has not been revived; it is as dead as ever. All that has happened is that in a 10 km stretch of the 370 km-long river, Narmada waters have been put in, treating the Sabarmati bed as a conduit or a pipeline for those waters. An artificial “river” of 10 km has thus been created for the city of Ahmedabad. The only lesson to be learnt from that experience is that it should be avoided.

River Interlinking Project

More disturbing is the fact during his election campaign, the present prime minister talked about the interlinking of rivers (ILR) project. That is a very controversial project which has many supporters but also many critics. The fact that the prime minister is predisposed in favour of the project is hardly reassuring, but one fervently hopes that he will study the weighty objections that many critics have raised before taking a decision on the project. The ILR project is an ill-conceived project and will be an unmitigated disaster. However, that subject cannot be discussed in this article. The reader’s attention is drawn to two articles by this writer on the subject in EPW (“River Linking Project: A Disquieting Judgment”, 7 April 2012; and “Linking of Rivers: Judicial Activism or Error?”, 16 November 2002).

Perhaps one is being unduly alarmist. One hopes that the Modi government will be as earnest about environmental and ecological concerns as about what goes by the name of development. One hopes further that there will be an agonising reappraisal of what constitutes true development. A word needs to be said about this.

As already mentioned, the prevailing idea of development is a booming stock market, an inward rush of foreign investment, and a GDP growth of 8% to 10%. However, 8% or 10% growth would imply a huge draft on natural resources, a high potential for pollution requiring remedial measures, and an immense generation of waste needing disposal. Is it possible to pursue 8% or 10% growth without damaging the environment and Planet Earth? However, let us leave such radical thinking aside for the time being, though we may be forced to face that logic in due course. In practical terms, what can be done?

Need for Focus on Specifics

May one suggest that we refrain from adopting targets for growth, and focus instead on specifics such as food inflation, farmers’ suicides, poverty, jobs, illiteracy, disease, infant mortality, safe and reliable water supply, appropriate sanitation arrangements, safety of women in the streets and workplaces, and so on, and above all corruption, leaving growth to look after itself. This is a subject that will need to be discussed at length. One can only offer without proof the statement that such a piecemeal approach is possible without adopting ideologies of the right or the left. In particular, it is necessary to shake ourselves free of the obsession with GDP growth rates. It is also necessary to stop being bemused by visions of India as a super-power, and try to make India a caring, humane, compassionate, equitable, just and harmonious society.

One shares the widespread hope that a single-party majority and a decisive prime minister will mark a new beginning. The prime minister’s statement from his new website says: “Let us together dream of a strong, developed and inclusive India”. That phrase needs to be expanded to include ecological sustainability and harmony – not only between groups/states/countries, but also between generations, and between humanity and Nature. In the hope that the new government is engaged in serious thinking about these matters, these reflections are offered to it for whatever they are worth.

(Ramaswamy R Iyer (ramaswamy.iyer@gmail.com) is with the Centre for Policy Research and is better known for his extensive writings on issues related to water.)

A flaw in the CSR design

Tulsi Jayakumar

Corporates can undertake social spending only where they are invested. The benefits go to already industrialised regions

Section 135 of the Companies Act 2013 and the resultant Corporate Social Responsibility (CSR) rules 2014, issued by the ministry of corporate affairs came into effect in April 2014. The activities listed which may be included by companies in their CSR policies appear ‘confusing’.

They include eradicating hunger and poverty, promoting education, promoting gender equality and empowering women, reducing child mortality and improving maternal health, and combating HIV virus, AIDS, malaria and other diseases.

For one, these activities are traditionally supposed to be undertaken by a welfare state. Is this then an admission of the Government’s abrogation of responsibility?

It has been argued by some economists that such CSR spends are a drop in the ocean of overall government spending on the social sector. The question is: Can this make a difference to the provision of essentially public goods that the Government has so far not delivered?

A more disturbing aspect of Section 135 relates to the linking of a company’s profit-making with the development of local areas.

Companies are required to spend 2 per cent of their average net profits in the preceding three years and focus on local areas, around which they operate. This is an absurd proposition.

Local development 
This would increase inter-state disparities in social indicators. For instance, states like Gujarat, Maharashtra and Andhra Pradesh (as also Odisha in 2013), with their large number of industrial proposals, are likely to see greater social development on account of higher CSR spend by the private sector.

Odisha was the most attractive state for investment in 2013. It accounted for over one-fifth of project proposals in the first 10 months, valued cumulatively at ₹4.7 lakh crore, according to data from the department of industrial policy and promotion (DIPP).

Of the 30 districts in Odisha, the three relatively more developed districts of Ganjam, Jajpur and Jagatsinghpur, which attracted the largest investors, already have an industrial presence. With literacy rates of 81, 80 and 87 per cent respectively, their development indicators were better.

On the other hand, a ministry of home affairs (MHA) report identifies six districts as Naxal-affected. The most backward — Malkangiri — with a literacy rate of 49 per cent and almost 80 per cent of the population belonging to the SC/ST communities, is not likely to attract investments. What hope is there for communities in such districts?

Dealing with losses
What happens to development projects when companies make losses? According to an estimate, of the 5,138 firms listed on the BSE, the total number of companies qualifying under Section 135 has come down from 1,500 in FY2010 to 1,372 in FY2012. So has the number of total qualifying companies with Profit After Tax greater than zero — from 1,457 to 1,265.

While the total estimated CSR spend of such companies increased over the period (from ₹7,609 crore to ₹8,343 crore), such figures may be misleading. This macro-picture masks the reduced CSR spending on account of the companies concerned running losses.

Also, it is during recessionary times, when the need for such expenditure may be highest among vulnerable groups, that CSR spend may actually be unavailable.

Presently, most companies spend on projects relating to education, health and livelihood. These areas have synergies with business interests and sustainability. The rules in the Companies Act 2013 would make it difficult for companies to pursue strategic CSR — aligned to business strategy — since any expense which can be traced back to financial profits may have to be set aside for CSR as indicated by the law.

We may then see companies preferring to spend on activities specified in the Act which, however, may have a lower long-run social impact --- such as protection of national art, heritage and culture, promotion of sports, and contributing to the Prime Minister’s National Relief Fund. But what about addressing the problems of inter-regional inequality?

(The writer is a professor of economics at the SP Jain Institute of Management and Research, Mumbai.)

Why is it so hard to act on man-made global warming?

Paul Krugman

There are three things we know about man-made global warming. First, the consequences will be terrible if we don't take quick action to limit carbon emissions. Second, in pure economic terms the required action shouldn't be hard to take: emission controls, done right, would probably slow economic growth, but not by much. Third, the politics of action are nonetheless very difficult.
But why is it so hard to act? Is it the power of vested interests?

I've been looking into that issue, and have come to the somewhat surprising conclusion that it's not mainly about the vested interests. They do, of course, exist and play an important role; funding from fossil-fuel interests has played a crucial role in sustaining the illusion that climate science is less settled than it is. But the monetary stakes aren't nearly as big as you might think. What makes rational action on climate so hard is something else - a toxic mix of ideology and anti-intellectualism.
Before I get to that, however, an aside on the economics.
I've noted in earlier columns that every even halfway serious study of the economic impact of carbon reductions - including the recent study paid for by the anti-environmental U.S. Chamber of Commerce - finds at most modest costs. Practical experience points in the same direction. Back in the 1980s conservatives claimed that any attempt to limit acid rain would have devastating economic effects; in reality, the cap-and-trade system for sulfur dioxide was highly successful at minimal cost. The Northeastern states have had a cap-and-trade arrangement for carbon since 2009, and have seen emissions drop sharply while their economies grew faster than the rest of the country. Environmentalism is not the enemy of economic growth.
But wouldn't protecting the environment nonetheless impose costs on some sectors and regions? Yes, it would - but not as much as you think.
Consider, in particular, the much-hyped "war on coal." It's true that getting serious about global warming means, above all, cutting back on (and eventually eliminating) coal-fired power, which would hurt regions of the country that depend on coal-mining jobs. What's rarely pointed out is how few such jobs still exist.

Once upon a time King Coal was indeed a major employer: At the end of the 1970s there were more than 250,000 coal miners in America. Since then, however, coal employment has fallen by two-thirds, not because output is down - it's up, substantially - but because most coal now comes from strip mines that require very few workers. At this point, coal mining accounts for only one-sixteenth of 1 percent of overall U.S. employment; shutting down the whole industry would eliminate fewer jobs than America lost in an average week during the Great Recession of 2007-09.
Or put it this way: The real war on coal, or at least on coal workers, took place a generation ago, waged not by liberal environmentalists but by the coal industry itself. And coal workers lost.
The owners of coal mines and coal-fired power plants do have a financial interest in blocking environmental policy, but even there the special interests don't look all that big. So why is the opposition to climate policy so intense?
Well, think about global warming from the point of view of someone who grew up taking Ayn Rand seriously, believing that the untrammeled pursuit of self-interest is always good and that government is always the problem, never the solution. Along come some scientists declaring that unrestricted pursuit of self-interest will destroy the world, and that government intervention is the only answer. It doesn't matter how market-friendly you make the proposed intervention; this is a direct challenge to the libertarian worldview.
And the natural reaction is denial - angry denial. Read or watch any extended debate over climate policy and you'll be struck by the venom, the sheer rage, of the denialists.
The fact that climate concerns rest on scientific consensus makes things even worse, because it plays into the anti-intellectualism that has always been a powerful force in American life, mainly on the right. It's not really surprising that so many right-wing politicians and pundits quickly turned to conspiracy theories, to accusations that thousands of researchers around the world were colluding in a gigantic hoax whose real purpose was to justify a big-government power grab. After all, right-wingers never liked or trusted scientists in the first place.
So the real obstacle, as we try to confront global warming, is economic ideology reinforced by hostility to science. In some ways this makes the task easier: We do not, in fact, have to force people to accept large monetary losses. But we do have to overcome pride and willful ignorance, which is hard indeed.

Against developmental fundamentalism

Ramaswamy R. Iyer

There is hope in the air: years of corruption, ‘policy paralysis’ and a non-functioning government are gone and there is a forceful, efficient, decisive leader at the helm. However, while joining in the national mood of hope and expectation, may one add a word of caution about the current emphasis on “quick project clearances”? The argument is that “green clearances” are responsible for delaying large projects and that the process should be made fast and easy.

Delays in project clearances can arise from several causes: plain inefficiency in the functioning of the clearance agency, poor project formulation necessitating a demand to reformulate the project, inadequate information necessitating a number of queries and demands for clarifications and additional material, a prolonged debate between the project proponents and the examining agency in those cases where a negative decision seems likely and so on. While delays caused by inefficiency can and should be eliminated, other delays are not really delays if they serve a useful purpose. The examination of projects that are likely to have serious environmental, social and human impacts, and demand heavy investments, cannot be rushed through. No more than the necessary time should be taken, but equally, not less than the necessary time must be taken. To cut that short would be to turn the entire clearance process into a mockery.

Giving clearances to projects
Why are “green clearances” in particular blamed for delays? The reason is that most project proponents and the ministries concerned regard a clearance under the Environment (Protection) Act a tiresome formality. The Ministry of Environment and Forests (MoEF) is unpopular with the so-called ‘developmental’ ministries; it is regarded as a ‘negative’ force that impedes ‘development.’ A development-environment dichotomy is posited, with the former being accorded primacy and the latter relegated to a secondary position.

The holders of the “primacy of development” argument would say: “The protection of the environment is important, but not at the cost of development.” Let us reverse that proposition: can we really have development at the cost of the environment? When we have destroyed all aquifers, turned all rivers into sewers, denuded all forests and reduced bio-diversity drastically, what development can there be? Faced with that question, the advocates of development might say: “Let us be moderate; let us not go overboard and become eco-fundamentalists.” What can be more basic than our habitat, our water and the air? Profound concern about them should not be deprecated as fundamentalism. What we have in fact had is developmental fundamentalism, accompanied by an angry impatience with environmental concerns.

Dare one hope that the negative attitude to environmental concerns will not continue in the new government? In the new government, the environment ministry is headed not by a Cabinet minister, but by a Minister of State with independent charge, Prakash Javadekar. He is reported to have said that the environment ministry will not be obstructionist. That is a revealing statement. It implies that any minister who implements the Environment (Protection) Act faithfully and effectively is being obstructionist and that he or she should moderate the implementation to avoid being so. It is also a defensive statement seeking to reassure everyone that he will try and not trouble anyone. Why does such a reassurance become necessary? The reason is that the Act seriously tries to protect the environment and contains provisions for the purpose, which means that if rigorously implemented, it is bound to bite in some cases. It follows that the bland statement often heard that there need be no conflict between the environment and development is not true. An effort needs to be made to reconcile the requirements of the Act and the demands of development, and it will not be an easy effort.

It is in that context that the advocates of development generally call for a ‘balancing’ of environment and development. ‘Balancing’ implies action on both sides, but in the ‘development versus environment’ debate, the demand is always for a compromise on environmental concerns, never for a moderation of developmental activities. However, perhaps one is being unduly alarmist. One hopes that the Modi government will be as earnest about environmental and ecological concerns as about what goes in the name of development. One also hopes that there will be an agonising reappraisal of what constitutes true development.

Another source of worry is in relation to land acquisition, displacement and rehabilitation. Many feel that the Rehabilitation Act of 2013 is deficient in several respects, but it offers some limited protection against unfair alienation of agricultural land, and a modest rehabilitation provision. In the drive for the quick implementation of ‘developmental’ projects, one hopes that the government will not be unduly influenced by the neoliberal economic view — that this act is a serious impediment to development. 

Restoring the Ganga
Reports to the effect that the new government proposes to restore the Ganga to its pristine condition are encouraging, but one must hope that it will not be a cosmetic exercise like the ‘revival’ of the Sabarmati in Gujarat. More disturbing is the fact that during his election campaign, the present Prime Minister talked about the Inter-Linking of Rivers Project, a controversial project. That the Prime Minister is predisposed in favour of the project is hardly reassuring, and one fervently hopes that he will study the weighty objections that many critics have raised before taking a decision on the project. It seems strange to want to restore the Ganga and at the same time undertake a project that will do great harm to several other rivers.

One shares the widespread hope that a single-party majority and a decisive Prime Minister will mark a new beginning. The Prime Minister’s statement — “Let us together dream of a strong, developed and inclusive India” — needs to be expanded to include ecological sustainability and harmony, not only between groups, States and countries, but also between humanity and Nature.

(Ramaswamy R. Iyer is a former Secretary, Water Resources, Government of India.)

Why do environmental markets fail?

NILANJAN GHOSH

Lack of knowledge about the real value of the ecosystem comes in the way of markets finding right prices

Environmental markets are being developed worldwide, on the faith that they will help solve environmental degradation.

Two major factors have driven this enthusiasm in the developed world: conscious national environmental policy movements toward market-based instruments, and rising demand for environmental goods and services. Developing nations have also geared up towards this direction.

The reasons for setting up markets are many. First, markets help discover the right price for the environmental resource and aid their allocation and distribution, and offer means of achieving social optimality in consumption and production. Second, markets help raise funds for sustainable development financing.

Third, market institutions are supposed to make the common man understand the value of services that the ecosystem provides to the economy as a whole, the incidence of economic activity on the ecosystem and its repercussions on life. Fourth, as scarcity of ecosystem services comes to the fore, the roles of creating markets and market values become important, as government instruments fail.

Fifth, markets work well at providing rewards and encouraging resource managers to properly manage natural resources.

When one looks at the value chain of marketed commodities, one realises goods extracted from ecosystems have long been traded in markets. The services provided by ecosystems have been used for just as long, but have remained beyond markets and largely un-priced.

Resources with poorly defined or undefined property rights (including forests, water, or grasslands), if not regulated in their use, can be accessed by all and used until exhaustion. But just as in any market, an emerging scarcity can make them tradable.

Reality checks

So the question arises: why do environmental markets fail so often? The most recent instance includes the emergence and failure of carbon markets. Despite the initial successes of environmental markets, some quarters have criticised them for lacking even basic safeguards against fraud, and not really resulting in emissions reductions. The overarching objective of environmental protection depends on whether the markets are really helping the realisation of efficient prices. Ideally, the price of a commodity in a market should reflect its scarcity value.

In theory, the market interaction between the demand and supply forces leads to equilibrium prices. There is an important assumption here. This is about the consumer being aware of the “utility” of the commodity.

The situation is, however, a bit difficult for environment or ecosystem as a commodity. An efficient market price should ideally reflect the scarcity value of a resource. Under perfect market conditions, prices become equal to the scarcity value. For the environmental market, information is the missing element.

So far, even ecological scientists have failed to decipher the range of ecosystem services provided by nature. There is clear lack of knowledge among the public about what will be the entire range of effects from trans-boundary air or water pollution. Here, it is difficult for market prices to reflect the true scarcity value.

A matter of choice

It has been argued in some quarters that during the recent financial meltdown, carbon credit prices or more precisely Certified Emission Reduction (CER) prices diminished, and that is precisely because the demand for CER, as a commodity in the consumer’s utility bundle, fell.

This is because consumers preferred other commodities to CERs. Does that mean that the value of environmental damage has diminished? Of course not.

Pollution keeps on doing the same damage during a recession, as it does during prosperous times. Mangroves provide the same ecosystem benefits that get translated into our economic welfare function during recession, as during a boom.

This means there is a clear divorce between prices and value when it comes to environment. Buyers of environmental services are only aware of a minuscule portion of the entire range of services that the ecosystem can offer. It is only this minuscule portion that enters their utility bundle and gets realised in market prices.

Let us now look at the supply side. Ecosystem services of nature are independent of the environmental market. Nature will continue with its provision of ecosystem goods and services of gas regulation, waste treatment, climate control, biological control, water regulation, pollination, food production, soil formation, nutrient cycling and other functions, unless disturbed by extreme anthropogenic forces or external stimuli.

This makes prices essentially demand-determined. Unfortunately, the entire problem is with the demand function of environmental services. No doubt, the crucial problem here lies with knowledge. In sum, unless there is adequate information about the environment and ecosystem, it is not possible for markets to discover right prices.

The writer is Acting President, Indian Society for Ecological Economics

Let’s make business greener

Prakash Nelliyat & Balakrishna Pisupati 

Natural-resource based businesses should share benefits with all stakeholders. Water and biodiversity play a significant role in sustaining human life and ensuring welfare. They are essential for securing food, medicines, energy and building materials.Water and biodiversity are mutually dependent; one cannot be sustained without the other. Any impact on the water sector will affect biodiversity and vice versa. Biodiversity provides important services such as natural pest control, water recycling and climate regulation.

Water and biodiversity play a vital role in sustaining and promoting business. In the manufacture of many products (such as food, medicines, fertilisers, pesticides, fibres, textiles, cosmetics) bio-resources play a significant role. Sometimes, water itself is an input in industries such as textiles, leather, paper and pulp, and sugar.

Impact on business

Every business depends on water and biodiversity, and also impacts on them. On an average, agriculture accounts for 70 per cent of the water withdrawals.

After agriculture, the major users of water are industries and energy (20 per cent of total withdrawal), and the domestic and urban (10 per cent of total withdrawal) sectors. Industrial water uses include processing of raw materials, cooling, cleaning, and as central ingredients in the goods produced. Sometimes water is required to use industrial products, such as cement. In the domestic sector too, water plays an important role in businesses such as desalination plants and packaged water supply.

Biodiversity refers to the variety of plants, animals and micro-organisms, and the ecosystems in which they occur, and is inherently valuable to humanity. Crops, livestock, forest products and fish are part of biodiversity and are also sources of food. A wide variety of plants, animals and fungi are used for manufacturing medicines and over 60 per cent of the world’s population depends on plant medicines for their primary health care.

At present, many chemical formulae and about 45 per cent of drugs are based on biodiversity. According to a study, over 70 per cent of the promising anti-cancer drugs come from plants in the tropical rainforests. It is estimated that of the 2,50,000 known plant species, only 5,000 have been researched for possible medical applications. Therefore, there is huge scope for identifying more drugs from nature.

Industrial products such as oils, lubricants, perfumes, dyes, paper, wax, rubber, latex, resins, poisons and cork are derived from various plant species. Animals origin products include wool, silk, fur, leather, lubricants and wax. In farming, bio-pest control and application of bio-fertilisers are environment friendly methods, and are growing industries.

Nowadays various animals are nurtured privately for display and as pets. Ornamental fish culture is a booming business. Biodiversity hotspots (nature reserves, parks and forests with wildlife and plants) are tourist centres, attracting millions of people. Eco-tourism is a growing outdoor recreational activity and business.

Emerging Challenges

Population growth and changing life-styles demand more food, energy and other consumer products that encourage mega irrigation, hydropower projects and industrial establishments.

Urban growth and industrial development have pushed cities to look increasingly farther for water and other resources they need. The modifications to water-related development (dams, irrigation schemes, urban extension, aquaculture) are at the cost of biodiversity.

According to a recent study, the biodiversity (number of species) in freshwater has declined by half since 1970. For developmental activities, biodiversity hotspots such as forests, wetlands, mangroves and coral reefs have been considerably encroached upon.

Further, the pollution load discharged into the ecosystem has also multiplied, and in certain locations is beyond nature’s carrying capacity. Ecosystem change has accelerated in many areas vulnerable to water-related activities. Further, climate change factors are significantly influenced by water availability and the health of the biodiversity.

The huge business potential of water and biodiversity naturally leads to their market possibilities. About 13 per cent (884 million) of the world’s population still relies on impoverished sources for drinking water, and 2.4 billion people are still without access to basic sanitation. Therefore, trade-offs among various water users are important.

Management Strategies

The future of business depends on the sustainability of water and bio-resources. Globally, the per capita availability of freshwater is steadily decreasing and the trend will continue as the world’s population grows, emerging economies increase their consumption levels, and climate change prevails.

For the global economy, if it needs to carry on expanding at the same pace, the worldwide annual water consumption will rise from 4,500 km{+3} today to 6,900 km{+3} in 2030, that is 40 per cent more than the current supply. The same pressure can be anticipated in biological resources too.

Some steps are proposed for the conservation and sustainable utilisation of water and biodiversity, from the business perspective.

The “access and benefit sharing” objective of the Convention on Biological Diversity should be operationalised. This would enable local communities (who use their traditional knowledge and efforts in managing water and biodiversity) to obtain a fair and equitable share from the overall benefits of resources-based businesses.

The benefit-sharing principle will act as an incentive to local communities for conservation and sustainable use of resources. In this regard, the industries’ cooperation is essential.

For the conservation and management of water and biodiversity, corporate responsibility is crucial, along with the role played by government departments. They can come up with innovative strategies that can be implemented with stakeholders’ participation to minimise water use, maximise recycling and sustain natural processes, including the management of biodiversity and the ecosystem.

Public-private partnership programmes in water supply, sanitation, and waste-water treatment have ample scope for entrepreneurs to take the lead with a focus on biodiversity.

Gifts of nature

Decisions on issues such as the conversion of ecologically sensitive areas for developmental purposes including wetlands and marshes are often taken considering the benefits of the project rather than the overall impact on the ecosystem. In this regard, the economic value of non-marketed goods and services of ecosystem/biodiversity is critical for effective policy decision-making.

If we follow these ‘Green Business’ principles, our water and biodiversity will be protected and we can achieve ‘Green Economy’ based growth in the country.

(The authors are members of the National Biodiversity Authority -NBA)