Unpromising Statement By G8

Below is a statement issued by the G8 in the recently concluded G8 summit in L'Aquila, Italy. Read it Carefully.

"We recognize the broad scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed 2 deg C. Because this global challenge can only be met by global response, we reiterate our willingness to share with all countries the goal of achieving at least a 50% reduction of global emissions by 2050, recognizing that [it] implies that global emissions need to peak as soon as possible and decline thereafter. As a part of this, we also support a goal of developed countries reducing emissions of GHGs in aggregate by 80% or more compared to 1990, or more recent years. Consistent with this ambitious long term objective, we will undertake robust aggregate and individual mid term reductions ,taking into account that baselines may vary............similarly major economies need to undertake quantifiable actions to collectively reduce emissions significantly below business-as-usual (BAU) by a specified year".

This is not at all a promising statement. My assessment of the statement is as below,

• Global leaders still think that the emission levels have not peaked. The statement gives room for further increase in emissions before it starts reducing. This is preposterous. As such there is no timeline fixed by which the emissions must peak or from where reduction of emission must start. All in all it means the business will be as usual without any commitment (or action).
• From where did this number of 50% come from? There is no scientific paper published that says that the temperature of the earth will not increase more than 2% if the carbon emissions are reduced by 50% of its 1990 levels. The report published by Intergovernmental panel on climate change (IPCC) in 2007 says that, there is a high probability of limiting the increase in earth's average temperature by 2 degrees if the global emissions of carbon can come down by 85% from its 2000 A.D levels.
• The only hope is that the grey areas will be sorted on in the COP-15 (conference of parties) in Copenhagen in December this year. Unless concrete decisions come out in Copenhagen, mitigating climate change will be a distant dream.
• But if the "You first" line of negotiations continue in Copenhagen, then it will be too late by the time the global leaders decide "who first?"
• Historically COP consensus or protocols have failed. The Kyoto protocol said that the industialized countries (Annex-1) must reduce their carbon emissions by 5% from their 1990 levels by 2012. Unfortunately, instead of reducing by 5%, they have increased their emissions by 10%. One hopes that it will not be repeated in Copenhagen.
  
• Since the publication of the reports by IPCC, all international negotiations have focused on "You first". There hasn't been any substantial progress in the negotiations. Even in the academic circles, there has been only talk about "Who is historically responsible?", "Who first?", "What will happen if the average temperature of the earth goes up by 2 degrees?" and so on. All these discussions are going nowhere apart from academic papers.
  

Unless concrete decisions are taken at Copenhagen, unless legally binding emission cuts are imposed on all countries, unless strong mid-term actions are taken by all countries inconvenient truth is inevitable.

BMV Education trust at Bhaktrahalli

Today i visited BMV education trust for the second time. BMV stands for Bharatha Rathna Sir M.Vishveshwariah . This is a school founded and run by Mr. L.Kalappa in a village called Bhaktrahalli in Shidlaghatta taluk in Chikkaballapur district in Karanataka. This school is about 80 kms from my house and about 30 Kms from the Bangalore international airport.

Mr. Kalappa is a labour advocate by profession and a social worker by Passion. He is the founder and president of BMV education trust. Mr. Kalappa started this school in 1985 by just starting construction in a government land. Subsequently he got it registered by persuading government authorities.

Mr. Kalappa is from this village called Bhaktrahalli. He was born and brought up in this village. He says he used to walk for 6 kms to attend primary school. He has faced plenty of hardships during his education due to lack of facilities. He says that it was his dream to start a school in his native village from his college days. Finally he took the bold step in 1985 by encroaching into government property at Bhaktrahalli. He subsequently persuaded the government and got 3 acres and 18 guntas registered for his trust.

In 1995, he got approval to start high school and also a little aid from the government. Today this school is 23 years old and has about 350 students from bhaktrahalli and nearby villages. He proudly says that today he has a couple of doctors and few engineers as the alumni of the school.

Mr.Kalappa got my contact from a common friend in Shimoga. Mr kalappa who is also an active environmentalist wanted my advice on some sustainable technologies that can be adopted in his school. I had visited the school last month and this was my second visit.

Bhaktrahalli is a village in chikkballapur district. If you cross the international airport, you have to take the deviation into devanahalli taluk towards vijayapura and get onto to the shidalghatta road. After crossing vijayapura, it is about 10 kms.

Bhaktrahalli and surrounding villages are very dry with bore well depths reaching 1300 feet for less than 2 inches of yield. So many small time farmers depend on rains for their crop (mainly ragi). Mostly cow mulching is the main economy of Bhatrahalli and surrounding villages.
This year due to bad monsoons, sowing has not taken place as yet. There has been couple of drizzles in june and no rain since then. So many farmers have kept the land ready for sowing but rain gods haven't quite smiled on them. Mr. Kalappa is of the opinion that, if rain gods do not show mercy in next couple of weeks, the villagers will be put to hardships. Most of the Villagers are small time farmers producing marginal surplus.

Obviously BMV education trust is the biggest building in the village. Right now it has about 350 students spread over LKG to X standard. The fees for the school is rupees 30 per month for classes 1 to 7 and rupees 50 per month for classes 8 to 10. This is inclusive of the uniform, text books, note books and mid day meal.
The school also has a mini bus to get the students to school. Most importantly, the school is constructing separate toilets for boys, girls and staff.

The school does not have any dependable water source. Though the school is connected to the panchayat borewell, it seldom gets water because the yields in the borewell are less and differential head of water between the water tank of the community and the school is not in the latter's favour. .

This school is currently run by donations from benevolent philanthropists and personal money of Mr. Kalappa. Mr. Kalappa has also covered the contributions to the school under 80G Government is also giving some aid by covering staff salaries from class 1 to 7. Mainly contribution from philanthropists is running the school.
All the records are very transparent. He even showed me the balance sheet and every voucher cut till today.

Despite all the problems, The school has postet 100% positive results in SSLC in the year 2007 and 2008. This is no joke. In fact, i was shown the results sheet. This is an excellent achievement. One has to bear in mind that the teachers in that school go door to door persuade the parents to send their children to school. Training reluctant children to the level of 100% result is no small achievement. (Teachers in the school take extra classes in the evening between 6 and 9 from January to April to train class X students, sometimes without light). All this is for a sum of rupees 3800 per month.

As soon as you enter the school, you are greeted by a nice lesson on the board and rashtra kavi kuvempu smiling over it.

The ground floor has classes from nursery to class 7 with a computer room (all computers donated), a staff room and a small office. There are about 8 computers, a flat screen TV and a DVD player. All of them have been donated. Rhymes are played on the dvd and some films are shown every now and then.
The first floor has classes 8, 9 and 10. They are building couple of rooms on the first floor to accommodate more sections. All the rooms have been named after famous literary figures of karanataka.

Mr. Kalappa has done all this almost single handedly. Though there are other trustees, he has almost taken the entire responsibility on his shoulders.
He jovially remarks that his friends avoid him because he talks only about his school and ask for donations. He has also raised some donation from the Akka charity foundation in Chicago.

Mr. Kalappa must be appreciated for his efforts and given due recognition. We need more committed people like him.

Please be more rational BMTC

I have been using public transport quite regularly for few years now. After the introduction of Volvo AC buses, i am using public transport more frequently. Air Conditioned Volvo buses are particularly convenient for long hours travel in bad traffic of Bangalore. Of late, thanks to good service from BMTC , i am able to cut down my car travel quite significantly.

I don't know about the profitability of BMTC, but the Vayu Vajra bus service to Bangalore international airport is really good and convenient.

But i have been observing something strange in the HR policy of BMTC. BMTC must be commended for recruiting more female personnel. Over the last few years, BMTC has also recruited many female employees for the Bus conductor's post.

Surprisingly, i don't find many female conductors in the Volvo as well as the airport vayu vajra buses. I have used both the regular intracity AC Volvo buses as well as the Vayu vajra airport service at all times of the day and i have hardly found female conductors there. But i have found many female conductors in regular buses in the city. I don't understand this.

The intracity Volvo buses are many times quite empty and the conductor's job is pretty easy. Particularly The Vayu Vajra airport buses are almost always empty (at least when i have used them) . In my opinion conductor is not required in the airport buses. (I once travelled from Airport to J.P.Nagar with only 3 co-passengers for the entire journey. The conductor was totally jobless).

On the other hand i find these female conductors struggling in regular buses. Conductor's job for a female is not easy. They are sometimes crowded and the conductor's job is very difficult particularly in summer. BMTC must put female conductors only in volvo buses. Or at least, first preference must be given to females for conductor's job in Volvo buses. BMTC will do well to take a look at this.

On the other hand i don't quite understand the logic behind conductors in the Airport service Vayu Vajra buses. They are simply not required. When contacted, a BMTC official told me that conductors are helpful in helping the passengers manage their luggage. My experience has been that people with more luggage will normally don't take the bus from or to airport. Even if they do, they will be young and can manage their luggage. Every time i have taken the Volvo to the airport, i have never seen the conductor helping the passenger with the luggage. I have observed a couple of times the BMTC person (not the conductor) helping the passengers to manage their luggage. All in all, for the conductor in the vayu vajra bus, it is just a ride to and fro from the airport a couple of times a day. BMTC is already operating the Vayu Vajra service under loss. They must take a serious look at downsizing the conductors in the airport service. The driver can do the job of issuing tickets.

Strangely, Many buses running intracity in peak hours do not have a conductor. The driver will perform the duties of the conductor as well. Not only does it add to the stress of the driver in peak hour traffic, but also cause traffic congestion since in Bangalore , we do not have a dedicated lane for buses and more time the driver spends in issuing tickets, more traffic will pile up behind him.

In my opinion, this is irrational or stupid. Why do you need conductors in Airport service AC volvo buses with limited stops and few passengers? On the other hand you don't have conductors in regular buses moving in peak hour Bangalore traffic with many stops.
BMTC, please be more rational.

Negative inflation and food prices.

The annual wholesale price index (WPI) based inflation rate fell to negative in the first week of June 2009, the first time in well over three decades. The last time the inflation turned negative was in late 1974 and early 1975.

Though the inflation has become negative, this is not deflation in the true sense of the term. The inflation numbers as released by the department of commerce and industry for the week ending June 6, 2009 is -1.61%. One must keep in mind that this is the Year on Year inflation rate and not inflation rate with respect to the base year.

All this means is that the prices of goods in the WPI basket has decreased by 1.61% with respect to its prices in the corresponding week last year. So if Good A was priced at rupees 100 on June 6 last year, the price of that good this year is 98.39 rupees. So the benchmark index is the price of the good A last year. Simply put, this is what is called base effect. Base year being 2008.

This is severely misleading vis-a-vis purchasing power of the common man. Last year, at this time inflation was hovering in double digits. It was almost 12% (11.66% to be precise). So the prices of the goods in WPI basket was 11.66% higher in 2008 compared to its prices in June 2007. So if one compares the prices in 2007 to the one in 2009, there is a an inflation of +9.8% over two years. (suppose the price of a good A in 2007 was rupees 100, it had become 111.66 in 2008 owning to 11.66% year on year inflation. So if the inflation now in June 2009 has dipped to -1.61 % year on year, the price of good A in 2009 is 109.86 rupees. This means an increase in price of 9.8% compared to 2007) . In other words, inflation is 9.86% with 2007 as base year.

The decline in the year-on-year inflation rate during the reported week this year was primarily due to a dip in the inflation rate of fuel and power that declined because of the base effect.

On this backdrop, if one strips the WPI basket and looks at the food prices, the year on year food inflation rose to 8.7 per cent this year, with cereals, pulses, vegetables, milk and spices recording a high rate of inflation. This is in spite of the fact that inflation rate of power and fuel plunged sharply this year by 12.8% year on year (-12.8%). This is very bad sign. This is giving an indication that though fuel and power prices have declined over the year, the food prices have increased. This is pointing to a bottleneck in the supply of food articles. With not so good monsoons on the cards, the signs are worrisome. The food situation will go from bad to worse by the end of this year or early next year if the monsoons fail. Monsoon failure will plummet the power situation, the inflation numbers of which will start recording positive numbers.

Legislation wise , the food security act contemplated by the UPA chairperson is most welcome here. But Supply of food need to be augmented for this kind of act to bear fruition in the near future.

Returning to the inflation numbers. The food inflation now stands at +8.7% over last year. If one compares this with food inflation last year, we are in for a surprise. Though the inflation was in double digits last year, the food inflation was 5.8% year on year. But in comparison, the year on year inflation based on WPI is negative this year (-1.61%), but still the food inflation stands at +8.7%. This is a very bad signal for the food situation in India .

Coming to inflation over the last two years, let us look at food prices. Inflation over the last two years in food has been 14.5% (Factoring 5.8% in 2008 over 8.7% this year). So the purchasing power of an individual has gone down by 14.5% compared to 2007 so far as food is concerned, assuming the income has remained constant which may not be the case.

But lets see it more carefully, the recent economic recession has had a lot of impact on the employment in the unorganized sector. Towards the end of 2007 national commission for enterprises in unorganized sector headed by Economist Arjun sengupta published some startling results. It said 77% of the people of India (about 835 million people) earn less Rs 20 a day. The economic recession would have worsened this situation. Major share of the earnings by workers in the unorganized sector goes in procuring food. Assuming that each worker was spending 10 rupees on food and 10 rupees in asset building everyday in 2007, he will now have to shell down 14.5 rupees for the same food. His net earning for asset building has plummeted by almost 50% to rupees 5.5 a day compared to rupees 10 a day in 2007.

In the light of this analysis, the food security act proposed by UPA assumes greater importance and one hopes that it will meet its desired goals.

Deregulating fuel prices.

The Economic survey tabled in the parliament on July 2 says that the government has to consider ending controls on fuel prices to curb demand. This is a very good recommendation and it is high time the government considers this seriously.

Once the subsidy on fuel is removed, If not as expected, but there will be definitely a check on consumption of fuel. High cost of fuel will definitely deter a certain percentage of the population from irrational and lavish consumption.

But the government has to be very careful in implementing this recommendation. Though it is a very good recommendation, it has certain drawbacks in the short run.

Hike in fuel prices, particularly diesel prices will have a cascading effect and reflect in hike in the price of every commodity. Most importantly its going to reflect very negatively on food prices. There will be very steep increase in food prices with deregulation of diesel prices.

Our country is not prepared to face this situation in the short run. We are still a very poor country with millions below poverty line. Lakhs of people sleep hungry every night. Hike in food prices in the short run will be disastrous for millions in our country.

One must note here that the year on year food inflation as recorded in Whole sale price index (WPI) is around +8% now. With not so good monsoon on the cards, the food inflation is likely to hit 14 to 15 % by next march. Measured in consumer Price index (CPI), the food inflation by March 2010 will is likely to be around 25% or even more. If the government thinks of deregulating the fuel prices by then, the food inflation will be beyond control.

But what choices do the government have? Deregulation of fuel prices should definitely be done not only to keep the demand under check but also to control the ill effects of climate change. Broadly the government has two choices.

1)A hike in diesel prices will have a cascading effect and reflect in hike in the price of every commodity. Petrol, on the other hand, will not have such a huge impact on the prices compared to diesel. Hence the government can consider dual pricing of diesel. The price for diesel for public transport, goods carrier and freight purposes can be pegged at rupees 38 or 40 for the next few years. This will not hurt the common man so far as essential commodities are considered.
On the other hand, the subsidy on petrol and diesel for private use must be totally deregularised. This means that the price of diesel sold at retail level for luxury cars must be market determined. Of course his would be an enormous administrative challenge and opens up large windows for corruption. But considering our quite efficient bureaucracy at higher levels, this should be possible.This policy of dual pricing of diesel will have dual advantages.
As the prices of petrol and diesel for private vehicles increase steeply, people will shift slowly to public transport at no increase in cost.This will consequently reduce congestion on roads and help in mitigating climate change.

2)Another alternative the government has is to de-regulate the prices of fuel in a phased manner. B.K. Chaturvedi committee has dealt this issue at length and has laid out a road map for de-regulation.

However, government can immediately de-regulate the petrol prices and slowly de-regulate the diesel prices.

Optimum and efficient use of crude oil is a dependent on the quality of physical infrastructure in a big way. Hence de-regulation of fuel prices (petrol or both petrol and diesel) must be accompanied by meeting certain measurable targets in infrastructure development. Every milestone in deregulation of fuel prices must be commensurate with achieving a certain tangible physical development of durable infrastructure.

Bottlenecks in the supply side of food can be overcome with sound rural infrastructure coupled with good fiscal policies. Unless development of rural infrastructure (particularly roads and power) is given a well meaning fillip, deregulating diesel prices will have negative consequences on millions of people.
Now that "de-regulation" is doing its rounds in the petroleum ministry, there will be pressure on the ministry by powerful corporate houses to hasten the process. The government must refrain from buckling under this pressure and take up de-regulation issue in a very calculated manner keeping all sections of the society and economy in mind.


[My Letter published in Hindu Businessline on the same subject http://www.thehindubusinessline.in/2008/06/10/stories/2008061050590800.htm]