Month: March 2023

E-waste regulations and critical issues

Post author By balancedreport
Post date March 1, 2023

In an era of rapid urbanisation, digitalisation, and population growth, the burgeoning problem of managing e-waste is a cross-cutting and persistent challenge. The Ministry of Environment and Forests notified a new set of e-waste rules in November 2022, which will go into effect on April 1, 2023. These rules address some critical issues while remaining silent on others.

What exactly is e-Waste?

Electronic waste, also known as e-waste, includes any discarded electronic or electrical device, such as computers, mobile phones, televisions, and refrigerators.
These devices contain hazardous substances such as lead, mercury, cadmium, and polyvinyl chloride (PVC) that, if not disposed of properly, can pose significant environmental and health risks.

Key Elements of India’s E-Waste Regulations

EPR (Extended Producer Responsibility): The first set of e-waste Rules were announced in 2011 and took effect in 2012. The introduction of EPR was a key component of the Rules (2011). Producers are responsible for the safe disposal of electronic and electric products once the consumer has discarded them under EPR compliance.
E-waste rules 2016, which were amended in 2018, were comprehensive and included provisions to promote authorisation and product stewardship. These rules also included new categories of stakeholders, such as Producer Responsibility Organizations (PRO).
The new rules (2022) introduce a digitalized systems approach: Standardizing the e-waste value chain through a common digital portal can increase transparency and reduce the frequency of paper trading or false trail, which is the practise of falsely claiming 100% collection on paper while collecting and/or weighing scrap to meet targets.

E-waste recycling: Analysis

There are two critical stages to effective e-waste recycling:

1. Component recovery (adequate and efficient recoveries of rare earth metals in order to reduce dependence on virgin resources) and

2. Residual disposal (safe disposal of the leftover residual during e-waste recycling).

Concern: The rules briefly mention the two aspects, but do not specify what is required to ensure the recovery tangent.
PRO and dismantlers are no longer mentioned in the new notification: The entire burden of recycling falls on authorised recyclers; they must collect a certain amount of waste, recycle it, and generate digital certificates via the portal.
Concern: New challenges may arise as companies are no longer required to work with PROs and dismantlers, who provided some double verification in terms of recycling quantity and quality.
Lack of recognition for the informal sector: India’s new e-waste management rules fail to recognise the critical role played by the informal sector, which handles 95% of the country’s e-waste. This lack of recognition could be attributed to the sector’s “illegality.”
Concern: This move may push e-waste management even deeper into the shadows, making it more difficult to monitor and regulate. This could result in environmental pollution, worker health risks, and inefficient e-waste management.

Health Effects

Incineration and leaching: Open incineration and acid leeching, which are frequently used by informal workers, have a direct environmental impact and pose serious health risks, particularly to child and maternal health, fertility, the lungs, kidneys, and overall well-being.
Occupational health hazards: In India, many unskilled workers from vulnerable and marginalised communities are unaware that what they call “black plastics” have far-reaching occupational health hazards, particularly when incinerated to extract copper and other precious metals for market value.
Children’s Exposures: As described in an international forum on chemical treaties, the ‘tsunami of e-waste rolling out of the world’ poses several health hazards for women in this sector, as they are exposed to residual toxics elements mostly in their own households and frequently in the presence of children.
Constant exposure to organic pollutants: Every year, a staggering 18 million children, some as young as five, work alongside their families at e-waste dumpsites in low- and middle-income countries, according to a recent WHO report. Heavy metals like lead, as well as persistent organic pollutants (POPs) like dioxins and flame retardants (PBDEs), have contributed to air, soil, and water pollution.

Way ahead

The activities of the recyclers must be recorded in the system to ensure maximum efficiency.
The authorities should track the amount of e-waste recycled versus the amount recovered at the end on a regular basis.
Recognising the potential of informal sector in e- waste handling.
For example, ‘Karo Sambhav,’ a PRO based in Delhi, has integrated informal aggregators into its collection mechanism. Through this initiative, e-waste is entered into a secure and structured system, and the informal sector gains financial and legal security.
To ensure that the law is effectively implemented, stakeholders must have the necessary information and intent to safely dispose of e-waste.
There is a need to strengthen reverse logistics, build stakeholder capacity, improve existing infrastructure, improve product design, rationalise input control, and implement green procurement practises.
Customers can be picked up at their homes.

@the end

As the volume of e-waste generated continues to grow rapidly, e-waste recycling and management has become a major environmental challenge in the modern world. Concurrent efforts are required to raise awareness and improve infrastructure for effective e-waste management. Furthermore, a strong collection and recycling system is required to meet legal requirements.

Source: https://www.thehindu.com/opinion/op-ed/unpacking-the-new-set-of-e-waste-rules/article66560850.ece

Economics

Current Account Deficit (CAD): Desirable and Unwanted Elements

Post author By balancedreport
Post date March 1, 2023

The current account deficit (CAD) increased to 4.4 percent of GDP in the second quarter of 2022-23, up from 2.2 percent the previous quarter, according to the RBI’s quarterly statistics. This represents a reversal from the unusual surplus of 0.9% of GDP in 2020-21. While the merchandise trade deficit has increased in the third quarter of this fiscal year, the CAD may fall.

What is Current Account Deficit (CAD)?

Current Account Deficit (CAD) = Trade Deficit + Net Income + Net Transfers

A current account is an important component of a country’s balance of payments, which is the account of transactions or exchanges between entities in the country and the rest of the world.
This includes a country’s net trade in goods and services, net earnings from cross-border investments such as interest and dividends, and net transfer payments such as remittances and foreign aid.
A CAD occurs when the value of goods and services imported exceeds the value of exports, whereas the trade balance refers to the net balance of goods export and import.

Components of Current Account

Trade Deficit

Trade Deficit = Imports – Exports
When a country imports more goods and services than it exports, it is said to have a trade deficit.
A trade deficit is an economic measure of a country’s negative trade balance, in which imports exceed exports.
A trade deficit is the movement of domestic currency to foreign markets.

Net Income

Net Income = Income Earned by MNCs from their investments in India.
When foreign investment income exceeds domestic savings, the country experiences a net income deficit.
Payments made to foreigners in the form of dividends on domestic stocks, interest payments on bonds, and wages paid to foreigners working in the country are used to calculate net income.

Net Transfers

Foreign residents use Net Transfers to send money back to their home countries. It also includes foreigner government grants. It also includes remittances, gifts, and donations, among other things.
The components of India’s CADs are both desirable and undesirable.

Desirable:

A desirable deficit is a natural reflection of rising investment, portfolio choices, and the country’s demographics.
If CADs can be financed by consistent capital inflows, such as FDI inflows, they are desirable because they are less susceptible to capital flight.
Stable capital flows are desirable because they allow debtor countries, such as India, to use and allocate capital to sectors that can produce long-term productive gains and foster higher economic growth.

Undesirable:

Large and persistent CADs can be unfavourable if they reflect larger issues, such as low export competitiveness, and are financed by insecure sources.
There may be cause for concern if deficits are financed by volatile capital flows such as portfolio flows. Portfolio flows are erratic and more vulnerable to reversals in the event of a global financial shock.

Concerns about India’s CAD’s countercyclical nature

External shock dominance: According to research, the country’s CAD rises when output falls rather than when demand rises, indicating that external shocks dominate.
For example, if oil prices rise, and because oil is used in the manufacturing process, the cost of production rises, resulting in a decrease in economic growth. In this case, CADs rise with falling growth due to both the inelasticity of oil import demand and its large share of total imports in India.

Challenges and a Path Forward

The financing’s composition is critical. While FDI inflows were sufficient to cover the deficit in 2021-22, they have been insufficient in the current fiscal year.
Over the medium term, policymakers must halt the negative spillovers from the global trade slowdown on merchandise exports.
Further rate hikes by the US Federal Reserve may result in capital outflows, adding to exchange rate market pressures. This could be difficult in the current environment, as a weaker currency combined with a sticky import basket will result in imported inflation.
Thus, policy measures must facilitate exports by focusing on structural reforms to improve trade competitiveness, as well as signing free trade agreements.

@the end

India is currently dealing with a dual deficit of high fiscal and CADs. While aggressive fiscal consolidation may be unwelcome in the face of mounting concerns about a global slowdown, a comfortable external environment can be maintained by ensuring stable financing and using exchange rates as a shock absorber to weather the adverse global economic situation.

Source: https://www.investopedia.com/terms/c/currentaccountdeficit.asp

Governance

Tobacco Consumption: Higher Prices May Be the Most Effective Method

Post author By balancedreport
Post date March 1, 2023

In India, the proportion of smokers is decreasing, but smokeless tobacco consumption is increasing. Tobacco use without smoking is widespread and poses a significant public health challenge. The use of smokeless tobacco in India is deeply ingrained in cultural and traditional practises, making public health interventions difficult to address.

DATA: Tobacco consumption in India

Consumption of tobacco among men in both smokable and chewable forms was higher in the north-eastern states of India in 2019-21 than in the rest of the country.
Consumption in the southern states is relatively low: In the southern states, the share of both types of tobacco consumption was relatively low. However, among those who smoked, the proportion of those who smoked more than five sticks per day was significantly higher in many southern states. So, while there were fewer smokers in the south, those who did smoked heavily.
Smokable forms: When only smokable forms were considered, the northern states of Himachal Pradesh, Uttarakhand, Haryana, J&K U.T., and West Bengal had a higher share.
If only chewable forms were considered, the share was higher in east Jharkhand, Bihar, and Odisha, as well as Uttar Pradesh, Madhya Pradesh, and Gujarat.
The proportion of cigarette/bidi smokers is decreasing: Overall, the proportion of cigarette/bidi smokers in India is decreasing. In 2019-21, the proportion of smokers fell by more than 10% compared to 2005-06.

What is the cause of this trend?

Price increases for smokable forms: According to health economists, the decrease in cigarette smoking may be attributed to price increases for the commodity over time.
The cost of chewable form has not increased: On the other hand, the prices of bidis and other chewable forms have not increased significantly, and thus consumption has not decreased significantly.

Why is tobacco pricing and taxation important?

Effective method of reducing consumption: According to research from many countries around the world, including India, a price increase induces people to quit or reduce their tobacco use while discouraging non-users from starting.
For example, a study conducted in India discovered that a 10% increase in the price of tobacco products resulted in a 6.4% decrease in adult tobacco consumption.
Higher prices can also deter young people from starting to smoke: According to the World Health Organization, raising tobacco prices by 10% can reduce youth tobacco use by 4%. This is especially important because the majority of tobacco users begin smoking during adolescence.

Tobacco use: negative health consequences

Tobacco use is the leading preventable cause of cancer. Cancers of the lungs, mouth, throat, larynx, pancreas, bladder, kidney, and cervix have all been linked to it.
Chronic obstructive pulmonary disease (COPD), which includes chronic bronchitis and emphysema, can be caused by it. It can also aggravate asthma symptoms.
Cardiovascular diseases: Consumption raises the risk of having a heart attack, having a stroke, or having another cardiovascular disease. It causes blood vessel damage and raises the risk of blood clots.
Tobacco use has been linked to infertility, premature birth, and low birth weight in babies.

Tobacco Use’s Social and Economic Impact

On an individual level:

Tobacco use can lead to decreased productivity and higher healthcare costs.
Smoking-related illnesses can cause absenteeism, poor work performance, and increased medical costs.
Furthermore, tobacco use can reduce life expectancy, which reduces an individual’s overall productive years.

On a societal level:

Tobacco consumption can reduce economic development by increasing the burden of healthcare costs and decreasing productivity.
According to a World Health Organization (WHO) study, tobacco-related illnesses cost India $22.4 billion in healthcare costs and lost productivity each year.

Conclusion

Tobacco use has significant socioeconomic and health consequences in India, particularly among the poor and marginalised sections of the population. Worryingly, cigarette prices have not increased significantly since the implementation of the GST. Taxing tobacco products is an important strategy for reducing tobacco consumption and its associated health and economic costs.

Source: https://www.euro.who.int/__data/assets/pdf_file/0004/74722/E82993.pdf