Cutting back on energy will help the lights stay on longer

 From recent reading it became clear that there is an energy crisis not only in Europe, but also in China – and in India !

Here is Shekhar Gupta explaining why we may suffer blackouts / power cuts over the coming months in parts of India – hopefully planned and announced ones, rather than sudden. 

There are many reasons for what is happening and I will share them as I read – but cutting back on our energy consumption will help the lights stay on a bit longer for everyone. 

25 IDEAS FOR BRINGING DOWN ELECTRICITY USE WITHOUT LOSING COMFORT

Home Lighting

1. In the early 90s, we moved to using 60 W filament bulbs instead of 100 W. In mid-90s, we replaced nearly all our filament bulbs with CFLs, thus reducing per light load to 18 and 36 W from 60 W. 

2. For the last few years, we buy only LEDs and are gradually replacing all bulbs as the past ones die out. All heavy use lights already have LEDs – 3 / 6 / 9 watts each usually. 

3. We find our selves becoming more economical in the use of lighting. One light suffices where two were put on habitually earlier. 

4. Natural light is utilized to the maximum by hanging transparent plastic curtain on the doors which get a lot of light. This plastic curtain keeps out the cold air in winter and hot air in summer, while letting in light. 

5. Window glasses are curtained off for the night only at sleep time as until then they continue letting in outside light. 

6. In consultation with our neighbours, we keep less of the lights of our common corridor on. 

7. Our torches are solar.

Cooling home in summers

8. Our mini honeycomb pad cooler uses just 90 W instead of the 350 W and above, for mid-sized woodwool coolers. 

9. We have just learnt that slower speeds in fans use much less electricity than full speed, so we will now use them at more optimum levels. 

10. We have started replacing old induction motor 90 W fans with new electronic motor 28 W fans – whenever old fans go out of order and cannot be repaired.

11. Our AC use is 10 % compared to our neighbours and only on the hottest days for short durations. The coolers carry on cooling after the AC is shut off. Coolers even circulate the cool air to a second room if both are occupied. 

12. All sun receiving areas of the house are shaded during summer with green nursery cloth. Tirpals / roller blinds / plastic curtains are used, preferably outside the sun receiving windows, so the glass does not heat up. 

Heating Home in Winters

13. We have maximized sun use when it is comfortable to be outside. Our balcony / garden are equipped with electric point for laptop, table and chair, so one can spend long hours outside. 

14. All sun receiving areas of the flat have conveniently placed furniture so one can spend the maximum time in direct heat from the sun. 

15. Blowers and Oil Radiators use 1000 or 2000 W at a time. In contrast halogen rod heaters use 125-400 W rods for heating and one can use multiple rods for faster heating. 

16. But as we have become more conscious of what global warming implies, we find ourselves dressing up even more warmly at home – as a result, in recent winters we have not needed to use heaters at all. 

17. Hot water is used only for bathing, not for washing of hands or washing utensils. Ofcourse, someone unwell would use the hot water stored in the geyser for washing hands, or an especially dirty utensil would be washed in hot water. 

18. Small carpets on the floor at crucial places (like by your bed) keep you warmer and make you step back from using heaters a bit. Ditto by using blankets as ground covers on ALL SLEEPING AND SEATING SURFACES – beds and sofas. 

Electronics

19. All computers are now switched off for the night as are spike busters connecting them to power sources. 

20. When we are getting up from our computers, we are more conscious to immediately put them to sleep while we are away. 

Use of Appliances

21. Having become more economical in our use of electricity, we now use the full capacity of an oven while baking rather than partially. For example, all shakarkandi (sweet potato) is baked together in larger quantitiy at a go. 

22. Washing Machines are ofcourse used only at full load. 

23. Hot things are not put inside the Fridge but allowed to come to room temperature before putting them in the fridge.

24. In summer, water from the fridge is mixed with normal temperature water in thermoses to get the right temperature for drinking water. The fridge does not have to be opened day long for drinking water then, thus conserving on electricity use.  

25. We are away from our home now and then, like most people. In the past, the fridge was left on when we were away. Now we plan in such a way that we try to consume the perishables, or take them with us to our home in another city. Milk packets are packed with ice in an ice box for travel to another city, and so on. However this cant be done for every trip.

The Only Disease Eradicated in the History of Mankind has been a Virus !

Only one disease has been completely eradicated so far - small pox - caused by a virus !

What follows is the story of how humanity did it...

A Virus Humanity Won Over

In 10,000 BCE, a deadly new virus emerged in Northeast Africa, killing indiscriminately and causing a disease we now know as smallpox. 

Around 180 AD, Small pox killed an estimated 5.5 million people in the Roman Empire, including the Emperor, and hastened its decline.

Smallpox kept revisiting countries and continents periodically with global migration patterns : China in the 4th century, Europe in the 7th century - and continued to kill millions of people. Generations watched helplessly as their children succumbed to the disease or were disfigured or blinded by it. 

The Japanese smallpox epidemic of 735–737 is believed to have killed as much as one-third of Japan's population.

Between 1868 and 1907, there were approximately 4.7 million deaths from smallpox in India.

During the 20th century, it is estimated that smallpox was responsible for 300 million deaths worldwide.  For perspective, the flu is supposed to have killed a 100 million people in 2018-2020. 

In the early 1950s an estimated 50 million cases of smallpox occurred in the world each year. As recently as 1967, 15 million people contracted small pox and two million died from it that year.

For Centuries, Inoculation was the only cure for Small Pox

Inoculation was likely practiced in Africa, India, China and Turkey long before the 18th century, when it was introduced to Europe. In China, powdered smallpox scabs were blown up the noses of the healthy. People would then develop a mild case of the disease and from then on were immune to it. There are hints of the practice in China from the 10th century.

Inoculation referred to the subcutaneous instillation of smallpox virus into non-immune individuals. The inoculator usually used a lancet wet with fresh matter taken from a ripe pustule of some person who suffered from smallpox. The material was then subcutaneously introduced on the arms or legs of the non-immune person. 

There were problems with inoculation though – some percent of the people still died, and some developed syphilis or other disorders due to the contamination that occurred in the procedure. 

A self-taught inoculator from Scotland, Notions found success in treating people from at least the late 1780s through a method devised by himself, despite having no formal medical background. His method involved exposing smallpox pus to peat smoke, burying it in the ground with camphor for up to 8 years, and then inserting the matter into a person's skin using a knife, and covering the incision with a cabbage leaf. He was reputed not to have lost a single patient despite inoculating thousands.

Establishing the idea of Vaccination

Edward Jenner, an Englishman, was the first to demonstrate that vaccination offered a reliable defense against smallpox. It was also a reliable defense against other illnesses, such as poliomyelitis, measles, and tetanus, although this was not known in Jenner's lifetime. 

It was 1796 before Jenner made the first step in the long process whereby smallpox, the scourge of mankind, would be totally eradicated - he vaccinated a small boy against small pox. 

In those years and throughout history, small pox killed 30% of those it infected and left nearly all the rest of its victims disfigured, or blind, or both. Some of its variants killed 100% of those they infected. 

Although he received worldwide recognition and many honors, Jenner made no attempt to enrich himself through his discovery. He actually devoted so much time to the cause of vaccination that his private practice and his personal affairs suffered severely. 

But his efforts bore fruit and soon most countries in Europe and in Americas had taken up national vaccination programmes around the beginning of the 19th century.

Many scientific discoveries were needed  to make large scale vaccinations possible

Until the end of the 19th century, vaccination was performed either directly with vaccine produced on the skin of calves or, particularly in England, with vaccine obtained from the calf but then maintained by arm-to-arm transfer. 

At that time, an Englishman, Sydney Copeman, found that vaccine suspended in 50% chemically-pure glycerine and stored under controlled conditions contained very few "extraneous" bacteria and produced satisfactory vaccinations. All vaccinations supplied by the Government were subsequently from Copeman. 

In early 1950s, Leslie Collier, an English microbiologist developed a method for producing a heat-stable freeze-dried vaccine in powdered form. The dried vaccine was 100% effective when reconstituted after 6 months storage at 37 °C, allowing it to be transported to, and stored in, remote tropical areas.

Benjamin Rubin, an American microbiologist developed the bifurcated needle. Easy to use with minimum training, cheap to produce, using four times less vaccine than other methods, and repeatedly re-usable after flame sterilization, it was used globally.

The Final Push for Eradicating Small Pox

In Northern Europe a number of countries had eliminated smallpox by 1900, and by 1914, the incidence in most industrialized countries had decreased to comparatively low levels. In the 1950s, a number of control measures were implemented, and smallpox was completely eradicated in Europe and North America.  

The first hemisphere-wide effort to eradicate smallpox was made in 1950 by the Pan American Health Organization. The campaign was successful in eliminating smallpox from all countries of the Americas except four. 

In 1958 Professor Viktor Zhdanov, Deputy Minister of Health for the USSR, called on the World Health Assembly to undertake a global initiative to eradicate smallpox. At this point, 2 million people were dying from smallpox every year. Overall, the progress towards eradication was disappointing, especially in Africa and in the Indian subcontinent. 

In 1966 an international team, the Smallpox Eradication Unit, was formed under the leadership of an American, Donald Henderson, who was trained at the CDC. In 1967, the World Health Organization intensified the global smallpox eradication effort. Under Henderson’s leadership, the WHO established a network of consultants who assisted countries in setting up surveillance and containment activities, which were as crucial as vaccination in containing small pox. 

Early on, donations of vaccine were provided primarily by the Soviet Union and the United States, but by 1973, more than 80 percent of all vaccine was produced in developing countries.

Victory – after 3500 years of the first proven disease case !

After two years of intensive searches, what proved to be the last endemic case anywhere in the world occurred in Somalia, in October 1977. A Global Commission for the Certification of Smallpox Eradication chaired by Frank Fenner examined the evidence from, and visited where necessary, all countries where smallpox had been endemic. In December 1979 they concluded that smallpox had been eradicated.

On May 8, 1980, the World Health Assembly announced that the world was free of smallpox and recommended that all countries cease vaccination: 

“The world and all its people have won freedom from smallpox, which was the most devastating disease sweeping in epidemic form through many countries since earliest times, leaving death, blindness and disfigurement in its wake”.

The cost of the eradication effort, from 1967 to 1979, was roughly $300 million US dollars. Roughly a third came from the developed world, which had largely eradicated smallpox decades earlier. The United States, the largest contributor to the program, has reportedly recouped that investment every 26 days since in money not spent on (a) vaccinations and (b) the costs of incidence. 

Will Forest Fires be our nemesis ?

In southern California, December is meant to bring the start of rainy season. Not in 2017. The Thomas fire, the worst of those that roiled the region that year, grew 50,000 acres in one day, eventually burning 440 sq miles and forcing the evacuations of more than 100,000 Californians. A week after it was sparked, it remained, in the ominous semi-clinical language of wildfires, merely “15% contained”.

Five of the 20 worst fires in California history hit the state in the autumn of 2017, a year in which more than 9,000 separate fires broke out, burning through almost 1.25 m acres – nearly 2,000 sq miles made soot. 

In the summer of 2018, the fires were fewer in number, totalling only 6,000. But just one, made up of a whole network of fires, together called the Mendocino Complex, burned almost half a million acres alone. 

In total, nearly 3,000 sq miles in California turned to flame, and smoke blanketed almost half the country. 

Things were worse to the north, in British Columbia, where more than 3 m acres burned, producing smoke that would travel across the Atlantic to Europe. 

Then, in November, came the Woolsey Fire, which forced the evacuation of 170,000, and the Camp Fire, which was somehow worse, burning through more than 200 square miles and incinerating an entire town so quickly that the evacuees, 50,000 of them, found themselves sprinting past exploding cars, their sneakers melting to the asphalt as they ran. It was the deadliest fire in Californian history.

When trees die – by natural processes, by fire, at the hands of humans – they release into the atmosphere the carbon stored within them, sometimes for as long as centuries. In this way, they are like coal. This is why the effect of wildfires on emissions is among the most feared climate feedback loops – that the world’s forests, which have typically been carbon sinks, would become carbon sources, unleashing all that stored gas. 

The impact can be especially dramatic when the fires ravage forests arising out of peat. Peatland fires in Indonesia in 1997, for instance, released up to 2.6gigatons (Gt) of carbon – 40% of the average annual global emissions level. 

Surprising health benefits of eating Mango

Debiji sent a great presentation on the health benefits of ingesting Mango. But I like to check these statements in published studies as many forwards sometimes have dubious claims which the sender may not have researched for himself. Here is what I found :

Mango is the national fruit of India and the Philippines, and the national tree of Bangladesh. Over one thousand mango fruit varieties are available worldwide.

It is native to India and Southeast Asia where it has been cultivated for over 4000 years. Currently, mango is also grown in Central America, Africa, Australia, and for a few years in Europe (Sicily, among other places).

Although Mango was first introduced in Sicily in the 1980s, it was only in-depth research that allowed it to be reintroduced in the 2000s. It is now enthusiastically used in Sicily to cover abandoned soils, previously dedicated to citrus groves and no longer profitable for the Sicilian rural market. 

Mango pulp has relatively high content in calories (60 Kcal/100 g fresh weight) and is an important source of potassium, fibre, and vitamins. Mango pulp is also a particularly rich source of polyphenols and carotenoids, a group of micronutrients found in plants which exert specific health benefit.

Mango skin and seed are usually discarded. However, several studies report that these mango by-products also contain high levels of health-enhancing compounds.

Mango skin has been found to be a good source of polyphenols, carotenoids, dietary fibre, and vitamin E. Many healthful compounds in fruit peel are present only in small amounts in the pulp.

A polyphenol called Mangiferin is one of the most potent antioxidants known. It has been found in mango bark, leaves and pulp, but the richest part of the plant in mangiferin is the fruit peel.

However, peel consumption can also promote an allergic reaction in some people because of either the presence of allergen urushiol in the fruit peel, or the presence of pesticides.

Mango seed kernels are equally rich in polyphenols with potent antioxidant activity. 

Finally, polyphenols are also present in mango leaves, flowers, and stem bark.

A certain number of Reactive Oxygen S3pecies (ROS) are produced in the human body and can damage cells. The ability of the body to fight off ROS goes down during stressful conditions. If ROS are not removed, their accumulation overcomes the cellular reparative abilities, causing the collapse of cellular functions and can result in the generation of pathological states related to aging, cancer, atherosclerosis, heart attack, stroke, and diabetes. 

The large variety of antioxidants, pigments, and vitamins that are present in any part of the mango plant are responsible for the antioxidant and free radical scavenging activities (destruction of ROS).

Several varieties of Mango from Bangladesh were tested, and Langra was found to have the highest phenol content as well as antioxidant properties.

Several studies showed that phytochemicals contained in mango play an anti-inflammatory role in several chronic pathological disorders associated with inflammatory responses.

Bioactive compounds of mango, particularly in its pulp and leaf extracts, have been also reported to exert anti-diabetic effects. Doses of Mango pulp to diabetic rats resulted in a significant decline in blood glucose levels.

Bioactive components contained in the different parts of mango (bark, pulp and kernels) have also shown anticancer activity in different tumour cell lines. The data collected is very encouraging and suggests a targeted action on tumour cells.

The insurance industry and fossil fuels..

The increasing frequency and severity of extreme weather events across the globe has been noted by studies. The specific types of weather events include hurricanes, extreme precipitation, tornadoes, landslides, mudflows, drought, wild fires, heat waves, flash floods and rising sea levels.

It is sobering to realize that only a little over a fourth of the losses due to natural disasters In 2016 were covered by insurance. That is, over a 100 billion pounds worth of losses in 2016, were not covered by insurance and the owners of the assets or services affected, had to bear those losses.

The increasing severity of weather events has been linked to continued fossil fuel use, dumping more and more CO2 every day in the earth's atmosphere, increasing its 'blanket' such that the heat from the sun cannot fully be released back into space.

The insurance industry is one of the world’s biggest institutional investors in fossil fuels.

In the United States, the city of San Francisco has potentially become the first US municipal body to try to force insurance companies to stop insuring and investing in fossil fuels.

Fossil fuels were long considered a ‘safe bet’ until climate scientists declared that the bulk of all known reserves had to stay in the ground if humanity is to limit global warming to 1.5ºC. The risk lies in these fossil fuel investments becoming what is known as stranded assets, which essentially means investments in coal, oil and gas could potentially suffer from a sudden and unexpected drop in value as society puts measures in place to prevent their use.

Whether it’s a drop in demand, new legislation or the threat of legal action, the sheer speed and unanticipated manner in which these factors could take hold could, at some point in the not to distant future, render the bulk of the insurance industry’s fossil fuel investments worthless.

There is also the question of what the insurance industry chooses to insure, or rather, not insure. Fossil fuel companies can’t operate their facilities or build new power plants without insurance coverage. They depend on insurers to cover the legal, financial and natural risks of their projects. Coal has been highlighted as the most carbon heavy of all fossil fuels generating not only nearly half of the world’s CO2, but also creating the most atmospheric pollution.

Researchers have concluded that we cannot afford to build any new coal power plants and have to retire existing plants early in order to meet the goals of the Paris Agreement and avoid the worst impacts of runaway climate change. Yet there are currently 1,600 new coal plants planned globally. If the insurance industry was to cease underwriting such intensive fossil fuel production sites it is likely that many of these projects would never go ahead.

However, in spite of their rhetoric, insurers continue to enable climate-destroying coal projects. They offer insurance coverage without which these projects could not go forward, and have invested more than 500 billion dollars in fossil fuel companies.

An increasing number of insurance companies have divested from providing insurance coverage and investment funds to new coal projects, they are selling holdings in coal companies and refuse to underwrite their operations.

Fifteen insurance compaies have fully or partially halted financial relations with coal companies, representing $4 trillion in global assets. The first-movers, including Allianz, Aviva, AXA and SCOR, are almost exclusively located in Europe and represent 13 percent of all global insurance assets. 

Allianz recently pledged to immediately withdraw from insuring single coal-fired power plants and coal mines, either in operation or planning. Zurich insurance Group announced in nov 2017 that it will stop providing insurance or risk management services for new thermal coal mines or for potential new clients that derive more than half their revenue from mining thermal coal. It will also stop supporting utility companies that generate more than 50 percent of their electricity from coal. Swiss Re and Lloyd’s will also be announcing plans to divest from coal in the coming months. AXA and Swiss Re have also limited their underwriting of tar sands projects

Unfortunately when it comes to the climate change time horizon, the very industry which could have more impact than any other is clearly not taking action quickly enough. Even the bold pledge by Allianz has significant limitations, as the company also stated it will continue to insure businesses that generate power though multiple fossil fuel sources, including coal, until 2040.

The eight top US insurance companies that do not consider climate change in their investments are State Farm, Allstate, Liberty Mutual, Berkshire Hathaway/Geico, Travelers, Nationwide, Progressive and USAA. Only one US insurance company, Lemonade, has pledged not to support fossil fuels.

We had better wake up to how deadly heat waves can be..

The world will face severe climate impacts even with 1.5 C degrees of warming, and the effects get significantly worse with 2 degrees. In a 2 C warmer world, nearly 40 % of the world's population will be exposed to severe heat atleast once every five years (in a 1.5 C warmer world, this percentage will be 14 %).

How quickly heat waves can kill, was brought home when 80,000 people died in Europe's 2003 heat wave. A majority of the deaths occured in August that year. During one shocking week that month, nearly a 100 % more people died in France than would have as per the regular death rate. 40 % extra people died in Portugal, Italy and Spain. Excess mortality exceeded 20% in Germany, Switzerland and Belgium and 10% in four other European countries.

That summer in some weeks, temperatures soared to 20–30 percent above average. Even nightly temperatures were higher than the average summer midday highs. The heat was particularly severe in France, where the temperature remained around 37 °C for more than a week in August in some areas.

The heat wave also affected the environment. Alpine glaciers shrank by 10 percent over the summer. Forest fires raged across western Europe. The heat affected harvests as well: fodder and grain production declined. In addition, high water temperatures and low water levels shut down French nuclear power facilities just when demand for electricity peaked.

Energy from Renewables..

The following are some of the highlights of what i have been reading lately on global warming :

• In November 2016, the Arctic was already experiencing extraordinary anomalies. Temperatures were 20C above normal.

• “The consequences of failing to keep the temperature below 1.5 C will be to wilfully condemn hundreds of millions of the poorest citizens of Earth to certain deaths from the severe impacts of climate change.”

I started looking for some of the ways forward for countries to bring down Co2 emissions.. there are dozens of ways, and among them are :

• Retrofitting existing buildings can save 70-90% of the energy used to heat and cool them. Such a move also tackles fuel poverty, creates local jobs and reduces deaths from cold. 

• Switching transport from fossil fuels to electricity powered by renewables, cuts emissions but also removes the air pollution that is responsible for an epidemic of lethal respiratory disease. In Europe alone, about half a million people suffer premature deaths each year due to air pollution.

• In 2015, Denmark generated 140 percent of its electricity requirements on one particularly windy day from wind turbines alone, the excess of which was exported to Germany, Norway and Sweden. In 2016, Germany came remarkably close to being completely run by clean energy for a day due to a surge in wind and solar power. 

• That same month, Portugal was powered solely by renewable sources for 107 hours, which is roughly four-and-a-half days, setting the bar higher. 

• But the Central American nation of Costa Rica beat all the European countries with its landmark achievement in green energy in 2016. For more than 250 days the country used zero fossil fuels and drew its electricity from hydropower plants, wind turbines and geothermal installations. Thanks to such efforts, the notion that renewables can run a whole country is no longer unfathomable. In fact, it is now an ideal to aspire to.

• In November 2016, many, mostly low-income countries, from Bangladesh to Tanzania and Guatemala, committed to switching entirely to renewable energy by 2030-50 at the latest. China is installing more new wind energy capacity in a single year than the UK has in total.

Embelished Claims

A friend sent this video. 

I wrote back to him : Thanks for this interesting talk – the arundhati and vashist stars were very thought provoking ! But atleast one of the claims is embellished – Vasco de gama did not seek out to ‘discover india’ as trade with india had been going on from europe since before Christ and after, via the Greek and then Roman empires. When the Roman empire declined, Indian traders turned their attention to south east asia where the sphere of Indian influence became large. Where Europe was concerned, Arabs and after them, Ottomon Turks dominated the trade with India, the Far East and China, via the Red Sea and sold in Europe primarily through Venetian traders.

Other European powers wanted to cut in on the lucrative spice trade, and many naval expeditions were launched to reach and directly secure sources of the spice trade. It was in this context that the columbus and vasco de gama expeditions were mounted. Vasco de Gama found the route around africa to reach india bypassing the red sea route controlled by the Turks. The pilots (the guides for the route) for this long expedition were european, moorish, and finally indian. There is no record of indian vessels ‘escorting vasco de gama’s ship from africa to india’.

India’s ancient maritime history isnt that well researched but atleast I have never seen references to India having dominated the world trade in spices even as it played a very important role in it.

India has produced great world religions that offer insight and understanding of the cosmos and man’s place in it. It has had sophisticated political and administrative traditions in parts of her history. It has many great innovations and discoveries to her credit. But it is perhaps our traditon of living within our environmental means that is the greatest techology of all. Therefore this trend common in social media of daily producing lies and half lies (that the unsuspecting among us circulate) to brag about some supposed aspect of indian domination makes one wonder why we lack self confidence to state what the facts tell us.  

Commentary on a noble song..

This song was sent over whatsapp :

Hamne Suna tha Ek hai Bharat - DIDI 1959

It’s a noble song that puts most india’s ills to having been under foreign domination. i dont agree though.. this is the misinformation I have heard from elders all my life. I don’t think all the distortions in india can be traced to british rule or muslim rule. Muslim rule lasted over parts of india for 600 years (till the middle of the 18^th century) and company / british rule for 200 years. But caste inequalities are millenia old.

Muslim rule over Spain and Portugal also persisted for over 700 years until the end of the 15^th century – but they have taken their own future in their hands since, have they not ? I think our country suffers as we have made (and continue to) too little effort to include all Indians in our effort to develop. We have continued to encourage income inequality which remains the HIGHEST in the world save the middle east. The top 10 % of the Indian population earned 55 % of the income in 2016. In Europe the share of the top 10 % was 37 %. After world war 2, the Governments in Europe built big welfare states, with generous jobless benefits, child subsidies and income support. Such benefits became the most important instruments for reducing inequality there.

The song also says it will take time for india to develop.. The WW2 ended just 2 years before india got her freedom. Europe suffered far more war, deaths, destruction of cities and countryside alike, and continuing occupation by a foreign power (USSR) of a large part of europe.. yet what have they built and achieved since then, and what have we ?

The achievements of europe are not just material – though ofcourse those are there to see. Germany had killed, ravaged, pillaged, large swathes of Europe. In return she and her allies had suffered extensive destruction. But after the war, Governments worked to encourage emotional healing between countries and communities, as did the Church and NGOs. They succeeded and the result of that was the European Union. In our country though we are following the opposite path – we are increasing divides between religions and communities. 

Why the FRDI Bill is so toxic

You may have heard that the cabinet has approved the Financial Resolution and Deposit Insurance (FRDI) bill and tabled it in the Lok Sabha. The bill was referred to a joint parliamentary committee without any discussion in the Lok Sabha. The committee is expected to place their report on the bill in the Lok Sabha in 2018.  If passed, in my view the implementation of the bill will destabilize the already worrying situation in our country :'

1.    The bill refers to a bail in by depositors – that means that a bank which is short of cash by having given away our money in massive loans that the promotors refuse to pay back (like Vijay Mallya), may recoup some of its losses by refusing to return part of or all of our money in the bank. That money may be converted to shares in the loss-making bank. Until the bank becomes profitable again, if at all, and the shares appreciate greatly in value, we will be unable to have our money that was in the bank, back.

2.     The money covered by insurance paid by the banks amounts to only Rs. 1 lakh per account holder in one bank. Yes, if you have another account in another bank that is separately insured for 1 lakh rupees also. Ofcourse some 67 % of the account holders in our public-sector banks have deposits amounting to less than 1 lakh so they are covered by this insurance. But the remaining 33 % presumably lower middle class and above will have their entire life savings in banks amounting to tens of lakhs possibly, especially soon after retirement.

3.     Atleast 12 % of all loans given by public sector banks have become unviable – wont be paid back by the loan takers. In terms of amount of money in loans that have become bad, figures ranging from 10 – 20 lakh crore rs. are being quoted in the media. For perspective, total amount of deposits in public sector banks are 111 lakh crores. The money loaned out is 81 lakh crores. The banks have borrowed money from other sources to the tune of 12 lakh crores. Whatever the math, it is being said by all concerned that the public-sector banks have become short of cash and are unable to make new loans to industry and agriculture in keeping with demand. This has badly hit economic growth in our country, but even more seriously, it puts our money in the bank at risk should the bank fail.

4.     For decades, the government has not gone far enough to improve the functioning of our public-sector banks. Instead, politicians have focused on milking the banks for large loans to their own enterprises and to the companies that fund them for elections – enterprises which have no intention of paying the loan back fully. So farmers owing a few thousands or lakhs to the banks are hounded and their land confiscated while companies with thousands of crores in outstanding loans are given more and more loans. So some of our money given for safe custody in banks has already disappeared in this loot. The amount of this lost money has become so large lately that it is affecting the giving of new loans and perhaps may eventually one day lead to the bank being unable to pay us back fully when we want to withdraw our cash.

5.     We have even earlier been aware of all this, but taken comfort in the implicit sovereign guarantee that our government will not let any commercial bank fail. And it has not. When some bank has been in trouble, RBI and Government have stepped in and merged it with another bank and so on. Cash injections have been made by Governments into public sector banks to help them meet their obligations. But with this proposed FRDI Bill, that sovereign guarantee appears to be a thing of the past – the govt. says in this bill that if your bank is in trouble, it is your money that should be used to help it stabilize.

6.     If this comes to pass with one or more banks, what of the depositors dependent for their living expenses on their bank account or on cash reserves to run their business ? What is their fault in this looting ? If it is essentially a fault of careless or corrupt governance, the government should be bailing out banks and setting right their governance. Of course Government should not be misusing our hard-earned taxes and bank deposits to first loot from deposits (and taxes) and then use some of those taxes to keep bailing out banks who keep giving loans to looters, and so on. It should be taking many corrective steps to minimize this loot and to make more loans possible to those genuinely putting up businesses and industries, and to help make agriculture more profitable by helping improve farm productivity.

7.     So has the government been taking any of the steps suggested by many committees ? The main supervision of banks is by the governing bodies of those banks.. these are stuffed full of government appointees, who perhaps use their positions to extract more loans for cronies. Many reforms such as having separate MDs and Chairmen of Banks, carefully making new appointments to bank governing bodies, making available better credit rating systems, and so on have been repeatedly mooted. But many positions on bank governing boards even now wait for months and years for government to approve of names suggested by RBI. Naming willful defaulters (those who have capacity to pay back loans but are choosing not to pay them) has been asked for repeatedly by courts in response to PILs but was resisted by government as well as RBI. Critics rightfully say that those borrowing thousands of crores from banks – our money, should be transparently rated, their project proposals put in the public domain, and their loan payback performance also publicly available. But this is far from being implemented.

8.     Instead, the agencies which can help monitor, investigate and stem the loot are more and more staffed with corrupt or lackadaisical people, or the positions are simply not filled for years, especially by the present government – CBI, central vigilance commission, central information commissioner, lokayukta, and so on..

9.     The FRDI bill envisages the creation of a Resolution Corporation that will rate the sickness of banks and take them over as required. It will manage their affairs and try to make them solvent if possible, or else sell their assets. These functions have been performed by the Reserve Bank of India (RBI) all along. To many commentators there is no justification for creating the Resolution Corporation to take over functions of the RBI. The only advantage to the government appears to be that the resolution corporation will have appointees made by the finance ministry and thus more directly controlled by it compared with the RBI which is an independent statutory body. And it is such government / political control itself which has brought the banks to their present pass !

10.   I have sent a mail to Lok sabha and Rajya sabha MPs of my area asking them to desist from voting for this bill when it is put to discussion and voting. I used this well drafted mail at this link - http://www.repealfrdi.net/ they send you a mail to your id (can take 2-3 hours) and you press the link to send it to the MPs. I have heard there is a petition ongoing at change.org to repeal this bill and I will find and sign it too.

11.   Some people wrote back to say they shared some of these concerns and had been trying to read up more. one person wrote back : ‘The Govt has issued a series of ads in the newspapers that deposits are safe. This was started during the Guj elections. I checked my known sources & have been told that this kind of thing cannot be done in India which is a savings oriented economy.’ Another person wrote back : ‘But last week finance minister Mr Jaitly cleared these same points on India TV and said that it's not true, all is fake and created by opposition. The government going to make law for more secure the money of depositers in bank.’

12.   Here is the background on how the FRDI bill came to be drafted in its present form : Post 2008 bail out of American banks, the US govt. felt they cannot do this again. So they proposed to the G-7 group of countries the bail in clause that money from the depositors of the failing bank be used to make it solvent again. (in contrast, bail out means some external party – usually the government gives money to the bank to make it solvent again). The G-7 group of countries accepted that clause and further proposed it to the G-20 group of countries – India among them. This clause was accepted by this group as well, and several countries have reportedly now made similar laws as in india – reportedly they include Canada, UK and the EU. The Financial Stability Board which was created to guide this process internationally has apparently a model law that india has copied more or less verbatim.

13.   But these countries offer much more security to their citizens compared to in our country. To begin with the deposit insurance in the UK and Germany is 3 times that of the average yearly wage in those countries. In Canada and the US, it is 5 times the average yearly wage in those countries. In India the average yearly wage is 1.25 lakh rupees, so our deposit insurance does not even cover one year’s wage. I guess it should be raised to atleast 4 lakh rupees to be equivalent to the UK norm, but would entail more payments for this insurance by the banks and therefore more payments by us as fees to our banks. Secondly, these countries offer a fantastic level of health care to all their citizens, old age pensions (which in Germany is 3000 euros a month – 2.25 lakh rupees !), and many other support systems. In India these systems and services are very inadequate. Especially the middle class onwards, everyone save government servants, are critically dependant on their savings in banks.

14.   Experts say that another difference between these countries and ours is that most deposits in their banks are by wholesalers – i.e. large institutions, credit unions, insurance companies and so on. These large institutions are better able to protect themselves. In our country most deposits are retail – i.e. by the end customer. So India should never have copied this bill from an international model which is totally unsuited for our country.

15.   The bail in clause has already been used in Cyprus in 2013. Cyprus is one of the EU countries, albeit a small one. The banks in that country had bought a lot of bonds from Greek Banks as investments. When the Greek economy started sinking those bonds became worthless and the Cyprus banks had no money to transact normal business with their customers. The bail in clause was invoked and customers could only have access to 1 lakh euros – the amount covered by their deposit guarantee. Some 40 % of the deposits above that amount were converted to shares of those failed banks. Another 20 % were kept in reserve for more conversion to shares if the bank needed to do so. Another 30 % was put in compulsory FDs for periods ranging from 3 months to 1 year. So one presumes the customers of those banks got only 10 % of their deposits back immediately, apart from 1 lakh euros, and another 50 % after a period of time when the situation had stabilized. But 40 % of every deposit was gone for a long time until the banks would be profitable and their share prices rose.

16.   The bail in clause was also used by the Iceland Government in 2009 (the term may not actually have existed then but the same strategy was employed). This is another small country in the Eurozone. The banks there raised money from Europe by offering crazy interest rates to the tune of 15 % and so on. The Iceland banks then went shopping for equally crazy assets all over the world, including sports teams and so on. The banks crashed after a few years. The government fully guaranteed (after the bank crash) the full amounts of deposits of the DOMESTIC customers. But it refused to honour the deposits of lakhs of customers who had transacted with those bank branches in countries such as the UK, Denmark and others. Those governments were agile enough to quickly freeze the assets of the failed banks in their countries, and thus retrieve for their citizens atleast some of their money.

17.   So obviously this bill should be repealed in full – rejected by parliament or withdrawn by the Government. It is not enough in my view to delete just 1-2 offending clauses – because they can easily be inserted back in after a few years by a majority single party led government. But that is not the end of our troubles with our banks – which can still fail and cause us grief. Government spokespersons and people who drafted the bill have said that therefore the bill does not really make things worse than they already are. But I think they are obfuscating the reality – today a bank may fail and may end up losing the money of some of its depositors. But depending on the losses, some or most may get their money back. But a bail in provision as per the FRDI bill would lock in the money of all depositors so that the bank may continue to survive.

18.   I have tried to study what positive steps can be taken so these must be the focus of what we demand that the Government do in this matter. The last RBI Governor’s tenure was from Sep 2013 to Aug 2016. Early on, he got RBI to minutely study the actual asset position of banks – i.e. how many loans had actually gone bad (as the banks were not declaring them and were hiding their actual financial position). With that report in hand by early 2015, RBI constituted a Banks Board Bureau with many eminent persons on board who set about to find talented people of integrity to head the banks or serve in their boards. Sadly, the Government has not worked in tandem with the Bureau to quickly fill bank boards with appropriate appointees.

19.   RBI and the Banks Board Bureau also worked on many other measures to recover some of these bad loans called NPAs (Non Performing Assets). From selling off some of the assets of failed companies, to restructuring the loans to giving an emergency cash injection in a few cases where the company could be helped to continue its business and return the funds by and by. But the RBI Governor, Raghuram Rajan, who was in the thick of this process of bad loans cleanup was not given another term after his 3-year term was over. This was a delicate task he was doing and many people felt he should have been allowed to complete it.

20.   In fact, there have been 24 Governors since the inception of the Reserve Bank and 12 of them have served terms of 4-7 years each. In previous regimes, the governor appointed by Congress Party was given an extension by the then BJP government, and that appointed by the BJP government was given an extension by the Congress Government. That must have been because the work they were then doing was felt to be more important than which regime appointed the Governor. But this BJP government not only did not extend the term of the RBI Governor appointed by the Congress Government before them, it allowed Subramaniam Swamy to endlessly belittle the RBI governor publicly with unfounded trivia. This was a new low in independent india, for the RBI and its Governors have been widely respected throughout its history not only in india but internationally too.

21.   The committee set up by the Finance Ministry to prepare the FRDI bill submitted its draft just after Rajan left the post of Governor, RBI, so his comments on this bill are not available to us. The timing may have been deliberate I think, as the RBI was already fully into the very issues that are the subject matter of this bill. The bill seeks to override RBI and give all its powers in the case of failing banks to a new entity – the resolution corporation. So not only we the tax payers will be asked to pay for a whole new bureaucracy, that new entity will have zero institutional experience to begin with. It will also have highly centralized powers against which no appeal can be made to the courts or any other entity except the highly overworked company law board ! So we must ask not only for the FRDI bill to be rejected / withdrawn, we must also ask that RBI must be enabled to continue its work on cleaning up the bad assets of banks, rather than the often adversarial position the Finance Ministry takes on these issues.

22.   RBI and the Finance Ministry must set up a credit rating agency which rates the credit position not only of companies that apply for loans but also of their promoters and sister concerns. The reports of this agency must be online, as also the appraisal reports by banks of the criteria they used to pass or reject specific loans. Ofcourse this may be done to begin with, for large loans. This may sound outlandish but such is the stranglehold of corruption including by bank officers, corporates, bureaucrats and politicians, that there is no other way to combat this phenomena. This suggestion has been repeatedly made by Prashant Bhushan who represented the first PIL on this subject in the 1990s. The petition was launched by H D Shourie, Arun Shourie’s father who had spearheaded a respected public organization called Common Cause. That and similar PILs also by Prashant Bhushan and Swaraj Abhiyan have continued to this day and it is a result of some of this work that the NPAs have come to light as much as they have.

23.   Those who have looted our money and brought our banks (and consequently our economy) to the precipice must be prosecuted and awarded exemplary punishments. But for this the institutions who can help do this need to be staffed fully with competent people, and left alone by the Government to do their job – RBI, CVC, CIC, Loayukta and most importantly, the CBI.

24.   A similar legislation to the FRDI bill has been adopted for EU as a whole, applicable to 28 Eurozone countries. Known as the Bank Recovery and Resolution Directive, the legislation is the centerpiece of efforts to avoid a repeat of the €1.6tn of taxpayer support to banks during the 2008 financial crisis. It empowers regulators to intervene quickly when a bank is weak, avoiding the panic that could arise from a messy and prolonged insolvency procedure. The law took effect in 2015, but markets were given an extra year to adjust to the most controversial measure: tougher rules imposing losses on a failing bank’s creditors, which kicked in on January 1, 2016. This stipulates that 8 per cent of a bank’s liabilities must be wiped out before any taxpayer support can be provided, placing unsecured senior bondholders and also large corporate depositors on the hook for forced losses, also known as bail-ins.

25.  However the EU legislation appears to be better than the FRDI bill in these respects : It does not amalgamate insurance companies along with banks in a single bill / authority, as FRDI bill seeks to do. Secondly, insured deposits are expressly excluded from bail-ins. Thirdly, the portion of households’ and small businesses’ deposits above €100,000 also get preferential treatment These deposits sustain a loss only if all the instruments with a lower insolvency ranking are insufficient to cover the losses and restore capital adequacy. Fourth, once bail-in has involved at least 8 per cent of total liabilities, taxpayer money can be used to bail out banks. Fifthly, it does not seem to require a separate resolution corporation. For example in the UK, the Bank of England has been designated as the resolution authority so RBI could and should have been designated as the resolution authority for banks in india also.

26.  A form of bail in has been implemented in Greece also. With the economy in Greece in trouble for several years, in the beginning of June 2015, it placed controls on the amount of cash that could be withdrawn from one’s account via ATMs. This limit was 60 euros when the average Greek monthly wage is 780 euros a month. That would be equivalent to withdrawing 840 rs. a day in India as our average monthly wage is 10,500 inr. After 3 weeks of being closed in june 2015, the banks opened, and the cash withdrwal limit was increased to 840 euros a fortnight which would be equivalent to 11500 rs. fortnightly withdrawal in india (in the context of the average monthly salary). That limit on withdrawals is STILL in place and is expected to be lifted at the earliest in end 2018, and only if the Greek economy does better than it is doing now, for which there is no certainty. Capital controls have also been in place through this period which means no money can be taken out of the country.

27.   Singapore’s proposed resolution regime, excludes all deposits and senior debt from bail-in. The paper on APPROACH TO RESOLUTION OF FINANCIAL INSTITUTIONS IN SINGAPORE makes clear that saving them from failing is not its objective as that would make for non-accountability of the owners and managers of those financial institutions (FI). Its objective is to protect the interests of the users of the services offered by that FI. In fact, back in 2009, Iceland allowed its two leading banks to fail, suffered many negative consequences, but quickly bounced back and now has the fastest growing economy of the developed world. Ireland at the same time also suffered distress in its banking system but bailed them out. The resultant disturbed financial landscape has still not abated fully in Ireland..

28.   In Singapore, as in England, there has been no need for a separate resolution corporation – the resolution function is the responsibility of the existing monetary authority in both countries, as it should be in ours.

29.   As the general secretary of a bank officers’ union says, the most dangerous consequence of the proposed FRDI Bill is that it will take out the issue of existence or liquidation of a PSB (or even LIC tomorrow !) from the domain of public debate and leave it to the whims of bureaucratic dictates. Already, there are many rules and legislation in place under the existing Acts that deal with winding up of financial institutions, United Forum of Bank Unions has said in its representation to the finance minister.

30.   FDRI Bill is also a poorly drafted law - think tank PRS Legislative Research demonstrates how clauses 58 and 62(1) regarding governance of a firm declared critical are inherently conflicting. There are other similarly inconsistent clauses.

31.   Most professionals from the financial field simply cannot appreciate the need for this Bill. The Banking Regulation Act has worked well to help struggling banks in the past – why cant it work now ? Former Deputy governor of Reserve Bank, Chakravarty, says there is no case for a bank failure even if 25 % of the loan books of PSBs goes bad. That is reassuring ! He also gives this great idea of separating wholesale banking (for corporates and institutions) from retail banking (for individuals).

32.   Chakravarty goes on to say that corporates should be funded by markets and not banks. RBI had started this process which has all of a sudden stopped, he says. On looking into what happened, we find that in Aug 2016 RBI announced a number of steps that will strengthen the corporate bond market. Thereafter it was expected that the government will nudge all stakeholders to act in order to complement RBI’s initiatives to address all outstanding issues. One of the reasons why the corporate bond market never really took off in India is because of high fiscal deficit and the government’s funding needs. The NK Singh committee was constituted to suggest new fiscal rules and it submitted its report in Feb 2017. However, the Government has chosen to not follow its recommendations for now.

33.   Murlidharan, who started the whatsapp brouhaha on this bill makes this startling point – if we depositors are expected to bail in failing banks, will we also be getting our share of profit when they are making profits ? (but at present when public sector banks make profits, those go to the Government !). He also very rightly states that bank facilities are merely an essential infrastructure / service just like roads or buses that a government is required to provide to its citizens. The implication is that users of a service should not be penalized for merely using a service !

34.   As an aside, this article a month ago speaks of why public sector banks are special and must be fostered : http://www.moneylife.in/article/tough-measures-needed-to-recover-mounting-npas-of-banks-say-experts/52267.html however private banks’ now have about 20 % of india’s deposits. Their loan books are largely healthy and growing at 20-25 % a year. They also are growing their loans to small and medium enterprises at the same rate.. Even their agriculture loans are growing !

More readings / videos on this subject :

1.     A month ago, Prashant Bhushan on corruption and bank failure.. http://www.thehindubusinessline.com/economy/crony-capitalism-corruption-and-political-pressure-contribute-to-current-problems-in-economy-prashant-bhushan/article9966613.ece

Also this video of Prashant Bhushan speaking on this subject last year : https://www.youtube.com/watch?v=LRD1cElTqTw

2.     An article published 6 months ago by a senior corporate gave simple pointers to how we can prevent or minimize new NPAs : https://blogs.timesofindia.indiatimes.com/valuesfirst/gentle-steps-taken-for-resolution-of-npas-are-unlikely-to-yield-results/

3.     Former RBI Governor Raghuram Rajan on what RBI is doing to clean up banks : https://www.youtube.com/watch?v=tvREHPJBDlM

4.     economic times’ debate on the FRDI bill earlier this month : https://www.youtube.com/watch?v=FXyZMeeqqb8

5.     an interview with a bank officer on the impact of the bill : https://www.youtube.com/watch?v=6dTnERZPn-o a second interview with the same bank officer : https://www.youtube.com/watch?v=TBOAHzvjJv8

6.     ndtv debate with mira banker : https://www.youtube.com/watch?v=amcu0cL2gmw ravish on frdi bill : https://www.youtube.com/watch?v=ygOgBnB9cjM

7.     shows how the banks board bureau under the RBI has been doing some of the work that is envisaged for the resolution corporation - http://banksboardbureau.org.in/WhatsNew/Details?id=10

8.     shows rbi does the work of monitoring the health of banks and taking corrective action : https://economictimes.indiatimes.com/news/economy/policy/government-rbi-in-talks-to-shore-up-psu-bank-capital/articleshow/60132474.cms

9.     shows governance and hr reforms of psbs are neglected by Govt. - http://www.businesstoday.in/current/economy-politics/modi-govt-psb-recapitalisation-public-sector-banks-recapitalisation-arun-jaitley-fiscal-stimulus/story/262527.html

10.   Excellent points on how inappropriate this bill is : http://www.livemint.com/Opinion/ZAc5cm4mkrry3xdzW1t5jM/Time-to-go-to-FRDI-Bills-roots.html

11.   Why indian corporates are not able to access their debt requirements from the bond market (instead of banks) : http://www.livemint.com/Opinion/TkhV30AwD8kkQBqLsQHueO/A-strong-corporate-bond-market-is-on-the-cards.html , http://www.livemint.com/Opinion/v34IDsYO9ocT5jyS3JBvAK/Strengthening-Indias-corporate-bond-market.html , http://www.livemint.com/Politics/XhpJxHhdc3l80YJjFRPajO/NK-Singh-panel-recommends-25-fiscal-deficit-target-by-FY.html , http://www.livemint.com/Politics/rACgsBE9cMFYEbZksaDanK/Govt-may-delay-implementation-of-NK-Singhs-FRBM-report.html

12.   The best TV debate on FRDI bill I have seen : https://www.youtube.com/watch?v=oGXREwK26Dk

13.   shows EU-wide rules for bank resolution have been framed : https://www.ft.com/content/8ad2ed98-d0a0-11e5-986a-62c79fcbcead

14.   Greece has also implemented a form of bail in : http://www.ekathimerini.com/218275/article/ekathimerini/business/capital-controls-to-stay-till-at-least-end-of-2018

15.   Shows Greece was considering raiding the deposits even below the insured amount as there was insufficient money in the deposit guarantee scheme : https://www.ft.com/content/9963b74c-219c-11e5-aa5a-398b2169cf79

16.   The depositors in one bank of Cyprus lost all their uninsured savings, only those at the other bank got equity options against their savings : https://www.usatoday.com/story/money/business/2013/07/29/bank-of-cyprus-depositors-lose-savings/2595837/

17.   Shows derivatives exposure can bring down banks endangering our savings.. https://www.huffingtonpost.com/ellen-brown/new-g20-bailin-rules-now-_b_6244394.html

18. This article says banks should have upto 18 % of their risk weighted assets in bonds that are clearly recognised at the time of issuance as being liable to be bailed in https://economictimes.indiatimes.com/news/economy/policy/how-frdi-bill-can-save-failing-banks-without-touching-your-deposits/articleshow/62277998.cms