Save the planet and the third world will pay

Barun Mitra, co-author of Climate change and sustainable development (released 29 November 2004), writes "Not surprisingly, Kyoto does not sound convincing to the world's poor. For what this present debate over climate change has done is to divert attention from the core issue of mankind ó poverty."

Mitra discusses a salient economic lesson from history ó "increased consumption stimulates efforts at improving efficiency, which in turn contributes to conservation, economic and environmental... The Kyoto protocol seeks to reverse this relationship by focusing on reducing consumption through punitive taxes and so on, which will not ultimately help conservation goals."

My article titled Save the planet and the third world will pay was published In Sunday Times on December 5 2004.

The Kyoto protocol was finally ratified a few weeks ago. It seeks to promote energy efficiency and alternatives to fossil fuels, and insists on reductions in the emission of greenhouse gases by the industrialised world in the hope that the climate may stabilise.

Tony Blair has declared it his intention to make climate change the cornerstone of the British government’s international policy and Margaret Beckett, the environment secretary, has gone around the world emphasising the need to adopt a more climate-friendly approach.

But the problem for the citizens of the poor countries, about two-thirds of humanity, is that they cannot afford to consume modern and clean energy. Consequently, even if all the rich countries were to meet their Kyoto targets, the impact on global climate might be marginal because the poor countries will consume much more energy and that will undercut any reduction in greenhouse gas emissions by the rich countries.

To persuade poor countries to sign up for the climate-change deal, schemes such as “tradable emission quotas” and the “clean development mechanism” are being offered as carrots to help finance the transition, and provide access to modern technologies. But if the record of foreign aid and development finance is any guide, the climate-linked funds are unlikely to help, as most will just prop up corrupt regimes while perpetuating poverty.

If all this sounds a bit academic, let me use a few snapshots from daily life in my own country, India.

My wife and I decided to do our bit to reduce energy consumption by buying a modern refrigerator a few months ago. It is CFC-free and much more energy efficient because it uses a frost-free technology that prevents the formation of ice inside.

But in a country where electricity is in short supply and power blackouts are common, the frost-free and energy-efficient technology can be a major handicap. The ice that formed inside the old-generation fridges no doubt made them less energy-efficient but during the long hours of a power cut that ice kept the contents cool. We, on the other hand, finished up with a fridge full of useless food.

The electricity sector is heavily regulated, and the service is mostly provided by monopoly public sector utilities that fail to meet the demand, causing frequent blackouts. So modern energy-efficient devices that rely on a constant supply of electricity are obviously not the best for the job. The Kyoto protocol does little to bring the energy sector under the discipline of competitive market forces, and fails to usher in much needed reforms that might reduce power cuts.

Many Third World problems, like ours in India, are linked to unreliable energy supplies that stop us using greener technologies rather than to excessive energy consumption.

It is a similar case when it comes to fuel tax (beloved of conservationists). Typically, an Indian pays about 100% extra on petroleum fuels in taxes and duties, and similar levies are imposed on vehicles. But far from reducing consumption or pollution, it has the opposite effect.

Indian cities are characterised by pollution caused by inefficient cars and adulterated petrol. The cost of fuel is so high that we can’t afford to buy more modern and efficient ones.
The high cost of transport also contributes to congestion, as people jostle to live as close to their workplace as possible. This exposes them to much higher levels of pollution, not because of their high consumption, but because of their inability to afford to live further out.

Such overcrowding was a feature of the Bhopal gas tragedy in 1984. High transport costs contributed to the large number of people living in close proximity to the Union Carbide plant. The poor paid the price for that tragedy.

It is a paradox that the poor who have the most to gain from fuel efficiency are least able to afford the technologies that make conservation possible.

For instance, if all the light bulbs in Delhi could be replaced by efficient compact filament lamps the city could overcome its daily electricity shortfall without adding any generation capacity. But 70% of households cannot afford the transition.

The problems of the poor and rural Indians are even more acute. Even today fewer than six in 10 of Indian households have electricity, while 150m households rely on traditional fuels such as firewood, dry cow dung cake and agriculture waste for cooking. These fuels are 20 times less efficient and more polluting than electricity or gas. When they are used in poorly lit and unventilated rural dwellings, they contribute to 1m premature deaths each year.

Supporters of climate change theory rightly warn that the poor are most vulnerable to natural calamities such as hurricanes, floods and droughts. Yet Kyoto protocol policies seek to retard the economic growth that would enable the poor to leave poverty behind and adapt better.

One hundred years ago 1m Indians died annually because of drought and malnutrition while annual floods and hurricanes killed about 100,000 people during the monsoon season. Pristine coastlines and natural mangroves did little to protect the poor then, but now, as a result of development, the monsoon kills only 10,000.

Not surprisingly, Kyoto does not sound convincing to the world’s poor. For what this present debate over climate change has done is to divert attention from the core issue of mankind — poverty.

In the past two decades the world had been slowly moving towards a more market-oriented approach and ensuring greater freedom for people to make their own decisions. But the emergence of the new environmentalism has put the environment, rather than people, at the centre of decision-making.

Consequently, every effort is aimed at reining in man’s creative talents, and curtailing demands for higher consumption. Not surprisingly, the climate-change debate has renewed the faith of old socialists who have found a new chain to enslave man through global regulations.

It may be counterintuitive but there is only one economic lesson from history — increased consumption stimulates efforts at improving efficiency, which in turn contributes to conservation, economic and environmental.

The Kyoto protocol seeks to reverse this relationship by focusing on reducing consumption through punitive taxes and so on, which will not ultimately help conservation goals.

If we can develop, the poor will be able to afford energy-conserving measures. Without development they cannot and the present cycle can only continue.

The easy guide to how much money you spend on Parliament

The nation spends 37,000 Rs every minute for the parliament to function properly. There is an increase of 3400 percentage in the cost per MP in the last twenty years. The members of Parliament even collect allowances when they boycott the Parliament. They are entitled to several other allowances too. My article titled "The easy guide to how much money you spend on Parliament" was published in The Indian Express on October 27th 2004.

At RS 437 crore in 2003-04, it costs the nation Rs 37,000 per minute to keep Parliament functioning.

The 400 hours estimated to have been lost in the last two sessions of Parliament in June, July and August 2004 have meant a financial loss to the exchequer ranging from Rs 88 crore to 207 crore.

The time parliamentarians spend discussing budgetary issues has declined from 23 per cent in 1970s to a mere 10 per cent today. And in 2004, the Finance Bill had to be passed without any debate at all.

The cost per MP (790 MPs, combining both houses) has risen from Rs 1.58 lakh in 1983-94 to 55.34 lakh in 2003-04. An increase of 3,400 per cent!

During the same period, consumer price index increased 500 per cent, and the average emolument for public sector employees increased 900 per cent.

It has been reported in the media, that 400 hours or 24,000 minutes were lost due to disruption of Parliamentary proceedings in the last two sessions spread over June, July and August. For the first time, even the finance bill could not be debated, ‘‘tainted ministers’’, Savarkar and other issues stalled parliament for days.

There has been a worrisome decline in terms of time spent on issues such as the union budget. According to one estimate, between 1952 and 1979, the Parliament devoted on an average 23% of its time on discussing and debating budget related issues. However, between 1980 and 2001 the time devoted to budgetary issues had come down to only 10%. In addition, the number of days when Parliament is in session has been steadily declining from 143 days in 1980 to merely 90 days 2001. This includes all the three basic sessions of Parliament — Budget session, monsoon session and winter session.

At a cost of about Rs. 37,000 per minute or about Rs. 22 lakh an hour or Rs. 1.7 crore per day (assuming that Parliament works for 245 days a year for 8 hours a day), on the basis of annual budgetary allocation for both houses of Parliament in 2003-04 at Rs 437 crore, the total loss in terms of public money comes to about Rs 88 crore or USD 19.5 million, for the 400 hours in the first two sessions of 14th Parliament.

Earlier, when members used to boycott Parliament, they did not collect their daily parliamentary allowances. Today, however, MPs feel free to disrupt the house from within and have no compunction about collecting their allowance for their labour. If members don’t sign their attendance and decline to collect their daily allowance at Rs. 500 days, then the exchequer could at least save Rs 3,95,000 each day for the 790 member. In the past two decades, the budgetary allocation for both houses of Parliament has increased from a mere Rs 12.49 crore in 1983-84, to Rs. 437.15 crore in 2003-04. A whopping 35 fold increase in 20 years!

As a point of comparison, the general consumer price index for industrial workers increased only five fold between 1982 and 2004. Even the per capita emoluments for the much vaunted public sector employees increased from Rs 21,549 in 1983-84 to Rs 1,93,205 in 2001-02, about 9 fold increase.

In contrast, on a per capita basis, the expenditure incurred on each of our 790 Members of Parliament of both houses, in 2003-04 at Rs 437 crore, comes to about Rs 55 lakh per MP. A 3400% increase over two decades. It was a mere Rs 1.58 lakh in 1983-84.

This in a country where the per capita income is estimated at about USD 450/- or Rs 20,250/-, which even in purchasing power parity (PPP US dollar 2500/-) terms would translate in to Rs. 1,12,500/-.

Our MPs cost us about 20 times more than what an average industrial worker earns in a year, and about 40 times the earnings of an ordinary citizen. And all this is after putting in only about 80 parliamentary working days in a year, compared to about 250 days put in by an urban salaried worker.

The annual cost of Rs 300 crore may look to be a small price to pay for maintaining Parliamentary democracy in India. But that is only the minimum direct cost. If one factors in mis-governance, then the total cost of Indian Parliament begins to look very formidable indeed.

Increasingly, legislators officiate as executives. The MPs Local Area Development Fund (MPLAD), which entitles each Member of Parliament to allot Rs 2 crore annually towards development projects facilitates this dilution of legislative functions. 57 years after Independence, India has ranked consistently around the 125th level on most international socio-economic indices, finding its place among the perpetually poor nations of the world.

While the costs are significant, Indian democracy is also extremely competitive. Almost half the sitting members lose their seat at every general election. After all, that is the only way for the voters to hold their elected representatives to account. One can only hope that this will induce the elected representatives to look afresh at the core issue of governance, if only to increase their own prospect of getting re-elected.

Salaries and perks of Members of Parliament.

MPs are paid salaries and allowances along with travel and other privileges so that they may perform their responsibilities as lawmakers without fear or favour. According to an estimate made a few years ago, this is what an MP makes in terms of salaries and allowances:—

1.Constituency allowance: Rs 12,000 per month.

2.Allowance for Attending Parliament: Rs 400 per day.

3.Office allowance: Rs 14,000/- per month.

4.Secretarial allowance: Rs 10,000 per month.

5.Stationery and postage: Rs 3,000/-.

6.Postage and franking: Rs 1,000/- per month.

Perks: (monetised estimates)

1.Each MP is entitled to a free house, transport to Parliament, and subsidised food. The cost maintenance and furnishing of the house is borne by the government as well. This could easily come to about Rs 1,20,000/- annually towards housing.

2.A daily travel allowance of Rs 8 per kilometre, which could translate in to Rs 48,000 for a chauffer driven car during session. In addition, a conservative estimate of rs 24,000 for food. Both these could total about rs 75,000 per year.

3.Each MP get 50,000 units of free electricity every year. At a conservative rate of rs 2.,50 per unit, this will come to Rs 1,25,000/-. In addition, water is provided free.

4.Each MP is entitled to 3 telephones, one in the office, one at home, and one in the constituency, and total free calls could be 1,70,000 free local calls per year. One of these lines can be used for connecting to the Internet. But MPs have to pay for these facilities if they use them beyond the free limit. Unutilised free calls can be transferred to their mobile phones. At a minimum the monetised value of this benefit would be about Rs 2 lakh per anum.

5.An MP can travel 32 times by air (business class) anywhere within India, along with his of her spouse of a companion. He or she can travel another 8 times from the constituency to Delhi to attend Parliament sessions. At an average air fare of Rs 7,000, this could easily come to Rs 5,60,000/- annually.

6.When travelling abroad on an official visit, the MP gets a free business class ticket, along with a daily allowance which depends on the country being visited.

7. Each MP is entitled to unlimited free passes to travel (first class or AC 2-tier) by train any where in the country, along with a companion. The annual rail fare could easily come to about Rs 1,00,000/-.

8. Most medical expenses of an MP are taken care of under the Contributory Health Service Scheme of the Union Government.

9. Each MP is entitled to a pension for life. (This was added by the previous NDA government). The basic pension is Rs 3000 per month, and it increases as per the length of service in Parliament. There are additional travel and medical benefits for former MPs as well.

Biosafety Protocol Will Harm Poor Farmers and Undermines WTO

My IPN press release titled Biosafety Protocol Will Harm Poor Farmers and Undermines WTO was published on International Policy Network on 11 September 2004.

11 September, Cancun – Today, the Biosafety Protocol goes into effect worldwide. The Global Freedom to Trade Campaign, a coalition of pro-globalization NGOs at the Cancun WTO Ministerial, believes that the Biosafety Protocol will harm poor farmers by preventing them from accessing farming technologies which would help them to generate income and escape poverty.

Agricultural expert Barun Mitra, Director of the Liberty Institute in New Delhi, India (a member of the SDN), commented:

“Farmers everywhere should have the freedom to choose the technologies they use. But the Biosafety Protocol will only aggravate the trade barriers they already face. Poor farmers will be subjected to arbitrary restrictions on trade in agricultural products, especially from the European Union. Thus, it will only prolong poor farmers’ escape from poverty.”

Trade expert Julian Morris, Director of International Policy Network in London commented:

“The Biosafety Protocol will undermine the WTO’s rules-based trading system, by allowing arbitrary trade restrictions which are not based on sound science. The agreement panders to pressure groups who are generally opposed to trade and believe that people should not have access to modern technologies.”

Why precautionary principle can damage wealth and health

THE World Trade Organization dispute between the EU and the US, Canada and Argentina over the EU's longstanding moratorium on genetically modified (GM) crops ñ due to be decided this week ñ is not about winners and losers. It is about the so-called precautionary principle, which has theoretically allowed the EU to close its borders to a large portion of the world's agricultural produce. The result of this case could have ramifications throughout the world, particularly for other innovative industry sectors.

My article titled Why precautionary principle can damage wealth and health was published in European Voice on June 10 2004

THE World Trade Organization dispute between the EU and the US, Canada and Argentina over the EU's longstanding moratorium on genetically modified (GM) crops - due to be decided this week - is not about winners and losers. It is about the so-called precautionary principle, which has theoretically allowed the EU to close its borders to a large portion of the world's agricultural produce. The result of this case could have ramifications throughout the world, particularly for other innovative industry sectors.

The problem is that the precautionary principle has never been clearly defined. It has been articulated by its proponents, but only hypothetically, not in the real world, and they have failed to analyze its consequences. The precautionary principle has found its way into several international conventions and declarations including the Rio Declaration, the convention on biological diversity and now the European Union treaty. It thus threatens to give rise to a global regime of ëgreen protectionism'. This is trade (disguised as environmental) protection.

In the case of biotechnology, the technology was guilty before being proven innocent. The burden of proof has been turned on its head. If there is any doubt, the precautionary principle dictates prohibition until safety is proven, absolutely. Such an approach cannot be tolerated by a modern society. We cannot simply ban everything, unless it is allowed by a small clique of politicians - has history taught us nothing?

The temptation for governments to use the precautionary principle to serve their own political interests is huge. Many invoke it to achieve specific aims and simply ignore it when it doesn't suit them. In cases when all the scientific evidence shows that a product is safe a government can always demand more evidence and justify it to their parliament, media and public as ëbetter safe than sorry'. Here lies the true danger of the principle - it sounds so simple. The average person on the street has no problem endorsing government action taken under the guise of precaution for them, their elderly parents, small children or the environment.

Of course, one can never be absolutely sure about anything and no one can guarantee that the introduction of GMOs into an ecosystem will not have adverse effects. However, the benefits far outweigh the risks and this is how governments should be assessing the use of technologies, through risk assessments and cost benefit analysis, not through a vague precautionary approach.
In my country, India, cotton is an important cash crop covering an estimated nine million hectares. Approximately one million farmers are dependent on it, not to mention the 60 million or so people employed down the value chain. Directly and indirectly, cotton accounts for 33% of India's export earnings. It is little wonder, then, that when Bt cotton came along, farmers were impatient to use it. However, our government was slow to approve. By taking the precautionary approach the government was taking money out of the pockets of its people. India's cotton fields have among the lowest yields, at around 300 kilogrammes per hectare, compared to the world average of 580kg. Chinese cotton fields average 1043kg per hectare.

The field trials in Andhra Pradesh and Karnataka were burnt down by environmental activists. Their justification? The precautionary principle. The government caved in and insisted on more field trials on top of the three years of existing tests. Farmers began to plant anyway. In September 2001 around 500 farmers in Gujarat were found to have planted approximately 11,000 acres with an unapproved Bt cotton. This was only discovered when a major bollworm attack left the crop devastated except the Bt fields, which not only survived, but thrived. In this light, the real threat to Indian agriculture is the precautionary principle, which denies access to these technologies.

We should all be suspicious when this principle crops up in an international document or treaty. It could end up splitting the world into trade blocs, undermining our opportunities to create wealth and reduce our ability to address real risks to us and our environment. Perhaps, policymakers and negotiators should be subject to the precautionary principle: they can be hazardous to health and wealth.

Patients, not Patents, need to be at heart of the health care debate

The present debate over the Indian patent law has done a disservice to the poor patients by shifting the focus away from the more sickness that afflicts the health care system in India. Its not patents but the government hold on the health care sector that is preventing the poor from gaining access to medicines.

A version of this article titled "Patients, not Patents, need to be at heart of the health care debate" has appeared in The Indian Express, January 28, 2004

The present debate over the Indian patent law, despite the passion, is underscored by the desire to score political points. Consequently, most of the arguments have been disconnected from reality.

India has been a proving ground for those who oppose patents on pharmaceutical products. We scrapped all product patents in 1972. As a result, India is now home to over 20,000 pharmaceutical companies producing copies of drugs developed and patented elsewhere. However, access to medicines remains poor suggesting that patents are not the key determinant of access that their opponents claim.

In India, medicine represents between 10 and 15% of total health care costs. This will not rise substantially when product patents are introduced for two reasons. First, over 90% of the medicines in the Indian market are now off-patent globally. Second, for most of those that would be patentable, there are close alternatives available which provide effective competition.

Poverty and associated malnutrition dramatically exacerbates the incidence of Malaria and TB preventable diseases that continue to play havoc in India decades after they were eradicated in rich countries. Not because of patents. Poor sanitation and polluted water sources prematurely end the life of about 1 million children under the age of five every year.

The real reason for the lack of access to medicines and other forms of healthcare is the prevailing stranglehold of government regulation of health sector. Just as economic regulation had strangulated development.

The public sector healthcare provision is a sick joke, characterised by shortages of hospitals, beds, equipments, medicines, and manpower. Claims of medical negligence and malpractice are frequent. Hospitals in India are often dangerous places. In spite of the risk of infection with HIV, the government of India recently admitted that 69% of injections administered in public hospitals could be unsafe.

In the face of poverty, inadequate health care delivery systems, and grossly inadequate sanitation systems, patents should at best be at the periphery of the health care debate, not at its centre. Yet many have argued that the introduction of product patents will undermine access by driving up prices of medicines.

Several Health NGOs have claimed that AIDS patients will be particularly adversely affected by the introduction of product patents, saying that the price of medicine in India is likely to shoot up.

The New York Times added its weigh in a recent editorial which argued that the poor in India and elsewhere will be denied access to AIDS medicine if India amends its patent laws to include product patent.

Yet it is conveniently ignored the fact that barely 1% of the estimated 3.5 million Indians with AIDS receive any kind of treatment at all. Some international NGOs have added their voice, saying that poor countries in Africa that import cheap generic medicines from India may suffer. It is ironic that these activists think Indian generic producers could save lives in Africa, when the same companies fail to reach out to patients at home. Clearly, for many NGOs, ideological antipathy towards MNCs, patents and profitability in the health sector takes priority over issues that actually affect health care for the poor.

Even if by some way, the world could bring down the prices of medicines to zero, medicines will continue to elude the poor. On the other hand, such a measure will only boost the profitability of spurious drugs manufacturers around the world, the murky merchants of death.

This debate over patent has done a disservice to the poor patients by shifting the focus away from the more sickness that afflicts the health care system in India. Proper delivery of medicine is dependent upon a lot of factors access to and availability of appropriate medical personnel, diagnostic facilities, treatment regimen, regular monitoring, diet and nutrition, etc. Without this basic infrastructure, health care can hardly be delivered effectively nor can medicine be administered properly. Patent or not. Priced or not.

Left wing political parties have also been vocal opponents of pharmaceutical product patents warning about the danger of the Indian health care system falling prey to profit seeking multinational corporations. Yet, they ignore the fact that most Indians dread the day they visit a public health facility. By contrast, some of the private healthcare sector in India is so well regarded that it is attracting health tourists from overseas. The policies of the leftists would, ironically, perpetuate this two-tier system instead of enabling every Indian to access high quality healthcare.

Political expediency is at the fore among other mainstream political parties. The present UPA government promulgated an ordinance to amendment that would make the Indian patent law compliant with WTO obligations in January 2005. The previous BJP-led NDA government had accepted the WTO obligations. Ironically, the then Commerce Minister who had originally introduced the amendment in Parliament, in December 2003, now says that he was misled about the implications of the bill, and has come out in opposition.

Indian pharma sector claim that it is price competitiveness will be compromised by the new patent law. Yet, many of them complain that they need protection from Chinese generic and bulk drug manufacturers. It should not come as a surprise that some of the Indian companies showed more interest in producing generic lifestyle drugs like Viagra, rather than meet the basic health care needs of Indians.

The Indian pharmaceutical sector should take a leaf out of the success of the information technology sector. Both based their initial strategy on weak IP regime. But from its inception, the IT sector aimed at the global market and soon graduated from copying to seeking copyright protection for their products. As a result, India's IT industry is a global force to be reckoned with and international IT majors have invested in India, developed products specifically for the Indian market at locally relevant prices.

In contrast, the Indian pharma sector was not only protected from international competition, it was in effect subsidised by a weak patent regime. In a new book, Intellectual Property Rights: Beyond 2005, Bibek Debroy and Amir Ullah Khan provide evidence that the lack of product patents led to complacency on the part of domestic industry. The industry succumbed to the temptation of using foreign technology, tinkering with it only slightly to reduce production costs and suit the Indian market.

With globalisation, several of the major India pharma companies, including Ranbaxy and Dr Reddy's, are seeking to break out of this mould and rub shoulders with the best in the world. This move is to be warmly welcomed but will only happen once the companies are able to obtain patent protection for their product locally. Then, the pharma industry will attract investors from around the world.

Indian patients deserve the best in the world. A deregulated and competitive health sector will stimulate research and innovation, and make quality service accessible to Indians. This will facilitate more private sector provision of hospitals, laboratories, manpower, insurance, and investment in R&D. Like in case of software, this will optimise the utilisation of Indian manpower in the pharma sector, and consequently the cost of drug development and research will fall. And the whole world will benefit.