In any new National Water Policy, the aim should also be to encourage conserving water resources and efficient usage
Context: The complexity and scale of the water crisis in India calls for a locus specific response, that can galvanise and integrate the ongoing work of different Ministries and Departments through new configurations.
Integrated approach:
- In 2019, Ministry of Jal Shakti was formed after merging Ministries of Water Resources, River Development and Ganga Rejuvenation and the Ministry of Drinking Water and Sanitation.
- It must further be done by taking various sectors together.
Understanding water stress:
In the rural areas,
- Groundwater extraction: 80%-90% of the drinking water and 75% of the water used for agriculture is drawn from groundwater sources.
- The Punjab Example: The draft report of the Central Ground Water Board concluded that Punjab would be reduced to a desert in 25 years if the extraction of its groundwater resources continues unabated;
- 82% of Punjab’s land area has seen a huge decline in groundwater levels, wherein 109 out of 138 administrative blocks have been placed in the ‘over exploited’ category.
- Groundwater extraction which was at 35% in the 1960s and 1970s, rose to 70% post the Green Revolution — a period which saw governments subsidising power for irrigation that left tubewells running for hours.
- Cultivation of water intensive crops such as paddy have further aggravated water depletion, even turning water saline.
In urban areas, 50%-60% of the water supply is drawn from groundwater sources, whereas the remaining is sourced from surface water resources such as rivers, often located afar, in addition to lakes, tanks and reservoirs.
- According to the composite water management index released by the think tank NITI Aayog in 2019, 21 major cities (including Delhi, Bengaluru, Chennai, Hyderabad) were on the brink of exhausting groundwater resources, affecting about 100 million people.
- The study also points out that by 2030, the demand for water is projected to be twice the available supply.
- The Chennai example: in 2019, life came to a standstill and parts of the city went without piped water for months
Factors responsible for water stress in Urban areas:
- Poor rainfall: For example in Chennai in 2019, it was 50% less than normal, the vagaries of the rainfall patterns are blamed to a fast-changing climate.
- Encroachment: the cities like Chennai and Mumbai has been built by incrementally encroaching floodplains and paving over lakes and wetlands that would have otherwise helped the process of recharging groundwater. The lack of space for water to percolate underground prevented rainwater from recharging the aquifers.
- Loss of green cover: which would have otherwise helped water retention. It now makes way for infrastructure projects. There is also the example, in Mumbai, in 2019, when 2,141 trees were felled at the Aarey colony, amid massive protests, to make space for a shed for the Mumbai Metro Rail Corporation Limited.
- Lack of sustainable urban planning
Impact: Such a situation, on the one hand, leads to flooding during normal rainfall due to stagnation, and on the other hand leads to drought-like conditions due to the prevention of underground water storage.
Need for synergy
- Synergy with other ministries: The Ministry of Water Resources must reconfigure its relationship with other Ministries and Departments –
- For urban areas: Urban Development, Local Self-Government and Environment), and
- For rural areas: with counterparts in agriculture, the environment and rural development for greater convergence to achieve water and food security.
- Effective Land zoning regulations: enhanced integration and coordination through effective land and water zoning regulations that protect urban water bodies, groundwater sources, wetlands and green cover while simultaneously working to enhance waste water recycling and water recharge activities targeting aquifers and wells through rainwater harvesting.
- Measures to manage and replenish groundwater: especially through participatory groundwater management approaches with its combination of water budgeting, aquifer recharging and community involvement.
- Interact and draw from the expertise of fields such as hydrology (watershed sustainability), hydrogeology (aquifer mapping and recharge) and agriculture sciences (water-sensitive crop choices and soil health).
- Surface water conservation including the many rivers and lakes which are in a critical and dying state due to encroachment, pollution, over-abstraction and obstruction of water flow by dams.
Conclusion:
- The Ministry of Jal Shakti, last year, had announced an ambitious plan to provide water connections to every household in India by 2024. In view of the ongoing erosion of water resources and an ever-increasing demand for water. Along with this the aim should be towards protecting and conserving water resources on the one hand and minimising and enhancing efficiency of water usage on the other.
- As the expert committee constituted under the Union Water Resources Ministry drafts a new National Water Policy, one hopes it would be rooted in locus specific realities and allows greater flexibility for integrating the insights and work of multiple departments and disciplines making way for new configurations to sustainably manage the country’s water resources.
2. Cryptocurrencies possess no significant use value or exchange value to sustain their current high prices
Context: Bitcoin and other private cryptocurrencies have been on a bull run recently. Unlike previous rallies, the current rally in bitcoin has witnessed the increasing participation of retail investors in India.
Reasons for the bull run –
- Limited supply: The most important feature of cryptocurrencies that is flaunted by their enthusiasts is their limited supply. But, Scarcity alone is not sufficient to facilitate the adoption of cryptocurrencies as money.
- High liquidity and money creation by central banks: In a world where central banks create a lot of money out of thin air, it is natural for investors who are looking to protect their wealth to seek abode in alternative assets whose supply cannot be cranked up as easily. This includes high prices of gold and silver.
Purely speculative rise – No fundamental value:
- Case in other Assets: Any asset must have either use value or exchange value in order for it to possess any fundamental value. This fundamental value, in turn, is reflected in the price of these assets in the long run.
- Stocks and bonds, for instance, possess exchange value that is based on the expected future cash flow from these assets.
- Commodities such as oil and steel possess use value because these assets are used to run vehicles and build real estate.
- Gold and silver have traditionally served as hedges against inflation because they possess fundamental value derived from their use as jewellery, Computer chips and money.
- Bitcoin and other cryptocurrencies may be scarce but it is questionable whether they possess any use value or exchange value. They neither offer direct use value nor possess significant exchange value. It possesses no significant fundamental value to sustain their current high prices.
A case of speculative mania?
- A future private currency: Many believe that the rising prices of cryptocurrencies reflect their likely future value as a currency. Many foresee a future in which private currency is widely accepted as money.
- After all, all investments are forward-looking.
- All currencies work on trust: If crypto currency is widely accepted, it would have a value.
- Volatility may be only due to the nascent, illiquid nature of the cryptocurrency market.
- However, the more cryptocurrencies are accepted in exchange for goods and services, the greater the chances of governments cracking down on them.
Importance of Fiat currency – like Rupee:
- Power & Influence: The monopoly that governments (and central banks) possess over the issuance of money is at the root of their power and influence.
- Financing deficits: This allows governments to fund their budget deficits, particularly during times of crises such as the current pandemic when tax revenues have taken an unprecedented hit.
- Amend Money supply: It also allows central banks to tinker with the money supply under the mandate of managing aggregate demand in the economy.
- In essence, monopoly control over money allows governments to indirectly tax citizens by increasing the supply of currencies, thus devaluing them.
Advantages of Private currencies like Bitcoin:
- Instantaneous settlement across the globe.
- Privacy of transaction.
- Limited supply limiting inflation risks.
- Government cannot devalue the currency – reducing private risks.
- No costs to central bank.
- Global currency which if fully convertible: The benefits of free market competition in money were elaborated by economist Friedrich Hayek in The Denationalization of Money.
- It offers people greater choice in what currencies they choose to use as a medium of exchange.
Problems of Private Crypto currencies in India:
- Classification Challenge: It cannot be any of the three:
- Gambling in India is illegal.
- Legal Tender: Only Rupee is legal in India.
- Commodity regulation: It would then invite the Capital gains tax.
- “Speculation remains Bitcoin’s primary use case” – Bloomberg
- P2P transactions for illegal online market places. Its use in illegal online marketplaces that deal with drugs and child pornography is well-documented.
- They thrive outside the realm of authority and regulation. These are neither issued by a central authority nor a central validating agency for transactions.
- Threat to official currency and monetary system: If cryptocurrencies like bitcoin are going to challenge fiat currencies like the U.S. dollar as a medium of exchange, they would essentially be challenging the authority of the government to print and spend.
- Speculative risks: It is highly volatile.
Government responses around the world:
- Governments will tolerate this for long: They will allow cryptocurrencies to exist only as long as these currencies remain a speculative asset and not a medium of exchange.
- China recently imposed a complete ban on all cryptocurrencies and plans to issue its own central bank-issued digital currency.
- Most notably, competition between currencies to cater to the demands of customers would ensure that fiat currencies that are printed indiscriminately simply go out of use. This is the outcome that governments fear and would fight to avoid at any cost.
- Law in India: Since 2020, when the Supreme Court overturned an order by the RBI dated April 6, 2018, restricting the use of cryptocurrencies, traffic in domestic cryptocurrency exchanges in India has grown many-fold.
Conclusion: the future of bitcoin and other cryptocurrencies is unlikely to be as bright as many believe it to be.
