Imported chocolates: a little caution could go a long way

Kolkata, December 23, 2004, Press Release

“Chocolates are a most welcome gift during Yuletide and the approaching New Year. But a little caution while buying these goodies would go a long way to ensure that they do not become reason for bother and anxiety during this season of cheer,” warns Mita Dutta, coordinator, ‘SAFETY WATCH’ a specialised programme centre of Consumer Unity and Trust Society at Kolkata, devoted to consumer safety.

This caution should especially be displayed while buying imported chocolates. With the craving of us Indians for all things foreign – foodstuff not the least – remaining as undiminished as ever, our tendency is to grab blindly at that attractive foreign label displayed in the shop window. Children, who are a very important market segment for chocolates, also make a beeline for these colourful brands.

With the liberalisation of the Indian economy, imported chocolates have inundated the market. These include reputed foreign brands (as well as their spurious imitations!) and other not so well known inferior brands, mostly from the neighbouring countries. This second category is naturally somewhat cheaper, within the reach of the common man. But many of these brands hardly conform to Indian laws and standards – and the infrastructure to monitor this is grossly inadequate.

Dutta emphasised the requirement of food product manufacturers, both indigenous and foreign, having to obtain the approval of the Central Committee of Food Standards (CCFS), specifying the type of food products and its contents. But as far as imported chocolates are concerned, this is more often than not violated with impunity, exposing consumers to health hazards. The case of a Canning Street shop trying to extend the expiry date of a huge consignment of imported chocolates, a few years back, is probably still fresh in our minds.

It is often eyewash to have mentioned date of manufacture and “best before” dates, as those are either mentioned in a foreign language or the size of the English print is so small as could be easily missed – elaborates Dutta. A random survey conducted a few years back by CUTS revealed the extent of violation of the provisions of the Prevention of Food Adulteration Act, 1955 (FPA). Most of the brands did not have the full name and address of either the manufacturer or the importer, so that in the event of a product complaint, there was no one to approach. Maximum retail prices were not mentioned, so that customers could be duped easily. Many samples were found in a melted condition (more so because chocolates imported from the colder countries are not subject to the ‘tropicalisation’ process adopted by Indian manufacturers) signifying faulty storage.

“In the present state of affairs, it is only the consumer herself who can guard against health hazards by using a bit of discretion while buying imported chocolates,” exhorts Dutta of SAFETY WATCH.

For further information, please contact:

Mita Dutta
Consumer Unity & Trust Society (CUTS)- Safety Watch
3 Suren Tagore Road, 2^nd Floor,
Calcutta-700019, India
Telefax: 91-33-24601424; Mo: 98303 27050

Right to Safety – Students as Consumers

Kolkata, December 18, 2004, Press Release

There are a number of very well meaning laws in India for the assistance of the common consumer. But their implementation leaves a lot to be desired with the result that their benefit does not percolate down to the consumer, as they should. The remedy is to raise the awareness levels of consumers about consumer rights and issues of consumer safety so that they can initiate prior informed action to safeguard themselves. And the right way is to start young.

In order to build awareness among young minds on these issues, Consumer Unity and Trust Society (CUTS), the premier research and advocacy organisation for consumer empowerment, organised a programme for school students today at the Don Bosco, Park Circus, auditorium.

On behalf of the Consumer Affairs Department, Government of West Bengal, Mr Ashok Bhattacharya, Controller of Legal Metrology, gave a thorough presentation on the different aspects of consumer rights. He spoke briefly on the history of the consumer movement beginning with its genesis in the USA during the Kennedy years, the UN pronouncements on the subject and our own Consumer Protection Act. He enunciated in detail each of the consumer rights on basic needs, right to safety, right to choose, right to information, right to consumer education, right to redressal, right to representation and right to a healthy environment.

A presentation by Ms Mita Dutta , Centre Coordinator at CUTS’ Kolkata office followed, explaining various aspects of consumer safety. She dwelt on the consumers’ rights to safe products and safe services pointing out the cracks and crannies where unsafe goods or services may occur. She particularly dwelt on the issue of road safety, especially duty towards accident victims. She rebutted the commonly held but erroneous perception of police harassment for bystanders and doctors and underscored the points of law from the Motor Vehicles Act and the clear directions by the Supreme Court about the primacy of saving the precious life of the victim and the indemnity of helpers and doctors from unnecessary police harassment

Each of the presentations were marked by very lively floor discussions where the students took active part, raising several pertinent questions, giving lie to the generally held perception that today’s youth are apathetic towards such issues

The second session of the programme was devoted to a debate among members of the participating schools, on the topic “In Today’s World of Advertisements, We are More Confused than Informed” The debate was very intense, at the end of which prizes were announced for the two best speakers, both for and against. Mr Jayanta Basu, eminent journalist from The Telegraph and Mr Rajat Chaudhuri, environmentalist and consumer activist were among the judges

About 20 schools from Kolkata participated in the programme. CUTS are to hold such programmes in future in the districts as well.

TRAI Fund to be used for consumer advocacy too: CUTS

November 10, 2004

The issue of secured and independent funding for TRAI is something that augurs well for better governance in India, and needs to be emulated throughout the government, says CUTS in response to the TRAI’s advocacy with the Government.

In a letter to the Government, CUTS has suggested that TRAI’s request should be considered in parallel with the Fund to be used for funding consumer advocacy, for which there are sufficient provisions under TRAI Act.

Established in 1984, CUTS (Consumer Unity & Trust Society) is a leading consumer advocacy group working effectively on diverse economic policy issues affecting the consumer interest.

On 4^th November 2004,TRAI had recommended to the Government to allow it to have a part of the annual licence fee paid by the telecom service providers and cable operators to the Government. This will make TRAI independent of Government funding. The TRAI Act provides legal authority to TRAI to frame regulations for levying fees and charge as a source to generate its own revenues. In several countries, the source of revenue for the telecom regulators is mostly the licence fees, spectrum fee, numbering fee, regulatory fee etc. TRAI has also asked the Government to provide similar financial autonomy to it.

CUTS, in its letter to the Government, has asserted that the consumer movement needs to be resourced and strengthened to ensure the sustainable success of the regulatory framework in India, telecom specifically and other sectors generally.

All our regulatory laws and arrangements, including TRAI Act, recognize consumer interest as one of its primary objectives. But the same is not as effective as it should be, due to lack of consumer advocacy. This is weak due to paucity of resources and consequent lack of capacity in consumer organizations.

CUTS says that their argument is strengthened by the TRAI’s statement: “In the absence of its independent source of funding, TRAI is not able to improve the service conditions of its employees and attract necessary talent to the organization. As a matter of fact, it is for this reason that the international benchmarking for adequacy of the regulatory structure is independent of the government for its funding”.

In terms of funding consumer advocacy, we have few sterling examples in India, likes of which do not exist in other countries. For instance the Consumer Welfare Fund, administered by Department of Consumer Affairs and the Investor Education and Protection Fund administered by Department of Company Affairs is used for consumer awareness and advocacy. SEBI too has a fund to support investor education activities, created under its own statutes, like the one CUTS are proposing for TRAI, among others.

Most regulatory laws have provisions for a fund to promote the purpose and objects of the law, but this has never been used to support consumer advocacy activities. The legal provision in TRAI Act can be put into effect if the government adopts a proactive stance, and that needs to be reflected as a ‘duty’ rather than a direction’ for the TRAI, when considering their proposals.

For further information please contact:

Pradeep S. Mehta,
Secretary General CUTS at 98102-06633.
Email: c-cier@cuts.org

Trade Liberalisation Alone Will Not Reduce Poverty: Experts

Nairobi, October 28, 2004

Trade and economic growth should not be considered as an end in itself but a means to reduce poverty and enhance economic development. Opening the discussion on the impact of trade cooperation between Africa and European Union (EU) under the Lome and the present Cotonou agreements for about thirty years, Ambassador Peter Robleh of the United Nations Economic Commission For Africa (UNECA) said, “so far the trade arrangement between EU and Africa did not result in considerable economic and social change in Africa”.

Many of the logical and illogical quality and technical standards for exports to EU stand as a barrier to exports, which has increased poverty in Africa. The huge amount spent on subsidising farmers in EU, Japan and also in the United States (US) has been threatening livelihood security of millions of poor farmers in Africa due to the distortion of agricultural prices and also dumping of subsidized goods in the markets. Aid is not the answer for poverty in Africa but fair trade is, he added.

Trade policy should be sufficiently integrated to the National Development Strategy of Sub Saharan African (SSA) countries if gains from trade liberalization are to be channeled to poverty reduction. There is need for refocusing on policy coherence among the various national and international trade and development agreements which African countries undertake with national development goals especially poverty reduction objectives.

If poverty is to be tackled through trade promotion then complementary policies and strategies are to be put in place to ensure that there is fair distribution of gains from trade among the people.

These were the key suggestions which emerged from a regional seminar titled “Can Africa Trade Her Way Out of Poverty” organized jointly by Nairobi based CUTS Centre For International Trade Economics and Environment (CUTS-CITEE) in collaboration with Friedrich-Ebert-Stiftung (FES) at Naivasha, Kenya on 25-26 October, 2004. The seminar brought together trade policy experts from Kenya, Tanzania, Uganda, Zambia, South Africa, Zimbabwe, Malawi, Nigeria, Ghana, India and Vietnam and from international organisations such as UNECA and Common Market for Eastern and Southern Africa (COMESA).

The seminar proposed a set of practical suggestions by which African countries can rationalize and develop coherence among the different trade arrangements viz. the World Trade Organization (WTO), Cotonou Agreement, Africa Growth and Opportunity Act (AGOA), regional integration treaties with the national development plans and also poverty reduction and growth strategies. Trade is not an end in itself but rather should be seen as a means towards more effective development that maximises and improves the welfare of the people. Trade policy and practices should be linked to National Development Strategies and must be complementary.

According to an EU presentation, trade is a major component of international development and the WTO can have the capacity to provide benefits to the poor countries through transparent and non discriminatory rules. The presenter argued that “no country has developed without trade but just trade liberalization alone will not bring in development”. Trade openness should be part of a wider policy on development, which includes sound macro economic policy, sound social policy and also south-south cooperation.

EU agrees that rich countries spend a lot of money on subsidising agriculture in trade distorting way which has a negative impact on farmers in Africa and elsewhere. Despite apprehensions raised by skeptics, EU argues that by the end of 2008, when the ongoing negotiations on Economic Partnership Agreements (EPAs) between EU and Africa are completed, the African markets will not be crowded with products from EU rather more competition and efficiency are expected.

Despite the predicted benefits for Africa under EPAs, many participants viewed that African countries should not rush to embrace economic partnership agreements with EU in the present format before preparing themselves for a tough competition by developing local productive capacity, regional integration and also doing adequate impact assessment studies at national and regional level.

For African countries to be mainstreamed and compete with efficiency in the regional and global trade, it was increasingly agreed that they need capacity building. Many felt that present capacity building efforts are mainly driven by donors agenda than by the needs of recipients.

The meeting recommended that capacity building in trade policy must reflect a common agenda and consensus between the developed and developing countries. Further, there is need for more transparency around the process, including those who are undertaking capacity building training, and where the resources are being invested. Better south-south exchange in capacity building through flexible donor support was suggested as a viable alternative for the present mess.

While analyzing the best policies, strategies and practices in distribution of gains from trade between rich and poor, the country experiences of Vietnam, Zambia, Kenya and Nigeria provided enough inputs. Many felt that there must be an appraisal of the needs of the poor, how the poor can gain from trade liberalisation and what contributions they can make the process should be a key element. The experience of Vietnam shows that economic planning and a comprehensive poverty reduction strategy which is linked to all the key economic development programmes of the government supported by private and voluntary sector can speed up poverty reduction.

In the case of Kenya the absence of a national trade policy stands in the way of bringing trade as a key component of development strategy. Nigeria relies almost totally on one raw material (oil) in its exports which led to a neglect of other productive sectors and consequently of a coherent trade policy. This is one of the reasons for growing poverty levels in Nigeria, whereas Zambia does not have a coherent national development strategy which encompasses trade.

The seminar concluded that poverty reduction is not only linked to trade and economic growth and coherent policies but also linked to good governance and implementation of appropriate measures to ensure effective distribution of wealth and provision of opportunities among the people.

For more information, please contact:
David Maina at CUTS- International: ph: 00254-20- 572790, cell: 00254720898687
Email: cuts-cuts-nairobi@cuts.org
Felix Eikenberg at Friedrich Ebert Stiftung, ph: +254-20-3748338, Kenya@fes.de

Transparency and implementation is core to achieve sustainability: CUTS

New Delhi, October 29, 2004, Press Release

Transparency in functioning of implementation agencies and transparent system of participation in policy and law making were highlighted as the necessary conditions for India achieving sustainability by a latest study conducted by CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE).

The findings of the research project titled “Stocktaking of Progress Towards Sustainability: A pilot Study of the Recent Indian Initiatives” were discussed at a peer review meeting held in New Delhi on 28^th October. The study, commissioned by the Ministry of Environment & Forests, Government of India, tested the appropriateness of Indian laws and their implementation on five major areas in meeting the demands of Section G of the United Nations Guidelines on Consumer Protection (UNGCP) and Johannesburg Plan of Implementation (JPoI), finalised at the World Summit on Sustainable Development, 2002. The five focal areas of the study were fly ash disposal, lead acid batteries, ozone depleting substances, eco-labelling and biological diversity.

It found that though law making in India is on the right track on all the focal areas, more elements of UNGCP and JPoI have to be incorporated. The implementation of the relevant laws is still in infancy. The situation demands unified effort on the part of the government and other state and non-state actors in order to achieve the goal of sustainability. Currently, stakeholder participation in the process of law-making and its implementation is very limited and they should be involved earnestly and widely for more transparency and achieving accountability.

Speaking at the meeting, Meena Gupta, Additional Secretary, MoEF, said: “There is a wrong impression, especially among the industry that MoEF is against growth and development of industry.” She pointed out that there is greater scope for involvement on the part of all the stakeholders concerned. Pradeep Mehta, Secretary General of CUTS stressed on the need for combining the objective of sustainability with growth and consumption to achieve sustainable development.

The participants of the meeting that included representatives from the major stakeholder groups, stressed on the need for making information on laws and policies available to stakeholders especially at the grass root level. The need for a system of “prizing the good practices” that would complement existing system of ‘penalties’ for offenders was also expressed. Further, they emphasised on the need for regular open debate on the news laws and policies that are passed to meet the objective of sustainability. Currently the laws are formed without much consultation and are forced on the stakeholders, creating difficulties for implementation, thus defeating their purpose.

For more information, please contact:
Rajeev D. Mathur, 98292 85922

“Challenges in Consumer Protection”

New Delhi, October 26, 2004, Press Release

Highlighting the poor enforcement of the consumer protection system in the country, Pradeep S. Mehta, Secretary General of CUTS, advocated for modifications in the current scenario. Adequate resourcing, capacity building and creating an enabling environment for consumer organizations can serve as a catalyst, for creating awareness among various stakeholders and for acting watchdogs in implementation.

Mehta was speaking in a brainstorming session on Industry, organized by the Planning Commission, Government of India last week. He was the only consumer activist invited to highlight issues in consumer protection.

In support of his arguments, Mehta mentioned that six laws were amended in 1986 to give consumers and their organizations the right to prosecute offenders. Prior to these amendments, the power for execution vested only with inspectors under the act. However, the enforcement under the amendments has remained on paper due to lack of enforcement mechanism.

Quoting an example from Gujarat, which took place in early 90’s, a case was lodged by a consumer group under the PFA Act, where some samples of suspected unsafe food were seized from the market. Mehta said, that the organization concerned had a trying time to even get the procedural formalities done. The local health authorities were unaware, whether a consumer organization had such a power at all.

67 percent cases have been disposed off by the national and state level forums under the Consumer Protection Act, 1986 while more than one lakh cases are still pending, thus defeating the objects of the law to provide for speedy and inexpensive redress. This delay is cause by two major factors: poor infrastructure in the consumer courts, and due to delaying tactics used by lawyers, said Mehta.

In this context, we need to strengthen the infrastructure at national, state and district forums and provide additional resources (physical and human). He further added, that we should debar legal practitioners except, when the complainant is him (her) self a legal practitioner, complainant engages a legal practitioner, complainant has no objection to the opposite party engaging a legal practitioner and when the forum deems fit that both parties engage lawyers.

There is also a need to institute a nation wide complaints handling and redressal mechanism to settle complaints before referring a case to a consumer court. Presently, several consumer disputes are settled by consumer organizations at their level, without taking them to a consumer court. This arrangement needs to be formalized and strengthened, said Mehta.

In the absence of consumer credit laws, the usurious interest rates charged from consumers on credit cards ranging from 30-35 percent per annum and lack of consumer education is a serious concern. He emphasised that the exercise to determine a candidate’s suitability is largely superficial. In this context, there is a need to regulate the credit card market by putting in place an appropriate regulator framework. An example of similar laws can be taken from New Zealand, Japan and Hong Kong. Mehta mentioned that the Hire Purchase Act 1972 is lying dormant, as it has not been notified till date on account of objection from the transport lobby and others.

Sinecures remain the bane of our new regulatory bodies despite Para. 4.21 of the Approach Paper of the 10^th Plan, which has been adopted by the National Development Council in May 2002: that the state and Central Governments as well as the PSUs should avoid post retirement jobs to the civil servants as also the judiciary. If the talent of any particular individual needs to be used even after his retirement, it can be on a short-term consultancy basis to meet a specific time bound requirement at the end of which the contract should be terminated.

He added that the focus remains on the sinecures for retired judges and bureaucrats and in the process, domain knowledge and actual experience has taken a back seat. The sinecures cause corruption and distortion in our governance system.

Mehta said that we welcome the government’s resolve in ensuring a regulatory framework that is transparent and independent of government, and is based on international best practice. The government’s decision of asking the Planning Commission to prepare a paper, identifying appropriate regulatory framework for various infrastructures is also welcome.

In this background there is a need for establishing professionally run regulatory institutions and strengthen them to ensure that competition is free and fair. We should avoid sinecures for retired judges and bureaucrats and involving various stakeholders and include consumer organizations to provide inputs to the plan body in its endeavor to come out with a policy paper on regulatory framework recommended Mehta.

The government has announced a pilot scheme for distribution of food stamps instead of PDS in two or three contiguous districts. Mehta concluded, that with an objective to have transparency in delivery mechanism, we need to involve civil society organizations (CSOs) as watch dogs in implementing the scheme.

For further information please contact:
Manish Agarwal, Policy Analyst, 9829285925
Email: c-cier@cuts.org

CUTS calls for strict watch over the safety of joyrides during Pujas

Kolkata, October 13, 2004, Press Release

Come Puja, and there will be lot of joyrides operating in the city violating all safety norms, warns Somi Home Roy, researcher, CUTS Safety Watch group, a premier consumer rights organisation working on consumer safety issues.

“One can hardly assess the hidden dangers of many rides that operate during different festivals, which seldom follow any safety standards. The rides might assure children a lot of fun but the parents do not know that these rides might cost their children a lifetime of trauma and pain” stated Roy. While children are the main victims of faulty rides, adults are no exception.

The business of amusement and fun is getting bigger in India. An estimated 600 million Indians venture out to various fairs and exhibitions year after year. But while everyone is keen on making profits, hardly anybody gives adequate attention to safety measures.

“It is a very common phenomenon, that after every accident, the licencing authority suggests the examination of the rides to see whether they have been maintained properly as required under the licence agreement. But no body answers the question as to why the authorities have to always wait for an accident to happen and then take action, especially when such accidents are so serious. Every year, several such accidents take place, many of which go unreported”, stated Roy.

Roy pointed out that the main cause of deaths and injuries on amusement rides is preventable. This would include things like lack of routine maintenance and disregard for safety rules by the operators. Each of these rides require rigorous quality control, be it in the manufacture of the parts, assembly at the fair site or its subsequent maintenance. The wear and tear caused by the speed, vibrations, weather and everything has to be carefully studied to ensure the safety of these rides. If these are not done properly, another shocking accident may be just round the corner.

Roy demanded that certificates for rides at fairs and carnivals should be revalidated each time a ride is moved to a new location.

She also pointed out the need of a competent licencing authority. Roy demanded that there should be random follow-up inspection during puja and other festivals and fairs to ensure compliance with the norms and regulations and licences should be revoked in case of failure.

Roy informed that very recently the Bureau of Indian Standards (BIS) has come up with “Code of Recommended Practice” for “Amusement Ride Safety” (IS 15475) and “Safety in Water Parks” (IS 15492). The statutory authority will give licences to the ride operators on the basis of compliance with these BIS recommendations. Roy suggested that the statutory authority while granting licence to the safe rides can put a logo on them, which will signify that the rides are safe. This will help people to identify a safe ride for their children and themselves and many accident could be avoided in future.

For further information, please contact:

Soumi Home Roy
Consumer Unity & Trust Society (CUTS)- Safety Watch
3 Suren Tagore Road, 2nd Floor,
Calcutta-700019, India
Telefax: 91-33-24601424
Mo: 9831445631

Competition Policy and Law: not a luxury but a necessity for developing countries

Dhaka, September 23, 2004, Press Release

23 September 2004, Dhaka: “Bangladesh government is committed to promoting effective and well-functioning market”, stated Altaf Hossain Chowdhury, the Minister of Commerce of Bangladesh. He was speaking at the regional launch meeting of a project on “Advocacy and Capacity Building on Competition Policy and Law in Asia”, codenamed as 7Up2, held at Dhaka on 22-23 September, 2004. The meeting was organised by Bangladesh Enterprise Institute (BEI) in partnership with CUTS International, India, which is also the lead partner of the project that covers five other countries: Cambodia, India, Lao PDR, Nepal, and Vietnam. The minister expressed his hope that the project will bring out significant learnings, which will help Bangladesh in shaping its policies on market regulation.

Earlier in the day, Mr. Farooq Shobhan of BEI highlighted the need of competition policy and law especially in the era of globalisation and liberalisation as the country is engaged in market-oriented reforms. “Markets cannot take care of everything and the government needs to ensure that appropriate regulatory frameworks are in place so that market failures do not thwarts the efforts of the government to ensure better standards of living for the people”, reasoned Sobhan.

Speaking on the occasion, Pradeep S Mehta of CUTS argued, “a competition policy and law is not the luxury of the developing world but a necessary governance instrument for all countries. It is true that as of now it is found mainly in developing countries but countries like the US, Canada and Australia adopted a competition law more than hundred years back when they were at a stage of development where developing countries find themselves today”. He also provided a brief account of the developments that have taken place on the competition policy and law front around the world.

Frank Matseart of the Department for International Development (DFID) Bangladesh expressed the commitment of DFID in promoting competition policy and law as a component of their private sector development strategy, which has important bearing on growth and poverty reduction in developing countries. He also noted that the achievements of the 7-Up1 project also implemented by CUTS in seven developing countries with support from DFID. He expressed the hope that the present project will be equally successful if not more.

Atiur Rahman, a reputed economist of Bangladesh noted that there is feeling in several countries including Bangladesh that in the aftermath of competition policy being dropped from the WTO Doha Round Agenda, the issue has become dead. However, he cautioned, “developing countries need a competition law for their own benefits irrespective of whatever happens at the WTO”.

The meeting also noted that several anticompetitive practices are taking place everyday that originate from outside a country or affect a number of countries or even the entire world. It was felt that there is an urgent need to adopt some multilateral framework to take care of these practices. However, it was also felt the proposals made at the WTO may not be appropriate. Not only because the WTO is not the most appropriate forum but also because under the proposals most cross-border anti-competitive practices that affect developing countries more will remain unaddressed. It was suggested that a new forum entirely dedicated to competition issues under the auspices of the UN could be considered.

It was also mentioned that there are regional dimensions of the issue as well. In South Asia, India being a very large country and countries like Nepal, Bhutan and Bangladesh having significant trade linkages, anti-competitive practices organised in India also affect the other countries. It happens in the reverse direction as well but at a lower scale. It was suggested that as the SAARC countries integrate more and more, a regional competition framework can be evolved. Some participants also opined that India which has relatively better regulatory arrangements should address the concerns of neighbouring countries and give access to them in its relevant forums.

Experiences from countries like India, Pakistan, Sri Lanka, Nepal, Cambodia, Lao PDR and Vietnam were shared in the meeting. It came out that the three countries: India, Pakistan and Sri Lanka have reasonably long experience with competition law, however, not very encouraging. Problems have been there with the design of the law and more so with its implementation which was not taken seriously by the policy makers. Countries like Bangladesh and Nepal have a different story as anti-competitive practices thrive without any threat of law. The three countries of Mekong region are no better where the markets are still dominated by state-owned enterprises.

The participants in the meeting also discussed about promoting a healthy competition regime in the project countries and the strategies and actions required to achieve this objective. It was highlighted that an appropriate competition policy and law would help everybody in the economy including the business. It needs to be emphasised that a competition regime is to create an enabling environment in which business thrives and grows though there are often apprehensions to the contrary. It is absolutely essential to involve all stakeholders in designing as well as implementing a competition regime was the consensus that prevailed among the participants.

Need to Regulate Cable TV Charges: CUTS Survey

New Delhi, September 29, 2004

“Most subscribers do not have option to change their cable operator and face frequent hike in subscription charges,” showed a survey done by a group of consumer organisations in the country, led by CUTS.

The survey findings reveal that 7 out of 10 households interviewed do not have option to change their cable operator, and 80% of these households faced a hike in subscription charges at least once in the last one-year. The survey is based on responses of more than 1500 representative respondents from the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. It was done by CUTS in Delhi and Kolkata, CAG in Chennai and CGSI in Mumbai. The project was supported by the Ministry of Consumer Affairs, Government of India, under their consumer welfare fund.

“In an industry where there is a virtual monopoly at the consumers’ end, the survey identifies a crying need to regulate prices and ensure proper service standards at local level”, said Pradeep S Mehta, Secretary General of CUTS and Bharath Jairaj, Legal Coordinator of CAG, Chennai.

The Cable TV sector is a seller’s market and the consumer is merely a puppet in the hands of operators, having no say in the types of channels s/he wants to watch. Though 70% cable TV subscribers received more than 50 channels, most of these (83%) usually watch less than 15 channels. Thus consumers are made to pay for more than 35 channels, which they do not watch. “This is a clear example of restrictive trade practice being followed in the cable TV industry. The Conditional Access System (CAS) was supposed to address this anomaly, however, it has remained a non-starter except for Chennai and South Delhi, with its fate uncertain,” commented Manish Agarwal, Policy Analyst at CUTS.

Eighty percent households covered by the survey, pay between Rs.150-300 as monthly cable subscription charges: maximum respondents (38%) pay between Rs.150-200, followed by 24% paying between Rs.200-250 and 20% paying between Rs.250-300 per month. Importantly, there is not much difference in the subscription charges paid by consumers in lieu of the number of TV sets owned by them.

Kolkata with average monthly subscription charge of Rs.175 is the least expensive metro, followed by Chennai (Rs.187), Mumbai (Rs.247), and Delhi (Rs.253), as the most expensive.

Among key improvements, consumers would like in the cable TV system: better picture and audio quality, an effective complaint redressal system, and stopping of change in order of channels.

Since CAS was to be implemented in the four metros, the survey was initially aimed at assessing consumers’ perception on the operational efficiency of CAS and to assess whether CAS has addressed these inefficiencies and inequity. However, notification on CAS was withdrawn on recommendations of the Telecom Regulatory Authority of India (TRAI), designated regulatory agency for broadcasting and cable services. Given the status quo, survey was done in the four metros to:

assess the structure of cable TV market and level of influence cable operators have on consumers; and
identify the level of consumer awareness about CAS

The survey reveals that most respondents (96%) have heard of CAS. However, in terms of acceptance of the system, there is variation across metros. Majority of respondents in Delhi, Kolkata and Chennai are not in favour of accepting CAS and advance fear of increase in monthly rentals as the main reason for their response. On the other hand, majority of respondents in Mumbai, in particular those paying monthly subscription charge of Rs.200 and above favour CAS and expect that CAS would reduce the monthly rentals.

Post-CAS monthly rental is thus a chief reason for accepting/rejecting CAS. Keeping aside the variation in their perceptions, what emerges is that most respondents do not want an increase in their monthly cable bills, if CAS is implemented.

Moreover, variation in perception of respondents across metros regarding post-CAS monthly subscription charges highlights the poor awareness with respect to CAS. In fact, lack of information about different aspects of transition to the CAS regime has been one of the main reasons for failure of CAS in its first attempt.

“TRAI is soon going to come out with its recommendations on Cable TV services. Given the experience with implementation of CAS, it is imperative that whatever system is proposed by TRAI, there is full clarity and mass awareness of consumers, in order for any proposed system to succeed”, suggested the consumer activists.

On mode of procuring set-top box, while majority of respondents in Delhi, Mumbai and Kolkata expressed their preference to buy, majority of respondents in Chennai prefer to rent a set-top box. Sixty-seven percent respondents do not mind advertisements during TV programmes. In contrast, only 3 out 10 respondents are willing to pay more if advertisements are removed from TV programmes.

While TRAI is working on its recommendations on CAS, several alternative technologies, such as DTH, broadband and Trap, have emerged. This requires the regulator to look at the full spectrum of issues involved in broadcast and cable regulation.

The Ministry of Information & Broadcasting in its bid to encourage alternative delivery platforms to provide choice to consumers and hence competition at consumers’ end has asked TRAI to make recommendations such as all TV channels are available on all delivery platforms on a non-discriminatory basis. “However, given that Indian law is not applicable to broadcasters who have uplinking facility outside the country, it is to be seen what mechanism TRAI recommends to make available all TV channels on all delivery platforms”, said the activists.

“The best way to regulate the sector is by segmenting the market at consumers’ level and ensuring price caps and service standards. On the contrary, if we allow for more than one operator, then it would lead to dirty competition, as the operators would try to damage the infrastructure of other operators”.

“CUTS has prepared a Draft Cable TV Bill in this regard and is organising a one day Seminar in New Delhi on 18^th October 2004 to deliberate on these issues. The seminar seeks to develop a consumer friendly cable TV system”, said Manish Agarwal, who prepared the report.

For further information, please contact:

Pradeep S Mehta, 98290 13131/98102 06633
Manish Agarwal, 98292 85925
Anand Patwardhan 022 - 2262 1612
Bharath Jairaj 044 - 2446 0387

Implementation of the Common Minimum Programme is a huge concern

September 17, 2004, Press Release

17 Sept. 2004, New Delhi: The Common Minimum Programme (CMP) of the United Progressive Alliance government has covered all relevant issues for India’s development with employment generation and poverty reduction. However, unless attention is paid on issues of economic governance at the grassroots, its outcome may be far from what is promised. This was expressed by the representatives of civil society organisations from different parts of the country while participating in a two-day national seminar titled “The Common Minimum Programme and Its Prospects for Economic Reforms”. The event was jointly organised by Firedrich Ebert Stiftung (a German political foundation) and CUTS International (a think-tank working on economic issues). It ended yesterday at the India International Centre, New Delhi.

Kicking-off the event, Pradeep S. Mehta, Secretary General of CUTS International said that economic reforms are not new in independent India. He explained the point by taking the example of reforms in the telecommunications sector, which started in mid-1980s. In today’s context, the major concern is whether the nation is witnessing “jobless growth or not”. “We need to understand the complexities of the system and see how to grow and balances the concerns of different communities,” he said. The CMP is designed to address these complexities and concerns and it is a challenge for all citizens of the country to see to it that it is implemented in its letter and spirit.

According to Paranjoy Guha Thakurta, Director of School of Convergence and economic commentator, the central question is whether there is any consensus on economic reforms. But before finding an answer to this question, it is necessary to debate on why and how to emerge consensus. “The apparent consensus on economic reforms is a fallacy, as otherwise why there is no consensus on privatisation,” he argued.

Presenting the current employment scenario of the country, N. P. Samy, Coordinator of the National Council of Labour (an apex trade union of unorganised sector workers) said that 93 percent of the current employment is in the unorganised sector, but only about 65 percent of our economy is considered as ‘unorganised’ according to various other (than employment) economic indicators. The government should address this imbalance through appropriate policy measures. He also argued that despite many claims otherwise, employment in the unorganised sector is declining over the last decade or so and this is mainly due to decline in agricultural production. Another major concern is quality of employment.

Pronab Sen, Advisor to the Planning Commission of India called for recreation of the planning system. The system is following a tiered approach – national, state, district and village-level planning. However, it is largely dysfunctional at the state, district and village-level, barring a few states. In this context, he argued that “the civil society organisations have a major role in making this system functional at the grassroots and only then the delivery mechanism (of public goods and services) will be improved.”

Amirullah Khan of the India Development Foundation argued that, contrary to some opinions, the proposed national employment guarantee act (providing legal guarantee of at least 100 days of employment every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle class household) would not result in a heavy financial burden on the state. The issue is that of implementation and creation of tangible assets for better delivery of public goods and services to the poor.

On day two, there were presentations and discussions on economic policy positions of different groups. According to Dinesh Trivedi, Member of Parliament (Rajya Sabha – Upper House), the nation is confused, as the people as well as policy-makers are not sure of the development model to be followed. However, the basic issue confronting the common people is access to basic needs like food, shelter, clothing, water, energy, communications. He urged the civil society organisations to work on fiscal reforms, as that will be major factor to determine the nation’s future course of development.

Amarjit Kaur of the All India Trade Union Congress said that trade unions are not opposed to reforms. “We are opposed to some contents of reforms, which suit the needs of vested interests and goes against the interests of the poor.” “What does economic reforms mean? Is it reduction of subsidies to the poor and subsidisation of the rich?” she argued. “The CMP will be considered successful if it can generate enough employment essential for the livelihood security of the poor.”

According to Tapan Sen of the Centre for Indian Trade Unions, in 1990s there was significant decline in public investment and this has resulted in the decline of purchasing power of poor consumers. At the same time, there are enough resources in the country and these are to be tapped through innovative means. He argued that the CMP should be implemented in a manner that the real economy grows, as only then the consumer base of the country will be expanded. “The Indian electorate has started responding to economic issues and this will increase the political accountability of the system,” he added.

All the participants took active part in this interactive event, including group discussions. They pointed out that the CMP does not talk about land reforms (including tenancy reforms) and environmental protection. These two issues are to be included, as they are fundamental to the availability of, access to, and ability to pay for basic needs.

Summarising the general debate during the closing session, Chetan Sharma, Deputy Editor of TV Today Group said that there are two major issues:

employment generation in a sustained manner and the quality of employment for better livelihood security
accountability of the system, so that the poor can have better access to basic needs (public goods and services)

In this context, participants were unanimous in their recommendation that the debate on economic reforms and its implications on the livelihoods should be held regularly and at different levels: national to grassroots. Such debates will deliberate on required public actions for better economic governance in the country. There should be an arrangement for holding objective and well-informed debates among civil society representatives (from various movements such as development, environment, consumer, human rights, women, youth, student) and other stakeholders (policy-makers, politicians, industry, etc). They also called for periodic social audit of the implementation of the CMP and its implications for the people of India.

CUTS calls for aid to road accident victims first, formalities later

Kolkata, September 6, 2004, Press Release

Kolkata, Sep 6: “Prompt” medical attention to accident victims! “Only a “lucky” few get it”, says Soumi Home Roy, a researcher with CUTS Safety Watch, a premier consumer organisation working on consumer safety issues.

Road accidents have become a regular phenomenon. Every 12 minutes an Indian dies on the road and 10 times that number get injured. In such circumstances, Roy pointed out that the role of medical institutions becomes important, as the first few minutes after the accident, termed the “Golden Hour,” are very precious and crucial. Many lives can be saved and disabilities prevented by providing immediate treatment to accident victims.

“But in India, medical handling of crash victims is far from satisfactory”, expressed Roy. The time taken between the accident and reaching the hospital is critical, but the procedural wrangles and public fear of getting involved in a police case delay crucial help. Additionally, the police and the medical institutions often prioritise completion of medico-legal formalities over treatment that results in the death or permanent disability of many victims. Moreover, many medical institutions deny emergency cases by giving lame excuses, such as non-availability of beds, etc.

“In 1989, the Supreme Court passed an order that a road accident victim needs immediate medical attention so that his life is saved,” informed Roy. The Court stated that any Doctor (or medical institution) can be approached for immediate treatment and that it is his duty to do so. Alternatively, failure on the part of the doctor (medical institution) to provide timely medical care to a person results in violation of his “Right to Life,” guaranteed under Article 21. The judgement added that in any such case, the police should not harass the doctor by dragging him to the police station in the name of investigation.

Subsequently, in 1994, Section 134 was added to the Motor Vehicle’s Act, 1988 to cover this exigency of providing immediate medical treatment and succour to accident victims. Under this section, a driver involved in any accident is required to secure medical aid for the injured person, by taking him to the nearest hospital/doctor and it shall be the duty of the hospital/doctor to render medical aid to the victim without waiting for completion of legal formalities. Failure in this regard is punishable under Section 187 of MV Act, 1988.

“What is unfortunate is the fact that even after so many years, most of the people are unaware of the Supreme Court judgement and Section 134 of the Motor Vehicles Act. Inspite of the provision under law, accident victims and their relatives suffer because of the ignorance”, lamented Roy.

Roy also pointed out that the entertainment industry, which plays an important role in spreading messages and moulding public perceptions, continue to portray this undesirable state of affairs.

Thus, there is an urgent need to sensitise common people, the police, the medical fraternity, as well as the entertainment industry on the same, opined Roy.

CUTS is involved with road safety issues since the last 20 years and twice it has served on the National Road Safety Council. It has also contributed to the framing of the first National Road Safety Policy draft in 1992. To make people aware about Section 134, CUTS has launched a nation wide campaign.

CUTS has written to the Ministry of Road Transport and Highways (MORTH), DG police of all the states and films/serials directors/actors. Upon hearing positively from eminent personalities like Alok Rawat, Joint Secretary, MORTH and Raj Kumar Hirani (film director), Roy feels encouraged to take this campaign further down to the masses and empower them.

Consumer group hails National Foreign Trade Policy

“The five-year National Foreign Trade Policy adopted by the Government of India is a step in the right direction. This is not only in consonance with the letter and spirit of the National Common Minimum Programme, but also will help India achieving a greater role in international trade negotiations,” said Pradeep S. Mehta, Secretary General of CUTS International, while welcoming its announcement. The Policy has several innovative measures to achieve the twin objectives of increasing India’s share from the current level of approximately one percent to 1.5 percent of world trade by 2009 and employment generation at a mass scale, he added.

The proposal to form a Board of Trade is welcome. However, the Commerce Minister should head this Board. Only then there will be political legitimacy of its activities. Instead eminent persons could head sub-groups, which will look at specific issues. Members of the Board and its sub-groups should be drawn from various fields, representing different interests such as business, consumers, trade unions, political parties, state government officials.

“Meeting the objectives of the Policy will crucially depend on the role of the state governments vis-à-vis international trade,” argued Bipul Chatterjee, Director of CUTS Centre for International Trade, Economics & Environment. For a better political buy-in of this Policy, the Government of India should conduct regular consultation with state government officials, local chambers and other interested parties. The Government should also urge the states to form state trade bodies, which can act as a platform to discuss and debate issues relating to international trade and their implications on the ground, Chatterjee suggested.

“It is heartening to see that the Policy is based on the principle of achieving coherence between the emerging international trading system and national development strategy as in today’s world, international trade is much more than export and import,” said Mehta. This Policy will strengthen India’s position during the Doha Round of WTO negotiations. Other than this broad policy direction, the Government should also come out with a domestic agenda of reforms taking into consideration the Framework Agreement on the basis of which the Doha Round of WTO negotiations is being held. This will help our negotiators to place proactive demands, based on ground realities, at the negotiating table.

For more information, please contact:
Pradeep S. Mehta, 98102 06633
Bipul Chatterjee, 98102 74001

Urge for more proactive South-South cooperation on trade negotiations

Islamabad, August 19, 2004: Cooperation among Southern countries through consensus building on trade and trade policy issues is essential to ensure a concerted approach to counter-balance the hegemony of developed countries in designing and implementing trade policies. These were the general observations voiced by the experts and participants during the second day of a regional conference on WTO issues being held at Islamabad.

At the session on the future of Singapore issues, the keynote speaker, Mr. Pradeep Mehta from CUTS International stated that developing countries had balked in including these issues in trade talks, specifically investment rules, because many wanted to retain control over their own key industrial sectors. The complexity of negotiating completely new areas would have left them at a disadvantage, compared to the rich countries.

Participants demanded an accelerated pace of clarification for these issues, as enhanced awareness in the South might lead greater participation in negotiations. It was argued that although there has been some technical assistance provided since Doha, it was mainly in the form of donor-driven workshops. It was felt that the capacity of Southern countries to negotiate and implement new obligations had not increased considerably.

On competition policy, Prof. Manoj Pant of Jawaharlal Nehru University stated that developing countries were not in a position to undertake many obligations and a harmonisation of competition laws across the board may not be in the interest of trade as each country's policy was determined by its domestic needs and culture. As a result, the one-size-fits-all approach would not work.

Former Indian Ambassador to the WTO, Mr. S. Narayanan, while sharing his experiences of the Doha meeting said that India had all along questioned the legitimacy of including the Singapore issues in the WTO programme. It had maintained that the issues are not for multilateral negotiations as they impinge on the sovereignty of individual countries.

On investment, many participants said that a multilateral agreement might erode governments' ability to regulate and formulate investment policies. An investment framework advocated by the proponents would prevent or limit the host government's ability to regulate the entry and operations of foreign firms and funds, and its ability to assist or give preference to local firms. Local firms may lose protection and assistance provided by the state. The prohibition on government to regulate the flow of funds could lead to financial instability, balance of payments problems and increased external debt.

On trade and competition policy, an extremely complex issue subject to different interpretations, there is a need for governments to assist and promote local firms so that they may be viable and develop despite their present relative weakness, to enable them to successfully compete with foreign firms and their products. However, there were apprehensions that the market access approach of developed countries may eventually win out, due to their higher negotiating capacity and influence.

On trade facilitation, the participants expressed serious concerns that it may lead to imposition of new obligations on developing countries that would be costly and difficult to implement.

Dr. Saman Kelegama, Executive Director of Institute of Policy Studies, Sri Lanka, while speaking at a session on trade in textiles & clothing, stated that two stages of the phase-out of the present quota regime have passed, but little meaningful integration had taken place. Exports will improve with relocation of industry from developed to developing countries, but the maximum relocation will be in South Asia. The region will gain from the new (post-2004) trade regime on textiles & clothing, with India & Pakistan benefiting from low wages and domestic capacity.

However, China is expected to dominate global trade in textiles & clothing, increasing its share to 50 percent after 2005. Sri Lanka, Thailand and the Philippines are expected to lose out due to dependence on imported fabrics. However, environmental, labour, health and other safety standards may be used to circumvent the quota-free trade regime. He further argued that one of the most important aspects of garment exports is to highlight the importance of this sector with people's livelihoods.

According to Dr. Aradhana Agarwal of Indian Council for Research on International Economic Relations, even in a quota-free regime the question as to which country would gain out of the new regime will depend on the sectoral competitiveness of that country. In India, there is little investment in technology and machinery. Apart from this, transaction cost is very high. India is already loosing out to China and although it is predicted that the country will gain from the quota-free trade regime this might not actually happen, she argued.

Dr. Atiur Rahman of Bangladesh Institute of Development Studies said that textiles and clothing is an extremely important sector for Bangladesh. If this sector collapses, there will be very serious repercussions on the Bangladeshi economy.

WTO agreements need to be negotiated in the interests of the people of South Asia

Islamabad August 18, 2004: Though cautious about certain agreements under the World Trade Organisation (WTO), speakers at a South Asian regional meeting started in Islamabad on Tuesday, the 17^th August, were of the view that globalisation is going to be unstoppable and the WTO agreements need to be negotiated in the interests of the people of South Asia. Developing countries must have their own agenda items for the negotiations.

Speaking at the inaugural session, Dr. Abdul Hafeez Shaikh, the Pakistani Minister for Privatisation said no country has progressed without being part of global stream and globalisation is unstoppable as the basic desire of people is to prosper through trade. “The South Asian region has lost much time. Therefore, we need to do a lot of catching to match with the level of economic development of other regions,” he said while delivering the keynote address. “WTO needs to be better understood that some of the decisions are going to have far reaching impact on the lives of people of this region”, the Minister further emphasised.

The Indian High Commissioner to Pakistan, Mr. Shiv Shankar Menon in his introductory remarks underlined the importance of regional cooperation in South Asia. He further opined that efforts towards regional cooperation are now getting necessary governmental support as well. In his speech, Pradeep S. Mehta, Secretary General of CUTS International highlighted the specific objectives of the meeting being held as part of the SACSNITI (South Asian Civil Society Network on International Trade Issues) project with the support of the International Development Research Centre of Canada. The meeting titled “WTO Post-Cancun Developments: Options for South Asia” is jointly organised by CUTS International, Sustainable Development Policy Institute, Islamabad, Oxfam GB in Pakistan and South Asia Watch on Trade, Economics and Environment. The SACSNITI, which was launched three years back, is a unique partnership between research organisations and advocacy groups in South Asian region.

The technical session on “Multilateral Trading System: Post-Cancún Scenario and the Future” was chaired by Mr. Qasim Niaz, Joint secretary, Ministry of Commerce, Government of Pakistan. Talking in this session Mr. Rashid Kaukab of South Centre, Geneva identified the main features and trends related to the WTO. He compared the establishment of WTO to the present scenario. Listing various comparative advantages of the WTO, he said that it provides legitimacy and credibility as three-fourth of its members are from developing countries. Concluding his presentation he argued that it is safe to predict that the WTO will continue to remain an important and relevant body but not the only form to conduct trade among countries. However, our goal should remain the development of developing countries, which could be achieved by strengthening South-South relationship and shaping, mobilising and channelising public opinion. Civil society and media had an important role to play, he added.

Mr. H. A. C. Prasad, Economic Advisor of Ministry of Commerce, Government of India presented his analysis of WTO’s July Decision. According to him, these negotiations were a step forward after the Cancún ministerial. He said that developing countries must find ways for better utilisation of the G-20 alliance.

Mr. Poshraj Pandey from Nepal was of the view that if developing countries can act jointly, the outcome could be in their interest. The chances of better negotiations will only be possible if developing countries continue to be part of larger negotiations. Solution lies in joint efforts on behalf of research and advocacy groups to assist governments in preparing negotiating agenda.

Dr. Nagesh Kumar, Director General of Research and Information System for Non-aligned and other Developing Countries (RIS), India, said 1990s was a decade of regionalism rather than a trend of globalisation. As a result of the formation of regional trading arrangements (RTAs), 60 percent of the world trade is done on preferential basis. Keeping this in view if a country is not part of any RTA, then its exports are prone to be disadvantageous. Now there is a movement in developed world to stop developing countries from forming such blocs. Developing countries should not be defensive about RTAs. They are building blocs to get into the multilateral system. The other aspect, which Kumar highlighted, was that RTA not only helps create trade but also expand the scope of investment.

Ms. Huma Fakhar of Pakistan raised certain important questions as how to negotiate the South Asia Free Trade Area (SAFTA). She was of the view that rest of the world is far ahead than South Asia in terms of building regional blocs. She called for more research to deal with regional trade issues and how to get benefit from regional trade.

Mr. Ratnakar Adhikari, Executive Director of South Asia Watch on Trade, Economics and Environment said that nothing is happening in terms of transfer of technical assistance to least developed countries (LDCs) within SAFTA in order to catch up with other countries in the region. He said the South Asian countries need to show seriousness towards regional cooperation, particularly in trade.

Dr. Abid Suleri of Oxfam GB in Pakistan called for a mechanism among the South Asian countries to achieve a win-win situation and argued that RTAs is one of the ways to achieve this goal. He urged the need to take media along to create enabling environment to influence policy and decision-making in South Asian countries.