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Change in Plastic Waste Management Rules

1. The Union ministry of environment, forest and climate change amended the Plastic Waste Management Rules (2016)
2. According to the amendment, manufacturers, suppliers, and sellers of plastic (and plastic products) across the nation will now be required to phase out, over a period of two years, all such products which have no alternative use or are non-recyclable and non-energy recoverable
3. This move was preceded by a state-wide ban in Maharashtra on the manufacture, usage, sale (wholesale and retail), distribution, storage and import of plastic bags and all disposable products made out of plastic

What comprises Plastic waste? What are its components?

1. The plastics waste constitutes two major categories of plastics – Thermoplastics and Thermoset plastics.
2. Thermoplastics constitute 80% and Thermoset constitutes approximately 20% of total post-consumer plastics waste generated in India.
3. The Thermoplastics are recyclable plastics which include; Polyethylene Terephthalate (PET), Low-Density Poly Ethylene (LDPE), Poly Vinyl Chloride (PVC), High-Density Poly Ethylene (HDPE), Polypropylene(PP), Polystyrene (PS) etc.
4. The Thermoset plastics contains alkyd, epoxy, ester, melamine formaldehyde, phenol formaldehyde, silicon, urea formaldehyde, polyurethane, metalized and multilayer plastics etc.

Need for this step

1. India has an uninspiring record when it comes to handling waste
2. India’s plastic waste is estimated officially at 26,000 tonnes a day
3. If the Centre and the States had got down to dealing with the existing regulations on plastic waste management and municipal solid waste, a ban would not even have become necessary.
4. Specifications for the recycling of different types of plastics were issued two decades ago by the Bureau of Indian Standards but it was not implemented on the ground
5. It is stated that 15, 000 tonnes of plastic waste is generated every day, out of which 9, 000 tonnes is collected and processed, but 6, 000 tonnes of plastic waste is not being collected.
6. In particular, the plastic carry bags are the biggest contributors of littered waste and every year, millions of plastic bags end up in to the environment vis-a-vis soil, water bodies, water courses and it takes an average of one thousand years to decompose completely.

Criticisms of this step

1. To the people employed in the industry, it could mean the shutdown of factories and potential job losses
2. To the consumer, it would mean choosing between alternatives that are either too expensive, impractical or not as easily available
3. The unrealistic timeline for the implementation of the plastic ban has caught all stakeholders unawares, making it extremely difficult to comply with.

Way Forward

NUDGING CONSUMERS

1. The government can nudge rather than coerce citizens to demand and use less plastic
2. One way of doing this would be to give discounts to customers who bring their own bags, or reward points for not requesting a plastic bag—as opposed to fining, penalizing, or charging high prices
3. Another nudge, which has been extremely successful globally in donation scenarios, is the “opt-out model”. Here, customers would by default be considered as opted-in for non-plastic items, forcing them to manually opt-out to choose otherwise.

Conclusion

1. Plastics became popular because they are inexpensive, can be easily produced and offer great convenience
2. Their wild popularity has turned them into a scourge
3. We need substitutes for plastic, incentives to re-use, and better waste disposal

Question

1. Plastic waste has become a nuisance today. In this context critically discuss the latest amendments to the Plastic Waste Management Rules of 2016. 

Introduction

India continues to be driven by the use of cash; less than 5% of all payments happen electronically, however, the finance minister, in 2016 budget speech, talked about the idea of making India a cashless society, with the aim of curbing the flow of black money.

Even the RBI has also recently unveiled a document — “Payments and Settlement Systems in India: Vision 2018” — setting out a plan to encourage electronic payments and to enable India to move towards a cashless society or economy in the medium and long-term.

What is a cashless economy and where does India stand?

A cashless economy is one in which all the transactions are done using cards or digital means. The circulation of physical currency is minimal.

India uses too much cash for transactions. The ratio of cash to gross domestic product is one of the highest in the world—12.42% in 2014, compared with 9.47% in China or 4% in Brazil.

Less than 5% of all payments happen electronically

The number of currency notes in circulation is also far higher than in other large economies. India had 76.47 billion currency notes in circulation in 2012-13 compared with 34.5 billion in the US.

Some studies show that cash dominates even in malls, which are visited by people who are likely to have credit cards, so it is no surprise that cash dominates in other markets as well.

Benefits of Cashless economy

1. Reduced instances of tax avoidance because it is financial institutions based economy where transaction trails are left.
2. It will curb the generation and circulation of black money as all electronic transactions are traceable.
3. Will reduce real estate prices because of curbs on black money as most of the black money is invested in Real estate prices which inflates the prices of Real estate markets
4. In the Financial year 2015, RBI spent Rs 27 billion on just the activity of currency issuance and management. This could be avoided if we become a cashless society.
5. It will pave way for low cost and universal banking services to all as no physical infrastructure is needed other than digital.
6. There will be greater efficiency and transparency in welfare programmes as money is wired directly into the accounts of recipients.
7. There will be significant productivity gains as transaction costs across the economy should also come down.
8. About 14% notes are reported to be fake, which has a huge negative impact on the economy, by going cashless, that can be avoided.

Challenges in making India a cashless economy

1. Availability of internet connection and financial literacy.
2. Though bank accounts have been opened through Jan Dhan Yojana, most of them are lying un-operational. Unless people start operating bank accounts cashless economy is not possible.
3. There is also a vested interest in not moving towards the cashless economy.
4. India is dominated by small retailers. They don’t have enough resources to invest in electronic payment infrastructure.
5. The perception of consumers also sometimes acts a barrier. The benefit of cashless transactions is not evident to even those who have credit cards. Cash, on the other hand, is perceived to be the fastest way of transacting for 82% of credit card users. It is universally believed that having cash helps you negotiate better.
6. Most card and cash users fear that they will be charged more if they use cards. Further, non-users of credit cards are not aware of the benefits of credit cards.
7. Indian banks are making it difficult for digital wallets issued by private sector companies to be used on the respective bank websites. It could be restrictions on using bank accounts to refill digital wallets or a lack of access to payment gateways. Regulators will have to take a tough stand against such rent-seeking behaviour by the banks.

Steps taken by RBI and Government to discourage use of cash

1. Licensing of Payment banks
2. Government is also promoting mobile wallets. Mobile wallet allows users to instantly send money, pay bills, recharge mobiles, book movie tickets, send physical and e-gifts both online and offline. Recently, the RBI had issued certain guidelines that allow the users to increase their limit to Rs 1,00,000 based on a certain KYC verification
3. Promotion of e-commerce by liberalizing the FDI norms for this sector.
4. The government has also launched UPI which will make Electronic transaction much simpler and faster.
5. The government has also withdrawn surcharge, service charge on cards and digital payments
6. The launch of BHIM APP
7. A discount of 0.75 per cent will be offered on purchase of petrol and diesel through either credit/debit cards, e-wallets and mobile wallets.
8. Credit/debit card transactions up to Rs 2,000 will be exempt from service tax.
9. Online booking of railway tickets will get Rs 10-lakh accident insurance.
10. 1 lakh villages with population less than 10,000 will get 2 PoS machines (swipe machines) each, free of cost supported through financial inclusion fund.
11. Demonetization (Will be dealt in a separate article)

What else needs to be done?

1. Open Bank accounts and ensures they are operationalized.
2. Abolishment of government fees on credit card transactions; reduction of interchange fee on card transactions; increase in taxes on ATM withdrawals.
3. Tax rebates for consumers and for merchants who adopt electronic payments.
4. Making Electronic payment infrastructure completely safe and secure so that incidents of Cybercrimes could be minimized and people develop faith in the electronic payment system.
5. Create a culture of saving and faith in the financial system among the rural poor.
6. The Reserve Bank of India too will have to come to terms with a few issues, from figuring out what digital payments across borders means for its capital controls to how the new modes of payment affect key monetary variables such as the velocity of money.
7. RBI will also have to shed some of its conservatism, part of which is because it has often seen itself as the protector of banking interests rather than overall financial development.
8. The regulators also need to keep a sharp eye on any potential restrictive practices that banks may indulge in to maintain their current dominance over the lucrative payments business.

Though it will take time for moving towards a complete cashless economy, efforts should be made to convert urban areas into cashless areas. As 70% of India’s GDP comes from urban areas if the government can convert that into cashless it will be a huge gain. Therefore different trajectories need to be planned for migration to cashless for those having a bank account and for those not having.

Questions

Q.1) What hurdles exist in making India a cashless economy? Discuss benefits of becoming a cashless economy and suggest how government can speed of this transformation.

Q.2) What challenges does government face in rural areas in its efforts towards a cashless economy? How could these challenges be overcome?