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RBI Monetary Policy: What does it mean for banks, economy?

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This Tuesday saw an upbeat in the Money Market resulting from the positive move from RBI monetary policy of reducing the CRR rate by 0.5%. The revised CRR now stand at 5.5% which was earlier 6% which would be effective from January 28th 2012. The CRR reduction was targeted to control the inflation .This news also saw the rupee strengthen against the dollar. The share market too rose to a 10 week high. What does this mean for the Banks, Economy and to the Common Man? Banks CRR Refers to the Cash Reserve Ratio that the Banks has to maintain with RBI. It is the minimum reserve that each bank must hold with the central bank out of customer deposits. A cut in CRR would definitely be advantageous to the banks as they would have more funds to lend/invest for profit generation. RBI also foresees a threat in the form of increase in bad debts/non-performing assets (NPA's) due to this move. To mitigate this risk RBI is planning to have a meeting with top 10 banks of India to discuss this further. Air India our restructuring classified as currently has Economy A positive move as this one would certainly be beneficial for the Indian Economy. The major benefit being a curb on inflation by giving a liquidity push. Till now RBI had been resorting to OMO or open market operation whereby it has bought back Rs 70,000 Cr worth of government securities from the market in the recent past. As of now inflation is projected to 7% by March end. The CRR cut has facilitated an injection of 32000 Cr rupees into the economy, which will soften the interest rates considerably. The RBI lowered its GDP growth forecast for the fiscal year that ends in March to 7 % from 7.6 %, and left its wholesale price index inflation target unchanged at 7 percent for the end of the fiscal year in March. However the RBI opted to keep the repo rate(repurchase rate or short term lending rate), at which it lends to the banks, unchanged at 8.5 %, keeping in mind the downtrend in global economy as well as slowdown in domestic economy. Reverse repo (rate at which the RBI borrows from banks) is also kept at 7.5 %. Impact on the Common Man Banks will have more money in their hands to lend to common man. There is no current change in interest rates but still one can hope for lower rates in future. There is no immediate relief from the EMIs for the home and auto loan borrowers but rate reduction is definitely on the cards. Banks will have reduced the cost of funds thereby ensuring fair amount of money for growth options. Price pressures and inflationary pressures remain, but positive hopes remain that it will certainly ease down during the next fiscal year which starts in April. Share markets rallied on the 24th Jan as a result of the CRR cut. The sensex touched the 17k mark and closed at 16,995 and Nifty crossed 5100 to close at 5127.All major banks performed well in the sharemarket. This was a result of an introduction of RS 32000 Cr into the system. RBI considers a cut in CRR as just a liquidity measure taken to control inflationary pressures. And according to RBI interest rate cut is again a few months away. International Monetary Fund or the IMF has cut India's growth rate for2013 from 8.1% to 7.3%. It has also warned that India should be more cautious in its policy easing measures. It is definitely a tough balancing act for the RBI between maintaining economic growth and controlling inflation. RBI monetary policy: It's time to change three gears We welcome the Reserve Bank of India's growing focus on protecting growth from fighting inflation. Monetary policy should change in three ways. First , policy rates need to cycle down to support growth. Second, RBI needs to reduce the money market liquidity deficit to ease pressure on lending rates instead of adding to it. Finally, we expect RBI to rebuild forex reserves instead of strengthening the rupee to fight imported inflation. We are relieved to see governor Subbarao signal a possible rate cut in March. In fact, growth is flashing red lights: loan demand has fallen to 17% from 21.4% in March 2011 and December GDP growth will likely slip to 6-6 .5% levels. debt ridden carrier was waiting for a favourable nod from the RBI for their debt and finally RBI is ready to treat it as Non performing asset. Once an asset is a non-performing one, banks are required to set aside 70% of the amount. Air India a debt amounting to Rs.43,777 Cr.

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After all, India is perhaps the only economy in the world in which lending rates have pierced their 2008-peak . What about inflation? We agree with RBI that the present relief could be temporary . In fact, we expect inflation to rebound in mid-2012 after the government hikes coal, oil and power prices. Flagellating ourselves by killing India's growth, however, will not pull down global oil prices. Not surprisingly, every other BRIC central bank has been easing already. We are quite confident that core inflation (ie, inflation adjusted for weather, oil and metal price shocks) will come off. With growth falling below the economy's potential of 8%, corporates are losing pricing power. Can we get past the mid-year rebound in inflation? One way could be to hike oil prices on Budget day itself. Sure, this will push up inflation by about 100 bps to 8% by March 2012 from our base case. Yet, markets will then see inflation falling straight to 5.5% in March 2013. This will also allow RBI to steadily cut rates without fearing a rebound in inflation. We are happy that RBI cut CRR by 50 bps to bring down money market liquidity deficit to ease pressure on rates. In fact, we hope that it later buys more government paper via OMOs to bring the money market liquidity deficit to its targeted Rs 60,000 crore from Rs 1,50,000 crore now. After all, monetary growth, at 16.5%, is running below the optimal 17.5% levels consistent with 8% growth. Finally, we expect RBI to revert to building up forex reserves as insurance cover . After all, the import cover (ie: months of imports that forex reserves can fund) has fallen to 7.7 months, the least since 1997. We appreciate that RBI could not buy forex reserves because it was trying to fend off imported inflation with a strong rupee at a time of high current account deficit. But, the recent crisis has shown that high forex reserves help as markets respect the fact that the Reserve Bank carries a big stick. The RBI must, at the earliest opportunity, recoup the $45 billion it has sold since 2008. Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the Money supply Repo rate Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get Money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive CRR or cash reserve ratio is the portion or percentage of liabilities(Net demand and time liabilities) of commercial banks that they need to keep with the RBI( so that RBI can help them with cash at time of need), What is a CRR rate? Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. Relation between Inflation and Bank interest Rates Now a days, you might have heard lot of these terms and usage on inflation and the bank interest rates. We are trying to make it simple for you to understand the relation between inflation and bank interest rates in India. Bank interest rate depends on many other factors, out of that the major one is inflation. Whenever you see an increase on inflation, there will be an increase of interest rate also. What is Inflation? Inflation is defined as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average level of prices in Goods and services. Inflation happens when there are less Goods and more buyers, this will result in increase in the price of Goods, since there is more demand and less supply of the goods. What is a Repo Rate? Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. What is a Reverse Repo Rate? How will it affect the Bank Loan interest rates Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive

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interest rates. It can cause the money to be drawn out of the banking system. Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man. Bill on education lacks vision On April 19, 2010, Mr Kapil Sibal, Union Minister for Human Resource Development, proposed a new Bill called The Prohibition of Unfair Practices in Technical Educational Institutions, Medical Educational Institutions and Universities, Bill, 2010.' He got it approved by the Cabinet a month later on May 19. The Bill has not yet been passed, probably due to strong opposition from the parties concerned. Their primary concern lies in its statement that current national policy supported by several judicial pronouncements is against commercialisation of higher education. We will consider three of the objectives of the Bill: prohibition ofaccepting admission fee and other fees and charges other than such fee or charges for such admission as declared by the institution in the prospectus for admission ; prohibition ofadmission without specified admission test for selection of the students where such test is required to be conducted as per appropriate statutory authority; prohibition ofdemanding or charging or accepting, directly or indirectly, capitation fee or demand by donation, by way of consideration for admission to any seat or seats in course or programme of study, by the institutions; Further, every person who at the time the offence was committed was in charge of, and was responsible to, the society or trust for the conduct of the business of the society or the trust, as well as the society or trust, shall be deemed to be guilty of the offence and be liable to be proceeded against and punished accordingly. On the other hand, no suit or other legal proceedings shall be instituted against the Government or officer or authority or person exercising powers or discharging functions under this Act for anything which is in good faith. NO LOFTY INTENTIONS Thus, the aim of the Bill is essentially negative and not positive. Nowhere does it aim to make our professional institutions world class. When Mr. Sibal took over as minister, he repeatedly expressed his dismay over why no institution in Independent India had produced a Nobel Prize. Such noble objectives and concerns are absent in the proposed Bill. For a start, let us consider what changes in national policy may make higher education internationally competitive, even capable of producing Nobel Prize winners and the like. In that case, we should look at how great institutions thrive abroad. For instance, Harvard University has an Endowment Fund of about Rs 100,000 crore and there are many other similar institutions in the US. They did not acquire such large endowments without accepting donations and incidentally, using them as what we would call capitation fees. Fundamentally, is there anything wrong in letting institutions accepting donations with donors naturally getting some returns? That is one issue. That is, can institutions accept donations and, as aquid pro quo, offer to include their names on their buildings, name professorships and even let them have some admissions in return? There may not be any objection these days to the former two. (When I was Director at IIT Madras even that was prohibited!) The third, relaxing admission criteria is more controversial. ADMISSION CRITERIA Nowadays, a student may be admitted under relaxed criteria on the basis of caste (or soon probably even religion) and nothing is expected in return from the candidate for the concession shown. Many of them take it as their natural due, and do not even care to support students from their own community. Suppose, instead, a person offers a substantial donation that will provide scholarships to needy students, or endows a chair at a high salary, or supports a laboratory, or pays for the construction of a building. Should or should not the institution accept such donations and even offer admission to the donor's ward if found as fit as a student of the reserved category? That is the first issue. The second issue pertains to the procedure for admissions. The proposed Bill lays enormous emphasis on entrance tests. I know of a case of the daughter of a student of mine who got an invitation from Harvard University, to the effect that the university was happy to note that she had obtained very high SAT scores and would like her to consider Harvard as a possible option for future study. The

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university made it clear that the letter was not an offer of admission but only an expression of interest in pursuing further the possibility of the student getting selected. Please note that Harvard did not offer admission but hinted about only its possibility. Thus, the SAT score was used as a shortlisting criterion and not as the criterion for selection. In fact, the candidate is asked to submit the names of three teachers to whom the university could refer for further evaluation of the personality and other attributes of the applicant. In this respect, our university institutions are, to put it mildly, arrogant. They never ask the teachers who know their students well what they think of them. In the Western system, those referee reports are crucial. They are used to discover what social and extracurricular activities the applicant is good at. The overseas university may then ask the candidate to appear for a personal interview. Then, based on SAT scores, performance in the school examinations, referee reports and the evaluation by interview, the candidate is selected. It may be noted that no suggestion was made in the invitation letter about the fees the candidate would be expected to pay. Such a comprehensive process for admissions is expressly prohibited in the Bill. Quality education for the poor Fee restrictions do not help the poor. Instead of making education cheap, why can't we charge rich students high fees and use the resulting surplus to cross-subsidise the poor? January 27, 2012: The previous article (Business Line, January 14, 2012), commented on two of the three prohibitions that the Union HRD Minister, Mr Kapil Sibal's Bill plans to impose on higher technical institutions in the country. Those two were the prohibition of admitting students without a central test and the prohibition of admitting students proposed by rich donors. The third prohibition (with which the Supreme Court concurs) refers to prohibition of charging higher fees than what is decided by a statelevel committee. Restricting fees is a form of price control. All price controls are meant to help the deserving poor who, otherwise, will not be able to avail the service. That form of socialism has been popular in many countries. In its extreme form, many countries of Europe make education absolutely free. However, we should not forget it is a form of cross-subsidy: the rich pay taxes; those taxes pay for the education of all, particularly the poor who pay little or no taxes. Price control Price control is a controversial issue among economists. Milton Friedman was totally opposed to it, whereas Paul Samuelson was partially in favour of it. Opposition to price control stems from the fact that it reduces incomes. When incomes go down, operational surpluses go down even more sharply; at the extreme, there may be no surplus at all to pay for much needed improvements. Thus, price control, inevitably, stunts future expansion. On the other hand, if there had been no price control, the larger surpluses could have improved both the quantity and quality of the output. On the other hand, without price control, the poor may never be able to afford the product, particularly a service to which they might be better qualified than the rich are. It is also possible that the surplus might not be used for further expansion; it may instead be squandered in wasteful luxury or even spent abroad. Nevertheless, money is generated and spent which should indirectly boost the economy. Thus, even wasteful expenditure could indirectly help the poor, too. 80-20 rule Then, how do we price higher education without hampering its future or denying it to the deserving poor? I have often suggested that we adopt Pareto's 80-20 rule which states that statistically the top half spends 80 per cent whereas the bottom half spends only the remaining 20 per cent. (That is largely true in India too but, unfortunately, that is not true anywhere of savings and investment.) In that case, let colleges charge 80 per cent of their costs from the top half of the population and only 20 per cent from the bottom half. Then, accounts will be balanced, the poor will be subsidised. The rich will subsidise the poor directly and voluntarily by paying high fees, instead of indirectly by paying involuntarily higher taxes. It can be argued that such a direct relationship between the rich and the poor will perform better than through the state as the intermediary. That is how Harvard University operates. It has a threepart system of admission. First, the academic division categorises all applicants without reference to their ability to pay. Then, the finance division identifies how much each candidate is willing to pay.

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With that information, the admission office makes a list of the best persons (including the very poor who may need actually not merely free education but even a scholarship) who will meet the total costs. How can that be done? Suppose a college wants to admit 100 students and needs Rs 1 crore. First, its academic section makes a merit list on the basis of multiple criteria (and not a central test alone). Each applicant also gives a bank guarantee separately to the finance section of the highest fees he or she is willing to pay. Then, the admission department finds out the total of the amount guaranteed by the top hundred applicants of the merit list. If the amount is inadequate, it drops the last student of the merit list and offers the vacancy to the highest paying qualified candidate. The process continues till the desired total of Rs 1 crore is reached. Thus, the best mix of academic and financial merit is admitted. It does not let in those who are both financially and academically poor. If the government wants to admit such students, it may guarantee them scholarships or admit them to its own institutions but it should not interfere with admissions in private colleges but expect that competition among colleges will ensure fairness. Coaching institutions In other words, the issues are: (a) instead of making education cheap (both in money and hence, in quality) why should we not charge rich students (provided they are as good as reserve category students are currently) high fees and use the resultant surplus to cross-subsidise the poor? (b) Why place total trust on test scores to the exclusion of assessment of personality which can be obtained only through referee reports and interviews? The present policy has encouraged coaching institutions where the charges are several times the fees paid for the whole course in engineering. Thus, it virtually lets in only the very rich who can afford to pay such heavy charges and negates the very purpose of keeping fees low, which is to make education affordable for the poor. It is also a fact that everywhere, without exception, prohibition has led to corruption and criminalisation. There is no point in making temples of learning corrupt or let them be led by the criminally minded. Basically, the issue is what do we want: Is it quality education or mere increase in quantity? Harvard regularly admits many poor people with scholarships and also produces Nobel Prize winners; will the government's policy do so? Management of energy demand Management of demand can lower consumption by 15 per cent, which is more than the demand-supply gap. Demand Side Management (DSM) and energy efficiency projects are contingent upon monitored and verified energy savings. The difficulties and uncertainties associated with measuring energy savings make it an intangible asset, making project investments difficult. For electricity utilities, there is an added conflict, as DSM and energy efficiency come directly in conflict with the goal of increase in revenues. The issue gets further vexed in the country, given that the distribution business is almost entirely owned and managed by public utilities which are sticky in responding to incentive structures. SAVINGS IN ELECTRICITY As per several estimates, DSM interventions could result in reducing consumption by 15 per cent, which is more than the demand-supply gap of around 10-12 per cent . In terms of savings on electricity procurement, on electricity generation of approximately 800 billion kwh, savings of 120 billion kwh is theoretically possible. Using a conservative rate of power purchase by utilities of Rs 2.50/kwh, the reduction in cost of procurement could be a staggering Rs 30,000 crore every year. This could be a game changer for the distribution sector that is beset with annual losses of more than Rs 50,000 crore. The financial unviability of the distribution sector is threatening investment returns on existing assets, while dampening the investment climate for the new ones. Utilities could improve their financial health by investing in DSM, given that the investment requirements for DSM are a fraction of investments in fresh capacity for similar outcomes (See table). In order to harness this potential, a strategic action plan needs to be laid down at the national level. The plan must address issues related to enhancing capacity of utilities, encouraging supply chain, setting up robust regulatory mechanisms, and innovative financing instruments for DSM. The action plan must also mitigate the following risks associated with DSM to prevent market failures: Operational risk pertaining to the risk associated with new energy efficient technologies by information dissemination and capacity enhancement;

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Project Implementation risk to achieve and maintain desired level of energy savings during the life cycle of the project; Regulatory and institutional risk arising out of inadequate capacity in the facility owners, financial institutions as well as service providers towards energy efficiency. Regulatory and policy certainty helps reduce risk perception; Financial risk due to tariff, interest rate movements, as well as counterparty risk (the risk that the borrower won't be able to repay the banker). UTILITY AND MARKET Many countries have structured policy and regulatory responses to overcome similar barriers, which could come in handy for Indian policymakers to accelerate the off-take of DSM measures. These responses have not only mainstreamed DSM and energy efficiency in the energy markets, but have also enabled seamless flow of commercial finance to sustain such investment. A couple of possible measures that hold promise for India are: Utility-based financing of DSM, and Market-based instruments for DSM Utility-based financing mechanism is based on the principle of sharing of economic benefits by utility with DSM participants. Implementation of DSM inevitably results in reduction of peak procurement by utility and commensurate monetary savings. Such monetary benefits could be shared with DSM scheme participants as incentives or project enablers. Regulatory oversight for such actions is mandatory under the present legal framework of electricity business in India. All investments and expenditures of utilities need to be approved by the Regulatory Commission. Regulators need to allow the DSM investment as a pass through in tariff, and bless the benefit-sharing approach. Some utilities have implemented such schemes where 2 compact fluorescent lamps were sold to consumers at the cost of one (eg. Delhi and Haryana). Himachal Pradesh implemented a scheme where it provided 4 compact fluorescent lamps free to the households as replacements of incandescent bulbs. Another model is to create a DSM investment fund and leverage it for risk guarantees, payment security cover, or last-mile equity support for private investments. DSM investments, being contingent upon future energy savings, find it hard to avail commercial lending at attractive rates. Several banks and financial institutions either treat this as unsecured lending (thereby limiting their exposure in compliance with the regulatory requirements) and/or charge a high risk premium, making many projects financially unviable. The DSM fund could provide the necessary risk security cover by way of partial guarantees, payment security and/or last-mile equity, to enable seamless flow of commercial finance at reasonable rates. The fund could be recouped from the return of investments, given that the payback period of most DSM investments is 3-5 years. This will enable the DSM fund to sustain private investments during a long period of time, with relatively small corpus. Another example is implementation of a market-based instrument for utility DSM, which has been successfully implemented in many countries. The White Certificate scheme of France (and some other European countries) is one of the successful examples of such an instrument that has encouraged private investment. In the White Certificate (WC) scheme, the suppliers of electricity, natural gas, LPG, oil (now including automotive fuels), and heat (district heating) are required to undertake energy efficiency measures and achieve a pre-defined percentage reduction in their annual energy delivery. WHITE CERTIFICATE Achievement of targets entitles them for a WC, which is a unique and tradable commodity carrying a property right on the amount of energy savings achieved, and guaranteeing that the benefit of these savings hasn't been accounted for elsewhere. The scheme enables trading of WCs by allowing purchase of WCs by those energy suppliers who are unable to meet the mandated target for energy consumption reduction. Such suppliers could either buy WCs or pay a penalty for ensuring compliance. The flexibility and tradability of WC guarantees achievement of the overall energy saving target set at the national level, at the most economical cost. The successful implementation of the Renewable Energy Certificates (RECs) in India has demonstrated the effectiveness of market-based instruments, as well as the appetite of the market. WCs could follow a similar approach with the State Electricity Regulatory Commissions, mandating the utilities to achieve targeted energy savings through DSM. It could allow the investments in DSM as pass through in tariff. Penalties for non-achievement of the DSM target need to be laid down. For the exercise to be implemented in a uniform manner throughout the country, the Forum of Regulators could play the coordination role at the national level, as in the manner of RECs. Specialised agencies like Bureau of Energy Efficiency (BEE) could support the state regulators and utilities to prepare DSM projects and programmes and implement them. Fungibility of WCs with RECs or the upcoming Energy

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Savings Certificates (ESCerts) for large industries could be worked out. Innovative financial instruments could unlock the DSM and energy efficiency market, estimated by BEE to be approximately Rs 70,000 crore. It could encourage private sector players to usher in the latest technologies in smart meters, smart grids and some other energy-efficient technologies. Polio eradication, a dubious claim Incidence of limb-paralysis in children arguably increased after the oral polio vaccination drive. Health officials seem to be in a self-congratulatory mode, since no case of paralytic polio has been reported during 2011. But that doesn't mean that polio has been eradicated. As has happened in some other countries, polio cases can reappear. Secondly, different public health experts have pointed out that polio cannot be eradicated through vaccination alone. Poliomyelitis, like many other infectious diseases, is primarily a disease of poverty, leading to insanitation and malnourishment. In developed countries, polio declined along with improvement in living standards, including sanitation. Vaccination played only a supplementary role in the disappearance of polio cases. However, now an illusion has been created that we can overcome polio through vaccination alone. Polio incidence can be substantially brought down through immunisation. But there are technical reasons why, unlike small pox, polio cannot be eradicated through vaccination. HIGHER LIMB PARALYSIS Under the Indian eradication programme, three doses of oral polio vaccine were introduced from 197879 into the National Immunisation programme. This reduced paralytic polio cases by 80 per cent from 24,257 in 1988 to 4,793 in 1994. But in 1995, under the influence of international agencies, the polio eradication strategy was launched, with a manifold increase in expense and human power deployment in polio vaccination. The Central Government spent Rs 1,747 crore on pulse polio in 2009-10, and a total of more than Rs 12,000 crore during the last 12 years. When, in 2006-07, it spent Rs 1004 crore on Pulse polio, routine immunisation with some other vaccines received only Rs 327 crore, and tuberculosis control Rs 184 crore. And the context is we have approximately 1.5 crore in tuberculosis cases and four lakh annual tuberculosis deaths compared with the estimated 20,000 cases, and less than 500 deaths annually, when the polio eradication programme was launched. The justification for incidence of lameness lameness in children. the Polio Eradication the polio eradication programme is that it would substantially reduce the in children, because polio constitutes the most important cause of preventable But in reality, the incidence of limb-paralysis in children has increased after Initiative!

The Web site of the National Polio Surveillance Project (NPSP) reveals that the number of cases of Acute Flaccid Paralysis (AFP) in children increased from 3,047 to 60,466 (20 times) during 1997 to 2011! Officials argue that this rise in figures is because of thorough documentation and increased sensitivity of the surveillance system for recording AFPs, and that most of these children are later found to be normal. However, if the sensitivity of the surveillance system is increased in, say, the year 2000, we would see a steep rise in AFP cases in only 2001, and may be 2002. The continuous steep rise in AFP cases from 1998 till today belies this explanation'. Dr Jacob Puliyel, invoking the Right to Information, accessed Uttar Pradesh data which revealed that in 2005, of the 10,055 AFP cases, 2,553 cases were followed up for two months, 898 (39 per cent) continued to have paralysis. These were thus not false positive cases' but were cases of paralysis as such. Dr Satyamala confirmed this for 2006, by again invoking the RTI. That most of these cases of residual paralysis' don't have a polio virus in their stools is no consolation for the paralysed children and their parents. It is possible that massive use of Oral Polio Vaccine (which contains attenuated but live polio virus) has mutated into a new virus which doesn't have identical morphological properties of the polio virus, but which causes paralysis. A rational and humane response to this rise in paralysed children should have been to suspend the additional dosages of the Oral Polio Vaccine and to investigate the matter. If any other scientific explanation is found, this programme can be exonerated. But till then, to continue with these additional dosages of Oral Polio Vaccine is unethical. It is necessary that all these children who have lost their limbs be fully rehabilitated, and their parents adequately compensated. Criminal liability should be ascertained for those officials who have suppressed this information of breakup of follow-up of AFP cases, and those officials and policymakers who are responsible for continuing this policy of PEI. VAPP CASES It is well-known that Oral Polio Vaccine inevitably causes Vaccine Associated Paralytic Polio (VAPP)

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in a miniscule proportion of Oral Polio Vaccine receivers an average 1 case of VAPP per 4 million doses of polio. In India, due to Pulse Polio, it is expected that annually there would be approximately 200 cases of VAPP till Pulse Polio continues. These children have to sacrifice their limbs involuntarily on the altar of Public Good', that too, without getting rehabilitated, and without their parents getting compensated! The Jan Swasthya Abhiyan made the demand for rehabilitation and compensation for VAPP cases. The National Human Rights Commission recommended it. But the government ignored it. Till polio isn't eradicated globally, developed countries will have to continue polio-vaccination even if there have been no cases of polio in these countries. Hence, it is in their interest that Polio Eradication is continued, even if it may not be the priority of the developing countries. One way of doing this is to exaggerate the problem of polio. In 1988, 32,419 cases of paralytic poliomyelitis were reported globally. While estimating the paralytic cases, WHO increased this figure 10-fold, to 3,50,000, with the argument that the actual cases were ten times the reported cases. By a sleight of hand, in subsequent literature, the word reported was deleted and it was claimed that annually polio paralyses more than 3,50,000 children'! It should also be pointed out that polio is only one cause of lameness in children, and the overwhelming majority of AFP cases are due to non-polio viruses. Hence, even if polio is eradicated, it will reduce lameness in children by only approximately 20 per cent. We should certainly try to control polio through vaccination and sanitation. But to create an impression that we are eliminating lameness in children through polio-vaccination is misleading.