Editorial 1 : A bad influence
Introduction: SEBI had issued a consultation paper with the objective “to restrict the association of Sebi registered intermediaries and regulated entities with unregistered finfluencers”.
Who are finfluencers?
- Financial influencers, or finfluencers, are those who provide financial advice and recommendations on social media platforms to investors.
Action taken by SEBI
- SEBI barred the finfluencer from dealing in the security market.
- It had also ordered finfluencer to pay back Rs 17.2 crore which he had allegedly made by luring clients through “misleading/false information” and “influencing” them to deal in securities.
Issues related to finfluencers
- They are self-styled experts, with little knowledge of the workings and intricacies of markets.
- In their desire to gain eyeballs, to get people to subscribe for their services, and to monetise them, some of these finfluencers resort to exaggerated clickbait-y claims.
- They have resorted to unethical means of pushing stocks down the throats of gullible investors.
- The incentive structures of these finfluencers, some of whom work on commissions, and their relationships with various brokerages, are also controversial.
Positive role of finfluencers
- Finfluencers can play a role in the dissemination of financial education and advice to those not well versed in financial markets, products and services.
What is SEBIs Power And Functions?
- SEBI is a quasi-legislative and quasi-judicial body which can draft regulations, conduct inquiries, pass rulings and impose penalties.
- It functions to fulfill the requirements of three categories:
- Issuers: By providing a marketplace in which the issuers can increase their finance.
- Investors: By ensuring safety and supply of precise and accurate information.
- Intermediaries: By enabling a competitive professional market for intermediaries.
What are the Issues and Related Concerns?
- In recent years SEBI's role has become more complex, the capital markets regulator is at a crossroads.
- There is excessive focus on regulation of market conduct and lesser emphasis on prudential regulation.
- SEBI’s statutory enforcement powers are greater than its counterparts in the US and the UK as it is armed with far greater power to inflict serious economic injury.
- It can impose serious restraints on economic activity, this is done based on suspicion, leaving it to those affected to shoulder the burden of disproving the suspicion, somewhat like preventive detention.
- Its legislative powers are near absolute as the SEBI Act grants wide discretion to make subordinate legislation.
- The component of prior consultation with the market and a system of review of regulations to see if they have met the articulated purpose is substantially missing. As a result, the fear of the regulator is widespread.
- Regulation, either rules or enforcement, is far from perfect, particularly in areas like insider trading.
- The Securities offering documents are extraordinarily bulky and have substantially been reduced to formal compliance rather than resulting in substantive disclosures of high quality.
Way Forward
- There is need of an attitudinal change, indeed, hundreds of inputs about the market being full of crooks necessitating a crackdown and severe intervention would be received.
- The foremost objective of SEBI should be cleaning up the policy space in this area of the market.
- SEBI must give special attention to human resources and matters within the organization. SEBI must encourage lateral entry to draw the best talent.
- Alignment and fitment of senior employees upon merger of the Forward Markets Commission into Sebi remains an open area of work.
- Enforcement can be strengthened with continuous monitoring and improving market intelligence.
- India’s financial markets are still segmented. One regulator can’t be blamed for another’s failure when the remit over a financial product overlaps.
- In this context a unified financial regulator makes eminent sense to remove both overlap and excluded boundaries.
Conclusion: Over the coming years, as the economy grows in size, as more and more individuals channel their money into the stock markets, ensuring the flow of accurate financial information, educating investors and ensuring their protection will be of critical importance.
Editorial 2 : To clear the air
Introduction: A recent report of the Air Quality Life Index (AQLI), published by Michael Greenstone from the Energy Policy Institute of the University of Chicago (EPIC), estimated that Indians were losing 5.3 years of life expectancy on average due to the health effects of air pollution.
Pollutants responsible for bad air quanlity?
- Matter less than 10 and 2.5 microns per cubic metre (PM 10 and PM 2.5 respectively), nitrogen dioxide, sulphur dioxide, carbon monoxide, ozone, ammonia and lead.
- Besides these, benzene and formaldehyde from wildfire emissions can lead to cancer.
- Cadmium too is an air pollutant, especially from cigarette smoke.
- “Fine particulate pollution” refers to particles less than 2.5 microns being suspended in the air.
- There is growing concern about “ultra-fine particles” that are smaller than 0.1 microns in diameter and can bypass entrapment in the lungs to enter the bloodstream.
Measurement of Air quality
- National air quality standards in India are less rigorous than the WHO’s standards.
- For PM 2.5, the WHO sets a limit of 5 microns while India’s limit is 40 microns.
- India’s AQI has six categories: Good, satisfactory, moderately polluted, poor, very poor and severe.
- An AQI of 0-50 is rated as “good”, while “severe” represents an AQI of 401-500.
- Delhi is presently rated as “poor” (201-300), with predictions of further worsening when crop burning commences.
Status of air quality in India
- Delhi features at the top or near the top of the world’s most polluted cities.
- In a 2022 list of the 50 most polluted cities put out by IQAir, a Swiss air quality information platform, 39 of them are Indian.
- Rural areas too are not free of pollution, as dust from unpaved roads and smoke from burnt biomass fuels meet fossil fuel emissions of vehicular intrusions from encroaching modernity.
- Presently, 22 states meet the national standards of AQI, while 15 do not. None meet the pristine WHO standards.
Factors responsible for poor air quality
- Landlocked geography of Gangetic plains
- Cold and dense air of winter prevents pollutants to disperse
- Stubble and waste burning in winter season
Sources of pollution
- Sources of both ambient (outdoor) and household (indoor) air pollution are well recognised.
- Particulate matter comes from
- line sources (vehicles),
- point sources (power plants, factories),
- area sources (garbage dump sites, sewage treatment plants) and
- natural sources (forest fires, volcanic eruptions).
- Diesel fuel emissions, and road and construction dust are important contributors year-round, with stubble burning as a seasonal culprit.
- Household air pollution comes from the use of biomass fuels and open fire-cooking stoves.
- The sources of emissions vary across different regions of India and between urban and rural areas.
- Emission source apportionment and population exposure assessments are important for context-relevant control strategies.
Impact of air pollution on human health
- Health harms of exposure to different pollutants are well documented in studies conducted in India and abroad.
- Acute effects like burning eyes, irritation of nose and throat, cough and feeling of choked breath are irksome but serious harm can arise from heart attacks and brain strokes, which are provoked when atherosclerotic plaques in blood vessels are disrupted by the pollutants, thereby triggering blood clots.
- It is now known that long-term exposure to air pollution can raise blood pressure (hypertension), lead to cardiovascular, cerebrovascular and peripheral vascular disease, cause cancers, and raise the risk of diabetes, dementia and cataracts besides the well-recognised risks of chronic lung disease and asthma.
- Inflammation stoked by air pollution can damage many organs and lower immunity to infections. Particulate matter (PM 2.5) has been found in maternal placenta and foetal brains.
- Exposure to air pollution during pregnancy increases the risk of stillbirths, neonatal deaths, low birth weight babies and birth defects.
- Children chronically exposed to air pollution have repeated respiratory infections, susceptibility to asthmatic attacks, lower learning ability and impaired physical growth.
Steps to be taken to reduce the impact of air pollution on health
- Air purifier’s use can used personal protection.
- Masks have to be of very high quality (N95) to offer protection against many pollutants.
- Avoid or reduce outdoor activity during smoggy periods.
- Breathing exercises help to maintain lung function
- Increased use of clean transport (like electric vehicles),
- Increased use of public transport in place of personal vehicles,
- Rapid transition to renewable energy sources from fossil fuels,
- Cessation of stubble and garbage burning,
- Good construction practices and efficient debris disposal.
- Household air pollution is being addressed through the substitution of biomass with natural gas and better ventilation of kitchens.
Conclusion: Proactive public policy, effective enforcement, vigilant monitoring and adaptive innovations responsive to reliable and regular data flows are needed to clear the air, clean our lungs and calm our blood vessels.