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14 March 2016 Editorial


14 MARCH 2016

Transparency at any cost

The shutdown of the 220 MW Unit-1 of the Kakrapar Atomic Power Station located in Gujarat’s Surat district following leakage of heavy water used to cool the nuclear reactor, on March 11, the fifth anniversary of the Fukushima Daiichi nuclear plant disaster in Japan, is at once a reminder of the inherent risks associated with operating nuclear reactors and the importance of augmenting safety mechanisms. Unlike the Fukushima accident, rated seven (the highest level) on the International Nuclear and Radiological Event Scale, where meltdown of the core of three reactors occurred due to the failure of the cooling system, it is reassuring that the safety systems of the KAPS reactor worked as intended, including the backup cooling systems, thus preventing any cascading event leading to radioactivity release outside the plant. While this may be a “rare event for a functioning plant” that happened for the “first time” in India, it is a cause for concern that the magnitude of the coolant system failure was “significant”. That the reactor has been shut down and an independent assessment of the safety situation at the plant is being undertaken by scientists from the Atomic Energy Regulatory Board evokes confidence. The second unit here has remained shut since July 2015 for maintenance. While the AERB has maintained its independence in terms of its risk assessment and management functions, there is no room for complacency. It must be borne in mind that collusion between the Japanese government, the country’s regulator and the operator had led to many violations that were detrimental to the environment and human health.

Given the heightened fear of nuclear energy in India following the Fukushima disaster, the only way AERB officials can reassure the public and win confidence is by being more transparent with its findings, however grave they are, and by taking all necessary steps to ensure that similar events are averted in the future. Just as lessons learnt from the Fukushima accident led to an enhancement of the level of safety of the backup systems in reactors that are under construction in India, lessons from this incident should be put to good use. These steps are indeed warranted as India plans to increase the installed nuclear power capacity from the current 5,780 MW to 10,080 MW by the end of the Twelfth Plan (2017) and 20,000 MW by 2020. Also, India gave an assurance in Paris that by 2030 it would reduce carbon emissions relative to its GDP by 33-35 per cent from 2005 levels and also generate 40 per cent of the country’s electricity from non-fossil fuel-based sources, using among others the solar, wind and nuclear options. While India has positioned itself as a leader in the renewable energy sector by playing a pivotal role in the creation of the International Solar Alliance, the nuclear space is plagued by delays in completing the construction of reactors, as seen in the case of Kota in Rajasthan (RAPP 7 and 8) and at Kakrapar (KAPP 3 and 4). Whether public sentiment supports fresh nuclear reactor proposals would depend on how well the AERB fulfils its tasks

Protecting the homebuyer

 The Rajya Sabha has passed the much anticipated Real Estate Bill, overcoming the sharp political rivalries that have stalled a lot of legislative activity in the House. In the course of five years, the Bill went through several rounds of discussions and numerous changes were made to its original text before it passed muster. Once enacted, it would finally give homebuyers enough confidence to be less inhibited by the “buyer beware” caution in a sector largely known for honouring the terms of deals mostly in the breach. An industry estimate suggests that about 10 lakh buyers invest every year in a house. According to Minister of Housing and Urban Poverty Alleviation M. Venkaiah Naidu, a total of 76,044 companies are involved in the real estate sector. It is estimated to contribute about 9 per cent of GDP (gross domestic product). He told the House that a total of 17,526 projects were launched between 2011 and 2015 with an investment value of Rs.13.70 lakh crore. The sheer scale of these numbers demands that this sector be run on transparent lines, taking into consideration both the need to foster fair play and encourage equity. Given the deep political divide in Parliament, it is encouraging to see that parties have risen above narrow considerations to let this important pro-consumer legislation go through.

Beyond just being a disciplinary legislation that regulates the haphazard functioning and the presence of unscrupulous operators in the real-estate business, the Bill will also bring in a sense of comfort and feeling of security to homebuyers. Compulsory registration of any project of the size of 500 square metres in size or involves eight apartments, a separate escrow account to park collections, greater clarity in the definition of carpet area, a tighter penalty norm for structural defects in construction, a mandatory consent clause for changes in construction plans and other such provisions will go a long way in boosting consumer confidence. Read in tandem with the stringent disclosure norms and penalty provisions, including imprisonment, in some cases, for delays and other contractual failures on the part of a builder, this legislation is a necessary and desirable means to clean up the real estate sector. It is hoped that the legislation will improve the trust quotient, which has been identified as a key factor hurting the credibility of the sector that serves the role of a multiplier in a growing economy. If that happens, it would go a long way in strengthening the overall demand sentiment. A better regulatory environment could also inject a sense of clarity in the operation of the industry, and facilitate prospective investors to look at it as a huge opportunity. It is important to note that the Central legislation has to be implemented by the States. The responsibility of providing the enabling ecosystem rests with them. The proof of the pudding will lie in the manner the States implement the legislation



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