Nearly 1 billion of world’s people face chronic hunger
By Oliver Richards 13 December 2008
The number of undernourished people in the world has increased from 923 million in 2007 to 963 million in 2008. This disturbing figure comes from a report on world hunger released on December 9 by the Rome-based UN Agency, the Food and Agriculture Organization (FAO), entitled The State of Food Insecurity in the World 2008.
The report notes that the number of chronically hungry people rose by 75 million in 2007, while the 2008 figure shows an increase of 40 million. The recent increase in the number of hungry people has been exacerbated by high food prices, especially in developing countries.
In a news release on the FAO web site, FAO Assistant Director-General Hafez Ghanem underscored the difficulties being faced by people in the developing world:
"For millions of people in developing countries, eating the minimum amount of food every day to live an active and healthy life is a distant dream. The structural problems of hunger, like the lack of access to land, credit and employment, combined with high food prices remain a dire reality."
The report is the ninth in a series that began in 1996 at the World Food Summit (WFS), which set up the goal of halving world hunger by 2015. While the WFS called for the number of hungry people to decline by 50 percent, the UN's Millennium Development Goal (MGD) has set a target to cut in half the proportion of those suffering malnutrition.
Given the upsurge in food prices and other problems, it will continue to be difficult to achieve either goal by 2015. With the increase to 963 million hungry people, it would be necessary to reduce the number of hungry people by about 480 million. And, while the proportion of undernourished people (the MDG measurement) had been decreasing, from 20 percent in 1990-92 to 16 percent in 2003-05, it appears that this progress is being reversed, moving back up to about 17 percent.
The distribution of undernourished people in the world is largely concentrated in the developing world, although there were 16 million undernourished persons in developed countries in 2003-2005. Among the 832 million chronically hungry persons in 2003-2005, 65 percent were concentrated in India, China, the Democratic Republic of the Congo, Bangladesh, Indonesia, Pakistan, and Ethiopia.
In sub-Saharan Africa, while the proportion of people who are chronically hungry was reduced between the early 1990s and 2003-2005, one in three persons still remains undernourished. However, most of the numerical increase in the undernourished has come from the Democratic Republic of Congo, which has suffered from a persistent conflict resulting in an increase from 11 million to 43 million chronically hungry people.
While South America has been one of the most successful sub-regions in reducing hunger, this success has not been uniform throughout the Latin American and Caribbean region. In Haiti, for example, 58 percent of the population suffers from chronic hunger.
The US invasions of Afghanistan and Iraq have had a direct, negative impact on levels of undernourishment in the Near East and North Africa regions, which have generally experienced some of the lowest levels of undernourishment. The number of chronically hungry undernourished persons in the region nearly doubled, from 15 million in 1990-92 to 28 million in 2003-2005. This number has increased by 4.9 million in Afghanistan, and by 4.1 million in Iraq.
While there has been some modest progress in Asia and the Pacific regions, "nearly two-thirds of the world's hungry people still live in Asia," according to the FAO report.
Since 1992, barely a third of the developing countries have been able to reduce the number of those suffering from chronic hunger. The findings show that those hardest hit by increases in food prices were the poor, the landless, and female-headed households.
Low-income families are more likely to be "net food buyers," or households that consume a higher value of food staples than the value they produce, who stand to lose from an increase in the price of food staples.
While landowners are in a good position to gain from food price increases, the report notes, "Across the board, high food prices hit landless households hardest."
Female-headed households will also suffer proportionally more than male-headed households. This is due to female-headed households' tendency to spend a higher proportion of income on food, heightening the impact of food price increases, and the gender-specific obstacles that women face, which may restrict their access to certain resources such as land and credit.
Facing higher food prices, households may try to cope by changing the quality, quantity, and diversity of foods eaten, or make cuts in other areas such as health care and education. The first strategy results in malnutrition and higher risks of deficiencies in essential micronutrients, especially among women and children.
The story of Drissa Kone, living in Côte d'Ivoire, illustrates some of the problems that arise as individuals attempt to save money on medicine. Suffering from a severe respiratory infection, he has turned to counterfeit medicines, which sell for a fraction of the price of legitimate medicines but are of questionable quality and may even further harm his health.
The FAO has analyzed the key determinants of countries' vulnerability to high food prices: whether they are net importers of energy products and cereals, relative levels of poverty, and prevalence of undernourishment. The report discusses the diverse number of ways in which a food crisis can arise, resulting from both natural and man-made disasters.
Natural disasters can be classified by whether they are "slow onset" or "sudden onset." While slow onset disasters, such as droughts, have constituted the majority of natural disasters, sudden onset disasters, such as hurricanes or earthquakes, increased from 14 percent of all natural disasters in the 1980s to 27 percent in 2000.
According to the FAO, man-made disasters include both war or conflict and socio-economic shocks that may be internal or external. War has been the primary cause of man-made disasters, although disasters arising from socio-economic shocks have risen from 2 percent in the 1980s to 27 percent in 2000.
As the WSWS wrote in a three-part series, "The world food crisis and the capitalist market," the sources of the current food crisis "lie in economic and political processes of privatization and price speculation that have unfolded over the past three decades and are bound up with the globalization of capitalist agriculture."
The world is presently reeling from a gigantic "socio-economic shock," in the form of a developing global financial crisis, which will inevitably exacerbate the world hunger crisis, as millions of people find themselves jobless, homeless, and are thrust deeper into poverty.
That nearly 1 billion people are suffering from hunger is yet another testament to the irrational allocation of resources under capitalism. As the foreword to the report notes: "Hunger has increased as the world has grown richer and produced more food than ever in the last decade."
While the capitalist mode of production has revolutionized the productive forces, developing the capacity to feed every person on earth and eliminate hunger, the social relations of production have become a fetter upon the realization of this goal. The FAO's The State of Food Insecurity in the World 2008 documents the devastating impact of the growth of social inequality—in the form of chronic hunger—on large numbers of the world's population.
Inflation eases to 8 per cent
Business Line, NEW DELHI: PTI
Inflation rate fell further to 8 per cent for the week ended November 29 mainly on account of declining prices of fruits and vegetables. The wholesale price-based inflation fell by 0.4 per cent from 8.4 per cent in the previous week. The inf lation was 3.89 per cent during the corresponding period a year-ago.
In primary articles group, the prices of fruits, vegetables, barley and grams declined during the week. As far as manufactured items were concerned, unrefined oil, gur, and rapeseed and mustard oil became cheaper. The inflation rate has been declining after it touched a peak of 12.82 per cent in August.
Among other important items, the prices of cement too dropped marginally during the week, pulling down the index of Non-Metallic Mineral Products group by 0.1 per cent. The items that became expensive include safety matches, ragi, urad, bajra, maize, and groundnut seed and oil. Paper and paper products and plastic items like PVC fitting and accessories also became dearer. There was no movement in the index of Fuel, Power, Light and Lubricants during the week. However, the inflation data for the week ended November 29 does not capture the impact of the cut in prices of petrol and diesel by the government by Rs 5 and Rs 2 per litre, respectively.
Besides, it also does not reflect the price reductions following four per cent across-the-board cut in excise duty announced on Sunday as part of the stimulus package to boost economy. Once the impact of these decisions is reflected in the wholesale pri ces, the inflation rate could decline further. The inflation rate for the week ended October 4 was revised to 11.49 per cent from the provisional estimate of 11.44 per cent. -
RBI cautions banks over realty loans
Asks lenders to make sure that end use of advances to commercial real estate. The Reserve Bank of India (RBI) may have relaxed norms for lending to commercial real estate by banks, but prudence in lending still tops the central bank’s agenda.
RBI has asked banks to be cautious about the end use of funds lent to real estate companies to ensure that loans are for construction and not for refinancing the existing loans or paying back foreign shareholders or private equity shareholders who want to exit.
The central bank has told lenders to take caution as an informal guideline, even as risk weights have been brought down for exposure to real estate.
The risk weight is a method for classification of assets on the basis of weightage allocated in proportion to the riskiness of the loan portfolio. The higher the risk weight, the higher is the risk.
A few weeks ago, RBI brought down the risk weight on commercial real estate loans from 125 per cent to 0.4 per cent.
Banking sources said the boom in the real estate sector was primarily driven by foreign funds, mostly in the form of private equity, which had funded through direct equity or debt or a combination of convertible instruments.
“With a sharp downturn in the real estate sector, most of these equity-holders want to exit at this point of time, suffering a loss. This is because they are of the view that the situation might get worse. Therefore, RBI fears that the fresh loans given to real estate players should not get used for financing the debt or equity components of the finance by private equity players.
This is the reason why the banks are so reluctant to finance real estate companies even when liquidity is not a problem,” said a banker active in real estate lending. According to a merchant banker involved in structuring PE deals, most of the financing done by foreign funds or private equity parties carry a call option. The call option clause in the investment agreement provides the option to the PE to recall money if certain conditions are not met or if a situation turns adverse.
A director on the board of Vijaya Bank said there is concern over deteriorating credit profile of real estate firms and entities, including non-banking finance companies (NBFCs), which have funding exposure to them. Why should banks take extra exposure when chances of default may grow,” asked the Vijaya bank director.
“Given the sudden drop in demand in commercial real estate, some PE funds may not feel confident about the future of investments. Also, global parents of these funds have been hit hard by the financial crisis so they would like to retrieve money for investments,” a merchant banker added.
RBI chief calls for ‘significant’ policy action to tackle crisis
Business Line Kolkata, Dec. 11
Extends Rs 9,000-cr line of credit to National Housing Bank, Exim Bank.
The government and the Reserve Bank of India need to take “significant” steps to counter the “significant crisis”, Dr D. Subbarao, Governor, Reserve Bank of India, said here on Thursday.
“The crisis has evolved and is evolving. Nobody around the world has the exact picture of how big the crisis is. It is a significant crisis and we need to take significant policy actions,” he told reporters after RBI’s Central Board Meeting here on Thursday.
Talking about the way forward, he said, “The situation is uncertain and it is not possible for us to calibrate a precise roadmap but we will continue to take appropriate measures at the appropriate time,” he added. The Reserve Bank, Dr Subbarao said, would review the inflation forecast in the next monetary policy scheduled for January 27, 2009.
On rate cuts
On being asked about further rate cuts, the RBI Governor said, “We are constantly reviewing the situation, we have already adjusted our CRR and policy rates and we will take appropriate measures at the right time.” According to him, the monetary policy measures taken by the central bank have so far yielded positive results. Banks should take the cue from the rate cuts announced by the apex bank on Saturday and should revise their lending rates accordingly, he pointed out.
Dr Subbarao further said that RBI would closely monitor the developments in the global and domestic financial markets and would try to minimise the stress on various sectors of the economy on account of the international financial crisis and the global slowdown.
The apex bank on Thursday announced Lines of Credit worth Rs 9,000 crore to the National Housing Bank and Exim Bank. The bank’s Central Board on Thursday approved refinance facility of Rs 4,000 crore to NHB and Rs 5,000 crore to the Exim Bank under the prevailing repo rate (6.5 per cent) under Liquidity Adjustment Facility for a period of 90 days. “During the 90-day period, the amount can be flexibly drawn and repaid and at the end of the 90-day period, the drawal can also be rolled over. “This refinance facility will be available up to March 31, 2010,” the RBI Governor said.
Support for housing
This would help provide liquidity support to the housing sector, particularly to the housing finance companies, which have been adversely affected by the recent financial market developments, he said. The refinance facility to Exim Bank would help mitigate pressures on account of the recent developments on loan disbursements to Indian exporting companies, he said.
PSU banks set to offer cheaper, easy home loans
Business Line New Delhi, Dec 11
Package for small, medium sector also on cards.
Housing loans will be available at cheaper rates and under simpler terms - The modalities of the new package were being worked out
Home loan borrowers looking for finance of up to Rs 20 lakh are likely to see a slew of concessions coming their way in the next few days. State-owned banks are close to finalising a package to give a boost to the housing sector by making such loans available at cheaper rates and under simpler terms.
The move to provide relief for home loan borrowers comes in the wake of the Government’s recent fiscal stimulus booster in which it promised that public sector banks (PSBs) would shortly announce a package for two categories – up to Rs 5 lakh, and between Rs 5 lakh and Rs 20 lakh.
Borrowers are now expecting at least 200-300 basis point cut in interest rates as relief under the package. They want interest rates on fixed rate home loans to come down to between 7 and 9 per cent say for a 10-year term period.
“The package that we are discussing will not be confined to interest rates. If we are going to stop with interest reduction, it will not augur well for the package. There has to be other incentives,” Mr T.S. Narayanasami, Chairman, Indian Banks Association (IBA), told reporters after an IBA meeting here on Thursday.
The Finance Secretary, Mr Arun Ramanathan, and senior Finance Ministry officials were also present at the meeting.
The IBA Chairman said that bankers were still discussing the modalities on how the package should be structured and that they had not come to any definite conclusion. Besides interest rate reduction, the public sector banks were also looking to include concession on margin requirements, waiving of processing fee for loans and changes in pre-payment clause in the package, Mr Narayanasami said.
PSBs are also looking at making credit more accessible and cheaper for small and medium enterprises (SMEs). Indications are that some form of interest subvention would be provided.
However, for the proposed interest concession on home loans up to Rs 20 lakh, Mr Narayanasami made it clear that no interest subvention was contemplated or even necessary.
“The whole exercise is to make interest affordable for housing and SME sectors. There will be a pragmatic view in cutting interest. We have not decided to what extent we will cut the interest rate. You wait for the package to be announced in a day or two,” he said.
Meanwhile, sources in the banking industry said that at today’s meeting the issue of cost of funds for banks was discussed, especially from the context of bulk deposits. The Finance Ministry had issued instructions that there should be no acceptance of bulk deposits outside the card rates.
Central public sector enterprises (CPSEs) were also instructed to strictly adhere to Finance Ministry guidelines and desist from inviting bids from banks for parking their surplus funds. The practice of inviting bids were leading to competition among PSBs and thereby raising their cost of deposits, which in turn led to increased lending rates, according to the Finance Ministry.
The Government was now closely monitoring, through a committee, as to whether PSBs as well as CPSEs were complying with the directions or not, sources said.
Banks want subsidy to cut home loan rates
Public sector banks are likely to announce a 50 to 100 basis point cut in interest rates on home loans up to Rs 20 lakh. The government is also considering an interest subvention for loans below Rs 5 lakh.
Banking sources said banks may provide loans up to Rs 5 lakh at around 8.5 per cent,and those between Rs 5 lakh and 20 lakh will carry an interest rate of 9.25 per cent a year. At present, interest rates on home loans below Rs 20 lakh, with a tenure of up to 10 years, is 9.5 to 10.5 per cent.
“The comfort level for banks is 8.5 per cent for home loans up to Rs 5 lakh and 9.25 per cent for Rs 5 lakh-20 lakh,” a public sector bank chief, who attended a meeting in Delhi to discuss the package, said.
To facilitate banks to lend at these rates, sources said that RBI may relax risk weights for these categories of housing loans if the banks reduce the margin money from 25 per cent to 10 per cent. At present, the risk weight is 50 per cent for home loans up to Rs 20 lakh.
A reduction in the margin requirement, or the part of the loan paid by borrower upfront, will mean that banks will have to provide more funds to the extent of the increase in the actual loan amount. A relaxation in risk weights will reduce the cost of the loan for the banks.
Other incentives that were discussed included a waiver of processing charges for home borrowers and a five-year lock-in period on interest rates.
Apart from housing, the public sector banks are also likely to give 50-basis-point concession in lending rates to Small and Medium Enterprises (SMEs) hit by the economic downturn.
“We have not come to any definite conclusion (on home loans). Some package will be formalised in the next one or two days,” Indian Banks Association Chairman TS Narayanasami said after meeting Finance Secretary Arun Ramanathan.
PSBs may waive pre-payment penalty on home loans
Economic Times NEW DELHI:
Public sector banks (PSB) are considering a suggestion to waive pre-payment penalty for home loans up to Rs 20 lakh. At present, banks charge anywhere between 1% and 3% of outstanding loan amount as additional interest if a consumer wants to repay the loan amount before the initially agreed loan tenure.
“We are considering a proposal to either completely waive the pre-payment penalty or reduce it significantly,” said the chairman of a PSB, on condition of anonymity.
The Indian Banks’ Association (IBA) is examining a proposal in this regard and may come out with specific guidelines in a few days. IBA is also examining the possibility of bringing down or waiving the processing fee and lowering the requirement of margin money for small home loans. All these steps are part of a government plan to revive the moribund housing sector. A revival in this sector could have positive spin-offs across various industries, notably cement and steel. Banks may resort to doing away with pre-payment penalties in order to make more small home loans available to consumers at cheaper rates and relaxed norms. All these measures are in addition to rate cuts of up to 300 basis points being planned by PSBs, which will bring down interest rates on loans up to Rs 20 lakh to between 8 and 10%.
“We are examining the possibility of waiving the processing fee and bringing down the requirement of margin money,” IBA chairman TS Narayanasamy told reporters in New Delhi after meeting chiefs of other banks and senior finance ministry officials including finance secretary Arun Ramanathan.
Mr Narayanasamy, who is also the chairman of Bank of India (BoI), said that IBA would come out with specific package for home loans of up to Rs 5 lakh and those between Rs 5 and Rs 20 lakh. The IBA is also finalising a similar package for loans to small and medium enterprises.
“The package would be announced in a day or two,” he said, adding that IBA was working on the package which could include “several measures” apart from the cut in interest rates. Several banks including the country’s largest lender, State Bank of India, Oriental Bank of Commerce and Uco Bank have said they are examining the possibility of home loan rate cut between 100 and 300 basis points.