Leisure, Lifestyle & Wellness
GM crops-Part 1: The truth about genetically modified foods

There are inherent risks and dangers if India were to adopt genetically modified crops. Here is an expose about several myths surrounding GM crops. This is the first part of a three-part series

There has been a great deal of publicity of late, particularly by the Agriculture Minister, about the necessity of genetically modified (GM) crops for feeding India’s masses, while dismissing the widespread concerns about them. These concerns cover health, environmental impacts, farmers’ indebtedness, loss of seed diversity and sovereignty. These risks are not activist extremism, but have repeatedly been endorsed by independent investigations—both abroad and in India.

Independent reports on GM: The first serious report in India was in 2010 by former minister of environment Jairam Ramesh, who called for a moratorium on Bt brinjal after inputs at seven public hearings and perusing scientific studies in favour and against its introduction. Then, in 2012 a report by the Parliamentary Standing Committee for Agriculture (PSCA) consisting of 31 members across party lines, unanimously castigated rampant regulatory failures, the exaggerated claims of increases in yield of Bt cotton, the health and environmental risks increasingly being reported across the world, and the stranglehold by large transnational seed corporations, whose expensive patented seeds have to be purchased afresh every year causing economic distress and suicides of farmers. The PSCA called for a complete moratorium on field trials of  GM crops until a proper bio-safety regulation based on the best globally available legislation is enacted and regulatory loopholes are plugged. Its report is accessible here as well as a three page  press release of it by the Lok Sabha Secretariat.

The most recent report is by a Technical Expert Committee (TEC) appointed by the Supreme Court in a public-Interest Litigation (PIL) on GM (Writ Petition no (Civil) No.260 of 2005). The TEC consisted of six members, of which five submitted a unanimous report calling for the following:

  • A moratorium on field trials of GM food crops until the “major gaps in the regulatory system” are addressed, and on commercial release “until there is more definitive information …about the long term safety of Bt in food crops”;
  • A ban on Herbicide Tolerant (HT) crops since manual weeding is both feasible and employment generating in India’s small farms;
  • A ban on GM crops for which India is the centre of origin/diversity

Each of these has been followed by a spate of articles, in some newspapers, attacking the findings of the PSCA, personal denigrations of their authors and fear mongering that without GM, India will be unable to grow the food it needs.  GM is one of the most important issues for India as it affects food and seed, vital for us all, and also because the spread of living organisms is irreversible. There is thus the need to sift PR hype from truth.

GM hype and GM truth: The hype is that GM is cutting edge technology in agriculture, that 170 million hectares are under GM crops, and that India will be left behind if it does not adopt this GM technology. The truth is that 170 million hectares constitutes only 3.4% of the world’s total agricultural land, that only six countries account for 91.8 % of all GM area (USA 40.8%, Brazil 21.4%, Argentina 14%, Canada 6.8%, India 6.3%, and China 2.3%) and that most countries in the world are rejecting or restricting it. The first four countries, accounting for 82% of all GM cropland, have average farm sizes of about 300 to 1000 acres and their main GM crops are Herbicide Tolerant (HT) i.e. designed to withstand herbicides, which will kill all plants other than the genetically modified HT crop. This actually results in more irresponsible spraying of herbicides, thereby leading to more toxin consumption. It has also led to unprecedented herbicide resistance in weeds. These pose a major problem to US farmers who cannot eradicate these “super weeds” which have affected 61 million acres of US farmland (Report by Stratus Agri-Marketing). The TEC has rightly recommended that there is no justification for HT GM crops in India, where sizes of Indian farms are only 3 acres on average and manual weeding provides employment to millions of women.

In India, Bt cotton is the only crop permitted so far. Bt crops involve the transfer of a gene from a soil bacterium (Bacillus thuringiensis, or Bt) into the seed, to produce a protein toxic to a targeted pest e.g. the bollworm in cotton. The hype is that Bt cotton yields have made India the second largest exporter of cotton whereas the truth is that very little of this is due to higher yields from Bt cotton. In fact, according to Cotton Advisory Board figures, cotton yield increased by 69% (i.e. from 278 kgs per hectare in 2000-01 to 470 kgs per hectare in 2004-05) when Bt cotton was less than 6% of total cotton area. However, as Bt cotton expanded to over 90% of the cotton area, yield  increased by only about 6%, stagnating at around 500 kg per hectare for the past 5 years. India has also become the world’s largest exporter of organic cotton—which does NOT use GM seed. In fact organic cotton exports are now being jeopardised by Bt contamination, as importers of organic cotton do not permit the slightest trace of genetic modification. Moreover, some types of bollworms have developed resistance and, after Bt cotton, there is an unprecedented invasion by other pests—such as sucking pests—which were earlier never a problem with cotton. Farmer risks now include more expensive seeds (5 to 10 times the cost of earlier seeds), pesticide spraying on these secondary pests and crop failures as these seeds need timely irrigation, which 65% of our farmers cannot provide. While some farmers may have benefited, amongst rainfed farmers indebtedness and suicides have not decreased despite wide adoption of  Bt cotton. Other possible impacts eg Bt toxin on soil microbes and on animals which consume the plant, allergy in cotton pickers and consumers, and health consequences of Bt cotton seed oil now being liberally mixed into edible oils, need to be monitored through independent and transparent long term studies, which is, unfortunately , not happening.

Stay tuned for part two of the three-part series.

(Dilnavaz Variava has been involved with the environmental movement in India for close to 40 years. She has held many roles, including CEO of WWF-India, Vice-President of the Bombay Natural History Society-BNHS, and on several apex committees of the Govt of India. Since about 10 years, ever since she was asked to Chair the Working Group on the Ecological Foundations for Sustainable Agriculture for a Govt of Maharashtra Expert Group on Agriculture,  she has been closely involved with this subject. She is  Honorary Convener of the Consumer Group of the Alliance for Sustainable and Holistic Agriculture- ASHA.)



Tushar Chakraborty

4 years ago

The abusive language used by Shanthu Shantharam , without going into the real issues , is despicable to say the least ! It is gender biased , and racist like attitude - which has no place in public debate . Now , when from Aruna Rodrigues it appears - that he was in the pay role of Syngenta !! Now - it explains his behaviour . This abuse proves - Ms Variva's arguments are correct hit !

Shanthu shantharam

4 years ago

Ms. Variava is so ignorant of facts and science and technological aspects of the GM technology that she should be barred from writing anything on the subject for life. Look at her audacity to write so much of misleading information. She must be convicted for spreading lies.

She sounds like a senior citizen which means she has zero or less than zero knowledge of modern biology and biotechnology. she will do great service to farmers by just keeping her mouth shut on the subject


Aruna Rodrigues

In Reply to Shanthu shantharam 4 years ago

Mr Shantaram
We meet again here ---haven't spoken to you since Nagoya when you misrepresented things as you are want to do, which is quite understandable.After all, years of being a spokesman for Sygenta colour your thinking.

This we all know including the Industry which is why you are losing your punch. Instead of using scientific arguments to counter M/s Dilnavaz you become offensive. But this is also par for the course. It demonstrates your inability to counter facts and therefore your utter frustration.
Aruna Rodrigues


In Reply to Shanthu shantharam 4 years ago

Aha! Here comes the industry man, Shantharam, with his usual obnoxious style. When you write, it is "leading" information, when someone points to counterfactuals, it is 'misleading' eh? You should just shut up yourself and let the debate take place. Citizens are smart enough to sift through facts and decide for themselves. Stop before you are convicted for obnoxious behaviour.

Shankar Deb

4 years ago

Bottom Line-

Has any of these foods been grown and consumed anywhere in the world? Yes, and the US is the origin of most of the GM foods, and its major consumer.

Haven't noticed the Americans having any adverse effects.

There is a huge lobby for and against GM foods, and as is to be expected, socialism spawns only fear and envy, and there is a lot of TV face time, the so called experts get out of fear mongering. It is ALWAYS easier to say NO, and takes courage and vision to say YES.

To me it seems, that if an advanced country has no difficulty in growing and consuming GM foods, why should we? The only concession I give to fear mongers is that the GM foods being consumed elsewhere, should have a history of at least 5 years of no adverse effects.

Lets all grow up!! progress always involves the unknown, and as long as we can get data of past history of no adverse effects, we should have no difficulty with it.

These doomsday predictors were at it when the computer was first introduced, when FDI was allowed, when India opened up to international competition etc, and every time something new was attempted. Best is to ignore them and take matured decisions


Sridhar R

In Reply to Shankar Deb 4 years ago

Sorry, Sankar. I disagree with you. Even as GM crops were proposed and researched upon, it was the scientists who came up with the need for biosafey enlisting all the problems associated with GM crops, and to this day, even in India, it is the scientists who are warning us. Meanwhile, what we suspect of those supporting GM crops, are more valid. That they are ignoring the large volume of studies that show GM crops are a hazard. I would prefer you to read the compilation brought out recently, of about 400 studies that demonstrated the ill effects of GM crops. And as for your very simplistic argument, that Americans are not showing any GM impacts, one simple question. Did any one look at whether they are having ill effects ? Can the ill effects be linked to GM crops in the absence of proper labelling. Aren't they now fighting for labelling ? Lets read more of what some one like Dilnavaz Variavah with a legacy of credible work have to tell. And as for you, your response - reeks of the hegemonic industrial thrust for GM crops. I would be vary of you, and wait for more of the article to come out.

Shankar Deb

In Reply to Sridhar R 4 years ago

Thank you Sridhar for your very measured comments.

I do not dispute that there are voluminous research papers on the dangers of GM, but if the USA with their sophisticated testing and follow through facilities have not found anything that endangers their citizens, I think we are being paranoid.

There is another similar debate going on in India and some other parts of the world about the dangers of the Shale gas technology. There are all sorts of people that argue that this will pollute aquifers, cause earthquakes and the civilized world as we know it will come to an end.

Yet the Americans have almost become energy self sufficient and their gas cost is now less that $4 per mmbtu, and their economy is on the rebound.

So let us muster some courage and say Yes, instead of just saying NO, because it is safer to stay with the familiar.

Sridhar R

In Reply to Shankar Deb 4 years ago

What an assumption - that "USA with their sophisticated testing and follow through facilities have not found anything that endangers their citizens". Ask the millions who are now demanding labelling. And ask those Corporate agri majors and food majors fighting labelling, what are they afraid of? If GM crops are so safe and good, label them. Come on.

Arvind V

In Reply to Shankar Deb 4 years ago

I hope the movie "GASLAND", will prove to be informative about shale gas extraction(FRACKING)& illuminates the fact that American Govt is a handmaiden of big business.


In Reply to Sridhar R 4 years ago

May i know which agri scientist is writing against GM crops?
You may popup few irrlevent names but look closely on their specialization & ideology.

Note: check NASA space exploration debate in usa. Those who are opposing it, are not space scientists but UFO-logists :)

Sridhar R

In Reply to Anand 4 years ago

Did i say Scientists write against GM crops. Why are you taking my statement and biasing it ? I said there are scientific studies showing GM crops to have problems of health, environment. And repeatedly we are hearing many, even among scientists saying that there are no studies that show GM crops as having problems. The studies I say can be read in this compilation. Please refute or critique that - http://indiagminfo.org/?attachment_id=55....

Gas starving Tamil Nadu obstructs GAIL's gas pipeline!

After laying more than 70kms of gas pipeline on farmland, the Tamil Nadu government wants GAIL to reroute the laying process and align it with highways. This entails several risks, that of safety, security and maintenance

State-run GAIL (India) Ltd is the largest gas transmission and marketing company in India, operating for the last 25 years, covering over 30,000kms of gas pipelines, out of which they themselves have laid 10,000kms.


At the moment, work on their Kochi to Mangalore gas pipeline, 310kms of which are projected to pass through Coimbatore, Tirupur, Erode, Namakkal, Salem, Dharmapuri and Krishnagiri in Tamil Nadu, has to be stopped at the request of state government. The Tamil Nadu government alleges that the farmers, in some of these areas, feel that laying gas line will lead to a loss of agricultural production!


GAIL has, in the past, laid network of gas pipelines on farmlands in several states like Karnataka, Punjab, Uttar Pradesh Haryana, Gujarat, Goa and Maharashtra, without any trouble. Experience shows that laying the gas pipeline via the farmland is the safest means of transport of gas, which is practised all over the world. It does not affect the farmer who is adequately compensated, and the pipelines are laid one or two metres below the ground level.


BC Tripathi, chairman and managing director (CMD) of GAIL, in a recent interview, has stated that the so-called unrest, agitation and apprehension in the minds of farmers have been created by vested interests. The work on the pipeline started after initial consultation, mutual discussions and after arriving at an understanding with the Tamil Nadu government and with its cooperation, GAIL has, in fact laid more than 70kms of gas pipeline on farmland.


To appease the farmers, it appears the Tamil Nadu government has now proposed that GAIL must reroute the laying process and align it with the highways. Such a change—laying the gas pipeline along with highways—entails several risks, that of safety, security, maintenance etc. Even the process of laying the pipeline would totally disrupt the movement of goods and services during the construction, besides being costly. In addition, such a move would mean that the gas lines would have to be below the national highways, on which heavy loads of traffic will pass!


GAIL, failing to receive an encouraging response from the Tamil Nadu government, has now resorted to take up the issue through the Madras High Court. GAIL feels there is no other alternative means to resolve the issue, though they are keen to sit across with the state government and find a solution to the problem.


Tamil Nadu government must realise that this gas pipeline will bring in much needed gas to the power starved state. Their own revenue will also come in the form of 4 million standard cubic feet per day (mmscmd) of gas to cover the taxes and other levies.


Readers of Moneylife may recall that Tamil Nadu Government had made objections in regard to the development of CBM (coal bed methane), as the Tamil Nadu Pollution Board (TNPB) had not given clearance to the project, though the work on this has been going on for a couple of years. In this particular case, it will be another 60 days or so before we know the recommendations of a Committee appointed for investigating this matter. Such delays only harm the national progress.


GAIL's work on the gas pipeline is also stuck in the same manner, which has followed the laid down procedure of the government, and this interference by Tamil Nadu government cannot be accepted, as it reflects on its poor ability to sort out the mess created by vested interests.


Hopefully, we expect the Court to direct the Tamil Nadu government to assist GAIL in completing the project on time and to take care of the leaders of the agitators.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



joy bala

4 years ago

ആര്യാടനു തിരിഞ്ഞ സത്യവും ചില തുടർചിന്തകളും...
1:00 PM Sabu Kottotty 8 comments
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മന്ത്രി ആര്യാടൻ മുഹമ്മദ് ചിലപ്പോൾ സത്യം വിളിച്ചുപറയും. അത് സ്വന്തം പാർട്ടിയിലെ അത്യുന്നതന്മാരുടെ താല്പര്യങ്ങൾക്ക് അത് എതിരാവുകയും ചെയ്യും. ഡീസൽ വില വർദ്ധനയും സബ്സിഡിയുടെ വെട്ടിച്ചുരുക്കലുമായി നട്ടം തിരിഞ്ഞ കെ എസ് ആർ ടി സിയുടെ രക്ഷാകവചമായി ബസ്സുകൾ ഗയിൽ വാതകത്തിലേക്കു മാറാൻ കേന്ദ്രസർക്കാർ വാഗ്ദാനം ചെയ്തതാണു 4000 കോടി രൂപ. അതാണ് ഗെയിലുമായി നടത്തിയ ആലോചനയിൽ വരും കാലങ്ങളിൽ ഒളിഞ്ഞിരിക്കുന്ന ചതി മനസ്സിലാക്കി മന്ത്രി ആര്യാടൻ വേണ്ടെന്നു വച്ചത്. സഹായധനം ഉപയോഗിച്ച് ബസ്സുകളെല്ലാം ഗയിൽ വാതകത്തിലേക്കു മാറിക്കഴിയുമ്പോൾ അവരുടെ സ്വഭാവം മാറില്ലെന്ന് ആരുകണ്ടു? ആ സമയത്ത് വാതകവില വർദ്ധിപ്പിച്ചാൽ കെ എസ് ആർ ടി സിയെ മരണത്തിനു വിട്ടുകൊടുക്കുകയോ ഗയിലിനു തീറെഴുതുകയോ അല്ലാതെ മറ്റൊരു ഗതിയുമുണ്ടാവില്ല.

ഗയിൽ വാതക പദ്ധതികൊണ്ട് ജനങ്ങൾക്കുണ്ടാകുന്ന ലാഭക്കണക്കുകൾ ശ്രദ്ധിച്ചാൽത്തന്നെ വരും കാല "ഗുണ"ങ്ങളും വ്യക്തമാവും. ജനവാസ കേന്ദ്രങ്ങളിലൂടെ കടന്നുപോകുന്ന പൈപ്പ്‌ലൈനിൽ നിന്ന് സബ്‌വേകൾ നിർമ്മിച്ച് പാചകവാതകം കുറഞ്ഞ ചെലവിൽ വീടുകളിലും ലഭ്യമാക്കുമെന്നും അത് കുടുംബ ബജറ്റിൽ കാതലായ മാറ്റമുണ്ടാക്കുമെന്നുമാണു വാഗ്ദാനം. ഭൂമികുലുക്കമോ മറ്റെന്തെങ്കിലുമോ കൊണ്ട് പൈപ്പ്‌ലൈന് എന്തെങ്കിലും സംഭവിച്ചാൽ ഒരു പ്രദേശം മുഴുവൻ തുടച്ചു നീക്കപ്പെടുമെന്നതും ജീവിതകാലം മുഴുവൻ സ്വന്തം ഭൂമിയിൽ അന്യരായി ഭീതിയോടെ ജീവിക്കേണ്ടി വരുമെന്നുള്ളതും മറച്ചുവെക്കുകയാണ്.

വീട്ടമ്മമാർക്ക് ഗ്യാസിനേക്കാൾ ഇൻഡക്ഷൻ കുക്കറുകളോടാണ് ഇന്ന് കൂടുതൽ താല്പര്യം. താരതമ്യേന ഏറ്റവും അപകടം കുറഞ്ഞതും എളുപ്പവും മാലിന്യമുക്തവുമായതും ഇൻഡക്ഷൻ കുക്കറുകൾ തന്നെയാണ്. ആവശ്യത്തിനു വൈദ്യുതി ലഭ്യമായാൽ നമുക്ക് ഏറ്റവും നന്നാകുന്നതും ഇതുതന്നെയാണ്. ഇടക്കിടെയുണ്ടാകുന്ന കറണ്ടുപോക്കാണ് ഇൻഡക്ഷൻ കുക്കറിന്റെ ശാപം. അതുകൊണ്ടുതന്നെ നമ്മുടെ വൈദ്യുതിപ്രതിസന്ധി മറികടക്കാൻ കഴിഞ്ഞാൽ ഗാർഹിക ഗാർഹികേതര വ്യവസായ മേഖലകളിൽ സാമ്പത്തികമായി ഒരു കുതിച്ചുചാട്ടം തന്നെ നമുക്കുണ്ടാകും.

ആർക്കും ബുദ്ധിമുട്ടില്ലാതെ നഷ്ടം തീരെയില്ലാതെ ഗയിൽപദ്ധതി നടപ്പിലാക്കാൻ കഴിയും. വാതകത്തിന്റെ വിപണനവും വരുമാനവുമാണ് അവരുടെ ലക്ഷ്യമെങ്കിൽ പദ്ധതി നടപ്പിലാകുന്നതോടൊപ്പം നമ്മുടെ വൈദ്യുതിപ്രതിസന്ധിയും പരിഹരിക്കപ്പെടും. ഇപ്പോൾ ഇവരുടെ സ്റ്റോറേജ് പുതുവൈപ്പിനിലാണുള്ളത്. അവിടെനിന്ന് 5 കിലോമീറ്റർ വടക്ക് മാറിയാണ് ഞാറക്കൽ 220 കെ. വി. സബ് സ്റ്റേഷൻ. ഇവിടേക്കുള്ള വൈദ്യതി കളമശ്ശേരിയിൽ നിന്നാണു കൊണ്ടുവരുന്നത്.

പുതുവൈപ്പിനിൽ എൽ എൻ ജി ടെർമിനലിനോടു ചേർന്ന് 2000 മെഗാവാട്ടെങ്കിലും ശേഷിയുള്ള പവർ സ്റ്റേഷൻ സ്ഥാപിക്കുക. നിലവിൽ ആവശ്യത്തിന് സ്ഥലസൗകര്യം അവിടെ ലഭ്യമാണ്. അവിടെനിന്ന് അഞ്ചു കിലോമീറ്റർ മാറിയുള്ള ഞാറക്കലിലും തുടർന്ന് കളമശ്ശേരി വഴി മാടക്കത്തറയിലും വൈദ്യുതിയെത്തിച്ചാൽ അവിടെനിന്ന് ഇന്ത്യയിലെവിടേക്കും എത്തിക്കാൻ ഒരു തടസ്സവുമുണ്ടാവില്ല. ഗയിലിനു വാതകവും ചെലവാകും പൈപ്പ്‌ലൈൻ കടന്നു പോകുന്ന വഴിയിലെ ജനങ്ങളും അവരുടെ വാസസ്ഥലങ്ങളും കൃഷിയിടങ്ങളും സുരക്ഷിതമാവും. ഒപ്പം നാം നേരിടുന്ന രൂക്ഷമായ വൈദ്യുതപ്രതിസന്ധിക്കും പരിഹാരമാവും. ആര്യാടൻ ഇത്രയൊക്കെ ചിന്തിച്ചിട്ടുണ്ടാവില്ലെങ്കിലും ഗയിൽ പദ്ധതിയിലെ ഭാവിയിലെ ലാഭക്കണ്ണുകൾ തിരിച്ചറിഞ്ഞു എന്നത് അംഗീകരിക്കതെ വയ്യ.

ജനങ്ങൾക്ക് കുറഞ്ഞ വിലക്ക് പാചകവാതകം എത്തിക്കുമെന്നു പറഞ്ഞ എൽ എൻ ജി കുറഞ്ഞനിരക്കിൽ വൈദ്യുതി എത്തിക്കുമെന്നു തീരുമാനിച്ചാൽ മതി. പൈപ്പ്‌ലൈൻ കടന്നു പോകുന്ന പ്രദേശങ്ങൾക്കു കൊടുക്കാനുദ്ദേശിക്കുന്ന ഭീമമായ തുകയുടെ ചെറിയ ഭാഗം മതിയാവും പവർപ്ലാന്റ് സ്ഥാപിക്കാൻ. ജനങ്ങളെ കുടിയൊഴിപ്പിച്ചുകൊണ്ടും അവരുടെ ജീവിതത്തെ ദുരിതത്തിലാഴ്‌ത്തിക്കൊണ്ടും "വികസന"പദ്ധതികൾ നടപ്പിലാക്കാൻ തുനിഞ്ഞിറങ്ങുമ്പോൾതിനേക്കാൾ മികച്ചതും ആരെയും ബിദ്ധിമുട്ടിക്കാത്തതും എന്നാൽ തങ്ങളുടെ ലക്ഷ്യം നിറവേറുന്നതുമായ രീതിയിൽ പ്രസ്തുത പദ്ധതികൾ നടപ്പിലാക്കാൻ കഴിയുമോയെന്ന് ആരായുന്നത് എപ്പോഴും നല്ലതാണ്. പദ്ധതികൾ വരണം, പക്ഷേ അതു ആളെക്കൊല്ലാനാവരുത്.

Karthik Duraisamy

4 years ago

This project would had a amazing impact had this been executed in 60/70s or max by 80s - we could have saved a lot on transportation of the fuel and efficiency could have been excellent. We are in 2013 and already are realizing the horrible effects of using fossil fuels - and need to move to cleaner energy is very high across the globe. GAIL has proved that the government organization's thinking process is minimum 30 years back-wards.

Whats fun in investing heavily for Infrastructure for a commodity, which the global society badly needs a break from? Can we continue on with the same increased rate of burning fossil fuels - and still say we are passing the world with care to our next generations? Should we need a government to invest heavy in better, efficient way to burn fossil fuel and make the world dirtier or make investments in green energy to benefit the mankind?

GAIL's project here, clearly doesn't make any sense from society well-being stand point. I believe that people at GAIL do know about all these, as lot of social well wishers, farmers made their protest in a solid fashion - despite which why should they press on going ahead with the project???


4 years ago

When GAIL can lay the gas pipeline alligned with highways in Kerala, why not they do the same in Tamilnadu also?



In Reply to PPM 4 years ago

Dear PPM, what you have said is correct. They laid the pipe near highways throughout kerala, but in tamilnadu they want to put only in farmers land. Why not in near to highways.

Karthik Duraisamy

In Reply to muthu 4 years ago

GAIL will take away agriculture land and will pay approx 10% of the market price for this land. More than the price, the agriculture land spread is already decreasing in many of southern states primarily due to less profitable situation in doing agri, and the other attractive options available for a farmer - to sell of his agri land at higher price for real estate. With human population and agriculture produce consumption on steady increase and agriculture on steady decrease - why should a society invest in a social infrastructure that would do so much harm to already decreasing agriculture?

SEBI’s warped ideas about PMS data disclosure

In response to Moneylife campaign for better disclosure of PMS data, a SEBI official has written to us defending the regulator’s stance. Here are the watchdog’s arguments, and our rebuttal

For nearly two years, Moneylife has battled the regulator to get information on the performance of portfolio management services (PMS) through Right to Information (RTI) application. Our effort started with the discovery that one investor has lost a whopping Rs1 crore (Read: Sordid tales) in a single action of gross mis-selling and a doctor couple whose nest egg halved in PMS (Read: Bad experience).  The Securities Exchange Board of India (SEBI), which swears by a ‘disclosure’-based regime, thwarted our attempt to collect PMS data at every turn. We filed an RTI request, which was turned down. We appealed to the Central Information Commission (CIC), who ordered SEBI to put PMS information in the public domain (Read: Power of RTI: CIC directs SEBI to disclose all information related to PMS).  Even that order has not been followed in spirit.

So we did more work. We struggled to compile the information that was available. We filed another RTI seeking data on a compact disk, as if it is parting with state secrets. SEBI refused. We then conducted a survey to get reactions from PMS investors and compiled it all in our cover story (Read over cover story here : Portfolio Management Schemes: Will Your Portfolio Blow Up?).  Finally, SEBI has woken up, but in anger. Amritha S Naik, an assistant manager at the Investment Management Department wrote to us defending SEBI’s position on niggardly disclosure and claiming that it was doing plenty for investors. Read the full letter below.

Incidentally, her predecessor was in touch with us when we started our campaign, but quickly clammed up and refused to respond, like all official channels of SEBI. Ms Naik’s letter too has not been routed through the communications department. We are not even sure whether mid-level SEBI officials are allowed to dash off letters to the media on their own on a selective basis. Here are the some of the main points of Ms Naik’s letter and our rebuttal.

 “Minimum investment per client increased from Rs5 lakh to Rs25 lakh so that only sophisticated investors can have access to such services”.

Moneylife: We wonder what is SEBI’s definition of “sophisticated”. The PMS investors that Moneylife has come across and who have lost money are indeed “sophisticated” but not necessarily ‘sophisticated investors’. They are doctor, actors, singers, editors, marketing consultants, advertising gurus and IT experts. Do they understand financial products? No. In fact, they choose the PMS only because they want expert money management and are willing to pay for expertise that keeps their money safe and growing. Yet, a majority of them end up with pathetic returns or even lose a part of their principal. Will Ms Naik explain to us how a “higher networth” is equal to “more sophisticated understanding of products and markets”. Do they mean that a Kareena Kapoor or a Sachin Tendulkar will have a terrific post-retirement career as experts in choosing the right financial products? Many years ago SEBI borrowed terms like “sophisticated” or “discerning” investors from the West and framed appropriately loose regulations for them. As the subsequent experience has shown, this assumption is all bunkum. This is why in UK and US, regulators have woken up to more instrusive regulation rather than hands-off, purely disclosure-based  regulation. Maybe SEBI officials need to make a few more foreign trips to get the hang of where the global regulation is headed.

With regard to PMS investors not having sufficient data to enable them to make an informed choice of a Portfolio Manager, we have tried to provide the available data in the best possible manner and in a way that is as informative as possible. We are also continuously working at making better information available from the perspective of PMS investors.

Moneylife: If SEBI is truly working to part with the data instead of trying to suppress it, why does SEBI continue to thwart our attempts to provide reliable information to hapless investors? SEBI has only started disclosing monthly PMS data after losing in an RTI appeal by Moneylife, and the data is hard to compile. It has also uploaded performance data only from January 2013. It is impossible to obtain data of every PMS given the site is pathetically slow and prevents easy comparison. More importantly, the performance needs to be compared with a benchmark. SEBI provides consolidated data of all schemes of a PMS, which is unusable by an investor. An individual needs to know how each scheme has performed and whether it has beaten its respective benchmark or not. This is available in the disclosure document sent to existing clients and SEBI. This should be made available. Even in the disclosure document, only three years worth of PMS data is available, unlike mutual funds which schemes’ performance is disclosed from inception. Why can’t the same thing be implemented for PMS schemes? But then, SEBI claims that every single PMS is individually customized, more about that later.

 “The PMS is expected to individually and independently manage the funds of each client in accordance with the needs of the clients which does not partake the character of a mutual funds”… “One of the main factors hindering this is that the data in respect of PMS is not amenable to straightforward consolidation in view of the fact that PMS is essentially an individual-oriented  and customised product  rather than  a group-oriented product. No units are issued and there is no NAV. Hence the data of various clients at a single PMS provider or across PMS providers is not amenable to consolidation, and thereby easy comparison…Disclosure Documents (DD) of the PMS are meant for the clients of the PMS. The portfolio managers are required to give access to DD to the clients through login id and password so that each client can view its portfolio, performance etc. The clients may not like to expose its portfolio to general public.

Nice claim, but if this is the case then:

  1. Why did SEBI issue a press released on March 2012 cautioning investors to specifically ASK for the disclosure document BEFORE entering into an agreement.
  2. If obtaining such data is simply not possible, because a PMS with, say, 200 clients, will have 200 separate returns, how is SEBI putting out scheme wise data rather than a band of returns for a certain class of investors?
  3. Why is SEBI still unwilling to part with the entire data, so that ‘sophisticated’ and independent researchers like us can collate it and put out performance details that would make sense to the average high networth investor?

Our research on the PMS data that we could lay our hands on reveals that the schemes of only two PMS companies have done consistently well in a three-year period. Many have performed erratically and some have not even performed at all. This information is only available in disclosure documents and our inquiry shows that no banker, who hawks PMS products, has access to this information or has compiled it for clients before recommending specific schemes. The recommendations are all a part of revenue deals between PMS companies and the banks.  This can only be to the disadvantage of investors who are required to make a minimum investment of Rs25 lakh for PMS services, by SEBI’s own diktat.

What is it so hard for SEBI officials to understand that investor can make an informed choice only by comparing the performance of different portfolio managers? Probably because SEBI either does not engage with investors directly or does so selectively. One can see how varied the performance of portfolio mangers can be in our analysis of 26 PMS companies. (Read: PMS Performance: The Good, the Average and the Ugly)

“Performance fees, if charged, shall be mandatorily on the basis of high-water mark principle.” Moneylife: Again, performance fee is only a part of the fees paid to a portfolio manager. The total advisory or performance fee paid to portfolio managers may be a fixed charge on the quantum of the funds being managed (or) charges linked to portfolio return (or) combination of both This is mentioned only in the disclosure document. Our cover story mentioned that the fees are negotiable from client to client. Therefore, an individual with a higher corpus can negotiate a lower fee. However, this is not the only cost; there are other expenses like brokerage and transaction costs, depository fees etc. This could be the highest if the portfolio manager resorts to excessive churning. In our PMS survey (Read the 'Survey Findings' section over here), many investors claimed excessive churning. SEBI has still to issue an order in the case pertaining to the actress-singer Suchitra Krishnamurthi (Read HSBC loots Suchitra Krishnamoorthi after big promises of 24% returns) who suffered enormous losses because of such reckless churning. SEBI has failed to address the issue because it is probably not even aware of it. Or does not want to exercise its brains as regards what it means for investors, like many other issues. We have accessed and examined portfolios where PMS companies have excessively churned stocks as well as mutual fund investments to create losses in the books of investors.

Based on how ill-informed and untenable SEBI’s arguments are, far from an apology, we demand that SEBI come down from its ivory tower, read the comments to our articles on PMS and engage with us in finding out facts, collating information and honestly redress genuine grievances about mis-selling, mismanagement and downright cheating. We would also like it to respond to all our reports on such mis-selling, not selectively. Only then will start justifying its role as a regulator.

Here is the letter we received from Ms Naik…

Dear Sir,

1. SEBI has taken various measures in the interest of investors of the Portfolio Management Services (PMS). Some of the  measures taken by the SEBI in recent past are as under:
i. Minimum investment per client increased from Rs5 lakh to Rs25 lakh so that only sophisticated investors can have access to such services.
ii. Segregation of unlisted securities in individual client accounts.
iii. Raising the minimum net-worth requirement for Portfolio Manager from Rs50 lakh to Rs2 crore excluding minimum capital adequacy/ net -worth requirement for any other activity.
iv. Performance fees, if charged, shall be mandatorily on the basis of high-water mark principle.
v. The PMS is expected to individually and independently manage the funds of each client in accordance with the needs of the clients, which does not partake the character of a mutual funds.

2. You are aware that PMS is in many ways different  from Mutual Fund. Some of the major differences are given as under:
i. In contrast to Mutual Funds, in case of PMS no pooling is allowed and no unit is issued
ii. PMS products are  meant for investors  with higher net-worth, and who are generally understood to be having more sophisticated understanding of the market and products.
iii. The relationship between portfolio manager and the client is contractual in nature and PMS is expected to provide customized service taking into consideration the need of customers, his preferences, risk profiling, suitability etc.
iv. The PMS is expected to individually and independently manage the funds of each client in accordance with the mandate  of the client which is rather different from the character of a mutual fund.
v. The performance of the portfolio manager  for various clients will be different  as investment philosophy,  need, preference, risk taking ability, choice of  different products, mandate  etc. are different for different clients.
vi. Disclosure Documents (DD) of the PMS are meant for the clients of the PMS. The portfolio managers are required to give access to DD to the clients through login id and password so that each client can view its portfolio, performance etc. The clients may not like to expose its portfolio to general public.

3. With regard to PMS investors not having sufficient data to enable them to make  an informed choice of a Portfolio Manager, it is stated that we have tried to provide  the available data in  the best possible manner and in a way that is   as informative as possible. We are also continuously  working at making  better information available from the perspective of PMS investors. One of the main factors hindering this is that the data in respect of PMS is not amenable to straightforward consolidation in view of the fact that PMS is essentially an individual oriented  and customised product  rather than  a group oriented product. No units are issued and there is no NAV. Hence the data of various clients at a single PMS provider  or across PMS providers is not amenable to consolidation, and thereby easy comparison.

4. And, finally the language and tone used in your article is unacceptably offensive. Characterising the SEBI staff as "corrupt" is really most unbecoming of your magazine. While constructive suggestions and criticisms are welcome, the use of defamatory expressions should be totally eschewed. The least we expect from you is an unqualified apology and no more repetition of this kind in future.

Yours faithfully,
Amruta S. Naik
Assistant Manager
Investment Management Department, Division of Funds I




4 years ago

SEBI was incapable of making a listed company refund debenture money of Rs.2,000 (on maturity) around 10 years ago. They do not even respond to small complaints of non receipt of annual reports. Some companies like Garnet Construction have made it a habit of not sending annual reports either hard or soft copy and neither is it available easily on the website. The market punishes these companies by beating the price from about Rs.150 in 2007 to about Rs.10 in 2013. These promoters do not want to earn honestly. For a investor with years in the market, I can show dozens of such examples. Is SEBI really interested in our welfare?

P M Ravindran

4 years ago

Ms Dalal may not have time and inclination to appreciate efforts by others to bring transparency in public transactions. But I must say that she too is amoung the millions banging their heads against stone walls to ensure probity in public life. My 15 years of dedicated effort in this field has lead me to this new definition for governance in India: an institution that does everything that it is NOT supposed to do and does NOT do anything that it is expected to do!

Recently, Oommen Chandy headed government in Kerala announced an allowance, in addition to pension, to all the judges of the high court who could not be given sinecures. It is Rs 10K for the CJ and 6k for other judges. I immediately wrote to all the editors a letter whose gist is as follows:

Firstly, this is open bribe being offered to the judges at the tax payers' cost.

Secondly, as it is judges retire the oldest, except for the politicians.

Thirdly, when the Central and State govts have stopped even statutory pension for all their employees, the introduction of this new allowance, would be an unwarranted burden on the exchequer.

Fourthly, Article 124 (7) of the Constitution of India lays down that:"No person who has held office as a Judge of the Supreme Court shall plead or act in any court or before any authority within the territory of India." and Article 220 of the Constitution of India lays down that: "No person who, after the commencement of this Constitution, has held office as a permanent Judge of a High Court shall plead or act in any court or before any authority in India except the Supreme Court and the other High Courts." Thus, even the current employment of supreme court and high court judges in various quasi judicial organisations is unethical and illegal.

Lastly, judges who are supposed to be doing a very honourable job are required to decline this offer from those who are facing allegations of various crimes and would expect a quid pro quo when their cases reach these courts!

Unfortunately, I did not see any daily publishing the above feedback in their letter to the editor columns!

Now considering that statutory pension has been done away with by the Central government for its employees and some state governments (including Kerala where the Commies have a strong presence!)isn't it time someone asked if the pension to MPs and MLAs will also be stopped with effect from those dates?


Sucheta Dalal

In Reply to P M Ravindran 4 years ago

Mr Ravi.... yes I am also banging my head about several issues. I dont complain about others. Your single point agenda is to bad-mouth Shailesh Gandhi and that I would not support. I cannot think of any other reason for you to make this dig while using this platform.
It is rather sad, since you are a retired services person and I go out of my for those who served the country by putting their life on the line!

nagesh kini

4 years ago

During a personal on-site visit after fixing prior appointment no responsible PIO appeared. They sent across a junior not knowing the RTI!

Umesh Sant

4 years ago

SEBI is a GOVERNMENT body that takes care of investment regulation. Looking at the way this country is run currently, can we really expect anything else from them?
Great effort by you people though. Watch out for these people running behind you instead of addressing the issue!

Vaibhav Dhoka

4 years ago

SEBI is one of the most Corrupt institution and has NO ACCOUNTABILITY to anyone,not to government not to investors,in fact it is bent on killing securities market.The reply itself speaks lot.In absence of Moneylife it would have grazing field for SEBI officials.


4 years ago

Brokers give them bribe and they work for them so they dont care for investors... what happened to one SEBI offficer who was caught in bribe case last year?

Suiketu Shah

4 years ago

1)Terrific effort by moneylife,congrats.
2)It is no surprise retail investors are fleeing the equity market with a watchdog like SEBi.
3)This reemphasises why RM's or "share experts" or "wealth management experts" of most private companies/banks offering PMS are unemployable hard-core criminals dressed in a tie who have to be treated like hard-core criminals in every which way.


4 years ago

SEBI has destroyed the equity market and the number of equity investors has gone down in last two decades. Investors have lost heavily.

R Balakrishnan

4 years ago

This goes on to prove the point that SEBI exists solely to further the interest of brokers and other vendors of financial products who cheat investors across different platforms. It is the brokers and the bankers who control SEBI. SEBI cares a damn about investors. And that is reflected in the attitude of the employees as well as the CEO, who go on making speeches full of gas.
Even what disclosure is happening, thanks to Moneylife, is so short of what the market needs.
SEBI is truly the biggest enemy of the investor

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The Scam
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Fiercely independent and pro-consumer information on personal finance
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