Q.1) Supreme court recently ruled that privacy was part of the fundamental right to life and personal liberty guaranteed to all citizens under Article 21 of the Constitution. Critically examine the significance of this Judgement and its consequences on various contemporary bills, statues and laws.
A nine-judge Constitution Bench of the Supreme Court ruled that right to privacy is “intrinsic to life and liberty” and is inherently protected under Article 21 enshrined under Part III of the Indian Constitution overruling its own eight-judge Bench and six-judge Bench judgments of M.P. Sharma and Kharak Singh cases delivered earlier.
Significance of the landmark Judgment:
- An ordinary man not just a citizen, but anyone, whether an Indian national or not, can move the constitutional courts of the land under Articles 32 and 226, respectively, to get justice in case of violation of fundamental right.
- The court emphasized upon personal, informational and digital privacy. It cleared the air on the amorphous nature the concept of privacy.
- The judgment of the SC by overruling it earlier verdict shows evolution of our judiciary with changing time.
- It will directly impact food choices, beef bans and any such restrictions that is intrinsic to choice and privacy
- The nine-judge Bench’s judgment gains international significance as privacy enjoys a robust legal framework internationally, though India has remained circumspect.
Bearing over Statutes/Bills/Laws:
- The landmark judgment declaring right to privacy a fundamental right would have bearing in matters relating to “Cattle and Livestock Sale Rules” that bans beef sale and restricts food choice that may be struck down.
- The judgment will have a crucial bearing on the government’s Aadhaar scheme that collects personal details, biometrics to identify beneficiaries for accessing social benefits and government welfare scheme.
- The court has observed that one’s sexual orientation is undoubtedly an attribute of privacy. It reopens the debate and rights of LGBT communities may finally get recognized by SC through striking down of IPC Section 377.
- This calls for robust Data security, protection and regulatory mechanism for important data of the citizens collected by both private and public authorities. The IT Act 2000 also will have restructuring to incorporate changing dynamics of data sharing.
- The Human DNA profiling with the dangers of data leakage and misuse will have implications due to this judgment.
- Right to terminate life under euthanasia can have negative fallout along with rise of suicides and abortion if recognized as arbitrary private decisions.
- Other negative consequences could include “Aadhaar” covering 99% population, if struck down, could cost exchequer heavily and the striking down of Aadhaar Act on grounds of privacy violations could curtail DBT, welfare scheme benefits.
By declaring right to privacy as a new freedom and clear fundamental right it has opened up plethora of hopes and aspirations of Indian citizens as a whole and protects them from arbitrary intrusions of their personal space. While it has negative fallouts, rationally demarcated restrictions on this freedom and a properly regulated robust data protection law to support the judgment is the need of the hour.
Nuclear Supplier Group (NSG) is a 48 member multi-lateral grouping, deals with the control of nuclear materials and technology, founded in response to India’s nuclear test in the year 1974.
The group has a set guidelines pertaining to items that are especially designed for nuclear use and the export of dual-use items (materials and technologies) which are considered as a guarantee for the country to procure and supply nuclear materials and technology. India thinks joining the group will pave its way for supplying some of its technologies and other nuclear items to other countries.
However, some expert thinks that joining NSG will be a futile exercise as India has already being recognized by some of powerful countries like US, Japan and Australia etc. as a peaceful user of nuclear items and can deal with the technologies and other items without any hassle and obstacles.
Why it seems to be a futile exercise?
Critics argue that as India had already got a clean NSG waiver in 2008; all these efforts to gain entry into the club will be a futile as it would not make any material difference because No foreign nuclear reactor supplier is waiting for India to get a NSG membership. However, non NSG somewhere obstructs India from openly dealing with other nations and also keeps away from making rules.
China’s backing to Pakistan for NSG membership similar to India gaining its membership will be a serious concern for many as Pakistan’s terrible proliferation record which many nations fear.
In fact, a long list of deal-breaker challenges hamper progress of foreign companies selling their hi-tech reactors — nuclear liability issue, Japan’s distaste for nuclear (both GE and Westinghouse are today Japanese-owned), local opposition and pricing. ‘NSG membership’ has never shown up in the list.
Energy from India-built nuclear plants is much cheaper. For GE-Hitachi and Westinghouse-Toshiba, the liability issue is a big risk, and if they factor the risk in costs, their energy will also be pricey.
- NSG membership is an assertion of right and joining it mean participating in the rules making of NSG. This will give India a chance to expose Pakistan’s terrible proliferation record and may block Pakistan forever. However, this will mount tension between India and Pakistan or India and China for Nuclear access.
- The 2008 waiver with USA made India eligible to receive advanced nuclear technologies that could be used to enrich uranium and/or reprocess plutonium. This has helped India a lot. However, such access is restricted to American technologies. Membership to the NSG will essentially increase India’s access to state-of-the-art technology from the other 47 members of the Group, as well.
- NSG membership also means India can begin to commercially produce nuclear power equipment, which it can then even sell to other countries. With access to state-of-the-art nuclear technologies, it can maximize its production benefits. However, the other nuclear haves nations are already in engagement with such countries and will prove less fruitful for India.
- Access to technology and being allowed to produce nuclear equipment will give a boost to the Make in India programme announced by our PM. That will boost economic growth in India, create more jobs and even lead to a whole new IT-industry segment that India can leverage.
- Most of the energy is generated from Coal which is unclean due to CO2 emissions. NSG membership can help India in shifting to clean Nuclear Energy and will also help India in its commitment to climate change.
- On grant of membership, India will have a say in the group’s decisions. India could also play a more pro active and constructive role in blocking illegal nuclear trades between China, Pakistan, North Korea etc.
However, India must further build on the theme that dwell on India’s “strong record” in dealing with the challenges of arms proliferation and its contribution to global non-proliferation and nuclear security efforts.
India must demonstrate its readiness and resolute to achieve global nuclear non-proliferation goals and show a certain degree of transparency with its strategic weapons programmes, to bolster the case for its full membership in the multilateral non-proliferation groupings.
The recent hearing of Supreme Court declaring the discriminatory practice of instant Triple Talaq as unconstitutional, a clear message that personal law can no longer be privileged over fundamental rights is established. The main ground on which the practice has been struck down is that this form of Talaq is arbitrary in the sense that the marital tie can be broken capriciously and whimsically by a Muslim man without any attempt at reconciliation so as to save it. This important judgment with its positive spillovers of gender justice provides a clear gateway to reinvigorating the debate of UCC and its implementation in near future.
In fact, the Uniform Civil Code(UCC) envisages uniformity in personal laws cutting across all religions, caste and creed pertaining to personal laws like polygamy, triple Talaq, Nikah Halala in case of Muslims; dowry, property rights and bigamy in case of Hindus; and divorce and property rights among Christians.
Need for Uniform Civil Code:
- First, a secular republic needs a common law for all citizens rather than differentiated rules based on religious practices.
- It will promote national integration and uniformity in laws across gender, caste and religions.
- It will fall along constitutional principles (DPSP, Article 44) towards achieving gender justice and equality, as envisaged by our constitution makers.
- There is a second reason why a uniform civil code is needed: gender justice. The rights of women are usually limited under religious law, be it Hindu or Muslim. The practice of triple talaq is a classic example.
- It will uphold human rights and provide a common legal procedure on violation.
Impediments to its implementation:
- There is no one personal law which is complete and just in itself. The apprehension that concepts alien to its socio-religious practices will march one after another if change in legislation is permitted in one field.
- Opposition from orthodox sections of various religions could lead to protests, separatist tendencies on grounds of alleged state interference in personal and religious space.
- Inordinate delays due to much litigation in court challenging UCC, may prolong its implementation.
- The diversity of our country and its multitude of customs and usages present a hindrance and a single framework accommodating all will not be an easy solution.
- Many experts believe it directly conflicts with the Right to religious freedom guaranteed in the constitution under Article 25 and 26 for pursuing various aspects of the religion.
- There is no concrete draft of how an ideal UCC should be that assuages the fears of other religious minority groups.
- The government will have to work hard to build trust, but more importantly, make common cause with social reformers rather than religious conservatives, an obvious political challenge in assuaging fears.
- The Government in coordination with all stakeholders must take up reforms in each personal law through independent initiatives, and bring separate aspects such as marriage, adoption, succession and maintenance into a uniform civil code in stages.
- The civil law in Goa—derived from the Portuguese Civil Procedure Code of 1939—could be a useful starting point for a national debate.
The underlying principle should be that constitutional law will override religious law in a secular republic. The dynamics of social transformation through the instrument of law from diverse civil code to uniformity shall be gradual. The government should draft a uniform civil code with widespread multi stakeholder discussions and a comprehensive review of several other laws in the context of gender justice. That is important in the context of the above judgment.
Q.4) Given the fact that PDS system is highly prone to leakages and corruption, many experts have suggested that it should be replaced by Direct Benefit Transfer system. Do you support this view? Critically discuss.
The government is likely to scrap public distribution scheme (PDS) system and transfer money directly to the accounts of poor beneficiaries after getting encouraging results from Haryana and Puducherry. This move has been supported as well as criticized by many economists.
Arguments in favour of substituting PDS grain transfers with cash
- PDS prone to corruption and leakage: Proponents of substituting PDS grain transfers with cash argue that PDS is an inefficient mode of transfer of subsidies, prone to enormous leakages into the black market, and high waste in costs of transferring subsidies in the form of food transfers. They argue that replacing food with direct cash transfers would greatly reduce corruption and leakages.
- Better targeting: It would enable the poor to access goods currently denied them by a PDS beset by corruption.
- More choice for Consumers: It would enable people to buy better quality food of their choice from the open market and not be restricted to items sold in the PDS, which are often inferior in quality and limited in range.
- Will Reduce Wastage: Providing subsidies directly to the poor, it is further argued, would both bypass brokers as well as reduce the waste and holding costs of storing grains in government silos. The amount of grain actually required for India’s buffer stock needs could be held in better-quality warehouses, eliminating waste and rotting.
- Will reduce fiscal deficit: Cash transfers would help reduce fiscal deficit by curbing expenditures earmarked for the PDS that are siphoned off through corruption, as well as avoiding substantially higher costs of transferring food rather than cash.
- Not leakage proof: It is problematic to assume that cash transfers would in themselves bring about drastic reductions in corruption and leakages in welfare programmes, as there is nothing intrinsic to cash transfers which renders them less vulnerable to leakages. Irregularities are empirically found to be high in existing cash transfer programmes. Cash transfers of old-age pensions are at least as notorious for corruption and leakages as the PDS.
- PDS performing better: Studies confirm that many states have been able to reform PDS and significantly reduce leakages, as much as some states have reformed pension transfers. Clearly, the difference between the corruption or probity of delivery of welfare programmes is not dependent on whether cash or food is delivered, but on political and administrative will and capacities, and public vigilance and organization.
- Misuse of Cash: It is also possible for people to spend cash transfers not on more nutritious food, as proponents suggest, but instead on non-food items, which would decrease the amount of household money left for buying food. There are significant gendered differences of choice here. Research confirms that culturally decisions relating to cash in households tend to be made by men, who may or may not spend the money on food. Decisions relating to food are made by women in almost all cultures, and therefore food rather than cash in a household is more likely to end up as food in a child’s stomach.
- Weak Banking Infrastructure: There are also worries about how genuinely inclusive of people in remote rural regions is India’s banking system. Fair price shops exist in three of every four villages, and are therefore generally accessible. According to one survey, average distance to the nearest bank branch is between 6.5km to 10km. Distances would be much longer in remote regions, entailing high additional costs of transport and time.
- A shield against Inflation: Another advantage of PDS over cash transfers from the perspective of the poor is that PDS supplies rations at a constant price, irrespective of the fluctuations in market prices. This therefore provides a shield against inflation, a benefit that cash transfers cannot match.
- Ensures stable income for Farmer’s: it is a mistake to view PDS only as a means to transfer subsidies to poor households. PDS costs need to be measured against its other goals as well. PDS requires the government to procure food from farmers. The government builds up stocks of grains which are also useful for price stabilization. Indeed, the guarantee of minimum support price purchase by the government for wheat and rice is the most important instrument for the protection of farmers’ income in India, and this would become unfeasible if the government could not offload a lot of this grain back through the PDS.
- Cash transfer leading to exclusion: In areas where pilot programme has been launched There were issues in transfers, as results show as high as 50 per cent of those entitled did not receive the full or part cash transfer, especially due to issues in linking of bank accounts with Aadhaar and ration cards.
Certainly, DBT is a novel idea and it could certainly reduce leakages and corruption of PDS system has proven its record in LPG case where Government saved rs 14000 crore due to better targeting and elimination of ghost beneficiaries
However, DBT in food subsidy is an idea which has many flaws as mentioned above. PDS system itself is flawed and it needs to be eliminated.
Therefore, instead of cash transfer Government should give food coupons as this will solve the problem of misuse of cash for buying non-food things and it will also give poor people choice to buy food from the retailer of their choice. Food coupon amount should be periodically revised so that it takes into account the current inflation. Thus what we require is a system which is somewhere in between the present inefficient PDS system and the proposed DBT system.
Q.5) To solve the Twin Balance problem, Economic Survey has suggested setting up of a Centralised Public Sector Asset Rehabilitation Agency. Critical discuss whether setting up of an agency like PARA will be feasible?
Due to ever increasing twin balance sheet problem and the rising difficulty to tackle it by any other means, the Government has proposed an another reform as a last resort i.e. Public Sector Asset Rehabilitation Agency (PARA) for the rehabilitation of the Public Sector Banks and Companies who are facing such crisis.
It is to be a centralized approach where the Agency will take charge of the assets of the worst affected Public Sector Undertakings and try to reduce their debt to a large extent.
Under this approach, the Public Assets Rehabilitation Agency will purchase the loans of the over-indebted infrastructure and steel firms. Then it will try to work out using several methodologies, one of them being the professional assessment of value-maximizing strategy to come to a conclusion as to how these debts can be paid and written off.
This requires a huge amount of investment in the projects which can be done only through fulfillment of capital requirements by the government. However, given the circumstances, Capital Markets, Corporations, and other private investors will not be agreeing to invest.
Many critics argue that PARA in reality does not provide any new means to solve this problem. It actually suffers from certain major loopholes which cannot be ignored:
Problem of disposal: It has somehow been ignored that the PARA will face the same problem as that of banks in disposing of these debts. Although it may be having some methodologies to do it, it requires huge finance to do this. There is not even much market for stressed assets owing to the reason as many sectors are currently plagued with overcapacity. So, it cannot really resort to selling these assets to a large extent.
Operational discrepancies: Many critics have pointed out that PARA proposes a very unclear method. The methods proposed are only a slight variation of the old ones like the ARC. They failed because of these mechanisms. So adopting them again can lead to a continuation of the problem.
One size fit all policy not feasible: In India, the issue of NPAs and corporate bankruptcy differ from bank to bank and corporation to corporation and hence, a one size fit all policy will not be feasible from overcoming such problems. Also, it will require the agreements from banks and corporation to shed their bad loans which draws certain percentage of it to the PARA.
However, setting up of PARA like institution has certain advantages also:
By taking away bank’s debt, it releases the bank of a huge amount of its financial burden. It has two major benefits:
Reduction in burden on banks: By taking away these bad debts, the PARA shoulders the responsibility of all the debts. This reduces the burden on the banks to find ways to get back their bad debts. The PARA particularly concentrating on this task can do it more effectively than these banks. Thus, banks can think of utilizing their human resources in focusing on other important activities than debt restructuring.
Restoring financial health: By buying these debts, it recapitalizes the bank. Once this is done, banks with greater capital can now focus on making new loans.
Concentration on one Agency: Since the bad debts are all now concentrated in one agency, it is easier to find a true estimate and address it step by step.
However, with various discrepancies this new institution seems to provide a new ray of hope to overcome from NPAs like situation and somewhat liberate to the corporation also. Till now it has been proved that the earlier such methods did not bring fruitful result, and hope that the new agency may liberate from such problems so it’s worth to have the experience of this also.
Since, the coin has both side, concerning both the aspects, we should try to minimize the negative aspects and focus more on its benefits and positive sides which will bear the fruitful result.
Hence, we should give PARA a chance to come into operation and at least start its task so that the ongoing problems can be assessed in a better way and some other way out could be thought.
The year 2016 witnessed agitation for reservation by many castes like Jats, Kapus, Patidars and Marathas. All these communities are dominant castes. The concept of Dominant caste was given by M.N Srinivas who held that a caste is dominant when it is numerically higher than the other castes. And it has significant control over land.
To some extent it is correct to say that rural Agrarian crisis is motivating Dominant Landed castes in most parts of India to agitate for Reservation There is tremendous amount of Farmer distress in Countryside in last few years due to agrarian crisis. Since most of these communities are landed agrarian caste, they are facing the brunt of agriculture slowdown. Rise in farm input costs, stable food prices in the last two decades, despite some episodes of price explosion Has led to dip in there farm income The average size of landholding at the national level has come down from 2.28 hectares in 1970-71 to 1.16 ha in 2010-11,which is making agriculture unviable. The process of marginalization of farm holdings might have contributed to the recent demand of Marathas and Patidars (also known as Patels) to be included in the other backward classes (OBC) category so that they could shift away from agriculture. Another source of rural distress in Maharashtra and Uttar Pradesh, in particular, has been the crisis in sugar and most of sugar farmers are either JATS or Marathas.
However it is not just Agrarian crisis which is motivating these communities to ask for reservation there are other factors also which are motivating them to agitate for Reservation these include
- Crippled urban economy-India’s growth in last 2 decades is led by increase in productivity and therefore number of jobs created in the private sector is much less, which means that dominant caste who are turning away from agriculture has very less opportunities to get job in private sector and thus only option left for them is government jobs, however there general status is making the competition tough for them, Therefore they are asking for reservation.
- Resentment against other OBC communities-Most of the other middle caste like Kunbi,Yadav,Gujjar,Reddy”s,and saini are in OBC category.The social,economic and political disparity between these groups and JATS,Patidars and Maratha and Kunbi has significantly decreased in last few decades. Due to reservation the representation of the above mentioned caste in government jobs has increased significantly in last few years in comparison to the dominant caste, which has made this dominant caste envy of these other OBC community and therefore motivated them to demand for reservation. It can also be said that the demands are a result of resentment among the dominant castes against the hitherto backward classes which witnessed growth due to reservation provision and consequently threatened the former’s dominant status.
- Political support-Most of this dominant caste are electorally and politically very powerful in that state, and they get support from opposition parties for vote bank politics. This political support and there strong position makes it difficult for the state government to ignore their demands, which has motivated them to ask for quota since it is very likely that there demand are accepted as happened in the recent Jat agitation.
Thus a combination of factors are motivating the dominant castes to demand for Reservation.
Q.7) Mental health in India remains shrouded in stigma, which stifles conversation and a much-needed public dialogue and exploration into the mental well being of a rapidly growing population. In the light of above statement, critically discuss the significance of the recently passed Mental Health Care Bill 2016.
According to estimate in India at least 5% of the population lives with a mental illness, which translates to over 50 million people. Nearly half of those with severe mental disease aren’t treated and of those with less severe versions, nearly 9 in 10 go uncared .
Stigma attached to mental ailments is the main reason why the society is struggling to address the problem .According to a survey done by the Live Love Laugh Foundation (TLLLF) Bangalore 80 per cent people felt it was stigma that prevented them from seeking treatment. 85 per cent thought mental illness was made worse by stigma. Even in metro cities, less than half of the people affected by psychiatric disorders receive adequate treatment. Mental illness in India continues to be shrouded in an air of secrecy and guilt.”
Recent passing of Mental Healthcare bill could be a possible solution to above problems as it has provisions like:
- The Bill states that every person would have the right to specify how he would like to be treated for mental illness in the event of a mental health situation. An individual will also specify who will be the person responsible for taking decisions with regard to the treatment, his admission into a hospital. Thus it provides autonomy and empowerment to the Patient to take their own decisions.
- It permits involuntary hospitalization only in exceptional circumstances.
- It mandates a range of services and bans the use of electro-convulsive therapy without anesthesia and prohibits its use in minors. Thus the Bill attempts to protect human rights of the mentally ill.
- In a much-needed change, the bill has adopted a medicalised approach to attempted suicide, treating it as the outcome of severe stress. The bill rightly blocks the application of the Indian Penal Code section that criminalizes it. A duty is also cast on the authorities to care for and rehabilitate such individuals.
- It puts the onus of responsibility on the state for training mental health professionals and providing access to public healthcare
- It requires insurance companies to provide health cover for people with mental illness and this will significantly reduce the cost of treatment for the Mental patients. This will also motivate more mental health patients to seek treatment
- It tries to provide checks and balances to ensure the dignity of the mentally ill.
But there are a few issues which also needs to be addressed –
- Social determinants of mental health e.g. poverty and social exclusion are ignored in the bill.
- Role of family in treatment is not addressed in this bill
- With health budget going down and budget for mental health treatment just 1% of the total health budget, implementation of provisions of the bill in the right spirit will be a challenge for State Government.
- It does not acknowledge the roles of counselors who are equally important as psychiatrists .Role of counselors needs to be enhanced if stigma associated with Mental healthcare needs to be taken care of.
Though it is a step in the right direction but certain issues in the bill needs to be addressed. Reliable and free professional counselling must be widely offered. For too long, mental health treatment in India has existed with the colonial legacy of large asylums and degrading confinement. Many who are held in such places have nowhere else to go, as families facing stigma have abandoned them. These issues needs to be addressed by the bill only than it could be said that this Legislation will end the stigma associated with mental illness.
Q.8) Despite the runaway success of the healthcare schemes and availability of Anti-Retroviral Therapy in government hospitals, social discrimination against HIV-positive people in India is pervasive. How will the proposed HIV and AIDS (prevention and control) Bill 2014 deal with this problem?
The stigma of having HIV or AIDS in India remains intense, despite having the worlds third-largest population of people with either. Some places even simply turn away people with HIV or AIDS.
How will HIV bill end the social Discrimination faced by the AIDS patients
- This law makes all sort of discrimination criminal, it also eases the process by which people living with HIV or AIDS get access to treatment. Even if it cannot do away with the stigma itself, the law offers a clear legal recourse and should loom large as a threat for insurers and hospitals that don’t recognise the evils of turning down or discriminating against people with HIV or AIDS.
- Under the bill, it is a legally punishable offence to deny a person living with HIV/AIDS insurance on the ground of the disease that lowers the immunity. In such a case, the insurer will have to part with a fine of Rs 10000
- It also guarantees protection against discrimination in the field of education, employment, access to housing and healthcare.
- It prohibits all acts of discrimination against HIV-positive people, or those living with such people. It also lists various grounds on which discrimination against HIV positive persons and those living with them is prohibited.
- The bill ensures that an HIV person below the age of 18 years has the right to reside in a shared household and enjoy the facilities of the household.
- The most crucial step is that it recognizes the right of a person to keep his health status confidential.
- According to the Bill, each state will appoint an ombudsman to inquire into complaints related to the violation of the act and the provision of health care services. Also, cases relating to HIV positive persons shall be disposed of by the court on a priority basis.
However, it is only half the battle won. The various issues unaddressed are –
- It does not guarantee ART treatment as the legal right of the patient implying that a person who is denied treatment cannot drag the Government to the court. It essentially dilutes an important part of the bill
- Insurance industry is allowed to use actuarial calculations for charging HIV infected people , which might make it non affordable. Proper capping of the actuarial pricing is much needed and is to be monitored by the Ombudsman.
Proper capping of the actuarial pricing is much needed and it needs to be monitored by the Ombudsman. The amendment to the bill is progressive on various fronts and the government’s effort must be appreciated. At the same time, the biggest fallacy plaguing PLHIV is the parochial mindset of our society.. The Government must undertake a nationwide sensitization program . The bill addresses many of the concerns of the HIV infected people and ensures their rights, however the real success depends on the implementation.
Q.9) It has been commented by many experts that management of the government’s debt by the RBI leads to a conflict with its role as monetary authority working to contain inflation and ensure financial stability. In the light of the above statement discuss how setting up of an Independent Public Debt Management Agency would improve the situation. Also discuss the challenges PDMA will face in its working.
- Public Debt Management Agency (PDMA) is a specialized independent agency that manages the internal and external liabilities of the Central Government in a holistic manner and advises on such matters in return for a fee.
- In other words, PDMA is the Investment Banker or Merchant Banker to the Government. PDMA manages the issue, reissue and trading of Government securities, manages and advises the Central Government on its contingent liabilities and undertakes cash management for the central government including issuing and redeeming of short term securities and advising on its cash management.
Why there is need for PDMA?
- Fragmented jurisdiction in public debt management: Currently the central Bank or RBI manages the market borrowing programmes of Central and State Governments. On the other hand, external debt was managed directly by the Central Government. Establishing a debt management office would consolidate all debt management functions in a single agency and bring in holistic management of the internal and external liabilities.
- It is considered as an internationally accepted best practice that debt management should be disaggregated from monetary policy, and taken out of the realm of the central bank. Most advanced economies have dedicated debt management offices. Several emerging economies, including Brazil, Argentina, Colombia, and South Africa, have restructured debt management in recent years and created an independent agency for the same.
The sources of these conflict of interest in RBI managing the Government debt, as listed out in the 2008 report of the Government are as under:
- There is a severe conflict of interest between setting the short term interest rate (i.e. the task of monetary policy) and selling bonds for the government. If the Central Bank tries to be an effective debt manager, it would lean towards selling bonds at high prices, i.e. keeping interest rates low. This leads to an inflationary bias in monetary policy.
- Where the Central Bank also regulates banks, as in India, there is a further conflict of interest. If the Central Bank tries to do a good job of discharging its responsibility of selling bonds, it has an incentive to mandate that banks hold a large amount of government paper. This bias leads to flawed banking regulation and supervision, so as to induce banks to buy government bonds, particularly long-dated government bonds. Having a pool of captive buyers undermines the growth of a deep, liquid market in government securities, with vibrant trading and speculative price discovery. This, in turn, hampers the development of the corporate bond market – the absence of a benchmark sovereign yield curve makes it difficult to price corporate bonds.
- If the Central Bank administers the operating systems for the government securities markets, as the RBI currently does, this creates another conflict, where the owner/ administrator of these systems is also a participant in the market.
Challenges/issues related to PDMA
- The size and dynamics of government market borrowing has a much wider influence on interest rate movements and systemic liquidity. An autonomous PDMA, driven by specific objectives exclusively focusing on debt management alone, may not be able to manage this complex task involving various trade-offs. It may even be compelled to issue more short term debts and enlarge the space for foreign investors making economy more vulnerable to the risk of capital flight.
- It may not be true that what has been practiced in some other countries would come true for India. The institutional arrangements for debt management must take into view the country specific context and requirements. The experience of debt management offices in the Euro area (especially Greece, Portugal and Ireland) has been less than satisfactory and has resulted in creating financial instability in the entire Euro Zone.
- This agency should be independent. Proposed agency is under the supervision of central government.
- State debts are managed by RBI. PDMA under central government have implication for federal structure of India.
10) Despite government initiatives like Make in India, Skill India and FDI liberalization why is Industrial Growth not showing any signs of recovery. What steps should be taken by Government to improve this situation?
Even though Government has taken several steps in Recent Years Like Make in India, passing of Bankruptcy law, Labor law reforms, FDI liberalization to ease the Process of Doing Business in India and give a boost to Industrial Sector still the recent data shows that The IIP has fallen to a 10-year-low in the first five months of the current fiscal from April to August. It is a negative 0.27 per cent, the lowest since 2007-8. This is even lower than the level reached during the Lehman crisis of 2009.
Reasons behind this trend
- Demand is not in a comfortable trajectory: Demand is the major factor to attract the industrial investment and for the growth of the industrial sector at the faster rate. Private final consumption is growing at 7%-8%. This is not lucrative for the Indian economy because we have lot of potential to grow faster.
- Over-leveraged Private Sector in India: Thus they do not have resources to initiate new investment.
- Industries are still not phasing out capacity shortage which is why they are still not investing. Capacity utilization is not as expected.
- The continuing slump in global demand .
- Slow growth in Agriculture which Converts into lack of demand for industrial Goods.
- Depreciation of Chinese Yuan is making Indian
Q.11) You are a district level officer, in charge of Civil Supplies. You are to ensure proper functioning of Public Distribution System (PDS) through which essential commodities like wheat, Rice, Sugar, Kerosene are distributed at a subsidized rate. Every shop has vigilance committee comprising of ration card holders, but still there are confirmed reports of black marketing of essential commodities. Field level supply officials are in collusion with shopkeepers and it is alleged that they get a monthly cut as illegal money. You want to improve the supply system.
(a) What are the various options before you?
(b) Examine the merits and demerits of each option and choose the option which you would adopt, giving reasons.
The various leakages in the public distribution system (PDS) through collusion between distributors and through black marketing pose a serious condition. In the above case, the various options before the district level officer are-
- Officials from one sectors be deputed to other sectors and be asked to make surprise checks.
- It is important to carefully assess the stage at which leakage is occurring. This is possible through GPS tracking of the system. GPS signals on the top of vehicles intended to carry the good grains and other essential items will help to track the leakage at correct stage. However, it requires technological investment to make the whole system function properly and also it should be done only on pilot bases.
- A roster of vigilance committee be made and rotated every three months.
- The appropriate option to ensure that there is a reduction in the leakages, direct transfer of subsidy in the account of the beneficiaries can be the choice. But, it requires opening up of bank accounts of all beneficiaries and is a cumbersome procedure. But once in functioning properly, it will be effective in the longer run.
Thus, the best course of option is to carry out the investigation so that the guilty can be punished, it is essential to carry out GPS tracking of the vehicles and the direct transfer of money in the bank accounts of the beneficiaries will reduce the corruption and make the system effective.
Q.12 What are the seven principles of public life? Why they have become so relevant in present situation? (150 words) (10 Marks)
There are various integral principles of public life which help a civil servant to perform his duties efficiently and effectively. In this regard, seven principles of public life were recommended by a committee headed by Lord Nolan during prime minister ship of John Major in 1994. They are
(1) Selflessness – Public Servants should perform their actions only in public interest and not in their own, family, friend, interest.
(2) Integrity – Holders of public office should not place themselves under any financial or other obligation that may come in their performance of duty.
(3) Objectivity – Decisions should go strictly on merit in accordance with facts, rules, procedures etc.
(4) Accountability – Holders of public offices are accountable for their actions and decisions to set out institutions and should be prepared for scrutiny.
(5) Openness – They should be as open as possible for their decisions and actions. Every decision should be based on reason.
(6) Honesty – Public Servants should be honest and they should declare any private interest relating to their public duty.
(7) Leadership – They should promote and support these principle by setting examples and through leadership traits.
These principles have become very significant in view of erosion of standards in public life. Today, the values have declined in governance, as a result, the effect is corruption and poor governance. It is important to imbibe these principles in the life of a public servant. They need to be imbibed with values such as honesty, integrity, selflessness and accountability.