3 Sep 2017 | Target Mains | 2nd Weekly Test

Q.1) Do you think failure of SAARC can be offset by a strong BIMSTEC? Critically comment.

Source: http://www.indiaglobalbusiness.indiaincorporated.com/bimstec-viable-alternative-saarc/

http://www.livemint.com/Politics/4JsOSUC4N81BK0T7zNYecK/Why-is-Bimstec-so-important-for-India.html

The cancellation of SAARC summit at the behest of growing bilateral differences between India and Pakistan has reinvigorated the potential of BIMSTEC to take forward the geo-politic discourse in the subcontinent. The South Asian regional cooperation and coordination on various developmental projects is in limbo as fallout of SAARC failure. In this backdrop, BIMSTEC aims to bring South Asia and South East Asian connectivity to the forefront which envisages to revive the much needed sub regional cooperation in the region. It is believed that a strong BIMSTEC can offset the misgivings of SAARC in the following ways:

  1. BIMSTEC naturally fills the vacuum created by the inactivity of SAARC. The bilateral problems extending in SAARC have made it all the more important for India to engage in BIMSTEC nations.
  2. BIMSTEC could act as a natural platform to fulfill India’s “key foreign policy priorities of ‘Neighborhood First’ and ‘Act East policy’
  3. Majority of members of BIMSTEC are the members of SAARC and India has well settled relations with them including Myanmar and Thailand too.
  4. BIMSTEC is home to 1.5 billion people, accounting for approximately 21 per cent of the world population, and a combined GDP of US$ 2.5 trillion. Considering the growth rate sustained by the BIMSTEC countries (around six per cent per annum), the future seems promising for these member nations.
  5. BIMSTEC has at last three major projects that, when finished, could transform the connectivity and coherence of the countries in the grouping:
  • Kaladan Multimodal project that seeks to link India and Myanmar.( especially benefitting North East )
  • Asian Trilateral Highway connecting India and Thailand through Myanmar.
  • Bangladesh, Bhutan, India and Nepal (BBIN) have signed a pact for the movement of goods and vehicles among them.

6. BIMSTEC can be leveraged along with ASEAN to stem the Chinese intrusions and dominance in the region in the interests of all nations of the grouping.

But BIMSTEC has its own challenges and SAARC its own aura-

  1. SAARC has a more targeted objective of South Asian cooperation and regional stability which is equally critical.
  2. The absence of countries like Afghanistan, Pakistan and Maldives in the BIMSTEC will prevent holistic development of the region. Afghan and Pakistan as critical links to the Russia and central Asian markets and west can’t be ignored either.
  3. India has long been accused of not taking up the leadership role in BIMSTEC initiative.
  4. Thailand and Myanmar are criticized for having ignored BIMSTEC in favor of ASEAN.
  5. Absence of permanent secretariat for very long time and lack of commitment to invest in several areas are holding BIMSTEC back.
  6. In the span of 20 years there have only been 3 annual meetings and 4th one is scheduled to happen this year.
  7. Another sub -regional grouping BCIM (Bangladesh, China, India and Myanmar) has posted doubts over the exclusivity of BIMSTEC grouping.

Way Forward
Though BIMSTEC is a viable alternative as a sub regional cooperation especially to counter Chinese dominance and influence but failure of South Asia is also not completely in the interest of India. Smooth working of SAARC is in the interest of south Asian countries to enhance cooperation with west Asian countries in terms of trade and investment. Failure of SAARC would increase the dominance of China in west Asia as well as in south Asia economically and militarily.

Both SAARC and BIMSTEC have their own importance. Therefore, it is imperative on part of India to actively
engage and maneuver both the forums to secure good relation and cooperation with South East Asia through
BIMSTEC and with west through SAARC.


Q.2) The stark differences in water availability in the river basins in the country has thrown up the idea of interlinking of rivers. However, River Linking Project involves multifaceted issues and challenges related to environmental, economic, ecological, legal, political and social costs. Discuss.

Source: http://www.thehindu.com/data/last-drop-interlinking-an-idea-with-flaws/article8567203.ece

http://www.business-standard.com/article/government-press-release/inter-linking-of-rivers-117081000816_1.html

http://indianexpress.com/article/opinion/columns/india-water-crisis-drought-marathwada-latur-water-train-2771756/
Inter Linking of Rivers refers to inter-basin water transfers between 2 or more rivers through human interventions on natural systems. India’s National Water Development Agency (NWDA) has suggested the interlinking of rivers of the country. The interlinking of rivers has two components: the Himalayan and the Peninsular. All interlinking schemes are aimed at transferring of water from one river system to another or by lifting across natural basins. The project will build 30 links and close to 3000 storages to connect 37 Himalayan and Peninsular rivers to form a gigantic South Asian water grid.

Why we require interlinking of rivers?

  • Large variation in rainfall and subsequent availability of water resources in space and time.
  • Because of this variability of available water, floods and drought coexist in our country in same time and space. ( Kerala, T.N and South Karnataka is facing drought while Rajasthan, Gujarat , Assam reeling under floods)

However, River Linking Project involves multifaceted issues and challenges related to environmental, economic, ecological, legal, political and social costs. River Linking Project involves multifaceted issues and challenges related to environmental, economic, ecological, legal, political and social costs. It has potential for disastrous and irreversible adverse after-effects which has been comprehensively discussed below:

Ecological Costs:

  • Water scientists and Environmentalists have remarked that the water flowing into the sea is not waste. It is a crucial link in the water cycle. With the link broken, the ecological balance of land and oceans, freshwater and sea water, also gets disrupted
  • It is feared that diversion of water from the Brahmaputra and the Ganges, which provide 85% of the country’s fresh water flow in the dry season, would result into an ecological disaster.

Economic Costs:

  • As this project is of massive estimated cost, a long term planning and a sound financial simulation are required to meet the standard for such proposals.
  • The huge expenditure of the project and the maintenance costs associated with the dams, canals, tunnels, and captive electric power generation will involve huge financial burdens.
  • This may generate fiscal problems that are difficult to handle.
  • This certainly requires financial assistance from the private sector as well as global capital agencies.
  • Mobilization of global capital may ultimately entail the risk of destroying social welfare measures.

Environmental costs

  • It will result in massive diversion of forest areas and submergence of land leading to deforestation and soil- erosion. (For example The Ken-Betwa link project puts in danger over 4,100 hectares of forest land or 8% of the Panna National Park).
  • There will be destruction of rivers, aquatic and terrestrial biodiversity, fisheries and groundwater recharge.
  • Possible downstream impacts, salinity ingress, pollution concentration, and increased methane emission from reservoirs are other adverse repercussions.
  • Scientists are also of the view that river diversion may bring significant changes in the physical and chemical compositions of the sediment load, river morphology and the shape of the delta formed at the river basin.
  • It could most likely create trigger points of natural disasters like landslides, earthquakes etc. as seen in case of Koyna dam and Tehri dam.

Legal costs:

  • Domestic and regional geo-politics play a pivotal role on the discussions on ILR. As of now, there is no mechanism as of now to deal with matters concerning inter-basin transfers. There are also important institutional and legal issues to be sorted out.
  • Each of the 30 schemes of the ILR is supposed to get through several statutory, legal and procedural steps.

Social Costs:

  • Reconstruction and rehabilitation due to displacement is not an easy task as seen before.
  • The construction of reservoirs and river linking canals in the peninsular component alone expect to displace more than 5, 83,000 people and submerge large areas of forest, agriculture and non- agriculture land.
  • It is likely to create social unrest/psychological damage and cultural alienation due to forced resettlement of local indigenous tribal community.

Political Implications:

  • Water being a state subject, the ILR plan further complicates existing water sharing and management problems between the riparian states.
  • Some of the ILR schemes have international implications, which may create strained relationship with neighboring countries like Bhutan, Nepal and Bangladesh.

Way forward:

NRLP has its fair share of positives and negatives. Though there are enough apprehensions over the project but they are not backed by any comprehensive scientific evidence to it. Inter basin water transfer is not a new concept. Large direct benefits of irrigation, water supply and hydropower and indirect benefits navigation, tourism, employment generation etc can be accrued in ILR program. Formation of River Basin Authority for coordinated action and subsequent building up of consensus among concerned States is prima facie needed. Legal provisions for implementation of ILR related to rehabilitation and appropriate afforestration
through CAMPA is to be concurrently addressed.


 Q.3) Is Cloud Seeding a solution for rising irrigation problems in Indian Agriculture Sector.” Critically examine.

Source: http://www.thehindu.com/news/national/tamil-nadu/the-cloud-seeding-myth/article17529580.ece

http://www.livemint.com/Politics/L0nbjdpMzCSc1yhC9UeLjK/Can-cloud-seeding-salvage-failing-rains-in-Karnataka.html

http://www.newindianexpress.com/states/karnataka/2017/aug/17/karnataka-government-gets-ready-for-cloud-seeding-project-1644311–1.html

Cloud Seeding is an artificial technique of inducing rainfall precipitation through dispensation of chemicals namely, Sodium Chloride, Silver Iodide and Potassium Chloride amidst rain bearing clouds. With the country facing consecutive droughts, continued agrarian distress, recurrent monsoon failures as a result of climate change, global warming all threaten to make agriculture unviable today, which employs 75 percent of the workforce. In the backdrop of growing water use issues of agriculture; water conservationists and weather experts have recommended cloud seeding as a potential alternative to resolve this.

Cloud seeding has much success in tropical and semi-tropical regions such as India as seen in cloud seeding experiments of TN and Karnataka. The cloud seeding has been suggested as a solution to rising irrigation problems and is justified in following ways:

  • The water resource capacity is unevenly distributed and persisting monsoon vagaries making large tracts of agricultural land still non-irrigated and dependent, cloud seeding can be a game changer to the faming distress.
  • Visible results: The past cloud seeding experiments in TN and Project Varshadhari in Karnataka have yielded heavy rainfall for at least an hour.
  • Scientific backing: The research by IITs has shown the increased ability of clouds to condensate in presence of aerosols.
  • Easy availability of Common Salt required for cloud seeding

However, as per reports and studies the success of Cloud Seeding is not guaranteed and is an unrealistic and unsustainable solution to irrigation problems due to reasons as follows:

  • Typical Conditions are required as only a certain kind of clouds can be seeded and it needs to have enough nuclei to process cloud seeding and thunder cloud development.
  • This cannot be done in dry weather conditions. We can experiment cloud seeding only when the cloud is in a developing stage.
  • We cannot quantify the volume of rainfall that the experiment will bring. This means in case of excess rainfall it may likely lead to flash floods and cause micro climatic disasters.
  • Chemical contamination due to residues in resultant rainfall can destroy planted crops and degrade soil fertility.
  • Due to flying of aircraft for long hours, high cost of Silver in Silver Iodide and usage of weather Doppler Radars, it can be a costly investment as compared to investments in water conservation, water use efficiency projects.
  • Undesired results and resource wastage in case clouds shift from target area to other regions.
  • Uncertainty: Difficulties in prediction of resultant rainfall due to cloud seeding makes it a non reliable alternative.

These are all reactionary approaches to manipulate the weather which may provide short term relief. Though cloud seeding is helpful in creating artificial rain, it is unrealistic and not a long term unsustainable solution to irrigation woes. It is no magic wand which will provide sufficient rainfall by itself. Increased focus on On-farm water use efficiency through rigorous implementation of PM Krishi Sinchayee Yojana, revival of traditional water storages and implementing institutional measures as per Mihir Shah Report on water conservation and recycling are the ways forward. Avoiding piecemeal approach, Cloud seeding should play a supporting pillar to the above long term irrigation redressal mechanism.


Q.4) What do you understand by Compensatory Afforestation? Critically comment on the provisions of Compensatory Afforestation Fund Bill.

Source: http://www.prsindia.org/billtrack/the-compensatory-afforestations-fund-bill-2015-3782/

http://indianexpress.com/article/explained/campa-afforestation-bill-rajya-sabha-green-india-mission-narendra-modi-2817475/

https://scroll.in/article/812753/understanding-the-compensatory-afforestation-fund-bill-and-why-it-spells-doom-for-adivasi-rights

Compensatory afforestation is defined as afforestation done in lieu of the diversion of forest land for non-forest use. The bill seeks to establish a permanent National Compensatory Afforestation Fund under the Public Account of India and it also allows the states to establish State Compensatory Afforestation Fund.

Firstly, through this bill an institutional mechanism will be put in place which can lead to utilisation of funds in an efficient and transparent manner at the centre, state as well as union territory level, which were hitherto managed under the aegis of ad-hoc body called CAMPA

Secondly, this bill seeks to the proper devolution of funds to the states for compensatory afforestation purpose, which was a long pending demand from the states as it was only 10% of the CAMPA funds which were devolved earlier

Thirdly, this programme will lead to creation of productive assets in the rural areas and also generation of employment opportunities

Fourthly, funds for the programme will be coming from the promoters of various projects who will be utilising the forest lands for their projects. So, it will put responsibility on the promoters to make judicious use of forest resources

  1. Loss of biodiversity:- Since it leads to diversion of original forests, the result is fragmentation, that is, the breaking up of large forest blocks into smaller and more vulnerable patches. Fragmentation in turn leads to biodiversity loss. Moreover, non- native species planted in the name of artificial plantation often have served as a threat to even the existing ecosystem.
  2. Artificial vs original:– Natural ecosystems take thousands of years to develop over a place. Raising artificial plantations elsewhere such as those along the flanks of railway lines, highways, and so on can’t be supposed to have the same biodiversity value as the original ones. Often, they have a poor survival rate.
  3. Unavailability of land for planting new forests:- which has often led to use of CAMPA funds for purchasing forest department vehicles or repairing buildings defeating the original purpose.
  4. Infrastructure development:- It could have both restorative and destructive connotations. Safeguards on what kind of infrastructure CAMPA money should create need to include wildlife impact assessments.

The bill is a step in right direction however the bill needs to pay more attention towards the ecological perspective by conserving and protecting the endangered species of wildlife and trees by utilising the CAMPA funds with the creation of productive assets while having wildlife impact assessment in mind rather than producing more woods.


Q.5) In view of the multiple sets of rules and sub-regulations prescribed by UGC and AICTE, which have unfortunately, acted as a deterrent to the development of premier educational institutions, the time is ripe for single unified authority for the regulation of higher education in the country. In this context, discuss the advantages of HEERA, a proposed body.

Source: http://www.thehindu.com/education/the-heera-conundrum/article19384415.ece

With an aim to simplify and consolidate the mass of regulations and compliances that currently operate in the sector, the Central Government has proposed to do away with the All India Council for Technical Education (AICTE) and the University Grants Commission (UGC) and replace them with a single body, tentatively titled Higher Education Empowerment Regulation Agency (HEERA).

Why does India’s higher education need a reform?

  • The idea to have a single higher education regulator is not a new one, but has been recommended by various committees set up by previous governments. While the National Knowledge Commission (2006) had recommended an
    independent regulatory authority for higher education, the Committee on Renovation and Rejuvenation of Higher Education (2009) had also advocated an apex regulatory body by converging multiple agencies in the field of higher
    education.
  • The TSR Subramanian committee, which had been tasked with coming up with a new education policy, too called for the scrapping of the UGC and AICTE.
  • The UGC Review Committee in 2014 had also recommended the commission be replaced with an apex institution named National Higher Education Authority.

What will be HEERA’s role and function?

  • HEERA is expected to eliminate the overlaps in the jurisdiction and remove irrelevant regulatory provisions.
  • It will bring the regulation of both technical and non-technical higher education institutions under one umbrella.
  • The way UGC and AICTE have been roundly criticized for their poor handling of higher education so far, HEERA is likely to be structured in a manner that addresses these deficiencies.

Advantages of HEERA:

  • The introduction of a unified regulator for both UGC and AICTE would eliminate all overlaps in jurisdiction and also do away with regulatory provisions that may no longer be relevant.
  • Sponsoring bodies of institutes of higher education would no longer be required to approach multiple authorities for clearances, which is likely to promote ease of development of institutions of higher learning.
  • HEERA is also expected to have sharper teeth than the extant AICTE and UGC: the HEERA Law is likely to empower HEERA to take strict penal action against defaulting institutions.
  • The multiple sets of rules and sub-regulations prescribed by UGC and AICTE, unfortunately, seem to have acted as a deterrent to the development of premier educational institutions would be done away with by setting up of a single body.
  • India has separated technical and non-technical education which is “outmoded and out of sync” with the rest of the world. Having a single regulator would result in better outcomes.
  • Having a single statutory body for higher education will simplify and consolidate the mass of regulations and compliances that currently operate in the sector.

Conclusion:

  • The multiple sets of rules and sub-regulations prescribed by UGC and AICTE, unfortunately, seem to have acted as a deterrent to the development of premier educational institutions. There has long been a need for change in the regime governing higher education in India.
  • The separation between the standards governing technical and non-technical education is seen as unnecessary and illusory. Therefore, the time is ripe for single unified authority for the regulation of higher education in the country.

Q.6) The court may seem to believe that acting in public interest, as a guardian of people’s rights, its powers are unfettered. However, such outright overreach can prove to be highly problematic for the entire system of governance in the country. In the light of the above statement critically discuss the consequences of Supreme court’s recent ban of liquor shops on highways.

Source: http://www.thehindu.com/news/national/other-states/rajasthan-revokes-state-highway-status-for-stretches-within-city-limits/article17806885.ece

http://www.thehindu.com/todays-paper/tp-opinion/my-way-on-the-highway/article17819995.ece

The Supreme Court’s order prohibiting the sale of alcohol within 500 meters of national and State highways highlights the perils of polycentric adjudication.  While our constitution mandates a separation of powers between the executive, the legislature, and the judiciary, Article 50 of the constitution clearly places policymaking firmly in the domain of the executive. For this reason the Supreme Court’s order has come under criticism. Apart from its polycentric consequences, it has been argued that banning alcohol — and micromanaging the distance from the highways where alcohol cannot be sold — is a classic example of policymaking, and that the Supreme Court has indulged in “judicial overreach”. Intentions of the SC order- positive perspective:

  • The stated reason for this order is the overriding imperative of preventing road accidents due to drunken driving stressing that the apex court acted in interest of Public.
  • The SC said it was acting to enforce the Right to Dignified Life under Article 21 of Indian Constitution in case of State inaction.
  • India has recently ratified to the BRASILIA DECLARATION as its long term commitment towards preventing road accidents and road safety.
  • The Supreme Court also said road accidents was unacceptable due to its costs in form of family sufferings.
  • Based on road statistics and expert views of National Road Safety Council & Ministry of Road Transport and Highways, it was pointed to Driving under Influence of Alcohol was a major cause of road accidents

Polycentric Consequences: Perspective against the order

  • Affects separation of powers: The Supreme Court’s order to ban liquor along highways and micromanage the distance between two falls under Executive’s purview and hence affects separation of powers under Article 50.
  • Subverting ways to accommodate: States are now re-classifying State Highways into local roads following the Supreme Court order on the ban of liquor outlets to subvert the order for instance The Rajasthan government passed an order recently to convert a portion of their State Highway roads passing through populous areas into urban and district roads.
  • Revenue Loss: Collateral consequences like lost livelihoods and a substantial hit in tourism for States such as Goa and Kerala, to name just two. Goa which has closed 30% of liquor shops and loss of revenue from state run liquor shops such as in TN’s TASMAC
  • Illogical: The judgment ignores the fact that liquor need not be necessarily purchased alongside highways and that it can be purchased at other places or before starting journey.
  • The Supreme Court did not seem to recognize the provision “within its jurisdiction” in Article 142 while doing complete justice.

Way Forward:

Thus, while the intentions of public interest behind Supreme Court’s directive cannot be disputed, it has in reality created polycentric consequences and its arguments under article 142 and article 21 is too far fetched. Better traffic policing like in Maharashtra, continued awareness and information dissemination about ill- effects of liquor should be promoted. Ban culture seldom works and respecting each other’s jurisdiction and Judiciary’s self correcting tendency alone can resolve the so called judicial overreach.


Q.7) Taxing agriculture income is an idea whose time has come. Critically discuss.

Source: http://blogs.economictimes.indiatimes.com/et-commentary/taxing-agricultural-income-selectively-is-an-idea-whose-time-has-come/

http://www.thehindu.com/todays-paper/tp-opinion/should-agricultural-income-be-taxed/article18579636.ece

http://www.livemint.com/Opinion/IjHS4ld7qFwApFx5NzVpXO/Why-India-should-tax-agricultural-income.html

Introduction:

  • The NITI Aayog has recently re-raised an issue of taxing farm income which at present is exempted from tax under section 10 (1) of IT Act. This has also been recommended by various committees such as Y. K. Alagh, K. N. Raj, Kelkar taskforce etc.
  • Farm income comprises of agricultural income as rent/revenue from land used for agricultural purposes, income derived from this land through agriculture and income derived from buildings on that land provided the building is required as a dwelling house, a store- house or other out-building and the land is not situated in any area which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population of not less than 10,000.

Why Agricultural Income should be taxed?

  • The economic and governance necessity of such a tax has always been apparent.
  • Non-agricultural income by large land holders are being shown as agricultural income and have prevented from being taxed. This triggers the generation and circulation of black money in huge manners. This has also been proved by the Planning Commission’s study on cooperative farms which has shown that the exemption provided is being misused in large
    context.
  • The underlying argument in the current discussion is to bring more people under the tax net to expand the tax base and also curb tax evasion because income from other sources is usually shown as agricultural income and thus evasion is easy.
  • The exemption for agricultural incomes ends up benefiting medium and large farmers and agricultural companies, which was surely not the intended outcome.
  • The agriculture sector has long acted as a tax shelter. Taxpayers wishing to convert black money into white money show ownership of ancestral property in villages. They are able to obtain fictitious receipts from traders of agricultural commodities as evidence that they have produced and sold agricultural produce.
  • The reality in India is that the agricultural sector is hugely unequal, both in terms of land holdings and incomes. Almost 70% of farmers have marginal land holdings of below 1 hectare and a very small percentage only 0.4% holds significant lands of over 10 hectares.
  • Even the proportion of agricultural households holding a decent sized plot of land which could yield a sufficient amount of income for a household, i.e., between 4 and 10 hectares is very small.
  • So, just by bringing to tax the incomes of the top 4.1% of total agricultural households, at an average tax of 30%, as much as Rs. 25,000 crore could be collected as agriculture income tax. The amount that would be brought to tax as a result of plugging the tax loophole would be in addition to this direct revenue.

Criticisms:
Taxing farm income from all the farmers will not be a good idea given the present circumstances of farmers under huge debt burden and erratic nature of rainfall and farm productivity. A majority of farmers in India — nearly 60% — are small farmers, with small holdings and a small marketable surplus. Their incomes are erratic. There is no climate insurance for them when the rains fail or in the event of floods. Droughts leave them reeling just as the fury of floods. Very often, when we talk of farmers, we assume they are all men — 40% of these farmers are women who do not have patta (title deed to the land they till) and do not have Kisan Credit Cards
either. The share of agricultural products to GDP has shrunk at an alarming rate from 32% to 15% as compared to high number of workforce involved in this. Taxing will be burden on small land holding farmers who are highly dependent on agricultural products or even work outside as daily wage labourers to compensate his/her income.

The widespread illiteracy among farmers will lead them to be exploited by tax authorities. Also with the dynamic nature of productivity will lead the government in difficulties to identify and monitor the bogus and real beneficiaries. Filling and paying income tax will exclude them out of many social schemes (as an automatic exclusion criterion) and also this income might not be regular or permanent which will made them more vulnerable.

Way Forward:

The need of the hour is to factor procurement policy plus pricing policy and the public distribution system before there is any talk of bringing the sector in the income tax net. Before we tax, we should aim at increasing the flow of credit, especially to those who are dependent on the rains, or in coastal and hilly areas, and aim for enhancing the quality and cost competitiveness of farm commodities to make them globally competitive. In order to make tax evasion consistently difficult, CBDT must make it mandatory for all individuals, who disclose agricultural income in excess of, say, Rs 20 lakh (limit for family Rs 40 lakh), to provide the following information in their income-tax returns: break-up of agricultural income into sale value of produce; rent from land and farm house; acres of agricultural land owned and leased with location, crops grown, yield and sale realization per acre; and details of fertilisers, seeds and pesticides purchased. Since every state has a land ceiling act, this information would ascertain if the assessee is showing
income from more land than prescribed under the act.


Q.8) The risk borne by a single party is extreme in case of both the PPP models (BoT and EPC). In the light of above statement, explain how Hybrid Annuity Model will resolve this problem? Also highlight its key features and analyze how the adoption of this model can help in completion of stalled projects?

Source: http://www.thehindubusinessline.com/opinion/columns/slate/what-is-ham-in-india/article9773587.ece

http://www.indianeconomy.net/splclassroom/131/what-is-hybrid-annuity-model-in-ppp/

http://www.financialexpress.com/opinion/nhai-hybrid-annuity-model-ham-model-tailored-to-cut-risk-for-developers-but-bankers-need-more-comfort-to-lend-to-these-projects/551589/

Most of the earliest highway projects allocated through PPP mode were implemented through BOT –TOLL MODE. Under this model the private party is selected to build, maintain and operate the road based on the fact that which private bidder offered maximum sharing of toll revenue to the government. Here, all the risks- land acquisition and compensation risk, construction risk (i.e risk associated with cost of project), traffic risk and commercial risk lies with the private party.  The private party is dependent on toll for its revenues. The government is only responsible for regulatory clearances. Thus in this model all the risk was borne by the Private sector.

  • To solve this Problem Government Brought EPC model. EPC stands for engineering, procurement and construction. It is a model of contract b/w the government and private contractor. The EPC entails the contractor build the project by designing, installing and procuring necessary labour and land to construct the infrastructure, either directly or by subcontracting. Under this system the entire project is funded by the government rather than the PPP model where there is cost sharing. Thus it shifts all the risk from the private players to the government and is the other extreme of BOT model where all risk was borne by the private player. Even though in EPC Model the private sector was absolved of the financing Risk as whole contribution was made by the Government however it was not a sustainable model in Long run since it suffered from one inherent limitation i.e. the financial resources available with the government.
  • HAM model is a Combination OF EPC model and BOT-Annuity model. Under this model. The government will provide 40 percent of the project cost to the developer to start work while the remaining investment has to be made by the developer. Thus under this model Risk is shared equally between both the parties i.e. Government and Private player and thus it resolves the problem of extreme risk borne by a single under the previous 2 models.

Key features of the HAM Model

  • Under this the government will pay 40 per cent of the project cost to the concessionaire during the construction phase in five equal installments of 8% each.
  • HAM is a mix of BOT Annuity and EPC models. As per the design, the government will contribute to 40% of the project cost in the first five years through annual payments (annuity). The remaining payment will be made on the basis of the assets created and the performance of the developer. Here, hybrid annuity means the first 40% payment is made as fixed amount in five equal installments whereas the remaining 60% is paid as variable annuity amount after the completion of the project depending upon the value of assets created.
  • Revenue collection would be the responsibility of the National Highways Authority of India (NHAI); developers will be paid in annual instilments over a specified period of time. There is no toll right for the developer.
  • An important feature of the hybrid annuity model is allocation of risks between the partners—the government and the developer/investor. While the private partner continues to bear the construction and maintenance risks as in BOT (toll) projects, it is required only to partly bear the financing risk. The developer is insulated from revenue/traffic risk and inflation risk, which are not within its control.

How the adoption of this model can help in completion of stalled projects?

  • In the hybrid annuity model, one need not bring 100 per cent of finance upfront and since 40 per cent is available during the construction period, only 60 per cent is required to be arranged for the long term. It would be easier for Private Players to raise the remaining 60% fund from the Market since Lending for hybrid annuity- modelled projects would be comparatively easier as there is no traffic risk associated. Lenders would be comfortable as the execution risk is less for contractors as the bidding rolls out only after 90% land is available.
  • This makes it attractive and viable for the private player to invest in Highway projects as In last few years many of the highway projects were stuck due to Lack of fund availability for private players due to high NPA,s of the banks and lack of long term financing options in India. This will help in completion of stalled Projects.

Q.9) Critically analyse  India’s deepening strategic relationship with Israel and its benefits for both the countries. 

Source: http://www.livemint.com/Opinion/rZefifXVCYRdleMNxAP5QI/India-Israel-and-a-natural-ideological-affinity.html

Introduction:

India-Israel diplomatic relationship started since 1992 and we have moved with much pace in order to strengthening the relationship further. Since the Upgradation of relationship, defence and agriculture have been the main pillars of bilateral engagement. In recent years bilateral ties have expanded to areas such as education, science & technology, homeland security, space technology and water management etc.

Benefits of India-Israel Relation:

  • Since 1991, with the break-up of Soviet Union and end of Cold War, Indo-Israel relations have improved substantially.
  • Defence sector has been guiding light in the development of relations.
  • From Buyer-Seller relationship, today India and Israel are moving towards Joint production of defense equipment, which dove tails well into India’s ‘Make in India’ initiative and attaining strategic independence in defense equipment.
  • Relations are diversified to also include agriculture, Nano-technology, space research and an understanding on counter-terrorism.
  • These above reasons and huge good will that India generates among Israeli population makes one to call them strategic partners and natural allies.

Criticisms to deepening ties between India and Israel:

However, India should continue its Multi-vectored approach towards its diplomacy and build multiple alliances and resist the temptation to call Israel as its natural ally because of the following reasons:

  • Iran, the Israel’s natural enemy is the only possible land route to India to reach the resource rich Central Asia in case the situation in Afghanistan goes against Indian interests.
  • Presence of huge Muslim population in India requires it to maintain good relations with Arab world, which opposes Israel.
  • India needs the help of Saudi Arabia as much as Israel to counter terrorism and also for fulfilling its energy security.
  • Human right violations of Israel in Gaza and west Bank might become a head-ache for India, which is so far a principle supporter of Palestine cause.
  • Our economy is heavily dependent on the oil & petroleum from the Islamic nations of west Asia. Millions of Indians work and send back billions of dollars to India as remittances. We have a lot of goodwill among these Islamic nations generated over the decades, which was visible during Operation Raahat – evacuation of Indians from Yemen. Over emphasis on Indo-Israel relationship may jeopardize relations with other Arab nations.
  • India’s shifting stand in UN on Human Rights violation in Palestine can damage its image as non-aligned country and country who always stood along weak countries for their just demand. If India wants its permanent seat in UNSC, it needs to have consistent stand against human rights violations.

Conclusion:

  • Given the circumstances India have (surrounding with the hostile neighbours) a reliable defence partner is always in benefit of India which Israel has proved on time to time.
  • However, there are many positive outcomes of deepening ties with Israel, but diplomacy with surrounding nations have to be handled very carefully and with utmost importance as India will need other nations also in order to have strategic cooperation and also to secure its energy security.

Q.10) What are the merits of the idea of conducting simultaneous elections for state assemblies and Parliament? Are there compelling reasons for India to consider this option? Critically examine.

Source: http://www.hindustantimes.com/opinion/pm-modi-s-reasoning-for-simultaneous-elections-stands-on-weak-ground/story-4INLqd1yzELHWSHW60WgWK.html

https://thewire.in/131341/parliament-state-assembly-simultaneous-elections-democracy/

Recently, the concept of simultaneous election in India has been reinitiated which entails for holding elections for Lok Sabha (Lower House) and State Legislative Assemblies together which was in practice prior to 1967. The idea behind this is to curb policy paralysis, improvement in governance and to more extent limit the exchequers’ burden. The topic is a hot issue for debate and involves various points to discuss.

Merits for holding Simultaneous Elections:

It will have similar period for imposition of Model Code of Conduct during which the developmental activities are put on hold and the time afterwards can be used for strengthening governance and also more concentration will bring more stability in governance. This Model Code of Conduct also effects the functioning of bureaucracy, which can also be taken care of.

Elections in India are thought to be a big-budget exercise. Simultaneous election will limit the Expenditure. This savings can be utilized in other developmental activities.

Simultaneous Elections will improve law and order problem as frequent elections tend to disrupt the normal public life and affect the functioning of essential services. Frequent elections lead to frequent disruption of road traffic by political rallies and also lead to noise pollution.

It is evident that crucial manpower is often deployed on election duties for a prolonged period of time. If simultaneous elections are held, then this manpower would be made available for other important tasks. 

Are there any compelling reasons for India for conducting simultaneous elections?

No, we don’t see any compelling reasons for conducting simultaneous election in India at present because:-

India’s elections are neither as expensive as it is thought to be nor does it have to be as disruptive to national governance as it is made out to be.

Over a five-year cycle, the government incurs a total of Rs 8000 crore for all elections. This works out to roughly Rs 1,500 crore every year or a paltry Rs 20 per voter per year.

To put this in context, India’s annual GDP is Rs 150 lakh crore. Every single year, India’s public sector companies alone lose 20 times more money than it costs to keep India a vibrant electoral democracy (as more fund for political parties are collected from corporate). This notion that the government can save enormous sums of money to help lift millions out of poverty by holding simultaneous elections is plain outlandish.

MCC by election commission regulates the party in power and restricts certain capital expenditure projects of an incumbent government once elections are called. Moreover, it is noted here that if MCC is in force in one state, the other states are free to launch developmental activities as we are planning more devolution of funds to the states (14th Finance commission recommendation and also claimed by the NITI Aayog). There is no holding of developmental activities across India with frequent election, then why simultaneous election is being thought.

However, simultaneous election also involves some challenges:

If both the elections are held together for instance in 2019, what will happen to the assemblies elected in 2017 and 2018? Will they be dissolved?

This will take the states power granted under Article 172 (1) of the constitution that allows an elected state government to recommend dissolution of the assembly and call for elections.

Under a simultaneous elections regime, the state will be beholden to the Union government for elections to its state, which goes against the very grain of political autonomy to states under our federal structure.

According to Article 85 and Article 174, elections to Lok Sabha and Legislative assemblies have to be held within six months (respectively) of dissolving either of them. So how can it be feasible if elections are held only at fixed durations?

Now, when the multi party democracy is a reality, it shows the polycentric voter diversity. How can there be simultaneous elections when there are different parties at the Centre, State, and local bodies?

Conclusion:

Election brings the governed and the people who govern closer to each other. Hence, any trampling with the process which can possibly clutter the voter’s choice is unwarranted and lead to a deficit of democracy.

The challenges in the present system are genuine. However, there are other possible solutions which can be tried. As several political thinkers have said, “Indian democracy is a unique case of a successful functional democracy with a vast diversity” .The highlight of this diversity is the choice and opinion. Hence, any amendments to the democracy’s largest festival should not be fraught with damaging the democracy itself.


Ethics Questions

Q.11) Secularism and cultural integration are two important values that need to be taught to matriculation level students. What will be best way of teaching these values and what will be its merits?

At a time, when we notice cases of communal disturbance, it is essential the children from the beginning are inculcated with values of secularism and cultural integration. The best way of teaching them is through inculcating ethics of national integration, involving them in religious matters of various faiths by celebrating festivals. The schools should plan a suitable curriculum, organise debates and symposiums and take students for visits to religious places of different faiths. It is important to teach them against cynicism and self centeredness. If they realize from beginning positive faiths of various communities, they won’t develop hatred against a particular religion.

The merit lies in fact that the children, in schools are not too much familiar with communal tensions and if they are taught values of secularism and cultural integration at right time, it will be good in the longer run. Having a good set of values will not allow them to get affected by people who try to disintegrate society on thin lines of communalism.


 

Q.12) X is the Private Secretary to Y who is M.D. of a big private enterprise that manufactures baby food. One day Y calls the chief chemist Z and suggests to dilute some of the most important ingredients which are very important for the children. The purpose of dilution is to earn more money. ‘X’ overhears the entire dialogue between ‘Y’ and ‘Z’. He is in dilemma as what to do under the given situation.

(a) What are the various options available to ‘X’?

(b) Suppose ‘X’ comes to you with all his options, what suggestion you would give him along with justifications.

 

Y has wrong intentions of adding the ingredients to the baby food. He merely wants to earn more money and for doing so, he is ready to compromise with health of children. The various options before X are-

  • He can request MD and tell him it is unethical and can harm children. The company may lose its credibility if the news comes in public.
  • He can ask chemist not to dilute the ingredients and try to convince him that it is wrong. The chemist may however go to the MD and tell about him.
  • He can inform the Independent Director (representing the interest of consumer) directly or through some member. It is possible that the board after coming to know about the situation will look into the matter.

There are various options available to X. Disclosing the matter might pose a threat to his job. However, if he keeps mute on the issue, it is liable to bring bad name to the enterprise.

  • He should first try to convince his boss that it is unethical to carry such wrong practice just to earn more money.
  • He can go to the chemist and seek his cooperation in ensuring that the important ingredients in the food are not diluted.
  • Even it the above options do not bring fruitful results, the last resort should be to have enough sacrifice capacity for the good of the children even if it involves quitting job. Just to save his job, he should not compromise with the life of the children otherwise he would also be equally responsible for supporting the MD in his wrong deeds.

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