Author: Explains

Note4Student:

UDAN (‘Ude Desh ka Aam Naagrik’) is a first-of-its-kind scheme globally to stimulate regional connectivity through a market-based mechanism. It is also linked to UPSC mains Syllabus (Infrastructure). Every year UPSC is asking 1-2 questions on infrastructure related issues. Therefore, this scheme is important for the exam.

Need for schemes like Udan:

1. There are as many as 398 “unserved” airports which have no commercial flights and 18 “under-served” airports host less than seven flights per week.
2. Besides, a major reason for the poor regional air connectivity in India is that airlines do not find it lucrative to operate from small cities. The government has tried to address this concern by an adroit combination of subsidies and fare caps.

Key features of the UDAN scheme

Pros of the scheme

1. It could lead to development of smaller cities as faster air connectivity will attract infrastructure & investment
2. It could ease passenger pressure from Railways & Roads.
3. It may provide major boost to Tourism industry in India
4. Smaller Airlines could successfully compete with bigger airlines.
5. 5.Moreover, of the 35 crore middle class citizens, only 8 cr people fly. Capping of fares, enhancing connectivity will lead to an increase in the number of citizens who can fly and can take some burden off railways
6. It will give impetus to India’s ambition of becoming third largest aviation market by 2020

Challenges/issues in implementing this scheme

1. Administration of VGF would require scrutiny of airlines balance sheet which would be a messy process. It has the potential of becoming another hotbed for controversy
2. Vgf would result in additional subsidy burden at a time when economic survey argued in favour of removing subsidies for the rich
3. Subsidy based regime would be impacted by the vagaries of price changes in oil prices
4. Capping of fares (1200 for half hour, 2500 for an hour) is criticized as airlines argue that it should be a fn of demand/supply
5. Significantly, the success of RCS depends on the state lowering tax rates and providing security at airports. Each state has to agree to this – and it may not be as simple as the centre has envisioned it to be.
6. Airports in many Tier 2 and Tier 3 cities do not have big runways, so they can’t take regular aircraft. That means airlines will need to induct smaller aircraft for short take-offs and landings. Such aircraft needs specialised crew. India produces 200 to 300 pilots every year, and it’s safe to say that training specialised crew will take time.
7. There are 476 airstrips in the country out of which 90 are in usable state, among which 76 are operational currently. It can be challenging to develop so many ports in the span of 10 years.

Conclusion:

Analysts say even as the intent of the policy is good and the efforts laudable, its success will depend on proper implementation and traffic demand/load factors. It’ll be a while before the results are visible, and its success can be measured. Needless to say, if the scheme is successful, it will have a positive impact on travel- and hospitality-related sectors. Domestic air-travel demand could get a fillip, which will be positive for the aviation sector from a long-term perspective. Developing regional routes is expected to eventually feed into major routes, and that augurs well for the sector.

Questions:

Q.) Discuss the main features and significance of the Udan scheme.

Q.) It is commented that success of UDAN scheme will depend on proper implementation and traffic demand/load factors.

Note4Students

As the focus of the Government is on black money, looking at agriculture for enhanced tax collection appears a logical corollary. This issue is definitely politically sensitive with several vested interests involved. The Government has been bold enough to operate the National Agricultural Market which breaks the traditional stronghold. The next step would be to start reforms in the direction of taxes so as to bring about greater accountability in the system while plugging the lacuna.

Introduction

1. The recent discussion on taxing farm income is nothing new.
2. This kind of thinking was doing the rounds even in British India, when as early as 1925, a committee was set up to assess the feasibility of taxing agriculture income.
3. The most famous attempt in post-Independence India was the K.N. Raj committee report of 1972, which also examined feasibility and implementation issues.
4. The Kelkar task force report of 2002 estimated that 95% of the farmers were below the tax threshold.
5. 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.

Fact and figure

 

Fig: growth of agriculture

1. The major problem is identifying the individuals given that many of them own small pieces of land or are landless labourers
2. 42 million-odd people in the organised sector around 17 million are salaried and pay taxes.
3. In the unorganised sector which has 56 million workers, another 18 million pay taxes. Hence, the strike rate for a population of 100 million workers is just 35 per cent. In the case of agriculture with 120 million potential assessees, it will be hard to identify them.
4. During the period 1991 to 2016, the share of agriculture decreased from 32% to 15%.
5. Compared with this, the workforce dependence on agriculture is still very high, at 49.7%
6. During the period of economic reforms, the gross capital formation of agriculture, which is the capacity to produce and an increase in productivity, has gone down tremendously

Key issues affecting agricultural productivity include

1. The decreasing sizes of agricultural land holdings.
2. Continued dependence on the monsoon.
3. Inadequate access to irrigation.
4. Imbalanced use of soil nutrients resulting in loss of fertility of soil.
5. Uneven access to modern technology indifferent parts of the country.
6. Lack of access to formal agricultural credit, limited procurement of food grains by government agencies.
7. Failure to provide remunerative prices to farmers.

Analysis

It should be taxed

1. 80 years ago Dr. B.R. Ambedkar said he favoured taxing agricultural income.He was of the view that tax should be levied on tax-paying capacity or income of the taxpayer, and that the rich must be taxed more and the poor less. Ambedkar criticised the land revenue system of the British but held the view that income from agriculture must attract tax.
2. Verified income tax returns provide credibility to the farmer which can be used to obtain adequate loans from formal credit channels.
3. Banks get easier access to reliable, valid and quantifiable data upon which the credit can be advanced without fear of default on loan.
4. Adequate formal documentation would help the Government to identify the difference between small and big farmers by which the targeted subsidy schemes in future can be rolled out to benefit the needy.
5. We can develop our GDP only when our agriculture income is taxed. We do not even have a sense of the extent of agricultural income right now
6. No taxes on Agriculture encourages laundering of non-agricultural income as agricultural income. e.g In 2014-15, a company made profits of Rs 215 crores, but claiming the agricultural income exemption, it paid no tax.
7. Have a slab of taxes like we have in other sectors and let each pay according to his income from agriculture.
8. The farmer with a small landholding of less than 2-3 hectares should be exempted from income tax.
9. If the small farmer is a reality, so also are the big agricultural farmers with their luxury cars and rich industrialists who own farmlands.
10. Here, if the government takes a decision to levy tax on their income earned from agriculture, the government revenue will not only rise but there will be an increase in the GDP ratio of agriculture.

Taxing agricultural income has not found favour mainly because of two factors.

1. A majority of farmers in India — nearly 60% — are small farmers, with small holdings and a small marketable surplus. Their incomes are erratic.
2. 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.
3. 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.
4. Given the technological and environmental constraints, the performance of the agriculture sector has not been encouraging, and consequently, the welfare of the population living in the countryside has not visibly improved.
5. The average per month income of a farm household in India in 2012-13 as per the National Sample Survey Office was just ₹6,491.
6. The income-expenditure gap for a majority of farmers is in the negative.
7. More than one-third of the farmers have expressed their choice to leave the non-remunerative occupation.
8. The agrarian distress has been deepening, and there has been a rise in farmer suicides. The agrarian sector is in deep crisis. Instead of finding a viable policy to solve the crisis, floating the idea of taxing farming income is a great disservice to the sector.

Concerns

1. The other issue is what can be taxed? Should it be value of output or the net income earned by farmers?
2. While the value of output sold can be gauged and tracked to the extent that it enters the market, this is not net income as there are expenses incurred in growing crops which include seeds, fertilisers, water, and so on. Also for those owning equipment a depreciation value has to be imputed.
3. This means farmers have to be treated on a par with companies or self-employed professionals and not income tax assessees. How can one draw up such a profit and loss account?
4. There is a lot of produce that does not enter the market and the marketable surplus can range from anywhere between 65 to 100 per cent depending on whether it is a food crop or a commercial product such as cotton and jute.
5. Hence, a large part of the value will be hard to fathom on this score. Also there is a lot of under-reporting given the state of logistics in the country.

Way Forward

1. A bold and dynamic approach is needed in India whereby all the political parties and all the Chief Ministers of India organize a conclave to debate and discuss the issues concerning taxation of agricultural income in India.
2. The discussion should be held primarily with reference to the national outlook and not personal gain or otherwise to a political party.
3. If this type of debate or discussion takes place in the country, then surely the policy makers may  be able to come to the conclusion that after decades of exemption of agricultural income now is the time that agricultural income be put to tax like any other normal income of the tax payer.
4. A way out is to tax the product which is presently also being done in some States through a mandi tax or something else.
5. This tax will be finally passed on to the consumer who will then have to pay a higher price for the product.
6. Such a move will ensure that the tax does not come in the way of the farmer’s income. Strictly speaking this would be an indirect tax on commodities, like an excise or sales tax, which will get subsumed under GST. The income of the farmer will still be outside the ambit of income tax.
7. The procurement policy plus pricing policy and the public distribution system have to be factored in before there is any talk of bringing the sector in the income tax net.
8. Need to devise a method that takes into account agricultural income beyond a certain threshold
9. Don’t give subsidies after a certain threshold.
10. We can devise methods to tax agricultural income.
11. have differential subsidies. Remove subsidies in the case of irrigated farming as opposed to rain-fed farming. A majority of the farmers are dependent on monsoons.

Note4Students:

The talk of bank mergers is thicker in the air now, than never before. Government has started with merger of SBI and its subsidiaries. This merger has initiated a debate with some economist calling it a landmark decision while others believe that it will make the financial system more risky.

Context:

Recently The boards of State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), the unlisted State Bank of Hyderabad (SBH), State Bank of Patiala (SBP) and Bharatiya Mahila Bank approved the scheme of merger with State Bank of India.

Background

1. The various committees appointed by the Government of India have advocated consolidation They argue that we need to have three to four large nationalized banks in order to improve the operational efficiency and distribution efficiency. The Narsimhan committee ii has specifically emphasized the need to have Indian Banks which are comparable in size with global leading banks.. The Narsimhan committee proposed a three-tier banking structure in India with around 3-4 large banks to take a stand in global scenario,8-10 banks to provide national coverage and rest to take care of local coverage.
2. Most of the mergers in the pre-reform period have been forced ones. The post-reform era has witnessed both forced and voluntary mergers. The forced mergers have been caused by the financial ill health of the acquired banks. Banks witnessing erosion in net worth, huge NPAs and decline in capital adequacy ratio have been forced by the regulatory authority to undergo merger. Oriental Bank of Commerce’s acquisition of Global Trust Bank is an example of forced merger. Voluntary mergers have expansion, diversification and growth as the main motives. HDFC’s acquisition of Times Bank and ICICI’s acquisition of Madura Bank are a few examples of voluntary mergers. India has also witnessed cross- border acquisitions in the recent past. SBI’s acquisition of a Mauritian bank is one such example.

What is bank consolidation?

1. Bank consolidation occurs when two or more banks become one bank. Bank consolidation can lead to expansion for the newly merged institution. Banks consolidate for multiple reasons, including to mitigate competition, gain capital power both domestically and internationally, to compete with larger banking institutions or to expand the services that the newly merged bank can provide both internally and geographically by decreasing overall operating costs.

Why do we need Consolidation of Banks?

1. Economies of scale: Assocham Survey has found that size of Indian banks in terms of their assets stands very small to make optimal use of their capacities to raise funds at internationally competitive rates. Combined assets of top ten banks constitute less than 60 per cent of the GDP unlike the banking system of European economies, where even after the global financial turmoil, assets of only top five banks has grown to four times of GDP.
2. Indian Banks are too small: Even as India is the second largest growth market for banking services after China in terms of the number of wealthy households, the ASSOCHAM Chief said, only two Indian banks, State Bank of India at the 64th position and ICICI Bank Ltd at 81st, figure among the global top 100 by tier I capital – a core measure of a bank’s financial strength that consists largely of shareholders’ capital.
3. Similarly, in terms of assets, India’s largest bank, SBI is now the world’s 70th largest bank. On the other hand, ICICI Bank Ltd, the largest private sector lender has attained the 148th position. None of the other Indian banks features among the top 200 banks in the world-in terms of size of assets.
4. Many experts in Banking field feels that hampered by the fragmented nature of the banking industry, Indian banks are not able to compete globally in terms of fund mobilisation, credit disbursal, investment and rendering of financial services. The balance sheets of top 10 Indian banks suggest the greater scope of consolidation to reap the benefits of large sized globally competitive Indian banks
5. Merger will increase Capital efficiency: Consolidation will also increase capital efficiency. Merged entity will have more leg room to raise capital.
6. Would decrease NPA: At a time when NPAs are high, and banks are putting more effort in recovery, the ability to recover by smaller number of banks will be higher though a individual bank’s exposure may go up. This is because there are smaller number of voices … in the joint lenders’ forum today there are too many voices and each lender has a differential right with the borrower and they often not agree to a common recovery programme. With consolidation the recovery will be far more focused. Thus consolidation could decrease NPA in India.

Advantages of merger of SBI with associate banks

1. SBI will have global presence among top 50 Banks, bringing confidence, investment and greater lending.
2. SBI can become one of the anchor banks to finance large infrastructure projects like dedicated freight corridor, solar energy, Sagarmala etc.
3. It will increase networking of SBI all over India, thus better services of SBI compared to its associate branches will be able to reach remote locations.
4. It will reduce duplication as SBI and its associates target the same clients with similar products.
5. It will consolidate resources and infrastructure, reducing the cost on operations, human resource and technological solutions, overlapping bank branches, reduce inter-bank transaction cost etc.

Disadvantages of merger

1. Presently these banks have huge NPAs thus merger should be planned after sufficient capital is injected.
2. Banking competition may be affected, as SBI is likely to be five times larger than its nearest competitor.
3. RBI has declared SBI as Domestic Systemically Important Bank (D-SIBs) and its failure can shock other parts of financial system.
4. Past example of large banks and their failure with financial crisis in Japan, USA, etc.
5. Workers resistance from associations like AIBEA calling for strikes
6. India has poor financial inclusion, thus needs variety of banks and differentiated services.

Suggestions

1. The govt should not rush through the process – all stakeholders must be involved in the process
2. In the event of further divestment, the govt. share shall not fall below 51% in any case
3. Acquiring bank shall not dominate the smaller ones- good practices of both should be combined; conscious and organized efforts to synthesize the differences must be made.

Conclusion

Bank consolidation is a tricky issue. While it is said that the long-term benefits of consolidation outweigh the short-term concerns, it must not be made a general policy. It is only to be done with right banks for right purpose with proper safeguards.

(Q) What do You Understand by Bank consolidation? Do Indian Banking sector need banking consolidation? Highlight Pros and cons.

(Q) Examine various implications of proposed merger of the State Bank of India with its five associate banks and the Bharatiya Mahila Bank.

 

 

Note4Students:

High speed rail is one of the most ambitious project of the Modi Government. It is also related to Infrastructure topic in the GS paper 3

Context

The government of India recently decided to build a high-speed rail (HSR) corridor between Mumbai and Ahmadabad at a cost of Rs 97,636 crore with Japanese financial and technical assistance.

What do we understand by High Speed Rail?

High-speed rail is a type of rail transport that operates significantly faster than traditional rail traffic, using an integrated system of specialized rolling stock and dedicated tracks.

India has one of the Largest rail Networks in the world, but as of now it does not consist of any line classed as  (HSR), which allows an operational speed of 200 km/h or more. The current Fastest Train in India is the Gatimaan Express that runs with a top speed of 160 km/h, with average speed of above 100 km/hr between Delhi and Agra.

The first Proposed High speed Train in India would run some 500 kilometers (310 miles) between India’s financial capital Mumbai and the western city of Ahmadabad, at a top speed of 320 km/h. Under the Japanese proposal, construction is expected to begin in 2017 and be completed in 2023. It would cost about 980 billion (US$15 billion) and be financed by Low interest loan from Japan.

Recently Government has introduced Tejas Express which is India’s first semi-high speed full AC train fleet introduced by Indian Railways, featuring newer modern on-board facilities.

   

Points in Favour of High speed rail Corridor

1. Cheap: The negotiated terms — the rate of interest of 0.1 per cent per annum and tenure of 50 years with 15 years grace — is the best till now for any project financed through a bilateral/ multilateral agency in India.
2. Speed: High speed is one of the biggest reasons for the proposal of this idea when it was first initiated in India. Major cities connecting with towns of economic growth face the problem of fast transportation. This would save time and boost businesses amongst the connected cities. Reduction in commuting time is greatly required in Mumbai and other metro cities where a lot of time is consumed in the process.
3. Promote Make in India: Second, the assistance programme involves transfer of technology and a Make in India component, which will have long-term benefits for Indian manufacturing.
4. Stronger and eco-friendly: Not only these High speed trains are stronger enough to carry heavier weight but are also eco-friendly as they do not require deforestations to set tracks. It is a modern and technologically advanced means of transportation which can be a step towards growth and development in India.
5. Gestation period is long: Fifthly The bullet train between Mumbai and Ahmedabad will cost Rs 97,636 crore and will be built over seven years. Hence, the entire Rs 98,000 crore (approximately) will not be spent in one year.
6. Will have multiplier effect: Sixthly A growing economy like India needs investment in infrastructure and railways, which has a multiplier effect. The Indian Railways is not constrained by demand but by capacity, and any substantial investment in railways will enable economic growth.
7. Will enhance transport capacity: Seventhly The HSR will enhance transport capacity by four to five times of the normal capacity and facilitate the movement of a large number of people. Train passenger volume between Wuhan and Guangzhou in China rose by 40 per cent after the construction of the HSR. Similarly, passenger volume between Beijing-Tianjin increased by 86 per cent within one year of the operation of the HSR. The high cost of the project is offset by much higher utilisation rates of the network and rolling stock per km than conventional rail.
8. Highly Safe: Eighthly Since the HSR system is highly safe, they reduce external costs (accidents, air/ noise pollution, impact on climate, etc). There has been no casualty due to accidents on Japanese high-speed trains since they started in 1964 .

Challenges /Criticisms

The project looks ambitious but challenges are many

1. Land acquisition: Bullet trains require seamless straight tracks on a flat terrain. Though France managed it in the existing tracks itself, but if new lands needs to be acquired, it can come only at an expensive compensation in Mumbai-Ahmedabad industrial cluster. It will also demand huge political will.
2. Operation& maintenance: Considering the existing scenario of the quality of O&M in Indian railways, the maintenance of this new elephant will pose many challenges even if it is privatized. Fencing all along the track and over bridges at all the line crossings will cost too dearer. The power demand will be more too. It will require the infrastructure of existing railway stations from where bullet train will pass to be upgraded as per the specifications which again will cost enormously.
3. Utility: Indian Railways is the lifeline of a common man. Who is going to utilize this service which is meant to connect mega cities? People who have means prefer swift air services to reach megacities. Common man will find it expensive. In the era of multimodal integrated transportation, isn’t it wise to better utilize the existing infrastructure more wisely? Invest to improve all existing tracks to make them sustain 160+ speeds. An airport even 20-25 kms away from Common Business District but well connected to it by a dedicated link is still quite time efficient. Best example being Shanghai airport at a distance of 30km or 30 minutes from city centre. Instead we must focus on low cost air services at even class III level cities for decentralized development. Major part of the city population are middle and lower income household, who demand more capacity rather than ultra high speed.
4. Cost-Benefit: The bullet trains in china run in losses. China being an infrastructure driven economy could sustain it. We need to analyze can we bear such a loss. We need huge investment in infrastructure in coming 2 decades. With limited resources we must ensure that cost benefit ratio is most efficient. A person earning 1000 rs a day cannot afford saving a day by spending 2000 on regular basis. And for emergencies Airways offer a good choice

Conclusion:

Bullet train has sets of pros and cons under India’s present situations and they need to be properly handled so that it brings prosperity and development in the country and not debacles. Every factor must be considered wisely and safeguarding of people’s living should not be compromised. There are risks in this project but without risks nothing big can be acquired

(Q) What do we understand by High speed rail? Does India need high speed rail? Give Pros and cons.

(Q) The government of India recently decided to build a high-speed rail (HSR) corridor between Mumbai and Ahmedabad at a cost of Rs 97,636 crore with Japanese financial and technical assistance.  Does India need projects such as this at such a high cost? Comment.

Source:

http://indianexpress.com/article/opinion/columns/mumbai-ahmedabad-high-speed-rail-india-2773376/

http://www.bbc.com/news/world-asia-india-35099426

Note4Students:

Cashless Economy has been in news frequently since Government has taken number of initiatives in last few years to promote cashless transaction. This makes it a probable topic for mains 2017

Introduction

1. India continues to be driven by the use of cash; less than 5% of all payments happen electronically however the finance minister, in 2016 budget speech, talked about the idea of making India a cashless society, with the aim of curbing the flow of black money.
2. Even the RBI has also recently unveiled unveiled a document — “Payments and Settlement Systems in India: Vision 2018” — setting out a plan to encourage electronic payments and to enable India to move towards a cashless society or economy in the medium and long term.

What is a cashless economy and where does India stand?

1. A cashless economy is one in which all the transactions are done using cards or digital means. The circulation of physical currency is minimal.
2. India uses too much cash for transactions. The ratio of cash to gross domestic product is one of the highest in the world—12.42% in 2014, compared with 9.47% in China or 4% in Brazil.
3. Less than 5% of all payments happen electronically
4. The number of currency notes in circulation is also far higher than in other large economies. India had 76.47 billion currency notes in circulation in 2012-13 compared with 34.5 billion in the US.
5. Some studies show that cash dominates even in malls, which are visited by people who are likely to have credit cards, so it is no surprise that cash dominates in other markets as well.

source

Benefits of Cashless economy

1. Reduced instances of tax avoidance because it is financial institutions based economy where transaction trails are left.
2. It will curb generation of black money
3. Will reduce real estate prices because of curbs on black money as most of black money is invested in Real estate prices which inflates the prices of Real estate markets
4. In Financial year 2015, RBI spent Rs 27 billion on just the activity of currency issuance and management. This could be avoided if we become cashless society.
5. It will pave way for universal availability of banking services to all as no physical infrastructure is needed other than digital.
6. There will be greater efficiency in welfare programmes as money is wired directly into the accounts of recipients. Thus once money is transferred directly into a beneficiary’s bank account, the entire process becomes transparent. Payments can be easily traced and collected, and corruption will automatically drop, so people will no longer have to pay to collect what is rightfully theirs.
7. There will be efficiency gains as transaction costs across the economy should also come down.
8. 1 in 7 notes is supposed to be fake, which has a huge negative impact on economy, by going cashless, that can be avoided.
9. Hygiene – Soiled, tobacco stained notes full of germs are a norm in India. There are many such incidents in our life where we knowingly or unknowingly give and take germs in the form of rupee notes. This could be avoided if we move towards Cashless economy.
10. In a cashless economy there will be no problem of soiled notes or counterfeit currency
11. Reduced costs of operating ATMs.
12. Speed and satisfaction of operations for customers, no delays and queues, no interactions with bank staff required.
13. A Moody’s report pegged the impact of electronic transactions to 0.8% increase in GDP for emerging markets and 0.3% increase for developed markets because of increased velocity of money
14. An increased use of credit cards instead of cash would primarily enable a more detailed record of all the transactions which take place in the society, allowing more transparency in business operations and money transfers.

This will eventually have the following chain effect:

1. Improvement in credit access and financial inclusion, which will benefit the growth of SMEs in the medium/long run.
2. Reduce tax avoidance and money laundering thanks to the higher traceability of all the transactions.
3. The increased use of credit cards will definitely reduce the amount of cash that people will carry and as a consequence, reduce the risk and the cost associated with that.

Challenges in making India a cashless economy

1. Availability of internet connection and financial literacy.
2. Though bank accounts have been opened through Jan Dhan Yojana, most of them are lying un operational. Unless people start operating bank accounts cashless economy is not possible.
3. There is also vested interest in not moving towards cashless economy.
4. India is dominated by small retailers. They don’t have enough resources to invest in electronic payment infrastructure.
5. The perception of consumers also sometimes acts a barrier. The benefit of cashless transactions is not evident to even those who have credit cards. Cash, on the other hand, is perceived to be the fastest way of transacting for 82% of credit card users. It is universally believed that having cash helps you negotiate better.
6. Most card and cash users fear that they will be charged more if they use cards. Further, non-users of credit cards are not aware of the benefits of credit cards.
7. Indian banks are making it difficult for digital wallets issued by private sector companies to be used on the respective bank websites. It could be restrictions on using bank accounts to refill digital wallets or a lack of access to payment gateways. Regulators will have to take a tough stand against such rent-seeking behaviour by the banks.

Steps taken by RBI and Government to discourage use of cash

1. Licensing of Payment banks
2. Government is also promoting mobile wallets.Mobile wallet allows users to instantly send money, pay bills, recharge mobiles, book movie tickets, send physical and e-gifts both online and offline. Recently, the RBI had issued certain guidelines that allow the users to increase their limit to Rs 1,00,000 based on a certain KYC verification
3. Promotion of e-commerce by liberalizing the FDI norms for this sector.
4. Government has also launched UPI which will make Electronic transaction much simpler and faster.
5. Government has also withdrawn surcharge, service charge on cards and digital payments
6. Launch of BHIM APP
7. A discount of 0.75 per cent will be offered on purchase of petrol and diesel through either credit/debit cards, e-wallets and mobile wallets.
8. Credit/debit card transactions up to Rs 2,000 will be exempt from service tax.
9. Online booking of railway tickets will get Rs 10-lakh accident insurance.
10. 1 lakh villages with population less than 10,000 will get 2 PoS machines (swipe machines) each, free of cost supported through financial inclusion fund.
11. Demonetization (Will be dealt in a separate article)

What else needs to be done?

1. Open Bank accounts and ensure they are operationalized.
2. Abolishment of government fees on credit card transactions; reduction of interchange fee on card transactions; increase in taxes on ATM withdrawals.
3. Tax rebates for consumers and for merchants who adopt electronic payments.
4. Making Electronic payment infrastructure completely safe and secure so that incidents of Cyber crimes could be minimized and people develop faith in electronic payment system.
5. Create a culture of saving and faith in financial system among the rural poor.
6. The Reserve Bank of India too will have to come to terms with a few issues, from figuring out what digital payments across borders means for its capital controls to how the new modes of payment affect key monetary variables such as the velocity of money.
7. RBI will also have to shed some of its conservatism, part of which is because it has often seen itself as the protector of banking interests rather than overall financial development.
8. The regulators also need to keep a sharp eye on any potential restrictive practices that banks may indulge in to maintain their current dominance over the lucrative payments business.

Though it will take time for moving towards a complete cashless economy, efforts should be made to convert urban areas as cashless areas. As 70% of India’s GDP comes from urban areas if government can convert that into cashless it will be a huge gain. Therefore different trajectories need to be planned for migration to cashless for those having bank account and for those not having.

Source: http://www.dailymail.co.uk/indiahome/indianews/article-3300738/Why-India-banking-cashless-economy.html

http://www.business-standard.com/article/economy-policy/demonetisation-steps-taken-by-govt-to-promote-cashless-transactions-116112300967_1.html

http://www.livemint.com/Opinion/UPu9N5gINQpmk0j1QpkA9K/Moving-to-a-cashless-economy.html

Questions:

Q.1) What hurdles exist in making India a cashless economy? Discuss benefits of becoming a cashless economy and suggest how government can speed of this transformation.

Q.2) What challenges does government face in rural areas in its efforts towards a cashless economy? How these challenges could be overcome?

Note4Students

The Cabinet recently approved the disinvestment plan for Air India and its five subsidiaries. It is being seen as Government’s one of the boldest reform moves till date. The Government is hopeful that the decision will attract a positive response and will revive Air India. The carrier has already been surviving on a bailout package. Last month, the NITI Aayog in its report had recommended the disinvestment of Air India

Introduction

1. The Union Cabinet gave its ‘in-principle’ nod to divest stakes in Air India — a wholly owned government airline.
2. The Cabinet decided to go for Air India’s strategic disinvestment, which means the government is willing to shed a substantial portion of its stake and hand over the management of the ailing airline to the private sector.
3. The Cabinet also approved strategic disinvestment in five of Air India’s subsidiaries — its MRO unit Air India Engineering Services (AIESL), ground handling arm Air India Transport Services, Air India Charters which operates Air India Express and Airline Allied Services which operates Alliance Air and Hotel Corporation of India (which owns Centaur Hotels), along with a joint venture AISATS.
4. The three profit-making subsidiaries are
5. the low-cost airline Air India Express Ltd,
6. the ground handling company Air India Air Transport Services Limited
7. Air India’s joint venture with SATS Limited for ground handling activities in Delhi, Mumbai, Trivandrum and Bengaluru.

Analysis

Operational strategy

Group of ministers (GoM) to decide,

1. The quantum of equity to be offered,
2. ays to deal with Air India’s “unsustainable” debt
3. Housing some of the airline’s assets into a shell company.
4. This group will also decide whether to demerge three of the airline’s profitable subsidiaries and do a strategic sale of these.
5. This group decides if foreign investors and/or foreign airlines can also bid for the national carrier.

Argument For Disinvestment

1. Market competition in a note the aviation ministry has argued that since there are several Indian owned private airlines operating in the domestic and international sectors, there is no need for the government to be involved in the aviation business.
2. The Niti Aayog had submitted its recommendations on the strategic disinvestment of Air India and five of its subsidiaries,
3. Citing the carrier’s monthly losses to the tune of Rs 200-250 crore as the primary reason why such a move is required.
4. Air India’s cash deficit is expected to double from Rs 1,050 crore in 2015-16 to Rs 2,069 crore in 2016-17, according to the provisional figures in a report submitted by the ministry of civil aviation to the standing committee on transport, tourism and culture.
5. There will ease the fiscal pressure on the union government — especially in indirectly servicing the airline’s outstanding debt burden of Rs52,000 crore.
6. The airline has so far received Rs 23,993 crore of the Rs 30,231 crore equity infusion promised by the government under a financial restructuring plan in 2012.
7. It reported a loss of about Rs 3,587 crore in 2015-16, compared with a loss of Rs 5,859 crore in the previous year.
8. ₹50,000 crore could be invested in social welfare sectors instead of financing Air India’s debt.
9. Economic Survey 2017 recommended that the government privatize Air India.
10. Market share Air India’s market share has also eroded rapidly over the years due to competition from private players — from 19.4% in 2013 to around 13.3% in May 2017 — in the domestic sector, which made it unattractive to continue running its operations.
11. Workers Problem Wooing professionals to work with Air India – assuming they come from the private sector – could be challenging. Many professionals would be reluctant to work with a loss-making entity, especially in a public enterprise set-up. In India, public sector companies, albeit profitable, have rarely attracted professionals from the private sector.

Challenges

The government will have to streamline its FDI policy so that foreign investors can buy a stake in Air India. The Civil Aviation Ministry has also made a case for the sale of non-core assets first to pay off existing creditors, so that the airline becomes more attractive to private buyers.

The task of strategic disinvestment of Air India is complex.

1. The balance sheet of Air India is not only debt-ridden but has some unusual assets.  Air India showed the traits of Raja Maharaja, over the years there has been huge collection of artwork in form of sculptures, murals and paintings.
2. Valuing these assets is a challenge. The other valuable assets include premium commercial space in major cities in India as well as London, Tokyo and Hong Kong.
3. Air India owns prime slots of the takeoff and landing at the major international airports. Air India’s association with Star Alliance that provides global connectivity to the airline too has commercial value.

The sale’s purpose should guide the sale’s rules.

1. Air India’s debt, now about $8 billion, is growing unsustainably. It was bailed out with $5.8 billion of taxpayer money in 2012. The sale’s purpose should be to compensate taxpayers for shouldering the burden of keeping the national carrier afloat. Air India’s disinvestment could deliver this if it results in reduced government interference and increased competition. Remember, most taxpayers are also flyers.
2. Competition in the air travel market will not increase if Air India gets acquired by a private airline in India. The rules should provide foreign airlines a level playing field. Sharp scrutiny of objections can expose and thwart hidden vested interests.

Conclusion

1. The need of the hour is a good assessment of Air India’s assets and liabilities plus a workable plan so that the airline can be made attractive to any prospective buyer.
2. This decision does convey to the investors that India is serious about reforms and will not throw good money into something not working out well.

“Government should only be a facilitator of business rather than doing business itself”. Analyse the statement in the light of disinvestment of air India

Attempt the questions individually by clicking on them.

Q.1) What hurdles exist in making India a cashless economy? Discuss benefits of becoming a cashless economy and suggest how government can speed of this transformation.

Source: https://www.civilsdaily.com/story/cashless-society/

Answer:

• A cashless economy is one in which all the transactions are done using cards or digital means. The circulation of physical currency is minimal.
• India uses too much cash for transactions. The ratio of cash to gross domestic product is one of the highest in the world—12.42% in 2014, compared with 9.47% in China or 4% in Brazil.

 

Hurdles?

1. Availability of internet connection and financial literacy.
2. Though bank accounts have been opened through Jan Dhan Yojana, most of them are lying un operational. Unless people start operating bank accounts cashless economy is not possible.
3. There is also vested interest in not moving towards cashless economy.
4. India is dominated by small retailers. They don’t have enough resources to invest in electronic payment infrastructure.
5. The perception of consumers also sometimes acts a barrier. The benefit of cashless transactions is not evident to even those who have credit cards. Cash, on the other hand, is perceived to be the fastest way of transacting for 82% of credit card users. It is universally believed that having cash helps you negotiate better.
6. Most card and cash users fear that they will be charged more if they use cards. Further, non-users of credit cards are not aware of the benefits of credit cards.

 

Benefits of Becoming Cashless Economy

1. Reduced instances of tax avoidance because it is financial institutions based economy where transaction trails are left.
2. It will curb generation of black money
3. Will reduce real estate prices because of curbs on black money as most of black money is invested in Real estate prices which inflates the prices of Real estate markets
4. In Financial year 2015, RBI spent Rs 27 billion on just the activity of currency issuance and management. This could be avoided if we become cashless society.
5. It will pave way for universal availability of banking services to all as no physical infrastructure is needed other than digital.
6. There will be greater efficiency in welfare programmes as money is wired directly into the accounts of recipients. Thus once money is transferred directly into a beneficiary’s bank account, the entire process becomes transparent. Payments can be easily traced and collected, and corruption will automatically drop, so people will no longer have to pay to collect what is rightfully theirs.
7. There will be efficiency gains as transaction costs across the economy should also come down.
8. 1 in 7 notes is supposed to be fake, which has a huge negative impact on economy, by going cashless, that can be avoided.

 

How government can speed of this transformation?

1. Open Bank accounts and ensure they are operationalized.
2. Abolishment of government fees on credit card transactions; reduction of interchange fee on card transactions; increase in taxes on ATM withdrawals.
3. Tax rebates for consumers and for merchants who adopt electronic payments.
4. Making Electronic payment infrastructure completely safe and secure so that incidents of Cyber crimes could be minimized and people develop faith in electronic payment system.
5. Create a culture of saving and faith in financial system among the rural poor.
6. The Reserve Bank of India too will have to come to terms with a few issues, from figuring out what digital payments across borders means for its capital controls to how the new modes of payment affect key monetary variables such as the velocity of money.
7. RBI will also have to shed some of its conservatism, part of which is because it has often seen itself as the protector of banking interests rather than overall financial development.

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Q.2) Discuss the salient features of the Maternity Benefit (Amendment) Bill, 2016? It is considered that the bill will provide women with much needed work life balance. Critically analyse.

Source: http://www.prsindia.org/billtrack/the-maternity-benefit-amendment-bill-2016-4370/

The Maternity Benefit (Amendment) Bill, 2016 that seeks to amend the old Maternity Benefit Act, 1961 that entitles women to receive maternity benefits has been passed by the Parliament.

It is considered that the bill will provide Women with much needed work life balance since it has following Provisions

1. Expecting mothers who are working in the organised sector can now avail 26 weeks of paid maternity leave instead of 12 weeks.
2. Bill allows 12 weeks of paid maternity leave to mothers who are adopting a child below the age of three months and also to commissioning mothers who opt for surrogacy.
3. This entitlement is applicable only upto first two children. For third child, the entitlement will be for only 12 weeks. The leaves further reduce to six weeks if the woman wants to become a mother for the fourth time.
4. It makes it mandatory for employers with 50 or more employees to provide crèches in close vicinity of the workplace, and by allowing women up to four daily visits to the crèche.
5. The enhancement of paid maternity leave for women is a progressive step and would benefit about 1.8 million women in the organised sector.

However

1. An increase in maternal leave and a mandate to provide crèches might result in adverse incentives for employers to hire women.
2. The Bill ignores roughly 90 per cent of the Indian women who are employed in the unorganised sector which includes domestic workers, agricultural labourers, seasonal and construction workers.
3. The Bill continues to reinforce the stereotype about childcare being exclusively a woman’s responsibility and excludes paternity leave from its ambit.
4. It discriminates against almost all adoptive mothers, particularly those who adopt older babies or children. It also discriminates against adoptive fathers and transgendered persons who may adopt, as it does not recognise their right to parental benefits.

Conclusion:

1. The long list of barriers that women face in accessing employment opportunities, such as the risk of exploitation particularly in the informal sector, the lack of wage parity, concerns regarding safety and security, etc., need to find a solution.
2. India’s problem is not just about ensuring women return to the workforce after childbirth but in bringing women into the workforce in the first place. Resolving this will require more than just maternity leave.

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Q.3) It is commented that Criminal defamation law have a chilling effect on freedom of expression. In the light of the above statement do you think that Criminal defamation should be amended. Critically comment.

Source: http://indianexpress.com/article/explained/simply-put-the-what-why-of-defamation/

http://www.hindustantimes.com/india/explained-supreme-court-verdict-on-defamation-law-its-implications/story-sCH7oeumka5daGHJGp5u9L.html

Recently Supreme Court of India in subramnanian swamy case upheld the validity of the criminal defamation law. 

It is commented by many experts that Criminal defamation law have a chilling effect on freedom of expression and therefore Criminal defamation should be amended.

 

Why Criminal defamation law should be amended?

 

1. These restrictions have a chilling effect on freedom of speech; they create an anomaly whereby the threshold for criminal prosecution for defamation is now possibly lower than the threshold for civil damages;
2. “Constitutional fraternity” is not a part of Article 19(2) of the Constitution, which specifically limits the circumstances under which the state can restrict speech to eight enumerated categories.
3. It is also nowhere in the fundamental rights chapter of the Constitution, so the question of “balancing” free speech against constitutional fraternity does not arise.
4. Article 21 which is a shield to protect the individual against State persecution or indifference, is used as a sword to cut down the fundamental right to freedom of speech and expression because of this provision.
5. Freedom of speech and expression of media is important for a vibrant democracy and the threat of prosecution alone is enough to suppress the truth. Many times the influential people misuse this provision to suppress any voices against them.
6. Considering anecdotal evidence, every dissent may be taken as unpalatable criticism. Sections 499 and 500 of IPC prescribes two years’ imprisonment for a person found guilty of defamation.

 

Why Should be retained as it is?

 

1. Reputation of an individual, constituent in Article 21 is an equally important right as free speech 
2. It has interpreted art 21 to provide for right to reputation and brought a new concept of constitutional fraternity – that is, an assurance of mutual respect and concern for each other’s dignity.
3. The Supreme Court declared that the right to free speech under Article 19(1)(a) had to be “balanced” against the right to “reputation” under Article 21.
4. It has been part of statutory law for over 70 years. It has neither diluted our vibrant democracy nor abridged free speech
5. Protection for “legitimate criticism” on a question of public interest is available in the Civil law of defamation & Under exceptions of Section 499 IPC
6. Mere misuse or abuse of law can never be a reason to render a provision unconstitutional rather lower judiciary must be sensitized to prevent misuse
7. Monetary compensation in civil defamation is not proportional to the excessive harm done to the reputation

Conclusion:

1. While the right to reputation may be protected by the Constitution, it should not be at the cost of freedom of speech.
2. Free speech is necessary because, it enables the media to hold governments and individuals accountable. Freedom of speech should also protect the right to offend within reasonable limits.
3. If the ability to legitimately criticize is not protected, voices throwing light on important issues will continue to be silenced by the rich and powerful

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Q.4) The government’s idea of providing proxy voting rights to NRIs is seen as a historic decision in the field of providing voting rights to its citizens. Discuss the pros and cons of this decision.

Source:  http://indianexpress.com/article/india/government-clears-proxy-vote-move-for-nris-4779759/

https://thewire.in/165868/nri-proxy-voting/

Introduction:

The Union Cabinet has cleared a proposal to extend proxy voting to overseas Indians by amending electoral laws.

Proxy voting is a type of voting whereby a member can delegate his or her voting power to a representative, to enable a vote in their absence.

The representative can be another member of the same body, or external. A human so designated is known as a “proxy”. Presently, only service personnel are permitted to vote through proxy.

Pros

1. The government’s decision to allow NRIs to vote could emerge as a decisive force in the country’s electoral politics as there are 114 countries that conduct such voting.
2. It will enable India to provide voting rights to NRIs which are enshrined to be given under Article 326.
3. This decision also, historically, removes an “unreasonable restriction” posed by Section 20(A) of the Representation of the People (Amendment) Act of 2010, requiring overseas electors to be physically present in their constituencies to cast their votes.
4. There are 10 million Indian citizens staying abroad. The additional votes, polled through this way, will obviously play a crucial role in state and general elections.
5. The traditional argument against such external voting has been that NRIs lack knowledge of domestic conditions. But, today with increased awareness among people who live in other nations, India’s move towards enabling voting from overseas is an instance of a larger global trend towards increased citizen participation.

Cons

There are arguments that a provision of proxy threatens the very core of democracy as how can we give special privilege of distance voting to some people who have migrated abroad when there are many times more domestic migrants who also seek to have a voting right at their homes? It is patently discriminatory. If a person from Bihar moves to Delhi or Mumbai in search of a job or education, he loses his right to chose his legislator in his village but if he goes to London, he will be entitled to special privilege.

1. It cannot be guaranteed that the proxy voter will vote as per the wishes of the actual voter. The method of proxy voting suffers from an inherent problem of trust deficiency and violates the principle of secrecy of voting.
2. Voting from abroad is fraught with other practical challenges like confirming NRI voters before every election and ensuring their post is received on time.
3. There can be no guarantee of NRI voters exercising their vote in a free and fair manner as there can be no check on coercion or inducements by the employers.
4. There is no guarantee that votes would not be sold to the so called proxy.
5. The commission would have to fix the number of votes a proxy could cast in an election. This calls for a drastic amendment to the Representation of People Act. For, currently the Act permits a person to cast only one vote and on introducing the new system, it would have make amendments and also fix the number of vote a person could cast.

Conclusion

Ascertaining the genuineness of the proxy selected by an NRI for casting vote would be the toughest challenge. Before experimenting it in Lok Sabha or Assembly elections, the Election Commission would have to devise a system or work out norms to ensure that a proxy delegated by an NRI is voting as per his desire.

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Q.5) Discuss the pros and cons of having permanent river water tribunal in India where there is significant number of such disputes.

Source:  http://www.prsindia.org/billtrack/the-inter-state-river-water-disputes-amendment-bill-2017-4671/

http://indianexpress.com/article/opinion/columns/inter-state-river-water-disputes-amendment-bill-2017-a-stronger-river-referee-4761698/

http://www.thehindu.com/opinion/editorial/Grappling-with-water-disputes/article16906692.ece

Hints:

In view of the ongoing water disputes in the country, Union Cabinet has proposed to have a permanent tribunal that will subsume existing tribunals and is expected to provide for speedier adjudication.

Problems in the Present Set up?

1. With increasing demand for water, inter-state river water disputes are on the rise.
2. Under the present Act, a separate Tribunal has to be established for each dispute and there is no time limit for adjudication or publication of reports.
3. Only three of the eight tribunals have actually given awards accepted by the states. Tribunals like those on the Cauvery and Ravi Beas have been in existence for over 26 and 30 years respectively without any award.

Features of the new structure

1. A single, permanent tribunal subsuming all the existing tribunals is proposed to be established to resolve grievances of states with speed and efficiency.
2. The proposed tribunal is expected to deliver its verdict within a span of three years.

Pros

1. A permanent tribunal to adjudicate river water disputes between States will undoubtedly be a vast improvement over the present system of setting up ad hoc tribunals as it is expected to provide for speedier adjudication.
2. An expert agency to collect data on rainfall, irrigation and surface water flows acquires importance and looks like an ideal mechanism to apportion water because party-States have a tendency to fiercely question data provided by the other side.
3. The Dispute Resolution Committee, an expert body that will seek to resolve inter-State differences before a tribunal is approached will discourage for needless litigation.
4. Water disputes are highly politicised and a strong public opinion forms around these issues. A single tribunal would address this issue as it would not be questioned for being politically biased.

Cons

1. Given the number of ongoing inter-State disputes and those likely to arise in future, it may be difficult for a single institution with a former Supreme Court judge as its chairperson to give its ruling within three years.
2. The finality and enforcement of a tribunal’s award may remain elusive as its interlocutory orders as well as final award are likely to be challenged in the Supreme Court. .
3. The benches of the permanent tribunal are going to be created to look into disputes as and when they arise. It is not clear in what way these temporary benches would be different from the present tribunals.
4. There is a severe lack of comprehensive data that looks at hydrology, meteorology, ecology and economy in an integrated fashion. Without having that data backbone, it will be difficult for a state-level tribunal or a central body to solve any issue.
5. The new tribunal does not address the problem of non-compliance by state governments like in the recent Beas-Satluj Tribunal award.

Conclusion

1. Having an institutional mechanism is one thing, but infusing a sense of responsibility in State governments is quite another. Water disputes have humanitarian dimensions, including agrarian problems worsened by drought and monsoon failures.
2. The Centre’s proposal to set up a single, permanent tribunal, subsuming all existing ad hoc tribunals, to adjudicate on inter-state river water disputes could be a major step towards streamlining the dispute redressal mechanism. But it alone will not be able to address the different kinds of problems—legal, administrative, constitutional and political—that plague the overall framework. Institutional mechanisms should be backed by the political will to make them work.

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Q.6) “Transgender Rights Bill 2016 is grossly ignorant of the very issues it is attempting to address” Critically comment.

Source:  http://www.prsindia.org/billtrack/the-transgender-persons-protection-of-rights-bill-2016-4360/

http://www.hindustantimes.com/india-news/transgender-bill-does-not-address-important-issues-parliamentary-panel/story-kXubecBoWjC6dZH9AGL22L.html

 

 

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Q.7) According to many experts by passing Child Labour (Prohibition and Regulation) Amendment bill, 2016 in its present form, India has failed its children. Discuss?

Source: http://thediplomat.com/2016/08/indias-new-child-labor-law-billed-to-fail/

http://www.thehindu.com/opinion/columns/A-law-that-allows-child-labour/article14560563.ece

As per International Labour Organization, child labour refers to work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development. A 2015 report by the International Labor Organization (ILO) puts the number of child workers in India aged 5 to 17 at 5.7 million, out of 168 million globally. Most of these children are engaged in the unorganized and unregulated sector forming the disempowered bulk of the country’s “invisible labor” force. Despite earlier bans on children under 14 working in hazardous industries, hundreds of children continue to toil in factories, even dangerous mines, where entire families are virtually bonded to contractors. It was precisely to address this social inequity, and human rights infractions, that India recently amended the long-overdue and controversial Child Labor (Prohibition and Regulation) Amendment Bill, after 30 years.

Some of the key and salient provisions include:

• The amendments intend to preserve Indian art and craft by enabling parents with traditional skills to pass them on to their children.
• The setting up of a Child and Adolescent Labour Rehabilitation Fund will help to improve the condition of the children and sponsor education for them.
• It prescribes more stringent penalty for Violators and high term of jail and fine with non bailable charges.
• It gives more autonomy to various institutions involved in child labour protection rehabilitation and redevelopment  empowering the government to make periodic inspection of places.

However, this legislation is being criticized by human right activists and experts for its flawed nature due to the following reasons:

• Under the mask of family work: The new exemption now allows children to work for “family businesses” after school hours and during holidays, which will give legal sanction to their continued exploitation thanks to the omnibus term. Under the new Child Labor Act, some forms of child labor may become invisible and the most vulnerable and marginalized children may end up with irregular school attendance, lower levels of learning, and could be forced to drop out of school.
• The flawed definition of family and family enterprises: This bill uses Indian family values to justify economic exploitation of children. It is misleading the society by blurring the lines between learning in a family and working in a family enterprise
• Inconsistent with UNICEF’s Critical Clause: By allowing children to work before and after school hours, the bill contravenes their most fundamental right to a childhood and their entitlement to live a life with dignity as guaranteed by the constitution and the the UN Convention on the Rights of the Child, to which India is a signatory.
• Reversing the gains:

In 1986, the Child Labour (Prohibition and Regulation) Act had after much discussion and expansion included 83 occupations. The new amendment reverses the gain by bringing down the list of hazardous occupations for children to include just mining, inflammable substances and explosives.

• Open discretion of government authorities:

Further, the occupations listed as hazardous can be removed, according to Section 4 — not by Parliament but by government authorities at their own discretion. This leaves it to open discretion.

• Non-uniform implementation :

List of hazardous factories can be amended by the state government, thus, leading to non-uniform implementation of this act.

• Making lawful what was unlawful earlier:

It allows that the children may work after school hours or during vacations, thus, actually making lawful a large part of child work that was earlier unlawful.

• Roughly defined purpose of Fund:

Funding from child rehabilitation fund is not directly linked to education and development rather it aims towards these goals without any mentioned method thus not giving any specific list of objectives.

Way forward:

If the amendments intended to preserve Indian art and craft by enabling parents with traditional skills to pass them on to their children, this should be done through reform and investment in education. Slashed budgets should be restored; mid-day meals should re-instituted; and secure housing should be provided through the Sarva Shiksha Abhiyan boarding schools to homeless children. Artisans should be hired as teachers to pass on traditional knowledge and skills to the next generation. Though the increased penalty and rehabilitation fund are welcome inclusions which will act as deterrent and provide relief to child labour. However, the amended Act, display a lack of national commitment to abolishing all forms of child labour and do not resonate with the constitutional objectives of elimination of child labour in India (Article 15(3), Article 24, Art 39(e), Art 45, Art 21A).

Child are future of a country and their holistic development must be the sole aim of a country and this requirement becomes more important for a developing country like India which has a significant part of its population  in the working age. So let us not fail our children as per Kailash Satyarthi and set the right imperative by overcoming all the shortcomings.

 

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Q.8) What do you understand by Fake news. Discuss its dangers in multi-cultural and democratic country like India.  What needs to be done to prevent this phenomenon?

Source: http://www.bbc.com/news/world-asia-india-40657074

http://www.firstpost.com/india/how-alt-news-is-trying-to-take-on-the-fake-news-ecosystem-in-india-3513879.html

Fake news is a type of yellow journalism or propaganda that consists of deliberate misinformation or hoaxes spread via traditional print and broadcast news media or online social media. Fake news is written and published with the intent to mislead in order to gain financially or politically, often with sensationalist, exaggerated, or patently false headlines that grab attention.

Dangers in multi-cultural and democratic country like India

1. People’s faith in social, print and electronic media reduces which could affect the benefits of these Media.
2. It can lead to violence between two or more communities thereby creating enmity and hatred between them.
3. It can disturb the social fabric of the society and tensions among communities persists for long times.
4. It reduces the tendencies of cooperation between different communities.
5. Political parties try to gain political advantages by polarizing the voter’s mind which further intensifies the tensions between different sections of society.
6. Politics of development takes back seat and communal tendencies emerge in politics.
7. In its purest form, fake news is completely made up, manipulated to resemble credible journalism and attract maximum attention and, with it, advertising revenue.
8. Political campaigning has progressed from mere appeals in the name of identity or loyalty or tall promises to something akin to psychological warfare. Parties that master the tools of such psych ops have a distinct edge over those stuck in the traditional mud. Fake news spreads on social media.

How to tackle it

1. The government must take the initiative to make all sections of the population aware of the realities of this information war and evolve a consensus to fight this war. It must also take strict action
2. News being spread using chatbots and other automated pieces of software should automatically be selected for special screening. Ordinary consumers of news can play a big role by, first, waking up to the reality that all they read on WhatsApp and Twitter is not the gospel truth, and then, by refusing to pass on what they cannot independently verify with other sources.
3. Websites that mimic well-known, credible media outlets in their name should be exposed with the vigour with which jokes are shared on social media.
4. An ombudsman deals with the credibility of news sources, it gains the privilege to ensure facts are reported
5. Government should have independent agency to verify the data being circulated in social and other media. The agency should be tasked with presenting real facts and figures.
6. Government should have mechanism for immediately issuing of notice against sites/people/agencies involved in spreading fake news.
7. There should be a provision of effective balances and check of filtering fake posts before it getting viral.
8. Social media websites should be made accountable of such activities so that it becomes their responsibility to have better controlling restricting the spread of fake news.
9. Government should take active measures for promoting awareness among people about fake news and their consequences.
10. Government should enlist penal provisions to perpetrators of fake news if it causes violence or deaths.

Government should make mandatory for Print and Electronic media to have internal mechanism for verifying incidents, facts and figures.

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Q.9) The Union cabinet’s decision to merge-and-consolidate India’s public sector banks (PSUs) is in direct opposition to the post-2008-crisis consensus that big banks are a systemic risk to their national economies. In the light of the above statement discuss the pros and cons of merger of Banks in India?

Source: https://thewire.in/173425/bank-mergers-risky-crisis-imf-india/

http://www.financialexpress.com/opinion/will-a-merger-of-banks-lead-to-too-big-to-fail/308004/

Introduction:

• Post 2008 crisis, the financial vulnerability of marked and banks have been witnessed practically by all major countries of the world. Rising Non-Performing Assets in India, growing financial burden over the banks, leveraging management etc. has compelled Indian Government to merge several small banks with one big bank. The decision will facilitate consolidation among the nationalized banks to create strong and globally competitive banks.

Pros:

Merger will help Banks, to expand its coverage beyond its outreach gearing up small banks at par with international standards for innovative products and services with the accepted level of efficiency.

• This will also help in improving the professional standards by ending the unhealthy and intense competition among Banks. In the global market, the Indian banks will gain greater recognition and higher ratings with improved competitions.
• Technical inefficiency is one of the main factors responsible for banking crisis. The scale of inefficiency is more in case of small banks. Hence, merger would be good.
• The size of each business entity after merger is expected to add strength to the Indian Banking System in general and Public Sector Banks in particular. However, the strength of the Bank is going to be increased with more effective and centralized management.
• Synergy of operations and scale of economy in the new entity will result in savings and higher profits.
• A great number of posts of CMD, ED, GM and Zonal Managers will be abolished, resulting in savings of crores of Rupee.
• Customers will have access to fewer banks offering them wider range of products at a lower cost.
• Mergers can diversify risk management as the recapitalization burden to the PSBs on the central government in case of crisis will come down substantially which will help in meeting more stringent norms under BASEL – III, especially capital adequacy ratio.
• From regulatory perspective, monitoring and control of less number of banks will be easier after mergers. This is at the macro level.

Cons:

• Immediate negative impact of merger would be from pension liability provisions (due to different employee benefit structures) and harmonization of accounting policies for bad loans recognition.
• Mergers will result in shifting/closure of many ATMs, Branches and controlling offices, as it is not prudent and economical to keep so many banks concentrated in several pockets, notably in urban and metropolitan centers.
• New power centers will emerge in the changed environment. Mergers will result in clash of different organizational cultures. Conflicts will arise in the area of systems and processes too. The weaknesses of the small banks may get transferred to the bigger bank also.
• Also, India right now needs more banking competition rather than more banking consolidation. In other words, it needs more banks rather than fewer banks. This does not mean that there should be a fetish about small-scale lending operations, but to know that large banks are not necessarily better banks.

Conclusion:

• Given the economic scenario considering the increased banking inclusion in India the merger is a good step to reach the far flung areas especially to the women and poor labourers who are absent from the mainstreaming of banking institutions.
• Since the merger is about people, a huge amount of planning is required to make consolidation process smoother. However, the consolidated effort from the part of the government, the banking institution and customer is needed to bring the positive result of merger.

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Q.10) Judicial activism and judicial overreach are separated by very thin line, and the judiciary has to be careful of it. If that line is crossed, judicial activism may be considered an encroachment on legislature? Discuss.

Source: http://www.hindustantimes.com/analysis/judicial-overreach-it-s-the-order-of-the-day/story-a24UnXJ2AST3aAxqnES39H.html

http://www.thehindu.com/todays-paper/tp-opinion/Judicial-activism-romanticism-amp-overreach/article15177963.ece

Introduction:

• Judicial Activism is pro active role taken by Judiciary to dispense social justice. However, there is a set limit drawn by our Constitution for three organs of the state i.e. Legislative, Executive and Judiciary to act within.
• All three organs are not supposed to encroach on each other’s domain but to keep effective checks and balances with each other. However, when the line has been crossed it becomes Judicial Overreach which is not in consonance with the working democracy.

Judicial Activism:

• When we speak of Judicial Activism, we point fingers to the invented mechanisms which have no constitutional backing (Eg: Suo moto (on its own) cases, Public Interest Litigations (PIL) etc). This strengthens our system of checks and balances.
• This Judicial Activism has invented many fruitful concepts such as Basic Structure Doctrine in Kesavananda Bharati Case. This has further expanded the scope of Judicial Review, use of due process of law instead of procedure established by law, collegium system for judges’ selection etc. apart from many others.
• Through judicial activism, judges can use their own personal feelings to strike down laws that they would feel are unjust. Whether it is an executive order, an immigration issue or a criminal proceeding, judges would have a good vantage point in deciding a certain case’s outcome.

Judicial Overreach:

• However, when Judicial Activism crosses its limits and becomes Judicial Adventurism, it is known as Judicial Overreach. In simple words, when Judiciary oversteps the powers given to it, it may interfere with the proper functioning of the legislative or executive organs of Government.
• This Judicial Overreach destroys the Doctrine of Separation of Powers by taking on the function such as law enforcement, policy making, and law making etc.
• Striking down of NJAC bill and the 99th constitutional amendment, the order passed by the Allahabad High Court making it compulsory for all Bureaucrats to send their children to government school, misuse the power to punish for contempt of court etc. comes under Judicial Overreach.
• Judicial Overreach by the court may prove lethal as Judiciary passes orders on social justice without having any practical knowledge about the particular issue. Whereas, Government does proper inquiry, investigation with its own expert research fallows on various issues before launching any projects and schemes.
• Recent ban on Liquor selling on the vicinity of National Highway by the SC is the burning example of Judicial Overreach.

Conclusion:

However, Judicial independence requires judges to be able to apply the law and ‘to exercise their constitutional powers impartially and fearlessly to all persons alike and at all times’. Similar independence is also required in the functioning of other two organs for their smooth functioning and effective results. However, arbitrary action by the legislature and executive must be curbed by the Judiciary with effective checks and balances which very much comes under Judicial Activism. Hence, the Judiciary should and must recognise the thin line drawn between Judicial Activism and Judicial Overreach.

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Q.11) Explain the following in the context of a Civil Servant.

                                                   (100*4=400 words) (5*4=20 Marks)

(a) Self control

(b) Conscientiousness

(c) Trustworthiness

(d) Non-partisanship

Q.12) A state was affected by an unprecedented flood which has caused wide spread damage to infrastructure and loss of private properties. Almost 10,000 (Ten thousand) people were washed away in the flood. After the flood, epidemic engulfed the state. The local people experienced the livelihood problems. State bureaucracy was badly demoralized due to apparent failure of government machinery. At this stage, a young and energetic Chief Minister (CM) took the full command of the situation. Now the responsibility lies on him to tackle the situation.

Think over the situation and answer the following questions.

(a) How the chief Minister would recharge the state bureaucracy?

(b) How he would convert problems into opportunity?

(c) What steps he would take to win the confidence of the people?

Q.12) A state was affected by an unprecedented flood which has caused wide spread damage to infrastructure and loss of private properties. Almost 10,000 (Ten thousand) people were washed away in the flood. After the flood, epidemic engulfed the state. The local people experienced the livelihood problems. State bureaucracy was badly demoralized due to apparent failure of government machinery. At this stage, a young and energetic Chief Minister (CM) took the full command of the situation. Now the responsibility lies on him to tackle the situation.

Think over the situation and answer the following questions.

(a) How the chief Minister would recharge the state bureaucracy?

(b) How he would convert problems into opportunity?

(c) What steps he would take to win the confidence of the people?

 

Q.10) Judicial activism and judicial overreach are separated by very thin line, and the judiciary has to be careful of it. If that line is crossed, judicial activism may be considered an encroachment on legislature? Discuss.

Source: http://www.hindustantimes.com/analysis/judicial-overreach-it-s-the-order-of-the-day/story-a24UnXJ2AST3aAxqnES39H.html

http://www.thehindu.com/todays-paper/tp-opinion/Judicial-activism-romanticism-amp-overreach/article15177963.ece

Q.9) The Union cabinet’s decision to merge-and-consolidate India’s public sector banks (PSUs) is in direct opposition to the post-2008-crisis consensus that big banks are a systemic risk to their national economies. In the light of the above statement discuss the pros and cons of merger of Banks in India?

Source: https://thewire.in/173425/bank-mergers-risky-crisis-imf-india/

http://www.financialexpress.com/opinion/will-a-merger-of-banks-lead-to-too-big-to-fail/308004/