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It’s been said, tried and tested multiple times that reading Laxmikant is inevitable for UPSC prep. In Fact we must use this book as the pretext for our preparation for Polity.

We are not going to support or advocate any new source to read Polity. Instead, we are going to tell you the SMARTER way of preparing for Prelims from Laxmikant itself.

Lets see how, read through the Year Wise breakup of questions asked from Polity

YearNumber of questions
201411
201513
20167
201719
201813
201912
202017
2021Any guesses?

 With the evolving numbers and inherent uncertainty above, we need to read between the lines and get an idea of the developing trend and pattern where the importance of Laxmikant cannot be ignored.

On an average UPSC has been asking 15-20 Questions each year from the polity section since 2011.

Most of the questions are being asked from a single source which is M Laxmikanth. Lately, a mix of current affairs-based questions has been introduced with associated static knowledge.

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How to start reading Laxmikanth?

Never devote equal importance or time to all sections of Laxmikant as that would turn out to be draining you (Mentally and Physically) at the end with no real outcome. With this extra hard work strategy, you may or may not solve all the polity questions in prelims.

The second strategy is the Hard-work + Smart strategy where even though you will read each and every chapter of Laxmikant but you will give special focus to certain important chapters and information which will help you to solve each and every question of polity in UPSC prelims. We call them “Meaty Areas”. And most importantly, always try to learn chapters from Laxmikant with one or two live examples. There are a sufficient number of them around us.

Some general observations about the book

  • It has been written in such a way that you do not need to make any notes out of it
  • It is one of the best compilation of various useful resources contained in the constitution
  • Its language is simple and easy to understand
  • It is way more to easy to comprehend than say, a book like Constitution of India by D .D. Basu

Macro-level suggestions on how we should read from Laxmikant book

#1. Start chronologically with Chapter 1 itself.

Remember the Union and its territories, recent LBA with Bangladesh. Go slowly, reading each and every line (each and every line of this book ought to be read)

#2. Prelims examination not only requires conceptual clarity but also the applied part of it.

The conceptual clarity helps to solve the analytical question asked from this section. (Prelims 2017, 2019 & 2020 was heavily loaded with conceptual questions from Polity).

Example:

1) Consider the following statements:

The Constitution of India defines its ‘basic structure’ in terms of federalism, secularism, fundamental rights and democracy.

The Constitution of India provides for ‘judicial review’ to safeguard the citizens’ liberties and to preserve the ideals on which the Constitution is based.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

2) Consider the following statements:

According to the Constitution of India, a person who is eligible to vote can be made a minister in a State for six months even if he/she is not a member of the Legislature of that State.

According to the Representation of People Act, 1951, a person convicted of a criminal offence and sentenced to imprisonment for five years is permanently disqualified from contesting an election even after his release from prison.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

You might be wondering how this is applicable to the current scenario? These questions appear to be directly coming from Laxmikant and that is even true but unlike earlier, they require a lot of conceptual clarity to answer them. Even seasoned aspirants have ended up marking them incorrectly. The interplay of phrases like “India defines” and “India provides” has made many confused.

According to the earlier trends, it was easy to attempt a maximum number of questions from polity because generally questions from this section were direct and based on factual information. But, now the nature of questions has changed.

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#3. Along with factual information, one should cover the current political developments.

Link the “Current Affairs” with “Associated Static”. This eases the pressure on the aspirant and also helps build confidence.

Example:

Q.) With reference to the Parliament of India, consider the following statements

  1. A private member’s bill is a bill presented by a Member of Parliament who is not elected but only nominated by the President of India.
  2. Recently, a private member’s bill has been passed in the Parliament of India for the first time in its history.

Which of the statements given above is/are correct?

UPSC, nowadays does not ask direct current affairs, it asks about background knowledge of any matter/issue.

Correlating things: the bookish knowledge and the practical happenings- is the real essence of preparing for UPSC civil services exam. Try to locate whatever you learned from Laxmikanth book in the day-to-day happenings, history, hypothetical situations, etc.

You may watch Lok Sabha proceedings and can tally whatever you learned from the book. You might read an article in a newspaper about change in name of a state, and revise the procedure for the same from the book. This will make learning interesting.

#4. Most importantly, analyze previous year’s question papers. See what type of question is asked and how they are asked.

Practicing previous year questions will help you to find out the areas where you commit mistakes.

Micro-level suggestions on how you should read the book

Section one: Historical background

What is most important here?

Committees of the Constituent Assembly

What is moderately important?

Composition of the Constituent Assembly

Rest can be ignored or given a mild read.

Section two: Fundamental Rights, Duties, DPSP, Preamble (Very very important)

General Comments

UPSC asks 5-6 Questions every year from this section. In UPSC 2020 most of the polity Questions were asked from this section. You have to read this section multiple times.

Specific Suggestions

  • Salient features of the Indian Constitution (Moderately important. The topics mentioned in this chapters are covered extensively in later chapters)
  • Preamble to the Constitution (Very very important) UPSC simply loves Preamble. It has asked questions on the preamble in 2015 and this year also. Read carefully about different words mentioned in the preamble (example fraternity) and what do they exactly mean.
  • Union and its territory (Moderately important). Aspirants should be aware of the process through which states are created and also they should be aware of the sequence of new states creation).
  • Fundamental rights, DPSP and Fundamental duties (Very very important) FR, FD, DPSP etc are difficult as they have laws and bylaws.
  • Some are explicit while others are implicit. It is thus important to get the concept and soul of them. UPSC won’t ask petty details or facts. It will exploit the conceptual part.
  • You should be able to connect dots with recent happenings. For example, in 2017 UPSC asked a question related to privileges after use of red beacons was abolished by the government for ministers/officers.
  • Amendment of the constitution (Read carefully about different types of majorities and which majority is used in which case for example in which cases two-third majority is required and in which cases simple majority is required.)
  • Read very carefully about basic terms of polity like Cabinet form of Government, Judicial review, President System, Prime Minister System, Federalism, First past the post system, Proportional representation, rights and duties etc.

In the last few years UPSC has been asking lots of questions to test the conceptual clarity of the aspirant.

Section three: Similar topics

Union and state Executive / Centre and State Relations

Given the nature of evolving polity in India and ever powerful state govts, the conceptual clarity with respect to the Centre and State relations and constitutional bodies / protocols have ( PM Modi rebuking CM Kejriwal for airing the live meeting).

Almost 90%  of powers and functions of President and Governor are the same. With respect to Delhi the introduction of the recent GNCT Act, with more power to the office of Lt Governor of Delhi is another aspect of development, important for both Prelims and Mains.

If you cover topics which are similar like President and governor, Prime Minister and Chief Minister, Parliament and state legislature, supreme court and high court together it will save your time and will be easy to memorize and link them. Smart work!

How President and Vice President are elected and removed

Read very carefully the Comparison table of powers of Governor and President mentioned in the Governor Chapter in Laxmikanth.

Always read trivial information very carefully, you can also make notes of the titbits information mentioned in any chapter since UPSC loves to ask trivia based questions, for example, the President can pardon a death convict, however, the Governor cannot.

Parliament and state legislature

Every year 1-3 questions are asked from it in prelims.

 What is most important in this chapter?

  • Read both chapters simultaneously. Look for differences between the powers of parliament and state legislature example privilege power of parliament is much wider than state legislature. (Very important)
  • Different committees and its composition and various kinds of motions and resolutions.
  • Different types of bills
  • Different types of discussions
  • Powers of speakers,deputy speakers,Chairman and Vice Chairman.
  • Comparison between powers of Lok Sabha and Rajya Sabha and Rajya Sabha and legislative council.
  • Budget.

Supreme court and High court

What is most important here?

  • Comparison between writ powers of High court and Supreme court. Master of Roaster, Conflict of interest, Corona crisis, you name it and Courts are into it. Especially use of art 142 by SC also needs to be inspected carefully.
  • Appointment and removal process of SC and HC judges(There is some trivial differences in that process)
  • Original powers of SC and HC

Section 4:  Constitutional/statutory and Executive bodies

What should you read very carefully?

  • Whether the body is constitutional, statutory or executive. Example SC/ST commission is constitutional body but backward commission and women commission are Statutory Bodies.
  • Who appoints the chairman and member of the commission and how they are removed.
  • Focus on trivial issues
  • Usually, except for appointment and removal, most of the functions and details of Central commissions and state commissions are similar.

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 Section 5: Special status of different states and union territories

What should you read very carefully?

  • Read carefully the role of Governor and president in these states as already emphasised.
  • Read carefully the powers of L.G. and president in union territories. President has some extraordinary power in some union territories.

Section 6: Local Bodies

These third tier of Govts are not considered the most important pillars of basic governance and their empowerment is must going forward. Aspirants need to devote a decent amount of time understanding the constitutional mandates and powers of Panchayati raj and Municipality.

14th and 15th Finance Commissions and their views of local governance and their development needs a mention here. There are now direct allocations to local bodies from Consolidated fund of India suggested by these Finance Commissions.

Read carefully different committees of Panchayati raj.

Regarding powers and functions of local bodies read carefully about which clause is mandatory (mandated by 73rd and 74th amendment) and which is optional (depends on whims and fancies of state government).

Example SC/ST reservation in local bodies is mentioned in 73rd and 74th amendment but OBC reservation is optional.

Section 7: Miscellaneous items

This will include remaining topics:

  • In this most important chapters are anti-defection law, the official language, political parties and elections.
  • The anti-defection chapter closely read about differences in the 52nd amendment and 85th amendment (it is bit tricky).
  • In the political party chapter extensively read about criteria for granting any political party national or regional status.

Rest of the chapters should be read but they are not very important from an exam perspective.

 

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Categories
Burning Issues

[Burning Issue] India and NATO

When the North Atlantic Treaty Organization (NATO) leaders meet later this year, they will debate the recommendations from a group of experts that advocates, among other things, extending a formal offer of partnership to India.

Such an idea has been discussed before but has always delayed on India’s aversion to entanglement in rival geopolitical blocs.

NATO: A backgrounder

NATO was found in the aftermath of the Second World War. Its purpose was to secure peace in Europe, to promote cooperation among its members and to guard their freedom – all of this in the context of countering the threat posed at the time by the Soviet Union.

  • NATO is a military alliance established by the North Atlantic Treaty (also called the Washington Treaty) of April 4, 1949.
  • It sought to create a counterweight to Soviet armies stationed in Central and Eastern Europe after World War II.
  • Its original members were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
  • NATO has spread a web of partners, namely Egypt, Israel, Sweden, Austria, Switzerland and Finland.

Why was it founded?

Communist sweep in Europe post-WWII and rise of Soviet dominance

  • After World War II in 1945, Western Europe was economically exhausted and militarily weak, and newly powerful communist parties had arisen in France and Italy.
  • By contrast, the Soviet Union had emerged from the war with its armies dominating all the states of central and Eastern Europe.
  • By 1948 communists under Moscow’s sponsorship had consolidated their control of the governments of those countries and suppressed all non-communist political activity.
  • What became known as the Iron Curtain, a term popularized by Winston Churchill, had descended over central and Eastern Europe.

And the US (the torchbearer of individual liberty and the master of democracy) had to enter (for no reasons) …

In 1948 the United States launched the Marshall Plan.

  • It infused massive amounts of economic aid to the countries of western and southern Europe on the condition that they cooperate with each other and engage in joint planning to hasten their mutual recovery.
  • As for military recovery, under the Brussels Treaty of 1948, the UK, France, and the Low Countries—Belgium, the Netherlands, and Luxembourg—concluded a collective-defense agreement called the Western European Union.
  • It was soon recognized, however, that a more formidable alliance would be required to provide an adequate military counterweight to the Soviets.

Ideology of NATO

  • The NATO ensures that the security of its European member countries is inseparably linked to that of its North American member countries.
  • It commits the Allies to democracy, individual liberty and the rule of law, as well as to peaceful resolution of disputes.
  • It also provides a unique forum for dialogue and cooperation across the Atlantic.

The Article 5

The heart of NATO is expressed in Article 5 of the North Atlantic Treaty, in which the signatory members agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.

NATO invoked Article 5 for the first time in 2001, after the September 11 attacks organized by exiled Saudi Arabian millionaire Osama bin Laden destroyed the World Trade Center in New York City and part of the Pentagon outside Washington, D.C., killing some 3,000 people.

NATO and its present relevance: China on radar

The end of the Cold War precipitated NATO’s identity crisis. With the US at the centrestage, the organization pivoted away from its longtime focus on collective defence against Moscow.

  • In December 2019, US made it clear that China is now on NATO’s radar screen.
  • Following continuous pressure by the Trump administration, the alliance agreed in April 2019 to initiate a study of China’s more assertive role on the international stage.
  • This culminated in NATO formally acknowledging, in its December 2019 summit declaration about China’s growing influence and international policies present both opportunities and challenges.

Why NATO should focus on China?

China presents a novel and complex challenge for NATO and it cannot rush into a confrontation. Four important considerations dominate NATO’s approach.

(1) China is not the Soviet Union

  • Beijing has far greater economic clout; modern Chinese citizens, unlike their earlier Soviet (and Chinese) counterparts, now live in a more market-oriented society.
  • The US and Chinese economies are intertwined in a way that differ markedly from the US and Soviet experience in the Cold War.
  • Despite talk of “decoupling,” China is continuing to integrate into global financial markets, which is something the Soviet Union never did.

(2) It dwells on new tasks

  • NATO is well-suited to take on new responsibilities thanks to the ambiguity of its founding text.
  • That is not, however, the case with China. Aside from internal difficulties, NATO is not facing an immediate threat to its survival, nor does it need new functions to justify its relevance.

(3) Repairing Transatlantic Divisions

  • There has been some limited transatlantic convergence in recent years, as the European Union has toughened its stance, labeling China a “systemic rival” in 2019.
  • Furthermore, the pandemic’s origins in China and the Beijing government’s initial response to the virus have given more voice to those who see China as a threat.
  • Recently, the United States and Europe have quietly increased their cooperation when trying to tackle China, such as over the Belt and Road Initiative.

India and NATO

During the Cold War, India’s refusal was premised on its non-alignment. That argument had little justification once the Cold War ended during 1989-91. Since then, NATO has built partnerships with many neutral and non-aligned states.

Reasons for India’s reluctance

  • India’s real problem is not with NATO, but with Delhi’s difficulty in thinking strategically about Europe. This inhibition has deep roots.
  • Through the colonial era, Calcutta and Delhi viewed Europe through British eyes. After Independence, Delhi tended to see Europe through the Russian lens.
  • In the last few years, Delhi has begun to develop an independent European framework but has some distance to go in consolidating it.
  • Talking to NATO ought to be one important part of India’s European strategy.

As the Cold War enveloped the world, nuancing Europe became harder in Delhi.  India began to see West Europe as an extension of the US and Eastern Europe as a collection of Soviet satellites.

Why should India join NATO?

Core to NATO’s future is its standing as an alliance of democracies, particularly given that its principal strategic competitors are China and Russia, major authoritarian powers.

(1) Non-alignment is irrelevant

  • Non-alignment is a worn-out misnomer. India is under no illusions that a truly non-aligned path remains a viable option.
  • China’s meteoric rise has dramatically heightened India’s need for closer security relationships with politically reliable, like-minded states.
  • India’s policy of equidistance, with tilts towards Russia and China, is not viable enough to meet the juggernaut of China’s power in Indo-Pacific.

(2) India is already partner with its members

  • An India-NATO dialogue would simply mean having regular contact with a military alliance, most of whose members are well-established partners of India.
  • India has military exchanges with many members of NATO — including the US, Britain, and France — in bilateral and minilateral formats.

(3) Strategic benefits

  • Longer-term, India would derive military-strategic benefits from partnership with the world’s most powerful alliance.
  • In the event of a conflict, India would benefit from having prior planning and arrangements in place for cooperating with NATO and its Mediterranean partners.

(4) Technological benefits

  • Partnering with NATO also carries technological benefits.
  • Under a US Act, India now enjoys the same technology-sharing and cost-sharing perks as other non-NATO US allies for purposes of the Arms Export Control Act.
  • It could also help to offset the growing concerns and negative scrutiny that India is increasingly attracting in Congress for its disproportionate reliance on Russian military equipment.

(5) Membership would not corner ties with Russia

  • Russia has not made a secret of its allergy to the Quad and Delhi’s alliance with Washington.
  • Putting NATO into that mix is unlikely to make much difference. Delhi, in turn, can’t be happy with the deepening ties between Moscow and Beijing.
  • As mature states, India and Russia know they have to insulate their bilateral relationship from the larger structural trends buffeting the world today.

Way forward

  • To play any role in the Indo-Pacific, Europe and NATO need partners like India, Australia and Japan.
  • Delhi, in turn, knows that no single power can produce stability and security in the Indo-Pacific. India’s enthusiasm for the Quad is recognition of the need to build coalitions.
  • More broadly, an institutionalized engagement with NATO should make it easier for Delhi to deal with the military establishments of its 30 member states.
  • On a bilateral front, each of the members has much to offer in strengthening India’s national capabilities.
  • India’s continued reluctance to engage a major European institution like NATO will be a stunning case of strategic self-denial.

Conclusion

  • NATO is not offering membership to India; nor seems New Delhi interested. At this issue is the question of exploring potential common ground.
  • A pragmatic engagement with NATO must be an important part of India’s new European orientation, especially amidst the continent’s search for a new role in the Indo-Pacific.

Treaties are concluded in the national interest purely. Hence India should think of NATO.


References

https://smallwarsjournal.com/jrnl/art/interview-west-needs-redevelop-tools-and-mindset-strategic-competition

https://indianexpress.com/article/opinion/columns/why-india-must-not-say-no-to-nato-7260435/

Categories
Burning Issues

[Burning Issue] Development Financial Institutions (DFIs)Bill

Finance Minister has introduced the National Bank for Financing Infrastructure and Development (NaBFID) Bill 2021 in the Lok Sabha to pave way for setting up a government-owned DFI to fund infra projects.

NaBFID Bill

  • The NaBFID Bill, 2021 was introduced in Lok Sabha on March 22, 2021.
  • The Bill seeks to establish the National Bank for Financing Infrastructure and Development (NBFID) as the principal development financial institution (DFIs) for infrastructure financing.

Tap to read more:

With inputs from PRS.

What are DFIs?

  • The Bill describes DFI as the principal financial institution and development bank for providing and enabling infrastructure financing throughout the life cycle of the projects concerned.
  • A DFI is basically an organization, either owned by the government or charitable institutions to finance infrastructure projects that are of national importance without expecting the standard commercial return.

Easy explanation:

  • The government wants to create jobs and it wants to do it in a way that’s sustainable.
  • One possible solution is to incentivize the private sector.
  • Because when they invest in creating large infrastructure projects, it has a ripple effect on the economy. It creates new jobs. It creates productive assets. It creates value in the long run.
  • However, these private entities won’t invest if they are strapped for cash.
  • So in a bid to free them from such constraints, the government will set up a new financing institution that will lend long term loans at quite reasonable interest rates.

This would become the DFIs.

DFIs: A Backgrounder

  • DFIs provide long-term credit for capital-intensive investments spread over a long period and low yielding rates of return, such as urban infrastructure, mining and heavy industry, and irrigation systems.
  • They are different from commercial banks, which mobilize short- to medium-term deposits and lend for similar maturities to avoid a maturity mismatch (a potential cause for a bank’s liquidity and solvency).

Their inception

  • In India, the first DFI was operationalized in 1948 with the setting up of the Industrial Finance Corporation (IFCI).
  • Subsequently, India’s Industrial Credit and Investment Corporation (ICICI) was set up with the World Bank’s backing in 1955.
  • The Industrial Development Bank of India (IDBI) came into existence in 1964 to promote long-term financing for infrastructure projects and industry.

Their disbanding

  • However, during the 1970-80s, DFI got discredited for mounting non-performing assets, allegedly caused by politically motivated lending and inadequate professionalism in assessing investment projects for economic, technical, and financial viability.
  • Due to these factors, Narsimhan Committee (1991) recommended disbanding of the DFI, and the existing DFI were converted into commercial banks.

With the NaBFID Bill, the DFI model has made a comeback.

Why need DFIs?

The intent behind setting up a DFI is to provide long-term financing for infrastructure. India has since long time needed infra push due to various reasons:

Infra boost: Infrastructure projects are complex, capital-intensive, and have long gestation periods that often pose risks to project financiers. The scale and complexity of infrastructure projects make financing a challenge.

Banking limitations: There are difficulties in bank-led financing of infrastructure; their liability profile is not suited for financing long-term high-risk infrastructure projects.

NPA Crisis: The surge in NPAs in the banking sector, and the need to augment financing of infrastructure for kick-starting the growth cycle have led to a renewed policy attention on setting up DFIs.

Pandemic induced crisis: Covid-19 pandemic is impacting business and economy, globally. It has exacerbated inequality, the poverty gap, unemployment, and the economy’s slowing down. Thus, infrastructure building through DFIs can help in quick economic recovery.

Economic boost: The government has envisaged attaining the target of becoming a USD 5 trillion economy by 2025.  However, this goal will depend on infrastructure across the country. DFI is a step in the right direction towards this goal.

Global success stories: DFIs in China, Brazil, and Singapore has been successful in both domestic and international markets.

Various challenges

(1) Sources of funds

The lack of a sustainable source of funds, however, can prove to be a serious constraint to the proposed DFIs. Subsidised credit from the government and the Reserve Bank of India (RBI) has not proved to be a sustainable source in the past.

(2) Banking Crisis

At the heart of this old idea coming back in a new shape is the banking crisis in India, which emerged as a consequence of banks trying to fulfill the funding requirements of infrastructure projects.

(3) Regulatory forbearance

There could also be need for some regulatory forbearance — the older DFIs (IDBI, ICICI) operated in an era with no regulatory norms for quite a while, save their own internal guidelines.

Way Forward

Overcoming finance hurdles

  • To ensure that the proposed institution is able to finance infrastructure investment, it should be allowed to raise long-term financing from domestic and external sources.
  • The DFI should be allowed to tap the pools of capital in the form of pension funds, insurance companies and mutual funds.
  • The proposed DFI should also be allowed to raise long-term financing from external markets and from multilateral financial institutions.

Sound management structure

  • The proposed DFI needs to have a sound management structure.
  • The government’s commitment to have a professional board with 50 per cent non-executive members is a step in the right direction.

Competency

  • The proposed DFI should be able to attract competencies such as those of investment professionals and other experts who are able to assess the project from the development standpoint and the risks involved.

Going beyond infra

  • NABFID must also help take infrastructure beyond roads and power, because there are other crucial sectors, especially health, social and urban infrastructure (water supply, sanitation) that has more pressing needs.
  • More importantly, these sectors need the benefit of private expertise and skills more than finance.

Ensuring Good Governance

  • While freeing a DFI from political interference or crony lending is necessary, merely having private shareholders or professional managers on board isn’t sufficient to ensure good governance.
  • This has to be backed by a robust system of external checks and balances such as supervision by RBI and proper due diligence by auditors and rating agencies.

Ensuring Ease of Doing Business

  • In the past, ambitious highway and pipeline projects have been continually held up by local protests and land acquisition woes, retrospective taxes, and poor contract enforcement.
  • The success of DFIs is contingent on ironing out such issues and removing on-ground impediments to the ease of doing business.

Lastly, fix the distorted demand side (grappled with twin balance sheet) before increasing supply. Any number of institutions can be launched, but cannot be expected to work miracles in a corroded system.

Conclusion

NABFID, with the support of the government, must go beyond being a provider of capital, to helping enable the return of private sector to infrastructure; else it could end up as just one more DFI in the financing spectrum.

While boosting investment in the infrastructure sector is imperative for sustained growth, the need for the hour is to resolve persistent issues in the debt market that impede long-term financing flow.


References

https://www.thehindubusinessline.com/opinion/editorial/return-of-dfis/article33794397.ece

https://www.prsindia.org/content/examining-rise-non-performing-assets-india

https://www.thehindubusinessline.com/opinion/the-new-dfi-must-look-beyond-financing/article34217199.ece

https://www.livemint.com/opinion/columns/nostalgia-holds-lessons-for-new-financial-institutions-11616951998342.html

Categories
Burning Issues

[Burning Issue] Centre versus State in Delhi

The passage of the Government of National Capital Territory of Delhi (Amendment) Bill, 2021 (GNCT Bill) sets the stage for a new cycle of confrontation between the Centre and the Delhi government.

The issue, which was at the heart of the ruling governments frequent run-ins with the Centre during much of its first term, was taken up by a Constitution Bench of the Supreme Court, which tilted the scales in favour of the elected government through its July 4, 2018 verdict.

Background: Special Status for New Delhi

  • Article 239AA of the Constitution of India granted Special Status to Delhi among Union Territories (UTs) in the year 1991 through the 69th constitutional amendment.
  • It provided a Legislative Assembly and a Council of Ministers responsible to such Assembly with appropriate powers.
  • That’s when Delhi was named as the National Capital Region (NCT) of Delhi.
  • As per this article – Public Order, Police & Land in NCT of Delhi fall within the domain and control of Central Government which shall have the power to make laws on these matters.
  • For remaining matters of State List or Concurrent List, in so far as any such matter is applicable to UTs, the Legislative Assembly shall have the power to make laws for NCT of Delhi.

The Centre-State Dispute

  • Delhi was given a fully elected legislative assembly and a responsible government through an amendment in the constitution in 1991.
  • Since 1991, Delhi had been made a UT with an assembly with “limited legislative powers”.
  • Cordial relations have prevailed between the Central and Delhi governments since 1996 and all differences have been resolved through discussions – with a few exceptions.

Lt. Governor at the Centrestage

  • The Article 239AA while conferring on the assembly the power to legislate on all matters in the state list as well as the concurrent list except land, police and public order – contained one sore point.
  • It said that in case of a difference between the L-G and the council of ministers, the matter shall be referred to the president by the LG for his decision and pending such decision the LG can take any action on the matter as he thinks fit.
  • It is this issue that the constitution bench of the Supreme Court resolved in 2018, when it said that the government does not have to seek the concurrence of the L-G on its decisions.
  • Any differences between them should be resolved to keep in view the constitutional primacy of representative government and co-operative federalism.

It is after this judgement, the Centre brought up this Bill.

NCT of Delhi (Amendment) Bill, 2021

  • Among the major proposed amendments, one makes it explicitly clear that the term “government” in any law made by the Legislative Assembly shall mean the L-G.
  • This, essentially, gives effect to the former L-G 2015 assertion that “Government means the Lieutenant Governor of the NCT of Delhi appointed by the President under Article 239 and designated as such under Article 239 AA of the Constitution”.
  • The Bill adds that the L-G’s opinion shall be obtained before the government takes any executive action based on decisions taken by the Cabinet or any individual minister.

What was the 2018 Supreme Court Verdict?

  • In its 2018 verdict, the five-judge Bench had held that the LG’s concurrence is not required on issues other than police, public order and land.
  • It had added that decisions of the Council of Ministers will, however, have to be communicated to the LG.
  • The L-G was bound by the aid and advice if the council of ministers, it had said.
  • The Bench of then CJI status of the LG of Delhi is not that of a Governor of a State, rather he remains an Administrator, in a limited sense, working with the designation of Lieutenant Governor”.
  • It had also pointed out that the elected government must keep in mind that Delhi is not a state.

Impact of the Judgement

  • Encouraged by the Supreme Court verdict, the elected government had stopped sending files on executive matters to the L-G before the implementation of any decision.
  • It has been keeping the L-G abreast of all administrative developments, but not necessarily before implementing or executing any decision.
  • But the amendment, if cleared, will force the elected government to take the L-G’s advice before taking any action on any cabinet decision.
  • The Bill seeks to bar the Assembly or its committees from making rules to take up matters concerning day-to-day administration, or to conduct inquiries in relation to administrative decisions.

Is the L-G left with no discretionary power?

  • The L-G does have the power to refer any matter, over which there is a disagreement with the elected government, to the President under Article 239AA (4).
  • The Delhi Law Secretary had in 2019 written in an internal memo that the elected government cannot use the SC verdict to keep the L-G in the dark about its decisions.
  • But the SC had also categorically pointed out that the L-G should not act in a mechanical manner without due application of mind so as to refer every decision of the CM to the President.

Issues with the Amendment bill

While the Centre may be well within its right to bring the amendment, the move would not be above judicial scrutiny.

(1) Constitutional morality

  • The point is that India is a quasi federal constitution. The Centre does have powers to create states and alter their boundaries.  
  • To use legislative power like this, just because the Centre can, also raises questions of constitutional governance and constitutional morality.
  • A city of two crore people can’t necessarily be deprived of statehood or be given a rather watered down version of statehood.
  • It is alleged that the Centre wants to govern Delhi through backdoor as people chose not to elect them in three consecutive elections.

(2) [Un]Constitutionality

  • The fact that the Delhi government draws its authority from Article 239 of the Constitution has been a subject of much controversy.
  • There are only three reserve subjects, land, law & order and police. The only power the LG has [on non-reserve subjects] is to refer the decisions to the President.
  • The government’s bill goes against the judgment of the constitutional bench and says that every executive decision of the Delhi government has to be ratified by the LG.
  • The Parliament does not have the power to change the constitutional mandate given to the elected government of Delhi.

(3) Sparking another power tussle

  • From 2015 to 2018, the government was engaged in a constant battle with the Centre over policy decisions and the powers of the L-G with the elected government.
  • The SC judgment gave the Delhi govt a freer hand in terms of policy decisions.
  • The government insiders have maintained that it was because of the judgment that the government was able to clear policy decisions like giving free power to those using under 200 units, free bus rides for women.
  • The amendments will have far-reaching implications — beyond just the tussle between any political parties.

What is Central Government’s argument?

  • The centre claims that there is nothing unconstitutional in the law and that it merely seeks to clear the ambiguities that existed in Article 239AA.
  • The complex power structure of Delhi where jurisdiction over different subjects is split between the central and the Delhi government is executed through the provisions of Article 239AA, the GNCTD Act 1991 and TBR 1993.
  • The Centre has also asserted that the amended GNCTD Act was necessary for proper implementation of the Supreme Court’s 2018 Constitution Bench judgment.

Way forward

Delhi’s governance needs a new re-imagination. Learning from international examples, and conceptualizing a new structure, can be a way forward.

Delhi cannot be unitary

  • What distinguishes Delhi from other federal districts is sheer size. Its population would subsume the populations of the above-mentioned cities.
  • Its closest peer is Mexico City. In a significant development, Mexico City was upgraded from federal district to the country’s 32nd state in 2016.
  • This was driven by the desire to provide more responsive government for residents.

Decentralisation of decision-making is important

  • There are alternative ways in which both the central government as well as state authorities can partake jointly in the management of the city.
  • This might be achieved by a two-tier metropolitan authority.

Control over police

  • Control over policing has been a major point of contention in Delhi.
  • With the lone exception of Abuja, in other federal districts, the local governments have jurisdiction over at least some aspects of policing.

Conclusion

  • The apex court should intervene now and advantage of the current controversy to permanently settle the jurisdiction. India will only prosper if all of its states do as well.
  • The solid foundations of federalism and democracy on which our country has thrived will begin to crumble if there is strife between the Centre and the states.

References:

https://thewire.in/government/lok-sabha-delhi-government-bill-lieutenant-governor

https://www.indiatoday.in/magazine/up-front/story/20210412-capital-and-control-1786755-2021-04-03

https://www.outlookindia.com/website/story/web-exclusive-explained-all-about-gnctd-bill-how-it-curtails-elected-delhi-govts-power/378249

https://www.outlookindia.com/website/story/opinion-how-relevant-is-federalism-in-view-of-the-gnctd-bill/378676

Categories
Burning Issues

[Burning Issue] 50 Years of India-Bangladesh Ties

Yesterday PM Modi took off for Bangladesh on a two-day trip to mark the centenary celebrations of Sheikh Mujibur Rahman and the 50th anniversary of Bangladesh’s independence from Pakistan.

This will be PM Modi’s first visit abroad since the coronavirus pandemic and is an example of the importance New Delhi gives to its ties with Dhaka.

Bangladesh @ 50

  • As Bangladesh marks the 50th anniversary of its declaration of independence from Pakistan, there is widespread admiration for its remarkably successful economic and social transformation.
  • Less noted are the profound geopolitical consequences of Bangladesh’s economic rise, including a shift in South Asia’s centre of economic gravity.
  • In seceding from Pakistan only 25 years after the creation of Pakistan in the name of religion, Bangladesh is the biggest testimony to the enduring truth that religion can’t peacefully unify a nation.
  • Bangladesh’s special location and political character would not have amounted to much if the nation had not made itself an economic success.

To understand the scale of Bangladesh’s economic transformation relative to Pakistan and India, let us consider two important facts.

  1. First, Bangladesh overtook Pakistan in 2019 to become the second-largest economy in the subcontinent—$303 billion to $279 billion in annual GDP.
  2. Second, the International Monetary Fund announced last year that Bangladesh’s per capita GDP would overtake that of India by a few dollars in 2020.

Beyond geographical inheritance

It is instructive to see how differently Islamabad and Dhaka have leveraged their geographic inheritance.

  • Pakistan’s strategic community has tended to imagine its unique location in geopolitical terms; Bangladesh, in contrast, has focused on leveraging its geography for economic growth.
  • To its own detriment, Pakistan insists that commercial links to India must wait until the resolution of the Kashmir question. Bangladesh, on the other hand, has turned its long frontier with India into a source of economic opportunity.

At the same time, it has also made progress in resolving contentious bilateral issues with New Delhi.

India-Bangladesh ties: An organic transformation

  • India’s links with Bangladesh are civilization, cultural, social and economic.
  • There is much that unites the two countries – a shared history and common heritage, linguistic and cultural ties, passion for music, literature and the arts.
  • India was one of the first countries, along with Bhutan, to recognise Bangladesh as a sovereign state on 6 December 1971.
  • It is also worth recalling that India shares its longest border of 4,096.7 kilometres with Bangladesh, which is also the fifth-longest border in the contemporary world.
  • With the onset of economic liberalization in South Asia, they forged greater bilateral engagement and trade.

What are its various dimensions?

(1) Geopolitics

  • From the perspective of India’s Northeast, Bangladesh is India’s most strategic neighbour, whom New Delhi cannot ever afford to ignore.
  • India’s dream of ‘Act East Policy’ can only be materialized with the helping hands of Dhaka.
  • The bridge ‘Maitri Setu’ has been built over the Feni River which flows between the Indian boundary in Tripura State and Bangladesh.
  • It is set to become the ‘Gateway of North East’ with access to Chittagong Port of Bangladesh, which is just 80 kms from Sabroom.

(2) Connectivity

  • Perhaps on top of the list is connectivity between India’s mainland and the crucial northeast, which is part of India’s “Look East” Policy.
  • The only connection between India’s mainland and the northeast was the Chicken’s Neck – a narrow strip of land that has always been a huge security concern.
  • India and Bangladesh have signed several pacts, so India can actually send goods and passengers over land across Bangladesh, connecting Bengal to Tripura.
  • In December 2020, Modi met Bangladeshi Prime Minister Sheikh Hasina during which both leaders agreed to revive the trans-border railway link connecting India’s Chilahati and Bangladesh’s Haldibari.

(3) Security

  • The other big security concern for India is that Bangladesh should not turn into the frontline of radical terror in the southeast.
  • Bangladesh could turn into a launchpad for religious radical terror activities in India.
  • India’s relationship with Bangladesh is also linked to its relationship with China.
  • India did not want Bangladesh to become a pearl in China’s “String of Pearls” strategy to hem in India by using its neighbours.

(4) Trade

  • Bangladesh is currently India’s biggest trade partner in the South Asian region.
  • To strengthen and encourage Bangladesh’s trade and commerce, India has given several concessions to Dhaka, including duty-free access to Bangladeshi products into the Indian markets.
  • New Delhi is also working continually to reduce Non-Tariff Barriers (NTB).
  • To encourage trade, India is developing the Integrated Check Post in 10 border crossing points to lower NTBs.

(5) Financial assistance

  • India has extended its hand of friendship whenever Bangladesh faced crises.
  • India offered lines of credit worth about $10 billion to Bangladesh as part of development assistance, which includes setting up orphanages, cultural centres, and educational institutions.
  • India has also simplified the visa process for Bangladeshi tourists and 1.5 million visas were issued in 2019.
  • During the coronavirus crisis, India provided medical training to Bangladeshi professionals, test kits and medicines, beside the dispatch of vaccine consignments. 

(6) Security 

  • The successful security cooperation between the nations resulted in tackling militancy in Bangladesh.
  • India’s efforts to contain the militant group Jamaat-ul-Mujahideen Bangladesh’s activities are an example of engagement on this front. 

(7) Settlement of boundaries

  • The resolution of land and maritime boundaries disputes is one of the major highlights of the bilateral ties.
  • After a ruling by the United Nations, India agreed to give up around 19,467 km in the Bay of Bengal without challenging the decision, a move that gave great access to Bangladesh to the resource-rich sea. 
  • The Land Boundary Agreement (LBA) signed between both nations in 2015 facilitated the transfer of 111 enclaves.
  • According to the historic agreement, Bangladesh received more than 17,000 acres from India and gave up over 7,000 acres to India. 

There are few irritants as well…

(1) Illegal migration

  • This has always been a primary problem for India since the partition of Bengal.
  • In view of this, recently, the Supreme Court asked the Centre complete the fencing of the India-Bangladesh border soon to check illegal immigration from Bangladesh into Assam.

(2) Dragon is the elephant in room

  • In 2016 when Chinese President Xi Jinping visited Bangladesh, the smaller country agreed to join the OBOR.
  • Bangladesh is increasingly tilting towards China due to the Asian giant’s massive trade, infrastructural and defence investments in these countries.
  • In spite of its Neighbourhood First Policy, India has been losing its influence in the region to China.

(3) NRC conundrum

  • The National Register of Citizens (NRC) has left out 1.9 million Assamese from the list with a group labelled as “illegal immigrants from Bangladesh” living in Assam post-1971.
  • India plans to seek their repatriation to Bangladesh.
  • Bangladesh remains firm in its stance that no migrants travelled to Assam illegally during the 1971 war of independence and that the controversial NRC risks hurting relations.

(4) Rohingya Issue

  • The Rohingya issue and India’s remarks in 2017 on the issue have been upsetting for Bangladesh which has been facing the challenge of providing shelter to more than a million refugees fleeing persecution.

(5) River disputes

  • India and Bangladesh have failed to conclude a framework agreement to optimise the use of waters from six rivers including the Manu, Muhuri, Khowai, Gumti, Dharla and Dudhkumar, which has been discussed for several months.
  • No progress was reported on the long-pending Teesta water-sharing agreement either after the recent visit.

Why India still needs Bangladesh?

(1) South Asian geopolitics

  • Bangladesh has emerged as one of India’s closest partners and second to Bhutan in South Asia.The role of Bangladesh is critical for India’s Act East Policy.
  • India counts on Dhaka’s support in Bangladesh, Bhutan, India and Nepal (BBIN) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) initiatives.
  • These collectively complement New Delhi’s Southeast Asia outreach.

(2) Connectivity

  • Bangladesh’s location is a strategic wedge between mainland India and NE seven states. Each of these states is land-locked and has shorter route to the sea through Bangladesh.
  • Transit agreement with Bangladesh will spur the socio-economic development of North-East India.

(3) Countering China

  • Bangladesh uses China card to supplement its bargaining capacity against India.
  • A ‘neutral’ Bangladesh thus ensures containment of an assertive China in this region.

(4) Fight against terror

  • Bangladesh has emerged as a key element in sub-regional connectivity initiatives with Pakistan refusing to play ball rendering SAARC ineffective.
  • In 2016, when India decided to skip the SAARC Summit in Islamabad following a spike in cross-border terror attacks, Bangladesh and Bhutan wasted no time in joining ranks in solidarity with India.

Way forward

  • The future will present itself with an abundance of opportunities to help the two countries to reach a new plane of bilateral relations higher than ever before.
  • Both nations should play their diplomatic cards with more maturity and pragmatism, keeping the regional aspirations and nuances of both countries in mind.
  • A judicious aggregation of regional expectations on both sides of the border will help in achieving their mutual national objectives.
  • To make the recent gains irreversible, both countries need to continue working on the three Cs — cooperation, collaboration, and consolidation.

Conclusion

  • The first 50 years have consolidated the foundation of India-Bangladesh relations.
  • Both have matured in the last decade with development in many areas of cooperation.
  • The shared colonial legacy, history and socio-cultural bonds demand that the political leadership of the two countries inject momentum into India-Bangladesh relations.

References

https://www.wionews.com/south-asia/india-bangladesh-relations-a-robust-history-and-optimistic-future-372759

Categories
Burning Issues

[Burning Issue] India-Pakistan Peace Talks

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The winds of a tentative peace are once again blowing from Pakistan. India and Pakistan surprised the world last month with a rare joint commitment to respect a 2003 cease-fire agreement.

Background

  • Pakistan has been aggressively pushing for ‘peace’ talks with India.
  • The selected PM Imran Khan says peace with Pakistan will give India direct access to Central Asia.
  • His master General Bajwa wants India to ‘bury the past’.
  • Much earlier, Pakistan, in a change, stuck to the topic of the Covid-19 pandemic in a virtual SAARC meeting called by PM Modi.
  • Pakistan did not make the usual rhetorical reference to the Kashmir issue at the meet.

The 2003 Ceasefire

  • Currently, what stops India and Pakistan from opening fire at each other is a 2003 ‘ceasefire offer’ made by the then PM of Pakistan, Zafarullah Jamali, on 23 November 2003 on the eve of the Eid-al-Fitr holiday.
  • The agreement remains a milestone as it brought peace along the LoC until 2006.
  • Between 2003 and 2006, not a single bullet was fired by the jawans of India and Pakistan.
  • It is this ceasefire agreement that is referred to as having been violated whenever Pakistan fires at Indian posts along the LoC. Not the one made during Kargil War.

To borrow and twist any phrase from the disclaimers in mutual fund advertisements, if the past is the only guide to future performance, there is no point talking about Pakistan. Just buy more sniper rifles and sit on the LoC. So, how do we break the deadlock?

Reason behind Pakistani soft-tone

Pakistan’s call for cooperation has some undeniable and immediate reasons:

(1) FATF sword

  • There are very low chances of Pakistan exiting the Financial Action Task Force’s (FATF) grey list.
  • A research paper by an Islamabad-based think tank has revealed that Pakistan sustained a total of $38 billion in economic losses due to FATF’s decision to thrice place the country on its grey list.  
  • Pakistan has been on the FATF’s grey list since June 2018 and the government was given a final warning in February 2020 to complete the 27 action points by June in the same year. 

(2) Pariah at OIC

  • The OIC statements of 2020 had made no specific mention of Kashmir in the agenda announced in Riyadh.
  • Pakistani rhetoric over Kashmir these days is backed only by Turkey as part of Ankara’s strategy to oppose Saudi-UAE dominance in the OIC.
  • The Gulf in turns has alienated Pakistan and are recalling their loans.

(3) US resentment over Daniel Pearl case

  • US President Joe Biden had said he was “outraged” after Pakistan’s top court upheld the acquittal and ordered the release of Ahmed Omar Saeed Sheikh.
  • This terrorist was convicted of masterminding the 2002 beheading of US journalist Daniel Pearl which was filmed and streamed across the world.
  • In 2018, the Pentagon cancelled $300 million in aid to Pakistan because of Islamabad’s inaction against terror groups.

(4) Sovereign insolvency 

  • The World Bank has approved a USD 300 million loan to help cash-strapped Pakistan address issues of climate change, health emergency and manage solid waste.
  • Pakistan received $500 million from the World Bank and the Asian Development Bank each in June this year to prop up its struggling economy.
  • Pakistan’s total public debt, domestic and external, was recorded at Rs36.3 trillion in the financial year 2019-20, up 154 per cent (or Rs22 trillion) since FY13, when it was recorded at Rs 14.3 trillion.

(5) Sinking economy

Pakistan’s economy is in the doldrums, plunging to new lows every day with inflation at an all-time high.

  • In January, Pakistan had witnessed 12-year high inflation at 14.6 per cent which is among the highest in the world.
  • The East Asia forum calls 2020 a forgettable year for Pakistan’s economy as its GDP fell to -0.4 per cent.
  • According to the World Economic Forum, the youth unemployment rate in Pakistan stands at 8.5 per cent in a country where 64 per cent of the population is below the age of 30.

Like anything, Pakistani political elites (preferably the Pak Army and ISI) had to make a call. Either to make peace with India, or continue fighting it and become a military protectorate and economic colony of China; Peace with India is the only way ahead.

How should India react?

The first reaction among informed Indians to Pakistan would be a big yawn.

Wait! India seems resilient …

We saw coordinated statements by the director-general of military operations (DGMOs) on both sides that they had solemnly agreed to once again abide by the 2003 agreement all of sudden. Something has gone on between the two sides for several weeks, if not months, behind the scenes.

  • What that means is a stop to those madcap, aimless spells of firing heavy ordnance at each other’s posts and villages. It achieved nothing, except take out some frustration.
  • Besides, it made great pictures and TV for commando comic channels on either side, which could then, with the help of angry grey moustaches, declare victory for their respective armies.
  • But the armies know the truth. As do their governments. At some point, they knew they needed to move on.

Bombing isn’t the answer and was never

We know that after Kargil, Op Parakram and Pulwama/Balakot.

  • In the 20 years since, the US has bombed large parts of Afghanistan to the Stone Age several times over. But it is the Americans who are retreating in defeat.
  • Militarily, diplomatically, politically or economically, achieving anything by force is out of the question.
  • Former Army chief General V.P. Malik has outrightly said that it isn’t possible today to achieve any of our territorial objectives, PoK or Aksai Chin, by military force.
  • Besides the capability question, any such adventure would immediately run into global disapproval and force a ceasefire earlier than you can advance a few miles.
  • Especially when we live in a neighbourhood with strong, competing nationalism and robust, nuclear-armed militaries.

We need to think creatively

  • In negotiations to end the Cold War, Ronald Reagan had famously used a line with Mikhail Gorbachev: ‘Trust, but verify’.
  • While dealing with Pakistan, we could turn it inside out: ‘Distrust, but verify’.
  • What that means is, while you view every new move coming from Rawalpindi (preferring this over Islamabad is deliberate) with the highest degree of suspicion, you check it out nevertheless.

That’s why, while we hold our deep scepticism close to our hearts, we apply our CS aspirants minds to read between the lines of Pakistan.

Two things stand out in that written speech-

  1. First, a commitment to non-interference in the internal affairs of any country in the neighbourhood or the region
  2. Second, they did not leave out the mention of Kashmir. But there was nuance. They said progress in relations of course depends on India creating a ‘conducive environment’ on its side of Kashmir.

What should India consider?

We have enough evidence by now to know that this is not a dispensation that looks forward to any conflict.

In seven years, and across eight budgets, the allocation for defence has remained the same or marginally declined. They are not preparing for war.  Similarly, Pathankot, Uri, Pulwama, Galwan all tell us they are also not about to be knee-jerked into a conflict.

Distrust-but-verify

  • India and Pakistan signed a ceasefire agreement in 2003, but it had hardly been followed in letter and spirit over the past several years with more violations than observance of the pact.
  • Ties between India and Pakistan nose-dived after a terror attack on the Pathankot Air Force base in 2016 by terror groups based in the neighbouring country.
  • Subsequent attacks, including one on the Indian Army camp in Uri, further deteriorated the relationship.
  • The ties dipped further after India’s warplanes pounded a Jaish-e-Mohammed terrorist training camp deep inside Pakistan on Feb 26, 2019 in response to the Pulwama terror attack in which 40 CRPF jawans were killed.

History tells us that India-Pak peace is littered with many false dawns and this report explores why there is not any guarantee of any amity anytime soon.  This is not the first time India and Pakistan are trying to make peace.  So there is a reason to be skeptical.

What has changed in the last six years is India’s response.

Recent backstabs

  • In 2014, the oath taking ceremony of Indian PM had attendance from dignitaries of all SAARC nations, including the then PM of Pakistan Nawaz Sharif.
  • This was the first time that a Pakistani leader was attending the oath-taking of an Indian prime minister-designate. There was optimism in the air.
  • In 2015, New Delhi returned the courtesy, and in a surprise visit, Modi stopped over in Lahore shortly after his visit to Afghanistan.
  • But Pakistan’s army generals were miffed with the growing camaraderie and exactly a year later, the weather changed dramatically.  On January 2, 2016, there was a terror attack in Pathankot.

No reasons to trust

  • There’s no guarantee that it would sustain because nothing much has changed materially on the ground.
  • On the diplomatic front, the rhetoric hasn’t been toned down either.  Islamabad in collusion with other nations has kept the rhetorical fire on Kashmir alive on global platforms.
  • On the security front, Pakistan is openly trying to resurrect the Khalistan movement.
  • Pakistan Army’s drones have been seized in Punjab and new terror groups have emerged in Kashmir with more secular names like “The Resistance Front”. 

There is neither any evidence of a fundamental shift in its policy on terror nor on the main bone of contention between the two countries: Kashmir. 

Lessons to India from the Ladakh

  • In 2019, the official rhetoric was promising India to retake PoK and putting more military pressure on Pakistan.
  • In contrast, the discourse on foreign policy since the Chinese pressure on the LAC has been one of marked sobriety scaling back all expectations of flippant militarism.
  • The standoff with China has brought home some stark realities. We can speculate on Chinese motives.
  • The LAC standoff considerably released the pressure on Pakistan.
  • We were reminded that the LAC and LoC can be linked; that the zone around Kashmir was a trilateral and not a bilateral contest, and that India will need significant resources to deal with China.

Way forward

Nevertheless, India and Pakistan have no other option but to negotiate their disputes sooner or later.

Formalizing the ceasefire agreement

The leadership in both countries must understand that the first point in their agenda during their next meeting must be the formalization of the 2003 ceasefire as it will keep jeopardizing the future of the peace process if left unresolved.

  • A durable, guaranteed formal ceasefire must be the first step on the pyramid of peace with Confidence Building Measures (CBMs) being the second and terrorism the final step for peace between the two.
  • There is no doubt that Pakistan should ever be given any locus standi on the Indian state of Kashmir.

We cannot change our neighbours

  • New Delhi can build on a no-war policy because it is strong enough to do so and Pakistan has no courage to initiate.
  • A weaker government would’ve been under much greater pressure in east Ladakh, and earlier with Pakistan, to do something more adventurous.
  • Many taunted Indian leadership for not going to war with China, unlike Nehru who “at least fought, even if he lost”.

Conclusion

India should seize the moment and build on the permanent de-escalation at LOC. The pandemic offers an opportunity for greater economic cooperation.

The onus is on Pakistan

  • Both countries should go beyond diplomatic spates and media warfare.
  • Hence, if the 2003 ceasefire is formalized with clear rules and regulations, demilitarized zones, neutral observers and joint commissions, it should reduce the chances of future ceasefire violations.
  • But the success of ceasefires in most of the conflict situations depends heavily on political will much heavily leaning on the other side of LOC.

References

https://www.wionews.com/south-asia/why-pakistan-is-offering-peace-with-india-371510

https://www.indiatoday.in/news-analysis/story/what-led-to-india-pakistan-ceasefire-at-loc-and-will-it-hold-for-long-1773379-2021-02-26

Categories
Burning Issues

[Burning Issue] Domicile Reservations in Private Sector

Two weeks back, the Haryana Governor gave his assent to the Bill providing 75% reservation in the private sector to job seekers from the state. And much recently Jharkhand government announced 75% reservation in private sector jobs with a salary of up to Rs 30,000 for locals.

Meanwhile, the Supreme Court had sought responses from all states on whether the 50% ceiling limit on reservation needs to be reconsidered.

In this edition of Burning Issues, we shall dive into what and how reservation for Private Sector would be; its repercussions on the principle of equality in our country and ultimately the performance of the private sector.

Reservation: A backgrounder

  • Reservations are an affirmative action against social discrimination prevalent in society.
  • They have had a place in India for over a century, much before they were written into the Constitution as a leg up for socially and educationally backward sections.

Private Sector: Diluting Reservation to the point of irrelevance

  • The issue of extending reservations to the private sector was occasionally mentioned in political circles whenever the issue of inadequate employment opportunities for the unprivileged in the public sector was discussed.
  • But it was never seriously debated.
  • The issue got trans-formed into demand after the country introduced structural reforms and after the acceptance of the globalisation process.

LPG era concept

  • Economic liberalisation brought in its wake a shift in emphasis from the public to the private sector.
  • It was decided to prune the size of the public sector by disinvesting capital and allowing not only Indian but also foreign private investors to invest in those areas of economic activity like power generation and distribution which were once reserved exclusively for the public sector.

Why is the demand gaining momentum?

  • There is an implicit assumption in this demand that employment opportunities are increasing in the private sector merely because it is expanding.

(1) LPG reforms

  • The policy of LPG reduced the number of employment opportunities in the public sector, which, in turn, reduced the job opportunities for backward communities.
  • A revelation of the reduction of employment opportunities in the public sector made some political parties and their leaden advance the demand for extending reservations to the expanding private sector.

(2) Populist impulse

  • The demand- jobs for locals only are bound to go down well with the electorate.
  • The leadership has been supporting the general cause of SC/STs and OBCs have only been repeating their support for the demand for extending reservations to the private sector.
  • While the political facet is a purely opportunistic political game plan.

(3) Rising unemployment

  • Given India’s population growth, each year there are close to 20 million (or 2 crore) people who enter the working-age population of 15 to 59 years. But not everyone seeks a job.
  • Just after last year’s lockdown, the unemployment rate has shot up to more than 30 percent, with 122 million people losing their jobs.

(4) Agrarian stress

  • The agrarian sector is under tremendous stress across the country, and young people are desperate to move out of the sector.
  • But there is a serious dearth of jobs (private and government).

(5) Inter-state migration

  • Every campaign for a sons-of-soil policy, for job reservation, whips up this anti “outsider” sentiment.
  • In the case of Haryana, one of the reasons given for justifying reservations was the proliferation of slums, presumably attributed to “outsiders” shifting to the State for work.

(6) Corporate preferences are biased

  • The Centre and many state governments probably doubt the robustness in the industry’s efforts when it comes to affirmative action.
  • Several reports — for instance, the State of Working India 2018 released by the Centre for Sustainable Employment of the Azim Premji University.
  • It has shown that discrimination is one of the reasons for under-representation of Dalits and Muslims in the corporate sector.

(7) Xenophobia

  • Another major reason for the appeal of jobs for locals is inherent xenophobia. This is not unique to India or Indian States, but is universal.
  • It was spectacularly manifest in the Brexit vote, when Britons thought that foreigners were taking away local jobs, and hence voted to secede from the European Union.
  • The actual facts were much less damaging. If anything, the so-called foreign workers contributed to the local economy through their productivity, and by paying both consumption and income taxes.

Why it is a bad idea?

It is worth examining why this idea is ultimately infructuous or irrelevant.

(1) Against Equality as well as meritocracy

  • It goes against the Constitution of India.
  • In fact, it violates several fundamental rights, such as freedom to move anywhere, the right not to be discriminated on the basis of place of birth, the right to be treated equally before laws and the right to pursue one’s livelihood.
  • These are enshrined variously in Articles 14, 15, 16 and 19 of the constitution.

(2) Migration criteria not justified

  • The actual data on inter-State migration shows that inter-State migration is relatively low in India.
  • While the country may have an estimated 100 million migrants, most of them are intra-state not inter-state. As per 2011 census, India had only 5.6 crore inter-state migrants.
  • They often bring skills, motivation, energy which may be in short supply or lacking locally.

(3) Free movement of labour

  • A more analytical aspect to highlight is that free movement of labour partly compensates for the uneven economic progress of different States.
  • The idea also goes against the established fact that migration of labour is good for the economy.
  • Many Indian states, Punjab, Gujarat, and Maharashtra, to name a few, have benefited from migrant labour.

(4) Un-ease of doing business

  • Local reservation in the private sector may not be the ideal solution to tackle the unemployment crisis.
  • In fact, it can deter the corporate sector from investing in states that come up with such a rule.
  • A better way to engage with the private sector would be to make the youth of a state employable with proper investments in education, health and skill development.

(5) Scapegoating the private sector

  • What distinguishes the private sector from the public sector is the inherent competition and a hunger for improvement.
  • Today, in the post-Covid era, India has a once in a lifetime opportunity to become the next manufacturing hub of the world.
  • In such a scenario, chief ministers should do well to engage with the private sector in a much more holistic manner, and not burden it with unfeasible rules.

(6) MSMEs to be hit harder

  • MSMEs could be the hardest hit.
  • They do not have the necessary capital to relocate and many studies have shown that more than 50 per cent of employees are not residents of the state.
  • Entrepreneurs worry that the reservation declared by backward states like Jharkhand could limit the scope of recruitment and have an adverse impact on productivity and competition based on merit.

Arguments in favour of quota in private

  • Often the privileged castes (or groups) use nefarious arguments to protect their interests.
  • Reservations once accepted in the constitutional framework are not a charity that is to be kept away from the ‘meritocracy’ of ‘private’ operations.
  • Like all other constitutional guarantees, one may feel the necessity to get ensured of equal opportunity in all spaces.
  • Giving preference and quotas for socially and educationally deprived sections in the private space is, therefore, in keeping with this fundamental tenet.
  • As the NCBC argues, with the number of jobs generated in the state sector shrinking steadily, for the promise of quotas in the Constitution to have any real meaning, it may be inevitable to extend it to the private sector.

How have the companies received this move?

  • Most companies have slammed the new local job quota law and asked the government to focus on training and skilling local youth.
  • Several experts have explained that Haryana is facing immense competition from other states that have now started attracting industrial investment.
  • Those states, however, are offering liberal policies and employment-incentive schemes. The new local job law could severely reduce new investments in Haryana.
  • Reservation affects productivity and industry competitiveness.

Way forward

The government is not an employment guaranteeing agency rather an authority which should create an environment through its policies which minimizes inequalities in income, status, facilities and opportunities.

  • India has already suffered a huge brain drain to the West because professionals do not get the same support here.
  • Our dependence on the government for everything and lack of individual self-reliance has promoted incompetent people and strengthened the bureaucracy, which has hurt India immensely in the long-run.
  • Recently, with rapid technological innovations taking over, the government has finally understood that they are not made for business and had to embrace private sector with open arms.
  • A better way to engage with the private sector would be to make the youth of a state employable with proper investments in education, health and skill development
  • States like Kerala have instituted enlightened policies of training migrant workers in the local language and also offering good education for their children.
  • In the medium to long term there is no option but for a big national focus on education, skilling, training and enhancement of human capital, which can get us out of this scarcity mindset of rationing jobs for locals.

Conclusion

  • The politics of identity and polarization on region/religious lines seems inadequate for the elections.
  • The philosophy and pragmatism of universal excellence through equality of opportunity for education and advancement across the nation is part of our founding faith and constitutional creed.
  • Clearly, this is not the appropriate domain of being “vocal for local”.
  • Although some reservations may still be necessary for the socio-political condition in India, reservation on the basis of domicile or residence within a State would be highly discriminatory.
  • It is more likely that such politically motivated steps would be overturned by the judiciary as has been done several times in the past.

References:

https://www.jstor.org/stable/4416239?seq=1

https://www.nationalheraldindia.com/india/states-rush-in-to-reserve-jobs-for-locals-and-prevent-inter-state-migration-of-labour

https://www.hindustantimes.com/analysis/why-local-quota-in-private-sector-is-not-a-good-idea/story-L4NEcekdviQUw5gZYnxktL.html

Categories
Burning Issues

[Burning Issue] Quadrilateral Security Dialogue

In a display of multilateral bonhomie, the Quad alliance — India, US, Japan and Australia —have held its first-ever leaders’ summit with an aim to counter China’s growing influence in the Indo-Pacific region.

Quadrilateral Security Dialogue: A Backgrounder

Quadrilateral Security Dialogue or the Quad is an informal strategic forum between the United States, Japan, India and Australia that is maintained by semi-regular summits, information exchanges and military drills between member countries.

  • The US, Japan, India and Australia came together in the aftermath of the 2004 Indian Ocean tsunami to assist the devastated countries.
  • Later, officials of the four countries met in 2007 “to look at issues of common interest.” During an India visit, then Japanese PM Shinzo Abe unveiled the idea of “the Confluence of the Two Seas” that gave birth to the concept of the Indo-Pacific.
  • A decade later officials of the four countries met in the Philippines in 2017 to talk about an aggressively rising China.
  • In 2019, the foreign ministers of the Quad countries met in Washington for the first time.
  • In November, the Quad nations came together to participate in a two-phase joint military exercise, Malabar 2020, in the Bay of Bengal and in the Arabian Sea.

Now it is increasingly viewed as ‘Asian NATO’.

Key takeaways from the PM level meet

All the world leaders talked about the cooperation in the Indo-Pacific region and its development.

  • PM Modi opined the extension of India’s ancient philosophy of Vasudhaiva Kutumbakam, which regards the world as one family.
  • He said that the countries are united by democratic values and commitment to a free, open and inclusive Indo-Pacific.
  • Biden committed to working with quad countries to achieve stability in the Indo-Pacific.
  • He also announced the launch of a new vaccine manufacturing pact, in which he said that the QUAD will be playing an important role.

Focus on Indo-Pacific: For the China-wary world

  • The latest meeting of Quad comes at a time when all four countries have either trade or security disputes with China.
  • Despite not explicitly mentioning China, Quad has been openly supporting a “free and fair” Indo-Pacific which is seen as a clear message to Beijing that it needs to curb its assertive behaviour.
  • The optics were hard to miss when India, the US, Japan and Australia joined their navies for the mega Malabar military exercise late last year, an activity which raised alarm in Beijing.
  • This posturing by the Quad nations sent a strong signal to China.

(1) US vs China

  • USA had followed a policy to contain China’s increasing influence in East Asia. Therefore, USA sees the coalition as an opportunity to regain its influence in the Indo-Pacific region.
  • The US has described China, along with Russia, as a strategic rival in its National Security Strategy, National Defence Strategy and the Pentagon’s report on Indo-Pacific Strategy.
  • Both are navigating intense disagreements over trade and human rights in Tibet, Hong Kong and the western Xinjiang region, as well as the coronavirus pandemic and increasing Chinese assertiveness in the South China Sea.

(2) Australia vs China

  • Australia is concerned about China’s growing interest in its land, infrastructure and politics, and influence on its universities.
  • Ties have been on a downward spiral since 2018 when Australia, accusing China of meddling in its domestic affairs, passed a new law against foreign interference and espionage.
  • It also barred Huawei from building the country’s 5G mobile network, among the first countries to do so, citing national security.
  •  The atmosphere worsened when  PM Scott Morrison’s government called for an international inquiry into the origins of the coronavirus that causes Covid-19.

(3) Japan vs. China

  • Tensions between Japan and China over the Senkaku/Diaoyu Islands dispute have recently increased.
  • China has relentlessly continued attempts to unilaterally change the status quo by coercion in the sea area around the Senkaku Islands.
  • The more salient indicator is the number of Chinese patrols inside the territorial sea of the islands, which Japan sees as an explicit violation of its territorial sovereignty.

(4) India vs. Quad

  • India’s strained relations with China needs no explanation. The year long border dispute is the testimony.
  • The Quad summit is taking place in the backdrop of an ongoing military disengagement between India and China following their months-long border standoff in eastern Ladakh.
  • China is increasing its footprint in our neighborhood through its Belt and Road policy and political coercion following the debt trap are some of the increasing concerns other than economic imbalance.

Opportunities unveiled for India

India’s engagement with the Quad goes back to China’s expanding footprint in South Asia and the Indian Ocean Region over the last few years. India can reap some benefits as discussed below:

 (1) Checkmating the Chinese

  • The maritime sphere is wide open to India to undertake coalition building, rule sets, and other forms of strategic exploration than compared to land borders.
  • The maritime space is more important to China than engaging in land grab attempts in the Himalayas. A huge chunk of Chinese trade happens via the Indian oceanic routes that pass through maritime chokepoints.

(2) Channelizing geo-politics

  • There is a growing great power interest in the maritime sphere, especially with the arrival of the concept of ‘Indo-Pacific’. For instance, many European countries have recently released their Indo-Pacific strategies.
  • The most recent was for France to send its warship in the international waters of the South China Sea.

(3) Maritime domain for India

  • Above is the backdrop against which one must see the progressive evolution of Exercise “Malabar”,
  • In the beginning, it was a bilateral event involving just the Indian and US navies. It became tri-lateral with the inclusion of Japan in 2015.
  • And now it has transformed into a four-cornered naval drill that will also include Australia.

(4) Check on China’s India Ocean Ambitions

  • The Quad has a valuable role to play as a check on China’s Indian Ocean ambitions.
  • India must develop ingrained habits of interoperable cooperation with its Quad partners.
  • This interoperable cooperation could pre-emptively dissuade China from mounting a naval challenge in its backyard.

(5) Eccentricity in South Asia

  • With India, located right at the centre of the Indo-Pacific geopolitical imagination can realize the vision of a ‘broader Asia’ that can extend its influence away from geographical boundaries.
  • Further, India with Quad countries can check the imperialist policies of China in the Indian Ocean region and ensure Security and growth for all in the region.

Issues with Quad

(1) Structural problems

  • The Quad has a core structural problem as its objective pivots around the U.S.
  • The Quad riles China as a hostile grouping, but hardly serves the security interests of its members.
  • Despite rhetoric relating to the promotion of a ‘rules-based’ world order, the Quad neither shares a strategic vision nor is it animated by a shared agenda.

 (2) Nature of alliance

  • Alliances involve written commitments to come to the defence of the other against a third party.
  • Despite the potential for cooperation, the Quad remains a mechanism without a defined strategic mission.

(3) Economic alliance not feasible

  • Quad is neither a military alliance nor an economic partnership.
  • Its intention to counter China in the rare-earth sector is logical given the dominant role the country plays in supplying more than half of the world’s such key materials.
  • But, for a country like India, the lack of relevant technologies and talent pool could obstruct its progress in building up a supply chain from scratch.

 (4) Overt emphasis on Maritime domain

  • The entire focus on the Indo-Pacific makes the Quad a maritime, rather than a land-based grouping, raising questions whether the cooperation extends to the Asia-Pacific and Eurasian regions.
  • India’s core concerns with China are primarily undemarcated borders and trade deficit.

 (5) Lack of existence of Indo-Pacific system

  • There has never been Indo-Pacific system ever since the rise of the port-based kingdoms of Indochina in the first half of the second millennium.
  • There were two Asian systems — an Indian Ocean system and an East Asian system — with intricate sub-regional balances.
  • The effort by a U.S. to artificially manufacture to combine the Indo and the Pacific into a unitary system is unlikely to succeed.

(6) Indian borders can go more vulnerable

  • A lesson for India is China’s long-held and strategic interest in parts of Jammu and Kashmir.
  • It is wrongly argued that it is Pakistan that is the issue in J&K.
  • China undoubtedly is as big an issue but has quietly hidden behind Pakistan’s cover.

Challenges: China will retaliate

(1) China’s assertiveness

  • China claims that it has historical ownership over nearly the entire region of South China Sea, which gives it the right to manufacture islands.
  • However, the International Court of Arbitration rejected the claim in 2016.
  • Since then, the incidences of Chinese transgression has only increased making China more assertive for its interest.

(2) Preying small nations

  • The ASEAN countries have a well-knit relationship with China. So are other SAARC countries have fallen prey to Chinese debt traps.
  • The Regional Cooperation Economic Partnership (RCEP) is a recent example of China’s increasing influence over ASEAN nations to which Australia is even a forerunner.

(3) Chinese monopoly

  • Considering the economic might of China and the dependence of Quad nations like Japan and Australia on China, the Quad nations cannot afford to have strained relations with it in the long run.
  • India too, is still very heavily dependent on Chinese exports.

Way Forward

  • Need for a clearer vision: It is important for members of the Quad not to be reactive. It is also important to exhibit openness, and ensure that all talk of a ‘Free and Open Indo-Pacific’ is more than just a mere slogan.
  • Consensus for a common objective: The Quad nations need to better explain the Indo-Pacific Vision in an overarching framework with the objective of advancing everyone’s economic and security interests.
  • Setting an agenda: This will reassure the littoral States that the Quad will be a factor for regional benefit, and a far cry from Chinese allegations that it is some sort of a military alliance. Future meetings can be an opportunity to define the idea and chart a future path.
  • Expanding Quad: India has many other partners in the Indo-Pacific; therefore India should pitch for countries like Indonesia, Singapore to be invited to join in the future. There is also a vital need to economically expand the Quad.

Conclusion

  • The Quad framework derives its geopolitical validation from India’s association and presents a unique opportunity for India to be an active participant in shaping regional security architecture with global undertones.
  • India’s moves with the Quad will be closely watched, as they bear more meaning than ever before on the path it will take to realise its strategic future.

References

https://www.cnbctv18.com/india/with-us-on-quad-table-heres-what-to-expect-from-its-first-online-summit-8567251.htm

https://www.thehindu.com/podcast/what-to-expect-from-the-first-ever-quad-summit-the-hindu-in-focus-podcast/article34046589.ece

https://www.livemint.com/news/india/what-all-to-expect-from-first-official-quad-meet-today-11615484523818.html

https://indianexpress.com/article/opinion/columns/india-quadrilateral-cooperation-dialogue-china-japan-us-6106772/

https://www.thehindu.com/opinion/op-ed/quad-strategic-opportunity-or-quagmire/article34029799.ece

Categories
Burning Issues

[Burning Issue] New IT Rules 2021

For the first time, the union government, under the ambit of the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, has brought in detailed guidelines for digital content on both digital media and Over The Top (OTT) platforms.

In this issue of BI, we provide you with an overview of its contents, the “safeguards” it seeks to establish, how they affect your internet usage experience.

Background: Social Media usage in India

  • The Digital India programme has now become a movement that is empowering common Indians with the power of technology.
  • The extensive spread of mobile phones, the Internet etc. has also enabled many social media platforms to expand their footprints in India.
  • Some portals, which publish analysis about social media platforms and which have not been disputed, have reported the following numbers as the user base of major social media platforms in India:
  • WhatsApp users: 53 Crore
  • YouTube users: 44.8 Crore
  • Facebook users: 41 Crore
  • Instagram users: 21 Crore
  • Twitter users: 1.75 Crore

What are the New Rules?

PC: Economic Times

[A] Guidelines Related to Social Media

Due Diligence To Be Followed By Intermediaries:

  • The Rules prescribe due diligence that must be followed by intermediaries, including social media intermediaries.
  • In case, due diligence is not followed by the intermediary, safe harbour provisions will not apply to them.

Grievance Redressal Mechanism:

  • The Rules seek to empower the users by mandating the intermediaries, including social media intermediaries, to establish a grievance redressal mechanism for receiving resolving complaints from the users or victims.

Ensuring Online Safety and Dignity of Users, Especially Women Users:

  • Intermediaries shall remove or disable access within 24 hours of receipt of complaints of contents that erodes individual privacy and dignity.

Enabling Identity of the Originator:

  • Significant social media intermediaries providing services primarily in the nature of messaging shall enable identification of the first originator of the information.
  • Required only for the purposes of prevention, detection, investigation, prosecution or punishment of an offence related to sovereignty and integrity of India, the security of the State, friendly relations with foreign States, or public order.

Removal of Unlawful Information:

  • An intermediary should not host or publish any information which is prohibited under any law in relation to the interest of the sovereignty and integrity of India, public order, friendly relations with foreign countries etc.

[B] Digital Media Ethics Code Relating to Digital Media and OTT Platforms

This Code of Ethics prescribes the guidelines to be followed by OTT platforms and online news and digital media entities.

Self-Classification of Content:

  • The OTT platforms, called the publishers of online curated content in the rules, would self-classify the content into five age-based categories– U (Universal), U/A 7+, U/A 13+, U/A 16+, and A (Adult).
  • Platforms would be required to implement parental locks for content classified as U/A 13+ or higher and reliable age verification mechanisms for content classified as “A”.
  • The publisher of online curated content shall prominently display the classification rating specific to each content or programme together with a content descriptor.

Norms for news:

  • Publishers of news on digital media would be required to observe Norms of Journalistic Conduct of the Press Council of India and the Programme Code under the Cable Television Networks Regulation Act.

Self-regulation by the Publisher:

  • Publisher shall appoint a Grievance Redressal Officer based in India who shall be responsible for the redressal of grievances received by it.
  • The officer shall take a decision on every grievance received it within 15 days.

Self-Regulatory Body:

  • There may be one or more self-regulatory bodies of publishers. Such a body shall be headed by a retired judge of the Supreme Court, a High Court or independent eminent person and have not more than six members.
  • Such a body will have to register with the Ministry of Information and Broadcasting.
  • This body will oversee the adherence by the publisher to the Code of Ethics and address grievances that have not to be been resolved by the publisher within 15 days.

Oversight Mechanism:

  • Ministry of Information and Broadcasting shall formulate an oversight mechanism.
  • It shall publish a charter for self-regulating bodies, including Codes of Practices.
  • It shall establish an Inter-Departmental Committee for hearing grievances.

Why do OTT services need to be regulated? 

First, an individual’s right to privacy may be endangered by OTT communication services too. Hence, there is a need for state intervention. Second, private entities may act as ‘big brothers’. This could also imply that market forces may not always act in the interests of consumers.

(1) Ambiguous definition of OTT/Social Media

  • Earlier, there was no universal definition of what OTT communication services are.
  • As a result, the difference between OTT communication and non-communication services becomes thin and blurred.
  • The definition of the term “intermediaries” is broad enough to cover all social media / content sharing platforms as per the new rules.

 (2) Issues with content

  • The Supreme Court has observed vulgar and harmful content being streamed on over-the-top (OTT) platforms.
  • It has observed content that deliberately and maliciously disrespects the nationalist, religious sentiments of our nation.
  • There is no dearth of uncertified and sexually explicit content and pornography that is otherwise banned in India.

(3) Data Privacy

  • When an individual is using any OTT for communication services, the data gets shared with the parent company.
  • This data can be used by the parent company for commercial purposes without explicit consent of the user, thereby affecting the user’s privacy.

(4) Data Sovereignty

  • The OTT service providers may store the personal information of the end-users in their data servers located abroad. This may lead to issues relating to data protection and national security.
  • Provisions such as the free flow of cross-border data, prohibition on data localisation and source code disclosure intend to curb the policy space available to the government.
  • Data of Indian users residing in servers outside India is a serious issue and can endanger the sovereignty and integrity of India.

(5) International Perspective

  • The digital economy regulations including OTT services are evolving across the world.
  • Countries like Singapore, UK have regulatory bodies to keep a check on the OTT platforms.
  • In the UK, the OTT platforms face the same scrutiny as any public service broadcaster.
  • Countries like Indonesia, Turkey and Saudi Arabia have strict regulations. They want total control in the hands of the Government. Many OTT platforms including Netflix has been blocked.

What about social media?

(1) Defamation

  • The most often documented and observed crimes occurring on social networking sites include people making anonymous threats, bullying, harassing, and stalking others.
  • Most of these types of crimes go unpunished and are therefore not treated very seriously.
  • Defamation on Social media may be defined as representing someone by hacking their social media accounts and sending indecent or inappropriate messages.

(2) Hate Speech

  • Hate speech is described as a speech of aggressive nature containing statements of inferiority and messages expressing prejudice against an individual or community based on certain features.
  • These features may include ethnicity, religious affiliation, sexual orientation, caste, national origin, sex, race, gender, and severe disability or illness.

(3) Harassment and cyber stalking

  • Online abuse, bullying, and harassment on social networking sites are synonymous with cyber-stalking. It usually includes the conduct of repeated harassment or threats done towards an individual.
  • Cyberbullying and harassment can include threatening or harassing email messages, text messages, or uploading information online.
  • It aims at a particular individual either through attempting to contact them directly or by distributing their private and sensitive information, to cause distress, fear, and anger.

(4) Privacy breach

  • The privacy of an individual is a basic human right, whether it is on social media or in the physical world.
  • A false claim about widespread child trafficking and harvesting of fake news widely through WhatsApp resulted in mob violence and more than three dozen deadly lynchings in 2017 and 2018.
  • WhatsApp declined the government’s demand to disclose the source of the rumours, stating its pledge of anonymity and privacy towards its users done through end-to-end encryption provided by the application.

Advantages offered by these rules

  • Effective checks and balances: These rules will ensure that social media platforms have to keep better checks and balances over their platforms. This will ensure the data is not shared unlawfully. This will ensure adherence to the rule of law.
  • Enhanced accountability: The new IT rules enhance government regulation over social and digital media. This will enhance accountability and prevent arbitrary actions by digital platforms like the recent one by Twitter.
  • Citizen empowerment: The new IT rules will lead to the empowerment of citizens. Since there is a mechanism for redressal and timely resolution of their grievances.
  • Maintenance of public order: Disinformation (Fake and wrong information) of data can be controlled. Since there is proper regulatory mechanism, disinformation can be removed easily. This will reduce instances of fake news incited violence.
  • India’s digital imprints: It will strengthen India’s position as a leader in digital policy and technological innovation. For example, China, with its larger digital population, has not been able to provide a fair and open local market for global companies in the digital space due to absence of proper IT Rules and Regulation.

Issues with the new rules

(1) No discussion with stakeholders

  • Another similarity between the farm laws and the way the government has approached this process is its unwillingness to engage with the stakeholders that matter.
  • The new regulation has come all of sudden in the absence of open and public discussion and without any parliamentary study and scrutiny.

 (3) Concerns over the legal basis

  • Questions have been raised about the very validity of the rules on technical grounds.
  • The govt has chosen to pass these rules under the requirement to outline the due diligence that Internet intermediaries have to follow in order to be able to claim their qualified legal immunity under Section 79 of the IT Act.
  • These rules at the outset appear unlawful even with respect to whether they could have been issued under the Information Technology Act in the manner chosen by the government.

(3) Using rule making power to issue primary legislation

  • The ability to issue rules under a statute — i.e. to frame subordinate legislation — is by its nature a limited, constrained power.
  • The government has made massive changes to the way the internet will work in India, but without having to take the matter to Parliament at all, by amending the rules under pre-existing sections of the law.
  • Critics argue that, with the present Internet content and social media rules, the Union Government has done precisely that.

(4) Data privacy concerns left unaddressed

  • In 2019, the government tabled a Personal Data Protection Bill in Parliament. It is yet to be turned into a law.
  • The fact that, in 2021, the government is continuing to bring in new regulations regarding the digital space without yet having passed a privacy law reflects its governance priorities.
  • With no privacy law insight and new government rules that undermine that fundamental right, citizens ought to be concerned about the way the state is observing all online activity.

Way forward

  • The Rules along with the Code of Ethics is the Government’s attempt in regulating the operations and content online. They seek to maintain a balance between self-regulation and government control.
  • The intent of the rules appears to be to curtail problematic content, empower viewers to make more informed choices, and create a level playing field for various mediums.
  • While this may be an essential step in streamlining the sector, which was until recently, unnoticed, and under-regulated, the efficacy in implementation of these Rules will need to be tested.
  • OTT content creators and the platforms themselves will have their hands full with complaints which will largely be based on subjective matters.
  • There is no way to objectively judge the efficacy of such rules/legislation since they evolve with time. We can only expect that the law will evolve from more practical learnings in the future.
  • As the digital space and technology for the distribution of content evolve, the regulatory framework for the digital industry will also continue to evolve.

In order to ensure fine-tuning of any significant bottlenecks, implementation challenges, and prevent possible misuse of the regulations, policymakers and stakeholders should continue to engage with each other to put in place a regulatory framework that is effective and balanced.

Conclusion

  • The public today is looking for content that brings out the truth of the society, deals with socio-political issues, provides us regional varieties and utmost importantly doesn’t hurt the sentiments of a single class of people.
  • The OTT platforms in the Indian sub-continent according to various industry experts have given a rise in the creative freedom of content creators and opportunities to many.
  • Looking at the present scenario, the need for an unbiased regulation is a must, and the new rules are a step in that direction.
  • What some think are going to be regulations, others feel it as a censorship measure in the virtual world.

References

https://en.wikipedia.org/wiki/Information_Technology_Rules,_2021

https://www.thehindubusinessline.com/opinion/why-ott-services-need-to-be-regulated/article32791521.ece

https://scroll.in/article/988448/four-reasons-to-be-worried-about-indias-new-it-rules-that-are-supposed-to-regulate-big-tech

Categories
Burning Issues

[Burning Issue] Women’s Safety and India

We are a booming economy and our GDP numbers are a testimony to that fact. But despite this, India, the world’s largest democracy, is failing to ensure basic fundamental rights to its citizens. Most importantly, we have failed to ensure our women’s right against exploitation. We are failing them by the minute. Perhaps, the second.

Tip of an iceberg: Crime against women in India

  • Much recently, a man whose daughter was sexually harassed was shot dead, allegedly by the main accused out on bail since 2018 and his associates, in Hathras district of Uttar Pradesh.
  • Another video has gone viral on social media where a young woman, can be heard announcing her decision to commit suicide. She committed suicide soon afterwards jumping into the Sabarmati River.
  • CJIs’ recent ‘marry the victim’ remark to rape accused has sparked another controversy. It has greatly trivialized sexual violence, denuded survivor of rights and personhood.

Crime against women: What NCRB has to say

  • Crime against women increased 7.3 per cent from 2018 to 2019 says the annual National Crime Record Bureau’s “Crime in India” 2019 report.
  • Majority of cases under crime against women under IPC were registered under ‘cruelty by husband or his relatives’ (30.9%), followed by ‘assault on women with intent to outrage her modesty’ (21.8%), ‘kidnapping & abduction of women’ (17.9%) and ‘rape’ (7.9%).
  • UP reported the highest number of crimes against women (59,853), accounting for 14.7 per cent of such cases across the country.
  • It was followed by Rajasthan (41,550 cases; 10.2 per cent) and Maharashtra (37,144 cases; 9.2 per cent).
  • The problem of underestimation of the gender-based crime is compounded by failure of the justice system of the country in securing convictions.

Various types of violence against women in India

  • The problem of gender-based violence runs very deep in India.
  • The rape crisis is just one facet of the multitude of problems that reflect the gender discrimination scenario.
  • These prejudicial attitudes are seen right from womb to tomb.

They start with the practice of sex-selective abortion and infanticide, and continue through adolescent and adult life with high levels of female infant mortality, child marriage, teenage pregnancy, lesser wages for women, unsafe workplaces, domestic violence, maternal mortality, sexual assault and neglect of elderly women.

[I] Domestic violence

  • Domestic violence is abuse by one partner against another in an intimate relationship such as dating, marriage, cohabitation or a familial relationship.
  • It is also categorised as domestic abuse, spousal abuse, battering, family violence, dating abuse and intimate partner violence (IPV).
  • It can be physical, emotional, verbal, economic and sexual abuse as well as subtle, coercive or violent.

[II] Killings

(a) Female infanticide and sex-selective abortion

  • Female infanticide is the elected killing of a newborn female child or the termination of a female fetus through sex-selective abortion.
  • In India, there is incentive to have a son, because they offer security to the family in old age and are able to conduct rituals for deceased parents and ancestors.
  • In contrast, daughters are considered to be a social and economic burden

(b) Dowry deaths

  • A dowry death is the murder or suicide of a married woman caused by a dispute over her dowry.
  • In some cases, husbands and in-laws will attempt to extort a greater dowry through continuous harassment and torture which sometimes results in the wife committing suicide.

(c) Honor killings

  • An honor killing is a murder of a family member who has been considered to have brought dishonour and shame upon the family.
  • Examples of reasons for honor killings include the refusal to enter an arranged marriage, committing adultery, choosing a partner that the family disapproves of, and becoming a victim of rape.
  • Village caste councils or khap panchayats in certain regions of India regularly pass death sentences for persons who do not follow their diktats on caste or gotra.

(d) Witchcraft accusations and related murders

  • Witchcraft is the practice of what the practitioner believes to be magical skills and abilities, and activities such as spells, incantations, and magical rituals.
  • Murders of women accused of witchcraft still occur in India.  Poor women, widows, and women from lower castes are most at risk of such killings.

[III] Sexual Abuse/ Molestation/ Rape

  • Rape is one of the most common crimes in India.
  • According to the National Crime Records Bureau, one woman is raped every 20 minutes in India.

[IV] Marital Crimes

(a) Marital rape

  • In India, marital rape is not a criminal offense.  
  • India is one of fifty countries that have not yet outlawed marital rape.

(b) Forced Marriage

  • Girls are vulnerable to being forced into marriage at young ages, suffering from a double vulnerability: both for being a child and for being female.
  • Child brides often do not understand the meaning and responsibilities of marriage.

[V] Harassment

(a) Trafficking and forced prostitution

  • Human trafficking, especially of girls and women, often leads to forced prostitution and sexual slavery.

(b) Online abuse

  • As internet becomes an increasingly important part of human existence to make their voices heard, a woman’s inability to feel safe online is an impediment to her freedom.
  • Women are regularly subject to online rape threats, online harassment, cyber-stalking, blackmail, trolling, slut-shaming and more.

(c) Harassment at the workplace

  • The #MeToo movement is aimed at demonstrating how many women have survived sexual assault and harassment, especially in the workplace.
  • Scores of women, many journalists, came out with accounts of sexual harassment at workplace, mostly comprising of indecent remarks, unwanted touches, demands for sex, and the dissemination of pornography.

Various laws for their protection

Various special laws relating to women include:

  • Protection of Women from Domestic Violence Act, 2005
  • Dowry Prohibition Act, 1961
  • Indecent Representation of Women (Prohibition) Act, 1986
  • Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
  • Prohibition of Child Marriage Act, 2006

The Government has also taken a number of initiatives for safety of women and girls, which are given below:

  • Nirbhaya Fund for projects for the safety and security of women
  • One-Stop Centre Scheme to provide integrated support and assistance to women affected by violence, both in private and public spaces under one roof
  • Online analytic tool for police called “Investigation Tracking System for Sexual Offences” to monitor and track time-bound investigation in sexual assault cases in accordance with Criminal Law (Amendment) Act 2018.
  • National Database on Sexual Offenders (NDSO) to facilitate investigation and tracking of sexual offenders across the country by law enforcement agencies
  • In order to coordinate various initiatives for women safety, MHA has set up a Women Safety Division.

MHA has issued advisories to all State Governments/UTs, advising them to ensure thorough investigation, conducting of medical examination of rape victims without delay and for increasing gender sensitivity in Police.

What makes women so vulnerable in India?

[I] Reinforced patriarchy

  • The perpetuation of violence against women in India continues as a result of many systems of sexism and Patriarchy in place within Indian culture.
  • Beginning in early childhood, young girls are given less access to education than their male counterparts.
  • Gender-based inequality is present even before that, however, as it is reported that female children are often fed less and are given less hearty diets that contain little to no butter, milk, or other more hearty foods

[II] Protecting ‘Dignity’

  • Women who are put in a situation where they are being subjected to gender-based violence are often victim shamed, being told that their safety is their own responsibility and that whatever may happen to them is their own fault.
  • In addition to this, women are very heavily pressured into complicity because of social and cultural beliefs, such as family honour.

[III] Popular culture

  • Even when girls are taught about the inequity they will face in life, boys are uneducated on this and are therefore unprepared to treat women and girls as equals.
  • Later in life, the social climate continues to reinforce inequality, and consequently, violence against women.
  • One popular depiction of this is electronic media such as movies where abuse of women is the most objectified topic.

Why stringent laws have failed?

(1) Stringent penalties aren’t deterrent

  • For crimes of different kinds across the world, nobody has been able to conclusively say that the death penalty is an effective deterrent.
  • It appears as though the call for the death penalty is more an outcome of outrage than of serious thought on what can change the prevailing situation.
  • Governments that want to look like they are ‘tough on crime’ are quick to respond to these calls.

(2) Dreadful trials

  • In countries like India, the certainty of punishment is relatively low and legal trials are often harder on victims than on the accused (leading to them withdrawing the case).
  • Simply changing the quantum of punishment in a few famous incidents is unlikely to deter others, as most cases either languish in the courts or are dismissed due to lack of evidence.

(3) Delayed Justice

  • Consider Nirbhaya’s case when one gets justice after almost 9 years.
  • This discourages families to seek justice as the accused gets bail and is freed until proven guilty.

 (4) Reduced reporting

  • In a large number of rape cases (94.6% of cases in 2016, for instance, according to the National Crime Records Bureau), the accused is known to the victim.
  • Given that scenario – say the accused is an uncle – having the threat of the death penalty looming over the case may make victims less likely to report cases of sexual violence, or even face increased pressure from their families to keep the matter to themselves.

(5) More chances of murder/increased violence

  • Once it is clear that the death or any other penalty is highly probable or inevitable in rape cases, it may in fact have the opposite impact – instead of acting as a deterrent.
  • It could lead to perpetrators making sure the victims are left dead and body is mutilated or disposed off or in no state to make a complaint or recognise the perpetrators.

(6) Retributive justice

  • Retributive justice is a theory of punishment that when an offender breaks the law, justice requires that they suffer in return, and that the response to a crime is proportional to the offence.
  •  Some argue that the state has a duty to support society’s retributive rage against those convicted of crimes such as rape.
  • This argument is a slippery slope as it leads to a revenge culture.

We prevent our sisters/daughter of late-night outing but do not show the courage to complain against improper lighting in public spaces, unreliable public transport and no visible presence of the guardians of the law during odd hours of the night.

Way forward

  • Gender-based violence, an especially violent crime like rape, is a multifaceted problem.
  • To address this, it is essential to tackle various other concurrent issues that act as contributing factors and thus play an equally important role.
  • Although the incorporation of stringent laws and stricter punishments are important to deter people from committing such crimes, the solution to this is much more than just promulgation.
  • It is important to acknowledge that judicial reform is only one aspect; there is a more humane side to this whole issue.

Conclusion

  • Every society, when confronted with conscience-jolting reacts with vindictive anger.
  • Crimes against women are a blot on our conscience and we must spare no effort to punish the perpetrators of such crimes.
  • The protection of women from all forms of abuse and oppression should be a national duty and a priority task.

References

https://www.tandfonline.com/doi/full/10.3402/gha.v7.23718

https://www.endvawnow.org/uploads/browser/files/understanding_womens_safety.pdf

https://www.washingtonpost.com/news/monkey-cage/wp/2015/02/11/how-laws-around-the-world-do-and-do-not-protect-women-from-violence/

https://www.dailyo.in/variety/crimes-against-women-violence-against-women-rapes-molestation-thomson-reuters-report/story/1/26019.html

http://www.womenlawsindia.com/legal-awareness/crimes-against-women/

https://thewire.in/women/rape-death-penalty

Categories
Burning Issues

[Burning Issue] Highlights of the 15th Finance Commission Report 2021-26

This year’s Union budget was accompanied by the unveiling of the Fifteenth Finance Commission’s report for the period 2021-22 to 2025-26. This report outlines some crucial recommendations for state governments, covering tax devolution, grants from the Centre, and the guidelines for the borrowings that they are permitted to incur over the medium-term.

Context

  • The Finance Commission is a constitutional body formed by the President of India to give suggestions on centre-state financial relations.
  • The 15th Finance Commission was required to submit two reports. The commission’s chairman is N. K. Singh, with its full-time members being Ajay Narayan Jha, Ashok Lahiri and Anoop Singh.
  • The first report, consisting of recommendations for the financial year 2020-21, was tabled in Parliament on February 1, 2020.

Background

What is the Finance Commission?

  • The Finance Commission (FC) was established by the President of India in 1951 under Article 280 of the Indian Constitution.
  • It was formed to define the financial relations between the central government of India and the individual state governments.
  • The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
  • As per the Constitution, the FC is appointed every five years and consists of a chairman and four other members.
  • Since the institution of the First FC, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the FC’s recommendations over the years.

Constitutional Provisions

Several provisions to bridge the fiscal gap between the Centre and the States were already enshrined in the Constitution of India, including Article 268, which facilitates levy of duties by the Centre but equips the States to collect and retain the same.

Article 280 of the Indian Constitution defines the scope of the commission:

  1. The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as the deemed necessary by him/her, which shall include a chairman and four other members.
  2. Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
  3. The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.

Important functions

  • Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
  • Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
  • To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.
  • Any other matter related to it by the president in the interest of sound finance.

Members of the Finance Commission

  • The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards.
  • It laid down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.
  • The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
  1. Are, or have been, or are qualified, as judges of a high court,
  2. Have knowledge of government finances or accounts, or
  3. Have had experience in administration and financial expertise; or
  4. Have special knowledge of economics

Major Highlights of the Report 2021-26

The final report with recommendations for the 2021-26 period was tabled in Parliament on February 1, 2021.  Key recommendations in the report for 2021-26 include:

[A] Share of states in central taxes

  • Vertical devolution: The share of states in the central taxes for the 2021-26 period is recommended to be 41%, same as that for 2020-21. 
  • This is less than the 42% share recommended by the 14th Finance Commission for 2015-20 periods. 
  • The adjustment of 1% is to provide for the newly formed union territories of Jammu and Kashmir, and Ladakh from the resources of the centre. 

[B] Criteria for devolution

  • Table below shows the criteria used by the Commission to determine each state’s share in central taxes, and the weight assigned to each criterion. 
  • The criteria for distribution of central taxes among states for 2021-26 period is same as that for 2020-21. 
  • However, the reference period for computing income distance and tax efforts are different (2015-18 for 2020-21 and 2016-19 for 2021-26), hence, the individual share of states may still change. 

Table : Criteria for Horizontal Devolution

Criteria14th FC 2015-2015th FC 2020-2115th FC 2021-26
Income Distance50.045.045.0
Area15.015.015.0
Population (1971)17.5
Population (2011)#10.015.015.0
Demographic Performance12.512.5
Forest Cover7.5
Forest and Ecology10.010.0
Tax and fiscal efforts*2.52.5
Total100100100
  • Income distance: Income distance is the distance of a state’s income from the state with the highest income. 
  • Demographic performance: The Commission was required to use the population data of 2011 while making recommendations.  The demographic performance criterion has been used to reward efforts made by states in controlling their population.  States with a lower fertility ratio will be scored higher on this criterion. 
  • Forest and ecology: This criterion has been arrived at by calculating the share of the dense forest of each state in the total dense forest of all the states.
  • Tax and fiscal efforts: This criterion has been used to reward states with higher tax collection efficiency.  It is measured as the ratio of the average per capita own tax revenue and the average per capita state GDP during the three years between 2016-17 and 2018-19.

[C] Grants

Over the 2021-26 periods, the following grants will be provided from the centre’s resources:

(1) Sector-specific grants

  • Sector-specific grants of Rs 1.3 lakh crore will be given to states for eight sectors. A portion of these grants will be performance-linked.
  • He sectors are: (i) health, (ii) school education, (iii) higher education, (iv) implementation of agricultural reforms, (v) maintenance of PMGSY roads, (vi) judiciary, (vii) statistics, and (viii) aspirational districts and blocks. 

(2) State-specific grants

  • The Commission recommended state-specific grants of Rs 49,599 crore. 
  • These will be given in the areas of: (i) social needs, (ii) administrative governance and infrastructure, (iii) water and sanitation, (iv) preservation of culture and historical monuments, (v) high-cost physical infrastructure, and (vi) tourism

(3) Grants to local bodies

  • Grants to local bodies (other than health grants) will be distributed among states based on population and area, with 90% and 10% weightage, respectively. 
  • No grants will be released to local bodies of a state after March 2024 if the state does not constitute State Finance Commission and act upon its recommendations by then.

(4) Disaster risk management

  • The Commission recommended retaining the existing cost-sharing patterns between the centre and states for disaster management funds. 
  • The cost-sharing pattern between centre and states is: (i) 90:10 for north-eastern and Himalayan states, and (ii) 75:25 for all other states. 
  • State disaster management funds will have a corpus of Rs 1.6 lakh crore (centre’s share is Rs 1.2 lakh crore).

[D] Fiscal roadmap

(1) Fiscal deficit and debt levels

  • The Commission suggested that the centre bring down fiscal deficit to 4% of GDP by 2025-26. 
  • For states, it recommended the fiscal deficit limit (as % of GSDP) of: (i) 4% in 2021-22, (ii) 3.5% in 2022-23, and (iii) 3% during 2023-26. 
  • It recommended forming a high-powered inter-governmental group to: (i) review the Fiscal Responsibility and Budget Management Act (FRBM), (ii) recommend a new FRBM framework for centre as well as states, and oversee its implementation.

(2) Revenue mobilization

  • Income and asset-based taxation should be strengthened, recommended the commission. 
  • To reduce excessive dependence on income tax on salaried incomes, the coverage of provisions related to tax deduction and collection at source (TDS/TCS) should be expanded. 
  • Stamp duty and registration fees at the state level have large untapped potential. 

(3) GST

  • Revenue neutrality of GST rate should be restored which has been compromised by multiple rate structure and several downward adjustments. 
  • Rate structure should be rationalized by merging the rates of 12% and 18%. 
  • States need to step up field efforts for expanding the GST base and for ensuring compliance.

(4) Financial management practices

  • A comprehensive framework for public financial management should be developed. 
  • An independent Fiscal Council should be established with powers to assess records from the centre as well as states.
  • The Council will only have an advisory role.

[E] Other recommendations

(1) Health

  • States should increase spending on health to more than 8% of their budget by 2022. 
  • Primary healthcare expenditure should be two-thirds of the total health expenditure by 2022. 
  • All India Medical and Health Service should be established.

(2) Defence and internal security

  • A dedicated non-lapsable fund called the Modernization Fund for Defence and Internal Security (MFDIS) should be established.
  • It will primarily bridge the gap between budgetary requirements and allocation for capital outlay in defence and internal security. 
  • The fund will have an estimated corpus of Rs 2.4 lakh crore over the five years (2021-26).   Of this, Rs 1.5 lakh crore will be transferred from the Consolidated Fund of India. 
  • Rest of the amount will be generated from measures such as disinvestment of defence public sector enterprises, and monetisation of defence lands.

(3) Centrally sponsored schemes (CSS)

  • A threshold should be fixed for annual allocation to CSS below which the funding for a CSS should be stopped (to phase out CSS which outlived its utility or has insignificant outlay). 
  • Third-party evaluation of all CSS should be completed within a stipulated timeframe. 
  • Funding pattern should be fixed upfront in a transparent manner and be kept stable.

Criticisms of the report

(1) 2011 census population as criteria

  • The commission’s proposal to use the 2011 Census figures as the basis to allocated union tax revenues will adversely affect the ability of Tamil Nadu and Kerala to provide an effective welfare state for their residents.
  • The basis for this claim is that southern states have (through a combination of improved health and education) reduced birth rates and total fertility rates far more than the northern states,.
  • Thus allocation union tax revenues on the basis of population will “punish” the southern states for following sensible policies.

(2) Creating a regional divide

  • In spite of this balancing act, however, the South has lost out. This yet again creates a North-South divide.
  • Karnataka was the biggest loser, with its share being slashed from 4.71% to 3.65%.
  • Of the five biggest losers, four are the southern states of Kerala, Karnataka, Andhra Pradesh and Telangana.

Significance of FC recommendations

  • As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.
  • Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of revenue, in the process of fulfilling their responsibilities.
  • However, states are better able to gauge the needs and concerns of their inhabitants and therefore more efficient at addressing them.
  • Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments, and can widen over time.

Conclusion

  • The positive of India being a political and economic union is what the XVFC tries to convey.
  • However, FCs has always struggled in balancing between ensuring equitable fund distribution among regions and fair fiscal federalism.
  • The best way forward would be to adhere to the letter and spirit of the constitution by balancing the Union and state’s revenue powers with expenditure responsibilities listed in the 7th schedule.
  • The government must appreciate the problems raised by states, and attempt to address the contemporary issues relevant to the terms of reference.

The report starts with the famous quote of Mahatma Gandhi: “The future depends on what we do in the present”. It would be interesting to see the impact of these overarching and revolutionary recommendations in the times ahead.


References:

https://www.prsindia.org/policy/report-summaries/report-15th-finance-commission-2021-26#.YDTwjXaMaZE.whatsapp

https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section=1  (Page no. 399 onwards)

https://pib.gov.in/PressReleasePage.aspx?PRID=1693868

https://www.bloombergquint.com/business/15th-finance-commission-report-challenges-and-controversies

https://scroll.in/article/952357/how-15th-finance-commission-is-trying-to-manage-south-indias-anger-over-tax-division-and-failing

Categories
Burning Issues

[Burning Issue] Climate Resilient Agriculture

India is witnessing a historic mass mobilization of farmers against three new farm laws. The country’s government maintains that these laws are the cure for a longstanding agrarian crisis. While this claim has been analysed from several angles, the environmental angle has often been overlooked. This is no small oversight since the agrarian crisis in India is underpinned by strong environmental vulnerabilities, including those associated with climate change.

India’s Agriculture: A Backgrounder  

Agriculture in India is a livelihood for a majority of the population and can never be underestimated.

Despite the fact that it accounts for as much as a quarter of the Indian economy and employs an estimated 60 per cent of the labour force, it is considered highly inefficient and incapable of solving the hunger and malnutrition problems. Despite progress in this area, these problems have continued to frustrate India for decades.

(1) Legacy issues

  • Agriculture is the primary source of livelihood for about 58 per cent of India’s population.
  • Most of them have been facing several major constraints such as input supply, credit availability, proper transport, and market facility, etc.

(2) Land Crunch

  • India accounts for only 2.4 per cent of the global land.
  • The average size of landholding per state is 1.08 hectares, according to the latest agricultural census.
  • Farmers in half the Indian states are marginal (with land less than 1 ha); the remaining are small farmers (landholdings of 1-2 ha).

(3) Population explosion

  • India’s population touched 1.38 billion in 2020 —17.7 per cent of the world’s population — according to global population data.
  • The country’s population has increased 3.35 times since Independence; by 2027, it will surpass China to become the most populated country in the world.

What holds Indian farmers on a backfoot always?

Major constraints in Indian agriculture are:

  • Farming for subsistence makes the scale of the economy in question with a majority of smallholdings.
  • Low-access of credit and the prominent role of unorganised creditors affecting decisions of farmers in purchasing of inputs and selling of outputs
  • Less use of technology, mechanisation and poor productivity for which the first two points are of major concern
  • Very less value addition as compared to developed countries and negligible primary-level processing at farmers level.
  • Poor infrastructure for farming making more dependence on weather, marketing and supply chain suitable for high-value crops.

Climate Change and Agriculture

  • One of the critical challenges for a country’s food security is climate change and its impact in form of extreme weather events.
  • The predicted 1-2.5 degrees Celsius temperature rise by 2030 is likely to show serious effects on crop yields.
  • High temperatures may reduce crop duration, permit changes in photosynthesis, escalate crop respiration rates and influence pest population.
  • Climate change accelerates nutrient mineralization, hampers fertilizer use efficiency (FUE) and hastens the evapotranspiration in soil.

Agri sub-sectors and climate change

(1) Foodgrains

  • Cultivation practices are completely based on climatic situations.
  • For example, in India, an increase in temperature by 1.5°C and a reduction in the precipitation of 2 mm can reduce the rice yield by 3 to 15 per cent.

(2) Horticulture

  • High temperature causes moisture stress situation, directing to sunburn and cracking symptoms in fruit trees like apricot, apples and cherries.
  • The temperature increase at the ripening stage causes fruit burning and cracking in litchi plantation.

(3) Animal husbandry

  • Dairy breeds are more prone to heat stress than meat breeds.
  • An increase in metabolic heat production breeds leads to higher susceptibility to heat stress; while the low milk giving animals are resistant.
  • Poultries, no doubt, are severely sensitive to temperature-associated problems, particularly heat stress.

(4) Fisheries

  • Increasing environmental temperature may cause seasonal betterment in the growth and development of fishes.
  • But it also enhances the dangers to the populations living away from the thermal tolerance zone.

Burden on Agriculture

(1) Food Security

  • Nearly 14 per cent of the population (189.2 million) is still undernourished in India, according to the State of Food Security and Nutrition in the World, 2020 report.
  • The Global Hunger Index 2020 placed India at the 94th position among 107 countries.
  • Food production must double by 2050 to match the country’s population and income growth.

(2) Demand for nutrition

  • Changing demand due to an increase in incomes, globalisation and health consciousness is affecting and going to affect more the production in future. 
  • Demand for fruits and vegetables, dairy products, fish and meat is going to increase in future.

(3) Trend for processed food

  • Researches, technology improvements, protected cultivation of high-value greens and other vegetables will be more.
  • There will be more demand for processed and affordable quality products.

(4) Technology intensiveness

  • More competition will be there among private companies giving innovative products, better seeds, fertilizers, plant protection chemicals, customised farm machinery and feed for animals.
  • There would be a requirement of cost-effective ways at competitive prices giving more returns on investment by farmers.

One point solution: Climate-resilient agriculture

What is Climate-Resilient Agriculture?

Climate-resilient agriculture (CRA) is an approach that includes sustainably using existing natural resources through crop and livestock production systems to achieve long-term higher productivity and farm incomes under climate variabilities.

Why CRA?

Most countries have been facing crises due to disasters and conflicts; food security, however, is adversely affected by inadequate food stocks, basic food price fluctuations, high demand for agro-fuels, and abrupt weather changes.

  • CRA practice reduces hunger and poverty in the face of climate change for forthcoming generations.
  • It can alter the current situation and sustain agricultural production from the local to the global level, especially in a sustainable manner.
  • Improved access and utilization of technology, transparent trade regimes, increased use of resources conservation technologies, an increased adaptation of crops and livestock to climatic stress are the outcomes.

Strategies and technologies in CRA

(1) Tolerant crops

  • Patterns of drought may need various sets of adaptive forms.
  • To reach deficient downpour conditions, early maturing and drought-tolerant cultivars need to be developed.

(2) Tolerant breeds in livestock and poultry

  • Local or indigenous breeds have the notion to forage for themselves. Indigenous breeds have unique characters that are adapted to very specific eco-systems across the world.
  • They are resistant to droughts, thermo-regulation, ability to walk long distances, fertility and mothering instincts, ability to ingest and digest low-quality feed, and resistance to diseases.
  • These breeds may not be highly productive in terms of meat or milk production, but are highly adaptive to the unpredictable nature and have low resource footprints.

(3) Water management

  • Water-smart technologies like a furrow-irrigated raised bed, micro-irrigation, rainwater harvesting structure, cover-crop method, greenhouse, etc. can support farmers to decrease the effect of variations of climate.
  • Hence, many researches across the world have been focusing their efforts on the design, development of cost-effective and environmentally friendly water-conserving devices to enhance water use efficiency.

(4) Agro-advisory

  • Response farming is an integrative approach; it could be called farming with advisories taken from the technocrats depending on local weather information.
  • The success of response farming, viz., decreased danger and enhanced productivity has already been taken in Tamil Nadu and many other states.

(5) Soil organic carbon

  • Different farm management practices can increase soil carbon stocks and stimulate soil functional stability.
  • Conservation agriculture technologies (reduced tillage, crop rotations, and cover crops), soil conservation practices (contour farming) and nutrient recharge strategies can refill soil organic matter by giving a protective soil cover.
  • Feeding the soil instead of adding fertilizers to the crop without organic inputs is the key point for the long-term sustainability of Indian agriculture.

GoI moves in this direction

The convergence of various policy programmes and sectoral plans has been undertaken by the GoI to ensure synergy and effective utilization of existing resources.

  • The National Mission of Sustainable Agriculture was implemented in 2010 under the National Action Plan on Climate Change (NAPCC).
  • It aimed to promote the judicious management of available resources and this was one of the eight missions under NAPCC.
  • The Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) was launched in 2015 to address the issues of water resources and provide a permanent solution that envisages Per Drop More Crop.
  • The Paramparagat Krishi Vikas Yojana mission was executed to extensively leverage adaptation of climate-smart practices and technologies.
  • To protect soil health, GOI has launched the Soil Health Card scheme with the main objective of analysing cluster soil samples and advocating farmers regarding their land fertility status.
  • Additionally, Neem-Coated Urea was also introduced to minimise the excess addition of urea fertilizers, thereby protecting soil health and supplying plant nitrogen.
  • To encourage farmers with more income benefit and ecosystem protection, programmes such as the National Project on Organic Farming and National Agroforestry Policy was introduced in 2004 and 2014 respectively.

Way forward

  • The most important pillar of realizing CRA in India is capacity building at all levels.
  • For mobilization and allocation of climate finance, we must follow the principles, such as people’s vulnerability-and livelihood-centred approach, polluter-pays principle and a programmatic approach for implementation of the plans and strategies.
  • Though environmental sustainability is typically a public good, public investments alone will not suffice to effectively address climate change.
  • Achieving climate resilience will require all kinds of professionals, lower and higher, must undergo basic training on how to tackle climate change, from the perspective of each profession and trade.
  • In fact, a whole of society approach is needed—from awareness to education and skill development of all types, with skills, expertise and policy research along with finance, for tackling climate change.

Conclusion

  • The increase in agriculture-sector expenditure in recent years has been on account of schemes like PM-KISAN, PMFBY, interest subvention and price support and loan waivers, with a focus on providing direct monetary benefits.
  • Apart from efforts aimed at helping the agrarian economy recover, the government should enhance expenditure on agricultural infrastructure.
  • A number of reports have highlighted that farm operations suffered due to infrastructure bottlenecks such as supply chain distortions, non-availability of credit, lack of quality inputs and marketing infrastructure.
  • Instead of cash-based schemes, India needs expenditure enhancing infrastructure for a climate-resilient future.

References:

https://theconversation.com/india-protests-farmers-could-switch-to-more-climate-resilient-crops-but-they-have-been-given-no-incentive-154700

http://www.fao.org/3/nc938en/nc938en.pdf

https://www.downtoearth.org.in/blog/agriculture/why-india-needs-climate-resilient-agriculture-systems-75381

https://www.downtoearth.org.in/blog/agriculture/climate-resilient-agriculture-systems-the-way-ahead-75385

 

Categories
Burning Issues

[Burning Issues] Chamoli Disaster

PC: The Quint

A massive glacier burst at Chamoli in Uttarakhand has yet again brought back our focus to the dangers of climate change. At least 58 people are confirmed to have been killed and more than 150 are missing.

Background

  • The flash flood began on 7 February 2021 in the environs of the Nanda Devi National Park in the outer Garhwal Himalayas in Uttarakhand.
  • It is believed to have been caused by a landslide, an avalanche or a glacial lake outburst flood.
  • It has caused flooding in the Chamoli district, most notably in the Rishiganga River, the Dhauliganga River, and in turn the Alaknanda the major headstream of the Ganges.

What has happened in Chamoli?

  • Experts are uncertain about what caused the massive Glacial Lake Outburst Flood at Chamoli in Uttarakhand.
  • It is unclear whether there was an avalanche in the area recently or whether the lake breach was the result of construction, anthropological activities, climate change etc.

A GLOF or glacial lake outburst flood is suspected. However, the paradox is that this region of the Himalayas does not have any known glacier lakes. However, if it was indeed a GLOF, the question of where the glacier lake is still holding.

What is Glacial Lake Outburst Flood (GLOF)?

  • A GLOF is a type of outburst flood that occurs when the dam containing a glacial lake fails.
  • An event similar to a GLOF, where a body of water contained by a glacier melts or overflows the glacier, is called a jökulhlaup.
  • The dam can consist of glacier ice or a terminal moraine.
  • Failure can happen due to various factors such as:
  1. Erosion, a buildup of water pressure
  2. Avalanche of rock or heavy snow
  3. Earthquake or volcanic eruptions under the ice or
  4. Displacement of water in a glacial lake when a large portion of an adjacent glacier collapses into it

Possible causes

(A) Avalanche

  • An avalanche is falling masses of snow and ice which gathers pace as it comes down the slope.
  • It is often caused by erosion or small tremors of earthquakes.
  • But an avalanche is unlikely to result in the rise of water of that magnitude what Chamoli witnessed.

(B) Cloudburst

  • What happened in Uttarakhand in 2013 was a multi-day cloudburst.
  • It is a sudden, very heavy rainfall accompanies by a thunderstorm. But it generally happens in monsoon.
  • In fact, the season in which such a disaster was witnessed has surprised experts as there is no immediate trigger that can be pointed to as the reason why water level rose to that level washing away two hydro projects.

(C) Water pockets

  • Satellite images do not show a glacial lake near the region, but there’s a possibility there may be a water pocket in the region.
  • Water pockets are lakes inside the glaciers, which may have erupted leading to this event. 

Uttarakhand is the birthplace of India’s environmental consciousness as this is where the women stopped the felling of trees in the Chipko Movement.

Why is Uttarakhand so vulnerable to the disasters?

(A) Mystery lies covered under the glaciers

  • There are over 1,000 glaciers in Uttarakhand. Almost all of them are receding. Most of the glaciers also have debris cover.
  • When glaciers retreat due to rising temperatures, the snow melts but the debris remains. This debris aids in the formation of lakes.

Cause: Retreat of glaciers

  • Glaciers have reduced considerably in mass and surface area since the little ice age period.
  • This has led to the formation of a large number of glacial lakes all across the Himalayas.
  • Many of these high-altitude lakes are potentially dangerous, because of their potential to cause flash floods in the event of a breach.

(B) Topography

  • Uttarakhand is located in the midst of young and unstable mountains and is subject to intense rainfall.
  • Over the years, the frequency of formation of these lakes has increased.

(C) Seismic activities

  • The Himalayas are the world’s youngest mountain ranges, prone to erosion and landslides and unstable because of high seismic activity.
  • The current policy of the government of pursuing hydro-power projects indiscriminately cannot be ignored.
  • The entire State of Uttarakhand is categorised as falling in Zone-IV and V of the earthquake risk map of India.

(D) Anthropogenic causes

  • There is indiscriminate construction activity and the subsequent ecological destruction in the Himalayan region in the name of urbanization and tourism development.
  • Studies have shown that widespread settlements, farming, cattle grazing and other anthropogenic activities have destroyed the natural barriers that control avalanches and floods.

What conspiracy theorists have to say?

  • Back in 1964, the Chinese tested their first nuclear weapon and India got worried because it was a next-door neighbour.
  • The mishap has led to murmurs that the tragedy could possibly be linked to a nuclear device that was left behind during a joint IB (Intelligence Bureau) and CIA (Central Intelligence Agency) operation.
  • Its radiations could have triggered the melting of snow as well as the glacier, argued the theorists, leading to the glacial outburst.

Last words ……

(A) The Himalayas are at the Climate edge

  • The recent climate change assessment report for India shows significant melting and decline in glacier mass over the Himalayan region in recent decades due to warmer temperatures. 
  • There is no doubt that global warming has resulted in the warming of the region.
  • Climate change-driven erratic weather patterns like increased snowfall and rainfall, warmer winters have led to the melting point of a lot of snow.

(B) Obsession with Hydropower has to be limited

  • As of today, some 7,000 MW of hydroelectric projects are either operating or being constructed in this fragile region; back to back; with no respect for the river or its need to flow naturally.
  • The issue is not about hydropower generation or the need for energy or development.
  • It is about the carrying capacity of this fragile region, which is even more at risk because of climate change.

Way forward

We need to urgently rise up to the challenge by applying innovative and inclusive solutions that support nature and communities, to restore and rebuild a resilient future for Uttarakhand. For that, a holistic approach is required, which would work on real-time assessment of the highly vulnerable Himalayan region.

Steps that need to be taken at earliest

  1. Investing in resilience planning, especially in flood prevention and rapid response.
  2. Climate proofing the infrastructure such as by applying road stabilization technologies for fragile road networks and strengthening existing structures like bridges, culverts and tunnels.
  3. Strengthening embankments with adequate scientific know-how
  4. Reassessing development of hydropower and other public infrastructure.
  5. Investing in robust monitoring and early warning system.
  6. Establishing implementable policies and regulatory guidelines to restrict detrimental human activities, including responsible eco- and religious tourism policies.
  7. Investing in training and capacity building to educate and empower local communities to prevent and manage risks effectively.

Broader planning and management must include:

(a) Coherent research

  • There are a lot more glaciologists and others who are working in the area and generating data.
  • Multiple scientific groups and institutions are involved. But there is no coherent output. Lots of data are being generated but not being put to good use.
  • There has to be one agency dedicated to the job.

(b) Monitoring

  • The first step in tackling the threat from these glacial lakes is to start monitoring them and the glaciers more actively and regularly.
  • There is a need to monitor every glacier. Glaciers in one basin do not have remarkably different properties.
  • Relying only on satellites and remote sensing is not going to be enough.
  • What is required is a consolidated state of glaciers in India, with the ability to zoom in on any of them and track the changes happening year by year.

(c) Planning

  • Construction-related activities in the state might not have a direct link to Chamoli incident, but these are not entirely benign.
  • The Himalayas are very young mountain systems, and extremely fragile and a minor change in orientation of the rocks can be enough to trigger landslides.
  • It is important to include glaciers in any environment impact assessment for major projects such as the construction of dams.
  • The entire catchment areas should be made part of the impact assessment.

(d) Mitigation

  • If we monitor the glaciers regularly, it would enable us to identify the lakes that need mitigation solutions.
  • Several structural and geotechnical measures can be applied, and there are successful examples where the threat from these lakes has been reduced.
  • It is possible to construct channels for the gradual and regulated discharge of water from these lakes, which will reduce the pressure on them, and minimise the chances of a breach.
  • At the same time, it also reduces the volume of water that goes into the flash flood. Also, alarm systems can be set up at the lakes that will warn the community downstream whenever an overflow happens.

Conclusion

  • It is not possible to completely prevent these kinds of incidents. But their potential to cause destruction can certainly be minimized.
  • Scientists can find a way to let the lake waters slowly drain at the nearby river at a regulated rate so that there is no flooding, and the pressure on the lake does not become unbearable.
  • Such solutions can be applied in Uttarakhand, and some work is being done.

It is said that those who fail to learn from history are doomed to suffer from it repeatedly. It is high time, therefore, for the government to realize that the Himalayan Mountains are fragile and impatient.


References

https://www.downtoearth.org.in/blog/climate-change/chamoli-glacier-burst-it-is-time-to-learn-from-our-mistakes-75419

https://timesofindia.indiatimes.com/india/uttarakhands-chamoli-disaster-what-we-know-so-far/articleshow/80748947.cms

Categories
Burning Issues

[Burning Issue] Key Highlights of Economic Survey 2020-21

Union Minister for Finance recently presented the Economic Survey 2020-21 in the Parliament. The key highlights are as follows:

[1] Saving Lives and Livelihoods amidst a Once-in-a-Century Crisis

  • India focused on saving lives and livelihoods by its willingness to take short-term pain for long-term gain, at the onset of the COVID-19 pandemic
  • Response stemmed from the humane principle that Human lives lost cannot be brought back
  • GDP growth will recover from the temporary shock caused by the pandemic
  • An early, intense lockdown provided a win-win strategy to save lives, and preserve livelihoods via economic recovery in the medium to long-term
  • The strategy also motivated by the Nobel-Prize winning research by Hansen & Sergeant (2001): a policy focused on minimizing losses in a worst-case scenario when uncertainty is very high.

[2] State of the Economy in 2020-21: A Macro View

Growth and recovery

  • COVID-19 pandemic ensued global economic downturn, the most severe one since the Global Financial Crisis
  • The lockdowns and social distancing norms brought the already slowing global economy to a standstill
  • Global economic output estimated to fall by 3.5% in 2020 (IMF January 2021 estimates)
  • India adopted a four-pillar strategy of containment, fiscal, financial, and long-term structural reforms:
  • India’s real GDP to record a 11.0% growth in FY2021-22 and nominal GDP to grow by 15.4% – the highest since independence.
  • Agriculture set to cushion the shock of the pandemic on the Indian economy in FY21 with a growth of 3.4%
  • Industry and services estimated to contract by 9.6% and 8.8% respectively during FY21
  • V-shaped recovery is underway, as demonstrated by a sustained resurgence in high frequency indicators such as power demand, e-way bills, GST collection, steel consumption, etc.

External sector

  • India remained a preferred investment destination in FY 2020-21 with FDI pouring in amidst global asset shifts towards equities and prospects of quicker recovery in emerging economies:
  • Net FPI inflows recorded an all-time monthly high of US$ 9.8 billion in November 2020, as investors’ risk appetite returned

Vaccination boost

  • Economy’s homecoming to normalcy brought closer by the initiation of a mega vaccination drive
  • India became the fastest country to roll-out 10 lakh vaccines in 6 days and also emerged as a leading supplier of the vaccine to neighbouring countries and Brazil

[3] Does Growth lead to Debt Sustainability? Yes, But Not Vice- Versa!

Growth causes debt to become sustainable in countries with higher growth rates; such clarity about the causal direction is not witnessed in countries with lower growth rates. Fiscal multipliers are disproportionately higher during economic crises than during economic booms. 

Hue over debts

  • Growth leads to debt sustainability in the Indian context but not necessarily vice-versa:
  • Debt sustainability depends on the ‘Interest Rate Growth Rate Differential’ (IRGD), i.e., the difference between the interest rate and the growth rate
  • Negative IRGD in India – not due to lower interest rates but much higher growth rates – prompts a debate on fiscal policy, especially during growth slowdowns and economic crises
  • In India, the interest rate on debt is less than the growth rate – by the norm, not by exception

Policy goals

  • Active fiscal policy can ensure that the full benefit of reforms is reaped by limiting potential damage to productive capacity
  • Fiscal policy that provides an impetus to growth will lead to a lower debt-to-GDP ratio
  • Given India’s growth potential, debt sustainability is unlikely to be a problem even in the worst scenarios
  • Desirable to use countercyclical fiscal policy to enable growth during economic downturns
  • Active, counter-cyclical fiscal policy – not a call for fiscal irresponsibility, but to break the intellectual anchoring that has created an asymmetric bias against fiscal policy

[4] Does India’s Sovereign Credit Rating Reflect Its Fundamentals? No!

  • The fifth-largest economy in the world has never been rated as the lowest rung of the investment-grade (BBB-/Baa3) in sovereign credit ratings
  • Reflecting the economic size and thereby the ability to repay debt, the fifth-largest economy has been predominantly rated AAA
  • China and India are the only exceptions to this rule – China was rated A-/A2 in 2005 and now India is rated BBB-/Baa3

No proper reflection

  • India’s sovereign credit ratings do not reflect its fundamentals
  • A clear outlier amongst countries rated between A+/A1 and BBB-/Baa3 for S&P/ Moody’s, on several parameters
  • Rated significantly lower than mandated by the effect on the sovereign rating of the parameter
  • Credit ratings map the probability of default and therefore reflect the willingness and ability of the borrower to meet its obligations
  • India’s ability to pay can be gauged by low foreign currency-denominated debt and forex reserves

Transparency is inherent

  • India’s fiscal policy reflects Gurudev Rabindranath Tagore’s sentiment of ‘a mind without fear’
  • Sovereign credit rating methodology should be made more transparent, less subjective and better attuned to reflect economies’ fundamentals

[5] Inequality and Growth: Conflict or Convergence?

  • The relationship between inequality and socio-economic outcomes vis-à-vis economic growth and socio-economic outcomes is different in India from that in advanced economies
  • Both inequality and per-capita income (growth) have similar relationships with socio-economic indicators in India, unlike in advanced economies
  • Economic growth has a greater impact on poverty alleviation than inequality
  • India must continue to focus on economic growth to lift the poor out of poverty
  • Expanding the overall pie – redistribution in a developing economy is feasible only if the size of the economic pie grows

[6] Healthcare takes centre stage, finally!

  • COVID-19 pandemic emphasized the importance of the healthcare sector and its inter-linkages with other sectors – showcased how a health crisis transformed into an economic and social crisis
  • India’s health infrastructure must be agile so as to respond to pandemics – healthcare policy must not become beholden to ‘saliency bias’
  • National Health Mission (NHM) played a critical role in mitigating inequity as the access of the poorest to pre-natal/post-natal care and institutional deliveries increased significantly

Reforms are indispensable

  • An increase in public healthcare spending from 1% to 2.5-3% of GDP can decrease the out-of-pocket expenditure from 65% to 35% of overall healthcare spending
  • Emphasis on NHM in conjunction with Ayushman Bharat should continue.
  • Telemedicine needs to be harnessed to the fullest by investing in internet connectivity and health infrastructure

[7] Process Reforms

  • India over-regulates the economy resulting in regulations being ineffective even with relatively good compliance with the process        
  • The root cause of the problem of over-regulation is an approach that attempts to account for every possible outcome
  • Increase in complexity of regulations, intended to reduce discretion, results in even more non-transparent discretion
  • The solution is to simplify regulations and invest in greater supervision which, by definition, implies greater discretion
  • Discretion, however, needs to be balanced with transparency, systems of ex-ante accountability and ex-post resolution mechanisms
  • The above intellectual framework has already informed reforms ranging from labour codes to removal of onerous regulations on the BPO sector

[8] Regulatory Forbearance an emergency medicine, not a staple diet!

  • During the Global Financial Crisis, regulatory forbearance helped borrowers tide over temporary hardship
  • Forbearance continued long after the economic recovery, resulting in unintended consequences for the economy
  • Banks exploited the forbearance window for window-dressing their books and misallocated credit, thereby damaging the quality of investment in the economy
  • Forbearance represents emergency medicine that should be discontinued at the first opportunity when the economy exhibits recovery, not a staple diet that gets continued for years

To promote judgement amidst uncertainty, ex-post inquests must recognize the role of hindsight bias and not equate unfavourable outcomes to bad judgement or malafide intent

  • An Asset Quality Review exercise must be conducted immediately after the forbearance is withdrawn
  • The legal infrastructure for the recovery of loans needs to be strengthened de facto

[9] Innovation: Trending Up but Needs Thrust, Especially from the Private Sector

India entered the top-50 innovating countries for the first time in 2020 since the inception of the Global Innovation Index in 2007, ranking first in Central and South Asia, and third amongst lower-middle-income group economies.

Need for thrust

  • India’s gross domestic expenditure on R&D (GERD) is lowest amongst the top ten economies
  • India’s aspiration must be to compete on innovation with the top ten economies
  • The government sector contributes a disproportionately large share in total GERD at three times the average of the top ten economies
  • The business sector’s contribution to GERD, total R&D personnel and researchers is amongst the lowest when compared to the top ten economies
  • This situation has prevailed despite higher tax incentives for innovation and access to equity capital
  • Indian resident’s share in total patents filed in the country must rise from the current 36% which is much below the average of 62% in the top ten economies

India’s business sector needs to significantly ramp up investments in R&D. For achieving higher improvement in innovation output, India must focus on improving its performance on institutions and business sophistication innovation inputs.

[10] JAY Ho! PM‘JAY’ Adoption and Health outcomes

PM Jan Arogya Yojana (PM-JAY) – the ambitious program launched by Government of India in 2018 to provide healthcare access to the most vulnerable sections demonstrates strong positive effects on healthcare outcomes in a short time.

The impact of PM-JAY on health outcomes by undertaking a Difference-in-Difference analysis based on National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-20) is following:

  1. Enhanced health insurance coverage: The proportion of households that had health insurance increased in Bihar, Assam and Sikkim from 2015-16 to 2019-20 by 89% while it decreased by 12% over the same period in West Bengal
  2. Decline in  Infant Mortality rate: from 2015-16 to 2019-20, infant mortality rates declined by 20% for West Bengal and by 28% for the three neighbouring states
  3. Decline in under-5 mortality rate: Bengal saw a fall of 20% while, the neighbours witnessed a 27% reduction
  4. Birth Control: Modern methods of contraception, female sterilization and pill usage went up by 36%, 22% and 28% respectively in the three neighbouring states while the respective changes for West Bengal were negligible
  5. Low cost care: PM-JAY is being used significantly for high frequency, low cost care such as dialysis and continued during the Covid pandemic and the lockdown.

Overall, the comparison reflects significant improvements in several health outcomes in states that implemented PM-JAY versus those that did not.

[11] Bare Necessities

Access to the ‘bare necessities’ has improved across all States in the country in 2018 as compared to 2012

  • It is highest in states such as Kerala, Punjab, Haryana and Gujarat while lowest in Odisha, Jharkhand, West Bengal and Tripura
  • Improvement in each of the five dimensions viz., access to water, housing, sanitation, micro-environment and other facilities
  • Inter-State disparities declined across rural and urban areas as the laggard states have gained relatively more between 2012 and 2018
  • Improved access to the ‘bare necessities’ has led to improvements in health indicators such as infant mortality and under-5 mortality rate and also correlates with future improvements in education indicators.

What next?

  • The thrust should be given to reduce variation in the access to bare necessities across states, between rural and urban and between income groups
  • The schemes such as Jal Jeevan Mission, SBM-G, PMAY-G, etc. may design an appropriate strategy to reduce these gaps
  • A Bare Necessities Index (BNI) based on the large annual household survey data can be constructed using suitable indicators to assess the progress on access to bare necessities.

References

https://www.indiabudget.gov.in/economicsurvey/

https://pib.gov.in/PressReleseDetail.aspx?PRID=1601273

Categories
Announcements

[Burning Issue] Myanmar Coup

https://d18x2uyjeekruj.cloudfront.net/wp-content/uploads/2021/02/myn.jpg
  • In the early hours of day, Myanmar’s military, also known as the Tatmadaw staged a bloodless coup which brought the country’s recent and limited experiment with democracy to an end.
  • Tens of thousands of protesters poured onto the streets across Myanmar in the biggest anti-coup rallies with deteriorating situation amidst internet ban.

India voiced a strong condemnation of the deeply disturbing developments in Myanmar.

Myanmar: A backgrounder

  • Myanmar, also known as Burma, is in South East Asia and neighbours Thailand, Laos, Bangladesh, China and India.
  • The biggest city is Yangon (Rangoon) but the capital is Nay Pyi Taw.
  • The main religion is Buddhism. There are many ethnic groups in the country, including Rohingya Muslims.
  • The country gained independence from Britain in 1948. It was ruled by the armed forces from 1962 until 2011, when a new government began ushering in a return to civilian rule.

Myanmar under Suu Kyi

  • Aung San Suu Kyi became world-famous in the 1990s for campaigning to restore democracy.
  • She spent nearly 15 years in detention between 1989 and 2010 after organising rallies calling for democratic reform and free elections.
  • She was awarded the Nobel Peace Prize while under house arrest in 1991.
  • In 2015, she led the NLD to victory in Myanmar’s first openly contested election in 25 years.

Her crackdown on Rohingyas

  • Suu Kyi’s international reputation has suffered greatly as a result of Myanmar’s treatment of the Rohingya minority.
  • Myanmar considers them illegal immigrants and denies them citizenship. Over decades, many have fled the country to escape persecution.
  • Thousands of Rohingya were killed and more than 700,000 fled to Bangladesh following an army crackdown in 2017.
  • Ms Suu Kyi appeared before the International Court of Justice in 2019, where she denied allegations that the military had committed genocide.

The ‘infamous’ Coup

  • The military is now backing in charge and has declared a year-long state of emergency.
  • It seized control following a general election which Suu Kyi’s National League for Democracy (NLD) party won by a landslide.
  • The armed forces had backed the opposition, who were demanding a rerun of the vote, claiming widespread fraud.
  • The election commission said there was no evidence to support these claims.
  • Suu Kyi is thought to be under house arrest. Several charges have been filed against her, including breaching import and export laws and possession of unlawful communication devices.

Public has outraged

Suu Kyi has urged her supporters to “protest against the coup”. The nights that followed the military takeover saw people show their dissent by banging pots and honking car horns.

  • The military blocked access to Facebook, which is widely used across the country than Twitter and Instagram. But that failed to stop large nationwide protests on Saturday.
  • The rulers then ordered a full internet blackout. Protesters, again, took to the streets to denounce the coup.
  • Next day saw the country’s largest protests since the so-called Saffron Revolution in 2007, when thousands of the country’s monks rose up against the military regime.

What has the international reaction been?

Experts say that the real motivation behind the military’s action is Suu Kyi’s popularity and growing power, which it believes could erode its control over critical policy domains.

  • The UK, EU and Australia are among those to have condemned the military takeover.
  • UN Secretary-General António Guterres said it was a “serious blow to democratic reforms”.
  • US President Joe Biden has threatened to reinstate sanctions.

Someone seems ‘pleased’

China neither condemned nor expressed any concern. It just said that reconciliation is needed between the civilian set-up and Myanmar military or Tatmadaw.

  • China blocked a UN Security Council statement condemning the coup.
  • The country, which has previously opposed international intervention in Myanmar, urged all sides to “resolve differences”.
  • Its Xinhua news agency described the changes as a “cabinet reshuffle”.
  • Neighbours including Cambodia, Thailand and the Philippines, have said it is an “internal matter”.

The two vastly different stances adopted by India and China offer a glimpse into who stands to gain as military rule returns to Myanmar after 10 years of gradual, albeit limited, political opening.

An analysis: India-Myanmar Relations

India-Myanmar relations are rooted in shared historical, ethnic, cultural and religious ties. As the land of Lord Buddha, India is a country of pilgrimage for the people of Myanmar. The geographical proximity of the two countries has helped develop and sustain cordial relations and facilitated people-to- people contact.

Both share a long land border of over 1600 km (approx.) and a maritime boundary in the Bay of Bengal.

A large population of Indian origin (according to some estimates about 2.5 million) lives in Myanmar. India and Myanmar signed a Treaty of Friendship in 1951.

India’s interests

  • The geographically strategic location of Myanmar makes it a bridge between South Asia and Southeast Asia.
  • India needs a good working relationship with the Myanmar government for its diplomatic and strategic initiatives.
  • This is especially due to China’s nefarious designs in Myanmar, which wants to develop it as a geopolitical base against India.
  • Despite Myanmar being ruled by military junta over the years, India has developed close ties and shares a good relationship with Tatmadaw.

(a) Strategic relations

  • Last year, despite facing shortage of its own, India handed over INS Sindhuvir, a submarine, to the Myanmar Navy.
  • Tatmadaw responded well to Indian overtures and even allowed India to conduct counter-interagency operations against Indian insurgents groups in Myanmar border areas.
  • Both nations seek to cooperate to counteract drug trafficking and insurgent groups operating in the border areas.

(b) Economic relations

(c) HADR operations

  • India responded promptly and effectively in rendering assistance after natural disaster in Myanmar such as the earthquake in Shan state (2010) Cyclone Mora (2017), and Komen (2015).
  • India offered to help in capacity building in disaster risk mitigation as well as strengthening Myanmar’s National Disaster Response Mechanism.

What defines China-Myanmar relations?

China has its own designs and wants to use Myanmar as another base in its ‘string of pearl’ strategy against India. Through the string of pearls approach, China intends to encircle India by developing military bases in India’s neighbouring countries and Myanmar has long been on China’s radar.

(a) Debt traps

  • Burdening Myanmar under Chinese debt trap is the first step of the plan.
  • Under China-Myanmar Economic Corridor (CMEC) part of the Belt and Road Initiative (BRI), China is funding and developing many big projects in Myanmar that can be used as military bases in future.
  • These infrastructure projects have put Myanmar in massive Chinese debt trap, and accounts for over 40 per cent of the current $10 billion national debt.

(b) Political interference

  • The second Chinese step was to control the political machinery.
  • Like in Nepal, where China maneuvered to install a pro-Beijing and anti-India group government, Myanmar is expected to witness the same thing with military coup.
  • Geostrategic experts say China instigated Nepal to start the border dispute with India.

(c) Trade dependence

  • With this second step done, the third step comes into play: making a country your economically held scapegoat.
  • When it comes to bilateral trade with India, it stood at just $1.5 billion dollars in 2019-20, nowhere near that of China.  With China, the bilateral trade is worth $12 billion dollars.
  • But if we go by an official Chinese report quoting the Ministry of Commerce of China, export and import between China and Myanmar was worth $168 billion dollars in 2019.
  • That is huge for a small country like Myanmar.

Through the prism of Coup

(a) Impact on India

While the coup invited international condemnation, not much will change for India as it has built ties with the Tatmadaw over the years.

  • The handing over late last year of INS Sindhuvir, a kilo-class submarine of the Indian Navy, to the Myanmar Navy, was the most recent sign of the deepening ties between New Delhi and the Tatmadaw.
  • India and China have been competing for influence in Myanmar.
  • If India hadn’t agreed to help Myanmar meet its naval requirements, it would have meant a greater Chinese presence in the Bay of Bengal.

Senior General Min Aung Hlaing (behind this coup) has made multiple visits to India over the last few years, most recently in 2019, when he met our PM.

(b) Impact on China

  • India was the largest supplier of weapons and other military equipment to Myanmar in 2019, the last year for which records are available in the SIPRI Military Expenditure Database.
  • Tatmadaw exported military hardware worth $100 million from India that year while it spent only $47 million on Chinese military equipment the same year.
  • This is significant because China has been the largest supplier of weapons to the Southeast Asian country over the decades.
  • The General has also been critical of China, accusing Beijing of providing support to certain insurgent groups in the country, including the Arakan Army in Rakhine state, which the Tatmadaw has been fighting.

Many rebel groups in Myanmar have been using Chinese-made weapons against the military. This, experts say, rules out a tight embrace of China in the near term.

Repercussions of the Coup

  • And with over 50 years of military rule and an isolated status in the world, it seems that most of the relations are held by China alone.
  • If the US goes ahead with its threat of sanctions because of the coup, Myanmar will have to turn to Beijing as a shield.
  • In a nutshell, Myanmar’s economy is largely dependent on China, and with a pro-Beijing government in place, Myanmar may well fall finally into Chinese debt trap by allowing China funded BRI projects.
  • If that happens, Myanmar will be reducing to a mere economic scapegoat of its largest trading partner China, and a hostile neighbour for India’s geopolitical interests.
  • This in turn will emerge as a deterrent in the global vision of Indo-Pacific.

It may be often tempting to describe India’s Myanmar policy as suffering from a dilemma between values and interest.

Wait….. India never acts blindfolded

India’s interest in Myanmar has always been guided strategically by the centrality of democracy to ensure deeper ties.

India has also learned to accept that “the liberal democratic paradigm will not automatically come about” in Myanmar, nor in any other part of India’s politically volatile neighbourhood.

So while Indian policymakers have always been clear about their democratic endgame in Myanmar, they also recognise that pragmatic adjustments are sometimes necessary to engage with the military, which remains the ultimate guarantor of internal stability and order.

Since Nehruvian times….

60 years ago, the Burmese armed forces, the Tatmadaw, first took over power to end a decade of democratic reforms in the 1950s.

  • The coup of March 1962 was a severe setback for India’s investment in a federal, democratic Burma under the leadership of Nehru’s great friend U Nu.
  • However, with the democratic regime in deep crisis, it made sense to engage General Ne Win to protect Indian interests, including cross-border insurgencies, China’s influence and the safety of the larger Indian diaspora.
  • Despite his personal distress at the imprisonment of his friend and the end of democracy, Nehru gave the green light for India to become one of the first countries to recognise the military regime, even before China.
  • For the time being, India will push for democracy in public domain but in private it will pivot to engage with Myanmar’s new military regime.

The road to democracy in Myanmar lies through its military

  • Sixty years later, the situation is strikingly similar.
  • This marks a return to India’s dual policy of the 2000s, when it built a relationship of high-level trust with the Myanmar military while also nudging and supporting the Generals to embrace democratic reforms.
  • This approach was first crafted in the late 1990s by Shyam Saran, then India’s ambassador in Yangon, and executed in 2000 with a rare display of successful defence diplomacy led by Army chief VP Malik.
  • This was no easy task. Western analysts criticised India for blindly engaging Myanmar.
  • At the UN India came under attack for not supporting sanctions and condemnatory resolutions, especially during the failed 2007 democratic uprising.

Despite such pressure, India stood firm and also paid a price for it. PM Manmohan Singh, for example, declined two invitations and only visited Myanmar in 2012, after the democratic opening.  

Way forward

  • The carefully calibrated policy of the 2000s will serve India well today, where circumstances are even more favourable.
  • Thanks to the rise of China, the US and the EU are now more wary of isolating Myanmar.
  • And the Tatmadaw is now also less enamored of China and keen to deepen relations with India.
  • But New Delhi will still have to work hard to pursue its democratic realist policy in Myanmar.

For India to play a role

(a) Domestically

  • The first challenge will be to preserve trust with the Generals even while keeping up the pressure to restore a democratic order.
  • Delhi will have to keep the relationship going at the highest level to ensure that the Generals respect India’s core concerns.
  • This includes the Naga peace process, keeping an eye on China’s activities, and cross-border connectivity initiatives.

(b) Internationally

  • The second challenge will be for India to coordinate its position internationally and buy itself manoeuvering space to engage Myanmar.
  • The US and the EU are still likely to be less understanding of India’s position than the Association of South-East Asian Nations and Japan.
  • Especially at the UN Security Council, India could play an important role to bridge differences and develop a common platform to nudge Myanmar back on to the democratic track.

Conclusion

  • Among the first countries to react, India’s statement was crystal clear, expressing “deep concern” about the future of democracy and the rule of law.
  • Such harsh words are not just out of moral solidarity with Aung San Suu Kyi and other democrats detained.
  • They reflect India’s long-held understanding that democracy is the only model for Myanmar to achieve political stability, internal security and sustainable development.

References

https://mea.gov.in/Portal/ForeignRelation/myanmar-july-2012.pdf
https://www.bbc.com/news/world-asia-55902070
https://swarajyamag.com/world/explained-how-the-military-coup-unfolded-in-myanmar-and-what-it-means-for-india
https://www.hindustantimes.com/opinion/indias-long-game-with-the-generals-101612444928293.html
Categories
Burning Issues

[Burning Issue] Highlights of Union Budget 2021-22

“Faith is the bird that feels the light and sings when the dawn is still dark.”

– Rabindranath Tagore (quoted by FM in her Budget Speech)

The Union Minister for Finance has finally presented the Union Budget 2021-22 in Parliament, which is the first budget of this new decade and also a digital one in the backdrop of unprecedented COVID-19 crisis.

It was been increasingly seen as a financial vaccine for the infected economy.

Before proceeding with the budget provisions, let’s brush up our basics of what the Union Budget actually is. Refer the following links:

Highlights of the 2021 Budget

Rupee Dynamics:

Part: A

The Budget proposals for 2021-22 rest on 6 pillars.

  1. Health and Wellbeing
  2. Physical & Financial Capital, and Infrastructure
  3. Inclusive Development for Aspirational India
  4. Reinvigorating Human Capital
  5. Innovation and R&D
  6. Minimum Government and Maximum Governance

[I]  Health and Wellbeing

  • There is substantial increase in investment in Health Infrastructure and the Budget outlay for Health and Wellbeing is Rs 2,23,846 crore in BE 2021-22 as against this year’s BE of Rs 94,452 crore.
  • This is an increase of 137 %.

PM Aatmanirbhar Swasth Bharat Yojana

  • FM announced this new centrally sponsored scheme, which will be launched with an outlay of about Rs 64, 180 crore over 6 years.
  • This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.
  • This will be in addition to the National Health Mission. 

Vaccines

  • Provision of Rs 35,000 crore made for Covid-19 vaccine in BE 2021-22.
  • The Pneumococcal Vaccine, a Made in India product, presently limited to only 5 states, will be rolled out across the country aimed at averting 50,000 child deaths annually.

Nutrition

  • To strengthen nutritional content, delivery, outreach, and outcome, Government will merge the Supplementary Nutrition Programme and the Poshan Abhiyan and launch the Mission Poshan 2.0.
  • Government will adopt an intensified strategy to improve nutritional outcomes across 112 Aspirational Districts.

Universal Coverage of Water Supply

  • The FM announced that the Jal Jeevan Mission (Urban), will be launched for universal water supply in all Urban Local Bodies with crore household tap connections.

Vehicle scrapping

  • A voluntary vehicle scrapping policy to phase out old and unfit vehicles was also announced.
  • Fitness tests have been proposed in automated fitness centres after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles

[II] Physical and Financial Capital and Infrastructure

Aatmanirbhar Bharat-Production Linked Incentive Scheme

Textiles

  • Similarly, to enable the textile industry to become globally competitive, attract large investments and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme.
  • This will create world class infrastructure with plug and play facilities to enable create global champions in exports. 7 Textile Parks will be established over 3 years.

Infrastructure

  • The National Infrastructure Pipeline (NIP) which the FM announced in December 2019 is the first-of-its-kind, whole-of-government exercise ever undertaken.
  • The NIP was launched with 6835 projects; the project pipeline has now expanded to 7,400 projects.
  • Around 217 projects worth Rs 1.10 lakh crore under some key infrastructure Ministries have been completed.

Infrastructure financing – Development Financial Institution (DFI)

  • Dwelling on the infrastructure sector, FM has said that infrastructure needs long term debt financing.
  • A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, a Bill to set up a DFI will be introduced.

Asset Monetisation

  • Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction.
  • A “National Monetization Pipeline” of potential Brownfield infrastructure assets will be launched.
  • An Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors.

Roads and Highways Infrastructure

  • FM announced that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs. 5.35 lakh crore Bharatmala Pariyojana project.
  • Of this 3,800 km have been constructed.
  • By March 2022, govt. would be awarded another 8,500 km and complete an additional 11,000 km of national highway corridors.
  • To further augment road infrastructure, more economic corridors are also being planned.

The states of West Bengal, Tamil Nadu, Kerala, Puducherry and Assam are due to go for Assembly polls by May. So, it is not surprising that budget announcements impacting these states would make headlines.

Railway Infrastructure

  • Indian Railways have prepared a National Rail Plan for India – 2030.
  • The Plan is to create a ‘future ready’ Railway system by 2030. Bringing down the logistic costs for our industry is at the core of our strategy to enable ‘Make in India’.
  • It is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.

Power Infrastructure

  • The past 6 years have seen a number of reforms and achievements in the power sector with the addition of 139 Giga Watts of installed capacity.
  • We have almost achieved last mile connectivity, connecting an additional 2.8 crore households and addition of 1.41 lakh circuit km of transmission lines.
  • Expressing a serious concern over the viability of Distribution Companies, the FM proposed to launch a revamped reforms-based result-linked power distribution sector scheme.
  • The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.

Also read UDAY Scheme

Ports, Shipping, Waterways

  • Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them.
  • A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs.
  • This initiative will enable greater training and employment opportunities for Indian seafarers besides enhancing Indian companies share in global shipping.

Petroleum & Natural Gas

  • The government has kept fuel supplies running across the country without interruption during the COVID-19 lockdown period.
  • Taking note of the crucial nature of this sector in people’s lives, the following key initiatives are being announced:
  • Ujjwala Scheme which has benefited 8 crore households will be extended to cover 1 crore more beneficiaries.
  • Government will add 100 more districts in next 3 years to the City Gas Distribution network.
  • A gas pipeline project will be taken up in Union Territory of Jammu & Kashmir.
  • An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Financial Capital

  • The FM proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.
  • The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.

Increasing FDI in Insurance Sector

  • FM also proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards. 

Disinvestment and Strategic Sale

  • In spite of COVID-19, Government has kept working towards strategic disinvestment.
  • The FM said a number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22.
  • Other than IDBI Bank, Government propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22.

[III] Inclusive Development

Under the pillar of Inclusive Development for Aspirational India, the Finance Minister announced to cover Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion.

Agriculture

  • Dwelling on agriculture, FM has said that the Government is committed to the welfare of farmers.
  • The MSP regime has undergone a sea change to assure price that is at least 1.5 times the cost of production across all commodities.
  • The procurement has also continued to increase at a steady pace. This has resulted in increase in payment to farmers substantially.

Land ownership and mapping

  • Early this year, PM had launched SWAMITVA Scheme.
  • Under this, a record of rights is being given to property owners in villages.
  • To provide adequate credit to our farmers, the Government has enhanced the agricultural credit target to Rs. 16.5 lakh crore in FY22.

Operation Green Scheme

  • In an important announcement to boost value addition in agriculture and allied products and their exports is the scope of ‘Operation Green Scheme’.
  • It is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.

Fisheries

  • FM proposed substantial investments in the development of modern fishing harbours and fish landing centres.
  • To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity.

Migrant Workers and Labourers

  • Government has launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country. 
  • ONORC plan is under implementation by 32 states and UTs, reaching about 69 crore beneficiaries – that’s a total of 86% beneficiaries covered.
  • The remaining 4 states and UTs will be integrated in the next few months.
  • Government proposes to conclude a process that began 20 years ago, with the implementation of the 4 labour codes.
  • For the first time globally, social security benefits will extend to gig and platform workers.
  • Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation.
  • Women will be allowed to work in all categories and also in the night-shifts with adequate protection.

Financial Inclusion

  • To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, the FM proposed to reduce the margin money requirement from 25% to 15% and to also include loans for activities allied to agriculture.
  • Moreover, a number of steps were taken to support the MSME sector and in this Budget, the Government has provided Rs. 15,700 crore to this sector – more than double of this year’s BE.

[IV] Reinvigorating Human Capital

Education

  • The FM has said that the National Education Policy (NEP) announced recently has had good reception.
  • More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.

Welfare of the SCs/STs

  • Government has set a target of establishing 750 Eklavya model residential schools in tribal areas with an increase in the unit cost of each such school from Rs. 20 crore to Rs. 38 crore, and for hilly and difficult areas, to Rs. 48 crore.
  • Similarly, under the revamped Post Matric Scholarship Scheme for the welfare of SCs will benefit 4 crore SC students till 2026.

[V] Innovation and R&D

Research

  • The FM has announced the National Research Foundation and added that the NRF outlay will be of Rs. 50,000 crore, over 5 years.
  • It will ensure that the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust areas.

Knowledge

  • Government will undertake a new initiative – National Language Translation Mission (NTLM).
  • This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages.

Space sector

  • The New Space India Limited (NSIL) a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.
  • As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021.

[VI] Minimum Government, Maximum Governance

  • Tribunals: FM proposed to take a number of steps to bring reforms in Tribunals for speedy delivery of justice and proposes to take further measures to rationalized the functioning of Tribunals.
  • Healthcare: Government has introduced the National Commission for Allied Healthcare Professionals Bill in Parliament, with a view to ensure transparent and efficient regulation of the 56 allied healthcare professions.
  • Census: FM announced that the forthcoming Census could be the first digital census in the history of India and for this monumental and milestone-marking task, Rs. 3,768 crore allocated in the year 2021-2022.

Fiscal health

  • On Fiscal position, FM underlined that the pandemic’s impact on the economy resulted in a weak revenue inflow.
  • The FM said fiscal deficit in 2020-21 is pegged at 9.5% of GDP and it has been funded through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings.
  • The govt would need another Rs 80,000 crore for which it would be approaching the markets in these 2 months.

Deficit targets

  • The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around 12 lakh crore.
  • The FRBM Act mandates fiscal deficit of 3% of GDP to be achieved by 31st March 2020-2021.
  • The govt plans to continue the path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period.

Fiscal consolidation

  • The govt hopes to achieve this by-

 the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land etc.


Part: B

In Part B of the Budget Speech seeks to further simplify the Tax Administration, Litigation Management and ease the compliance of Direct Tax Administration.  The indirect proposal focuses on custom duty rationalization as well as rationalization of procedures and easing of compliance.

Direct Tax Proposals

  • The FM provided relief to senior citizens in filing of income tax returns, reduced time limit for income tax proceedings announced setting up of the Dispute Resolution Committee, , relaxation to NRIs, increase in exemption limit from audit and relief for dividend income.
  • FM also announced steps to attract foreign investment into infrastructure, relief to affordable housing and rental housing, tax incentives to IFSC, relief to small charitable trusts, and steps for incentivizing Start-ups in the country.
  • The Budget proposes to make dividend payment to REIT/InvIT exempt from TDS.
  • Stating the resolve of the Government to reduce litigation in the taxation system, the FM said that the Direct Tax Vivad se Vishwas Scheme announced by the Government has been received well.
  • In order to allow funding of infrastructure by issue of zero coupon bonds, the Budget proposes to make notified infrastructure debt funds eligible to raise funds by issuing tax efficient zero coupon bonds.

Indirect Tax Proposals

  • On the issue of Indirect Tax proposals, the Minister said that record GST collections have been made in the last few months.
  • She said several measures have been taken to further simplify the GST.
  • The capacity of GSTN system has been announced. Deep analytics and artificial intelligence have been deployed to identity tax evaders and fake billers, launching special drives against them.
  • With respect to the custom duty policy, the FM has said that it has the twin objectives of promoting domestic manufacturing and helping India get on to global value change and export better.

Export promotion

  • The Budget proposes certain changes to benefit MSMEs which include increasing duty on steel screws, plastic builder wares and prawn feed.
  • It also provide for rationalizing exemption on import of duty free items as an incentives to exporters of garments leather and handicraft items.
  • It also provides withdrawing exemption on imports of certain kind of leather and raising custom duty on finished synthetic gem stones.
  • To benefit farmers, the FM announced raising custom duty on cotton, raw silk and silk yarn.
  • She also proposed an Agriculture Infrastructure and Development Cess on a small number of items.
  • The Minister said that the Turant Custom Initiative rolled out in 2020 has helped in putting a check of misuse of Free Trade Agreements.

Other Highlights of Budget Speech

Achievements and Milestones during the COVID-19 pandemic-

Pradhan Mantri Garib Kalyan Yojana (PMGKY)

  • Valued at Rs. 2.76 lakh crore
  • Free food grain to 80 crore people
  • Free cooking gas for 8 crore families
  • Direct cash to over 40 crore farmers, women, elderly, the poor and the needy

Aatmanirbhar Bharat package (ANB 1.0)

  • Estimated at Rs. 23 lakh crore – more than 10% of GDP
  • PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
  • Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP

Status of India’s fight against COVID-19

  • 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
  • 2 or more new vaccines expected soon
  • Lowest death rate per million and the lowest active cases

2021 – Year of milestones for Indian history

  • 75th year of India’s independence
  • 60 years of Goa’s accession to India
  • 50 years of the 1971 India-Pakistan War
  • Year of the 8th Census of Independent India
  • India’s turn at the BRICS Presidency
  • Year for Chandrayaan-3 Mission
  • Haridwar Maha-Kumbh

Vision for Aatmanirbhar Bharat

  • Atmanirbharta – not a new idea – ancient India was self-reliant and a business epicentre of the world
  • AtmaNirbhar Bharat – an expression of 130 crore Indians who have full confidence in their capabilities and skills

    Strengthening the Sankalp of:

  • Nation First
  • Doubling Farmer’s Income
  • Strong Infrastructure
  • Healthy India
  • Good Governance
  • Opportunities for Youth
  • Education for All
  • Women Empowerment
  • Inclusive Development

Reading the budget

  • The Budget, at its simplest, is the government’s tentative income and expenditure statement. Like all financial statements, the devil lies in the fine print.
  • At its broadest, the Budget is a pious statement of the government’s policy and ideological intentions.
  • It is also the government’s statement of how it seeks to tackle the immediate political (electoral) and economic challenges.
  • Hence, any quick assessment of the Budget has to be preliminary.

An act of balancing

  • The Union Budget 2021-22 is focused on the revival of economic growth and takes cognizance of the need for higher allocation for Covid-19 vaccine development and distribution.
  • The expansionary nature of the Budget was the need of the hour and comes along with a roadmap for fiscal consolidation.
  • Higher allocation to capital expenditure should support growth revival and job creation.
  • All in all, the Budget addresses key issues facing the Indian economy and does the balancing act required in these unusual times.

Few hits to count

  • The government gave proper attention to fiscal sustainability while increasing the size of the Budget.
  • The budget follows a series of measures as part of the AtmaNirbhar Bharat packages over the last 10 months, which she said, added up to Rs 27.1 lakh crore or 13 per cent of GDP.
  • The FM in his speech has accepted the recommendations of the Fifteenth Finance Commission that 41 per cent of net Union tax proceeds be shared with states, and 1 per cent for the UTs of J7K, and Ladakh.
  • The spending push is directed towards infrastructure sectors including roads and highways, railways, textiles, metro trains, health and water supply.
  • A much-awaited scrapping policy for personal and commercial vehicles is also expected to boost demand for automobiles.
  • The budget puts in place an institutional structure – a bad bank and a developmental financial institution (DFI) – that will enable low-cost funds for infrastructure investments.
  • What really caught the attention of FIIs tracking the Indian economy was the decision to hike the FDI limit in the insurance sector to 74 per cent from 49 per cent now.
  • Budget speech nods for a policy of strategic disinvestment of PSUs barring a bare minimum in four key strategic sectors: from transport and telecom to defence, atomic energy, power, coal, banking and insurance.

Major misses:

Job losses ignored

  • The novel coronavirus pandemic and the resultant lockdown led to massive job and livelihood losses.
  • Unlike most advanced countries and emerging market economies, India’s response to address the distress of the masses has been meagre.

Extreme spendings

  • With its fiscal deficit at 9.5% of GDP for FY21 and 6.8% in FY22 Budget for 2021-22 seems to signal “spend like there is no tomorrow”.
  • For well over a decade-and-a-half, we have tried attaining deficit targets (3%) set out in the Fiscal Responsibility and Budget Management (FRBM) Act (2003).

A mirage for farmers

  • The Finance Minister has rightly drawn attention to the fact that the purchases under the MSP Programme have increased 1.5 times between 2013-4 and 2019-20.
  • Thus, the “true” increase in the purchase price was a meagre 19 %in six years.
  • Even this does not translate into a 19 % increase in incomes of the farmer because the costs of inputs such as diesel, labour and seeds have also gone up.

High on agri-subsidies

  • From a policy perspective, one must point to the huge bias towards subsidies as compared to investments, especially research and development.
  • India spends not even half of what a private global company like Bayer spends on agri-R&D — almost Rs 20,000 crore every year.
  • The expenditure on agri-R&D needs to be doubled or even tripled in the next three years if growth in agriculture has to provide food security at a national level and subsidies on food and fertilizers need to be contained.

No tax relief

  • Even though the revenue position of the government was tight going into the budget, it must be noted that citizens have also been waiting for a tax exemption relief since 2014.
  • But only compliance issues were dealt with in the budget besides giving tax relief to those above 75 years of age.

Environment less in focus

  • The budget announces good initiatives like a mission on hydrogen energy, a vehicle scrapping policy and reducing allocation to coal exploration.
  • However, reducing the budget for autonomous institutes under the union environment ministry amounts to a symbolic message that when cash strapped environment takes a back seat.
Categories
Burning Issues

[Burning Issue] Regime change in the US

This January 20th officially marked the end of the Trump era in US politics as Joe Biden took over from him to become the 46th president of the United States of America. This major event is seen worldwide as undoing or a reset of American regressive protectionist policies and moves by Donald Trump.

The world has been waiting for the day to unfold the broad contours of the policy on globalization and international relations. Most expect a return to the pre-Trump era with the US playing a more active role in world dynamics.

India welcomes Biden

PM Modi has personally congratulated Biden on his success and used the occasion to emphasize on the importance of strategic partnership between the two countries.  There is no doubt that the change of regime in the US will not affect the time-tested foundations of this friendship that were in fact laid with Obama administration declaring India as a major defense partner of the U.S.

But much water has flown down the bridge since the time of Obama-Biden rule in the US after Trump.

Lets’ have a look over recent developments in India-US ties:

India’s relationship with the US has been largely confined only on strategic terms and the ties have been unusually constructive under Trump administration.

In the strategic domain, this included, the finalization of many agreements and ministerial and QUAD meets among others.

Challenges before the new regime

President Joe Biden faces a slew of important foreign policy challenges some of which include:

(A) Climate change

  • Joe Biden has warned the climate crisis poses an “existential threat” to the world as he unveiled a radical change in direction from the Trump era by halting fossil fuel activity on public lands.
  • He reaffirmed US commitment for Paris Agreement.
  • Biden said he will host an early Leaders’ Climate Summit aimed at raising climate ambition and making a positive contribution to the COP26 and beyond.

(B) China’s expansionism

  • The coalition against China is likely to persist and ties with India and other Pacific nations, including Japan and Australia, may be further boosted.
  • Ties with Beijing were remarkably tense during the Trump administration.
  • The newly administered pentagon has continued Trumps legacy against China’s expansionist moves in the South East Asia.

(C) Pakistan and terror

  • The Biden administration considers Pakistan a “major non-NATO ally,” a status bestowed upon only seventeen countries that facilitate military trade and cooperation.
  • However, in reality, Pakistan has not acted as an ally ever. The listing of Pakistan in FATF ‘Grey List’ clearly indicates its ambiguous policies.
  • It is against this backdrop that new US president Joe Biden must now confront the Pakistan test of appeasement of the new regime.

(Lets’ not get into what the US prospect plans are with the Russia, Taliban and Afghanistan.)

India’s expectations from the new regime

  • The US and India see each other as key strategic partners and analysts expect Indo-US relations to be less strained.
  • The major change India is hoping for is in terms of—software exports, H1 visa policy, minimum compensation for engineers via which Trump tried discouraging hiring Indian IT professionals.
  • Of late, the US was seen pressurizing India on its Agri subsidy policy, for which, there may not be a major shift, but it might be easier to deal with the new regime.

Defense priorities

  • The new administration under Biden has iterated that India is ‘bipartisan success story’, and made it clear that strategic ties with India will remain strong, especially on the Indo-Pacific.
  • It ensured continuity from the Trump administration in dealing with China’s aggressive actions.

India’s concerns remain

South Asia does not seem to be a priority operational theatre for the new US administration. The Indian apprehension with regard to the Biden liberal administration seems to be a hard-press on various issues like:

(A) Policies toward China and Pakistan

  • This could disrupt India’s current strategy. Whatever the complications for the US, Trump’s strident opposition toward China served Indian interests well.
  • India could avoid balancing against China and, until the recent troubles on the border, could actually entertain cooperation with Beijing.
  • India thus enjoyed the best of both worlds: limiting China’s opposition toward itself while having its rival constrained by American hostility.

(B) Trade disputes

  • India seeks reinstatement of its privileged access as a developing country to the U.S. market.
  • Trump abolished this benefit and Biden may not restore it without greater U.S. access to the Indian market in return—exactly when New Delhi itself has become more Atmanirbhar.
  • More liberal U.S. visa policies for Indian professionals could take the sting out of these trade problems.

(C) Look-out policies

  • Excepting its adversaries, the United States did not care much about what happened inside other countries in the areas of human rights, religious freedoms, and democratic practices.
  • A Biden administration would likely be different, bringing domestic Indian political developments under greater U.S. scrutiny and possibly pushback.
  • This could invite undue interference on Kashmir matters as well.

(C) Iran

  • To be a friend of Iran and the US at the same time is getting more and more difficult day by day.
  • New Delhi may have to face a disappointment with Washington to continue its oil imports from Iran
  • After all, India needs Iran because of Chabahar and Afghanistan — where the American withdrawal is another bone of contention.

Why does this regime change impacts India?

(A) Support against terrorism

  • This intense engagement has helped achieve robust support from the US against terrorism.
  • This was evident after the Pulwama attack last year, leading to designation of Jaish-e-Mohammed chief Masood Azhar as a global terrorist under UN Security Council Resolution 1267, and the placing of Pakistan on the grey-list of the FATF.

(B) Defence ties

  • For India, its relationship with the US on defence issues has strengthened. India has procured over $18 billion worth of defence items from the US, almost half of this in the last five years.
  • India conducts more bilateral exercises with the US than with any other country.

(C) Energy

  • The other area where the relationship has grown in recent years is energy.
  • The bilateral Strategic Energy Partnership was launched in April 2018; India has started importing crude and LNG from the US from 2017 and 2018 respectively.
  • The total imports are estimated at $6.7 billion — having grown from zero.

(D) Trade

  • In the backdrop of the global economic slowdown, where India’s global exports have fallen consistently, it is important for the country to diversify and strengthen bilateral relations with other markets.
  • It has set its sights on “large developed markets”, improved access to which would help its industry and services sectors.
  • These include the US, which has, over the last two decades, become a crucial trading partner in terms of both goods and services.

US has no alternatives to India

(A) India as an open data market

  • India is, after all, the largest open data market in the universe. Per capita, more data is consumed in India than anywhere else in the world.
  • For American “big tech” firms, India provides a scale for their products unavailable in any other country.
  • Despite current economic woes, this will continue to be the largest growing and relatively open consumer market for American products and business.

(B) Indian-Americans

  • About 4.5 million people of Indian origin live in the US today, but despite their relatively small numbers, Indian Americans are a growing political force in the country.
  • Trump and even Biden has sought to court the Indian-American vote in the run-up to the 2020 election.

(C) India as a defence partner

  • India is also a large arms importer.
  • Defence trade is widely seen as the silver lining in this relationship – US-India defence deals have ballooned in the past decade, from nearly zero in 2008 to a little more than $15bn in 2019.

(D) Solution to China’s hegemony

  • On the trade front, India can be an effective supplier rather than being an outsourcing hub if compared to China.
  • Strategically also, the U.S. views India as a platform to contain China’s hegemony in the Indo-Pacific.
  • India sees it as an opportunity for economic expansion, with the U.S. being an equal partner.

Way forward

  • There are rising concerns in the US about India’s fiscal limitations, its ties with Russia, its ponderous response to a pattern of Chinese provocations on its border, and its drift toward illiberal politics.
  • The current state of play suggests that the two countries might come at a crossroads.
  • India should be prepared to face a situation where Biden presidency is fully geared to deal with Chinese aggressiveness in the Indo-Pacific region militarily through QUAD.
  • India has to continue building its defence forces to counter any joint mischief by Pakistan and China on our borders even as our military-level talks with China for disengagement on LAC in Ladakh are kept up.
  • Also, India has to use all international forums to warn the democratic world against the grave threat of terrorism that it faces on account of the spread of radicalization.

Conclusion

  • President Trump would be remembered for breaking from the traditional polity to confront the new challenges of the present, for shifting the focus from international politics to the domestic situation.
  • As usual, India cheers the inevitable strong support by the US on multiple fronts discussed above.  
  • However, India needs to keep the new US regime on its side for strategic and security reasons.
  • Till then, India should keenly watch Joe Biden unfold his foreign policy agenda.
Categories
Burning Issues

[Burning Issue] Five Years of Startup India Scheme

As the world’s economy transitions into one where economic value is created by bringing about disruption, and consequently behavioural change, governments know they have to create ample runway space for startups to take off.

With that in mind, five years ago, the central government took this into consideration and launched the Startup India Scheme on January 16, 2016, to give new firms, particularly in the Micro, Small and Medium Enterprises (MSME) sector a boost.

What are Startups?

  • A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable economic model.
  • While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder.
  • At the beginning, startups face high uncertainty and have high rates of failure, but a minority of them does go on to be successful and influential.  Some startups become unicorns.

Why do we need start-ups?

Start-ups make an indispensable contribution in the economic growth of a nation.

(1) Employment Generation

Entrepreneurship creates more avenues for new job in the economy. This would help harness the readily available employment in our country. This mission will reduce the burden from service and agricultural sector and enables condition of balance in economy.

(2) Creation of Wealth

Since entrepreneurs are attracting investors by investing their own resources, the people of the nation would get benefit when startups grow. Since the money is sharing with the society, wealth is creating within the nation.

(3) Better standard of living

Startups can implement innovations and technologies to improve the living of people. There are many startups who are working for rural areas to develop the community.

(4) Economic growth

GDP plays a vital role in enhancing the economic growth of a country. By supporting and encouraging more startups, it is possible to generate more revenue domestically and consumer’s capital will also flow around the Indian economy.

(5) Source for FDI

It has been noted that in recent years, the volume of foreign investments made in the Indian startup is quite huge. The foreign investments in the startups act as an easy capital raise and technological investment for the startups which makes them readily accept the investments coming towards them.

(6) Culture of Entrepreneurship

Startups encourage a culture of entrepreneurship and innovation which leads to create new job opportunities and provide support to the economy. Success stories motivate talented youth to start their own ventures and help them to become a job provider instead of a job seeker.

(7) Advancement in technology

Startups are more focused on new technologies and cutting-edge innovation. Free from a multilayered corporate bureaucracy, startups are more agile and able to build an idea into a product and improve it upon consumer demand with faster decision-making communications.

Startup India Scheme

  • Startup India is an initiative of the Government of India.
  • The campaign was first announced by PM Modi during his speech on 15 August 2015 address from the Red Fort.
  • The action plan for this initiative is focusing on three areas:
  • Simplification and Handholding.
  • Funding Support and Incentives.
  • Industry-Academia Partnership and Incubation.
  • An additional area relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances.
  • It was organized by the Department for promotion of industry and internal trade (DPI&IT).

An evaluation of the Scheme

(A) Successes

  • Investment: $63 Bn has been invested in Indian startups in the last five years. The Indian tech startups rose about $13.5 Bn in funding across 885 deals in 2017, which is the peak year in terms of funding in the past five years.
  • Growth: From 29K startups in 2014, the numbers grew exponentially from 2015-2018 to touch 55K in 2020. Between 2016 and August 2020, Startup India programme says it has recognised over 34.8K startups. 
  • IPRs: Among these, 8.3K startups received intellectual property rights (IPR) fee benefits, while over 2.6 lakh people enrolled in the entrepreneurship-focused learning courses.
  • Gender inclusion: In terms of gender diversity across workspaces in India, just 9% of the board members of the top 20 unicorn startups in India are women.

(B) Failures

  • Clearances: The Startup India scheme had received around 1368 applications by mid-December last year out of which DPIIT has only accepted 502 application forms and recognized them as ‘startups’.
  • Delay: The delay and lack of efficiency is a cause for the startup plan to fail in some cases.
  • Funding: The concerns of domestic angel and VCs on capital gains tax remain largely unaddressed.
  • EODB issues: Venture capital firms and angel investors are more cautious while investing in Indian startups. It is because the conditions, the ease of capital flow and doing business are not stable enough.

Some lacunae of the scheme

  • Definitional issues: The scheme is criticized by professionals because of the definition of Start-up provided in the scheme. The definition states that a mere act of developing products or services that do not have the potential for commercialization or have no or limited incremental value for customers would not be a start-up.
  • Test of ‘Innovation’: Each startup is scrutinized by an Inter-Ministerial Board (IMB) to see if the startup is ‘innovative’ – i.e. if it is unique or a world first. Most of the start-ups would lie outside the purview of this definition.
  • Red tapism: Further eligibility of start-up, lies under definition or not, shall be approved or certified by an inter-ministerial board which is a retrograde step and against the government policy of ‘Min Government Max Governance’.
  • Taxation mirage: A tax break of three years has been given in the scheme. Anyone who has business sense knows that only a few of start-ups will be profitable in the first three years and so this handful can avail them of the tax break.
  • Patenting terms: The other option for startups to get tax benefits is to get a patent. And we all know that it takes several years to register a patent in India, and if royalty profits accrue before then, the tax benefits will be denied.

Inherent challenges to Start-ups in India

  • Financial scarcity: Availability of finance is critical for the startups and is always a problem to get sufficient amounts.
  • Lack of Infrastructure: There is a lack of support mechanisms that play a significant role in the lifecycle of startups which include incubators, science and technology parks, business development centers etc.
  • Regulatory bottlenecks: Starting and exiting a business requires a number of permissions from government agencies. Although there is a perceptible change, it is still a challenge to register a company and exiting it.
  • Compliance hurdles: For example earlier Angel tax, which stands removed no, falls under corruption and bureaucratic inefficiencies as it takes the focus of entrepreneurs away from building a product or service to responding to tax notices and filing appeals.
  • Low success rate: Several startups fail due to poor revenue generation as the business grows. As the operations increase, expenses grow with reduced revenues forcing startups to concentrate on the funding aspect, thus, diluting the focus on the fundamentals of business.
  • Lack of an Innovative Business Model: To be successful a startup must be innovative. Unfortunately, Indian startups are less innovative than startups elsewhere. Many Indian startups don’t have an original business idea that is disruptive and by which consumers will be provided with better service.
  • Non-competitive Indian Markets: Too many startups serving too few consumers are saturating the Indian market.  Most startups serve the fraction of Indians who live in urban India. The majority of Indians who live in rural areas and small towns remain untouched by most startups.

Various initiatives by the Govt.

There are numerous government initiatives to assist start-ups,

  • MUDRA Scheme: Through this scheme, start-ups get loans from the banks to set up, grow and stabilize their businesses.
  • SETU (Self-Employment and Talent Utilization) Fund: Government has allotted Rs 1,000 Cr in order to create opportunities for self-employment and new jobs mainly in technology-driven domains.
  • E-Biz Portal: Government launched e-biz portal, India’s first government to business portal that integrates 14 regulatory permissions and licenses at one source to enable faster clearances and improve the ease of doing business in India.
  • Credit Guarantee Fund: launched by the GoI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.
  • Fund of Funds for Start-ups (FFS): 10,000 Rs corpus fund established in line with the Start-up India action plan under Small Industries Development Bank of India (SIDBI) for extending support to Start-ups.
  • Tax Sops: Tax exemption on Capital gain tax, Removal of Angel tax, Tax exemption for 3 years and Tax exemption in investment above Fair Market Value.

Entrepreneurship today is ‘survival driven’ self-employment, formed out of necessity, as well as opportunity motivated, largely because poverty and lack of formal employment opportunities rear its ugly head in striving economies.

Way Forward

The best of the Indian startup ecosystem still lies ahead.

  • There is a need for policies and progressive strategies from governments to encourage startups and provide access and assistance in key areas including tax clarity, incubation, affordability and licensing.
  • In any case, governments should be well prepared and dedicated to creating a culture of startups to impact the entrepreneurial ecosystem in their cities, countries and citizens.
  • Innovation and economic growth depend on being able to produce excellent individuals with the right skills and attitudes to be entrepreneurial in their professional lives.
  • It is critical, therefore, that nations set out to develop entrepreneurial skills, attitudes and behaviour in the school systems at all levels as a part of the lifelong learning process.
  • To produce effective entrepreneurs who can initiate change, governments need to cut ‘red tape’ and streamline regulations.
  • Funding, another daunting and difficult challenge, has to be resolved at earliest with liberal funding mechanisms.
  • Apart from all these concerns, Start-up India has potential to solve India’s problems and create jobs. Nonetheless, the challenges and changes are not to be dreaded but defeated.

Conclusion

  • The current economic scenario in India is in expansion mode.  Indian Startups are now spread across the length and breadth of the entire country.
  • The Indian government’s policies like Make in India, Digital India, Atmanirbhar etc. shows the enthusiasm of centre to imbibe reforms.
  • With the government going full hog on Startups, it could arrest the brain drain.
  • Efforts are being made by diverse stakeholders in the Indian startup ecosystem to elevate domestic policies in concurrence with global trends.

References

RSTV

https://inc42.com/features/startupindia-at-5-the-defining-moments-from-indias-startup-ecosystem-in-the-last-5-years/

https://www.financialexpress.com/industry/sme/cafe-sme/startup-india-how-entrepreneurs-can-realise-full-potential-of-govts-scheme-remain-competitive/1907610/

https://www.theweek.in/news/biz-tech/2019/01/03/Corruption-securing-funds-key-challenges-for-startups-in-2019-Report.html

https://timesofindia.indiatimes.com/blogs/yankeedoodle/why-startup-india-has-failed-how-to-fix-it/

Categories
Burning Issues

[Burning Issue] Terrorism and the World

India battles on multi-layered fronts to counter cross-border terrorism.

Our security forces are constantly engaged in creating an environment of security in the country.  They have been quite successful in diagnosing and executing them.

The airstrike after the Pulwama attack and the earlier surgical strike made clear the zero-tolerance policy of India towards terrorism.

Context

  • International terrorism is one of the most serious threats to international peace and security.
  • Highlighting yet again the issue of terror at the UN, India has said terror has become a “means of waging war” and requires “global action”.

Why in news?

  • Foreign Minister S Jaishankar has recently addressed the United National Security Council (UNSC) open debate over ’20 years after the adoption of resolution 1373’ on combating terrorism.
  • Describing terrorism as the greatest threat to mankind, he had proposed an eight-point action plan at the UNSC to ensure effective action against the menace of terrorism.

What is Resolution 1373?

  • The Security Council Resolution 1373, adopted unanimously on 28 September 2001, is a counter-terrorism measure passed following the 9-11 terrorist attacks on the United States.
  • The resolution was adopted under Chapter VII of the United Nations Charter and is therefore binding on all UN member states.

Major provisions of the resolution

  • The resolution aimed to hinder terrorist groups in various ways. 
  • UN member states were encouraged to share their intelligence on terrorist groups in order to assist in combating international terrorism.
  • The resolution also calls on all states to adjust their national laws so that they can ratify all of the existing international conventions on terrorism.
  • It stated that all States “should also ensure that terrorist acts are established as serious criminal offences in domestic laws and regulations and that the seriousness of such acts is duly reflected in sentences served.”

How Terrorism has become a global issue?

  • The rise of ISIS and the growing problem of foreign fighters have led, in recent years, to some wider acknowledgment that terrorism is a global catastrophe.
  • 9/11, 26/11, Christchurch terror attacks have transformed the global belief of terrorism being a local problem.

Impacts of Terrorism

(1) Economic impacts

Terrorism also thwarts economic growth indirectly by affecting macroeconomic variables, e.g., by reducing FDI, lessening domestic investment, increasing inflation, increasing non-development government expenditures (law and order and Security), damaging stock markets, and increasing unemployment, among others.

(2) Political impacts: A Terror incident shakes the very foundation of a legitimate government and its establishments on moral grounds of accountability (for intelligence failure to avert terror incidences). This results in political instability.

(3) Socio-cultural impacts: Terrorism is often associated with a particular religion or ethnicity. This often leads to paranoia towards a religion leading to communal tensions. Multi-diverse countries like India are the worst hit.

(4) Loss of Life & Property

This is the main impact of a terrorist event. But as we know, casualties are not the only way terrorists can achieve their goals. When people stop leaving their homes and carrying out their lives as normal due to real or perceived terrorist threats, businesses see the impact on their bottom line.

The 8-Point Action Plan

In a first intervention since India joined the UNSC as a temporary member on 1 January 2021, S. Jaishankar had put forward an eight-point action plan as part of his zero-tolerance policy for terrorism, saying there are “no good and bad terrorists” and there should be “no ifs and buts” around terrorist activities.

1. Summon the political will to combat terrorism.

Nor should we allow terrorism to be justified and terrorists glorified. All member states must fulfill their obligations enshrined in international counter-terrorism instruments and conventions.

2. Do not countenance double standards in this battle.

Terrorists are terrorists; there are no good and bad ones. Those who propagate this distinction have an agenda. And those who cover up for them are just as culpable.

3. Reform the working methods

Reform the working methods dealing with sanctions and counter-terrorism. The practice of placing blocks and holds on listing requests without any rhyme or reason must end.

4. Firmly discourage exclusivist thinking that divides the world and harms our social fabric.

Such approaches facilitate radicalization and recruitment by breeding fear, mistrust, and hatred among different communities. The UNSC should be on guard against new terminologies and misleading priorities that can dilute our focus.

5. Enlisting and delisting

Enlisting and delisting individuals and entities under the UN sanctions regimes must be done objectively, not for political or religious considerations.

6. Curbing terror linkages

Linkages between terrorism and transnational organized crime must be fully recognized and addressed vigorously.

7. Combating terrorist financing

It will only be as effective as the weakest jurisdiction. The Financial Action Task Force (FATF) should continue to identify and remedy weaknesses in anti-money laundering and counter-terror financing frameworks. Enhanced UN coordination with FATF can make a huge difference.

8. Adequate funding

Adequate funding to UN Counter-Terrorism bodies from the UN regular budget requires immediate attention. The forthcoming 7th review of the UN’s Global Counter-Terrorism Strategy offers an important occasion to strengthen measures to prevent and combat terrorism and building capacities of member states.

Global facets of Terrorism

Terrorism is the calculated use of violence to create a general climate of fear in a population and thereby to bring about a particular political or social objective.

It has been practiced by political organizations with both rightist and leftist objectives, by nationalistic and religious groups, by revolutionaries, and even by state institutions such as armies, intelligence services, and police.

Various attempts have been made to distinguish among types of terrorist activities. In general, there are three basic facets of terrorism – international terrorism, domestic terrorism and transnational terrorism.

We need to be familiar with these five types of terrorism:

  • State-Sponsored terrorism, which consists of terrorist acts on a state or government by a state or government.
  • Dissent terrorism, which are terrorist groups which have rebelled against their government.
  • Terrorists and the Left and Right, which are groups rooted in political ideology.
  • Religious terrorism, which are terrorist groups which are extremely religiously motivated and
  • Criminal Terrorism, which are terrorists acts used to aid in crime and criminal profit.

Terror tactics these days are more modernizing through new technologies such as:

Bio-terrorism: It is the intentional release of biological agents to cause illness or death in humans, animals, or plants. These agents may be bacteria, fungi, toxins, or viruses. They may be naturally occurring or human-modified.

Cyber-terrorism: It is the convergence of cyberspace and terrorism. It refers to unlawful attacks and threats of attacks against computers, networks, and the information stored therein when done to intimidate or coerce a government or its people in furtherance of political or social objectives.

Why do people resort to terrorism?

Individuals and groups choose terrorism as a tactic because it can:

  • Act as a form of asymmetric warfare in order to directly force a government to agree to demands
  • Get attention and thus political support for a cause
  • Directly inspire more people to the cause (such as revolutionary acts) – propaganda of the religion/separatism
  • Indirectly inspire more people to the cause by provoking a hostile response or over-reaction from enemies to the cause

Somewhere in the roots of domestic terrorism, socio-cultural deprivation remains the prime mover.

Terrorism in India

Following are the types of terrorism which threatens India’s security and internal peace and tranquility.

  1. Ethnic terrorism
  2. Religious terrorism
  3. Ideological terrorism

Ethnic Terrorism: Terrorism based on an identity crisis, resource crisis, and cultural imperialism among various ethnic groups is called ethnic terrorism. It is spread in the northeast region of India.

Religious terrorism: The systematic violence propagated based on religion is called religious terrorism. The feeling of religious superiority is at the root of this terrorism. Religious terrorism in modern times is considered terrorism.

Ideological terrorism: If the purpose of planned violence is motivated by communist elements, it is called Left Terrorism or Naxalism/Maoism.

The UN and its handling of Terrorism

The UN’s counter-terrorism work in recent years can be organized under three headings:

First, a norm-setting role that includes-

  • the development and promotion of a Global Counter-Terrorism Strategy and efforts to counter violent extremism,
  • a set of international conventions, and
  • far-reaching UNSC  resolutions imposing counter-terrorism obligations on member states;

Second, capacity-building activities to help countries meet some obligations (through FATF and all) and

Third, Security Council-mandated sanctions, in the 1990s, against state sponsors of terrorism, and since 9/11 against hundreds of individuals and entities affiliated with Al Qaida.

The UN has accumulated ample experience and a proven record of success in its efforts to end civil wars over the past two and a half decades.

However, serious questions arise regarding the preparedness of the UN’s conflict management tools, in particular its peace operations, to deliver mandates in countries affected by terrorist insurgencies, such as Afghanistan, Iraq, Libya, Syria, Somalia, Yemen and Lebanon.

Limitations to the UN

The U.N. is too political, too uncoordinated, too focused on process rather than outcomes and follow-up, and too far removed from the people who actually deal with the problems of terrorism.

  • Invocation of a “war on terrorism” and adoption of reflexive security measures renders very serious pressure on any organization such as the UN.
  • As an intergovernmental organization catering to the needs and driven by the interests of national governments, the UN is constitutionally ill-equipped to implement counter-terror measures.
  • The UN’s comparative advantage may thus lie in supporting and mobilizing funding for networks that would allow for the sharing of best practices among such local actors.

Need for a global action

A high-level review of UN peace operations concluded in 2015 that the UN peacekeeping missions, due to their composition and character, are not suited to engage in counter-terrorism operations. This is mainly because-

  • The growing presence of religious terrorist groups in many of today’s civil war environments complicates the UN’s peacemaking.
  • This is because many of these groups pursue maximalist demands that are very difficult to meet or to incorporate into political settlements based on human rights and democratic governance.
  • Even where such groups may be motivated primarily by local, legitimate, and reversible grievances, key powers tend to discourage negotiations with them.
  • Again, extremists groups have proven difficult to engage around respect for humanitarian norms, which the UN has successfully employed elsewhere with other armed non-state actors.
  • The UN has increasingly become a target of such groups, which has led it to ever greater preoccupation with protecting itself rather than local civilians.
  • This has greatly hampered its ability to engage with the local population, win hearts and minds, and mediate local disputes.

India’s action: Leading from the front

India has been fighting insurgency and terrorism since its days of independence.

  • India has been at the forefront for a call of global action against terrorism which is increasingly becoming a global phenomenon.
  • India has been calling for the passing of the Comprehensive Convention on International Terrorism (CCIT) at the UN. CCIT calls for a common definition of terror and the criminalization of international terrorism.
  • A decade of relentless efforts by India to get Pakistan-based terror master Masood Azhar listed as a global terrorist by the UNSC finally came to fruition in 2019.
  • India has been successful in drawing attention to its problem of terrorism by casting Pakistan as a breeder and supporter of terrorist organizations.  To this testimony, India’s role play at the FATF against Pakistan is globally visible.

This signifies India’s leadership in global counter-terrorism efforts.

Way Forward

  • Indeed, around the world many governments continued to rely primarily on military and law enforcement tools in their counter-terrorism efforts often to the detriment of human rights and with insufficient attention paid to underlying drivers of extremism.
  • The world needs to shift its focus primarily from military and law enforcement tools towards a holistic approach.
  • This is because counter-terrorism efforts often tend to detriment the human rights and least attention is paid to underlying drivers of extremism.

Endorsing the Christchurch Call

Christchurch call of action is an initiative named after the New Zealand city where 51 people were killed in an attack on mosques.

The attack had highlighted the urgent need for action and enhanced cooperation among the wide range of actors with influence over this issue, including governments, civil society, and online service providers, such as social media companies, to eliminate terrorist and violent extremist content online.

The initiative outlines collective, voluntary commitments from governments and online service providers intended to address the issue of terrorist and violent extremist content online and to prevent the abuse of the internet.

Such collaboration can be extended over various parameters of counter-terrorism moves by the global community.

A note for the UN

While it is true that the UN’s operational counter-terrorism activities have faced severe shortfalls and limitations; the UN has proven a useful venue for establishing the broad normative and cooperative frameworks for collective counter-terrorism action.

  • The UN needs to reflect on how it can adapt its peace operations to deliver on their mandate in theaters where terrorist networks are present.
  • Among the key questions the UN will need to confront are: how to identify elements among violent extremist groups that could potentially be engaged in mediation, peace and reconciliations processes.
  • The UN has to arrive at a how to adapt Disarmament, Demobilization, and Reintegration programs to the context of violent extremism.

India has to be ‘all-alert ‘

Looking to international organizations such as the UN has lost much of its appeal since the war in Iraq and Afghanistan. The loss of credibility renders it incapacity of any substantial action against these insurgents or the countries that harbor them.

  • Technological advancements and, arguably, new geopolitical alliances also bring with them new terrorist threats.
  • Despite myriad ideological and operational complexities when it comes to terrorist groups active in the country, India is outperforming its peers when it comes to meeting these challenges.
  • However, the fight against terrorism is far from over.
  • India must be prepared with its military and diplomatic options to eliminate these threats well in advance.

Conclusion

  • Terrorism is not just a violent activity but it attacks the social, cultural, and defense fabric of the country and society and hinders its sustainable development.
  • All countries must solve problems like the socio-economic unjust, refugee crisis, human rights abuses globally, and stands unanimously against all forms of terrorism to end it.

In conclusion it can be said, India’s war against terrorism remains largely her own problem.  For time to come, India will have to deal with its problem of terrorism on its own accord.


References

https://www.orfonline.org/research/one-year-since-the-christchurch-call-to-action-a-review/

https://timesofindia.indiatimes.com/india/in-8-point-action-plan-against-terrorism-jaishankar-slams-pak-takes-a-dig-at-china/articleshow/80241500.cms

https://www.thequint.com/news/india/eam-jaishankars-8-point-action-plan-in-unsc-to-combat-terrorism#read-more#read-more

https://en.wikipedia.org/wiki/Terrorism_in_India

http://www.ipcs.org/comm_select.php?articleNo=1657

Categories
Burning Issues

[Burning Issue] Three Decades of Human Development Index (HDI)

This December, we commemorated the 30th anniversary of the HDI.

Out of 189 countries, India has ranked 131 on the Human Development Index 2020 prepared by the United Nations Development Programme (UNDP). With an HDI value of 0.645, the country fell in the medium human development category.

People are the real wealth of a nation. The basic objective of development should be to create an enabling environment for people to live long, healthy and creative lives. This may appear to be a simple truth.

Background

  • The human quest for knowledge has been sustained by an unspoken assumption: that the answers to life’s questions can be found if we try hard enough.
  • And when we do, we will be able to reorganize society in rational ways, free from superstition, dogma, and oppression.
  • Yet, the ideas that liberate one generation become the shackles of the next. It is the relentless march of ideas that add to the beauty, sense and the meaning of life.
  • One such simple, but the transformational idea was the Human Development Index (HDI) as a measure of progress.

The Human Development Index

  • The HDI combines indicators of life expectancy, education or access to knowledge and income or standard of living, and captures the level and changes to the quality of life.
  • The index initially launched as an alternative measure to the gross domestic product, is the making of two acclaimed economists from Pakistan and India, namely Mahbub ul Haq and Amartya Sen.
  • It stresses the centrality of human deve­lop­ment in the growth process and was first rolled out by the United Nations Development Programme in 1990.

Dimensions of the Human Development Index

The idea that progress should be conceived as a process of enlarging people’s choices and enhancing their capabilities is the central premise of the HDI.

Since its launch, the HDI has been an important marker of attempts to broaden measures of progress. The HDI considers three main dimensions to evaluate the development of a country:

1. Long and healthy life

The long and healthy life dimension is measured by life expectancy at birth. The life expectancy at birth is a statistical measure that an average individual is expected to live based on certain demographic factors such as the year of birth and current age.

2. Education

This is a second dimension in the HDI. The indicators of education are the expected years of schooling and the mean years of schooling. According to the UN, the average maximum years of schooling is 18 years, while the mean maximum years of schooling is 15 years.

3. Standard of living

The standard of living is usually measured by the gross national income (GNI) per capita. The GNI indicates the total domestic and foreign output created by the residents of a certain country.

Major highlights of the 2020 Report

  • Out of 189 countries, Norway, Ireland and Switzerland are in the top three rungs.
  • The size of economic resources, as usual, has been a key factor affecting human development; the distribution and allocation of these resources also play a major role in determining the level of human development.
  • The 2019 HDI ranks India with a per capita income of $6,681 in the 131st position, a notch lower than its 130th rank in 2018, which puts it in the medium human development category.

What India has achieved over the years?

  • The report stated that since 1990, the HDI value of India has increased to 0.645 from 0.429, registering an increase of over 50%.
  • During the same period, the life expectancy at birth in India rose by nearly 12 years, while mean years of schooling witnessed an increase of 3.5 years.
  • During this while, the expected years of schooling also rose by 4.5 years.
  • Moreover, during this period, GNI per capita of India also increased, registering a rise of nearly 274%.

India has gained but still lags far behind

  • However, trends for the last three decades indicate that India has raised its HDI score at an annual average rate of 1.42%, almost a third higher than the 1% growth clocked by developing countries as a whole.
  • But India’s gains still lag behind many other Asian nations like China (1.47%), Bangladesh (1.64%), Cambodia (1.66%) and Myanmar (1.86%).
  • And a closer look at the other composite indices from the family of development indices shows that India falters badly in many areas, especially on the gender and income distribution fronts.

All of which isn’t surprising given that it was in 1991 that India initiated economic liberalisation. The HDI improvement over this period essentially captures the benefits that accrued to Indian society from that historic decision.

  • Decline in Infant Mortality Rate & Maternal Mortality Rate.
  • Increased Immunization.
  • Better housing, sanitation and education.
  • Smaller families, growing income.
  • Improved public healthcare infrastructure, particularly, preventive healthcare.

Very often has been insisted on the inadequacy of income as the sole indicator of welfare and augmented, that measuring income is losing its utility, becoming more puzzling and contributes only insignificantly to human development.

Limitations of HDI

HDR has been always disputable and has caught the public-eye, whenever it was published. It has many reasons.

One of them is that the concept of human development is much deeper and richer than what can be caught in any index or set of indicators. Another argument is that its concept has not changed since 1990 when it was also defined in the first.

(1) An incomplete indicator

  • Human development is incomplete without human freedom and that while the need for qualities judgement is clear; there is no simple quantitative measure available yet to capture the many aspects of human freedom.
  • HDI also does not specifically reflect quality of life factors, such as empowerment movements or overall feelings of security or happiness.

(2) Limited idea of development

  • The HDI is not reflecting the human development idea accurately.
  • It is an index restricted to the socio-economic sphere of life; the political and civil spheres are in the most part kept separate.
  • Hence there is a sub-estimation of inequality among countries, which means that this dimension is not being taken into consideration appropriately.

(3) A vague concept

  • Concerning data quality and the exact construction of the index HDI is conceptually weak and empirically unsound.
  • This strong critic comes from the idea that both components of HDI are problematic. The GNP in developing countries suffers from incomplete coverage, measurement errors and biases.
  • The definition and measurement of literacy are different among countries and also, this data has not been available since 1970 in a significant number of countries.

(4) Data quality issues

  • The HDI, as a combination of only four relatively simple indicators, doesn’t only raise a questions what other indicators should be included, but also how to ensure quality and comparable input data.
  • It is logical that the UNDP try to collect their data from international organizations concentrating in collecting data in specific fields.
  • Quality and trustworthiness of those data is disputable, especially when we get the information from UN non-democratic members, as for example Cuba or China.

(5) A tool for mere comparison

  • The concept of HDI was set up mainly for relative comparison of countries in one particular time.
  • HDI is much better when distinguishing between countries with low and middle human development, instead of countries at the top of the ranking.
  • Therefore, the original notion was not to set up an absolute ranking, but let’s quite free hands in comparison of the results.

(6) Development has to be greener

  • The human development approach has not adequately incorporated environmental conditions which may threaten long-term achievements on human development. The most pervasive failure was on environmental sustainability.
  • However, for the first time in 2020, the UNDP introduced a new metric to reflect the impact caused by each country’s per-capita carbon emissions and its material footprint.
  • This is Planetary Pressures-adjusted HDI or PHDI. It measured the amount of fossil fuels, metals and other resources used to make the goods and services it consumes.

(7) Wealth can never equate welfare

  • Higher national wealth does not indicate welfare. GNI may not necessarily increase economic welfare; it depends on how it is spent.
  • For example, if a country spends more on military spending – this is reflected in higher GNI, but welfare could actually be lower.

Significance of HDI

Social measures of development ought to be factored in to calculate a country’s overall level of development. Some believe that additional factors such as human rights and happiness are very important. But still, HDI is a relevant factor.

  • It is one of the few multidimensional indices as it includes indicators such as literacy rate, enrollment ratio, life expectancy rate, infant mortality rate, etc.
  • It acts as a true yardstick to measure development in real sense.
  • Unlike per capital income, which only indicates that a rise in the per capital income implies economic development; HDI considers many other vital social indicators and helps in measuring a nation’s well-being.
  • It helps as a differentiating factor to distinguish and classify different nations on the basis of their HDI ranks.

Lessons for India

  • Global experiences offer India a way out of this predicament.
  • Studies show that high growth accompanied by more effective income distribution and female empowerment strategies can help enhance human development, even with moderate social expenditures.
  • Clearly, India’s HDI scores can also be substantially enhanced if a politically committed government rolls out inclusive policies that strengthen public health, education and nutrition, and end gender discrimination to usher in a more egalitarian order.

Way forward: It lies in Sustainable Development

  • Both sustainable development and poverty eradication are both long-term and urgent endeavours, requiring not only the gradual and substantial redirection of country policies but a rapid response to pressing problems.
  • Ideally, sustainable development could provide an overarching framework within which all sub-goals (eg poverty eradication, social equality, ecosystem maintenance, climate compatibility) are framed.
  • It is not a subset of development; it is development (in a modern world of resource limits).
  • Environmental issues are not one factor among many but the meta-context within which poverty and other goals are sought.
  • Investing more in public research could lead to technological solutions to poverty and sustainability problems becoming more rapidly and openly available.

Developed nations owe it to all

  • To engage the broad coalition of support required to maintain high levels of development co-operation, rich countries will have to appeal to mutual benefit, not just charity.
  • There is a serious danger that poor countries may come under pressure to compromise on poverty reduction objectives for the sake of the planet – “green aid conditionalities” could emerge.
  • It should be made explicit that the poorest countries should follow whatever path best brings them out of poverty, including engaging in dirty growth if that means eradicating poverty faster.

Not to forget

  • From its beginnings, the HDR has argued for taking seriously the role of local specificity in thinking about economic and social development.
  • This recognition underlines the inherent limitations of global indicators and rankings. Such indicators can only help prompt focus and consideration relative backwardness.

Conclusion

  • To sum up, the introduction of the HDI three decades ago was an early attempt to address the shortcomings in conventional measures of wellbeing.
  • The HDI has continued to attract widespread attention and motivates the work of activists, scholars and political leaders around the world.
  • The HDI compels us to ask what matters more, the quantitative expansion of an economy, or the qualitative improvement in the capabilities of society.
  • Indeed the revival of interest in this subject at the highest levels of government is the need of the hour.

If a metaphor is used, human development accounting represents a house and the HDI is the door to the house. One should not mistake the door to be the house and one should not stop at the door, rather one should enter the house.


References

https://www.epw.in/tags/human-development-index#slideshow-2

https://www.deccanherald.com/opinion/the-measure-of-progress-926696.html

https://www.financialexpress.com/lifestyle/health/india-ranks-131-on-human-development-index-2020-all-you-need-to-know/2155827/

https://timesofindia.indiatimes.com/blogs/toi-editorials/unfinished-story-indias-hdi-ranking-shows-success-in-poverty-reduction-but-failure-on-equality/