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RSTV Archive Yojana/RSTV

[SansadTV] Silver Economy: Challenges & Opportunities

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Context

  • India’s elderly population is on the rise.
  • As per surveys, the share of elders, as a percentage of the total population in the country, is expected to increase from around 8.6% in 2011 to almost 12.5% by 2026, and surpass 19.5% by 2050.
  • Given this sharp rise there is an urgent need to create a more robust eldercare ecosystem in India, especially in the post-COVID phase.
  • The government is exploring various ways to promote the idea of silver economy.

Silver Economy: An Explainer

  • The Silver Economy is dedicated to the elderly in our societies.
  • It is the system of production, distribution and consumption of goods and services aimed at using the purchasing potential of older and ageing people.
  • It seeks to satisfy their consumption, living and health needs.
  • It impacts every market and industry, such as: home accommodation, transport, food industry, insurance, robotics, health and e-health, communications, internet, sports and leisure.

Why focus on senior citizens?

  • Drivers of economy: Older people are no longer at the periphery of the economy. Seniors are now significant players in the economy and their role will get even bigger.
  • High income/savings: Since older people tend to have both high incomes compared to younger populations and high needs, they are major consumers.
  • High population: There are currently 750 million seniors in the world, and that figure will cross the 1 billion marks by 2030.
  • Wealth accumulation: Seniors are the wealthiest age cohort in the world, together with older professionals (45-64 years).

Issues

  • Many of the world’s “new seniors” will be in Asia and less wealthy than the current average.
  • Burden of diseases
  • Still, because they are relatively richer and relatively older, Western economies will remain the top “silver economies” into the next decade.

Issues in India

India is a young country with elaborate socio-cultural intricacies and an aging population.

  • Dependency: A large section of the senior population in India is still dependent on the joint family set up for their senior care and post-retirement needs, with financial planning for retirement taking a back seat.
  • High population: An increase in the number of seniors in India will reduce the percentage of India’s human resource capital and its ability to drive economic growth.
  • Increased retirement age: Many seniors in India expects to work beyond retirement age to raising the retirement age in India as longevity, expanded social benefits, increased homeownership, etc.
  • Second-life income: In developed economies a major share of the retirement income comes from social security. While in emerging markets like India, people rely on their personal savings as a primary source.
  • Low insurance penetration: This highlights the inadequacy and underscores the critical need to streamline retirement planning schemes and strengthen the pension programs in the country. There is a lacks of social security framework.

Key initiatives

As the senior population grows in size, India will need to look at them both as an important consumer segment as well as an essential part of its ambitious growth plan.

An understanding of their needs, preferences, and lifestyles will be critical in unlocking the economic potential of this segment.

[1] National Policy for Senior Citizens

  • The government of India has already taken steps in this direction with the introduction of the Draft National Policy for Senior Citizens 2020.
  • The Draft NPSC seeks to create a strong silver economy that caters to the new and evolving needs of seniors in the country.

[2] SAGE Project

  • A scheme has been launched to promote private enterprises that bring out innovation in products and processes for the benefit of the elders.
  • This project is known as Senior Aging Growth Engine or SAGE.
  • It will identify, evaluate, verify and aggregate the needs of elder persons to deliver products, solutions and services.

[3] SACRED Portal

  • Another portal SACRED- Senior Able Citizens for Re-Employment in Dignity, recently launched will connect the senior citizens with job providers in the private sector.

Way forward

(1) Universal pension program:

  • Income security in later years stems from multiple sources such as pensions, insurances (medical and life), investments.
  • This provides an opportunity for India to create a universal pension program for its 1.3 billion people.

(2) Financial incentives:

  • There is a pressing need to promote and facilitate fiscal planning in the early years and supplement it with senior-friendly tax structures and integrated insurance products.
  • Such measures can help provide multiple income options to seniors to help them embrace a lifestyle of their choice.

(3) Regulatory mechanism:

  • Income generated from savings is the go-to for most elders.
  • A regulatory mechanism will set a viable base rate for the interest accrued on senior citizen deposits and ensure market dips don’t affect retirement income and senior-specific saving plans.

Conclusion

  • As the demography undergoes changes of such massive proportions, we need to figure out ways to supplement the impending deficit.
  • Seniors can help elevate the economy by being active participants in both the income generation and income expenditure side of the market.
  • Keeping senior citizens meaningfully engaged, will also help them lead fuller lives and help achieve a healthy work-life balance.
  • This necessitates robust policy support to implement programs that encourage and simplify the process for seniors to opt for post-retirement employment.
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RSTV Archive

[Sansad TV Archive] Indian Economy: Growth in Core Sectors

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Context

  • For the second month in a row, output from India’s eight core sectors has shown acceleration.
  • It rose by 11.6%, in August, compared to a 6.9% contraction a year ago.
  • Although crude oil and fertiliser output has declined, 4 out of 8 core sectors registered strong double-digit growth according to the Index of Eight Core Industries released by DPIIT.

Growth in Core Industries

  • The ICI measures the combined and individual production in 8 core industries that include Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
  • These 8 Core Industries make up 40.27 per cent weight of the items included in the IIP or the Index of Industrial Production.
  • The August output of ICI was 3.9% higher than pre-COVID levels, compared to July that recorded a 1.1% uptick above 2019 levels.
  • Cement production jumped 36% compared to a 14.5% contraction in August 2020, while coal and natural gas registered a 20.6% surge.

What are the Core Industries in India?

  • The main or the key industries constitute the core sectors of an economy.
  • In India, there are eight sectors that are considered the core sectors.
  • They are electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers.

Index of Eight Core Industries (ICI) vs Index of Industrial Production (IIP)

[A] Index of Eight Core Industries

  • The monthly Index of Eight Core Industries (ICI) is a production volume index.
  • ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
  • Prior to the 2004-05 series six core industries namely Coal, Cement, Finished Steel, Electricity, Crude petroleum and Refinery products constituted the index basket.
  • Two more industries i.e. Fertilizer and Natural Gas were added to the index basket in 2004-05 series. The ICI series with base 2011-12 will continue to have eight core industries.

Components covered in these eight industries for the purpose of compilation of index are as follows:

  • Coal – Coal Production excluding Coking coal.
  • Crude Oil – Total Crude Oil Production.
  • Natural Gas – Total Natural Gas Production.
  • Refinery Products – Total Refinery Production (in terms of Crude Throughput).
  • Fertilizer – Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertilizer and Single superphosphate (SSP).
  • Steel – Production of Alloy and Non-Alloy Steel only.
  • Cement – Production of Large Plants and Mini Plants.
  • Electricity – Actual Electricity Generation of Thermal, Nuclear, Hydro, imports from Bhutan.

[B] Index of Industrial Production

  • The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
  • The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.

Difference between the two

  • IIP is compiled and published monthly by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.
  • However, ICI is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), and Ministry of Commerce & Industry.
  • The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).
  • These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.

Importance of Core Industries

  • The core sectors have a major impact on the Indian economy and significantly affect most other industries as well.
  • Their measures help account the physical volume of production in India.
  • Their analysis offers clearer and realistic assessment of what’s happening in the economy
  • Their progress is used by government agencies for policy-making purposes.
  • They remain extremely relevant for the calculation of the quarterly and advance Gross Domestic Product (GDP) estimates.
  • The core sector is also known as Infrastructure output as they represent the basic industries that form the base of the economy.

Do you know about the Strategic Sectors?

The government has identified four strategic sectors where the presence of state-run companies will be reduced to a minimum.

  1. Atomic energy, space and defence
  2. Transport and telecommunications
  3. Power, petroleum, coal and other minerals and
  4. Banking, insurance and financial services
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RSTV Archive

[SansadTV Archive] AUKUS – Geopolitical Impact

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Recently a new trilateral security partnership was announced between Australia, the UK, and the USA. This has created ripples in the India-Pacific Region.

France is smarting from the humiliation at being blindsided by the AUKUS pact that it says was drawn behind its back and is furious at being “stabbed in the back”.

AUKUS: A Backgrounder

  • This new partnership is known as AUKUS and the major highlight of this arrangement is the sharing of US nuclear submarine technology with Australia.
  • The first major initiative of AUKUS would be to deliver a nuclear-powered submarine fleet for Australia thereby giving it a nuclear heft in the Pacific where China has been particularly aggressive.
  • Apart from this AUKUS will also involve the sharing of cyber capabilities and other undersea technologies.
  • This alliance is considered to be most significant security arrangement between these three nations.

Ripples created by AUKUS

(A) US shift of focus

  • AUKUS is both an acknowledgment of and a concession to the loss of US strategic primacy.  
  • It gives justification for the hasty withdrawal from Afghanistan — to be able to better focus on the strategic rivalry and trade competition with China.

(B) Resentment in the EU and France

  • The deal has complicated the relations between France and Australia, and also France and the US. France is upset as it has been kept out of the loop.
  • France has even ordered the recall of its ambassadors to Washington and Canberra.  

(C) Chinese offensive reception

  • China, expectedly, has strongly criticised AUKUS and the submarine deal as promoting instability and stoking an arms race.

(D) Confusion among the SE nations

  • The new great power contestation might actually generate much room for the Southeast Asian states to manoeuvre, as they are wooed simultaneously by China, AUKUS, and the Quad.
  • They realise that AUKUS is a challenge to the hallowed notion of “ASEAN centrality”, a totemic rhetorical device which seeks to have others acknowledge its relevance.

Why is France offended?

  • France takes its role as an Indo-Pacific power seriously in a region.
  • One must know that France has 12 time zones. The areas in French Polynesia in the Pacific Ocean are mainly responsible for this.
  • It maintains four naval bases, stations around 7,000 soldiers and has 1.5 million citizens in island territories such as New Caledonia and French Polynesia.
  • France’s anger also stems from the realization that NATO is now a defunct organization in absence of the glue, USSR, that held it together.
  • It is finding it difficult to deal with America’s clear shifting of focus from NATO to Indo-Pacific.

Why such an alliance?

(A) Deteriorating China-AU relations

  • Tensions have been high between Australia and an increasingly assertive China, its largest trade partner.
  • Australia banned Chinese telecom giant Huawei in 2108 and its PM called for an investigation into the origins of COVID-19 last year.
  • China retaliated by imposing tariffs on or capping Australian exports.

(B) US act of counterbalancing

  • China has nuclear-powered submarines, as well as submarines that can launch nuclear missiles.
  • The three signatories to the AUKUS deal have made it clear though, that their aim is not to arm the new subs with nuclear weapons.

(C) Bringing Australia at the centrestage of Indo-Pacific

  • In the context of the AUKUS agreement, nuclear-powered submarines will give the Royal Australian Navy the capability to go into the South China Sea.
  • This is primarily because a nuclear-powered submarine gives a navy the capability to reach far out into the ocean and launch attacks.
  • A nuclear-powered submarine offers long distances dives, at a higher speed, without being detected gives a nation the ability to protect its interests far from its shores.

Exactly, How?

  • To go from a diesel-electric fleet to a nuclear fleet is thus a change of strategy, not just of propulsion.
  • It provides a way to project power from the shipping lanes which feed the all-important Malacca Strait to the waters off Taiwan.
  • Add on the capacity to launch much longer-range missiles—a submarine could deliver missiles to China’s mainland while sitting to the east of the Philippines—and the country has a greatly expanded offensive capacity.

AU: Another US Base

  • If Australia’s strategic stance is changed by the deal, so is America’s.
  • Since the second world war the US has projected power across the region called as an archipelago of empire.
  • There are the island bases from Hawaii in the east to Guam, Okinawa in Japan and, in the Indian Ocean, Diego Garcia, leased from Britain without the consent of its natives.
  • In Australia, America has now, in effect, a beefed-up continent-sized base for its own operations as well as a reinvigorated ally.

Outcomes of AUKUS

(A) Offensive front against China

  • There is no gainsaying the fact that rapid accretion in China’s economic and military capacities, but more particularly its belligerence, has led to a tectonic shift in regional security paradigms.
  • Several countries have been obliged to review their defence preparedness in response to China’s rising military power and its adverse impact on regional stability.

(B) India as a bridge in Anglosphere

  • The transatlantic fissure has also pointed to something inconceivable—that India could emerge as a potential bridge between different parts of the West.
  • Our PM was on the phone with French President Emmanuel Macron reaffirming India’s strong commitment to the Indo-Pacific partnership with France.
  • India’s solidarity with France at a difficult moment is rooted in New Delhi’s conviction that preserving the West’s unity is critical in shaping the strategic future of the Indo-Pacific.

(C) Exposed Chinese double standards

  • China has the world’s fastest-growing fleet of sub-surface combatants.
  • This includes the Type 093 Shang-class nuclear-powered attack submarine (SSN) and the Type 094 nuclear-powered Jin-class ballistic missile submarine (SSBN).
  • Its nuclear submarines are on the prowl in the Indo-Pacific.
  • Yet, China denies Australia and others the sovereign right to decide on their defence requirements.

Implications on QUAD

  • Not superseding: This alliance does not and will not supersede or outrank existing arrangements in the Indo-Pacific region such as the Quad, which the US and Australia form with India and Japan, and ASEAN.
  • Complimentary to QUAD: AUKUS will complement these groups and others.

Opportunities for India

While the Quad and Washington’s Indo-Pacific pivot generate much interest and anxiety, it is easy to forget that the two ideas are, in essence, about India.

  • India’s role has enhanced: Balancing China is the challenge confronting the United States, and Washington has recognized that India is an indispensable part of the answer.
  • Just another alliance: New Delhi has no reason to complain if Australia, Britain, and the United States raise the military capabilities of their coalition. The submarine deal is an undiluted example of strategic defence collaboration.
  • Intimidating China: The introduction of nuclear-powered submarine through AUKUS has a complicating impact on the Chinese maritime calculus. Anything that maintains a balance of power in the region is desirable.
  • Focusing inside on land border: AUKUS also leaves India with a less of a headache in securing its maritime flank from Chinese aggression and New Delhi may focus more fully on the threat emanating from the land border with China.

Creating affinity with France (the Submarine giant)

  • In fact, instead of constricting India, AUKUS has opened a window of strategic opportunity and a chance for New Delhi to deepen its partnership with France provided it plays the cards well.
  • India and France are strongly committed to making the Indo-Pacific an area of cooperation and shared values.

Way forward

  • The setback ‘down under’ may spur France to focus afresh on partners such as India.
  • India must strike a balance between continuing imports and implementing the all-important Atmanirbhar Bharat in defence manufacturing.
  • France should take AUKUS as a business deal.
  • Its momentary reaction at the cancellation of the contract by Australia should soon subside.
  • As a major Indo-Pacific power, France is an important part of the regional security calculus.
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RSTV Archive

[Sansad TV ] India and Persian Gulf Region

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The Indian Air Force is a few months back has participated for the first time in Exercise Desert Flag-VI in UAE along with air forces of the United Arab Emirates, United States of America, France, Saudi Arabia, South Korea and Bahrain.

In this article, we will discuss and analyze various aspects of the strategic significance of the Persian Gulf Region for India.

Context

India’s relations with the Gulf Cooperation Council (GCC) countries, especially Saudi Arabia and the United Arab Emirates (UAE), have witnessed a significant upswing since 2015, across the areas of trade, investments, counter-terrorism, and security cooperation.

Regional and international developments, including the rise of the Islamic State (ISIS), China’s growing regional footprint, as well as heightened tensions over Iran’s nuclear program, also contributed to amplifying the importance of the GCC states in India’s foreign policy calculus.

Persian Gulf: A backgrounder

  • Persian Gulf also called Arabian Gulf is a shallow marginal sea of the Indian Ocean that lies between the Arabian Peninsula and southwestern Iran.
  • It is bordered on the north, northeast, and east by Iran; on the southeast and south by part of Oman and by the United Arab Emirates; on the southwest and west by Qatar, Bahrain, and Saudi Arabia; and on the northwest by Kuwait and Iraq.
  • The Shatt al-Arab river delta forms the northwest shoreline.

Global fossil fuel depot

  • The Persian Gulf and its coastal areas are the world’s largest single source of petroleum, and related industries dominate the region. ‘
  • Safaniya Oil Field in Saudi Arabia, the world’s largest offshore oilfield, is located in the Persian Gulf.

Conflicts in the Gulf

  • The Persian Gulf is a relatively constricted geographic area of great existing or potential volatility.
  • The smaller states of the gulf are particularly vulnerable, having limited indigenous populations and, in most cases, armed forces with little more than symbolic value to defend their countries against aggression.
  • All of them lack strategic depth, and their economies and oil industries depend on access to the sea.

Various threats

  • Over the last decade, the Gulf has been in ferment — the fall of Hosni Mubarak in Egypt in the wake of the Arab Spring in 2011 deprived Saudi Arabia of its security partner and created in the kingdom a deep sense of strategic vulnerability.
  • It saw in Iran a hegemonic player in regional affairs and opted to challenge the expansion of Iran’s presence on a sectarian basis in the region that it considered its zone of exclusive influence.
  • This set up proxy conflicts between the two Islamic neighbours in Syria, Yemen and Iraq.

What is the Gulf Cooperation Council (GCC)?

  • The GCC is a regional, intergovernmental political and economic union that consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
  • The Charter of the GCC was signed on 25 May 1981, formally establishing the institution.

India-GCC engagement

  • The significant presence of the Indian community in the Gulf countries over the last 40 years and the role of Indian enterprises in the development of the region have taken place in the framework of important changes in bilateral political and economic relations.
  • The GCC countries also became India’s principal trade and investment partners.
  • The Gulf is an integral part of India’s ‘extended neighbourhood’, both by way of geographical proximity and as an area of expanded interests and growing Indian influence.

Diplomatic Relations

  • The governments of the GCC members are India-friendly and Indian-friendly.
  • Many GCC members have outrightly ignored Pakistan’s foul cries regarding Kashmir in the OIC.
  • The Prime Minister of India has received the ‘Order of Zayed’, the highest civilian order of the UAE and the ‘King Hamad Order of the Renaissance’, the third-highest civilian order of Bahrain.

Economic Relations

  • The GCC states are among India’s key suppliers of energy, and annual remittances from Indians in these countries are worth an estimated USD 4.8 billion.
  • The UAE and Saudi Arabia are India’s third and fourth-largest trading partners respectively and the total bilateral trade of the GCC countries with India for the year 2018-19 stood at USD 121.34 billion.
  • UAE also features in the top 10 sources of FDI inflows into India.

Security Relations

  • Both India and the GCC are members of the Financial Action Task Force (FATF).
  • Apart from the participation of Saudi Arabia, Oman, Kuwait, and others in India’s mega multilateral Milan Exercise, India also has bilateral exercises with most of them.

Cultural relations

  • India’s relations with the peoples of the Gulf and the Arabian Peninsula go back several millennia when Indian sailors, merchants, intellectuals and men of faith traversed the waters of the Indian Ocean, exchanging navigation skills, goods, ideas and belief systems.
  • They thus enriched each other materially and spiritually and created a shared ethos that endures to this day.

India and Iran

  • India has always shared a friendly relationship with Iran.
  • But the India-Iran relation faces one of the most complex phases at all times due to the USA’s pressure which has politico-economic impacts.
  • In May 2018, the USA abandoned the nuclear deal and reinstated economic sanctions against Iran.

Qatar Crisis and India

  • Qatar’s has connections with various terrorist and sectarian groups aimed at destabilising the region including the Muslim Brotherhood, al-Qaeda, the Islamic State of Iraq and Syria (ISIS) and groups supported by Iran.
  • Such developments are likely to have significant implications for India, given that its citizens make up the largest expatriate group in the region.

India’s importance to the Gulf

  • India has acquired a large and rewarding regional footprint, particularly as the preferred source of manpower, food products, pharmaceuticals, gem and jewellery, light engineering items, etc.
  • Indians are also the biggest stakeholders in Dubai’s real estate, tourism and Free Economic Zones.
  • Indian interests do not entail power projection but necessitate peace and regional stability. India has always avoided involvement in local or regional disputes in the region.

India’s interests in the Gulf

  • There are around seven million people of Indian origin working in the Middle East. Security and stability in the region is hence of paramount importance for India.
  • Further, the Indian diaspora in the region remits around USD 40 billion a year.
  • These funds are immensely valuable as they help India manage its current account deficit. Energy is another critical area of engagement.
  • A fifth of India’s oil, and about 65 per cent of gas imports, comes from countries of the Middle East including Iran, Qatar, Iraq, Saudi Arabia and others.

Future of Cooperation

  • Economic recovery after the pandemic and the building of ties on fresh bases will need to take into account that the pandemic has accelerated many of the trends in the world economy that were at nascent stage earlier.
  • These are a shift in favour of clean energy, digitisation and the attendant need for skilled manpower, and the paramount importance of connectivity, both physical, to explore new trade links, and digital, to shape new regional value chains.
  • Water conservation can be a new area for cooperation between India and the GCC countries to sustain a better quality of life over the long-term, given that both regions are facing water stress.
  • Food security is also a priority concern for all GCC nations, with the countries being particularly anxious about supply disruptions due to market or political volatilities.
  • Given India’s huge fruit and vegetable produce and vast quantities that are wasted due to poor storage, the food processing sector has the greatest potential for GCC-India cooperation, especially investments.

Conclusion

  • Given the five millennia-old narrative of engagement that has defined India’s links with the Gulf, the pandemic has opened opportunities to reinvent our connections on new bases, as we have been doing over several centuries.
  • There will be a clear synergy in India and the GCC countries consolidating their traditional areas of cooperation — energy, trade and investment.
  • This will need adopting of an integrated and cohesive approach, backed by institutional support, to develop ties in the diverse areas set out above — renewables, water conservation, food security, digital technology and skills development.
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RSTV Archive

[Yojana Archive] Reforms in the civil Services

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Context

  • Civil Service is vital for the government to function.
  • It’s regarded as the ‘steel frame’ of administration in India from colonial days.
  • The colonial legacy of civil service continues amidst the fast-changing era of globalization.
  • It is therefore, indispensible that civil service reforms are carried out as a part of good governance.
  • A reboot and re-orientation of it is needed to ensure effective service delivery.

Civil Services in India: A backgrounder

  • Civil Services refer to the career civil servants who are the permanent executive branch of the Republic of India. It is the backbone of the administrative machinery of the country.
  • As India is a parliamentary democracy, the ultimate responsibility for running the administration rests with the people’s elected representatives.
  • The elected executive decides the policy and it is civil servants, who serve at the pleasure of the President of India, implement it.
  • However, Article 311 of the constitution protects Civil Servants from politically motivated vindictive action.

Evolution of Civil Services

Ancient India: Kautilya’s Arthasastra gives seven basic elements of the administrative apparatus- Swamin (the ruler), Amatya (the bureaucracy), Janapada (territory), Durga (the fortified capital), Kosa (the treasury), Danda (the army), and Mitra (the ally). The higher bureaucracy consisted of the mantrins and the amatyas. While the mantrins were the highest advisors to the King, the Amatyas were the civil servants.

Medieval India: During the Mughal era, the bureaucracy was based on the mansabdari system. The mansabdari system was essentially a pool of civil servants available for civil or military deployment.

Colonial India: The big changes in the civil services in British-India came with the implementation of Macaulay’s Report 1835. The report recommended that only the best and brightest would do for the Indian Civil Service to serve the interest of the British Empire.

Post-Independence: Indian civil services system retained the elements of the British structure like a unified administrative system such as an open-entry system based on academic achievements, permanency of tenure.

Post partition: When India was partitioned following the departure of the British in 1941, the Indian Civil Service was divided between the new dominions of India and Pakistan. The Indian remnant of the ICS was named the Indian Administrative Service, while the Pakistani remnant was named the Pakistan Administrative Service.

Classification of Services

  • The modern Indian Administrative Service was created under Article 312(2) in part XIV of the Constitution of India, and the All-India Services Act, 1951.
  • Constitution has not elaborated the types and categories of services. As per the Constitution, the services are categorized into the followings categories:
  1. All India Services (AlS)
  2. State Services
  3. Local and Municipal Services.
  4. There are four groups of central, services Central Services Group A(Indian Foreign Service, Indian Audit and Accounts Service, Indian Statistical Service etc.), B (Central Secretariat Service, Geographical Survey of India, Zoological Survey of India etc.), C & D.
  5. The highest personnel strength among the entire civil services system in India is with Central Secretariat Service and Indian Revenue Service (IT and C&CE).

Latest Developments

  • The Govt. of India approved the formation of the Indian Skill Development Service in 2015, Indian Enterprise Development Service in 2016.
  • Further, the Cabinet of India approved merging all civil services under Indian Railways into a single Indian Railways Management Service as part of structural reform in the sector in 2019.
  • Also the lateral entry of professionals in Civil Services has begun.

Our discussion: Civil Service Reform

  • Civil Service Reform is a deliberate change effort by the government to improve its capacity to effectively and efficiently execute policies.
  • The purpose of ‘reform’ is to reorient the Civil Services into a dynamic, efficient, and accountable apparatus for public service delivery built on the ethos and values of integrity, impartiality, and neutrality.
  • The reform is to raise the quality of public services delivered to the citizens and enhance the capacity to carry out core government functions, thereby, leading to sustainable development.

Why need CS reforms?

  • Accelerated change globally
  • Globalization
  • Technological advances
  • greater decentralization
  • social activism
  • Economic Reforms

What are the various bottlenecks of Indian Civil Services?

  • Poor capacity building
  • Inefficient incentive systems that do not appreciate upright and outstanding civil servants but reward the corrupt and the incompetent
  • Outdated rules and procedures that restrict the civil servant from performing effectively
  • Systemic inconsistencies empanelment in promotion
  • Lack of adequate transparency and accountability procedures
  • no safety for whistleblowers
  • Arbitrary and whimsical transfers: insecurity in tenures impedes institutionalization
  • Political interference and administrative acquiescence
  • Dominance of few elite services in promotions, work allocations, and assignments

Structural Issues

Generalist Vs Specialist: Civil Services was designed to deliver certain core functions: Law and Order; Government programs and realizing Governments’ orders. However, changes/Causes/Reasons mentioned above led to change in the role of the state. 

New Challenges: Cyber security, complex business, trade, legal aspects are some of the major emerging threats.

Recent Reforms

(1) Mission Karmayogi

  • It is aimed at better services delivery to the public.- “governance, performance, and accountability”. lt promises a shift from rules to roles, silos to coordination, interdisciplinary movements, and a continuous capacity building exercise.
  • The focus of the reform is the creation of a ‘citizen-centric civil service’ capable of creating and delivering services conducive to economic growth and public welfare.
  • Accordingly, Mission Karmayogi shifts the focus from “Rule-based training to Role-based training”. Greater thrust has been laid on behavioral change.

(2) National Programme for Civil Service Capacity Building:  

  • It aims for learning resources from the best institutions and practices from across the world while retaining Indian sensibilities and culture.
  • The mid-career training will now be available to all government staff instead of the top officers alone, and their profile and assessment will be continuous.
  • If there is a need for some special appointment, then authorities can do so by looking at the profile of the officers with the help of technology instead of depending on perceptions.

Key features of the new Reforms

  • ‘Rules based’ to ‘Roles based’ HR Management
  •  Aligning work allocation of civil servants by matching their competencies to the requirements of the post.
  • To emphasize on ‘on-site learning’ to complement the ‘off-site’ learning.
  • To create an ecosystem of shared training infrastructure including that of learning materials, institutions and personnel.
  • To calibrate all Civil Service positions to a Framework of Roles, Activities and Competencies (FRACs) approach and to create and deliver learning content relevant to the identified FRACs in every Government entity.
  • To make available to all civil servants, an opportunity to continuously build and strengthen their Behavioural, Functional, and Domain Competencies in their self-driven and mandated learning paths.
  • To enable all the Central Ministries and Departments and their Organizations to directly invest their resources towards co-creation and sharing the collaborative and common ecosystem of learning through an annual financial subscription for every employee.
  • To encourage and partner with the best-in-class learning content creators including public training institutions, universities, start-ups, and individual experts.

Way forward

  • Civil Service Reforms should realign the outdated structure and culture of the services and forgo its colonial hangover aiming to raise the quality and sensitivity of services to the citizens that are essential for sustainable economic and social development.
  • Rationalization and harmonization of service is the need of the hour.

Conclusion

  • Capacity augmentation of Civil Servants plays a vital role in rendering a wide variety of services, implementing welfare programs, and performing core governance functions.
  • A transformational change in Civil Service Capacity is proposed to be affected by organically linking the transformation of work culture, strengthening public institutions, and adopting modern technology to build civil service capacity with the overall aim of ensuring efficient delivery of services to citizens.
  • The future of the country cannot be progressive without a reformed bureaucracy.
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RSTV Archive

[Sansad TV Archives] Petroleum Products – Need for Price Cut

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The Goods and Services Tax (GST) Council has recently decided to keep petroleum products out of the GST regimes.

As the retail prices of petroleum products are soaring, demand for price reduction has gained momentum.

Fuel prices in India

  • India meets its domestic oil demand mainly through imports.
  • While international crude prices have risen sharply in the last six months, a major reason for the high selling price of petrol is the high levy of local taxes.

Factors affecting fuel prices?

  1. Crude oil production and pricing
  2. Rupee vs. Dollar Rates
  3. Demand-Supply scenario
  4. Internal transportation
  5. Pricing mechanism

Present taxation of Fuels

  • Currently, taxes on petroleum products are levied by both the Centre and the states.
  • While the Centre levies excise duty, states levy value added tax (VAT).
  • For instance, VAT on petroleum products is as high as 40% in Maharashtra, contributing over ₹25,000 crore annually.
  • By being able to levy VAT on these products, the state governments have control over their revenues.
  • When a national GST subsumed central taxes such as excise duty and state levies like VAT on July 1, 2017, five petroleum goods – petrol, diesel, ATF, natural gas and crude oil – were kept out of its purview.

Why bring Petro/Diesel under GST?

  • GST is being thought to be a solution for the problem of near-record high petrol and diesel rates in the country, as it would end the cascading effect of tax on tax.
  • The state VAT is being levied not just on the cost of production but also on the excise duty charged by the Centre on such output.

Why were they left out of GST?

  • This is because both central and state government finances relied heavily on taxes on these products.
  • Since GST is a consumption-based tax, bringing petroleum under the regime would have mean states where these products are sold get the revenue and not the producer ones.
  • Simply put, Uttar Pradesh and Bihar with their huge population and a resultant high consumption would get more revenues at the cost of states like Gujarat.
  • Under the present Covid situation, bringing petroleum products under GST will be a very tough call for both the Centre and states “as both will stand to lose”.

Typically, for every Re 1 of excise hike on petrol and diesel, the gain to the exchequer is around Rs 13,000-14,000 crore. However, with the Covid-related consumption slump, the gains may be a bit lower than this.

How does this impact consumers?

High oil prices add to inflationary pressures. Inflation poses a challenge to growth.

  • Record high prices for diesel means that the cost of transporting goods goes up across the country which in turn could result in increasing the prices of essential commodities like fruit and vegetables as well.
  • Household incomes see a perceptible drop and gradually even the demand for discretionary goods starts declining.
  • Petrol and diesel have a combined weight of 4.69% in the wholesale price index and 2.34% in the retail price index.
  • Any increase in the prices of the transport fuels affect the WPI more than the CPI but what is more worrisome is the pass-through effect the increase in fuel prices can cause.

Impact of inclusion of fuel under GST

  • If petroleum products are included under the GST, there will be a uniform price of fuel across the country.
  • However, petroleum products coming under GST not necessarily means that taxes or prices will come down.
  • If the GST council decides to opt for a lower slab, taxes may come down.
  • At present, India has four primary GST rates – 5 percent, 12 percent, 18 percent and 28 percent.
  • Levying a standard rate of GST on petrol would mean that the prices increase dramatically in Andaman and Nicobar, but on the flip side, they would fall in Maharashtra if the cumulative rate is lower than the current rate.

Way forward

  • The government can offset the prices by lowering excise duty slightly, which saw an exorbitant hike during March last year.
  • This window, the experts say, is available to the government only this year.
  • Next year, when the demand for transport fuels comes back to pre-pandemic levels and there is sharper upward revision, the risk to inflation will be much higher and may leave no ammunition with the government.
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RSTV Archive Yojana/RSTV

[RSTV Archive] Agriculture: Priorities & Challenges

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The Vice President a few months back had advised top priority and coordinated action by both the Centre and the states to bring in reforms. He suggested that the 4 Ps – Parliament, political leaders, policymakers and press – must proactively adopt a positive bias towards agriculture.

Observing that many people are leaving agriculture and migrating to urban areas because of rising input costs and unfavourable market conditions, he said the problems that are holding back Indian farmers from realizing their full potential must be identified and solved.

India Agriculture: A backgrounder

While agriculture’s share in India’s economy has progressively declined to less than 15% due to the high growth rates of the industrial and services sectors, the sector’s importance in India’s economic and social fabric goes well beyond this indicator as:

  • Population dependency: Nearly three-quarters of India’s families depend on rural incomes.
  • Rural sector: The majority of India’s poor (some 770 million people or about 70 percent) are found in rural areas.
  • Food Security: India’s food security depends on producing cereal crops, as well as increasing its production of fruits, vegetables and milk.

India is a global agricultural powerhouse. It is the world’s largest producer of milk, pulses, and spices, and has the world’s largest cattle herd (buffaloes), as well as the largest area under wheat, rice and cotton.

It is the second-largest producer of rice, wheat, cotton, sugarcane, farmed fish, sheep & goat meat, fruit, vegetables and tea.

Challenges to Indian Agriculture

Three agriculture sector challenges will be important to India’s overall development and the improved welfare of its rural poor:

[1] Raising agricultural productivity per unit of land

  • Raising productivity per unit of land will need to be the main engine of agricultural growth as virtually all cultivable land is farmed.
  • Water resources are also limited and water for irrigation must contend with increasing industrial and urban needs.
  • All measures to increase productivity will need exploiting, amongst them: increasing yields, diversification to higher value crops, and developing value chains to reduce marketing costs.

[2] Reducing rural poverty

  • Rural development must also benefit the poor, landless, women, scheduled castes and tribes.
  • Moreover, there are strong regional disparities: the majority of India’s poor are in rain-fed areas or in the Eastern Indo-Gangetic plains.
  • Hence, poverty alleviation is a central pillar of the rural development efforts.

[3] Food security needs

  • The sharp rise in food-grain production during India’s Green Revolution of the 1970s enabled the country to achieve self-sufficiency in food-grains and stave off the threat of famine.
  • However, the recent slow-down in agricultural growth has become a major cause for concern.
  • India’s rice yields are one-third of China’s and about half of those in Vietnam and Indonesia. The same is true for most other agricultural commodities.

Ground challenges

[a] Small and Fragmented Land Holdings:

  • Small and scattered land holdings apply to a small plot of land that is uneconomical.
  • An agricultural farm must have a certain amount of land in order to be cost effective in terms of purchasing and utilizing inputs, as well as harvesting.

[b] Quality seeds

  • The seed is a vital and essential inputs for the crops yields and maintaining agricultural production growth.
  • The delivery of high quality seeds is just as important as its processing.
  • Unfortunately, good superiority seed are out of reach for the majority of the farmers,  marginal farmers and particularly small, due to exorbitant seed  rates.

[c] Manures, Fertilizers and Biocides

  • For hundreds of years, Indian soil were used to produce crops with no regard for replenishment. As a result, soils have been depleted and exhausted, leading to low productivity.
  • Almost all of the crop has among the lowermost average yields in the world.
  • It is a critical concern that can be resolved by increasing the use of fertilizers and manures.

[d] Irrigation challenges

  • Despite  the  fact  that  India  is a  world’s 2nd  largest  moistened  country  after  the  China,  only  one 3rd  of  the  crop  production  is  irrigated. 
  • In  a  rainy  climate  country  like  India,  where  rainfall  is  unpredictable,  unreliable,  and  erratic,  irrigation  is  the  most  significant  agricultural  input. 
  • India will  not  be  able  to  make  sustainable  development in agriculture until and unless much than half of the collected area is irrigated.

[e] Lack of Mechanization

  • Despite the large scales mechanization of the agriculture in few part of the world, most agricultural operation are still carried out manually.
  • Irrigating, sowing, thinning, ploughing and pruning, harvesting threshing, weeding, and transporting the crops all make little or no use of machines.
  • This is particularly true for small and marginal farmers.  It leads to significant waste of labour and human labour yields per capita.

Priority Areas for Support

[A] Enhancing agricultural productivity, competitiveness, and rural growth

(1) Promoting new technologies and reforming agricultural research and extension:

  • Major reform and strengthening of India’s agricultural research and extension systems is one of the most important needs for agricultural growth.
  • These services have declined over time due to chronic underfunding of infrastructure and operations, no replacement of aging researchers or broad access to state-of-the-art technologies.
  • Research now has little to provide beyond the time-worn packages of the past.

(2) Improving Water Resources and Irrigation/Drainage Management

  • Agriculture is India’s largest user of water.
  • However, increasing competition for water between industry, domestic use and agriculture has highlighted the need to plan and manage water on a river basin and multi-sectoral basis.
  • As urban and other demands multiply, less water is likely to be available for irrigation. Ways to radically enhance the productivity of irrigation (“more crop per drop”) need to be found.
  • Piped conveyance, better on-farm management of water, and use of more efficient delivery mechanisms such as drip irrigation are among the actions that could be taken.

(3) Facilitating crop diversification to higher-value commodities

  • Encouraging farmers to diversify to higher value commodities will be a significant factor for higher agricultural growth, particularly in rain-fed areas where poverty is high.
  • Moreover, considerable potential exists for expanding agro-processing and building competitive value chains from producers to urban centers and export markets.
  • While diversification initiatives should be left to farmers and entrepreneurs, the Government can, first and foremost, liberalize constraints to marketing, transport, export and processing.

(4) Promoting high growth commodities

  • Some agricultural sub-sectors have particularly high potential for expansion, notably dairy.
  • The livestock sector, primarily due to dairy, contributes over a quarter of agricultural GDP and is a source of income for 70% of India’s rural families, mostly those who are poor and headed by women.
  • Growth in milk production, at about 4% per annum, has been brisk, but future domestic demand is expected to grow by at least 5% per annum.
  • Milk production is constrained, however, by the poor genetic quality of cows, inadequate nutrients, inaccessible veterinary care, and other factors.

(5) Developing markets, agricultural credit and public expenditures

  • India’s legacy of extensive government involvement in agricultural marketing has created restrictions in internal and external trade.
  • Even so, private sector investment in marketing, value chains and agro-processing is growing, but much slower than potential.
  • While some restrictions are being lifted, considerably more needs to be done to enable diversification and minimize consumer prices.
  • Improving access to rural finance for farmers is another need as it remains difficult for farmers to get credit.

[B] Poverty alleviation and community actions

  • While agricultural growth will, in itself, provide the base for increasing incomes, for the 170 million or so rural persons that are below the poverty line, additional measures are required to make this growth inclusive.
  • For instance, a rural livelihoods program that empowers communities to become self-reliant has been found to be particularly effective and well-suited for scaling-up.
  • This program promotes the formation of self-help groups, increases community savings, and promotes local initiatives to increase incomes and employment.

[C] Sustaining the environment and future agricultural productivity

(1) Over-use management

  • In parts of India, the over-pumping of water for agricultural use is leading to falling groundwater levels. Conversely, water-logging is leading to the build-up of salts in the soils of some irrigated areas.
  • In rain-fed areas on the other hand, where the majority of the rural population live, agricultural practices need adapting to reduce soil erosion and increase the absorption of rainfall.
  • Watershed management programs can be implemented where communities engage in land planning and adopt agricultural practices that protect soils.
  • This can lead to increase in water absorption and raise productivity through higher yields and crop diversification.

(2) Climate change mitigation

  • More extreme events – droughts, floods, erratic rains – are expected and would have greatest impact in rain-fed areas.
  • The watershed program, allied with initiatives from agricultural research and extension, may be the most suited agricultural program for promoting new varieties of crops and improved farm practices.

[D] Marketing reforms

  • In the absence of properly organized market and sufficient transportations facilities, Indian farmers face a problem of the low incomes from their vendible surplus crops.
  • As a result, farmers have fallen prey to distributers for the fast discarding of their crop at the lower price and uneconomic.
  • Price fluctuations in agricultural product are also a significant threat in Indian agriculture.
  • Price stability is important not only for farmers, but also for buyers, exporters, and agro-based industry.
  • The price movements of the agricultural product in India are neither the smooth nor the uniform, resulting in a fluctuating pattern.

Various govt initiatives

The Government of India has taken several steps which include:

  • Improvement in soil fertility through the Soil Health Card scheme.
  • Providing improved access to irrigation and enhanced water efficiency through Pradhan Mantri Krishi Sinchai Yojana (PMKSY).
  • Supporting organic farming through Paramparagat Krishi Vikas Yojana (PKVY).
  • Support for creation of a unified national agriculture market to boost the income of farmers.
  • A new scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY) has been launched for implementation from Kharif 2016 to mitigate the risk of crop loss in agriculture sector.
  • Marketing reforms through the three farm laws.

Conclusion

  • Among the major sources of agrarian distress are low levels of farmers’ incomes and their fluctuations over the years.
  • The problem is acute and is getting severe with the passage of time, affecting large chunks of the population that make living with agriculture.
  • Persistent low levels of income may also adversely affects the future of agriculture sector in India.
  • Adequate attention is required to improve the agricultural incomes and thus the welfare of the farmers to secure future of agriculture in the country.
  • Reaching this end will reduce persistent disparity between farm and non-farm income, alleviate agrarian distress, encourage inclusive growth and infuse dynamism in the farming sector.
  • Decent incomes in farm sector will also attract youth towards the farming profession relieving the non-farm job sector of the continuing burden.
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RSTV Archive Yojana/RSTV

[RSTV Archive] Normal Monsoon and Economy

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IMD had predicted normal monsoon for 2021. However, initial estimates show that some states may not get enough rain.

In this article, we shall learn how this will impact economic growth, especially when other sectors are still reeling under Covid-19 impact.

What is Monsoon?

  • Monsoon is traditionally a seasonal reversing wind accompanied by corresponding changes in precipitation.
  • It is now being used to describe seasonal changes in atmospheric circulation and precipitation associated with annual latitudinal oscillation of the Intertropical Convergence Zone between its limits to the north and south of the equator.
  • Usually, the term monsoon is used to refer to the rainy phase of a seasonally changing pattern, although technically there is also a dry phase.
  • The term is also sometimes used to describe locally heavy but short-term rains.

What defines a Normal Monsoon?

The Indian Meteorological Department (IMD) calls a monsoon season:

  • ‘Normal’ when the total amount of rainfall in the country between June and September is within 10 per cent (plus or minus) of the average rain over a long period.
  • ‘Deficit rainfall’ is when it drops below the margin of 10 per cent of the average.
  • ‘Excess rainfall’ is when it exceeds the average by more than 10 per cent.

What is the LPA method?

  • The IMD uses long period average (LPA) method to forecast the monsoon.
  • LPA represents the average annual rainfall received by India during the southwest monsoon over the five decades from 1961 to 2010.

Why is it so important to have Normal Monsoon?

A good monsoon usually brings renewal and recovery, especially when times are grim. The right amount of rainfall brings the promise of a bumper harvest, boosting rural incomes and demand, driving an essential economic cycle.

(1) Crop success

  • The monsoon is critical for agriculture in the country since nearly 60% of India’s net arable land lacks irrigation.
  • The monsoon delivers about 70% of India’s annual rainfall and determines the yield of several grains and pulses, including rice, wheat, and sugarcane.
  • India is the world’s biggest producer of sugar, cotton and pulses, and the second-biggest producer of wheat and rice. 

(2) Food inflation

  • More importantly, higher agriculture yield would mean lower pressure on food prices and the overall retail inflation.
  • A normal south-west monsoon should help to contain food price pressures, especially in cereals and pulses.
  • It is also crucial to keep up the rural demand.

(3) Drinking water

  • The rains also replenish nearly 100 large reservoirs critical for drinking water and power generation across the country.
  • In the event of deficient rains, cities such as Chennai, Mumbai, and Hyderabad will be forced to cut water supplies.

(4) Demand spur in the economy

  • Most major sectors of the economy like to base their sales and distribution activities on the monsoon’s behavior.
  • For example, if the monsoon fails, lower production of foodgrain would mean lower demand for diesel to transport goods.
  • A company involved in sales and distribution of automotive fuels would like to cut down production before the demand plummets.
  • From share markets and betting houses to the collections at temples and sales of vegetables, the monsoon affects everything.

(5) Hydro Energy

  • A normal monsoon will also lead to reservoirs across India, which are responsible for water supply in cities, filling up.
  • Thus it  will also lead to an increase in production of hydro power which is a cleaner form of energy.

Importance of Monsoon for the Agriculture

  • When the first wave of Covid-19 cases ravaged the economy in 2020, it was the agriculture sector, powered by an above-average monsoon, that saved the economy and millions who depend on agriculture, both directly and indirectly.
  • Nearly half of India’s farmland has no irrigation and is dependent on monsoon rains, which account for 70-90 per cent of annual rainfall.
  • Farming accounts for almost 15 per cent of India’s GDP and employs nearly 42.6 per cent of the workforce.
  • While the share of Indians employed in the sector is declining, it remains a critical sector.

Public sentiments associated

  • Normal monsoon will also improve the sentiment in rural India which has witnessed many coronavirus cases and deaths.
  • It will lead to an increase in income of farmers and provide a boost to rural demand which has been facing pressure in the second wave.

Significance for post COVID recovery

  • A normal monsoon would ensure that inflation remains in the band of 4%-6% as targeted by the Reserve Bank of India.
  • Low inflation will help the Reserve Bank of India to continue with its stance of keeping interest rates low. Generally, central banks resort to an increase in interest rates to tackle high inflation.
  • Low rate scenario is required at a time when Indian economy is battling from the economic fallout of the pandemic.

Issues in Monsoon Prediction

  • One may complain about the “unreliability and uncertainty of rainfall prediction in India.
  • In recent times, the unpredictability of monsoons has increased significantly with the impact of global warming that has resulted in climate change all over the world.
  • For climate scientists, determining the location, extent, and intensity of the ITCZ is the biggest challenge and in recent times it has become more difficult due to climate change and other factors like El Nino, a global climate cycle that disrupts the path of trade winds.
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RSTV Archive Yojana/RSTV

[RSTV Archive] Indigenous Military Doctrine

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The Indian Armed forces are considering introducing Bhagwad Gita and Kautilya’s Arthashastra as part of the curriculum for Officers.

A few weeks back, the Prime Minister had stressed the importance of enhancing indigenization in the national security system, not only in sourcing equipment and weapons but also in the doctrines, procedures and customs practised in the armed forces.

What is a Military Doctrine?

  • Military doctrine is the expression of how military forces contribute to campaigns, major operations, battles, and engagements.
  • It is a guide to action, rather than being hard and fast rules. Doctrine provides a common frame of reference across the military.

Why do we need such a doctrine?

  • It helps standardize operations, facilitating readiness by establishing common ways of accomplishing military tasks.
  • It decides what you buy, produce, or prioritize, all of which flows from deciding your best fighting foot.

Definitions worldwide

  • Russia defines it as “a system of officially adopted State views on the preparation for armed defence and armed protection of the Russian Federation”.
  • The NATO (North Atlantic Treaty Organisation) defines it as “fundamental principles by which the military forces guide their actions in support of objectives”.

Objectives of a military doctrine

  • Doctrine links theory, history, experimentation, and practice.
  • Its objective is to foster initiative and creative thinking.
  • It provides the military with an authoritative body of statements on how military forces conduct operations and provides a common lexicon for use by military planners and leaders.

India’s Military Doctrine

  • The current combat doctrine of the Indian Army is based on the effective combined utilization of holding formations and strike formations.
  • In the case of an attack, the holding formations would contain the enemy and strike formations would counter-attack to neutralize enemy forces.
  • In the case of an Indian attack, the holding formations would pin enemy forces down whilst the strike formations attack at a point of Indian choosing.
  • India’s nuclear doctrine follows the policy of credible minimum deterrence, No first strike, No use of nuclear weapons on Non-nuclear states and Massive nuclear retaliation in case deterrence fails.

India has (since 2004) adopted a new war doctrine known as “Cold Start” and its military has conducted exercises several times since then based on this doctrine.

India’s own: Cold Start Doctrine

  • “Cold Start” involves joint operations between India’s three services and integrated battle groups for offensive operations.
  • A key component is the preparation of India’s forces to be able to quickly mobilize and take offensive actions without crossing the enemy’s nuclear-use threshold.

Need for Indigenization of Military Doctrine

  • To learn from others is laudable, but it prevents clarity on our innate strengths and capabilities.
  • For instance, re-evaluate how the Himalayas remained India’s true frontier for decades.
  • Using it as an advantage could translate into a series of airfields to quickly bring up men and material, while removing roads altogether.
  • Let the enemy battle it out in the forests. Our advantage is in bringing forces to bear against a China with incredibly long logistics lines.

Decisive factors in India’s doctrine

  • India is a country of continental size with land borders shared with a large number of countries, 1197 islands and a coastline of 7516 kilometres with a vast Exclusive Economic Zone.
  • Despite her historically developed racial, cultural, linguistic and religious diversity, India is a nation with an innately all-embracing, secular polity that has welcomed and assimilated various cultures into her existing milieu.
  • Her modern values are rooted in democratic governance and profound respect for human life.
  • Defending India calls for defending her physical, economic and cultural identity in the prevalent geo-political milieu.

(a) Geopolitical scenario

  • The geo-political scenario is fast changing and is likely to continue to do so in the coming decades.
  • Although the USA remains the only super power today, the world is witnessing the emergence of various centres of power, with India emerging as one of the leading global players.
  • Each centre of power is attempting to achieve a ‘balance of interest’ as opposed to the erstwhile ‘balance of power’.

(b) Economic scenario

  • With market forces playing an important role, economic strength is likely to become the currency of power. National economies are undergoing liberalization to cater to globalization.
  • The dominance of the developed world over the global economy is, nonetheless, likely to continue.
  • Even so, China and India have been acknowledged as emerging economic powers.
  • Economic linkages and inter-dependence amongst countries are likely to result in mutual security becoming an important issue.
  • Water, energy sources (mainly oil) and even environmental issues may emerge as causes of future conflict between states.

(c) Security Scenario

  • The security challenges facing India are varied and complex as it has two unsettled borders.
  • The country has experienced four major conventional border wars besides an undeclared war fought in Kargil in 1999.
  • It is engaged in an externally abetted proxy war for the last several years in Jammu and Kashmir and has been combating terrorism perpetuated by militant and terrorist groups sponsored by a foreign State.
  • At the same time, a number of insurgencies, spurred by tribal and ethnic aspirations in addition to left wing ideologies are being tackled in various parts of the country.
  • A number of nuclear weapon states are in India’s neighbourhood; hostile, radical or fundamentalist elements gaining access to and posing a threat with weapons of mass destruction (WMD) is also a possibility.

Way forward

  • The first step in this process is of course the visualization of how the next conflict and future wars will unfold.
  • The challenges are myriad and the views to meet these challenges are varied both in the manner it is to be done and the timing.
  • It is also a fact that a template which is applicable to a particular country cannot be applied across the board as we are dictated by our own peculiarities of terrain, resources and adversaries.
  • Major restructuring is the need of the hour and it would take time.
  • However, let us not forget that of the four wars we have fought since Independence, we were victorious in three – surely, there are some good fundamentals on which Indian military and strategic thought have evolved.
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RSTV Archive Yojana/RSTV

[RSTV Archive] Circular Economy: Concept & Challenges

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With a growing population, rapid urbanization, climate change and environmental pollution, India must move towards a circular economy. An economic approach aimed at eliminating waste and the continual use of resources, the circular economy offers a new paradigm that emphasizes the need to take a comprehensive view of products and processes.

In this article, we shall understand the concept of a Circular economy over a linear one and also look at challenges that lie ahead.

Circular Economy: The Concept

  • A circular economy (also referred to as “circularity”)is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution.
  • Most linear economy businesses take a natural resource and turn it into a product which is ultimately destined to become waste because of the way it has been designed and made.
  • This process is often summarized by “take, make, waste”.
  • By contrast, a circular economy includes 3 R’s (Reduce, Reuse and Recycle), Refurbishment, Recover, and Repairing of materials.
  • Hence, Circular Economy focuses on increasing productivity in terms of more efficient utilization of resources.

Principles of Circular Economy

The concept is based on three main principles:

#1 Minimization of waste and pollution

The concept suggests the minimization of waste and pollution by reducing damages from economic activities.

#2 Extension of the useful life of products and materials

A circular economy aims to extend the useful life of the products and materials by creating the loops of the materials and products circulating in the economy. The goal is achieved through the active reuse, repair, and remanufacturing of the products and materials utilized in the economy.

#3 Regeneration of natural systems

The regeneration of natural systems is one of the fundamental concepts of a (circular) economy. It enhances natural capital and creates the necessary conditions for the regeneration of natural systems.

Why is the global attention towards this?

  • Raw material supply: Circular Economy fulfills the need for raw materials required by industries, especially the manufacturing industries.
  • Input costs are minimized: The output produced by industries in a circular economy comes back to the industries in the form of input.
  • QCDF improvement: Ultimately, QCDF (Quality, Cost, Delivery, and Flexibility) and sustainability level of industries get improved.

Applications of Circularity

(A) Construction sector

(B) Food and Agriculture

(C) Transportation and Mobility

Benefits offered by Circular Economy

For Economy

  • Economic growth, as defined by GDP, would be achieved mainly through a combination of increased revenues from emerging circular activities.
  • It lowers the cost of production through the more productive utilization of inputs.  
  • These changes in input and output of economic production activities affect economy-wide supply, demand, and prices.
  • Its effects ripple through all sectors of the economy adding to overall economic growth.

For Environment

  • It solves the problem of disposal of waste by converting waste into raw materials.
  • Besides the problem of solid waste management, the circular economy also solves the problem of air pollution, water pollution, and land pollution.

For Individuals

  • Lower cost for products and services
  • Greater utility and choice
  • Reduced negative externalities, e.g. congestion, pollution
  • Increased Efficiency of the products

Limitations to the circular economy models

There is some criticism of the idea of the circular economy.

  • Linearity: Recovery and recycling of materials that have been dispersed through pollution, waste and end-of-life product disposal require energy and resources, which increase in a nonlinear manner as the percentage of recycled material rises
  • Waste management: Impossibility for waste producers to dissociate themselves from their waste and emphasizes the contingent, multiple, and transient value of waste.
  • Unavoidability: A key tenet of this principle is to consider waste as avoidable and worthy of interest.
  • Utopian concept:  Circular Economy analogy of a circle evokes endless perfection; the analogy of scats evokes disorienting messiness.
  • Capability: Proponents of the circular economy have tended to look at the world purely as an engineering system and have overlooked the economic part of the circular economy.
  • Invisible economy: Invisible hand of market forces will conspire to create full displacement of virgin material of the same kind.

Need of the hour

  • India has a huge potential for reuse and recycling as less than 10-15% of the total waste generated goes into the recycling process.
  • Circular Economy will boost the reuse and recycling of materials.
  • To start with, sectors like construction, agriculture and vehicle and mobility can be considered as they are going to get the largest growth in coming years and thus India will be able to save more than Rs. 40 lakh Crore by 2030.

India’s roadmap

  • Digital India’: This mission contains a significant component of the recycling of electronic wastes. Swachh Bharat Mission is also about making wealth out of wastes.
  • Vehicle Scrappage Policy: This most recent reflects the perfect application of circular economy in Automobile sector.

Way forward

  • Build circular economy knowledge and capacity: Taking maximum advantage of circular models requires decision-makers throughout the organisation to understand the benefits and take them into account in business decisions.
  • Innovate to create new products and business models and demonstrate their success: Businesses can foster innovation to address challenges, such as transition costs, more rapidly by collaborating with research institutions and by making information open source.
  • Collaborate with other businesses, policymakers, and the informal economy: Participation in pre-competitive collaboration in cross-industry and cross-value-chain networks can enable businesses to drive change that they cannot create on their own.
  • Invest in circular economy opportunities: While sizing and prioritizing the value of investment related to the circular economy opportunities outlined in this report requires detailed analysis, the circular economy offers attractive opportunities for both businesses and financial institutions.

Conclusion

  • Resources in the world are finite. The circular economy will help the inefficient utilization of resources.
  • Political will is the key for implementation of Circular Economy.
  • Countries including India need to think about what they are taking from the environment and what they are contributing to it.
  • They also need to ensure that the material gets recycled or reused before it turns into waste.

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[RSTV Archive] Judiciary & Artificial Intelligence

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The Supreme Court’s Artificial Intelligence Committee a few months back in April has launched its Artificial Intelligence portal SUPACE.

What is SUPACE?

  • SUPACE is an acronym for Supreme Court Portal for Assistance in Courts Efficiency.
  • It is a blend of human and artificial intelligence, and as clarified by Bobde, will not be used in decision-making.
  • The role of AI will be limited to the collection and analysis of data.
  • The courts fully retains the autonomy and the discretion of the judge in deciding the case, though at a much, much faster pace because of the readiness with which the information is made available by the AI.

Salient features of SUPACE

  • SUPACE facts and arguments relevant to judging a particular case are intelligently presented in a matter of seconds—done manually, this would have taken months—adjudication could become that much faster.
  • SUPACE is customizable, that is, it can behave uniquely like an individual user, learning from and mirroring user behaviour; to illustrate, imagine a system that learns to glean relevant data and present it in a structure that a judge/legal researcher finds easy to comprehend or present.
  • As it is with all AI, as the system ‘learns’, efficiency leaps exponentially.
  • The SUPACE system also includes a chatbot that can give the overview of a case, respond to elementary questions, while switching between documents and prompting further questions to sharpen the user’s understanding of a case.

Need for AI in Judiciary

  • India’s judiciary is mired in backlogs.
  • According to the data available with the National Judicial Data Grid, around 3.81 crore cases are pending in India and more than one lakh cases have been pending for more than 30 years.

Other such initiatives

  • SCI-Interact: In 2020, the Supreme Court developed a software called, SCI-Interact, to make all its 17 benches paperless. This software helps judges access files, annexures to petitions and make notes on computers.
  • LIMBS: Earlier, the Department of Legal Affairs has introduced a web-based application called LIMBS or Legal Information Management & Briefing System. The idea is to track the entire life cycle of a case efficiently.
  • SUVAAS: In November 2019, the Apex Court launched an indigenously engineered neural translation tool, SUVAAS, to translate judicial orders and rulings from English to vernacular languages faster and efficiently.

Global IT solutions in Judiciary

  • The criminal justice system of the US uses algorithms to estimate the risks of habitual offence.
  • Many courts in the country are also actively embracing online dispute resolution (ODR) initiatives.
  • Unsurprisingly, China has also been adopting AI in the judiciary. The country reportedly has more than 100 robots in courts to recover case histories.

Applications of AI in Judiciary

  • AI could be used in cases of a repetitive nature that fit a strict pattern such as bouncing of cheques, civil violations or drunk driving.
  • Pre-judicial work, such as case management, random allocation of matters to benches, case-law indexing and analysis, administrative work linked to a court can lean on AI to streamline and reduce pendency.
  • Judging involves human emotions too. No scientific tool has any moral issue attached to it, said Justice Srikrishna who helmed the study for India’s data protection policy.
  • AI has not been programmed to delve into human emotions.

Debate over SUPACE

  • SUPACE has opened up a debate of sorts on how much AI can be used to dispense justice.
  • The core job of a judge is judging. That cannot be outsourced, said former Supreme Court judge B N Srikrishna.
  • Nuances of judging a person’s state of mind are beyond a bot, said jurists.
  • Judicial work cannot be handed over to a machine, even one with AI or programmed to read and understand law, said Justice Srikrishna.

Limitations of SUPACE

  • For now, in India, SUPACE will be used for administrative purposes and not decision making.
  • Automated fairness is not possible to be achieved because ML-based systems do not know how to explain or digest the information they learn.
  • A mere idealistic approach to estimate things would not take the initiative further.

Possible applications of SUPACE

  • AI has abilities to identify fact patterns easily and compare them with precedents.
  • Traffic violations and drunken driving cases or some civic violations can be dealt with by AI.

Way forward

  • The ethical and responsible use of AI and ML for the advancement of efficiency enhancing can be increasingly embedded in legal and judicial processes.
  • The Supreme Court has laid a strong foundation basis which efficiency enhancement can be accelerated across functional processes.
  • This is one of the key reasons why justice delivery in India is poised for transformative change.

Conclusion

  • SUPACE will produce results customized to the need of the case and the way the judge thinks.
  • This will be time-saving. It will help the judiciary and the court in reducing delays and pendency of cases.
  • AI will present a more streamlined, cost-effective and time-bound means to the fundamental right of access to justice.
  • It will make the service delivery mechanism transparent and cost-efficient.
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[RSTV Archive] India- France Relationship

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Context  

  • Bilateral ties between New Delhi and Paris cover a gamut of issues including defense, maritime, space, security, and energy.
  • The two nations have managed to carve out a forward-looking partnership that is aimed at strengthening bilateral cooperation on issues such as terrorism, climate change, sustainable growth and development, infrastructure, urbanization, and science and technology.

Background

  • France-India have a ‘special relationship’ with each other, so much so that by August 2019, France has been called “India’s new best friend” by a researcher of the Hudson Institute.
  • Both nations have a centuries-old history of trade relations.
  • From the 17th century until 1954, France maintained a colonial presence in the Indian subcontinent; Puducherry, one of its former Indian territories, is a popular tourism destination for French travellers to India.
  • India has largely referred French constitutional principles in its constitution making

Highlights of the recent meet

  • India and France explored ways to strengthen cooperation in the Indo-Pacific, including under a trilateral mechanism with Australia to address emerging challenges in the maritime and space domains.
  • The two foreign ministers held extensive talks covering all aspects of the bilateral strategic ties as well as regional and global challenges.

Key areas collaboration

(A) Strategic cooperation

  • France has decided to be part of India’s Indo-Pacific Oceans Initiative (IPOI).
  • Both nations have explored ways to strengthen cooperation in the Indo-Pacific.
  • This includes the India-France-Australia trilateral mechanism, addressing emerging challenges in the maritime and space domains and working together in the area of climate action and biodiversity protection.

(B) Trade

  • Bilateral trade with France has witnessed a steady rise in the last decade reaching USD 10.75 billion in 2020.
  • The two sides also recognised the importance of fast tracking the discussions on an India-EU trade and investment agreement.

(C) Defence collaboration

  • The defence and security ties between India and France are on an upswing in the last few years.
  • India had signed an inter-governmental agreement with France in September 2016 for procurement of 36 Rafale fighter jets at a cost of around Rs 58,000 crore.
  • Dassault Aviation, the manufacturer of Rafales, has delivered 14 jets to the Indian Air Force so far.

(D) Technological collaboration

  • The first space agreement between France and India dates back to 1964. Existing partnerships between the two nations cover almost all areas of space activity.
  • Space agencies of India and France inked an agreement for cooperation for the country’s first human space Mission Gaganyaan.
  • The agreement provides for CNES to support implementation of a scientific experiment plan on validation missions, exchange information on food packaging and the nutrition programme, and above all the use by Indian astronauts of French equipment, consumables and medical instruments.
  • ISRO will also be launching the joint Oceansat 3-Argos mission this year.
  • With the new agreement, France will be taking part in the great technological and human challenge that is the Gaganyaan programme.

Energy

  • India-France alliance is the main pillar of the International Solar Alliance launched by India.

(E)Cultural ties

  • Indian culture enjoys wide following amongst the people of France. An Indian Cultural Centre, named Vivekananda Cultural Centre, is being opened in Paris.
  • The International Day of Yoga has been organized by the Embassy of India in Paris and other cities of France since 2016 and have received wide acclaim and press coverage.

Conclusion

  • India and France both share the same vision for a new balanced multipolar world, which must be based on the rule of law.
  • They also share the same vision on the main challenges of the times, be they security developments in Asia and the Indo-Pacific, or combating international terrorism. But it is by possessing the capability of ensuring national security and making strategic choices that most efficiently defend their shared principles and visions.

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[RSTV Archive] Sexual Crime – Fast-tracking Justice

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Context

The Union Cabinet earlier this month has approved the continuation of over 1000 Fast Track Special Courts to ensure faster delivery of justice to victims of sexual offenses, as a centrally sponsored scheme for another two years.

What is the announcement?

  • The decision offers continuation of 389 exclusive POCSO courts to expedite trials and provide immediate relief to minor girls who are victims of sexual crimes.
  • The continuation of the scheme involves a total outlay of more than Rs 1,572 crore. Rs 971 crore is provided by the Centre from the Nirbhaya Fund, the remaining amount is expected to be provided by states.
  • This decision is being hailed as a major step towards de-clogging the justice system.

Fast Track Special Courts: A backgrounder

  • Incidents of rape of minor girls below the age of twelve years and women below the age of sixteen years have shaken the conscience of the entire nation.
  • To bring more stringent provisions and expeditious trial and disposal of such cases, the Criminal Law (Amendment) Act, 2018 was enacted which made provision of stringent punishment, including death penalty, for perpetrators of rape, it said.
  • This led to the establishment of the fast-track special courts.

Sexual Crime in India

  • 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.
  • Marital Crimes: In India, marital rape is not a criminal offense.  India is one of fifty countries that have not yet outlawed marital rape.
  • 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.  
  • Trafficking and forced prostitution: Human trafficking, especially of girls and women, often leads to forced prostitution and sexual slavery.
  • Online abuse: Women are regularly subject to online rape threats, online harassment, cyber-stalking, blackmail, trolling, slut-shaming and more.
  • Harassment at the workplace: Sexual harassment at workplace, mostly comprising of indecent remarks, unwanted touches, demands for sex, and the dissemination of pornography.

Why do we need to tackle such crimes in a speedy manner?

  • When we talk about violence, it is easy to focus on the physical effects.
  • The injuries on the body can be life-changing and can even result in death. It is important however to consider the impact of this incident can have on victim’s mental health.
  • Depression, anxiety and low self-esteem are typical repercussions of a violent experience. These psychological effects can be incredibly destructive.
  • Many victims report feeling suicidal tendency. The psychological effect may completely change the personality of the victim.
  • Hence it is important to extend the psychological support to the victim. Speedy Justice serves this purpose.

Various laws for the protection of women

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 the 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.

Need for fast-track courts

  • Clearance rate: They have a better clearance rate as compared to the regular courts and hold speedy trials.
  • Speedy Trial: Besides providing quick justice to the hapless victims, it strengthens the deterrence framework for sexual offenders.
  • Deterrence framework: Besides providing quick justice to the victims, it strengthens the deterrence framework for sexual offenders.

Expected outcomes from these courts

  • Women safety: Further the commitment of the nation to champion the cause of safety and security of women and girl child.
  • Reduction of pendency of cases: Fastracking of these cases will declog the judicial system of the burden of case pendency
  • Special consideration: Reduce the number of pending cases of Rape & POCSO Act.
  • Speedy access to justice: Provide speedy access to justice to the victims of sexual crimes and act as a deterrent for sexual offenders.

What else can be done?

  • Increasing number of fast track courts is an urgent need.
  • Special investigation units comprising predominantly women police officers should be created.
  • In these special courts, women judges should be there so that the victim feels comfortable in narrating the details of the sexual assault perpetrated on her.
  • Gender sensitization programs will help the officers to have the required considerate approach for rape victims.
  • Another very important aspect is to provide counseling for the family members of the victim. So that the family can positively help the victim to come out of trauma.
  • There should be a state sponsored victim compensation fund particularly for heinous offences including rape.

Conclusion

  • Breaking the cycle of abuse will require concerted collaboration and action between governmental and non-governmental actors including educators, health-care authorities, legislators, the judiciary and the mass media.
  • Education of both men and women will lead to change in attitudes and perceptions.
  • It is not easy to eradicate deep seated cultural value or alter traditions that perpetuates discrimination.
  • It is mammoth task. We are just doing bits and pieces. A way ahead is obscure but in our sphere with concrete and pronounced steps.

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[RSTV Archive] Project 75 India

The Government has recently issued a Request for Proposal (RPF) to the two selected Indian Strategic Partners (SP) – for building six conventional submarines indigenously under Project 75 India or P-75I.

A backgrounder

  • Project 75 India is a part of India’s thirty-year-old submarine building plan by which all the six submarines which are under the project should already be sailing and it should have been followed by the submarines now for which the RFP has been issued.
  • It is a long-awaited and long-overdue project.
  • This should have happened way back but it got delayed because it was difficult to find a strategic partnership model.

What is Project-75I?

  • The Project 75I-class submarine is a follow-on of the Project 75 Kalvari-class submarine for the Indian Navy.
  • In the late 1990s, around the time of Kargil war, a three-decade plan took shape for indigenous construction of submarines.
  • It was known to have two separate series of submarine building lines – codenamed Project 75 and Project 75I — in collaboration with foreign entities.
  • Under this project, the Indian Navy intends to acquire six diesel-electric submarines, which will also feature advanced air-independent propulsion systems.
  • This is for enabling them to stay submerged for longer duration and substantially increase their operational range.

Air-independent propulsion (AIP)

  • AIP has the fuel cell technology which permits the batteries of the submarines to continue functioning even after it gets discharged.
  • It also reduces the chances of detection because the moment it comes closer to the surface, submarines are very prone to detection and after that, it becomes very difficult for a submarine to hide because it cannot move quickly under the water. 
  • Hence, AIP gives longer endurance to submarines than what a conventional battery submarine can offer.
  • AIP is required on an urgent basis for the Indian Navy subs in view of the growing presence of the Chinese in the Indian Ocean Region (IOR).

Strategic importance of submarines development

  • Ageing arsenal: Currently, India has less number of submarines than what is required with some more of those from both types being at various stages of construction. India currently operates one submarine each in nuclear-powered Classes of Chakra and Arihant and in addition to 14 submarines belonging to three classes of Diesel Electric category — Kalvari, Shishumar and Sindhughosh, some of which are ageing.
  • Combat roles in near future: The nuclear powered and diesel-electric submarines have their designated roles in the Carrier Battle Groups, which are formations of ships and submarines with Aircraft Carriers at the lead role.
  • Strategic deterrence: As per the basic principles of submarine deployment and the minimum requirement for India to create a strategic deterrence, there is a specific number of submarines of both types that India needs to have in active service.

Significance of Project 75 India

  • ‘Make in India’ Projects: It will serve to facilitate faster and more significant absorption of technology and create a tiered industrial ecosystem for submarine construction in India.
  • Self-Reliance: From a strategic perspective, this will help reduce current dependence on imports and gradually ensure greater self-reliance and dependability of supplies from indigenous sources.
  • Securing Indo-Pacific: China is increasing its presence in the Indian Ocean Region (IOR) and this is creating pressure on the Indian Navy in sprucing up the submarine arm.

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Back2Basics: Various classes of Submarines in India

In maritime terms, a class of ships is a group of vessels that have the same make, purpose and displacement.

Chakra Class: Under a 10-year lease from Russia since 2012

Arihant Class: Nuclear-powered ballistic missile submarines

Shishumar Class: Diesel-electric attack submarines Indian variant of the Type 209 submarines developed by the German Navy

Kalvari Class: Diesel-electric attack submarines designed by French company DCNS

Sindhughosh Class: Kilo-class diesel-electric submarines built with the help of Russia

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[RSTV Archive] B. Tech in Regional Languages

In a country as culturally and regionally diverse as India, it has often been noticed that a considerable number of bright students are either sceptical or don’t opt for the Engineering degree in college for the fear and apprehension of not understanding the English language effortlessly.

Who are Engineers, btw?

  • Engineers are people who solve problems and focus on making things work more efficiently and effectively.
  • They apply the theories and principles of science and mathematics to research and develop economical solutions to technical problems.
  • Their work is the link between perceived social needs and commercial applications.

Engineering in Regional Languages

  • In total14 Engineering Colleges in the country will now begin to offer various courses in regional languages.
  • These colleges have secured permission from the All-India Council of Technical Education (AICTE) to collectively admit over 1,000 students in UG programmes that will be taught in regional languages.

Why debate this issue?

  • It’s been a subject matter of debate ever since the proposal was made for technical education in regional languages.
  • We shall talk about the potential challenges that students of these courses could face in their education ahead and careers.

Regional languages for the courses

  • At least half of them, four from Uttar Pradesh, two from Rajasthan and one each from Madhya Pradesh and Uttarakhand will teach in Hindi.
  • The remaining colleges from Andhra Pradesh, Maharashtra, West Bengal and Tamil Nadu will offer the programme in Telugu, Marathi, Bengali and Tamil, respectively.

Criteria for the colleges

  • The AICTE has put very stringent conditions on those aiming to launch the courses.
  • The colleges need to be accredited by the National Board of Accreditation (NBA) and should be among top ranked in their respective states.
  • They can start with either the batch size of 30 or 60. The priority would be granted to autonomous institutions fulfilling all the criteria.
  • They would have an option to either appoint another set of teachers who can teach in regional languages or train the existing ones, which would be much easier.

Benefits offered by the move

  • Language promotion: This move will promote regional language as the mode of delivering education.
  • Breaking the regional divide: High school dropout has been mainly caused by consistent failure to clear English language paper in India. The move would help aspirants, particularly from rural and tribal areas, to realize their dreams.
  • Better learning: Learning in their mother tongue helps the students to grasp the fundamentals more readily. It improves the cognitive abilities of students and also boosts their self-confidence.
  • Ensuring equal opportunity: This step will ensure that no students face discrimination in higher education institutes due to the language barrier.
  • Skill development: Vernacular language when combined with skill development helps develop professionals who can transform the country from the grassroots.
  • Technology solutions: At job level the engineers often have to deal with the workers in regional languages so it will be an added advantage.

Major challenges

Imparting technical education in one’s mother tongue can be a challenging task at the initial stage because of multiple reasons.

  • Strict criteria: The criterion laid by the AICTE are somewhat difficult for institutions to acquire in short span of time.
  • Curriculum translation: Making study material available in regional languages is toughest challenge. There had been no attempt in the past to translate engineering subjects (quiet often authored by foreign authors).
  • Faculty issues: The teachers must have a strong command over their mother tongue and must have the ability to easily communicate in the same language that they are teaching. This cannot be achieved overnight at such a short notice.
  • Limited domain: The option, however, would be available for undergraduate courses and is limited for traditional branches like mechanical, engineering, civil, electrical and others. It is impossible to practice software coding in regional languages.
  • Employability challenges: There is a big question that arises regarding their employability in the era of globalization. It has been observed that many companies prefer hiring individuals with English speaking skills irrespective of their academic performance.

Various moves by AICTE

  • AICTE has been constantly putting in all the necessary efforts to make this move successful and hassle-free for students and institutions.
  • They are offering course materials in all the above-mentioned regional languages and are translating courses taught under the Swayam platform.
  • They are also appointing a new set of teachers who have a stronghold in regional languages and can teach in the same without difficulty.
  • It has also been decided that the examinations will be conducted in the language preferred by the student.
  • The institutions have also been advised to make the necessary provisions for compulsory graded courses in English to make sure that the students are good with the language before they enter the corporate world.

Feasibility check: Good or Bad Decision?

(1) English offers more ease

  • Countries like Germany, Japan, China are homogenous societies (speaking one language mostly) and secondly, India cannot be equated with them. India is entire Europe.
  • Even in these homogeneous societies, many institutions have started moving to English now, seeing the disadvantages they are facing.
  • They are learning from us. Not sure if there is an equivalent of India in the world. India is Europe, roughly in terms of languages or land area.

(2) English no more a barrier

  • India has produced C V Ramans, J C Boses, Meghanad Sahas earlier. It has also produced institution builders such as Bhabhas, Ramannas and Bhatnagars.
  • Why aren’t we producing people of this calibre right now?  Evolution wise, people are only becoming better.
  • We have brought in so much of bureaucracy into our systems and almost all leadership and Innovation gets scuttled at every stage.

(3) Limits of the knowledge pool

  • IIT education involves integration of a lot of research and open study materials.
  • Students have to read various other books and reference materials which come in English.
  • Offering complete BTech and masters courses in local languages will deprive the students of a vast amount of resource material available in English.

(4) Reforms in vernac school education are long overdue

  • Many state run primary , secondary and higher schools are on the edge of their perish.
  • This is equally true in terms of the quality of education imparted in such schools.
  • It is ironical and distant to dream for UG courses in local languages where the state of school educations is poor.

Way forward

  • The move offers everyone an equal opportunity.
  • Every child who does schooling in local languages must have an opportunity to take JEE Main and JEE Advanced in their local language.
  • JEE Advanced must be conducted in all local languages, where there is a demand.
  • We need to free up our educational institutions from bureaucratic controls and create competition among them by also providing them autonomy.
  • Autonomy and Competition need to go hand in hand.

Need of the hour: Curriculum transformation

  • One of our problems is that, we have never connected our institutions and never engaged them to solve problems of the society/country.
  • The less practical syllabus has to do away for more real life applications of engineering.
  • So it’s the overall system in the country to blame for our plight and not our educational institutions or instruction in English.

Conclusion  

  • Overall, it’s a welcome step that is going to enhance the learning outcome which is very important as per the vision of new education policy.
  • Dr A P J Abdul Kalam truly believed that science education should be imparted to students in vernacular language to nurture creativity and help them understand the subject easily.
  • However, multidisciplinary institutions and autonomy, as articulated in NEP, are the need of the hour.
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[RSTV Archive] UN Debate: Maritime Security

India’s PM has addressed the UNSC open debate on the issue of Enhancing Maritime Security. In this article, we will discuss and analyse all aspects of this issue.

Maritime Security

  • Maritime security is one of the latest buzzwords of international relations.
  • Major actors in maritime policy, ocean governance and international security have in the past decade started to include maritime security in their mandate or reframed their work in such terms.
  • Core dimensions of maritime security involves the concept of blue economy, food security and the resilience of coastal populations.
  • A secure maritime environment provides the precondition for managing marine resources.

Dimensions of maritime security

Why it is significant?

  • Maritime security is of utmost significance to the world community as there are maritime concerns ranging from piracy at sea to illegal immigration and weapon smuggling.
  • It also deals with threats of terrorist attacks and environmental catastrophes.
  • For India, maritime security is an important aspect of national security as it has a coastline of over 7,000 km.
  • With advancement in technology, physical threats in the maritime region have now been overshadowed by technological threats.
  • India’s exports and imports have remained mostly across the shipping lanes of the Indian Ocean.
  • Therefore, securing Sea Lanes of Communication (SLOCs) have been an important issue for India in the 21st century.

Need for an agenda

  • In today’s economy, the oceans have an increased importance, allowing all countries to participate in the global marketplace.
  • More than 80 percent of the world’s trade travels by water and forges a global maritime link.
  • About half the world’s trade by value, and 90 percent of the general cargo, are transported in containers.
  • Many countries have invested significant resources in maritime infrastructure, trade, energy supply chains, cargo movements and processes.
  • China, undeniably a continental country, claims sovereignty over all of the South China Sea islands and their adjacent waters.

5-point agenda for enhancing maritime cooperation

[1] Removal of barriers to legitimate maritime trade:

  • Global prosperity depends on the active flow of maritime trade. Any hindrance in maritime trade can threaten the global economy, PM said.
  • Maritime trade has always been part of the civilizational ethos of India.
  • PM termed this principle as ‘SAGAR’ Security and Growth for All in the Region.

[2] Resolution of maritime disputes peacefully in accordance with international law:

[3] Fight threats from natural disasters, non-state actors:

  • PM said the Indian Navy has been patrolling to counter piracy in the Indian Ocean since 2008.
  • It is enhancing the common maritime domain awareness of the region through our White Shipping Information Fusion Centre.
  • India has provided support for hydrographic surveying and training of maritime security personnel to several countries.

[4] Conservation of marine resources:

  • Our oceans directly impact our climate. Hence, it is very important that we keep our maritime environment free of pollutants like plastic waste and oil spills.
  • We also need to take joint steps against over-fishing and marine poaching, PM said.
  • He also emphasized the need for increased mutual cooperation in Ocean Science research.

[5] Promoting responsible maritime connectivity:

  • PM said it is well understood that the creation of infrastructure is necessary to boost maritime trade.
  • He advocated for appropriate global norms and standards to ensure that such infrastructure projects are carried out as per the fiscal sustainability and absorption capacity of the host countries.

A veiled dig at China

  • PM has indirectly cautioned that fiscal sustainability and absorption capacity of the countries have to be kept in mind in the development of such infrastructure projects.
  • The wanton disregard shown by China towards established maritime norms and rule of law has been unprecedented in modern times.
  • PM pointedly referred to “dangerous encounters between vessels at sea and provocative actions to advance unlawful maritime claims” in the South China Sea (SCS).
  • India’s initiative is a wake-up call for everyone to recognize and address the real and imminent threat to our common maritime heritage.

If Beijing locates, dusts off and re-reads the provisions of UNCLOS, it would be a major step forward.

Outcome of the UNSC meet

  • The meet was significant. Barring China, all others stressed the centrality of UNCLOS and international cooperation.
  • India’s concept of SAGAR and its vison of Indo-Pacific is receiving greater acceptability. Nations accept that the objective should be development for all.
  • The convergence of Russia and India is of great importance. While Russia is aware of the tension growing in the SCS, it is also concerned that none should disturb the strategic balance in the Arctic.
  • China has to make a choice whether it wishes to act as a responsible and mature nation and accept the international laws or would continue to flout them.

Securing the Indian Ocean

  • The Indian Ocean is the major gateway accounting for nearly 75 per cent of the world’s maritime trade and half of global oil consumption.
  • Any threats to the free movement of ships on these oceans and unfair practices have an impact on the global economy.
  • Therefore, regional trade relations based on internationally acceptable principles should be the way forward.

Way forward

  • The onus is on India to expand its horizons to safeguard its strategic and economic interests.
  • India’s legacy to the global policy basket could be advocacy for sustained focus on the maritime domain and the correlation with globalization, the blue economy, the health of the ocean and the overall impact on human security.
  • Security and equitable growth for all by husbanding the global ocean for future generations is a laudable goal and encouraging the UNSC to prioritize this issue is a worthy cause.

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[RSTV Archive] Investment positive: End of Retro Tax

The Taxation Laws (Amendment) Bill, 2021 passed by Lok Sabha offers to drop tax claims against companies on deals before May 2012 that involve indirect transfer of Indian assets on fulfilment of specified conditions including the withdrawal of pending litigation and the assurance that no claim for damages would be filed.

What is a Retrospective Tax?

  • A retrospective tax is a tax imposed on a transaction or deal that was conducted in the past.
  • Retrospective taxation allows a nation to implement a rule to impose a tax on certain products, goods or services and deals and charge companies from a time before the date on which the law is passed.
  • It was introduced in a 2012 amendment to the Finance Act, which enabled imposition of retrospective tax on deals executed after 1962 involving transfer of shares in a foreign entity which had assets in India.

Why was such a tax introduced in India?

  • Countries use this form of taxation to rectify any deviations in the taxation policies that, in the past, allowed firms to take benefit from any loophole.
  • Multilateral instruments reflects the contemporary scenario where exclusive national sovereignty is replaced with pooled exercise of taxation powers by treaty partners.
  • Not only India, but many other countries like the US, UK, Australia, Netherlands, Belgium, Canada, and Italy have retrospectively taxed firms.

A Curious case of Cairn

  • The roots of this law date back to 2007, when Vodafone bought over a majority stake in the telecom operations of Hutch in India for $11.1 billion.
  • While the deal involved the changing of hands of Indian operations of Hutch, the companies party to it were registered outside India and all the paperwork and financial transactions, too, were done outside the country.
  • But the Indian government ruled that Vodafone was liable to pay capital gains tax to it as the deal involved the transfer of assets located in India.
  • Importantly, there was no rule in the Indian statutes then that allowed such taxation.
  • Vodafone challenged this claim and the case went to Supreme Court, which ruled in 2012 that there was no tax liability on Vodafone’s part to Indian authorities.

What was the law made then?

  • In 2012, Parliament amended the Finance Act to enable the taxman to impose tax claims retrospectively for deals executed after 1962 which involved the transfer of shares in a foreign entity whose assets were located in India.
  • The target, of course, was the Vodafone deal. Very soon, tax claims were also raised on Cairn Energy.

How did the Companies react?

  • The changes to the Finance Act allowed India to reimpose its tax demand on Vodafone.
  • Tax authorities had slapped a tax bill of Rs 7,990 crore on Vodafone, saying the company should have deducted the tax at source before making a payment to Hutchison.
  • By 2016, reports say, the bill had risen to Rs 22,100 crore after adding interest and penalty.
  • The demand on Cairn was for Rs 10,247 crore in back taxes over its move, beginning in 2006, to bring its Indian assets under a single holding company called Cairn India Ltd.
  • A few years later, when Cairn India Ltd floated an IPO to divest about 30 per cent of its ownership of the company, mining conglomerate Vedanta picked up most of the shares.
  • However, Cairn UK was not allowed to transfer its stakes as Indian officials held that the company had to first clear the tax liability.

A case in the Hague

  • That prompted Cairn UK to move the Permanent Court of Arbitration to The Hague, Netherlands.
  • It said that India had violated the terms of the India-UK Bilateral Investment Treaty by imposing a retrospective tax due on it.
  • The treaty provides protection against arbitrary decisions by laying down that India would treat investment from the UK in a “fair and equitable” manner.
  • Vodafone, too, had sought arbitration before the Permanent Court of Arbitration, citing the “fair and equitable” treatment clause in the India-Netherlands BIT.

India’s response

  • In September last year, the Hague court ruled in favour of Vodafone, quashing India’s tax claim after holding that it violated the “equitable and fair treatment standard” under the bilateral investment treaty.
  • India refused to pay the compensation; Cairn launched recovery proceedings across countries as part of which a French court ordered the freezing of some Indian assets in Paris.
  • This move discourages foreign investors from coming to India and that the Centre should look to resolve the case at the earliest.
  • The amendments now mooted are designed to do just that.

Tussle’s impact

  • The order endangering sovereign assets was largely seen as a dent on an emerging power like India.
  • Especially when the country is trying to portray itself as an investment destination on its road to recover from the economic impact of the Covid-19.

Taxation Laws (Amendment) Bill, 2021

  • The Bill offers to drop tax claims against companies on deals before May 2012 that involve the indirect transfer of Indian assets would be “on fulfilment of specified conditions”.
  • The condition includes the withdrawal of pending litigation and the assurance that no claim for damages would be filed.
  • As per the proposed changes, any tax demand made on transactions that took place before May 2012 shall be dropped, and any taxes already collected shall be repaid, albeit without interest.
  • To be eligible, the concerned taxpayers would have to drop all pending cases against the government and promise not to make any demands for damages or costs.

Need for the amendment

  • The retrospective taxation was termed “tax terrorism”.
  • It is argued that such retrospective amendments militate against the principle of tax certainty and damage India’s reputation as an attractive destination.
  • This could help restore India’s reputation as a fair and predictable regime apart from helping put an end to taxation.

Benefits offered

Conclusion

  • Even after the Bill becomes law, entities such as Cairn Energy must convince its shareholders and accept the caveats.
  • Prospective investors, however, may take heart from the fact that the government has shown the intent not to claim tax retrospectively.
  • It has demonstrated a willingness to undo a measure that was seen as hurting the inflow of foreign investment.
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[RSTV Archive] UNSC Presidency: India’s Agenda

India has assumed the presidency of the United Nations Security Council for the month of August and is set to organise key events in three major areas of maritime security, peacekeeping and counter-terrorism. In this article we will discuss and analyse all aspects of this issue.

Key agendas on the table

During its Presidency, India will be organizing high-level signature events in three major areas:

  • Maritime security
  • Peacekeeping and
  • Counterterrorism

However, in the closed meeting, Afghanistan is the first item on the agenda of the Security Council.

About United Nations Security Council

  • The UNSC is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
  • Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
  • It is the only UN body with the authority to issue binding resolutions to member states.
  • The Security Council consists of fifteen members. Russia, the United Kingdom, France, China, and the United States—serve as the body’s five permanent members (P5).
  • These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General.
  • The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms. The body’s presidency rotates monthly among its members.

India and UNSC Presidentship

  • This is India’s eighth tenure as a non-permanent member in UNSC.
  • India had been elected as a non-permanent member of the UNSC for 1950-51, 1967-68, 1972-73, 1977-78, 1984-85, 1991-92 and 2011-12.
  • Each non-permanent member gets the opportunity to operate as president of the UN Security Council during the two years it is part of the grouping.
  • The presidency of UNSC changes hands every month between its members in the English alphabetical order of the member states’ names.
  • India will be in line for the presidency again in December 2022.

Powers of the UNSC President

  • The presidency derives responsibility from the Provisional Rules of Procedure of the UNSC’s practice.
  • The holder of the presidency is considered to be the ‘face’ and spokesperson of the UNSC.
  • The UNSC president is also authorized to issue both presidential statements (subject to consensus among Council members) and notes, which are used to make declarations of intent that the full Security Council can then pursue.

Responsibilities of the UNSC president include:

  • Calling meetings of the UN Security Council
  • Appealing to parties in a conflict to “exercise restraint”
  • Reading statements of the UN Security Council to the press
  • Approving provisional agenda (proposed by the secretary-general)
  • Presiding at UNSC meetings and deciding questions relating to policy and overseeing any crisis

Issues with UNSC

(1) Non-representative

  • UNSC in its current form is not representative of the developing world and global needs — with the primacy of policy being a political tool in hands of P5.
  • By 1992, India, Brazil, Germany, and Japan (referred as G4) had put up their claims and logic for demanding inclusion as permanent members.
  • India has been part of UN since its inception and has contributed maximum peacekeepers to UN so far, has a strong case.
  • Brazil is the largest country in Latin America (unrepresented continent) and fifth-largest in the world. Japan and Germany are one of the largest financial donors to UN.

(2) Rivalry with G4

  • The pitch for reforms of G4 was lowered by their regional rivals like Italy, Pakistan, Mexico and Egypt.
  • They started formulation of another interest group, known to be “Uniting for Consensus” opposing G4 becoming permanent members with veto power.

(3) Rigid framework

  • Reforms in the UNSC also require an amendment to the UN charter, in accordance with Article 108.
  • This highlights that any reform of the Security Council not only requires the support of at least two-thirds of UN member states but also all the permanent members.

(4) Veto power

  • The stance of P5 members to expansion has been varying as per their national interest, like most P5 members agree to Indian inclusion, except China.
  • It becomes obvious that even if one member of P5 doesn’t agree to any reform, the UNSC cannot be reformed.
  • There have been many proposals since its inception from totally abolishing veto power to selectively using it for vital national security issues.

(5) No consensus

  • It has been seen in past that the UNSC, in some of the major global security issues, could not arrive at a consensus and interventions that happened by countries mainly from P5 without UNSC resolution.
  • US entry in Iraq war or Warsaw Pact war in Afghanistan are few cases in point.
  • The UNSC has thus become an organization, which can pass strong resolutions against weak countries, weak resolutions against strong countries and no resolution against P5 countries.

Suggested reforms

  • Expansion: Besides the existing P5 members, an expansion of UNSC from five to 10 permanent members, with the addition of G4 and South Africa. This will provide equitable regional representation besides balancing the developing and developed world to meet the aspirations of humanity.
  • Abolition of veto: The expansion of P5 without veto power makes very little impact on the problems, because of which the reforms are required. Ideally the veto power should be abolished.

Conclusion

  • Under the given charter, articles and structures, there is very little hope for UNSC reforms in near future.
  • The lack of reforms can push the credibility crisis of UN to a degree that it becomes unsustainable for it to function, or incidences of side-lining the UN increase manifold.
  • If the UNSC does not appoint new permanent members then its primacy may be challenged by some of the new emerging countries.
  • There is also a possibility that if UN doesn’t reform itself, it may lose relevance and alternate global and regional groupings may assume greater importance.
  • No P5 member is likely to compromise this power in its own national interest, which is generally prioritized before global interest, thus making the reformation process a mirage.
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[RSTV Archive] Limited Liability Partnership (Amendment) Bill, 2021

The government has introduced in the Rajya Sabha the Limited Liability Partnership (Amendment) Bill, which seeks to encourage the startup ecosystem and further boost ease of doing business in the country.

Key changes as proposed in the bill includes as viz. introduction of the concept of ‘small companies’, decriminalization of certain offences, empowering Govt. to establish special courts etc.

What are LLPs?

  • A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations.
  • In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence.
  • This is an important difference from that of an unlimited partnership.
  • In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation.

Liability. But against whom?

  • Limited liability means that if the partnership fails, then creditors cannot go after a partner’s personal assets or income.
  • LLPs are common in professional business-like law firms, accounting firms, and wealth managers.

Benefits offered by an LLP

  • Risk avoidance: For a long time, a need has been felt to provide for a business format that would combine the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost.
  • Flexibility: The LLP format is an alternative corporate business vehicle that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement.
  • Startup-promotion: This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular.
  • Service-oriented: Internationally, LLPs are the preferred vehicle of business particularly for service industry or for activities involving professionals.  
  • Investment promotion: The hybrid structure of LLP will facilitate entrepreneurs, service providers and professionals to organize and operate in an innovative and efficient manner for effectively competing in the global market.
  • Ease of Doing Business: The cost of forming an LLP is low and there’s’ less compliance and regulatory burden. It has no requirement of minimum capital contribution.

Limitations of LLP

  • Penalty on non-compliance: The compliance that is to be followed by LLP is minimal. But, if these compliances are not completed on time, then the LLP will have to pay a heavy penalty.
  • Winding up and dissolution of LLP: A minimum of two partners is required to form an LLP. If the minimum number of partners is below two for six months, then the LLP will be dissolved. It may be dissolved if the LLP is unable to pay its debts. 
  • Difficulty to raise capital: The LLP does not have the concept of an IPO (equity or shareholders like a company). Angel investors and venture capitalists cannot invest in the LLP as shareholders.

LLPs in India

  • The concept of the Limited Liability Partnership (LLP) was introduced in India in 2008.
  • An LLP has the characteristics of both the partnership firm and company.
  • The Limited liability Partnership Act, 2008 regulates the LLP in India.
  • Minimum two partners are required to incorporate an LLP. However, there is no upper limit on the maximum number of partners of an LLP. 

Setting up of an LLP

  • Minimum two partners are required to incorporate an LLP. However, there is no upper limit on the maximum number of partners of an LLP.
  • Among the partners, there should be a minimum of two designated partners who shall be individuals, and at least one of them should be resident in India.
  • The rights and duties of designated partners are governed by the LLP agreement.
  • They are directly responsible for the compliance of all the provisions of the LLP Act, 2008 and provisions specified in the LLP agreement.
  • The rights and duties of designated partners are governed by the LLP agreement.
  • They are directly responsible for the compliance of all the provisions of the LLP Act 2008 and provisions specified in the LLP agreement.

LLP Amendment Bill, 2021

Key Highlights:

  • Total of 12 offences to be decriminalized under LLPs. The decriminalized offences will then get shifted to an internal adjudication mechanism to help unclog criminal courts from routine cases.
  • The government has also approved creation of a class of small LLPs to encourage entrepreneurs. These LLPs will be subject to fewer compliances, reduced fee or additional fee, and smaller penalties in the event of default.
  • The changes, including removing criminal action for failure to comply with provisions of the Act, will help about 2.30 lakh such firms in the country.
  • A penalty in the form of a fine has been decided for violations of general trends. This boosts Aatmanirbhar Bharat.

New Concepts:

  • Definition of Small Company:  The government will also introduce a new definition of small LLPs based on their turnover size and contributions by partners or proprietors. At present, there are relaxations for thresholds up to turnover size and partner’s contribution of Rs 40 lakh and Rs 25 lakh, respectively.
  • Lower compliance: It will incentivize unincorporated micro and small partnerships to convert into the organized structure of an LLP and derive its benefits. The corporate affairs ministry is also working towards setting up an e-adjudication platform as part of the new version of the MCA21 portal.
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[RSTV Archive] Central Bank Digital Currency

In the recent past, worldwide interest in cryptocurrency has risen. A recent survey says 86% of the central banks across the world are actively researching cryptocurrency while 60% are engaged in CBDC. Against this backdrop, the Reserve Bank of India (RBI) discussed its “phased implementation strategy” of a Central Bank Digital Currency (CBDC).

Central Bank Digital Currency (CBDC)

  • CBDC is a central bank issued digital currency which is backed by some kind of assets in the form of either gold, currency reserves, bonds and other assets, recognised by the central banks as a monetary asset.
  • The present concept of CBDCs was directly inspired by Bitcoin, but a CBDC is different from virtual currency and cryptocurrency.
  • Cryptocurrencies are not issued by a state and lack the legal tender status declared by the government.

What is Currency chest?

Currency in India is managed by Currency chest. Currency chest is a place where the Reserve Bank of India (RBI) stocks the money meant for banks and ATMs. These chests are usually situated on the premises of different banks but administrated by the RBI.

Why India needs a digital rupee?

  • Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
  • High currency in circulation: India has a fairly high currency-to-GDP ratio.
  • Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

Why is CBDC preferred over Cryptocurrency?

  • Sovereign guarantee: Cryptocurrencies pose risks to consumers.  They do not have any sovereign guarantee and hence are not legal tender.
  • Market volatility: Their speculative nature also makes them highly volatile.  For instance, the value of Bitcoin fell from USD 20,000 in December 2017 to USD 3,800 in November 2018.
  • Risk in security: A user loses access to their cryptocurrency if they lose their private key (unlike traditional digital banking accounts, this password cannot be reset).
  • Malware threats: In some cases, these private keys are stored by technical service providers (cryptocurrency exchanges or wallets), which are prone to malware or hacking.
  • Money laundering: Cryptocurrencies are more vulnerable to criminal activity and money laundering.  They provide greater anonymity than other payment methods since the public keys engaging in a transaction cannot be directly linked to an individual.
  • Regulatory bypass: A central bank cannot regulate the supply of cryptocurrencies in the economy.  This could pose a risk to the financial stability of the country if their use becomes widespread.
  • Power consumption: Since validating transactions is energy-intensive, it may have adverse consequences for the country’s energy security (the total electricity use of bitcoin mining, in 2018, was equivalent to that of mid-sized economies such as Switzerland).

Features of CBDC

  • High-security instrument: CBDC is a high-security digital instrument; like paper banknotes, it is a means of payment, a unit of account, and a store of value.
  • Uniquely identifiable: And like paper currency, each unit is uniquely identifiable to prevent counterfeit.
  • Liability of central bank: It is a liability of the central bank just as physical currency is.
  • Transferability: It’s a digital bearer instrument that can be stored, transferred, and transmitted by all kinds of digital payment systems and services.

Key benefits offered

  • Faster system: CBDC can definitely increase the transmission of money from central banks to commercial banks and end customers much faster than the present system.
  • Financial inclusion: Specific use cases, like financial inclusion, can also be covered by CBDC that can benefit millions of citizens who need money and are currently unbanked or banked with limited banking services
  • Monetary policy facilitation: The move to bring out a CBDC could significantly improve monetary policy development in India.
  • Making of a regional currency: In the cross border payments domain, India can take a lead by leveraging digital Rupee especially in countries such as Bhutan, Saudia Arabia and Singapore where NPCI has existing arrangements.

Others:

  • It is efficient than printing notes (cost of printing, transporting, and storing paper currency)
  • It reduces the risk of transactions
  • It makes tax collection transparent
  • Prevents money laundering

Issues involved with CBDC

  • Innovation with centralization: The approach of bringing a sovereign digital currency stands in stark contrast to the idea of decentralization.
  • Liability on RBI:  when bank customers wish to convert their deposits into digital rupee, the RBI will have to take these liabilities from the books of banks and onto its own balance sheet.
  • Inflationary risk: Central banks would indulge in issuing more digital currencies which could potentially trigger higher inflation.
  • User adoption: User adoption could also pose a major setback for the smooth roll out of the CBDC in India. The main challenges would always be user adoption and security.
  • Reduced savings: Many, including various central bankers, fear that people may begin withdrawing money from their bank accounts as digital currencies issued by Central banks become more popular.
  • Volatility: the risk is higher and there is more price volatility and lesser acceptance as a money instrument globally, unless the trust factor and investor protection factors change.

Way forward

  • The launch of CBDCs may not be a smooth affair and still requires more clarity in India. There are still a lot of misconceptions about the concept of digital currency in the country.
  • The effectiveness of CBDCs will depend on aspects such as privacy design and programmability.
  • There is a huge opportunity for India to take a lead globally via a large-scale rollout and adoption of digital currencies.

Conclusion

  • RBI is creating small pivot for experimenting CBDC where financial transaction is happening through digital currency.
  • CBDC has to be a gradual process, various nuances has to be taken care not only about its utilization but also about the impact it will make.
  • More clarity on the concept in the days to come will be the key for CBDCs and much will depend on how the whole concept will evolve in India which is predominantly a paper currency market.