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  • Recovery from COVID-19 is an opportunity to create economies that are more resilient and fair

    This article discusses the three principles which could form the basis for recreation of the economy devastated by the Covid-19. The first is adopting the economies of “scope” instead of economies of scale. The second is about governance and focus on bottom-up approach. And third is about empowering the people.

    Impact of Covid-19 on the ideology of globalisation

    • The history of the globalisation has turned out to be very brief.
    • In 2020, the global COVID-19 pandemic has forced millions of Indians to return to their villages.
    • Jetsetters have been locked in their gated communities.
    • Global supply chains have been broken apart.
    • People are scrambling for essentials from local suppliers.
    • The ideology of globalisation has hit realities on the ground.

    Recovery from COVID-19 is an opportunity to create economies that are more resilient and fair. The following three architectural principles must apply.

    1. Replace economies of scale by the economies of scope

    • COVID-19 has settled, for now, the debate between free-trade evangelists and advocates of industrial policy.
    • The vulnerability of global supply chains: A complex global economy in which local producers obtain scale (and lower costs) by supplying products for global markets is vulnerable to shutdowns anywhere.
    • The resilience of local economies: Local economies that have a variety of capabilities within them, albeit on smaller scales, are more resilient.
    • Therefore, local economic webs must be strengthened, in preference to global supply-chains.
    • “Make in India,” which was dismissed by free traders as a reversion to pre-1991 economic policies, has become a necessity.
    • Make in India is necessary to maintain supplies of essentials and to create employment for the hundreds of millions of Indians with fragile incomes who have been badly shaken by the lock-down of the Indian economy.

    2. Local systems solution to global problems

    • Local systems solutions are essential for global systemic problems.
    • Privatisation: Garrett Hardin had coined the expression, “The Tragedy of the Commons”, in 1968.
    • The Tragedy of the Commons is a term for the proposition that a resource that belongs to everybody will not be cared for by anybody.
    • This supported policies to privatise public property, ostensibly for the benefit of everybody and became the dominant school of economics from the 1970s onwards.
    • A different explanation: Elinor Ostrom, who was awarded the Nobel Prize for economics in offered a different explanation for the tragedy of the commons.
    • She argued that common resources are well-managed when those who benefit from such resources the most are in close proximity to them.
    • For her, the tragedy occurred when external groups exerted their power (politically, economically or socially) to gain a personal advantage.
    • Bottom-up approach: She was greatly supportive of the “bottom-up” approach to issues: Government intervention could not be effective unless supported by individuals and communities.
    • The world is facing challenges of ecological sustainability and persistent inequalities, which seem to get worse with the prevailing paradigm of economic growth.
    • These challenges are described in the 17 Sustainable Development Goals (SDGs).
    • They cut across national boundaries.
    • They also span several domains of expertise and institutional mandates.
    • The final, 17th goal states the principle by which all the goals will be achieved — “partnerships”.

    Actions theory Vs. Systems thinking

    • Action theory: The prevalent action theory, used by governments, businesses and philanthropic organisations to solve complex problems, focuses on breaking complex problems into components and then tackling the components in separate silos.
    • Problems caused by the actions theory: This widely prevalent theory of action has contributed greatly to causing the systemic, interconnected problems the SDGs now aim to address.
    • What is systems thinking: Effective action to address multiple challenges together requires “systems thinking” — that is, a systemic vision spanning across the problems.
    • Systems thinking is essential, amongst experts at the top and amongst partners on the ground.
    • Several organisations are promoting collaborative action with systems thinking on the ground in India.
    • Kudumbashree in Kerala has proven the power of community action.
    • The Foundation for Ecological Security, guided by Elinor Ostrom’s ideas, is working in many Indian states.
    • Dainik Bhaskar is promoting “SDG chaupals” in Indian villages.

    3.  Empowering the people

    • The third principle for the new economy is, empower the people, the fundamental requirement for genuine democracy.
    • India’s Constitution seeks self-governance in India’s towns and villages.
    • These are not being implemented by governments and policy experts who do not want to give up power to the people.
    • India lives in its villages, Mahatma Gandhi had said. Most of India still does.
    • And many, who had migrated to cities looking for jobs, are returning, shaken by the pandemic.
    • Gandhi was a systems thinker. For Gandhi, the global village was an abstract concept.
    • This cannot be realised until local villages and towns become harmonious communities, where people live in harmony with each other and with nature around them.

    The corona crisis has laid bare some of the problems associated with globalisation. It has forced a rethink of the economic policies and model adopted by the world. Against this backdrop, a question can be asked by the UPSC that demands the analysis of problems that have surfaced and solutions. For ex. “Covid-19 pandemic has brought into a sharp focus some inherent problems associated with the globalisation. In this context suggest the ways to make the Indian economy resilient to such shocks and fair to all the sections of society”

    Conclusion

    COVID-19 marks the end of the economics’ paradigm of the Washington Consensus. New models of economies, and new rules of global governance, must be bottom-up, not top-down. That’s how the whole world can move from relief, to recovery, and into resilience.

    Back2Basics: What was the Washington Consensus?

    • The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury.
    • A British economist named John Williamson coined the term Washington Consensus in 1989.
    • The ideas were intended to help developing countries that faced economic crises.
    • In summary, The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help.
    • Some examples include free-floating exchange rates and free trade.

  • It will take fiscal boldness now to relieve financial distress

    The article discusses the fiscal response of the government to deal with the corona crisis. Fiscal response to the 2008 financial crisis was higher in terms of GDP percentage. Also, a comparison with emerging peer economic indicates that India might be running the tighter fiscal policy in the time of crisis. The article suggests higher spending by going beyond the traditional fiscal space.

    A possible explanation for moderate fiscal response by the government

    • The Indian government has till now come up with an insipid fiscal response to the ongoing economic crisis.
    • Long battle: One view is that the government does not want to fire all its bullets in what threatens to be a long battle. It wants to time its interventions.
    • Weak public finances: The other possible explanation for this fiscal timidity is that India has entered this crisis with weak public finances.

    Comparison with finances at the 2008 financial crisis

    • The combined official fiscal deficit of the Union plus state governments was at its lowest level in many decades.
    • The economic boom of the preceding four years had led to higher tax collections pouring into the treasury.
    • The massive increase in spending announced in the budget of February 2008 was with an eye on the national election scheduled a year later, rather than in anticipation of a coming storm.
    • Then followed the second wave of fiscal expansion after the North Atlantic financial crisis hit Indian shores seven months later.
    • Back then, India’s effective fiscal stimulus over two years was a substantial 4.3% of gross domestic product (GDP).
    • In 2020, the crisis-driven spending plan announced by the government so far is less than 1% of GDP.
    • There could yet be a big fiscal push in the coming days.

    Tighter fiscal policy in crisis compared to other emerging economies

    • Some of the budget estimates released a few days ago by the International Monetary Fund are telling.
    • In 2018, the total fiscal deficit of the Indian government as a proportion of GDP was 2.4 percentage points higher than the average for Asian emerging markets.
    • India is expected to end 2020 with a total fiscal deficit that will be 2.5 percentage points lower than Asia’s average.
    • In other words, India ran a looser fiscal policy compared to the rest of Asia in normal times, but is likely to run a tighter fiscal policy than its regional peers in a crisis year.
    • Something similar can be seen in estimates for public debt.
    • Asian public debt as a proportion of GDP is expected to go up by nine percentage points in 2020.
    • The comparable figure for India is 2.9 percentage points. (These estimates are being cited with full knowledge that forecasting models break down during extreme events.)

    Funding extra expenditure through money creation

    • Lack of traditional fiscal space should not hold the government back in a crisis situation.
    • There are many options outside the consensus macro playbook.
    • Money creation: A commonly cited option right now is funding extra expenditure through money creation rather than borrowing.
    • The size of the Reserve Bank of India (RBI) balance sheet as a percentage of nominal GDP is close to its 35-year average.
    • There is scope for printing more money right now.
    • Lower inflationary pressure: And the inflationary consequences are likely to be muted because of the lower velocity of money amid a demand collapse.
    • Public finances in the future: Getting public finances back on track is a battle that lies in the future.
    • A rapid recovery in economic activity would be the best solution.
    • Otherwise, history tells us that countries have brought down their public debt numbers through some combination of financial repression, austerity, higher taxes and inflation.
    • Some element of capital controls could also be back in play.

    Need for increasing discretionary government spending

    • The collapse in tax revenues as the economy is shut down will automatically lead to a rise in India’s fiscal deficit.
    • However, there is a need for an increase in discretionary government spending as well.
    • Economists have shown that spending multipliers are higher than tax multipliers in India.
    • In other words, the increase in economic output for every unit increase in the fiscal deficit is higher when the government spends rather than changes tax rates.
    • State’s spending Vs. Union spending: Spending by states gives more bang for the buck than equivalent spending by the Union government.

    “Below the line measures” to support the economy

    • Also, there are options other than direct spending to support the economy.
    • Countries such as Germany, the UK, Italy, France and South Korea have complemented traditional fiscal expansions with “below the line” measures such as loans and guarantees to companies.
    • In an excellent recent study, analysts estimate that more than half of Indian corporate balances sheets will be unable to meet expenses with zero revenues.
    • They are careful to point out that their analysis is based on extreme assumptions that there is no fall in their wage bills, no revenues, and no access to fresh credit.

    One of the common suggestions we have been coming across is the spending by the government by printing money. In this article, the second important suggestion is below the line measures. Take note of these measures and options available with the government.

    Way forward

    • The poor need income support for their very survival. That should be at the top of any democratic government’s list of
    • However, protecting Indian companies from a financial collapse also matters, because otherwise, the economy will see a reduction in its capital stock, which will be needed both for a rapid recovery as well as job creation once the worst is over.
    • There are contagion risks in financial markets as well, going by what has happened to some mutual funds that were invested in bonds.

    Conclusion

    These are extraordinary times that require extraordinary measures. The danger from a delayed fiscal programme is that hysteresis may set in, as companies run out of money and supply chains are broken, damaging our economic prospects in the medium term.

     

     

  • ‘Trends in World Military Expenditure’ Report, 2019

    The annual report ‘Trends in World Military Expenditure, 2019’ was released by the Stockholm International Peace Research Institute (SIPRI), a Swedish think tank.

    Military expenditure across the World

    • The global military expenditure rose to $1917 billion in 2019 with India and China emerging among the top three spenders, according to the report.
    • In 2019, the top five largest spenders — U.S. ($732 bn), China, India, Russia ($65.1 bn) and Saudi Arabia ($61.9 bn) — accounted for 62% of the global expenditure.
    • China’s military expenditure reached $261 billion in 2019, a 5.1% increase compared with 2018, while India’s grew by 6.8% to $71.1 billion.
    • In Asia and Oceania, other than India and China, Japan ($47.6 bn) and South Korea ($43.9 bn) were the largest military spenders.

    What drives India’s military spending?

    • India’s tensions and rivalry with both Pakistan and China are among the major drivers for its increased military spending.
    • While India’s defence spending excluding pensions, which constitute a significant part, has been growing in absolute terms, it has been going down as a percentage of its GDP as noted by the report.

    Significant rise

    • India’s expenditure in 2019 was 6.8% more than that in 2018.
    • It grew by 259% over the 30-year period of 1990–2019, and by 37% over the decade of 2010–19.

    The Defence expenditure in India is increasing every year in absolute terms, implying higher spending while there has been very selective modernisation of the armed forces. Critically analyse.

  • Global Terrorism Index (GTI) 2019

    A report compiled by NITI Aayog has questioned the methodology adopted by an Australian based institute to rank India as the seventh-worst terrorism affected country.

    Despite of being a global threat, there is yet no consensus on the definition of terrorism. Despite the considerable discussion, the formation of a comprehensive convention against international terrorism by the United Nations has always been impeded by the lack of consensus on a definition.

    Global Terrorism Index (GTI)

    • GTI is a report published annually by the Institute for Economics and Peace (IEP).
    • The index provides a comprehensive summary of the key global trends and patterns in terrorism since 2000.
    • It produces a composite score in order to provide an ordinal ranking of countries on the impact of terrorism.
    • It is an attempt to systematically rank the nations of the world according to terrorist activity.
    • The index combines a number of factors associated with terrorist attacks to build an explicit picture of the impact of terrorism, illustrating trends, and providing a data series for analysis by researchers and policymakers.

    Its database

    • The GTI is based on data from the Global Terrorism Database (GTD).
    • The GTD is collected and collated by the National Consortium for the Study of Terrorism and Responses to Terrorism (START) at the University of Maryland.
    • It has codified over 190,000 cases of terrorism.
    • The GTI covers 163 countries, covering 99.7% of the world’s population.

    India’s ranking

    • India has moved to the seventh position from the previous years eighth in the annual Global Terrorism Index (GTI) 2019.
    • India has ranked ahead of conflict-ridden countries such as the Democratic Republic of Congo, South Sudan, Sudan, Burkina Faso, Palestine and Lebanon.

    Why such ranking matters?

    • The positioning in the global indices impacted investments and other opportunities.
    • The purpose was to see which of the indices can be used to drive reforms or which of these would require some amount of engagement with the publishing agency to make the indices more relevant.

    Issues with GTI

    • The GTD was based solely on “unclassified media articles, with more than 100 structured variables such as each attack’s location, tactics and weapons, perpetrators, casualties and consequences etc.
    • The large diversity in definitions of terrorism amongst countries, and the lack of a universally accepted definition of terrorism, leads to a great deal of ambiguity in calculating and understanding GTI reports.
    • IEP’s economic impact of terrorism model does not account for costs for countering violent extremism and long-term economic impacts on business activity, production and investment.
    • Indeed, the GTI 2019 report itself states that a great majority of property damage values from terrorist incidents are coded in the GTD as ‘unknown,’ resulting in 1 out 4 parameters scoring nil for most countries.
    • Similarly, the definition of mass shootings used in the GTI is limited to ‘indiscriminate rampages in public places resulting in four or more victims killed by the attacker,’ leaving out lone-wolf attacks.

    Highly irrelevant data

    • The absence of a robust data collection and analysis methodology, and any engagement with Governments facing the scourge of terrorism, means that the GTI has low direct value for policymakers.
    • It cannot be used as an aid to understand and alleviate challenges to countries from domestic and cross border terrorism.

  • RBI should preserve its inflation credibility

    This article by Urjit Patel elaborates on the recent actions of the RBI which are likely to result in making the role of MPC redundant. Some of the moves cited are injection of liquidity by the RBI and reduction of reverse repo rate by the RBI. Implications such actions could have for the macroeconomic stability are also discussed.

    Stimulus package after the 2008 financial crisis and problems created by it

    • Following the global financial crisis of 2007-08, India, like many other countries, embarked on a stimulus.
    • The pump-priming did not end too well.
    • Inflation and bad loans: By 2013, India crossed or approached double-digit figures in inflation and the national fiscal deficit, in addition to looming bad loans.
    • Taper tantrum: In summer 2013, when the Federal Reserve indicated a possible reversal of its ultra-accommodative policy, macroeconomic parameters for India were so weak that it got caught up in the “taper tantrum” and experienced external sector fragility.

    Inflation targeting and the role of MPC

    • While fiscal excesses and financial sector stress remain issues today, India has improved significantly on at least one dimension — namely, inflation — which has also stabilised the external sector.
    • How was this beneficial progress achieved?
    • Starting in September 2013, the Reserve Bank of India (RBI) initiated an effort to build credibility with domestic savers and international investors on maintaining inflation at prudent levels.
    • Three years thereafter, the RBI Act was amended to put in place a flexible inflation targeting framework.
    • A Monetary Policy Committee (MPC), comprising of RBI representatives and external members appointed by the Government of India, was enjoined with the legal mandate of managing the policy (repo) rate.
    • MPC was mandated to keep consumer price inflation at a target level of 4 per cent, while keeping in mind economic growth.

    Assessment of MPC’s performance

    • By objective measures, the MPC framework until recently worked rather well.
    • It lent transparency and democratic accountability to the process of interest-rate setting.
    • Combined with efforts on managing food inflation, it has brought inflation closer to the target.
    • It has contributed to tempering household inflation expectations.
    • It has kept borrowing costs in the economy at reasonable levels in spite of the high level of government borrowing and several other distortions.
    • Appreciation by the rating agencies: Indeed, rating agencies and multilateral institutions repeatedly mention the MPC and the inflation targeting framework as a landmark structural reform towards sound macroeconomic management.

    Latest monetary actions by RBI that reduced MPC’s role

    • Since last year, a series of monetary actions by the RBI have left the MPC’s decision on the policy rate partly redundant, diluted the accountable process of monetary decision-making.
    • This has put at stake the sanctity of the MPC framework.
    • With a stated intention to improve the transmission of monetary policy to households and corporations, the RBI has pumped unprecedented levels of money (close to Rs 7 trillion) into the banking system.
    • It has done so mostly by purchasing government bonds but partly also by purchasing dollars.
    • No desired results: Given impaired financial sector balance-sheets, transmission to economic growth has been at best muted; liquidity is no silver bullet to durably address financial sector stress.
    • The primary effect of excessive liquidity has, instead, been to monetise the government’s expenditures and keep its borrowing costs low.
    • With its declared aim not being met satisfactorily, the RBI has doubled down on liquidity supply, with the same outcome.
    • An important casualty has been the MPC framework.
    • Contradictory actions: At times, even when the MPC has kept the policy rate unchanged, the RBI has injected yet more liquidity to move medium-term interest rates down.
    • The two actions have been noted to be in direct contradiction of each other.
    • If the objective is to move medium-term rates, why not build consensus within the MPC to cut the policy rate more aggressively and communicate the rationale?
    • Change in reverse repo by the RBI: Further, given the enormous liquidity glut, every night banks park liquidity with the RBI at a (reverse repo) rate lower than the policy rate and which is not set by the MPC; nevertheless, this rate used to be changed only as part of the MPC Resolution.
    • Lately, the RBI has moved reverse repo rate progressively lower than the policy rate; recently.
    • It has done so outside of the MPC meeting cycle and not as part of the MPC Resolution.
    • There are straightforward tools in liquidity management to ensure that in surplus conditions also, the central bank transacts with banks at the policy rate — technically, by switching from “deficit” to “floor” system of liquidity management.
    • Such a switch is routinely adopted by central banks when they provide excess liquidity; the RBI has chosen not to do so.

    What are the implications?

    • The net effect is that market interest rates are being increasingly controlled by the RBI rather than the MPC.
    • Indeed, there is a proposal that the rate at which the RBI absorbs liquidity be still lower, likely divorced from the policy rate set by the MPC.
    • The spirit of the MPC framework enshrined in the RBI Act is being violated.
    • It is unclear how the MPC can be expected to satisfy its legal mandate if what it seeks to achieve via the setting of the policy rate is in conflict with, or compromised by, the RBI’s liquidity management.
    • These developments have the potential to pose risks for India’s macroeconomic stability going forward.
    • The implicit monetisation of fiscal expenditures through government bond purchases by the RBI in the secondary market has postponed the recognition of the untenable fiscal reality.
    • The delay has meant the government has had limited policy space since the onset of COVID.
    • Supply-chain disruptions due to measures taken to contain the pandemic raise the possibility of cost-push inflationary pressures, especially given the excessively easy fiscal and monetary conditions.
    • This can abruptly raise economy-wide borrowing rates, inflict losses on banks, and imperil financial stability.
    • If the gains in inflation credibility built by the MPC framework are dissipated by ineffective policies and operations, both household and investor expectations for inflation in India could unhinge.
    • Worse, it could instigate turmoil in the external sector.
    • Excessively low bank deposit rates may induce some non-resident deposits to exit the country.

    A question based on the issue of RBI’s action and its implication for MPC and overall economy can be asked by the UPSC, for ex- “The MPC framework has performed well in delivering on its mandate. Yet, there were some actions by the RBI recently which could be perceived as inimical to the functions of the MPC. Discuss.”

    Conclusion

    In a highly unpredictable time such as this, the RBI should preserve its inflation credibility. The decision on monetary policy actions based on voting by committee members, provision of inflation and growth forecasts in the resolution statement, and coordination of rate-setting and liquidity management, need to be adhered to.

    Back2Basics: What is MPC?

    • The Reserve Bank of India Act, 1934 (RBI Act) was amended by the Finance Act, 2016,  to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.
    • The Monetary Policy Committee is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.
    • The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.
    • As per the provisions of the RBI Act, out of the six Members of Monetary Policy Committee, three Members are from the RBI and the other three Members of MPC are appointed by the Central Government.
    • Governor of the RBI is ex officio Chairman of the committee.

  • Kesavananda Bharati Case (1973): The judgment that upheld basic structure of India’s constitution

    Exactly 47 years ago, the Supreme Court passed its landmark judgment in Kesavananda Bharati vs State of Kerala, considered among the most significant constitutional cases in India’s judicial history.

    Major judgments of the Supreme Court are mentioned in the newscard. Aspirants are advised to memorize them all with thier key features. UPSC may ask a prelim question mentioning all these judgements and asking which of them are related/not related to the Amendments in the Constitution.  Right from the Shankari Prasad Judgment (1951) to the Ayodhya Judgement (2019), note down all important judgements.

    Background

    Amending  the Constitution

    • The Constitution of a country is the fundamental law of the land. It is based on this document that all other laws are made and enforced.
    • Under some Constitutions, certain parts are immune from amendments and are given a special status compared to other provisions.
    • Since the Indian Constitution was first adopted, debates have raged as to the extent of power that Parliament should have to amend key provisions.

    Early years of Absolute Power

    • In the early years of Independence, the Supreme Court conceded absolute power to Parliament in amending the Constitution, as was seen in the verdicts in Shankari Prasad (1951) and Sajjan Singh (1965).
    • The reason for this is believed to be that in those initial years, the apex court had reposed faith in the wisdom of the then political leadership when leading freedom fighters were serving as Parliamentarians.
    • In subsequent years, as the Constitution kept being amended at will to suit the interests of the ruling dispensation, the Supreme Court in Golaknath (1967) held that Parliament’s amending power could not touch Fundamental Rights, and this power would be only with a Constituent Assembly.

    Parliament could make any amendment

    • Article 13(2) reads, “The State shall not make any law which takes away or abridges the right conferred by this Part (Part-III) and any law made in contravention of this clause shall, to the extent of the contravention, be void.”
    • In both the cases, the court had ruled that the term “law” in Article 13 must be taken to mean rules or regulations made in exercise of ordinary legislative power and not amendments to the Constitution made in exercise of constituent power under Article 368.
    • This means Parliament had the power to amend any part of the constitution including Fundamental rights.

    The tussle between Parliament and the judiciary

    • In the early 1970s, the government of then PM Indira Gandhi had enacted major amendments to the Constitution (the 24th, 25th, 26th and 29th) to get over the judgments of the Supreme Court in RC Cooper (1970), Madhavrao Scindia (1970) and the earlier mentioned Golaknath.
    • In RC Cooper, the court had struck down Indira Gandhi’s bank nationalization policy, and in Madhavrao Scindia it had annulled the abolition of privy purses of former rulers.

    Background for the Kesavananda Bharati Case

    • All the four amendments, as well as the Golaknath judgment, came under challenge in the Kesavananda Bharati case.
    • Here, relief was sought by the religious figure Swami Kesavananda Bharati against the Kerala government vis-à-vis two state land reform laws.
    • Since Golaknath was decided by eleven judges, a larger bench was required to test its correctness, and thus 13 judges formed the Kesavananda bench.
    • Critics of the doctrine have called it undemocratic since unelected judges can strike down a constitutional amendment. At the same time, its proponents have hailed the concept as a safety valve against majoritarianism and authoritarianism.
    • Noted legal luminaries Nani Palkhivala, Fali Nariman, and Soli Sorabjee presented the case against the government.
    • The majority opinion was delivered by CJI S M Sikri, and Justices K S Hegde, A K Mukherjea, J M Shelat, A N Grover, P Jaganmohan Reddy, and H R Khanna. Justices A N Ray, D G Palekar, K K Mathew, M H Beg, S N Dwivedi, and Y V Chandrachud dissented.

    A closer win

    • By a 7-6 verdict, a 13-judge Constitution Bench ruled that the ‘basic structure’ of the Constitution is inviolable, and could not be amended by Parliament.
    • The basic structure doctrine has since been regarded as a tenet of Indian constitutional law.

    The judgment in Kesavananda Bharati

    • The Constitutional Bench, whose members shared serious ideological differences, ruled by a 7-6 verdict that Parliament should be restrained from altering the ‘basic structure’ of the Constitution.
    • The court held that under Article 368, which provides Parliament amending powers, something must remain of the original Constitution that the new amendment would change.
    • The court did not define the ‘basic structure’, and only listed a few principles — federalism, secularism, democracy — as being its part.
    • Since then, the court has been adding new features to this concept.

    ‘Basic structure’ since Kesavananda

    • The basic structure doctrine was first introduced by Justice Mudholkar in the Sajjan Singh case (1965).
    • Major features were notably propounded by Justice Hans Raj Khanna in 1973.
    • The ‘basic structure’ doctrine has since been interpreted to include the supremacy of the Constitution, the rule of law, Independence of the judiciary, doctrine of separation of powers, federalism, secularism, sovereign democratic republic, the parliamentary system of government, the principle of free and fair elections, welfare state, etc.
    • An example of its application is SR Bommai (1994), when the Supreme Court upheld the dismissal of the governments by the President following the demolition of the Babri Masjid, invoking a threat to secularism by these governments.

  • How the ozone layer hole over Arctic closed?

    Recently the EU’s Copernicus Atmosphere Monitoring Service (CAMS) announced that a hole in the Arctic ozone layer, believed to be the biggest reported, has closed.

    What healed the hole in the Ozone?

    • The ozone hole’s closing was because of a phenomenon called the polar vortex, and not because of reduced pollution levels due to Covid-19 lockdowns around the world.
    • The hole in the North Pole’s ozone layer, which was first detected in February, had since reached a maximum extension of around 1 million sq km.

    Ozone hole

    • The ‘ozone hole’ is not really a hole — it refers to a region in the stratosphere where the concentration of ozone becomes extremely low in certain months.
    • Ozone, made up of three oxygen atoms, occurs naturally in small amounts.
    • Roughly 10 km to 40 km up in the atmosphere (the layer called the stratosphere), the ozone layer is sunscreen, shielding Earth from harmful ultraviolet radiation.
    • Manufactured chemicals deplete the ozone layer. Each spring over Antarctica (it now springs there), atmospheric ozone is destroyed by chemical processes.
    • This creates the ozone hole, which occurs because of special meteorological and chemical conditions that exist in that region.

    The importance of the ozone layer

    • Ozone (chemically O3, a molecule of three oxygen atoms) is found mainly in the upper atmosphere, an area called the stratosphere, between 10 and 50 km from the earth’s surface.
    • Though it is talked of as a layer, ozone is present in the atmosphere in rather low concentrations.
    • Even at places where this layer is thickest, there are not more than a few molecules of ozone for every million air molecules.
    • They perform a very important function. By absorbing the harmful ultraviolet radiations from the sun, the ozone molecules eliminate a big threat to life forms on earth.
    • UV rays can cause skin cancer and other diseases and deformities in plants and animals.

    Why this year’s hole was massive?

    • This year, the ozone depletion over the Arctic was much larger.
    • Scientists believe that unusual atmospheric conditions, including freezing temperatures in the stratosphere, were responsible.
    • Cold temperatures (below -80°C), sunlight, wind fields and substances such as chlorofluorocarbons (CFCs) were responsible for the degradation of the Arctic ozone layer.
    • Although Arctic temperatures do not usually fall as low as in Antarctica, this year, powerful winds flowing around the North Pole trapped cold air within what is known as the polar vortex.
    • By the end of the polar winter, the first sunlight over the North Pole initiated this unusually strong ozone depletion—causing the hole to form.

    How long it will take for complete recovery?

    • As per the Scientific Assessment of Ozone Depletion data of 2018, the ozone layer in parts of the stratosphere has recovered at a rate of 1-3 per cent per decade since 2000.
    • At these projected rates, the Northern Hemisphere and mid-latitude ozone is predicted to recover by around 2030, followed by the Southern Hemisphere around 2050, and polar regions by 2060.

    Also read: Polar Vortex

    https://www.civilsdaily.com/news/whats-causing-extreme-cold-in-us-midwest/

  • What are Deep Fakes?

    Cybercrime officials in India have been tracking certain apps and websites that produce vulgar photographs of innocent persons using Artificial Intelligence (AI) algorithms. These images are then used to blackmail victims, seek revenge or commit fraud on social networking and dating sites.

    The most notorious misuse of AI is knocking the door. The Deepfake is an application of Deep Learning (an axiom of AI and Machine Learning). UPSC may ask a mains question about the challenges posed by AI-based technology.

    What is Deep Fake?

    • Cybercriminals use AI software — now easily available on apps and websites — to superimpose a digital composite (assembling multiple media files to make a final one) on to an existing video, photo or audio.
    • They are computer-generated images and videos.
    • Using AI algorithms a person’s words, head movements and expressions are transferred onto another person in a seamless fashion.
    • That makes it difficult to tell that it is a deepfake unless one closely observes the media file.

    Threats posed

    • Because of how realistic deepfake images, audio and videos can be, the technology is vulnerable for use by cybercriminals who could spread misinformation to intimidate or blackmail people.
    • With real-time face tracking it is becoming easier to fabricate believable videos of people doing and saying things they never did.
    • There are rising cases of “revenge porn” i.e. creation of sexually explicit videos or images that are posted on the Internet without the consent of the subject as a way to harass them.

    What are the catfish accounts?

    • Catfishing refers to the practice of setting up fictitious online profiles most often for the purpose of luring another into a fraudulent romantic relationship.
    • A “catfish” account is set up a fake social media profile with the goal of duping that person into falling for the false persona.

    What can we do to protect yourself?

    • A basic check of their social media profiles, comments on the images and whether similar profiles exist could help determine if the person is genuine.
    • While it is not easy to keep track of who downloads or misuses the user images, the best way to protect is to ensure that we are using privacy settings on social media profiles.
    • If one feels his/her image has been used without prior permission, they could use freely available reverse image search tools to find images that are similar to yours.
    • One can also be mindful of who he/she is conversing with on the web.

  • Who was Lord Basaveshwara?

    Prime Minister has offered his homage to the 12th-century social reformer Basaveshwara on his birth anniversary.

    Vaishnavism and Shaivism are the two most profound strands of Bhakti Movement in Indian history. Enlist all the Bhakti Saints and their theistic philosophy and teachings. Try to spot the minute differences between them.

    Lord Basaveshwara

    • Basaveshwara or Basavanna was an Indian 12th-century statesman, philosopher, a poet and Lingayat saint in the Shiva-focussed Bhakti movement and a social reformer in Karnataka.
    • He lived during the reign of the Kalyani Chalukya/Kalachuri dynasty.
    • He was active during the rule of both dynasties but reached his peak of influence during the rule of King Bijjala II in Karnataka, India .

    Founder of Lingayat cult

    • The traditional legends and hagiographic texts state Basava to be the founder of the Lingayats.
    • However, modern scholarship relying on historical evidence such as the Kalachuri inscriptions state that Basava was the poet-philosopher who revived, refined and energized an already existing tradition.

    His Philosophy

    • Basava’s Lingayat theology was a form of qualified nondualism, wherein the individual Atman (soul) is the body of God, and that there is no difference between Shiva and Atman (self, soul).
    • Basava’s views finds places in Vedanta school, in a form closer to the 11th century Vishishtadvaita philosopher Ramanuja.

    Famous works

    • Basavanna spread social awareness through his poetry, popularly known as Vachanaas.
    • Basavanna rejected gender or social discrimination, superstitions and rituals but introduced Ishtalinga necklace, with an image of the Shiva Liṅga to every person regardless of his or her birth.
    • As the chief minister of his kingdom, he introduced new public institutions such as the Anubhava Mantapa (or, the “hall of spiritual experience”) which welcomed men and women from all socio-economic backgrounds.

    Back2Basics: Bhakti Movement

    • The Bhakti movement refers to the theistic devotional trend that emerged in medieval Hinduism.
    • It originated in eighth-century south India and spread northwards.
    • It swept over east and north India from the 15th century onwards, reaching its zenith between the 15th and 17th century CE.
    • It has traditionally been considered as an influential social reformation in Hinduism, and provided an individual-focused alternative path to spirituality regardless of one’s birth or gender
    • Salvation which was previously considered attainable only by men of Brahmin, Kshatriya and Vaishya castes, became available to everyone.

  • The universal delivery of food and cash transfers by the state amid Covid-19

    This focus of this article is on the universal delivery of food and cash transfer amid corona pandemic. There are some estimates of the cost of universal cash transfer and food delivery in the article and suggestion to ensure universal delivery.

    Universal food and cash delivery is needed

    • The immediate need for universal food and cash delivery is by now obvious and urgent.
    • Across the country, there are reports of people — migrant workers, local workers, peasants, pastoralists, fisherpeople, vendors, ragpickers, and the destitute — facing extreme hardship, even starvation, because their livelihoods have been extinguished by the lockdown.
    • These have created further an unprecedented humanitarian crisis, as millions of households with depleted savings have no way to access food and other basic necessities over the coming weeks.
    • The threat of infection from COVID-19 makes even harder their coping mechanisms.
    • In these dire circumstances, it is essential for the state to directly provide the basic means of survival to anyone who needs it.
    • This must be in both cash and kind. Food access is the most important.
    • But because of the closure of economic activity and the absence of any livelihood opportunity, this must be combined with cash transfers to tide over this period and the immediate aftermath.
    • Food transfers must be provided for at least six months, and cash transfers for at least three months, though these can be extended depending on the period of lockdown.
    • Because of the severity of the crisis and the high probability of widespread hunger and descent into poverty, these transfers must be universal, made available to every person who needs them, without relying on exclusionary criteria, existing lists or biometric identification.

    The points mentioned below give us the ideal of food-grain stocks with India. And there are also the estimates of how much would be required if we decide to go for universal delivery of food. The data given below is important from Mains perspective.

    How much will be the cost of universal food delivery?

    • Consider first free universal provisioning of 10 kg of grain (wheat or rice) per person per month.
    • This is likely to be availed of by at most around 80 per cent of the population.
    • With an estimated population of 1.3 billion, providing this for six months would require 62.4 million tonnes of grain.
    • This is a maximal estimate — the actual requirement would be lower.
    • Stocks with the FCI: The FCI is currently holding 77 million tonnes of foodgrain stocks, compared to buffer stock norms of 24 million tonnes.
    • It is expected to procure another 40 million tonnes from the current rabi harvest.
    • It could easily release and allow the free distribution of foodgrain of 5 million tonnes and still have foodgrain stocks of 54.5 million tonnes, if the expected rabi procurement targets are met.
    • Cost of storing grains: Furthermore, it is costly for the FCI to store this grain. The current costs of storage are estimated to be Rs 5.60 per kilogramme per year or Rs 2.80 for six months.
    • This means that by releasing 4 million tonnes to feed the hungry of India over the next six months, the FCI would actually be saving Rs 17,472 crore, assuming that these idle stocks would have persisted.
    • But even if these were sold, the costs are the revenue that would have been earned.
    • This is difficult to estimate but by using Finance Minister’s estimates in Budget we get a (maximal) figure of Rs 1,17,000 crore.

    Cost of universal cash transfer

    • In addition, a proposed cash transfer of Rs 7,000 per month for three months to every household, assuming again that 80 per cent of households would receive this.
    • With five persons per household, this expenditure would be Rs 4,36,800 crore.
    • The two transfers together amount to Rs 5,53,800 crore, or around 9 per cent of currently estimated GDP.

    Financing the expenditure through fiscal deficit

    • This sum of Rs. 5,53,800 is not a forbidding sum.
    • A great part of the responsibility to make these resources available vests with the Union government.
    • But whatever taxes are introduced in a supplementary budget that has become unavoidable, the expenditure incurred has to be financed immediately through a fiscal deficit.
    • Given the massive deflationary pressures and a complete collapse of economic activity, there is a strong case for financing the additional public expenditure through deficit financing or borrowing directly from the RBI.
    • This is required both for coping with the pandemic and for softening the blow of the lockdown.

    Following two suggestions are important suggestions for the delivery of food and cash in case we don’t have reliable data.

    How to ensure universal delivery of food?

    • The question arises of how universal delivery of these food and cash transfers is to be ensured.
    • Existing lists are inadequate for the purpose because they significantly underestimate and exclude those who should be beneficiaries.
    • For example, at least 100 million people are excluded from access to food under the National Food Security Act based on the 2011 Census.
    • The most effective way of dealing with the food emergency is to provide food delivery at doorsteps or neighbourhood collection points to anyone who asks for it, with a simple marker such as the indelible ink used during elections to serve as the indicator of receipt.

    How to endure universal delivery of cash?

    • For cash transfers, the matter is more complicated.
    • In rural India, MGNREGA job cards and pensions cover most households and allow bank payments.
    • The urban poor include migrants, contract and casual workers mostly in small and medium enterprises, daily wagers, domestic workers, self-employed persons like street vendors, sex workers and ragpickers, and the destitute including homeless people.
    • But there is no comprehensive record of the urban poor because the state has instituted no effective mechanisms to secure labour rights or social security rights to most urban workers.
    • The urban poor build and service the city, surviving without rights and a hostile or indifferent state.
    • The legally-mandated registration of inter-state migrants and construction workers in practice excludes most because their employers with the connivance of the state don’t wish to be bound to secure their rights.
    • The humanitarian emergency created by the pandemic and lockdown entails universal cash transfers again to every adult who presents herself to designated officials in decentralised offices.
    • For those who have accessible bank accounts, the funds can be credited to these accounts.
    • For others, the Odisha system, whereby pensions are disbursed as cash in hand at pre-specified times, maybe a useful model to follow.
    • This also can be adopted with indelible ink as proof of receipt.

    Employment schemes after cash transfers

    • The income transfers must quickly give way to an expanded rural employment guarantee scheme, and a new urban employment programme.
    • These urban employment programs include caregiving and building water supply, sanitation and shelter for the urban poor.
    • Private hospitals also need to be nationalised at least for the duration of the pandemic.

    Conclusion

    The working and poor people should not be made to bear the burden of the pandemic. There is a need for a bold resolve, by central and state governments, to literally reach the last person, rural or urban, with the food and cash they require to survive with dignity.