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GS Paper: GS2

  • Anti-defection law: when a nominated MP loses RS membership

    A nominated MP had to resign from Rajya Sabha before the completion of his term due to the Anti-defection law.

    The story of Nominated Members

    • During the making of the Constitution, members of the Constituent Assembly felt that Rajya Sabha should have members who might not win elections but will bring knowledge and expertise to discussions.
    • It led to Rajya Sabha having 12 nominated members from different walks of life.
    • The broad criterion for their nomination is that they should have distinguished themselves in fields like literature, science, art, and social service.
    • The President nominates such individuals as recommended by the Centre.
    • Nominated members have the same rights and privileges as elected members, with one notable difference — they cannot vote in the election of the President.

    Anti-defection law

    • In 1985 the Tenth Schedule, popularly known as the anti-defection law, was added to the Constitution.
    • But its enactment was catalyzed by the political instability after the general elections of 1967.
    • This was the time when multiple state governments were toppled after MLAs changed their political loyalties.
    • The purpose of the 1985 Constitution Amendment was to bring stability to governments by deterring MPs and MLAs from changing their political parties on whose ticket they were elected.
    • The penalty for shifting political loyalties is the loss of parliamentary membership and a bar on becoming a minister.

    Try this PYQ:

    Consider the following statements:

    1. The Chairman and the Deputy Chairman of the Rajya Sabha are not the members of that House.
    2. While the nominated members of the two Houses of the Parliament have no voting right in the presidential election, they have the right to vote in the election of the Vice President.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    What invites defection?

    The law covers three types of scenarios with respect to MP switching parties.

    1. The first is when a member elected on the ticket of a political party “voluntarily gives up” membership of such a party or votes in the House contrary to the wishes of the party.
    2. The second possibility is when an MP who has won his or her seat as an independent candidate after the election joins a political party. In both these instances, the MP lose the seat in the House on changing (or joining) a party.
    3. The third scenario relates to nominated MPs. In their case, the law specifies that within six months of being nominated to the House, they can choose to join a political party.

    Why is a nominated member given 6month time?

    • The time is given so that if a nominated MP is not a member of a political party, they can decide to join one if they want.
    • But if they don’t join a political party during the first six months of their tenure, and join a party thereafter, then they lose their seat in Parliament.

  • Orunudoi Scheme

    Ahead of the Assam Assembly elections, the Orunudoi scheme, with women as its primary target group, is the most popular.

    There can be confusion from the name of the scheme.

    Orunudoi Scheme

    • Through Orunodoi — announced in the 2020-21 Budget — monthly assistance of Rs 830 is transferred to women members of marginalised families of Assam.
    • On account of being a DBT, or a Direct Benefit Transfer scheme, the money is credited directly to the bank account of the woman head of a family because they are primary caretakers of the household.
    • The scheme gives a choice to the poor and needy households on how they want to spend their money.

    Eligibility criteria

    • The applicant, a woman, has to be a permanent resident of Assam, whose composite household income should be less than Rs 2 lakh per annum.
    • Families with specially-abled members and divorced/widowed/separated /unmarried women are prioritized.
    • Poorer families, those without the National Food Security Act (NFSA) or ration cards, are also given priority.

  • ACT-Accelerator Coalition

    ACT-Accelerator, a global coalition formed in April 2020 to fight the novel coronavirus disease (COVID-19) is facing a severe fund crunch to meet its goals for 2020-21.

    ACT-Accelerator

    • The Access to COVID-19 Tools Accelerator (ACT Accelerator) is a G20 initiative announced on 24 April 2020.
    • A call to action was published simultaneously by the World Health Organization (WHO).
    • The ACT Accelerator is a cross-discipline support structure to enable partners to share resources and knowledge.
    • It comprises four pillars, each managed by two to three collaborating partners:
    1. Vaccines (also called “COVAX”)
    2. Diagnostics
    3. Therapeutics
    4. Health Systems Connector
    • India is an active donor in this alliance.

    Try this PYQ based on a global coalition:

    Q.Consider the following statements:

    1. Climate and Clean Air Coalition (CCAC) to Reduce Short Lived Climate Pollutants is a unique initiative of G20 group of countries.
    2. The CCAC focuses on methane, black carbon and Hydrofluorocarbons.

    Which of the above statements is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • A giant leap forward for the Quad

    The first-ever Quad summit is an important milestone in the geopolitics of the region. The article highlights its significance.

    Significance of the first Quad summit

    • The maiden Quadrilateral Security Dialogue summit of the leaders of Australia, India, Japan and the U.S. on March 12 was a defining moment in Asian geopolitics.
    • That it was a meeting at the highest political level, occasioned a productive dialogue, and concluded with a substantive joint statement is indicative of its immediate significance.
    • If it leads to tangible action and visible cooperation, it will impact the whole region.

    Brief background of the Quad

    • The Indian Ocean tsunami of 2004 triggered cooperation among the navies and governments of the Quad powers.
    • They sought to forge diplomatic cooperation on regional issues in 2006-08.
    • But gave up mainly because China objected to it and the hostility to China was not yet a potent enough glue.
    • This began to change in 2017 when Beijing’s behaviour turned hostile, climaxing in multiple challenges in 2020.
    • This time, U.S. President Joe Biden moved swiftly to host a virtual summit, drawing immediate response from the other three leaders.

    5 highlights of the summit

    • A more sophisticated approach is being invented, with enhanced emphasis by the U.S. on carrying its allies and strategic partners together.
    •  The summit’s outcome, therefore, merits close attention for at least five reasons.

    1) Compromise over vision of Indo-Pacific

    • Past debates over diverse, even differing, visions of the Indo-Pacific are over.
    • The joint statement struck a neat compromise:
    • To please the U.S. and Japan, it refers to a “free and open” Indo-Pacific, but in the very next sentence it offers an elaboration – “free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion” – that amply satisfy India and Australia.

    2) Alignment of approach towards China

    • The summit leaders have secured an adequate alignment of their approaches towards China.
    • Senior officials gave sufficient hints on this score, reinforced by phrases such as “security challenges” and “the rules-based maritime order in the East and South China Seas” in the joint statement.
    • Instead of unidimensional antagonism, the Quad members have preferred a smart blend of competition, cooperation and confrontation.

    3) Quad’s commitment development and well being of the region

    • The Quad has placed a premium on winning the battle for the hearts and minds of people in the Indo-Pacific region.
    • This explains the special initiative to ensure equitable access to COVID-19 vaccines for every person in need in the region from the western Pacific to eastern Africa.

    4) Working groups

    • The establishment of three working groups on vaccine partnership; climate change; and critical and emerging technologies and their new standards, innovation and supply chains is a welcome step.
    • All this should get the four national establishments into serious policy coordination and action mode, creating new capacities.
    • The careful choice of themes reflects a deep understanding of the long-term challenge posed by China and has global implications.

    5) Quad working together in future

    • The March 12 summit will not be a one-off.
    • The leaders have agreed to meet in-person later this year, possibly at an international event within the region.
    • Foreign ministers will gather at least once a year; other relevant officials, more often.
    • Thus, will grow the habits of the Quad working together for a common vision and with agreed modalities for cooperation.

    How ASEAN and China will react

    • The summit has been watched closely by the ASEAN capitals. A few of them may express cautious welcome.
    • Beijing seems rattled but resigned to the Quad’s new momentum.
    • The Chinese see it in negative terms, targeting New Delhi in particular.

    Consider the question “With the first-ever summit, the Quad is moving towards a strong coalition. In light of this, examine the challenges India faces as it deepes its engagement in the grouping.” 

    Conclusion

    The summit and ‘The Spirit of the Quad’ – the inspired title of the joint statement – represented a giant leap forward. Now is the time to back political commitment with a strong mix of resolve, energy, stamina and the fresh ideas of stakeholders and experts outside of government to fulfil the promise of the Quad.

  • National Capital Territory of Delhi (Amendment) Bill, 2021

    The Ministry of Home Affairs (MHA) moved the NCT of Delhi (Amendment) Bill, 2021 to the Lok Sabha where it proposed that “government” in Delhi means the Lieutenant Governor of Delhi.

    What is the news?

    • The Bill gives discretionary powers to the L-G of Delhi even in matters where the Legislative Assembly of Delhi is empowered to make laws.
    • The Delhi state govt has criticized the bill saying that it seeks to drastically curtail powers of the elected government”, which is “against” the Supreme Court judgment of 2018.

    NCT of Delhi (Amendment) Bill, 2021

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

    What purpose does the 1991 Act serve?

    • Delhi’s current status as a UT with a Legislative Assembly is an outcome of the 69th Amendment Act through which Articles 239AA and 239BB were introduced in the Constitution.
    • The Act was passed simultaneously to supplement the constitutional provisions relating to the Assembly and the Council of Ministers in the national capital.
    • For all practical purposes, it outlined the powers of the Assembly, the discretionary powers enjoyed by the L-G, and the duties of the CM with respect to the need to furnish information to the L-G.

    What is the 2018 Supreme Court Verdict?

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

    Consider the question “What are the parameters laid down by the Supreme Court in the Government of NCT of Delhi vs. Union of India (2018) to avoid the conflict between Lt. Governor and the Delhi Government? Also examine the scope of referring any matter to the consideration of the President by the Lt. Governor.”

    What will change if the amendments are cleared by Parliament?

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

    Does the L-G enjoy no discretionary power under the current arrangement?

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

    What are the state government’s fears?

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

    Back2Basics: Special Status for New Delhi

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

  • Maritime border dispute between Kenya and Somalia

    In a move that is set to further undermine stability in East Africa, Kenya has said that it will not take part in proceedings of the International Court of Justice (ICJ) over its maritime border dispute with neighbouring Somalia.

    Can you recall the terms like “Scramble for Africa”, “Paper Partition of Africa”? If yes, then you know very well the malady of the present-day Continent of Africa.

    What is the news?

    • Nairobi has accused the top UN body of bias.
    • The move comes after Somalia’s decision to sever diplomatic relations with Kenya in December after it accused Nairobi of meddling in its internal affairs.
    • The maritime dispute is said to form a crucial part of the diplomatic quarrel between the two countries.

    The disputed area

    • The main point of disagreement between the two neighbours is the direction in which their maritime boundary in the Indian Ocean should extend.
    • According to Somalia, the sea border should be an extension of the same direction in which their land border runs as it approaches the Indian Ocean, i.e. towards the southeast.
    • Kenya, on the other hand, argues that the territorial southeast border should take a 45-degree turn as it reaches the sea, and then run in a latitudinal direction, i.e. parallel to the equator.
    • Such an arrangement would be advantageous for Kenya, whose coastline of 536 km is more than 6 times smaller than Somalia’s (3,333 km).

    Why is this area important?

    • The triangular area thus created by the dispute is around 1.6 lakh sq km large and boasts of rich marine reserves.
    • It is also believed to have oil and gas deposits.
    • Both Somalia and Kenya have accused each other of auctioning off blocks from this area, Al Jazeera reported.

    How have Kenya and Somalia tried to resolve the dispute?

    • After negotiations to resolve the issue bilaterally failed, Somalia in 2014 asked the ICJ to adjudicate.
    • Kenya resisted, arguing that the world court did not have jurisdiction to hear the case.
    • In 2009 both countries had a commitment to settle the dispute out of court.
    • However, in February 2017, the ICJ ruled that it did have the right to rule in the case, and in June 2019 said that it would begin public hearings.
    • These hearings never took place, as Kenya successfully applied to have them postponed thrice– the last one being in June 2020, when it cited difficulties due to the Covid-19.

  • [pib] Mission Sagar-IV

    As part of Mission Sagar-IV, Indian Naval Ship Jalashwa has arrived at Port Anjouan, Comoros to deliver 1,000 Metric Tonnes of rice.

    Mission SAGAR, unlike other missions, can create confusion with the name and its purpose. It is not a military exercise. Make note of such special cases. UPSC can ask such questions as one-liner MCQs.

    Also note the location of the island country Comoros and its geostrategic significance.

    Mission Sagar

    • SAGAR is a term coined by PM Modi in 2015 during his Mauritius visit with a focus on the blue economy.
    • It is a maritime initiative that gives priority to the Indian Ocean region for ensuring peace, stability and prosperity of India in the Indian Ocean region.
    • The goal is to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and an increase in maritime cooperation.
    • It is in line with the principles of the Indian Ocean Rim Association.

    Earlier such missions

    • This is the second visit of an Indian Navy ship to the island country within a span of one year.
    • Earlier, as part of Mission Sagar-I, in May-June 2020, the Indian Navy had delivered essential medicines to the nation.
    • Mission Sagar-II was undertaken in May-June 2020, wherein India reached out to Maldives, Mauritius, Seychelles, Madagascar and Comoros, and provided food aid and medicines.
    • Sagar-III was undertaken in Sihanoukville Port, Cambodia.

  • The Quad’s importance to India’s strategic autonomy

    India is a member of both the Quad and the BRICS. Is not it the contradiction? The article answers this question and maps the transformation of India’s relation with the U.S. over the years.

    Is India’s participation in BRICS and Quad contradictory?

    • Global Times, the Chinese newspaper last week speculating on the implications of the historic Quad summit for the BRICS.
    • In calling the Quad a “negative asset” for the BRICS the Global Times was highlighting what it sees as a contradiction in India’s participation in both the forums.
    • The paper argues that India has worsened “India-China and India-Russia relations” and halted progress “in the development of BRICS and SCO”.
    • Global Times warns that if India continues to get closer to Washington, India “will eventually lose its strategic autonomy”.

    Understanding India’s strategic autonomy

    • “Strategic autonomy” is the framework that guided Delhi’s international relations since the Cold War.
    • In the early 1990s, strategic autonomy was about creating space for India against the overweening American power.
    • Why the space was needed? It was mainly because of the U.S. stance on two important aspects: Kashmir issue and nuclear program.
    • President Bill Clinton had questioned the legitimacy of Jammu and Kashmir’s accession to India and declared the US’s intent to resolve Delhi’s Kashmir dispute with Pakistan.
    • Washington insisted that rolling back India’s nuclear and missile programmes was a major objective of US foreign policy.
    • All that changed over the last three decades.

    8 elements of  transformation of India’s relations with the U.S and China

    • A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer.
    • A few elements stand out.
    • First, China has become more assertive on the contested boundary, therefore, the support from the US and its Asian allies has been valuable.
    • Second, on the Kashmir question, China raises the issue at the UNSC while the US is helping India to block China’s moves.
    • Third, on cross-border terrorism, the US puts pressure on Pakistan and China protects Rawalpindi.
    • Fourth, the US has facilitated India’s integration with the global nuclear order while Beijing blocks Delhi’s membership of the Nuclear Suppliers Group.
    • Fifth, the US backs India’s permanent membership of the UNSC, China does not.
    • Sixth, India now sees the trade with China hollowing out India’s manufacturing capability.
    • Its objective on diversifying its economy away from China is shared by the US and the Quad partners.
    • Seventh, India opposes China’s Belt and Road Initiative as a project that undermines India’s territorial sovereignty and regional primacy.
    • India is working with Quad partners to offer alternatives to the BRI.
    • Finally, India sees China’s rising military profile in the subcontinent and the Indian Ocean as a problem and is working with Washington to redress the unfolding imbalance in India’s neighbourhood.

    India’s approach to BRICS and SCO

    • The BRICS was part of India’s strategy in the unipolar moment that dawned at the end of the Cold War.
    • India’s current enthusiasm for the Quad is about limiting the dangers of a unipolar Asia dominated by China.
    • But India will continue to attach some value — diplomatic if not strategic — to a forum like the BRICS.
    • After all, the BRICS forum provides a useful channel of communication between Delhi and Beijing at a very difficult moment in the evolution of their bilateral relations.
    • The BRICS is also about India’s enduring partnerships with Russia, Brazil, and South Africa.
    • India also values its ties with the Central Asian states in the SCO.
    • The BRICS could certainly become a productive forum someday — when Delhi and Beijing mitigate their multiple contentions.

    Consider the question “A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer. Examine the elements that support this underlying transformation of India’s relationship with the two countries.”

    Conclusion

    No amount of words in a BRICS declaration can hide the sharpening contradictions between India and China today. The absence of joint statements did not mask the growing strategic congruence among the Quad nations in recent years.

  • Explained: The Cairn Tax Dispute

    In December 2020, a three-member tribunal at the Permanent Court of Arbitration in the Netherlands ruled against India in its long-running tax dispute with the U.K.-based oil and gas company Cairn Energy.

    PCA Ruling against India

    • The tribunal ordered India to pay about $1.4 billion to the company.
    • Following this, Cairn Energy has successfully moved courts in five countries, including the US and the UK to recognise its claim as per the arbitration award.
    • The Netherlands, France, and Canada are the other three countries.
    • Such recognition by courts opens the door for Cairn Energy to seize assets of the Indian government in these jurisdictions by way of enforcing its claim, in case the latter doesn’t pay its dues.

    What is the dispute about?

    • The dispute started in early 2014 when Indian tax authorities started questioning Cairn Energy requesting information on the group’s reorganization in the financial year 2006-07.

    Issue over the tax due

    • This escalated, and by 2015, the authorities had sent the company a draft assessment order, assessing in the process that there was a principal tax amount of $1.6 billion that was due.
    • The year in reference, 2006-07, was one in which big corporate changes and developments took place in Cairn Energy.

    Basis of the tax demand: Sale of Shares

    • It was the year in which it not only undertook a corporate reorganization but also floated an Indian subsidiary, Cairn India, which in early 2007 got listed on the Indian Stock Market.
    • Through the corporate reorganization process, Cairn Energy had transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India.
    • But the tax authorities claimed that in the process of this reorganization, Cairn Energy had made capital gains worth ₹24,500 crores.
    • This, the department asserted, was the basis of the tax demand.

    Is this case similar to Vodafone’s battle with the government?

    • The Vodafone case in 2007 was triggered by Hong Kong’s Hutchinson Telecommunications’ sale of its stake in India’s Hutchinson Essar to Vodafone based out of the Netherlands.
    • The Hong Kong firm made a capital gain on this, which the Indian tax authorities deemed fit to tax.
    • They held that Vodafone should have withheld the tax, and therefore imposed liability on it.
    • The Supreme Court quashed the taxman’s demand that the sale of shares, in this case, would amount to transfer of a capital asset within the meaning of Section 2(14) of the Indian Income Tax Act”.

    What governs the Sale of Shares?

    • In the Union Budget of 2012, the Income Tax Act, 1961 was amended to make sure that even if a transfer of shares takes place outside India, such a transfer can be taxed.
    • This was done when the value of those shares is based on assets in India. And this was applied retrospectively.

    Cairn won over Retrospection

    • The action against Cairn Energy was based on this move.
    • India lost its arbitration case against Vodafone as well, with the government being asked to fork out around ₹80 crores.

    What happened after the tax claims in the Cairn Energy dispute?

    • After receiving a draft assessment order from the tax authorities, Cairn UK Holdings Ltd. appealed before the Income Tax Appellate Tribunal.
    • The tribunal, while providing the company relief from back-dated interest demands, however, upheld the main tax demand.
    • The company had initiated proceedings of arbitration under the U.K.-India bilateral investment treaty.
    • But during this time, the government sold Cairn’s almost 5% holding and seized dividends totalling ₹1,140 crore due to it from those shareholdings and set off a ₹1,590-crore tax refund against the demand.

    What was the main argument of Cairn Energy during the arbitration?

    • The claimants, Cairn Energy and Cairn UK Holdings argued that till the amendment was made to tax retrospectively in 2012, there was no tax on indirect transfers.
    • Indirect transfers here meant transfer by a non-resident of shares in non-Indian companies which indirectly held assets in India.
    • The application of the 2012 amendments, they alleged, constituted “manifest breaches” of the U.K.-India bilateral investment treaty.

    What was India’s defence during the arbitration?

    • India’s counter to the main charge of Cairn Energy was that its 2006 transactions were taxable irrespective of the 2012 amendments.
    • It argued that “Indian law has long permitted taxation where a transaction has a strong economic nexus with India”.
    • It said even if it is retrospective, it is “valid and binding applying the longstanding constitutional, legislative and legal framework in which the claimants have invested”.

    What did the arbitration tribunal rule?

    • The tribunal said the tax demand violated the U.K.-India bilateral investment treaty.
    • The tribunal said India “failed to accord Cairn Energy’s investments fair and equitable treatment” under the bilateral protection pact it had with the United Kingdom.
    • It also ordered India to compensate Cairn Energy and its subsidiary for “the total harm suffered” as a result of the breaches of the treaty.

    India’s way ahead

    • It has been reported in the media that India will appeal against the tribunal’s decision.
    • If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests.

    Back2Basics: Permanent Court of Arbitration (PCA)

    • It is an intergovernmental organization located in The Hague, Netherlands.
    • It is not a court in the traditional sense but provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
    • The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade.
    • The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states.
    • The organization is not a United Nations agency, but the PCA is an official United Nations Observer.

  • How scarcity of jobs is fuelling nativism in the States

    The article examines the factors contributing to the States pursuing domicile based employment policies.

    What is driving states to provide reservation to locals in private jobs

    • The Haryana government has recently passed legislation that mandates companies in Haryana to provide jobs to local Haryanvis first.
    • The unemployment rate in Haryana is the highest of all States in India, as per data from the Centre for Monitoring Indian Economy, or CMIE.
    • The cabinet of the government of Jharkhand approved similar legislation to reserve jobs for Jharkhand residents.
    • The Dravida Munnetra Kazhagam (DMK) in Tamil Nadu announced a similar proposal in its manifesto for the upcoming Assembly elections.
    • Such moves have attracted criticism from economists and commentators
    • Creating more jobs, not on reserving the few available ones’ is the popular refrain.
    • Creation of new jobs is not entirely in the control of State governments. It is a complex interplay of multitude of factors.

    Factors playing role in job creation

    • Job creation is obviously an outcome of the performance of the larger economy.
    • Chief Minister of a State in India has limited control over the management of the larger economy and thereby, attract new investors and businesses who can create jobs.
    • Businesses need abundant high quality skilled and unskilled labour, land at affordable prices, uninterrupted supply of electricity, water and other such ‘ease of business’ facilities for its expansion.
    • State governments in India can theoretically compete with each on these parameters.
    • Further, any tax advantages that a particular State can provide vis-à-vis others will increase its attractiveness.
    • But, realistically in India, in very few of these parameters can a poorer State compete against a richer State.

    Issues faced by the States

    • The availability of skilled local labour is a function of many decades of social progress of the State and cannot be retooled immediately.
    • After the introduction of the Goods and Services Tax (GST), State governments in India have lost their fiscal autonomy and have no powers to provide any tax concessions to businesses.
    • Beyond all these, the most critical factor in the choice of a location for a large business is what economists term as the ‘agglomeration effect’
    • Agglomeration effect is the ecosystem of supply chain, talent, good living conditions and so on attracting the other businesses.
    • So, a State with an already well-established network of suppliers, people, schools, etc. are at a greater advantage to attract even more businesses.
    • It is due to this agglomeration effect that the three richest large States (Maharashtra, Tamil Nadu and Karnataka) are three times richer than the three poorest large States (Bihar, Uttar Pradesh and Madhya Pradesh), in per-capita income, compared to 1.4 times in 1970.
    • In the absence of a level playing field and with no fiscal autonomy, it is enormously difficult for developing States in India to attract new investments and create new jobs.

    Consider the question “Examine the factors contributing to the nativist tendencies in the employment within the States. Suggest the measures to deal with the issue.”

    Conclusion

    Until the economic playing fields for the various States are levelled and much greater fiscal freedom provided to the States, “don’t protect but create jobs” will only remain a topic of a hollow lecture and moral sermons.