Urban Transformation – Smart Cities, AMRUT, etc.

[op-ed snap] Cities at crossroads: Federalism for the city

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Problems with urbanization and ways to improve it


CONTEXT

It is time to reflect on what should be the priorities in fixing our cities. The scale of the challenge is massive whether we look at the availability of clean drinking water, unpolluted air, quality of public transport, traffic management and parking, integrated planning of transport and land use, law and order, management and safe disposal of solid waste that is generated, treatment of waste water and effluents, and affordable housing.

Importance of Cities

  • Rapid economic growth in any country is associated with a decline in the share of agriculture and an increase in the shares of manufacturing and services in its GDP, and this involves greater urbanisation.
  • Going forward, as we try to achieve rapid growth which is necessary to provide growing employment opportunities for our young work-force, we need to position our cities as drivers of the structural transformation of the Indian economy.
  • UN projections suggest that India’s urban population will increase from 461 million in 2018 to 877 million in 2050, with India contributing the largest share of global urban population growth from 2018 to 2050.
  • State governments have the principal responsibility for urban development. But in order to deliver, they can and should ensure that city governments are sufficiently empowered to get the job done.
  • This requires strengthening the finances of these governments, building their capacity to take on the new challenges that urbanisation brings, and providing an enabling environment through legislative and administrative support.

No  transformative action on devolution

  • The 74th Constitutional Amendment of 1992 gives the state governments the power to transfer a set of 18 legitimate municipal functions to the municipal governments and also devolve finances to them to enable them to perform these functions and organise the delivery of the public services.
  • Town planning — the golden goose — was not typically transferred.
  • Also, action on devolution of funds to urban local governments has been unpredictable and hopelessly inadequate.
  • The Government of India must work towards amending the Constitution to undo the injustice that has been meted out to local governments.

 

Past efforts in strengthening the foundation

  • In the past decade or so, the Centre has come to recognise that urbanisation is set to accelerate with India’s rapid growth.
  • First, the UPA government launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awas Yojana as centrally sponsored schemes.
  • The NDA government followed up with a number of their own urban development missions like Swachh Bharat, AMRUT, Smart Cities Mission, and Housing for All.

State’s Role

  • An important point to note is that the national missions could deliver only where the state governments were pro-active in bringing about the change.
  • Only a few state governments have been able to come forward to realise the potential offered by the national missions.
  • The missions played an additional role in igniting a competitive spirit among the state governments in the delivery of public services.

Way Forward

  • A simple solution would be for the Government of India to introduce an incentive grant system whereby states which devolve funds to some desired degree get to top up the financial grant from the Centre.
  • This should be limited to second-tier cities, which are crucial to a new urbanisation thrust.
  • Metropolitan cities need such grants much less, since states can help them raise resources by empowering them to unlock land value. They are also better placed to develop PPPs with viable revenue models to attract private funds.

Conclusion

Essentially, co-operative federalism needs to go deeper, below the state level. There are no shortcuts to improving the state of our cities. The state governments need to decentralise, devolve and empower the cities. We, as responsible citizens, need to engage with the government to find collective solutions while at the same time, holding the government accountable.

Foreign Policy Watch: India-SAARC Nations

[op-ed snap] Eastward course

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : India's focus on BBIN is a better alternatice to SAARC.


CONTEXT

It is tempting to see Prime Minister Narendra Modi’s invitation to the leaders of a Bay of Bengal forum for the inauguration of his second term, as a “snub to Pakistan”.

Rational behind Marginalising SAARC

  • But the talk of a snub misses the story of the larger regional dynamic that has emerged over the last few years.
  • When he travelled to the Kathmandu summit of the South Asian Association for Regional Cooperation in Kathmandu at the end of 2014, PM Modi may have figured out that the future of SAARC was bleak.
  • At the summit, Nawaz Sharif pulled out of regional connectivity agreements that were ready for signature.
  • Officials from Islamabad were very much part of the prolonged and painful negotiations to finalise the agreements.
  • Quite clearly, the Pakistan Army in Rawalpindi had pulled the plug at the very last minute.
  • The fiasco at Kathmandu evidently led the PM to shift the focus to India’s sub-regional cooperation within South Asia with Bangladesh, Bhutan, Nepal.
  • Instead of holding the rest of the region hostage, India chose to expand regionalism with the BBIN forum.
  • The PM also looked beyond SAARC to revive the moribund BIMSTEC regional forum that brings together five South Asian countries (Bangladesh, Bhutan, India, Nepal, Sri Lanka) and two South East Asian countries (Myanmar and Thailand).

Pakistan still holds importance

  • That it is not invited to the PM’s oath-taking ceremony on Thursday does not mean Pakistan will disappear from India’s foreign policy agenda.
  • During the last few years, Modi has demonstrated his political will for either peace or war with Pakistan.
  • If he travelled to Lahore on short notice at the end of 2015, he was ready to attack a terror camp at Balakot in February 2018. Modi will have an opportunity to engage Pakistan Prime Minister Imran Khan at a Central Asian summit in Bishkek, Kyrgyzstan next month.
  • Any productive meeting with the Pakistani leadership needs significant preparation and hopefully, there are back channel conversations underway.

Conclusion

  • While Pakistan to the west is a big challenge that needs to be carefully managed, the east is full of opportunities — marked by the economic resurgence of Bangladesh and Myanmar that form a bridge to the dynamic region of East Asia.
  • Modi has talked the talk on BIMSTEC in the first term. He must now walk the walk, by committing substantive resources for the strengthening of BIMSTEC and removing the multiple obstacles within India for the rapid economic integration of the Bay of Bengal littoral.
Economic Indicators-GDP, FD, etc

[op-ed snap] Government’s key agenda must be to accelerate growth

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Economic growth should be top agenda of new government.


CONTEXT

Accelerating economic growth must be on top of the agenda of the new government. It is only a fast-growing economy that will generate the surpluses which are necessary to address many of our socio-economic problems and to provide social safety nets.

The decline in the investment rate

  • In current prices, the ratio of Gross Fixed Capital Formation to Gross Domestic Product has stayed low at 28.5% between 2015-16 and 2017-18. In 2018-19 it is estimated at 28.9%. In 2007-08, it was as high as 35.8%. In constant prices, the ratio, has, however, shown a smaller decline from the peak.

Reviving investment

  • The bulk of public investment comes from public sector enterprises, including the Railways.
  • What is needed is for the government to interact with all public sector units and prepare a programme of public investment for 2019-20.

Long term view of Public Sector

Public sector units can take a longer-term view than the private sector. A strong public investment programme can be a catalyst of private investment. In a situation such as the present one, it can crowd in private investment.

Industry government participation

Second, there have to be sector- or industry-wise discussions between the government and industrialists to understand the bottlenecks that each industry faces in making investment and take actions to remove them.

  • Banks are under stress and the ratio of non-performing assets (NPAs) has risen.
  • We need to resolve this issue as early as possible so that banks can get back to lending at a significant pace. In the absence of term lending financial institutions, banks provide both working capital and long-term loans.
  • That is why resolving the issue of NPAs is critically important for larger flow of long-term funds.

Jobs and growth

  • The answer to the problem of jobs is only growth. It is faster growth and faster investment which will generate employment.
  • Sectors such as IT and the financial system, which provided attractive employment to young educated entrants to the labour market in the past, have their own problems.
  • But an improvement in the financial system may trigger some new jobs. Ultimately, it is overall growth which is key to more employment.

Rural Demand –

  • The main concern is the slowdown in rural demand, which can affect the off-take of consumer goods.
  • Agrarian distress, which is the cause of the slowdown in demand, needs to be tackled on a priority.
  • Where distress is due to a fall in prices, the best course of action is to resort to limited procurement so that the excess over normal is procured by the government.

Increase in agricultural output –

  • As far as increase in agricultural output in the short run is concerned, the monsoon is a big question mark.
  • Nothing can be done about it except changing the cropping pattern depending on rainfall.
  • Over the medium term, more attention must be paid to increasing agricultural productivity through consolidation of land holdings and spreading better techniques of cultivation.

Goods and services act

  • The government should get tax authorities, industrialists, traders and, particularly, exporters to sort out the issues together.
  • The Insolvency and Bankruptcy Code was another significant step taken in the last few years.
  • Even here there are some bottlenecks and the government must address them.

Land Reforms –

Compulsory acquisition of land is the antithesis of competition and should be resorted to only in limited cases where the public interest is involved.

Labour Reforms – 

  • Labour reforms should wait until the economy has picked up steam and moved to a higher growth path.
  • Only in these circumstances will there be less resistance.

 

Conclusion

To conclude, besides economic factors, non-economic factors are also critically important to revive what are often described as ‘animal spirits’. Investment today is based on expectations of future earnings. Thus it is an act of faith in the future. For this to happen, there must be social and political tranquillity.

Foreign Policy Watch: India-United States

US has removed India from its currency monitoring watchlist

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Currency Monitoring Watchlist

Mains level : Impact of the move


News

  • The US administration under Trump has removed India from its currency monitoring watchlist.

Countries in the list

  • India, alongside China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.
  • While India and Switzerland have not been mentioned in the latest list, the US has added Ireland, Italy, Malaysia, Singapore and Vietnam to the list, with China continuing to figure in it.
  • While the designation of a country as a currency manipulator does not immediately attract any penalties, it tends to dent the confidence about a country in the global financial markets.

The criterion

  • Countries with a current-account surplus equivalent to 2 per cent of gross-domestic product are eligible for the list, according to modifications made in the new list, down from 3 per cent earlier.
  • Other thresholds include repeated intervention in the currency markets and a trade surplus with the US of at least $20 billion

Why is this significant?

  • Tweaks in currency policy has been used by the Trump administration to browbeat countries that, from Washington’s perspective, have hurt American businesses and consumers.
  • For India, this comes amid the ongoing trade spat between Washington and New Delhi.
  • Trump has repeatedly claimed that India is a “tariff king” and imposes “tremendously high” tariffs on American products.
Foreign Policy Watch: India-China

India proposes reply to Wuhan

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SCO

Mains level : Wuhan Spirit


News

  • India has proposed that the next informal summit between PM Modi and Chinese President Xi Jinping be held in October in Varanasi.

The Wuhan Spirit

  • The first informal summit between the two leaders took place in Wuhan in Hubei province in China on April 27-28, 2018.
  • The government saw the value of the Wuhan informal summit — no border stand-offs in a politically sensitive year.
  • Particularly, they established mutual trust and they jointly planned for the future of improvement and the strengthening of the China-India relationship.
  • India and China were currently limiting the threshold of their differences so that overall development of ties remained unhampered.
  • They agreed to significantly enhance efforts to build on the convergences through the established mechanisms in order to create the broadest possible platform for the future relationship.
  • They agreed to handle the differences through peaceful discussion within the context of the overall relationship, bearing in mind the importance of respecting each other’s sensitivities, concerns and aspirations.

Why Varanasi?

  • The choice of Varanasi is because PM wants to invite Xi to his parliamentary constituency, just like the Chinese President had hosted him in Xiamen for the BRICS summit.
  • More detailed discussions are expected to take place when the two leaders meet in Kyrgyz Republic capital, Bishkek, on the sidelines of the SCO summit in June.

Why informal meets are necessary?

  • In June 2017, just before the Doklam incident rocked the relationship, the two leaders had met on the sidelines of SCO summit in Astana, Kazakhstan.
  • The leaders had come up with the formulation that “differences should not become disputes” at that meeting.
  • After the Doklam border stand-off was resolved in August 2017, just before the BRICS summit in Xiamen in China in September 2017, the Astana consensus evolved in June 2017 was recalled.
  • The two sides had then discussed the possibility of the informal summit, the idea for which had been first floated in Astana itself.
  • Over the next seven months, the two sides had worked on holding the informal summit in Wuhan in April.

New peak of cooperation

  • The understandings between two Asian giants reached during the Wuhan summit — a new template for the leaders of the two countries to have a long meeting.
  • After the Wuhan summit, the armed forces of the two sides were given “strategic guidance” by the two leaders, and 2018 and 2019 have remained peaceful – without any major incident along the LAC.
  • Beijing — in a single stroke, by lifting the hold on Azhar’s listing as global terrorist under the UNSC 1267 — has created more political space for engagement between the two sides.

Way Forward

  • Many caution that the relationship is prone to ups and downs as was visible during Xi’s Gujarat visit in September 2014 — when Modi had hosted Xi while there was an ongoing stand-off at the border in Chumar.
  • Also, the issue of how India will respond to the Belt and Road Initiative ahead holds the key to the future of the relationship.
Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Regulatory Sandbox for fintech testing

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Regulatory Sandbox

Mains level : Read the attached story


News

  • The SEBI has released a discussion paper on a framework for a ‘regulatory sandbox,’ wherein companies dealing with financial technologies can test new technologies and products in a live market environment.

What is Regulatory Sandbox?

  • A sandbox approach provides a secure environment for fintech firms to experiment with products under supervision of a regulator.
  • The concept of a regulatory sandbox or innovation hub for fintech firms was mooted by a committee headed by then RBI executive director Sudarshan Sen.
  • The panel, which submitted its report in November 2017, had called for a regulatory sandbox to help firms experiment with fintech solutions, where the consequences of failure can be contained and reasons for failure analysed.
  • If the product appears to have the potential to be successful, it might be authorised and brought to the broader market more quickly.
  • The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services.

Why such move?

  • Fintech or financial technology companies use technology to provide financial services such as payments, peer-to-peer lending and crowdfunding, among others.
  • According to NITI Aayog, India is one of the fastest growing fintech markets globally, and industry research has projected that $1 trillion, or 60% of retail and SME credit, will be digitally disbursed by 2029.
  • The Indian fintech ecosystem is the third largest in the world, attracting nearly $6 billion in investments since 2014, the think tank said.
  • A global survey ranked India, with 1,218 fintech firms, second in terms of fintech adoption, with an adoption rate of 52 per cent.

Issue of Data Privacy

  • The risks for fintech products may arise from cross-border legal and regulatory issues where confidentiality and customer protection are major areas that needed to be addressed.
  • The proposed Personal Data Protection Bill, 2018, had categorised all financial data as “sensitive personal data”, which is not the case for many European countries.
Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Social and Labor Convergence Programme (SLCP)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Social and Labor Convergence Programme (SLCP)

Mains level : Labour reforms in India


News

  • The ‘Social and Labor Convergence Programme (SLCP),’ an initiative to have a standard-neutral, converged assessment framework for the textile and clothing industry, will be launched in India very soon.

Social and Labor Convergence Programme (SLCP)

  • The SLCP is an initiative led by the world’s leading manufacturers, brands, retailers, industry groups, (inter)governmental organizations, service providers and civil society organizations, to eliminate audit fatigue by replacing current proprietary tools with a standard-neutral Converged Assessment Framework.
  • The objective of the programme is to improve the working conditions in textile units by allowing resources that were previously designated for compliance audits to be redirected towards the improvement of social and labour conditions.

What SCLP actually is?

  • This is a voluntary adoption by the textile and clothing makers.
  • The SLCP would be holding free seminars at Mumbai, Bengaluru, Tiruppur, and New Delhi and will launch operations in India, China, Sri Lanka and Taiwan this month.
  • The SLCP is not a code of conduct or compliance programme.
  • The converged assessment framework is a tool developed by the SLCP, which provides a data set with no value judgment or scoring.
  • It is, however, compatible with existing audit systems and codes of conduct. This means that the same data set can be used by a wide-range of stakeholders.
  • It eliminates the need for repetitive audits to be carried out on the same facility.

Impact

  • For the exporting units, it will reduce the number of social audits and facilitate measuring of employment practices, thus improving working conditions and employee relations.
  • It also redeploys resources towards improvement actions and fosters collaboration between supply chain partners.
  • The benefits of SLCP for facilities are that it addresses audit fatigue by reducing the number of social audits and facilitates measuring of employment practices, thus improving working conditions & employee relations.
  • It also redeploys resources towards improvement actions and fosters trust and collaboration between supply chain partners.
  • SLCP will be holding a series of free one-day seminars in four centres to introduce facilities and their business partners to the SLCP process.