June 2019
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[op-ed snap] Ocean of neighbours

Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Revival of bimstec is a strategic step in view of neighbourhood integration Policy.


CONTEXT

Prime Minister Narendra Modi’s first visit abroad in his second term to Maldives and Sri Lanka is being billed as the reaffirmation of Delhi’s traditional diplomatic emphasis on “neighbourhood first”.

Focus on ocean Island states

  • The visit to Male and Colombo offers the opportunity to firmly place the Indian Ocean island states into India’s regional geography.
  • Modi must now expand the ambit of the strategy to draw in Madagascar, Comoros, Reunion and Diego Garcia. Reunion is part of France and Diego Garcia hosts a major American military facility.
  • Similarly, Delhi should focus on a number of small islands that dot the sea lines of communication in the eastern Indian Ocean — the Cocos and Keeling islands belonging to Australia come readily to mind.

Dysfunctioning SAARC

  • At the only SAARC summit during his first term, held in Kathmandu at the end of 2014, Modi saw the forum’s dysfunction.
  • It could not wrap up regional connectivity agreements negotiated for years before, thanks to Pakistan’s decision to pull the plug at the last minute.
  • With SAARC going nowhere, Modi turned to the BIMSTEC grouping, invited its leaders to join the BRICS summit at Goa during 2016, and again last month for the inauguration of Modi’s second term.
  • Delhi should have no problem recognising that Islamabad is not ready for economic integration with India; it wants a settlement of the Kashmir question to precede any economic and political cooperation with India. That might take a while.

Revival of BIMSTEC

  • Modi’s focus on BIMSTEC was as much about rediscovering a forgotten regional organisation as it was about putting the Bay of Bengal on India’s mental map.
  • Over the last few years, Colombo has been persistent in claiming an “Indian Ocean identity” rather than a South Asian identity.
  • The future of the Maldives, sitting astride one of the world’s busiest sea lines of communication, is in the Indian Ocean.
  • Both of them are acutely conscious of their growing maritime salience and have not been hesitant to develop all-round political leverage.

Realities to be acknowledged

  • First, it needs to recognise that island states and territories — including the smallest pieces of real estate — are coming into strategic play amidst the return of great power rivalry to the littoral.
  • Second, the island states in the south western Indian Ocean form a coherent group and must be dealt within an integrated framework.
  • In eastern Indian Ocean, a focus on developing the Andaman Islands opens up possibilities for sub-regional cooperation with Thailand, Indonesia and Singapore.
  • Third, India needs to develop its own national capabilities — especially in the delivery of strategic economic and security assistance to the island states. Without that the ambitious goals identified under the SAGAR vision will remain elusive.

Conclusion

Finally, in his SAGAR vision, Modi signalled India’s readiness to work with other powers in promoting regional prosperity and security. There are big possibilities for collaboration with France, the US, Australia and Japan in different corners of the Indian Ocean. The joint bidding by India and Japan for the development of East Container Terminal in the Colombo port underlines the potential.

Foreign Policy Watch: India-SAARC Nations

[op-ed snap] Eye on growth

Mains Paper 3 : Mobilization Of Resources |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Rate cut signals economy is in crisis and measures are required to boost growth.


CONTEXT

As was expected, the monetary policy committee (MPC) of the Reserve Bank of India delivered its third consecutive rate cut of 25 basis points, citing significant weakness in growth impulses.

Background

  • The repo rate now stands at 5.75 per cent. Significantly, all six members of the MPC, including Viral Acharya and Chetan Ghate who had earlier voted against monetary easing, opted not only for a loose monetary policy, but also a shift in stance from neutral to accommodative, opening the door for more rate cuts in the future.
  • The message is clear: Inflation remains contained, while the slowdown in economic activity is deeper than what was believed.

Inflation Front

  • On the inflation front, recent data points towards a broad-based pick up in prices of several food items, increasing the prospects of higher retail inflation in the coming months.
  • However, the MPC isn’t perturbed, as it expects a larger reversal in prices during autumn and winter.
  • Further, with demand weakening, core inflation has moderated, as have households expectations of three months ahead inflation.
  • The RBI now expects retail inflation at 3-3.1 per cent in the first half of FY20, rising thereafter to 3.4-3.7 per cent in the second half, well within the 4 (+/-2) per cent band.

Reasons to worry

  • In the economy though, there is reason to worry.
  • In February, the RBI had projected the economy to grow at 7.4 per cent in FY20.
  • It then lowered its forecast to 7.2 per cent in the April, and has now cut it to 7 per cent.
  • But with the underlying drivers of growth sputtering, private consumption, investment and export growth remain subdued, and with limited fiscal space, achieving even this may be difficult.

Does transmission work?

Questions –

  •  Will cuts in the repo rate translate to lower lending rates?
  • Will it boost consumption and investment demand?
  • In the policy document, the RBI noted that while the transmission of the previous two repo cuts was 21 bps to the lending rate on fresh rupee loans, the lending rate on outstanding loans increased by 4 bps as “past loans continue to be priced at higher rates”.

Optimistic notion –

  • Perhaps, with liquidity moving into surplus mode — liquidity in the system turned into an average daily surplus of Rs 66,000 crore after being in deficit in April and most of May — transmission will improve.
  • The decision to review the liquidity management framework by constituting an internal working group is a positive signal.

Conclusion

The dovish tone of the policy increases the likelihood of another rate cut in August, presumably once concerns over fiscal slippage are addressed after the budget is presented, and greater clarity emerges on the monsoon. Further rate cuts though will depend on the extent of the growth slowdown and the trajectory of inflation.

RBI Notifications

[op-ed snap] Breaking the algorithm

Mains Paper 3 : Cyber Security |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Algorithm collusion should be monitored to promote transparent market.


CONTEXT

Businesses are increasingly utilising algorithms to improve their pricing models, enhance customer experience and optimise business processes. Governments are employing algorithms to detect crime and determine fines. Consumers are benefitting from personalised services and lower prices. However, algorithms have also raised concerns such as collusions and malfunctioning, privacy, competition issues, and information asymmetry.

  • Automated systems have now made it easier for firms to achieve collusive outcomes without formal agreement or human interaction, thereby signalling anti-competitive behaviour.
  • This results in “tacit algorithmic collusion”, an outcome which is still not covered by existing competition law.

Case study –  This can occur in non-oligopolistic markets too. In 2015, US Federal Trade Commission fined David Topkins (former e-commerce executive of a company selling online posters and frames), for fixing the price of certain posters sold through Amazon Marketplace using complex algorithms, impacting consumer welfare and competition adversely. 

Security Concerns from collusion alogotithm

1.Negligence of private data

  • In order to enjoy services at low or zero price, consumers neglect the value of their data.
  • Access to easily procurable data such as Facebook “likes” can be used to target only advantageous customers circumventing anti-discrimination mechanisms.

2.Ransomware attack –

  • Application of advanced algorithms have also resulted in an increase in ransomware attacks.
  • A devastating cyber attack — the WannaCry ransomware attack — hit the world in May 2017, affecting around 2,30,000 computers across 150 countries.

3.Competition –

  • Important concerns pertain to “competition” as well.
  • Processing of large datasets through dynamic algorithms generate real-time data “feedback loops”, impacting competition adversely.
  • As more users visit select platforms, not only more data, but data with greater reliability is collected, allowing firms to more effectively target customers. Consequently, more users feedback into this loop. 

Case Study – That Google has been estimated to charge a higher cost-per-click (CPC) than Bing, a competitor, suggests that advertisers attribute a higher probability of converting a viewer of Google’s ads into a customer.

4. Complexity of system –

  • Then, we have evolving machine-learning algorithms ranging from voice recognition systems to self-driving cars.
  • Even high-profile programmers/developers may not be able to trace the working of such algorithms making nearly impossible the identification of any anti-competitive practice.

Conclusion

A rethink of public policy is absolutely essential if non-desirable impacts of artificial intelligence on human race are to be arrested.

Cyber Security – CERTs, Policy, etc

Explained:  Cabinet Committees

Mains Paper 2 : Ministries & Departments Of The Government |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Cabinet Committees

Mains level : Conduct of Business in Parliament


News

  • Recently the Union government has released the composition of eight Cabinet Committees, including two new ones — one on Investment, the other on Employment and Skill Development.

What are these Cabinet Committees for?

Transaction of Business

  • The executive works under the Government of India Transaction of Business Rules, 1961.
  • These Rules emerge out of Article 77(3) of the Constitution, which states: The President shall make rules for the more convenient transaction of the business of the GoI, and for the allocation among Ministers of the said business.
  • The Rules mandate the minister-in-charge of a department (ministry) to dispose of “all business allotted to a department under” him or her.
  • However, “when the subject of a case concerns more than one department”, no decision can be taken “until all such departments have concurred, or, failing such concurrence, a decision thereon has been taken by or under the authority of the Cabinet”.

Who constitutes the Cabinet Committees?

  • The Prime Minister constitutes Standing Committees of the Cabinet and sets out the specific functions assigned to them. He can add or reduce the number of committees.
  • Ad hoc committees of ministers, including Groups of Ministers, may be appointed by the Cabinet or by the Prime Minister for specific matters.

Key Committees

Appointments:

  • Of the eight panels constituted by Prime Minister Narendra Modi on Thursday, the most vital is the Cabinet Committee on Appointments.
  • This Committee decides on all important empanelments and shift of officers serving on Central deputation.

Accommodation:

  • The Cabinet Committee on Accommodation determines the guidelines or rules with regard to the allotment of government accommodation.
  • It also takes a call on the allotment of government accommodation to non-eligible persons and organisations as also the rent to be charged from them.
  • It can consider the allotment of accommodation from the General Pool to Members of Parliament.
  • It can consider proposals for shifting existing Central Government Offices to locations outside the capital.

Economic Affairs

  • The Cabinet Committee on Economic Affairs is supposed to review economic trends, problems and prospects of the country.
  • It works for evolving a consistent and integrated economic policy, coordinate all activities requiring policy decisions at the highest level, deal with fixation of prices of agricultural produce and prices of essential commodities.
  • It considers proposals for investment of more than Rs 1,000 crore, deal with industrial licensing policies and review rural development and the Public Distribution System.

Parliamentary Affairs

  • The Cabinet Committee on Parliamentary Affairs draws the schedule for Parliament sessions and monitors the progress of government business in Parliament.
  • It is the only CC headed by Union Home Minister where all other are headed by PM.
  • It scrutinises non-government business and decides which official Bills and resolutions are to be presented.

Political Affairs:

  • The Cabinet Committee on Political Affairs addresses problems related to Centre-state relations.
  • It also examines economic and political issues that require a wider perspective but have no internal or external security implications.
  • It is also known as super cabinet.

Security:

  • The Cabinet Committee on Security deals with issues relating to law and order, internal security and policy matters concerning foreign affairs with internal or external security implications.
  • It also goes into economic and political issues related to national security. It considers all cases involving capital defence expenditure more than Rs 1,000 crore.
  • It considers issues related to the Department of Defence Production and the Department of Defence Research and Development, Services Capital Acquisition plans and schemes for procurement of security-related equipment.

Investment:

  • The Cabinet Committee on Investment will “identify key projects required to be implemented on a time-bound basis”, involving investments of Rs 1,000 crore or more, or any other critical projects, as may be specified by it, with regard to infrastructure and manufacturing.
  • It will prescribe time limits for giving requisite approvals and clearances by the ministries concerned in identified sectors.
  • It will also monitor the progress of such projects.

Employment:

  • The Cabinet Committee on Employment and Skill Development is supposed to provide “direction to all policies, programmes, schemes and initiatives for skill development aimed at increasing the employability of the workforce.
  • It shall work for effectively meeting the emerging requirements of the rapidly growing economy and mapping the benefits of demographic dividend.
  • It is required to enhance workforce participation, foster employment growth and identification, and work towards removal of gaps between requirement and availability of skills in various sectors.
  • The panel will set targets for expeditious implementation of all skill development initiatives by the ministries and to periodically review the progress in this regard.
  • The addition of the two committees is indicative of the new focus areas for the government. The goal of both is new jobs.

Election panel wants to revisit rule on punishment to voters for false mismatch claims

Mains Paper 2 : Representation Of People's Act |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Section 49MA

Mains level : Electors awareness and associated issues


News

  • The Election Commission may “revisit” a rule that provides for prosecution of an elector if a complaint of EVM and VVPAT machine malfunction turns out to be false.

Rule 49 MA

  • A voter who claims that the electronic voting machine (EVM) or the paper trail machine did not record his or her vote correctly is allowed to cast a test vote under Rule 49 MA of the Conduct of Election Rules.
  • But, if the voter fails to prove the mismatch, poll officials can initiate action against the complainant under section 177 of the Indian Penal Code.
  • Section 177 applies in the case as it deals with giving false submission.
  • The IPC section states that the person “shall be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both…”

Why such penalty?

  • The EC has all along maintained that if there is no penal provision, people may make false claims.
  • The penal provision is used as an exception very rarely.
  • The intention of the provision must have been to “discourage” those who want to “disrupt” the electoral process by making such complaints.

 Arguments against 49MA

  • The Rule 49MA of ‘The Conduct of Elections Rules’ is termed unconstitutional as it criminalizes reporting of malfunctioning of EVMs and VVPAT machines.
  • The plea alleged that putting the onus on the elector in cases of arbitrary deviant behaviour of machines used in election process, infringes upon a citizen’s right to freedom of expression under the Constitution.
  • The burden of proof rests on the elector for reporting any deviant behaviour of EVMs and VVPAT machines, who will face criminal charges irrespective of whether the complaint was truthful and honest.
Electoral Reforms In India

RBI has cut lending rates for the third consecutive time

Mains Paper 3 : Indian Economy |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Repo and Reverse Repo

Mains level : Monetary policy decisions


News

  • The RBI has reduced the repo rate by 25 basis points (bps) to 5.75 per cent in the second bi-monthly monetary policy meet of the financial year 2019-20 (FY20).
  • It was a third straight interest rate cut by the RBI’s monetary policy committee (MPC).

What is Repo Rate?

  • REPO denotes Re Purchase Option – the rate by which RBI gives loans to other banks.
  • In other words, it is the rate at which banks buy back the securities they keep with the RBI at a later period.
  • Bank gives loan to the public at a higher rate, often 1% higher than REPO rate, at a rate known as Bank Rate.
  • RBI at times borrows from banks at a rate lower than REPO rate, and that rate is known as Reverse REPO rate.

Why has RBI cut repo rate

  • The RBI was widely expected to go for an interest rate cut amid dismal gross domestic product (GDP) growth, subdued investment and slowdown in consumption space.
  • Last week, government data showed GDP growth slowed to a five-year low of 5.8 per cent in the fourth quarter (Q4) of FY19.
  • Weak growth amid benign CPI inflation had created room for the Monetary Policy Committee to cut the repo rate by 50-75 bps through FY20E, beginning in June 2019.

Concern over the cut

  • The big concern is whether the transmission of the cut takes place adequately, in the sense of banks passing in the rate cut to customers.
  • This has not happened sufficiently in the case of the previous cuts.

Back2Basics

Monetary Policy Committee

RBI Notifications

Free transport for women in Delhi

Mains Paper 1 : Social Empowerment |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Women safety measures


News

  • Under a new proposal announced by the Delhi government, women will have the option to not pay for rides.
  • The move, which is at the stage of feedback and planning, has drawn various reactions.

Logic behind the move

  • The most common reason for any city incentivizing the use of public transport has been to tackle congestion on the roads.
  • The reasons given by the Delhi government are different.
  • One, to make it easier for women to move from informal and more unsafe modes of transport such as shared autos and cabs to more formal and safer modes such as the Metro.
  • Two, the government hopes that with women being able to travel for free, more of them, especially from the economically disadvantaged groups, would start working.

What’s so special with the move?

  • Globally, conversations around free public transport have revolved around decongestion and affordability, rather than safety.
  • One reason is that many of these experiments have been carried out in highly advanced Scandinavian countries with mostly safe public spaces and better reporting rates of crime against women.

Various Challenges

  • The proposal to make public transport free for women has no well known precedent anywhere in the world, and could be the first of its kind.
  • Studies on fully free public transport systems have underlined both positives and challenges.
  • In 1991, the Netherlands introduced a seasonal free-fare travel card for higher education students, which led to the share of trips made by students rising from 11% to 21%.
  • Fifty-two per cent of cyclists, and 34% of car users moved.
  • However, small European cities can hardly be an indicator for Delhi.
  • The population of all of the Netherlands is around 1.7 crore, much less than Delhi’s estimated 2 crore.
  • Average income levels are not comparable, and the public transportation system in Delhi is weaker than in most European countries.

Challenges of implementation

  • Delhi Transport Corporation (DTC) is looking at special passes for women.
  • But the Metro has automated fare collection (AFC) gates that require tokens or Metro cards — the Metro will have to either isolate entry or exit points for women.
  • Along with safety on public transport, last mile connectivity is a big issue.
  • For women, walking to and from the nearest bus stop or Metro station, especially during the early mornings and late evenings, remains unsafe in many places in the city.

Way Forward

  • The challenge for the Delhi government is to find the funds for the project.
  • According to the Delhi government, the cost of subsidizing women’s travel will be around Rs 1,200 crore annually.
  • However, studies show that operational costs frequently rise in the long run, and schemes become increasingly less viable.
  • The West has done it to battle road congestion and pollution.
  • We haven’t really found a similar project in developing countries. But perhaps this will make us the pioneers.
Women empowerment issues: Jobs,Reservation and education