[op-ed of the day] Governing India through fiscal math

Mains Paper 3 : Government Budgeting |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Concerns with maintaing Strict Fiscal Deficit approach


Note- Op-ed of the day is the most important editorial of the day. Aspirants should try to cover at least this editorial on a daily basis to have command over most important issues in news. It will help in enhancing and enriching the content in mains answers. Please do not miss at any cost.

CONTEXT

While it is important for a government to pursue a sound economic policy, including management of the public finances, it is yet another matter to make a fetish of any one aspect of it. The latter appears to govern this government’s approach to policy when the fiscal deficit is given pride of place in its self-assessment.

Thread of fiscal discipline

  • Soon after the Budget for 2019-20 was presented, one of the Finance Minister’s predecessors remarked that “fiscal prudence rewards economies”.
  • It figured in the most recent Economic Survey, and its anticipated magnitude for 2019-20 was the final statement in the Budget speech that had followed.
  • The Finance Minister had commenced the speech saying how the government was committed to fiscal discipline.

Fiscal discipline

  • In the context, “fiscal discipline” is understood as taking the economy towards the 3% of the gross domestic product.
  • Actually, the point is two-fold:
    • whether the fiscal deficit should be the sole index of fiscal management
    • what a reduction in the deficit would achieve.

Not always a perfect measure

While a sound fiscal policy is highly desirable, the magnitude of the fiscal deficit is not always and everywhere — think here of the state of the economy — a good measure of soundness.

 Overall imbalance in the Budget

  • First, the fiscal deficit reflects the overall imbalance in the Budget.
  • Embedded in the accounts of the government is the revenue account which is a statement of current receipts and expenditure.
  • A fiscal deficit may or may not contain within it a deficit on the revenue account, termed the “revenue deficit”.
  • The possible embeddedness of a revenue deficit within a fiscal deficit muddies the waters somewhat.
  • For movements in the overall, or fiscal, deficit by itself tell us nothing about what is happening to the revenue deficit.
  • A revenue deficit implies that the government is dissaving.
  • Therefore, unless the revenue deficit is kept explicitly in the picture, we cannot deduce the soundness of economic management from a mere reduction in the fiscal deficit.

Rewards yet to be seen

  • A revenue deficit of the Central government is relatively recent, having been virtually non-existent till the 1980s.
  • After that a rampant populism has taken over all political parties, reflected in revenue deficits accounting for over two thirds of the fiscal deficit such as the case today.

Implications of Revenue deficits

  • Revenue deficits have become structural in India by now.
  • This has three implications:
    • That the public debt is only bound to rise;
    • we are permanently borrowing to consume,
    • And leaving it to future generations to inherit the debt.

International borrowing

  • Of late an entirely new dimension has been added to fiscal management, but here again the appropriateness of conducting economic policy by reference to the magnitude of the fiscal deficit remains the issue.
  • In the last Budget the government has signalled its intention to borrow in foreign currency from the international market.
  • This is an innovation alright as the Government of India has so far never borrowed in the international markets, leaving it to public sector organisations and the private corporate sector to do so.

Justification of the move

  • In the Budget speech of the 17th Lok Sabha, the Finance Minister justified the move in terms of the very low share of foreign debt to GDP.
  • The proposal has received criticism, some of it focussing on the consequences of exchange rate volatility.

Concerns with it 

  • Benefits have been flagged too, such as that Indian sovereign bonds will attract a lower risk premium because the price of the foreign-currency-denominated sovereign bond will now be discoverable.
  • This though ignores the biggest lesson from the global financial crisis of 2007, that the market cannot be relied upon to price risk correctly.
  • And, both arguments overlook the foreign exchange constraint.
  • Dollar-denominated debt has to be repaid in dollars.
  • Right now our reserves are fairly high but this could change.
  • Oil prices could go back to where they were, the trade war initiated by U.S. President Donald Trump holds little prospect for faster export growth, and portfolio investment may flow out.
  • While these are only possibilities, they point to the need to ultimately base your borrowing plan on expected dollar earnings.
  • The opportunity offered by low global interest rates right now is not matched by the likelihood of robust export growth.

Conclusion

  • In the final analysis though, it is not the risk of exchange rate depreciation or stagnant exports or even capital flight that is the issue; it is the rationale for borrowing.
  • With revenue deficits the overwhelming part of the fiscal deficit, we would be borrowing to finance consumption.
  • Dollar denominated sovereign debt is just a matter of shifting this borrowing overseas.
  • That is the real issue.

 

Financial Inclusion in India and Its Challenges

[op-ed snap] Patients and victims

Mains Paper 2 : Health & Education |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Regulation of medical devices


CONTEXT

  • Last year, a series of reports revealed the traumatic experiences of Indian patients who had received faulty hip implants manufactured by the pharma major, Johnson and Johnson
  • Another investigation has revealed that Johnson and Johnson paid hefty compensations to US patients who had received the defective implants.
  • In India, however, the company has challenged government orders to compensate 4,700 patients who had undergone hip replacement surgeries.
  • The reports also highlight that the story is more than that of corporate negligence.
  • That Johnson and Johnson continue to brazen it out in India has much to do with the regulatory deficit in the country.
  • The investigations pertain to implants manufactured under two brand names, ASR and Pinnacle.
  • Both products are not in the market currently.
  • Johnson and Johnson recalled ASR from the global market in 2010, while Pinnacle was withdrawn in 2013.

Recalling of medical Device

  • But recalling a medical device is not like recalling a consumer product.
  • Defective implants can cause crippling pain — even death.
  • Patients who receive such implants need regular monitoring. In several countries, registries track the health of such patients.
  • In fact, Johnson and Johnson’s recalling of ASR owes to the more than 15 warnings, between 2007 and 2009, issued to it by the Australian Joint Registry (though the company describes its decision as “voluntary”).
  • Pinnacle was pulled out of the market after a flurry of lawsuits in the US alerted the country’s Food and Drug Administration (FDA) about the device’s defects.

The slow reaction by India

  • In India, in contrast, regulators were slow to react.
  •  Maharashtra’s FDA red-flagged ASR a few months after Johnson and Johnson withdrew the product from the global market.
  • But it took another year for the Central Drugs Standard Control Organisation to ban the import of ASR.
  • Another year went by before the drug regulator issued an advisory to orthopaedic surgeons asking them to not implant ASR.

Defence by corporate

  • These delays are significant because last year, Johnson and Johnson told a Union Ministry of Health and Family Welfare (MoHFW) expert committee that it cannot trace as many as 3,600 patients who underwent surgeries involving the faulty implant.
  • That India did not have a joint registry when these surgeries happened has compounded the problem.
  • The want of a registry has also come in the way of ascertaining the damage caused by Pinnacle. Johnson and Johnson claims that it has no adverse reports of the device in the country.
  • However, reports in this paper have highlighted the trauma of at least seven patients with Pinnacle implants.

Conclusion

  • In 2017, the MoHFW issued the Medical Devices Rules. However, the country’s base legislation on implants continues to be the Drugs and Cosmetics Act, 1940, which does not have the scope to cover most modern devices, including hip implants.
  • The Indian orthopaedic device market is valued at over 450 million dollars and is expected to grow by 30 per cent per year till 2025.
  • The investigations into faulty hip implants bring out the urgent need for a law to regulate medical devices.
Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

[op-ed snap] Ban or regulate? — On India’s policy on cryptocurrencies

Mains Paper 3 : Mobilization Of Resources |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Regulation of cryptocurrencies


CONTEXT

The recommendation of an inter-ministerial committee that India should ban all private cryptocurrencies, that is, Bitcoin and others like it, hardly comes as a surprise.

Background

  • Indian policymakers and administrators have time and again made clear their distaste for them, their existence owed almost entirely to advanced encryption technologies
  • In his Budget speech in 2018, Finance Minister Arun Jaitley said the government doesn’t consider them legal tender.
  • The Reserve Bank of India has repeatedly warned the public of the risks associated with dealing with cryptocurrencies.
  • Bitcoin, the most prominent among them, has yo-yoed wildly in value, even over short periods of time.

Concerns with cryptocurrencies

  • A May 2019 article by Bloomberg, citing data from blockchain analysis firm Chainalysis, said “speculation remains Bitcoin’s primary use case”.
  • Its use in illegal online marketplaces that deal with drugs and child pornography is well-documented.
  • There have been cases of consumers being defrauded, including in India.
  • Given all this, it is understandable that the committee, under the chairmanship of Subhash Chandra Garg, the former Economic Affairs Secretary, has come across as being wary of private cryptocurrencies even while advocating a central bank-issued cryptocurrency.

No central authority to regulate 

  • Governments and economic regulators across the world are wary of private cryptocurrencies.
  • As they need neither a central issuing authority nor a central validating agency for transactions, these currencies can exist and thrive outside the realm of authority and regulation.
  • They are even deemed a threat to the official currency and monetary system. The question then is whether banning cryptocurrencies is the most effective way to respond.

Drafting a law

  • The inter-ministerial committee believes it is, going so far as to draft a law that mandates a fine and imprisonment of up to 10 years for the offences of mining, generating, holding, selling, dealing in, transferring, disposing of, or issuing cryptocurrencies.
  • But six of the seven jurisdictions that its report cites have not banned cryptocurrencies outright.
  • Many of them, including Canada, Thailand, Russia and Japan, seem to be moving on the path of regulation, so that transactions are within the purview of anti-money laundering and prevention of terror laws.
  • China, which India has taken a cue from, has gone for an outright ban.

Conclusion

  • Even there, the report says, “owing to the network-based nature of cryptocurrencies, after banning domestic crypto exchanges, many traders turned to overseas platforms to continue participating in crypto transactions.”
  • Trading in China is now low but not non-existent.
  • But why would an outright ban be a superior choice to regulation, especially in a field driven by fast-paced technological innovations?
  • The report, unfortunately, doesn’t clarify that point.
Blockchain Technology: Prospects and Challenges

Explained: Renaming of States

Mains Paper 2 : Parliament & State Legislatures |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Renaming of States


News

Demands for ‘Bangla’

  • Over the years, several demands have been made, for reasons that could be either political or administrative, to change the name of West Bengal.
  • The first such demand can be traced back to 1999, when the then CM Jyoti Basu took the initiative.
  • At that time, “Bangla” and “Paschim Bangla” were considered, but the parties concerned could not reach a consensus.
  • A request in 2018 was rejected by the Ministry of External Affairs (MEA) in November 2018 due to the similarity between “Bangla” and “Bangladesh”.

Why such demands?

  • The renaming demand is more to do with chronology than anything else.
  • The state’s name “West Bengal” starts with the letter “W”, which being the fourth last letter among English alphabet pushes the state to number 30 in the state roll call.
  • The implication is that during official meetings where all states are present, by the time West Bengal gets a turn to speak either the hall was half-empty or the audience was fast asleep.
  • Changing the name to “Bangla” would give it precedence, pushing it to spot number four.
  • Also the name of a state should invoke a strong sense of identity among its people and this identity can be formed if the state’s name carries the signature of its history and authentic culture, claims state govt.

Procedure for renaming a state 

  • Unlike in the case of renaming cities, to change the name of a state, approval from the Centre’s Ministry of Home Affairs (MHA) is required under provisions laid down in its 1953 guidelines.
  • This means that a Constitutional amendment becomes necessary to affect this change.
  • The Union MHA then takes over and gives it consent after it receives No Objection Certificates (NOCs) from several agencies such as the Ministry of Railways, Intelligence Bureau, Department of Posts, Survey of India and Registrar General of India.
  • If the proposal is accepted, the resolution, introduced as a Bill in the Parliament, becomes a law and the name of the state is changed thereafter.

Back2Basics

Renaming of states

  • The Constitution of India provides for the renaming of a state under Article 3.
  • The Article 3 provides for formation of new States and alteration of areas, boundaries or names of existing States
  • The procedure of renaming of the state can be initiated by either the Parliament or the State Legislator and the procedure is as follows:
  1. A bill for renaming a state may be introduced in the Parliament on the recommendation of the President.
  2. Before the introduction of the bill, the President shall send the bill to the respective state assembly for expressing their views within a stipulated time.
  3. The views of the state assembly are not binding; neither on the President nor on the Parliament.
  4.  But the process must not be skipped as it is of vital importance as any law so made will be affecting that particular state.
  5. On the expiry of the period, the bill will be sent to the Parliament for deliberation.
  6. The bill in order to take the force of a law must be passed by a simple majority.
  7. The bill is sent for approval to the President.
  8. After the approval of the said bill, the bill becomes a law and the name of the state stands modified.

Some of the instances of change in the name of the states are:

Old Name New Name Year of Change
East Punjab Punjab 1950
United Province Uttar Pradesh 1950
Madras Presidency along with Hyderabad Andhra Pradesh 1956
Madhya Bharat Madhya Pradesh 1959
Pondicherry Puducherry 2006
Uttaranchal Uttarakhand 2007

With inputs from: https://blog.ipleaders.in/renaming-state-city/

The International Charter “Space and Major Disasters”

Mains Paper 3 : Disaster Management |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : About the charter

Mains level : Disaster management



News

Sharing space data for flood control

  • With Assam inundated by floods, several countries including China, Russia and France collaborated with India on sharing satellite images of the scale of inundation.
  • As signatories to the The International Charter Space and Major Disasters, any of the 32 member countries can send a ‘request’ to activate the Charter.
  • This would immediately trigger a request by the coordinators to space agencies of other countries whose satellites have the best eyes on the site of the disaster.

About the charter

  • The International Charter “Space and Major Disasters” is a non-binding charter which provides for the charitable and humanitarian retasked acquisition of and transmission of space satellite data to relief organizations in the event of major disasters.
  • It was initiated by the European Space Agency and the French space agency CNES after the UNISPACE III conference held in Vienna, Austria in July 1999.
  • Since 2000, when the Charter came into operation there have been about 600 activations and data from 61 satellites have helped with disaster operations in 125 countries.
  • Charter addresses both natural disasters like floods, earthquakes, forest fires, landslides, tsunamis, ocean storms, volcanic eruptions and man made disasters like oil spills and industrial accidents.
  • India has signed the charter in 2001.

India too raises its helping hand

  • This is a standard practice under the charter and in the past ISRO too had provided information to other space agencies in response to similar requests.
  • In August 2014, for instance, ISRO’s CARTOSAT shared images after an activation request from China after an earthquake struck Yunan province and killed 398.
Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

Integrated Battle Groups (IBGs)

Mains Paper 3 : Various Security Forces, Agencies & Their Mandates |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Integrated Battle Groups (IBGs)

Mains level : Need for IBGs



News

  • The new concept of Integrated Battle Groups (IBGs) which the Indian Army plans to create as part of overall force transformation is close to implementation.

What are IBGs?

  • IBGs are brigade-sized, agile, self-sufficient combat formations, which can swiftly launch strikes against adversary in case of hostilities.
  • Each IBG would be tailor-made based on Threat, Terrain and Task and resources will be allotted based on the three Ts.
  • They need to be light so they will be low on logistics and they will be able to mobilise within 12-48 hrs based on the location.
  • An IBG operating in a desert needs to be constituted differently from an IBG operating in the mountains.
  • The key corps of the Army are likely to be reorganized into 1-3 IBGs.

Objective of IBG

  • Holistic integration to enhance the operational and functional efficiency, optimize budget expenditure, facilitate force modernization and address aspirations

Structure

  • While a command is the largest static formation of the Army spread across a defined geography, a corps is the largest mobile formation.
  • Typically each corps has about three brigades.
  • The idea is to reorganise them into IBGs which are brigade-sized units but have all the essential elements like infantry, armoured, artillery and air defence embedded together based on the three Ts.
  • The IBGs will also be defensive and offensive. While the offensive IBGs would quickly mobilise and make thrust into enemy territory for strikes, defensive IBGs would hold ground at vulnerable points or where enemy action is expected.

Why need IBGs?

  • After the terrorist attack on the Parliament, the Indian military undertook massive mobilization but the Army’s formations which were deep inside took weeks to mobilise loosing the element of surprise.
  • Following this, the Army formulated a proactive doctrine known as ‘Cold Start’ to launch swift offensive but its existence was consistently denied in the past.
  • Its existence was acknowledged for the first time by Gen Rawat in January 2017.
Indian Army Updates

All India Tiger Estimation Report – 2018

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Tiger census 2018, Tx2

Mains level : Conservation of tigers in India


News

  • India has 2,967 tigers, a third more than in 2014, according to results of a tiger census.
  • India has achieved the target of doubling tiger population four years before the 2022 deadline.

Statewise tiger count

  • According to the census, Madhya Pradesh saw the highest number of tigers at 526, closely followed by Karnataka at 524 and Uttarakhand at number 3 with 442 tigers.
  • While Pench Tiger Reserve in Madhya Pradesh recorded the highest number of tigers, Sathyamangalam Tiger Reserve in Tamil Nadu registered the “maximum improvement” since 2014.
  • Chhattisgarh and Mizoram saw a decline in their tiger numbers while tiger numbers in Odisha remained constant. All other states witnessed a positive trend.

About All India Tiger Estimation

  • The tiger count is prepared after every four years by National Tiger Conservation Authority (NTCA) provides details on the number of tigers in the 18 tiger reign states with 50 tiger reserves.
  • However, this time, the census also included data collected from the rough terrains of north-eastern states which was not possible due to logistic constrains before.
  • The entire exercise spanned over four years is considered to be world’s largest wildlife survey effort in terms of coverage and intensity of sampling.
  • Over 15, 000 cameras were installed at various strategic points to capture the movement of tigers. This was supported by extensive data collected by field personnel and satellite mapping.
  • Taking a step further, authorities have attempted to digitize the records by mandating the use of a GIS based app called M-STRiPES (Monitoring System For Tigers-Intensive Protection and Ecological Status) developed by Dehradun-based Wildlife Institute of India.

Back2Basics

Project Tiger

  • Project Tiger is a tiger conservation programme launched in April 1973 during PM Indira Gandhi’s tenure.
  • In 1970 India had only 1800 tigers and Project Tiger was launched in Jim Corbett National Park.
  • The project is administrated by the National Tiger Conservation Authority (NTCA).
  • It aims at ensuring a viable population of Bengal tigers in their natural habitats, protecting them from extinction etc.
  • Under this project the govt. has set up a Tiger Protection Force to combat poachers and funded relocation of villagers to minimize human-tiger conflicts.
Tiger Conservation Efforts – Project Tiger, etc.

Deep Ocean Mission

Mains Paper 3 : Awareness In The Fields Of It, Space, Computers, Robotics, Nano-Technology, Bio-Technology |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Deep Ocean Mission

Mains level : India's quest for ocean bed resources


News

  • The Deep Ocean Mission (DOM) to explore the deepest recesses of the ocean has finally got the green signal from the government.

Deep Ocean Mission (DOM)

  • Nodal Agency: Ministry of Earth Sciences (MoES)
  • The mission proposes to explore the deep ocean similar to the space exploration started by ISRO.
  • Underwater robotics and ‘manned’ submersibles are key components of the Mission which will help India harness various living and non-living (water, mineral and energy) resources from the seabed and deep water.
  • The tasks that will be undertaken over this period include deep-sea mining, survey, energy exploration and the offshore-based desalination.
  • These technological developments are funded under an umbrella scheme of the government – called Ocean Services, Technology, Observations, Resources Modelling and Science (O-SMART).

Objective of the mission

  • A major thrust of the mission will be looking for metals and minerals.
  • It has been estimated that 380 million metric tonnes of Polymetallic nodules are available at the bottom of the seas in the Central Indian Ocean.
  • These are rocks scattered on the seabed containing iron, manganese, nickel and cobalt.

Exploring our EEZs

  • Exclusive Economic Zones (EZs) are boundaries prescribed by the UN Convention on the Law of the Sea (UNCLOS) which give the rights to a state regarding the exploration and use of marine resources.
  • India’s EEZs spreads over 2.2 million sq. km. and in the deep sea lies unexplored and unutilized.
  • India has been allotted a site of 75,000 sq. km. in the Central Indian Ocean Basin (CIOB) by the UN International Sea Bed Authority for exploitation of Polymetallic nodules (PMN).
Indian Ocean Power Competition

Iconic Tourist Sites Initiative

Mains Paper 1 : Arts & Culture |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Iconic tourists sites initiative

Mains level : Promoting tourism in India


News

Iconic Tourist Sites Initiative

  • During her Budget speech earlier this month, Finance Minister said that 17 “Iconic Tourist Sites” in the country would be developed by the government into world class tourist destinations.
  • The initiative was aimed at enhancing India’s soft power. The Sites included:
  1. Taj Mahal & Fatehpur Sikri (Uttar Pradesh)
  2. Ajanta and Ellora (Maharashtra)
  3. Humayun Tomb, Qutub Minar and Red Fort (Delhi)
  4. Colva Beach (Goa)
  5. Amer Fort (Rajasthan)
  6. Somnath and Dholavira (Gujarat)
  7. Khajuraho (Madhya Pradesh)
  8. Hampi (Karnataka)
  9. Mahablipuram (Tamil Nadu)
  10. Kaziranga (Assam)
  11. Kumarakom (Kerala)
  12. Mahabodhi Temple (Bihar)

Roadmap

  • The government is looking at overall development from the tourism point of view in and around these sites — which includes roads and infrastructure, hotels and lodges, connectivity and access.
  • As such, several ministries, from Railways to Civil Aviation, will be involved, while the Tourism Ministry will be the nodal agency.
  • In keeping with international standards, interventions in and around the monuments will have elements of universal accessibility, green technology, and enhanced security for tourists.
Tourism Sector

Species extinction in India

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Extinct species mentioned in the newscard

Mains level : Not Much


News

  • Four species of fauna and 18 species of flora have gone extinct in India in the past few centuries, according to wildlife survey organisations.

Species extinct from India

Flora

  • As per information given by the BSI, 18 species of plants — four non-flowering and 14 flowering — have gone extinct.
  • The notable among them are Lastreopsis wattii , a fern in Manipur discovered by George Watt in 1882 and three species from the genus Ophiorrhiza (Ophiorrhiza brunonis , Ophiorrhiza caudate and Ophiorrhiza radican ), all discovered from peninsular India.
  • Corypha taliera Roxb, a palm species discovered in Myanmar and the Bengal region by William Roxburgh is also extinct.

Fauna

  • Cheetah (Acionyx jubatus)
  • Sumatran rhinoceros (Dicerorhinus sumatrensisi) are considered extinct in India.
  • The pink-headed duck (Rhodonessa caryophyllaceai) is feared extinct since 1950
  • The Himalayan quail (Ophrysia supercililios) was last reported in 1876.
Wildlife Conservation Efforts