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[op-ed snap] The true toll of the trade war between the US and China

Mains Paper 3 : Indian Economy |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Global Trade


CONTEXT

The growing trade war between China and the USA does not hold good news for the world.

Background of the multilateral trading system

  • For much of the last century, the US managed and protected the rules-based trading system it created at the end of World War II. 
  • That system required a fundamental break from the pre-war environment of mutual suspicion between competing powers. 
  • The US urged everyone to see that growth and development for one country could benefit all countries through increased trade and investment. 
  • The US served as a benevolent hegemon.
  • The system’s multilateral institutions, especially the IMF, helped countries in dire need of funds.
  • America’s power stemmed from its control over votes in multilateral institutions, both directly and through its influence over countries in the G7. 
  • Most countries trusted the US would not misuse its power to further its national interests, at least not excessively. 
  • The expansion of rules-based trade and investment opened up lucrative new markets for US firms. America granted some countries access to its markets without demanding the same level of access to theirs.
  • If emerging-markets expressed concerns about the potential effects of more open trade on some of their workers, economists were quick to reassure them that any local pain would be outweighed by the long-term gains. 

Impact of trade

  • Trade affected domestic workers unequally, but now moderately educated workers in developed countries bore the brunt of the pain, while higher-skilled workers in urban service-sector industries flourished.
  • Policymakers in advanced economies reacted to the backlash against trade in two ways. 
    • They tried to impose their labor and environmental standards on other countries through trade and financing agreements. 
    • They pushed for far stricter enforcement of intellectual property (IP), much of which is owned by Western corporations.

The case of China

  • This resulted in the rise of China. 
  • Like Japan and the East Asian tigers, China grew on the back of manufacturing exports. But, unlike those countries, it is now threatening to compete directly with the West in both services and frontier technologies.
  • China has adopted labour and environmental standards and expropriated IP according to its own needs. 
  • It is now close enough to the technological frontier in areas like robotics and Artificial Intelligence.
  • China’s burgeoning tech sector is enhancing its military prowess. 
  • Unlike the Soviet Union, China is fully integrated into the world trading system.

Breakdown of world trade order

  • Advanced economies find that higher regulatory structures and standards they adopted during their own development now put them at a competitive disadvantage vis-à a-vis differently regulated emerging-market countries. A
  • These countries resent external attempts to impose standards such as a high minimum wage or ending the use of coal.
  • Emerging economies have delayed opening their domestic markets to the industrial world. Developed country firms are especially eager for unfettered access to the attractive Chinese market.

What does the future hold

  • China can be slowed but cannot be stopped. A powerful China must see value in new rules, even becoming a guardian of these rules. For that, it must have a role in setting them. 
  • One can hope that China and the US will, avoid opening up any new fronts in the trade and technology war.
  • There is a dire need for negotiations.
  • Countries need to negotiate a new world order which accommodates multiple powers or blocs rather than a single hegemon.
Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

[op-ed snap] Throttled at the grass roots

Mains Paper 2 : Panchayats & Local Bodies |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Empowering Local Bodies


CONTEXT

25 years after the 73rd and 74th constitutional amendments, very little actual progress has been made in this direction. Local governments remain hamstrung and ineffective; mere agents to do the bidding of higher-level governments. 

Facts

  • About 32 lakh peoples’ representatives are elected every five years to the local bodies.
  • Devolution is not mere delegation. It implies that governance functions are assigned by law to local governments, along with adequate transfer of financial grants, taxes, and staff so that they carry out their responsibilities.
  • Local governments are to report primarily to their voters, and not so much to higher-level departments. 
  • The Constitution mandates that panchayats and municipalities shall be elected every five years.
  • States are mandated to devolve functions and responsibilities to them through law. 
  • Given diverse habitation patterns, political and social history, it makes sense to mandate States to assign functions to local governments. 
  • A study for the 14th FC by the Centre for Policy Research shows that all States have formally devolved powers with respect to five core functions of water supply, sanitation, roads and communication, streetlight provision and the management of community assets to the gram panchayats.

Issues remain – Finance

  • The volume of money set apart for them is inadequate to meet their basic requirements. 
  • Much of the money given is inflexible; even in the case of untied grants mandated by the Union and State Finance Commissions, their use is constrained through the imposition of several conditions. 
  • There is little investment in enabling and strengthening local governments to raise their own taxes and user charges.

Functionaries

  • Local governments do not have the staff to perform even basic tasks. 
  • As most staff are hired by higher-level departments and placed with local governments on deputation, they do not feel responsible for the latter; they function as part of a vertically integrated departmental system.

Elections

  • In violation of the constitutional mandate of five-yearly elections to local governments, States have often postponed them. 
  • In 2005, when the Gujarat government postponed the Ahmedabad corporation elections, a Supreme Court constitutional bench held that under no circumstances can such postponements be allowed. 
  • Supreme Court rejected other alibis for election postponements, such as delays in determining the seat reservation matrix, or fresh delimitation of local government boundaries. 
  • In Tamil Nadu, panchayat elections have not been held for over two years now, resulting in the State losing finance commission grants from the Union government.
  • Criminal elements and contractors are attracted to local government elections, tempted by the large sums of money now flowing to them. They win elections through bribing voters and striking deals with different groups
  • Higher officers posted at the behest of MLAs extract bribes from local governments for plan clearances, approving estimates and payments. 
  • There is no evidence to show that corruption has increased due to decentralisation. Decentralised corruption tends to get exposed faster than national or State-level corruption.

Problems with centralisation

  • The current Union government has centralised service delivery by using technology, and panchayats are nothing more than front offices for several Union government programs. 
  • The ‘Smart City’ program does not devolve its funds to the municipalities; States have been forced to constitute ‘special purpose vehicles’ to ring-fence these grants.

Way ahead

  • Gram sabhas and wards committees in urban areas have to be revitalised. 
  • Consultations with the grama sabha could be organised through smaller discussions where everybody can really participate. 
  • Even new systems of Short Message Services or social media groups could be used for facilitating discussions between members of grama sabha.
  • Local government organisational structures have to be strengthened. Panchayats are burdened with a huge amount of work that other departments thrust on them, without being compensated for the extra administrative costs. 
  • Local governments must be enabled to hold State departments accountable and to provide quality, corruption-free service to them, through service-level agreements.
  • We cannot have accountable GPs, without local taxation. Local governments are reluctant to collect property taxes and user charges fully. They are happy to implement top-down programs because they know that if they collect taxes, their voters will never forgive them for misusing their funds. 

Decentralisation

A decentralisation is always a messy form of democracy, but it is far better than the operation of criminal politicians at a higher level. We can keep track of corrupt local government representatives; at a higher level, we will never know the extent of dirty deals that happen.

Panchayati Raj Institutions: Issues and Challenges

[op-ed snap] The case for privatizing public sector banks

Mains Paper 3 : Indian Economy |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Public Sector Bank privatization


CONTEXT

Former RBI governor D. Subbarao raised the question of whether India needs public sector banks at all in this day and age.

Reasons for privatization

  • The country’s financial sector is now wide enough and deep enough to take care of financial intermediation without state support. 
  • Even after the bank nationalization of 1969, the state dominance of the sector has kept competition levels low.
  • There was unnecessary micro-management by RBI, resulting in poor lending decisions and market distortions.

Problem with interest rate benchmarking

  • Right now, banks are largely expected to do as they are told. Last RBI’s directive to commercial banks to link their loan rates with its repo rate or other external benchmarks need not be issued in truly free markets. 
  • Competition for loan customers would not let a bank keep its lending rates higher. Rivalry for deposits and other funds would mean a bank pays as much as it could afford to.
  • To find the best way to gain an edge in a competitive market, banks would turn efficient.
  • In India, state lenders are under little pressure to do this. Tough the entry of private banks has upped service standards and induced some changes, the sector is saddled with non-performing loans, inefficiencies and heavy costs. 
  • High state-controlled rates of interest on small saving schemes attract a big chunk of people’s savings, leaving lenders short of money to lend and paying too much for deposits.

Cause for privatization

The sector’s health requires banks to assess and price risks properly. For this, bankers need to act diligently in the interest of profit-seeking shareholders. This would be better enabled by privatization. 

Challenges with privatization

  • State’s exit could result in foreign equity control of banks and even a loss of sovereignty.
  • Since large banks would be “too big to fail”, the government would still need to bail them out in case they approach bankruptcy. This would involve public funds and amount to the socialization of losses.
  • Close regulation would still be needed.

Way ahead

With all the challenges above, the state could argue it needs to retain ownership control as well. Immediately, at least the appointment of public sector bank chiefs must be freed of state control.

Banking Sector Reforms

Explained: Ration card portability

Mains Paper 2 : Government Scheme/Policies |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : About the scheme

Mains level : Need for ONORC



Context

  • The government is showcasing the rollout of the ‘One Nation One Ration Card’ scheme as one of the biggest achievements of its first 100 days in power.
  • The launch of the nationwide food security net is scheduled for June 2020, but several challenges remain before migrants can take advantage of full portability.

Food Security in India

  • India runs the world’s largest food security programme, distributing more than 600 lakh tonnes of subsidised food grain to more than 81 crore beneficiaries every year.
  • This is done through a vast network of more than five lakh ration or fair price shops.
  • Under the National Food Security Act (NFSA), each beneficiary is eligible for five kg of subsidised grains per month at the rate of ₹3/kg for rice, ₹2/kg for wheat and ₹1/kg of coarse cereals.

Ration Card

  • A ration card is issued to the head of the family, depending on the number of members in a family and the financial status of the applicant.
  • It is used by households to get essential food grains at subsidised prices from designated ration shops (also called fair price shops) under the Targeted Public Distribution System (TPDS).
  • Over the years, different types of ration cards were issued depending on the level of deprivation.
  • Later, in 2013, when the National Food Security Bill was passed, different ration cards were compressed to just two — priority and Antyodaya (for the most poor).
  • The responsibility of identifying eligible families and issuing ration cards to them rests with the state/UT government.

One Nation One Ration Card scheme

  • Until recently, this has been a location-linked benefit, leaving crores of migrant workers and families out of the food safety net.
  • Each household’s ration card is linked to a specific fair price shop and can only be used to buy rations in that particular shop.
  • Over the last few years, 10 States (partially in one) have implemented the Integrated Management of Public Distribution System, which allows beneficiaries to buy rations from any fair price shop within that State.
  • The Centre is now in the process of expanding these efforts into a nationwide portability network which is called the ‘One Nation One Ration Card’ scheme.
  • It is scheduled to come into full effect by June 2020, after which a ration card holder can buy subsidised grain at any fair price shop in the country.

Beneficiaries of the scheme

  • The main beneficiaries of the scheme are the country’s migrant workers.
  • According to data from the Census 2011, there are more than 45 crore internal migrants in India, of whom more than half have not completed primary education, while 80% have not completed secondary education.
  • Registering for ration cards at their new location is an arduous process, especially if some members of the household still remain in their original home.
  • Apart from this, field studies estimate that four crore to ten crore people are short-term migrants, often working in cities, but not moving there permanently.
  • Women who change locations after marriage also find it difficult to start accessing ration benefits using a new household’s card.

Benefits

  • Lower levels of education are linked to lower income, which would make a large percentage of these migrants eligible for NFSA benefits.
  • The Centre hopes that allowing ration card portability will also curb corruption and improve access and service quality by removing monopolies.
  • Under the old system, beneficiaries were dependent on a single fair price shop and subject to the whims of its dealer.
  • Under the new system, if they are denied service or face corruption or poor quality in one shop, they are free to head to a different shop.
  • The scheme is also driving the faster implementation of initiatives to digitise and integrate the food storage and public distribution system.

What is needed to make it work?

  • The scheme involves the creation of a central repository of NFSA beneficiaries and ration cards, which will integrate the existing databases maintained by States, UTs and the Centre.
  • Aadhaar seeding is also important as the unique biometric ID will be used to authenticate and track the usage of ration by beneficiaries anywhere in the country.
  • Currently, it is estimated that around 85% of ration cards are linked to Aadhaar numbers.
  • For the scheme to work, it is critical that all fair price shops are equipped with electronic point-of-sale machines (ePoS), replacing the old method of manual record-keeping of transactions with a digital real-time record.
  • On the back-end, the Food Corporation of India’s Depot Online System is integrating all warehouses and godowns storing subsidised grain in an attempt to create a seamless flow of online information from procurement until distribution.

Progress so far

  • Two pairs of States — Andhra Pradesh-Telangana and Maharashtra-Gujarat — became the first to begin implementing portability between their States last month.
  • From October 1, two more pairs — Kerala-Karnataka and Rajasthan-Haryana — will join the experiment.
  • By January, all eight States and at least three others which already implement intra-State portability will form the first national grid for the ‘ONORC’ scheme.

Difficulties ahead

Lack of infrastructure

  • There are only 4.32 lakh ePoS machines which have been installed in more than 5.3 lakh fair price shops.
  • Apart from much of Northeast India, much of that gap comes from three States: Bihar, West Bengal and Uttarakhand.
  • Given that they are major source States for migrants, Bihar (only 15% coverage) and West Bengal (70% coverage) must speed up ePoS installation for the system to work smoothly.
  • In some rural and remote areas, ePoS connectivity also remains erratic, jeopardising smooth functioning.
  • In Jharkhand, a State which was an early adopter of digitisation and Aadhaar-based biometric authentication in 2016, there have been widespread complaints of denial of food due to system failures.

Different ration benefits

  • In other States, the challenge comes from the difference between ration benefits offered by the State in comparison to the Central entitlement.
  • Tamil Nadu, for example, offers 20 kg of free rice per month to almost 2 crore ration card holders, as well as subsidised sugar, pulses and oil, over and above the NFSA benefits.
  • The State government has made it clear that it will not be offering these benefits to migrant workers, as the Centre will cover the costs of NFSA benefits only.

Household issue

  • Another issue could arise if the members of a single household are split between two different locations.
  • The scheme’s guidelines only permit purchase of half the subsidised grain at one time in an effort to prevent one member of the household taking the entire ration for the month, leaving family members in a different location stranded without food.

Lack of data and inventory management

  • The biggest challenge may lie in the lack of any concrete data on inter-State migration trends, especially short-term migration.
  • The allocation of food grains to States will have to be dynamic to allow for quick additional delivery to cover any shortfalls in States with large migrant populations.
  • Currently, Food Corporation of India godowns stock grains up to three months in advance.
  • Food Ministry officials acknowledged that there is a “steep learning curve” ahead to ensure that movement of grain matches migration flows.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Criticizing executive, judiciary and bureaucracy cannot be called sedition: SC Judge

Mains Paper 2 : Executive & Judiciary |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Sedition Law and issues


News

  • Justice Deepak Gupta, judge of Supreme Court, opined about the chilling effect caused by sedition law on legitimate criticism on the organs of state.
  • As citizens, Indians have the right to criticize the government, and criticism cannot be construed as sedition, he said, adding that stifling such criticism will make us a police state.

Sedition and Right to dissent

  • Criticism of the executive, the judiciary, the bureaucracy, the armed forces cannot be termed sedition.
  • If we stifle criticism of these institutions, we shall become a police state instead of a democracy.”
  • There is a very important right which is not spelt out in the Constitution… the right of freedom of opinion, the right of freedom of conscience, by themselves, include the most important right — the right to dissent.

Why is dissent important?

  • Every society has its own rules, and over a period of time, when people stick to only age-old rules and conventions, the society degenerates; it doesn’t develop.
  • New thinkers are born when they disagree with well-accepted norms of the society. If everybody follows the well-trodden path, no new paths will be created and no new vistas of the mind will be found.
  • If a person doesn’t ask questions and raise issues questioning age-old systems, no new systems will develop and horizons of the mind will not expand.
  • New thoughts and religious practices have developed only when they have questioned the old.

A right to expression

  • He said that in a secular country such as India, a non-believer, an atheist, an agnostic, ritualistic or a spiritualist person all has the right to expression.
  • When we talk of dissent, it reminds of Justice H R Khanna in the habeas corpus case.
  • That dissent is more important than any decision that may have come before or after it. Today, it is the rule of law.
  • In a case, a five-member bench was adjudicating on the matter of those detained during the Emergency in 1975, and Justice Khanna was the lone dissenter, while the four other judges in the bench allowed unrestricted powers of detention during the Emergency

Judiciary not above criticism

  • The judge emphasized that allowing a climate for free expression of thoughts and ideas without fear of criminal prosecution is essential for growth of civilization.
  • The judiciary is not above criticism. If Judges of the superior courts were to take note of all the contemptuous communications received by them, there would be no work other than the contempt proceedings.
  • Not only should there be criticism but there must be introspection. When we introspect, we will find that many decisions taken by Judiciary need to be corrected.

(Note: All these are personal opinion of the apex court Judge.)

Judiciary Institutional Issues

Pollution Under Control (PUC) Test

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PUC Test

Mains level : Combating urban air pollution



News

  • Since the Motor Vehicles (Amendment) Act, 2019 came into force, long queues of vehicles are commonly being seen at pollution control centres in Delhi.
  • After undergoing pollution under control (PUC) test, a vehicle is certified for a certain period of time.

What is a PUC certificate?

  • The PUC certificate is a document that any person driving a motor vehicle can be asked to produce by a police officer in uniform authorised by the state government.
  • These issue certificates if a vehicle is found complying with the prescribed emission norms.
  • The fine for PUC violations has now gone up to Rs 10,000; it used to be Rs 1,000 for the first offence and Rs 2,000 for subsequent violations before the amendments came into force.
  • The test costs between Rs 60 and Rs 100.
  • The validity of the test is one year for BS IV vehicles and three months for others.
  • A PUC certificate contains information such as the vehicle’s license plate number, PUC test reading, date on which the PUC test was conducted and the expiry date.

How is a pollution control check carried out?

  • The computerised model for pollution check was developed by the Society of Indian Automobile manufacturers.
  • A gas analyser is connected to a computer, to which a camera and a printer are attached.
  • The gas analyser records the emission value and sends it to the computer directly, while the camera captures the license plate of the vehicle.
  • Subsequently, a certificate may be issued if the emission values are within the limits.

Why PUC?

  • According to the Transport Department, Delhi, 217.7 tonnes of carbon monoxide is emitted every day by vehicles in the city.
  • Vehicular pollution estimates include 84.1 tonnes of nitrogen oxides and 66.7 tonnes of hydrocarbons per day.
Air Pollution

Krishna Water Dispute

Mains Paper 2 : Federalism |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Krishna Basin

Mains level : Krishna water dispute



News

  • The Krishna river dispute took a new turn this week, when Maharashtra and Karnataka agreed to jointly oppose AP’s application seeking a relook at the Krishna Water Disputes Tribunal’s 2010 order on water distribution between the riparian states.

The Krishna river dispute

  • The Krishna is an east-flowing river that originates at Mahabaleshwar in Maharashtra and merges with the Bay of Bengal, flowing through Maharashtra, Karnataka, Telangana and AP.
  • Together with its tributaries, it forms a vast basin that covers 33% of the total area of the four states.
  • A dispute over the sharing of Krishna waters has been ongoing for many decades, beginning with the erstwhile Hyderabad and Mysore states, and later continuing between successors.

Krishna Water Disputes Tribunal

  • In 1969, the Krishna Water Disputes Tribunal (KWDT) was set up under the Inter-State River Water Dispute Act, 1956, and presented its report in 1973.
  • The report, which was published in 1976, divided the 2060 TMC (thousand million cubic feet) of Krishna water at 75 per cent dependability into three parts.
  • It was 560 TMC for Maharashtra, 700 TMC for Karnataka and 800 TMC for Andhra Pradesh.
  • At the same time, it was stipulated that the KWDT order may be reviewed or revised by a competent authority or tribunal any time after May 31, 2000.
  • Afterward, as new grievances arose between the states, the second KWDT was instituted in 2004.
  • It delivered its report in 2010, which made allocations of the Krishna water at 65 per cent dependability and for surplus flows as follows: 81 TMC for Maharashtra, 177 TMC for Karnataka, and 190 TMC for Andhra Pradesh.

After the KWDT’s 2010 report

  • Soon after the 2010 report was presented, AP challenged it through a Special Leave Petition before the Supreme Court in 2011.
  • In an order in the same year, the apex court stopped the Centre from publishing it in the official Gazette.
  • In 2013, the KWDT issued a ‘further report’, which was again challenged by Andhra Pradesh in the Supreme Court in 2014.
  • After the creation of Telangana from AP in 2014, the Water Resources Ministry has been extending the duration of the KWDT.

Row over share

  • Andhra Pradesh has since asked that Telangana be included as a separate party at the KWDT and that the allocation of Krishna waters be reworked among four states, instead of three.
  • Maharashtra and Karnataka are now resisting this move. On September 3, the two states said: Telangana was created following bifurcation of Andhra Pradesh.
  • Therefore, allocation of water should be from Andhra Pradesh’s share which was approved by the tribunal.

Duo’s stance

  • It is relying on Section 89 of The Andhra Pradesh State Reorganization Act, 2014, which reads:
  • The term of the Krishna Water Disputes Tribunal shall be extended with the following terms of reference, namely:
  1. shall make project-wise specific allocation, if such allocation has not been made by a Tribunal constituted under the Inter-State River Water Disputes Act, 1956;
  2. shall determine an operational protocol for project-wise release of water in the event of deficit flows.
  • For the purposes of this section, it is clarified that the project-specific awards already made by the Tribunal on or before the appointed day shall be binding on the successor States.

Nilgiri Tahr

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nilgiri Tahr

Mains level : Conservation of wildlife species in India



News

  • In more good news for the State animal, the Nilgiri tahr, its sightings in the Mukurthi National Park have risen from 568 in 2018 to 612 this year.

Why a good news?

  • There was a decrease in tahr numbers in 2017, when a population of only 438 was recorded, down from 480 in 2016.
  • This was the second consecutive year that an increase in the population of the animal had been recorded in the park, meaning the population of the Nilgiri tahr, also known as the Nilgiri ibex, has risen by 132 since 2016.

Nilgiri tahr

  • IUCN Conservation Status: Endangered
  • The Nilgiri tahr (Nilgiritragus hylocrius) aka the Nilgiri ibex or simply ibex.
  • It is endemic to the Nilgiri Hills and the southern portion of the Western Ghats in the states of Tamil Nadu and Kerala in Southern India.
  • It is the state animal of Tamil Nadu.
  • The Nilgiri tahr inhabits the open montane grassland habitat of the South Western Ghats montane rain forests eco-region.
  • At elevations from 1,200 to 2,600 metres (3,900 to 8,500 ft), the forests open into grasslands interspersed with pockets of stunted forests, locally known as sholas.
  • Eravikulam National Park is home to the largest population of this Tahr.
Wildlife Conservation Efforts