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  • Civil Services Reforms

    Finding a way to share IAS officers

    Context

    There are recent reports in the media about serious concerns of several state governments on Government of India’s proposed move to amend the IAS service rules to meet the shortage of officers at various levels at the Centre.

    How does central deputation work?

    • Voluntary: Under the current dispensation, officers opt for central deputation from the states voluntarily.
    • The Centre then makes a selection from among these officers for posts which are vacant or are likely to be vacant in the near future.
    • While doing so, it considers the suitability of the officer based on his/her past experience.
    • Once the selection is finalised, orders are issued, requesting the state government to relieve the officer concerned.
    • Quota for each state: Each state has a certain quota beyond which its officers are not accepted by the Centre.

    Shortage of officers on central deputation

    • In the last decade, there has been a gradual decline in the number of officers who opt for central deputation.
    • Generally, of the total cadre strength of the states, about 25-30 per cent used to be on central deputation.
    • Currently, less than 10 per cent are working in various central ministries.
    • According to certain reports, in states like UP, Bihar, Odisha and Tamil Nadu and Kerala, the number is between 8 per cent and 15 per cent.
    • One of the reasons for this non-availability of officers for central deputation is the inadequate recruitment more than a decade and half ago.
    • But an important reason is also the comparatively better service conditions in the states.

    So, what do the proposed rules seek to achieve?

    • While fixing the cadre strength of states, about 40 per cent posts of senior duty are earmarked for central deputation.
    • Shortage to be shared equitably: Considering that recruitments in the past were not adequate, the proposed change in rules provides for shortage to be shared equitably between the Centre and states.
    • Time limit to relieve officers: Also, since vacancies need to be filled in time, there is a suggestion of a time limit in which states must respond and relieve the officer selected.

    Way forward

    • Respect the views of State: It has to be clearly understood that when states give the list of officers they wish to offer for central deputation, it will be the decision of the states alone.
    • The Centre, if it wishes to have an officer work for it, can suggest so to the state. 
    •  If the state does not wish to suggest his name for deputation, the Centre should respect their views, even though they have the power under cadre rules to do so.
    • Improving working conditions for officers: The Centre has to realise that improving working conditions for officers at the deputy secretary and director levels is critical to the success of cadre management.
    • Many of the officers at this level have concerns regarding education of their children, transport and the higher cost of living in Delhi.
    • A deputation allowance for the period of deputation in Delhi could be an option.
    • Non-adversarial manner: The states also have to look at this issue in a non-adversarial manner, where needs of both the Centre and the state have to be matched and met.
    • The Centre should dispel fears of states about misuse of central power.

    Conclusion

    Proposed amendment to service rules is needed to meet shortage of personnel, but Centre must dispel states’ fears about overreach.

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  • Banking Sector Reforms

    Bank Frauds in India

    1. Poor banking governance: Most frauds show that banks did not observe due diligence, both before and after disbursing loans. Poor level of checks and balances in the banking system is one of the reason.
    2. Poor monitoring: Lack of technology and fraud monitoring agencies to detect frauds makes the problem more complex. There is an absence of an effective mechanism to monitor the credit flow. Flawed risk-mitigation design, which creates an excessive focus on credit or market risks, but focuses less on operational risks also leading to more breaches.
    3. Technological backwardness: Excessive dependence on manual supervision, at both external and internal levels makes it impossible to manually control and supervise the sheer volume of transactions.
    4. Immoral behaviour: The disintegrating moral fibre of Indian businessmen, bankers and other white-collar professionals, nepotism in internal committees of banks, unnecessary political interventions lead to increased frauds.
    5. Political interference: The political pulls and pressures on investigating agencies, and long-drawn processes of legal system act less as a deterrent.

     

  • Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

    What is Anti-Dumping Duty?

    India has initiated an anti-dumping probe against imports of a certain type of tiles, used for covering the floors in residential and commercial buildings, from China, Taiwan and Vietnam following a complaint by domestic players.

    Why in news?

    • Countries start anti-dumping probes to determine whether their domestic industries have been hurt because of a surge in cheap imports.
    • The dumping has caused material injury to the domestic players. If established, the Directorate General of Trade Remedies (DGTR) would recommend an anti-dumping duty on these imports.
    • As a countermeasure, they India would impose these duties under the multilateral regime of the World Trade Organisation (WTO).

    What is Dumping?

    • Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.
    • This is an unfair trade practice which can have a distortive effect on international trade.
    • Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.

    What is Anti-Dumping Duty?

    • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
    • In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market.
    • In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry.
    • Such ‘dumped’ products have the potential to undercut local businesses and the local economy.
    • Anti-dumping duties provide relief to the domestic industry against the injury caused by dumping.

    Mechanism in India

    • The Department of Commerce recommends the anti-dumping duty, provisional or final.
    • The Department of Revenue in Finance Ministry acts upon the recommendation within three months and imposes such duties.

    WTO and Anti-Dumping Duties

    • The WTO operates a set of international trade rules, including the international regulation of anti-dumping measures.
    • It does NOT intervene in the activities of companies engaged in dumping.
    • Instead, it focuses on how governments can—or cannot—react to the practice of dumping.
    • In general, the WTO agreement permits governments to act against dumping if it causes or threatens material injury to an established domestic industry.

    Issues with such duties

    • Anti-dumping duties have the potential to distort the market.
    • In a free market, governments cannot normally determine what constitutes a fair market price for any good or service.

    Back2Basics:

    Countervailing duty (CVD)

    • Countervailing duty (CVD) is a specific form of duty that the government imposes in order to protect domestic producers by countering the negative impact of import subsidies.
    • CVD is thus an import tax by the importing country on imported products.
    • To make their products cheaper and boost their demand in other countries, foreign governments sometimes provide subsidies to their producers.
    • To avoid flooding of the market in the importing country with these goods, the government of the importing country imposes a countervailing duty, charging a specific amount on import of such goods.

    How does it work?

    • The duty nullifies and eliminates the price advantage (low price) enjoyed by an imported product when it is given subsidies or exempted from domestic taxes in the country where they are manufactured.
    • It raises the price of the imported product, bringing it closer to its true market price.
    • In this way, the government is able to provide a level playing field for domestic products.

     CVD and India

    • The World Trade Organization (WTO) permits the imposition of countervailing duty by its member countries.
    • In India, the CVD is imposed as an additional duty besides customs on imported products when such products are given tax concession in the country of their origin.

    Who imposes countervailing measures in India?

    • The countervailing measures in India are administered by the Directorate General of Anti-dumping and Allied Duties (DGAD), in the commerce and industry ministry’s department of commerce.

     

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  • US policy wise : Visa, Free Trade and WTO

    What is America COMPETES Act?

    The US has unveiled the Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act of 2022 that proposes to open up new vistas for talented individuals from across the world with a new start-up visa.

    What is the COMPETES Act?

    • The bill provides $52 billion to encourage more semiconductor production in the US, and $45 billion for grants and loans to improve supply chain resilience and manufacturing, among other programs.
    • It also includes funding to address social and economic inequality, climate change, and immigration.
    • For instance, it provides an exemption for STEM PhDs from the green card cap and creates a new green card for entrepreneurs.
    • The bill also authorizes $600 million a year to construct manufacturing facilities to make the US less reliant on solar components made in Xinjiang, China.

    Key provisions in the Act

    • The Act amends the Immigration and Nationality Act to create a new classification of “W” non-immigrants for entrepreneurs with an ownership interest in a start-up entity.
    • It seeks to establish procedures for foreign nationals with an ownership interest in a start-up entity to self-petition for lawful permanent resident status as an immigrant entrepreneur.
    • The bill exempts from the numerical limits on immigrant visas certain foreign nationals (and the spouses and children of such aliens) who have earned a doctoral degree in STEM.

    Implications for Indians

    • It would mean more opportunities in the US for Indian talent, and for skilled workers.
    • Every year, the US administration issues 85,000 H-1B work permits.
    • Every year, Indians and Indian companies corner a lion’s share of the H-1B work permits issued that year.
    • With this new category, Indian professionals will likely have a better shot at opportunities that the Act is likely to provide.

     

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  • ISRO Missions and Discoveries

    Small Satellite Launch Vehicle (SSLV)

    The new chairman of the ISRO Dr S Somanath has indicated inauguration of indigenous new launch rockets, called the Small Satellite Launch Vehicle (SSLV).

    What is SSLV?

    • The SSLV is a small-lift launch vehicle being developed by the ISRO with payload capacity to deliver:
    1. 600 kg to Low Earth Orbit (500 km) or
    2. 300 kg to Sun-synchronous Orbit (500 km)
    • It would help launching small satellites, with the capability to support multiple orbital drop-offs.
    • In future a dedicated launch pad in Sriharikota called Small Satellite Launch Complex (SSLC) will be set up.
    • A new spaceport, under development, near Kulasekharapatnam in Tamil Nadu will handle SSLV launches when complete.
    • After entering the operational phase, the vehicle’s production and launch operations will be done by a consortium of Indian firms along with NewSpace India Limited (NSIL).

    Vehicle details

    (A) Dimensions

    • Height: 34 meters
    • Diameter: 2 meters
    • Mass: 120 tonnes

    (B) Propulsion

    • It will be a four stage launching vehicle.
    • The first three stages will use Hydroxyl-terminated polybutadiene (HTPB) based solid propellant, with a fourth terminal stage being a Velocity-Trimming Module (VTM).

    SSLV vs. PSLV: A comparison

    • The SSLV was developed with the aim of launching small satellites commercially at drastically reduced price and higher launch rate as compared to Polar SLV (PSLV).
    • The projected high launch rate relies on largely autonomous launch operation and on overall simple logistics.
    • To compare, a PSLV launch involves 600 officials while SSLV launch operations would be managed by a small team of about six people.
    • The launch readiness period of the SSLV is expected to be less than a week instead of months.
    • The SSLV can carry satellites weighing up to 500 kg to a low earth orbit while the tried and tested PSLV can launch satellites weighing in the range of 1000 kg.
    • The entire job will be done in a very short time and the cost will be only around Rs 30 crore for SSLV.

    Significance of SSLV

    • SSLV is perfectly suited for launching multiple microsatellites at a time and supports multiple orbital drop-offs.
    • The development and manufacture of the SSLV are expected to create greater synergy between the space sector and private Indian industries – a key aim of the space ministry.

    Back2Basics:

  • Food Processing Industry: Issues and Developments

    Unlock India’s food processing potential

    Context

    One of the largest producers of fruits and vegetables in the world to boost processed food in large quantities, India has formulated a unique Production-Linked Incentive Scheme (PLIS) which aims to incentivise incremental sales.

    Progress made so far

    • A sum of ₹10,900 crore has been earmarked for the scheme.
    • Beneficiaries have been obliged to commit a minimum investment while applying for the scheme.
    • Under Category 1, firms are incentivised for incremental sales and branding/marketing initiatives taken abroad.
    • Assuming the committed investment as a fixed ratio of their sales and undertaking execution of at least 75% of the projects, the sector is likely to witness at least ₹6,500 crore worth of investment over the next two years.
    • New alternatives are being explored which have immense potential in replacing the staples of rice and wheat in the form of Nutri-cereals, plant-based proteins, fermented foods, health bars and even fresh fortified foods for pets.
    • By welcoming the new brands in the category, PLIS aims to create an enabling ecosystem for innovation in both food products and processes.

    Way forward

    1] Improve infrastructure

    • A study in the United States concluded that a 1% increase in public infrastructure increased the food manufacturing output by 0.06% in the longer run (https://bit.ly/3rOeE0l).
    • This correlation holds good for India too as a higher investment is being concentrated in States such as Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Uttar Pradesh.
    • These States as reported by the Good Governance Index 2020-21, ranked among the highest in the ‘Public Infrastructure and Utilities’ parameter with ‘Connectivity to Rural Habitations’ showing the highest improvement.

    2] Improve profitability in export

    • For the exports market, it is now established that sales promotion is positively related to increased sales volume, but inversely related to profitability.
    • To bridge this gap, of the 13 key sectors announced under the PLIS, the ‘Food Processing PLIS’ earmarks a dedicated Category 3 for supporting branding and marketing activities in foreign markets. 
    •  This ensures that India’s share of value-added products in the exports basket is improved, and it may leverage on its unique geographical proximity to the untapped markets of Europe, the Middle East/West Asia, Africa, Oceania and Japan.

    3] Access to credit

    •  The access of micro, small, and medium enterprises (MSMEs) to finance is a perennial problem in the country, predominating due to a lack of proper credit history mechanism for MSMEs.
    • Smart financing alternatives such as peer-to-peer (P2P) lending hold potential for micro-food processors.
    • Access to working capital has in theory been addressed by the Trade Receivables Discounting System (TReDS), a platform for facilitating the financing/discounting of trade receivables of MSMEs through multiple financiers.

    Conclusion

    With growing populations, changing food habits and unrestricted use of natural resources, nations must come together and lay out a road map for a common efficient food value chain.

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  • Renewable Energy – Wind, Tidal, Geothermal, etc.

    The consequences of an ill-considered green strategy

    Context

    Europe’s push for renewable energy at the cost of conventional fuel may end up causing a global food crisis.

    Consequences of fuel shortage in Western Europe

    • Since August 2021, Western Europe has faced a problem with renewable energy – the wind doesn’t always blow when needed and the sun doesn’t always shine.
    • Commodity markets across the world operate on a balance of demand and supply — even seemingly “small” changes in either side of a few percentage points can push the prices up or down sharply.
    • High energy bills: Higher gas prices have pushed up energy bills for households and are expected to impact household spending and consumption as well.
    • High urea prices: Natural gas is used to produce urea – if gas prices go up, fertiliser also becomes expensive.
    •  Some poor and middle-income countries are already starting to face problems of fertiliser availability — there are reports from several Indian states as well. 
    • High food prices: The impact of expensive fertiliser will be felt some months down the line as expensive fertiliser and reduced harvests push up food prices.
    • India is relatively less affected as the share of natural gas in the country’s energy mix is low but will still face problems due to high food prices.
    • In 2007-08, when oil prices were high, there was a push to use “biofuels” led by the US and Europe.
    •  The effects of the 2008 food price crisis were felt around the world, especially by the poor.

    Lessons for India

    • Cheap and reliable energy sources should not be abandoned until the alternatives have been stringently stress tested.
    • India will be especially hard hit if oil prices spike as it imports close to 1.4 billion barrels of oil annually.

    Consider the question “What are the inherent dangers in rapid transition to the green energy? Suggest the way forward for India.”

    Conclusion

    A blind push to shut down traditional sources of energy and move to less reliable “clean” energy can have second and third order effects.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Govt tweaks spending norms for Contingency Fund of India

    The government has tweaked spending norms for Contingency Fund of India, allowing 40% of the total corpus to be placed at disposal of the Expenditure Secretary.

    What are the proposed changes?

    • Budget 2021-22 proposed to enhance the Contingency Fund of India from ₹500 crore to ₹30,000 crore through Finance Bill.
    • An amount equivalent to 40 per cent of the Fund corpus shall be placed at the disposal of the Secretary, Ministry of Finance, Department of Expenditure.
    • This would serve the purpose of meeting unforeseen expenditure.

    What is Contingency Fund of India?

    • Contingency is a negative event which may occur in future, like recession or pandemic.
    • The Constitution has a provision for a contingency fund. Its corpus is always kept intact.
    • Article 267 of the Constitution mandates formation of a corpus under Contingency Fund of India to deal with any emergency situation.
    • It is placed at the disposal of the President of India.
    • Government cannot withdraw funds from it without authorization of the Parliament.
    • And the corpus has to be replenished with the same amount later.

    Management of the fund

    • The fund is held by the Department of Economic Affairs on behalf of the President of India and it can be operated by executive action.
    • The fund can be increased through a Finance Bill when Parliament is in the session.
    • Or through Ordinance if the House is not in session and situation warrants.
    • Withdrawal from the fund takes place with the approval of the Secretary of Department of Economic Affairs, in terms of the Contingency Fund of India Act, 1950.
    • An amount equivalent to 40% of the corpus has now been placed at the disposal of the Expenditure Secretary.
    • All further Contingency Fund releases beyond this limit will require the approval of the Expenditure Secretary in addition to the Economic Affairs Secretary’s approval.

    Back2Basics:

    Consolidated Funds of India

    • The provision for this fund is given in Article 266(1) of the Constitution of India.
    • The government meets all its expenditure from this CFI.
    • It receives money from:
    1. Direct and indirect taxes Loans taken by the Indian government
    2. Returning of loans/interests of loans to the government by anyone/agency that has taken it
    • The government needs parliamentary approval to withdraw money from this fund.
    • Each state has its own Consolidated Fund of the state with similar provisions.
    • The Comptroller and Auditor General of India audits these funds and reports to the relevant legislatures on their management.

    Public Account of India

    • All other public money (other than those covered under the Consolidated Fund of India) received by or on behalf of the Indian Government are credited to this account/fund.
    • It is constituted under Article 266(2) of the Constitution.
    • This is made up of:
      1. Bank savings account of the various ministries/departments
      2. National small savings fund, defense fund
      3. National Investment Fund (money earned from disinvestment)
      4. National Calamity & Contingency Fund (NCCF) (for Disaster Management)
      5. Provident fund, Postal insurance, etc.
      6. Similar funds
    • The government does not need permission to take advances from this account.
    • Each state can have its own similar accounts.
    • CAG makes audit of all the expenditure from the Public Account of India.

     

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  • Prime Minister’s Office : Important Updates

    What are Padma Awards?

    The central government has announced the names of Padma awardees for this year.

    What are Padma awards?

    • The Padma awards are the highest civilian honor of India after the Bharat Ratna.
    • They are announced every year on the eve of Republic Day.
    • The awards are given in three categories:
    1. Padma Vibhushan (for exceptional and distinguished service)
    2. Padma Bhushan (distinguished service of higher order) and
    3. Padma Shri (distinguished service)
    • The award seeks to recognize achievements in all fields of activities or disciplines where an element of public service is involved.

    Note: During the years 1978 and 1979 and 1993 to 1997, Padma awards were not announced.

    Who are the awardees?

    • The awards are given in certain select categories which include Art, Social Work, Public Affairs, Science & Engineering, Trade & Industry, Medicine, Literature & Education, Civil Service and Sports.
    • Awards are also given for propagation of Indian culture, protection of human rights, wild life protection among others.

    Its constitution

    • The PADMA Awards were instituted in 1954 along with Bharat Ratna.
    • At that time only Padma Vibhushan existed with three sub-categories – Pahela Varg, Dusra Varg and Tisra Varg.
    • These were subsequently renamed as Padma Vibhushan, Padma Bhushan and Padma Shri vide Presidential Notification issued on January 8, 1955.

    Particulars of the awards

    • The awardees do not get any cash reward but a certificate signed by the President apart from a medallion which they can wear at public and government functions.
    • The awards are, however, not a conferment of title and the awardees are expected to not use them as prefix or suffix to their names.
    • A Padma awardee can be given a higher award only after five years of the conferment of the earlier award.

    Terms of awarding

    • Not more than 120 awards can be given in a year but this does not include posthumous awards or awards given to NRIs and foreigners.
    • The award is normally not conferred posthumously.
    • However, in highly deserving cases, the Government could consider giving an award posthumously.

    Who is eligible for Padma awards?

    • All persons without distinction of race, occupation, position or sex are eligible for these awards.
    • However, government servants including those working with PSUs, except doctors and scientists, are not eligible for these awards.
    • The award seeks to recognize works of distinction and is given for distinguished and exceptional achievements or service in all fields of activities and disciplines.
    • According to Padma awards selection criteria, the award is given for “special services” and not just for “long service”.
    • It should not be merely excellence in a particular field, but the criteria has to be ‘excellence plus’.

    Who nominates the awardees?

    • Any citizen of India can nominate a potential recipient.
    • One can even nominate one’s own self. All nominations are to be done online where a form is to be filled along with details of the person or the organisation being nominated.
    • An 800-word essay detailing the work done by the potential awardee is also to be submitted for the nomination to be considered.
    • The government also writes to various state governments, governors, Union territories, central ministries and various departments to send nominations.

    Who selects the awardees?

    • All nominations received for Padma awards are placed before the Padma Awards Committee, which is constituted by the Prime Minister every year.
    • The Padma Awards Committee is headed by the Cabinet Secretary and includes Home Secretary, Secretary to the President and four to six eminent persons as members.
    • The recommendations of the committee are submitted to the Prime Minister and the President of India for approval.
    • The antecedents of the selected awardees are verified using the services of central agencies to ensure nothing untoward has been reported or come on record about them.
    • A final list is then prepared and announced.

    Is the recipient’s consent sought?

    • There is no provision for seeking a written or formal consent of the recipient before the announcement of the award.
    • However, before the announcement, every recipient receives a call from the Ministry of Home Affairs informing him or her about the selection.
    • In case the recipient expresses a desire to be excluded from the award list, the name is removed.

     

    Try this question from CSP 2021

    Q.Consider the following statements in respect of Bharat Ratna and Padma Awards

    1. Bharat Ratna and Padma Awards are titles under the Article 18(1) of the Constitution of India.
    2. Padma wards, which were instituted in the year 1954, were suspended only once.
    3. The number of Bharat Ratna Awards is restricted to a maximum of five in a particular year.

    Which of the above statements are not correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    Post your answers here.

     

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  • Corruption Challenges – Lokpal, POCA, etc

    Corruption Perceptions Index (CPI), 2021

     

    The 2021 Corruption Perception Index by Transparency International places India 85th on a list of 180 countries, one position above last year.

    Corruption Perceptions Index (CPI)

    • The CPI is an index which ranks countries “by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys.”
    • The CPI generally defines corruption as an “abuse of entrusted power for private gain”.
    • The index is published annually by the non-governmental organisation Transparency International since 1995.
    • The index ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and business people.
    • It uses a scale of 0 to 100 to rank CPI, where 0 is highly corrupt and 100 is very clean.

    What kind of corruption does the CPI measure?

    The data sources used to compile the CPI specifically cover the following manifestations of public sector corruption:

    • Bribery
    • Diversion of public funds
    • Officials using their public office for private gain without facing consequences
    • Ability of governments to contain corruption in the public sector
    • Excessive red tape in the public sector which may increase opportunities for corruption
    • Nepotistic appointments in the civil service
    • Laws ensuring that public officials must disclose their finances and potential conflicts of interest
    • Legal protection for people who report cases of bribery and corruption
    • State capture by narrow vested interests
    • Access to information on public affairs/government activities

    The CPI does NOT cover:

    • Citizens’ direct perceptions or experience of corruption
    • Tax fraud
    • Illicit financial flows
    • Enablers of corruption (lawyers, accountants, financial advisors etc)
    • Money-laundering
    • Private sector corruption
    • Informal economies and markets

    Highlights of the 2021 Report

    • The top-performing countries were Denmark, Finland and New Zealand — all having a corruption perceptions score of 88 — followed by Norway, Singapore and Sweden, all of them scoring 85.
    • In contrast, the worst-performing countries were South Sudan with a corruption perceptions score of 11, followed by Syria (13), Somalia (13, Venezuela (14) and Afghanistan (16).

    India’s performance

    • In 2021, India ranked 86th with the same CPI score of 40.
    • The report highlighted concerns over the risk to journalists and activists who have been victims of attacks by the police, political militants, criminal gangs and corrupt local officials.
    • Civil society organizations that speak up against the government have been targeted with security, defamation, sedition, hate speech and contempt-of-court charges, and with regulations on foreign funding.

     

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