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  • Interstate River Water Dispute

    Inter-State Boundary Disputes in India

    | Polity | Mains Paper 2: Federalism

    The Union Home Ministry (MHA) has informed that 11 States and one Union Territory have boundary disputes between them.

    Why in news?

    • There are disputes arising out of the demarcation of boundaries and claims and counterclaims over territories.
    • Occasional protests and incidents of violence are reported from some of the disputed border areas.

    Major boundary disputes include:

    [1] Karnataka-Maharashtra

    • The Belgaum district is arguably part of one of the biggest inter-state border disputes in India.
    • The district has a large Marathi and Kannada-speaking populations and has been at the centre of a dispute for a long time.
    • The area came under Karnataka in 1956 when states were reorganized and till then it was under the Bombay presidency.

    [2] Assam-Mizoram

    • The border dispute between Assam and Mizoram is a legacy of two British-era notifications of 1875 and 1933, when Mizoram was called Lushai Hills, a district in Assam.
    • The 1875 notification differentiated Lushai Hills from the plains of Cachar and the other demarcated boundary between Lushai Hills and Manipur.
    • While Mizoram became a state only in 1987 following years of insurgency, it still insists on the boundary decided in 1875.
    • Assam, on the other hand, wants the boundary demarcated in 1986 (based on the 1933 notification).
    • In that case, entire Mizoram was part of Assam before the Independence,” Assam Chief Minister Himanta Biswa Sarma said on July 27.
    • Mizoram says the 1986 agreement is not acceptable as the Mizo civil society was not consulted at that time.

    [3] Haryana-Himachal Pradesh

    • The Parwanoo region has had the spotlight over the border dispute between the two states.
    • It is next to the Panchkula district of Haryana and the state has claimed parts of the land in Himachal Pradesh as its own.

    [4] Himachal Pradesh-Ladakh

    • Himachal and Ladakh lay claim to Sarchu, an area on the route between Leh and Manali.
    • It is considered a major point where travellers stop when travelling between the two cities.
    • Sarchu is in between Himachal’s Lahul and Spiti district and Leh district in Ladakh.

    [5] Arunachal Pradesh-Assam

    • Arunachal’s grievance is that the re-organisation of North Eastern states unilaterally transferred several forested tracts in the plains that had traditionally belonged to hill tribal chiefs and communities to Assam.
    • After Arunachal Pradesh achieved statehood in 1987, a tripartite committee was appointed which recommended that certain territories be transferred from Assam to Arunachal.
    • Assam contested this and the matter is before the Supreme Court.

    [6] Meghalaya-Assam

    • The problem between Assam and Meghalaya started when the latter challenged the Assam Reorganisation Act of 1971, which gave Blocks I and II of the Mikir Hills or present-day Karbi Anglong district to Assam.
    • Meghalaya contends that both these blocks formed part of the erstwhile United Khasi and Jaintia Hills district when it was notified in 1835.
    • Meghalaya bases its case on survey maps of 1872 and 1929 and certain notifications of 1878 and 1951, while Assam wants to go by the rejected recommendations of the Churachand Committee.

    [7] Assam-Nagaland

    • The longest-running border dispute in the North East is between Assam and Nagaland, which began soon after Nagaland became a state in 1963.
    • The Nagaland State Act of 1962 had defined the state’s borders according to a 1925 notification when Naga Hills and Tuensang Area (NHTA) were integrated into a new administrative unit.
    • Nagaland, however, does not accept the boundary delineation and has demanded that the new state should also have all Naga-dominated areas in North Cachar and Nagaon districts.
    • Since Nagaland did not accept its notified borders, tensions between Assam and Nagaland flared up soon after the latter was formed, resulting in the first border clashes in 1965.
    • This was followed by major clashes between the two states along the border in 1968, 1979, 1985, 2007, 2014 and 2021.

     

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  • India-UK ties

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Context

    When Delhi thinks of technological cooperation with major powers, the US, Europe and Japan come to mind. The missing link in India’s technological mind space, however, is the United Kingdom.

    How India can benefit from technology partnership with Britain

    • Britain was the first nation to industrialise and has a long tradition of scientific research and technological development.
    • With top-ranking universities and the golden triangle of science and innovation — London, Oxford and Cambridge — Britain is one of the world’s top technology powers.
    • WIPO ranking: This year, the World Intellectual Property Organisation ranked Britain fourth in the global innovation index.
    • India is far behind at the 46th position.
    • India, then, could gain in a technology partnership with Britain.

    Overview of the India-UK bilateral ties

    • Pakistan angle: India’s foreign policy community can’t shake off the Pakistan prism in viewing London.
    • To be sure, London’s advocacy of Pakistan has always irritated Delhi.
    • Instead of complaining about London’s South Asian policy, Delhi now simply ignores London’s claims for a special role in India’s political disputes with Pakistan.
    • By focusing on the positive, Delhi is betting it can reduce the traditional negative elements in the engagement with the UK.
    • At the same time, Delhi recognises the enormous strategic possibilities with Britain and is willing to invest political capital to build on those synergies.
    • Meanwhile, the steady relative decline of Pakistan — its economy is now about a tenth of India’s — and Delhi’s deepening strategic partnership with Washington are also encouraging London to rethink its past approach to the Subcontinent.
    • India is fully conscious of UK’s enduring global salience.
    • External Affairs Minister Subrahmanyam Jaishankar has often highlighted Britain’s continuing weight in the world as the fifth-largest economy, a permanent member of the UN Security Council, a major financial centre, and a leading hub of higher education and technology.
    • Britain also enjoys a global maritime reach and a measure of political influence across the world.

    Possibilities for partnership in the technological domain

    • While a trade agreement between Delhi and London is said to be imminent, it is in the technological domain that the prospects are immense but under-explored.
    • There is insufficient awareness in India’s strategic community of the British moves to put science and technology at the very heart of its political, economic, security and foreign policies.
    •  London announced a raft of measures this year starting with a major report on “Global Britain in a Competitive Age: An Integrated Review of Security, Defence, Development, and Foreign Policy”.
    • One of the broad themes stand out from these initiatives, which is forming a coalition of like-minded countries.
    • London wants to build a coalition of like-minded countries to reshape the global governance of technology.
    • This includes strengthening technological ties with the traditionally close partners in the Anglosphere — US, Canada, Australia, and New Zealand — as well as other partners like Japan and India.
    • All these elements of British policy mesh with India’s own economic, political, and security interests.
    • The British technology initiatives are also aligned with the technological agenda of the Quad — or the Quadrilateral forum that brings together Australia, India, Japan, and the US.

    Consider the question “In India’s partnership with the UK, it is the technological domain where prospects are immense but underexplored. Comment.”

    Conclusion

    For Delhi, the essence of the new alliance with Britain is fourfold — generate domestic prosperity, enhance national security, climb up the global technology hierarchy, and contribute to the construction of a free, open, and democratic global technological order.

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    Back2Basics: Major themes of the policy report on “Global Britain in a Competitive Age”

    • [1] Leverage technology to “level up” the regional and social inequalities in Britain.
    • [2] Ensure Britain’s privileged position as a leading science power.
    • [3] Focus on technological innovation to drive Britain’s future economic growth.
    • [4] Build internal security resilience against new technological threats.
    • [5] Modernise the intelligence apparatus with the help of new technologies.
    • [6] Integrate technology into the national defence strategy as new capabilities like AI become as consequential as battle-tanks, ships and fighter jets.
    • [7] Project technological power to counter malevolent actors in the international system.
    • [8]A coalition of like-minded countries.

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  • Coronavirus – Economic Issues

    The stepping stones in the post-pandemic world

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Context

    The COVID-19 pandemic has profoundly impacted lives and livelihoods across the world. Governments, global institutions, industry, academia and non-profit organisations around the world have joined hands to tackle the global challenge and help countries rebuild their economies.

    Criticality of international cooperation and role for India

    • The novel coronavirus pandemic has once again highlighted the criticality of international cooperation in combating current and future challenges.
    • Areas of cooperation: Key among these include economic growth, building competitiveness of the investment climate, ensuring sustainable development paths and adapting to technology acceleration.
    • Strengthening global partnership: Building resilience to cope with the threats posed by pandemics and other man-made and natural disasters has necessitated strengthening global partnerships now more than ever.
    • Global partnerships help in building mutual trust and understanding by agreeing upon common rules and standards and sharing of best practices.

    Areas to focus on

    [1] Challenge of long term sustainability of growth process

    • While the world economy is rebounding strongly, the long-term sustainability of the growth process needs to be strengthened.
    • Exit from the massive stimulus packages itself may pose risks of economic and financial instability.

    [2] Challenges of supply chain management:

    • The pandemic severely disrupted global supply chains and set the global trade trajectory on a downward path.
    • Even as the world emerges from the pandemic, facilitating medical supplies and essentials will continue to remain a top priority and for this, supply chains will need to be kept flowing.
    • For this year, the United Nations Conference on Trade and Development (UNCTAD) indicates an increase of 22.4% in the value of global merchandise trade compared with 2020.
    • World trade is expected to stand about 15% higher than before the COVID-19.
    • FDI flows in developing economies also increased significantly, totalling $427 billion in the first half of 2021.
    •  Cooperation on trade facilitation for enhancing open and transparent markets, technical assistance and reduction of complex process and arrangements must be promoted.

    [3] Increasing competitiveness

    • Competitiveness will be key in facilitating growth and inclusive development.
    • New opportunities and avenues across potential high growth sectors such as manufacturing and start-ups must be leveraged.
    • An ecosystem of entrepreneurship and innovation with targeted policies and interventions will contribute to enhancing productivity and generating employment.

    [4] Structural changes with the emergence of digital economy

    • Certain structural changes are likely to become permanent in the future and this is especially true of the digital economy
    • Equitable adaptation: The rise of telemedicine, remote work and e-learning, delivery services, etc. necessitates equitable adaptation to advanced technologies and tools, building robust infrastructure, and occupational transitions.
    • Skill development and worker training, investments in education and vocational training, and capacity building would be some key areas of focus for filling technology gaps and nurturing new and existing talent.
    • Investment in innovation: At the same time, investments in innovation will be crucial, especially during a crisis.

    [5] Climate change

    • Matter of urgency: Climate change has now acquired urgency from policymakers around the world, as seen in the recent COP26 at Glasgow.
    • International alliances and cooperation on building sustainable solutions, green technology, resource efficiency, sustainable finance, etc., must be promoted to fast-track meeting the sustainable development goals and for ensuring all-round development.

    Opportunities for India

    • Attaining faster growth path: India’s recent reforms, role in combating the pandemic, and startup vibrancy, among other factors, have attracted global attention and can help it attain a faster growth path, provided its integration with the world economy and trade gains strategic intensity.
    • Reliable and trusted player: With multiple strategic shifts, India’s role as a reliable and trusted player in the comity of nations stands enhanced.

    Way forward

    • In the post-pandemic world, it will be critical for India to improve on its investment climate and systematically target its export capabilities across sectors and regions.
    • Ease of doing business and new free trade agreement with major markets will help it integrate closely with the world through trade and investment partnerships.

    Conclusion

    The time for India is here and it must leverage international partnerships for ensuring a robust and sustained economic growth path.

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  • Electronic System Design and Manufacturing Sector – M-SIPS, National Policy on Electronics, etc.

    The challenges in being a chip hub

    op-ed snap | Economics | Mains Paper 3: Awareness in various sc and tech fields,Indigenization Of Technology

    Context

    India is aiming to manufacture silicon semiconductor chips.

    Efforts to set up chip fabrication plant

    • India has intensified efforts to set up a semiconductor fabrication plant with the help of Taiwan, the market leader.
    • For this the government is investing over $7.5 billion.
    • The Tata Group is in talks with three States — Tamil Nadu, Telangana and Karnataka — to invest over $300 million to set up a semiconductor manufacturing facility.
    • In 2014, NASSCOM wanted to promote a National Technology Corridor along coastal A.P. stretching through the Visakhapatnam, Rajahmundry and Vijayawada region.
    • Given the abundance of water, sand (raw material for making silicon ingots), road, rail, ports and airport connectivity, the industry body wanted to push and promote the design and manufacturing of electronic chips.

    Challenges

    • IP and design: While welcoming such moves by the government and technology experts, local players in the segment say that chip making itself will not be enough.
    • Other aspects such as designing and Intellectual Property are required to make a mark.
    • Designing is what brings value to the chips.
    • If the Intellectual Property lies with the foreign entity, we end up manufacturing the basic material which does not serve the purpose.
    • Need to promote SoCs: Rather, we need an ecosystem to promote SoCs (System on a Chip) which makes more sense.”
    • There are several firms in India which are now making SoCs, which is a good sign.
    • Connect related industries: The bigger challenge and immediate need for the Indian government is to connect related industries in India to create the ecosystem, industry players say.

    Consider the question “What are the challenges India may face as it aims to manufacture silicon semiconductor chips?”

    Conclusion

    The initiative is an uphill task as many factors need to come together for India to make a mark in the niche chip making and designing industry. Also, upcoming firms should be able to sustain themselves in the market when subsidies from the government are withdrawn.

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  • Foreign Policy Watch: India-United States

    India stands committed to UNCLOS

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

    India remains committed to promoting a free, open and rules-based order rooted in international law and undaunted by coercion, the Centre informed Parliament while reiterating support for the United Nations Convention on the Law of the Sea (UNCLOS).

    Background of UNCLOS

    • UNCLOS replaces the older ‘freedom of the seas’ concept, dating from the 17th century.
    • According to this concept, national rights were limited to a specified belt of water extending from a nation’s coastlines, usually 3 nautical miles (5.6 km; 3.5 mi).
    • This was considered according to the ‘cannon shot’ rule developed by the Dutch rulers.

    About UNCLOS

    • UNCLOS is sometimes referred to as the Law of the Sea Convention or the Law of the Sea treaty.
    • It came into operation and became effective from 16th November 1982.
    • It defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources.
    • It has created three new institutions on the international scene :
    1. International Tribunal for the Law of the Sea,
    2. International Seabed Authority
    3. Commission on the Limits of the Continental Shelf

    Note: UNCLOS does not deal with matters of territorial disputes or to resolve issues of sovereignty, as that field is governed by rules of customary international law on the acquisition and loss of territory.

    Major conventions:

    There had been three major conferences of UNCLOS:

    1. UNCLOS I: It resulted in the successful implementation of various conventions regarding Territorial Sea and Contiguous Zones, Continental Shelf, High Seas, Fishing Rights.
    2. UNCLOS II: No agreement was reached over breadth of territorial waters.
    3. UNCLOS III: It introduced a number of provisions. The most significant issues covered were setting limits, navigation, archipelagic status and transit regimes, exclusive economic zones (EEZs), continental shelf jurisdiction, deep seabed mining, the exploitation regime, protection of the marine environment, scientific research, and settlement of disputes.

    The convention set the limit of various areas, measured from a carefully defined baseline.

    These terminologies are as follows:

    (1) Baseline

    • The convention set the limit of various areas, measured from a carefully defined baseline.
    • Normally, a sea baseline follows the low-water line, but when the coastline is deeply indented, has fringing islands or is highly unstable, straight baselines may be used.

    (2) Internal waters

    • It covers all water and waterways on the landward side of the baseline.
    • The coastal state is free to set laws, regulate use, and use any resource. Foreign vessels have no right of passage within internal waters.
    • A vessel in the high seas assumes jurisdiction under the internal laws of its flag State.

    (3) Territorial waters

    • Out to 12 nautical miles (22 km, 14 miles) from the baseline, the coastal state is free to set laws, regulate use, and use any resource.
    • Vessels were given the Right of Innocent Passage through any territorial waters.
    • “Innocent passage” is defined by the convention as passing through waters in an expeditious and continuous manner, which is not “prejudicial to the peace, good order or the security” of the coastal state.
    • Fishing, polluting, weapons practice, and spying are not “innocent”, and submarines and other underwater vehicles are required to navigate on the surface and to show their flag.
    • Nations can also temporarily suspend innocent passage in specific areas of their territorial seas, if doing so is essential for the protection of their security.

    (4) Archipelagic waters

    • The convention set the definition of “Archipelagic States”, which also defines how the state can draw its territorial borders.
    • All waters inside this baseline are designated “Archipelagic Waters”.
    • The state has sovereignty over these waters mostly to the extent it has over internal waters, but subject to existing rights including traditional fishing rights of immediately adjacent states.
    • Foreign vessels have right of innocent passage through archipelagic waters, but archipelagic states may limit innocent passage to designated sea lanes.

    (5) Contiguous zone

    • Beyond the 12-nautical-mile (22 km) limit, there is a further 12 nautical miles (22 km) from the territorial sea baseline limit, the contiguous zone.
    • Here a state can continue to enforce laws in four specific areas (customs, taxation, immigration, and pollution) if the infringement started or is about to occur within the state’s territory or territorial waters.
    • This makes the contiguous zone a hot pursuit area.

    (6) Exclusive economic zones (EEZs)

    • These extend 200 nm from the baseline.
    • Within this area, the coastal nation has sole exploitation rights over all natural resources.
    • In casual use, the term may include the territorial sea and even the continental shelf.

    (7) Continental shelf

    • The continental shelf is defined as the natural prolongation of the land territory to the continental margin’s outer edge, or 200 nautical miles (370 km) from the coastal state’s baseline, whichever is greater.

    India and UNCLOS

    • As a State party to the UNCLOS, India promoted utmost respect for the UNCLOS, which established the international legal order of the seas and oceans.
    • India also supported freedom of navigation and overflight, and unimpeded commerce based on the principles of international law, reflected notably in the UNCLOS 1982.
    • India is committed to safeguarding maritime interests and strengthening security in the Indian Ocean Region (IOR) to ensure a favorable and positive maritime environment.

     

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  • e-Commerce: The New Boom

    What is Q-Commerce Model?

    | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Online grocer Grofers has rebranded itself “Blinkit”, in line with its new focus on “quick commerce”, which essentially involves delivering customer orders much faster than it does currently.

    Q-Commerce Model

    • Q-commerce (‘quick commerce’) – sometimes used interchangeably with ‘on-demand delivery’ and ‘e-grocery’ – is e-commerce in a new, faster form.
    • It combines the merits of traditional e-commerce with innovations in last-mile delivery.
    • The premise is largely the same, with speed of delivery being the main differentiator. Delivery is not in days but minutes – 30 or less, to be competitive.
    • This has in turn expanded the breadth of what individuals can order, with perishable goods – like groceries – being a large niche q-commerce companies speak to.
    • It tends to focus on the micro – smaller quantities of fewer goods.

    Features of this model

    • Countering pandemic: The supply chain disruptions triggered by the Covid-19 pandemic led to the emergence of a new sub-vertical in the online grocery segment.
    • Quickest delivery: It is the unique selling proposition (USP) of which was the promise of delivery within 10-30 minutes of ordering.
    • Micro-warehousing : The focus of most of these ventures is on setting up micro-warehouses located closer to the point of delivery, and of restricting stocks of high-demand items.

    Back2Basics:  Marketplace and Inventory-Based Model

    (1) Marketplace Model

    • It provides an IT platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller. Ex. India Mart, Amazon, Flipkart.
    • The e-commerce firm does not directly or indirectly influence the sale price of goods or services and is required to offer a level playing field to all vendors.

    (2) Inventory-Based Model

    • Inventory based model of e-commerce means an e-commerce activity where the inventory of goods and services is owned by an e-commerce entity and is sold to the consumers directly.
    • Ex. Alibaba

     

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  • NPA Crisis

    Co-Lending Model for Banks-NBFCs

    Prelims Only | Economics | Mains Paper 3: Inclusive Growth & Issues

    A November 2020 decision by the RBI to permit banks to “co-lend with all registered NBFCs based on a prior agreement” has led to unusual tie-ups between the banks and companies.

     The ‘Co-Lending Model’

    • In September 2018, the RBI had announced “co-origination of loans” by banks and Non-Banking Financial Companies (NBFCs) for lending to the priority sector.
    • The arrangement entailed joint contribution of credit at the facility level by both the lenders as also sharing of risks and rewards.
    • Subsequently, based on feedback from stakeholders, the RBI allowed the lenders greater operational flexibility, while requiring them to conform to regulatory guidelines.
    • The primary focus of the revised scheme, rechristened as ‘Co-Lending Model’ (CLM), was to “improve the flow of credit to the unserved and underserved sector of the economy.

    Repercussions of Co-Lending

    (1) Bank-NBFC tie-ups at indiscriminate scale

    • Several banks have entered into co-lending ‘master agreements’ with NBFCs, and more are in the pipeline.
    • SBI, the country’s largest lender, signed a deal with Adani Capital, a small NBFC of a big corporate house, for co-lending to farmers to help them buy tractors and farm implements.

    (2) Greater risk in co-lending

    • NBFCs are required to retain at least a 20 per cent share of individual loans on their books.
    • This means 80 per cent of the risk will be with the banks — who will take the big hit in case of a default.

    (3) Corporates in banking

    • While the RBI hasn’t officially allowed the entry of big corporate houses into the banking space, NBFCs — mostly floated by corporate houses — were already accepting public deposits.
    • They now have more opportunities on the lending side through direct co-lending arrangements.

    Back2Basics: Non-Banking Financial Company (NBFC)

    • An NBFC is a company incorporated under the Companies Act 2013 or 1956.
    • According to section 45-I (c) of the RBI Act, a Non–Banking Company carrying on the business of a financial institution will be an NBFC.
    • It further states that the NBFC must be engaged in the business of Loans and Advances, Acquisition of stocks, equities, debt etc issued by the government or any local authority or other marketable securities.

    NBFC business:

    The NBFC business does not include business whose principal business is the following:

    1. Agricultural Activity
    2. Industrial Activity
    3. Purchase or sale of any goods excluding securities
    4. Sale/purchase/construction of any immovable property – Providing of any services

    Difference between Banks and NBFCs:

    • NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:
    1. NBFC cannot accept demand deposits;
    2. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
    3. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in the case of banks.

     

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  • Corruption Challenges – Lokpal, POCA, etc

    [pib] Lokpal-Online: Platform for management of complaints

    PIB | Governance | Mains Paper 2: E-Governance

    The (first) Chairperson, Lokpal of India, Justice Pinaki Chandra Ghose has inaugurated’ a digital Platform for Management of Complaints called ‘Lokpal-Online’.

    Lokpal-Online

    • Lokpal-Online is an end-to-end digital solution for the management of complaints against public servants filed under the Lokpal and Lokayuktas Act, 2013.
    • It is a web-based facility, which will quicken the disposal of complaints in an accountable, transparent and efficient manner with benefits to all stakeholders.
    • It facilitates handling of complaints during the complete lifecycle of the Complaint, right from its filing to the final disposal.
    • It aims to bring more transparency and efficiency to the complaint handling mechanism.

    Notable features of Online-Lokpal

    • Convenience to complainants for filing complaints online from anywhere anytime
    • Information to the complainant about action on the complaint at every stage through e-mails and SMS
    • Facility to the complainant to ascertain the status of complaint at anytime
    • Identity of the complaint is kept confidential
    • The CVC, CBI and other inquiry agencies can upload their reports directly on the ‘Lokpal-Online’ platform.
    • Reminders to inquiry agencies through e-mails and SMS
    • Generation of analytical reports as per requirement

    Back2Basics: Lokpal

    • The Lokpal, the apex body to inquire and investigate graft complaints against public functionaries, came into being with the appointment of its chairperson and members in March 2019.
    • In March 2019, former SC judge Justice Pinaki Chandra Ghose was selected as the first head of the Lokpal.

    Lokpal and Lokayuktas Act, 2013

    • The Lokpal Act 2013 is anti-corruption legislation that seeks to provide for the establishment of the institution of Lokpal.
    • It seeks to inquire into allegations of corruption against certain important public functionaries including the PM, cabinet ministers, MPs, Group A officials of the Central Government, etc.
    • The Bill was introduced in the parliament following massive public protests led by anti-corruption crusader Anna Hazare and his associates.
    • The Bill is one of the most widely discussed and debated Bills in India in recent times.

    Its history

    • The term Lokpal was coined in 1963 by Laxmi Mall Singhvi, a member of parliament during a parliamentary debate about grievance mechanisms.
    • The Administrative Reforms Commission (ARC) headed by Morarji Desai submitted an interim report on “Problems of Redressal of Citizen’s Grievances” in 1966.
    • In this report, ARC recommended the creation of two special authorities designated as ‘Lokpal’ and ‘Lokayukta’ for a redress of citizens’ grievances.
    • Maharashtra was the first state to introduce Lokayukta through The Maharashtra Lokayukta and Upa-Lokayuktas Act in 1971.

     

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  • Judicial Reforms

    Judges cannot be shielded from citizens’ questions

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Context

    Recently, the Chief Justice of India, in his own mild way, protested against the attack on judges. One can understand his pain and agony, but he too knows that judges do not, and should not live in ivory towers.

    Questioning and analysing actions of the judiciary

    • As the judiciary is one of the pillars of democracy, and the Constitution entrusts judges with the task of protecting the constitutional rights of the people, especially the right to life and liberty, the consumer of justice has every right, and would be fully justified in critically examining, and commenting upon each and every word of the judges spoken or written, howsoever unpalatable it may be.
    • It appears that it is in the above spirit that MP Shashi Tharoor, speaking in Parliament on the High Court and Supreme Court Judges (Salaries and Conditions of Service) Amendment Bill said that the judiciary had failed to stem the tide of militant majoritarianism.
    • He alleged that the “judiciary’s inaction almost always favours those in power”. 
    • He has raised pertinent questions, and has brought out the glaring failings of the judiciary in matters concerning the protection of the constitutional rights of citizens. 
    • Pendency of important cases such as the abrogation of Article 370 of the Constitution, the Citizenship Amendment Act, electoral bonds, and many petitions under the preventive detention laws highlights this issue.

    Issues in functioning of collegium system

    • As regards the functioning of the collegium system, judges are transferred without any seeming justification, and in some cases re-transferred, justifying neither their initial transfer nor the re-transfer.
    • Some elevations of judges raise eyebrows, while some are ignored.
    • Should the collegium not be more transparent than it has been in the past in the matter of the elevation and transfers of judges?

    Conclusion

    Judges cannot be shielded from citizens’ questions. After all, as a consumer of justice, the citizen has a right to know.

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  • RBI Notifications

    Why crypto currency legislations needs careful consideration

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Context

    The government has decided to introduce a bill that seeks to prohibit all private cryptocurrencies in India.

    Background of the bill

    • In 2018, the three-judge bench of the Supreme Court set aside the RBI circular that prevented crypto exchanges from dealing with the formal financial system on grounds of proportionality.
    • Purpose of the bill: The current bill now attempts to define the rules of the game so that the RBI, tax authorities, SEBI and other agencies have much better legal guidance in deciding the course of action with respect to VCs in their respective domains.
    • The rules can, therefore, range from a ban to controlled interaction with the formal financial system.

    Issues involving cryptos

    • Issues involving cryptos can be seen at three levels, each of which is equally important.
    • The first is its impact on sovereignty.
    • The second is its interaction with financial markets.
    • Third is the value proposition that the entire concept of crypto brings to the economic debate.
    • Incorporation of price stability mechanism: Some of the variants of cryptos such as the stable coin clearly indicate that these are attempts to create systems of money that incorporate features of price stability that imply a parallel monetary system.
    • Diluting the sovereign function of money creation: Unrestricted co-opting of VC clearly dilutes the sovereign function of money creation, clearly impacting the revenues of RBI.
    • Concerns pertaining to money laundering, terrorist threats and narco-trading also come under this category given the high value and anonymity offered by cryptocurrencies.

    Challenges in cryptocurrencies interaction with the formal system

    • As of now cryptos have been recognised as assets or commodities and as a medium of exchange. Their role as units of account or legal tender is rather limited.
    • They may offer a store of value given their short supply. From a banking point of view, certain issues do arise.
    • Since VCs are not legal tenders, they cannot be used in the discharge of debt.
    • Thus, banks cannot accept VCs to close a loan account.
    • Second, can banks lend in fiat by accepting VCs as collateral assuming the VC is an asset?
    • Incompatible with the fractional system of banking: At a deeper level, the very idea of VCs and the way they are designed are incompatible with the fractional system of banking.
    • The fluctuations in interbank liquidity require that money supply adjusts to system requirements.
    • If money supply undergoes compositional change in favour of VCs, this ability will be curtailed thus accentuating the crisis.
    • In financial markets, crypto such as ICOs bring another set of issues.
    • The ICO is a creature that disrupts the very concept of limited liability in corporate finance.
    • ICOs are, at times, designed in such a way that the beneficial owner identity is concealed.
    • SEBI is yet to convey a position on various issues surrounding this idea.
    • Issues with making VCs medium of exchange: VCs have emerged as a medium of exchange and many countries have permitted VC ATMs.
    • But how does this proposition fare given that considerable advances have been made in the payment systems domain in India.
    • Is it worthwhile that additional competition is introduced in a market that is hyper-competitive?
    • It will have impact on existing investments in mobile payment and UPI technology.
    • Impact on poor states: It is well known that the Indian population exhibits significant behavioural divergences in their savings and credit behaviour across regions.
    • Such wide behavioural changes have profound implications on bank strategies and product designs.
    • In the past, there have been several instances of states having low per capita income being more prone to chit fund investments that have negatively impacted the savings of many poor households.
    • The issue of consumer protection needs to be addressed and the current laws may have to be reviewed considering this innovation.

    Conclusion

    The bill must meet many important objectives. While there are obvious concerns of money laundering and benami transactions, there are equal concerns with respect to company laws, payment systems and banking, securities and other commercial laws.

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    Back2Basics: About Stablecoin

    • Stablecoins bridge the worlds of cryptocurrency and everyday fiat currency because their prices are pegged to a reserve asset like the U.S. dollar or gold.
    • This dramatically reduces volatility compared to something like Bitcoin and results in a form of digital money that is better suited to everything from day-to-day commerce to making transfers between exchanges.

    What is ICO?

    • ICO stands for “initial coin offering,” and refers to a formerly popular method of fundraising capital for early-stage cryptocurrency projects.
    • In an ICO, a blockchain-based startup mints a certain quantity of its own native digital token and offers them to early investors, normally in exchange for other cryptocurrencies such as bitcoin or ether.

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