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

    Putting India-U.S. trade ties on new footing

    op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues

    After tumultuous years of Trump administration in trade policies, the article examines the new possibilities under the next U.S. President in trade ties with India.

    Approach towards WTO and India

    • The new U.S. administration will have more constructive stance on multilateral issues in the World Trade Organization (WTO).
    • The Trump administration went out of its way in seriously undermining WTO institutions when the organisation was already in need of reform and new direction.
    • The Biden administration is less likely to engage in unilateral tariff increases and more likely to pursue remedies in the WTO.
    • In case of India, the Trump administration it pursued an aggressive approach to resolve market access concerns through threats to eliminate India’s benefits under the Generalized System of Preferences programme.
    • However, the follow-through was weak.
    • The administration was on the brink of concluding a historic bilateral trade deal, yet it lost focus.

    5 likely developements

    • 1) It is clear that Mr. Biden plans to focus on domestic concerns first.
    • There may be trade aspects to some of these efforts, but they may have limited early relevance for a future U.S.-India trade policy.
    • 2) Two, as it turns to trade policy, the Biden administration is not likely to place India among its top few priorities.
    • Among top priorities will include formulating its approach with China, such as finding alternatives to the Regional Comprehensive Economic Partnership to set new global standards that address China’s practices.
    • That said, India should be among the priorities at the next level down.
    • 3) The trade deal still pending with the Trump administration remains compelling.
    • There could be an early opportunity to conclude these negotiations and for the Biden administration to get credit.
    • A bilateral deal will not lead to serious consideration of FTA negotiations any time soon.
    • But this first trade agreement could pave the way for later additional small agreements.
    • 4) The existing Trade Policy Forum (TPF) met only once over the last four years.
    • It seems likely that the Biden administration will see the TPF’s value as a venue for more regular discussions on a range of trade issues.
    • 5) A reinvigorated TPF will present new opportunities for the two countries to take up a range of cutting-edge trade issues that will be critical in determining whether the U.S. and India can converge more over time or will drift further apart.
    • These include digital trade issues, intellectual property rights and approaches to nurturing innovation, better health sector alignment, and more regular regulatory work on science-based agricultural policies.

    Conclusion

    The future looks bright for U.S.-India trade under a Biden administration, but that does not mean it will be any easier. It will be critical for leadership on both sides to commit to strong efforts to put the trade relationship on a new footing, which will have to involve a ‘can-do’ attitude to solving problems.

    Back2Basics: Trade Policy Forum

    • It was established in 2005.
    • The Forum is part of the overall United States-India Economic Dialogue, replacing the Trade Policy Working Group pillar.
    • It  convenes on a regular basis.
    • The Forum provides an opportunity to work together to expand trade between the two countries.
    • The agenda could cover the following subjects: tariff and non-tariff trade barriers; foreign direct investment; subsidies; customs procedures; standards, testing, labeling and certification intellectual property rights protection; sanitary and phytosanitary measures; government procurement; and services.

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  • Banking Sector Reforms

    Mistake in allowing industrial houses to own banks

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

    The article analyses the risks involved in allowing the corporate houses to own and operate the banks.

    Context

    • An internal working group of the RBI has recently made a recommendation to permit industrial houses to own and control banks.

    Encourage bank but not owned by banks

    • According to the report, the main benefit is that industry-owned banks would increase the supply of credit, which is low and growing slowly.
    • Credit constraints are indeed a real problem, and creating more banks is certainly one way of addressing the issue.
    • But this is an argument for encouraging more banks but it is not an argument for creating banks specifically owned by industry.
    • The other powerful way to promote more good quality credit is to undertake serious reforms of the public sector banks.

    Problems in allowing industrial houses in banking

    • The problem with banks owned by corporate houses is that they tend to engage in connected lending.
    • This can lead to three main adverse outcomes:

    1) Over-financing of risky activities

    • Lending to firms that are part of the corporate group allows them to undertake risky activities that are not easily financeable through regular channels.
    • Precisely because these activities are risky, they often do not work out.
    • And when that happens, it is typically taxpayers who end up footing the bill.
    • In principle, connected lending can be contained by the regulatory authority.
    • However, experiences in other nations show that regulating connected lending is impossible convincing most advanced countries that regulating connected lending is impossible.
    • Indonesia tried to regulate the practice: It banned the practice.
    • The only solution is to ban corporate-owned banks.
    • Regulation and supervision need to be strengthened considerably to deal with the current problems in the banking system before they are burdened with new regulatory tasks.

    2) Lack of exit

    • The economic landscape is littered with failed firms, kept alive on life support, making it impossible for more efficient firms to grow and replace them.
    • While some progress was initially made under the Insolvency and Bankruptcy Code (IBC), this had stalled even before the pandemic, largely because existing promoters and owners mounted a stiff resistance.
    • If industrial houses get direct access to financial resources, their capacity to delay or prevent exit altogether will only increase.

    3) Increasing dominance

    • The Indian economy already suffers from over-concentration.
    • We not only have concentration within industries, but in some cases the dominance of a few industrial houses spans multiple sectors.
    • If large industrial houses get banking licences, they will become even more powerful, not just relative to other firms in one industry, but firms in another industry.

    Impact on regulator and government

    • The power acquired by getting banking licences will not just make them stronger than commercial rivals, but even relative to the regulators and government itself.
    • This will aggravate imbalances, leading to a vicious cycle of dominance breeding more dominance.

    Impact on quality of credit

    • Indian financial sector reforms have aimed at improving not just the quantity, but also the quality of credit.
    • The goal has been to ensure that credit flows to the most economically efficient users, since this is the key to securing rapid growth.
    • If India now starts granting banking licences to powerful, politically connected industrial houses we will effectively be abandoning that long-held objective.

    Impact on economy and democracy

    • Indian capitalism has suffered because of the murky two-way relationship between the state and industrial capital.
    • If the line between industrial and financial capital is erased, this stigma will only become worse.
    • Corporate houses that are already big will be enabled to become even bigger allowing them to dominate the economic and political landscape.
    • A rules-based, well-regulated market economy, as well as democracy itself — will be undermined, perhaps critically.

    Consider the question “What are the challenges and opportunities in allowing the industrial houses to own and operate the banks.”

    Conclusion

    The conclusion is clear. Mixing industry and finance will set us on a road full of dangers — for growth, public finances, and the future of the country itself.

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  • Electoral Reforms In India

    One nation One election

    Prelims Only | Polity | Mains Paper 2: Federalism

    Prime Minister once again raised the pitch for “One Nation, One Election” and a single voter list for all to prevent the impact of the model code of conduct on development works due to frequent elections.

    Try this question:

    Q.Discuss how a common electoral roll and simultaneous elections are ways to save the enormous amount of effort and expenditure on Elections in India. Also discuss the centralizing tendency behind the idea.

    Elections in India

    • Currently, elections to the state assemblies and the Lok Sabha are held separately — that is whenever the incumbent government’s five-year term ends or whenever it is dissolved due to various reasons.
    • This applies to both the state legislatures and the Lok Sabha. The terms of Legislative Assemblies and the Lok Sabha may not synchronize with one another.
    • For instance, Rajasthan faced elections in late 2018, whereas Tamil Nadu will go to elections only in 2021.

    Simultaneous Elections

    • But the idea of “One Nation, One Election” envisages a system where elections to all states and the Lok Sabha will have to be held simultaneously.
    • This will involve the restructuring of the Indian election cycle in a manner that elections to the states and the centre synchronize.
    • This would mean that the voters will cast their vote for electing members of the LS and the state assemblies on a single day, at the same time (or in a phased manner as the case may be).

    Birth of the Idea: A backgrounder

    • Simultaneous elections are not new to India. They were the norm until 1967.
    • But following dissolution of some Legislative Assemblies in 1968 and 1969 and that of the Lok Sabha in December 1970, elections to State Assemblies and Parliament have been held separately.
    • The idea of reverting to simultaneous polls was mooted in the annual report of the Election Commission in 1983.
    • The Law Commission’s Report also referred to it in 1999.
    • After PM floated the idea once again in 2016, the NITI Aayog prepared a working paper on the subject in January 2017.

    What are the proposals under it?

    There were two proposals to conduct elections synchronization in two batches.

    • One proposal was to make the shift to simultaneous polls in a phased manner, where general elections, of few States and UT may be synchronised in 2019.
    • For such a synchronization to happen, besides political consensus and extension of term up to six months in some states, amendments to the Constitution have to be made.
    • Elections to the remaining States and UTs with will be synchronised by the end of 2021.
    • Thereafter, elections to the Lok Sabha, all the State Legislative Assemblies and Union Territories (with legislatures) will be held simultaneously from 2024.

    Advantages of simultaneous elections

    • Reduce cost: The cost of an election has two components – one, expenditure incurred by the Election Commission and two, expenditure incurred by the political parties. A large number of government employees and public buildings are diverted from their regular responsibilities for election duties. Supporters of the simultaneous elections argue that it will reduce election expenditure in terms of finance and reduce diversion of human resources for election duties.
    • Reduce disruption due to MCC: Model Code of Conduct (MCC) comes into operation during election season. MCC is seen as an obstacle to the government service delivery mechanism. Simultaneous elections may reduce such disruption.
    • Reduce populism: During elections, political convenience takes precedence over public interest. To lure voters, political parties concede to popular demands without any consideration to public interest. Simultaneous elections reduce such opportunity for political parties.
    • National prespective: Simultaneous election promotes national perspective over the regional perspective. This is important for the unity of the country.
    • Strengthen National parties: Since it promotes national perspective, simultaneous elections strengthen national parties. This reduces mushrooming growth of political parties based on narrow vote bank politics.
    • Strengthens federalism: Simultaneous elections bring States on par with the Center. If the elections are to be held simultaneously once in five years, the elected state governments cannot be dismissed easily. This reduces the anomalies created by the Article 356 (President’s Rule) of the Indian constitution and hence, it strengthens federalism.
    • Stability: The simultaneous election once in five years provides stability to the governments. It allows the government to take difficult and harsh decision in larger public interest.

    Arguments against simultaneous elections

    • No guarantee that expenditure of the political parties will reduce: Simultaneous elections may reduce the expenditure incurred by the Election Commission. But there is no guarantee that expenditure of the political parties will reduce. Political parties may spend entire fund at once rather than in phases.
    • Reduce importance of state elections: Center and States are equal and sovereign within their jurisdiction. Simultaneous elections may reduce the importance of state elections. Thus it affects the concept of federalism.
    • Violates Article 83(2) and Article 172 : Article 83(2) and Article 172 of the Constitution requires that the Lok Sabha and State legislatures be in existence for five years from the date of its first meeting, “unless dissolved earlier”. Simultaneous elections ignore this phrase, as there would be no opportunity to dissolve Lok Sabha or State Assemblies.
    • Negates NCM: A government can be in power as long as it enjoys the confidence of Parliament. Simultaneous elections can work only if governments last for a fixed tenure of five years regardless of confidence of Parliament. It negates the concept of ‘no confidence motion’ – an important tool for legislative control over the executive.
    • Keep Government on toes: Elections are an important part of representative democracy. Simultaneous elections with fixed tenure of five years curtail people’s right to express their confidence or displeasure on the government.
    • Ignores diversity: Simultaneous elections will relegate local issues or issues of state importance to the background. This completely ignores the diversity of the country.
    • Logistical challenge: Holding simultaneous election once in five years may also face logistical challenges. For the free and fair conduct of the elections, security forces need to be deployed in large numbers. Given the current strength of security personnel, this may be a challenging task.

    Way forward

    • There needs to be a consensus and all hands on the deck to see whether the country suits for simultaneous elections.
    • All political parties should at least cooperate in debating this issue, once the debate starts, the public opinion can be taken into consideration.
    • India being a mature democracy, can then follows the outcome of the deliberation.

    Shekhawat solution

    • The former vice-president Bhairon Singh Shekhawat proposed a solution. He called for a review of provisions of the no-confidence motion.
    • He suggested that no-confidence motion must mandatorily be accompanied by an alternative government formation plan. This prevents premature dissolution of Lok Sabha on account of political instability.
    • But critics point out that, this solution will take away people’s right to elect or dismiss a government.

    Conclusion

    • The constitution of India has essentially prescribed a federal structure of state governance.
    • As we are aware that there are several levels of government such as Lok Sabha and the Rajya Sabha besides, state governments, Municipal Corporations and the Panchayats, which are forms of local governance.
    • As a result the entire power is not concentrated with one government.
    • But One Nation, One Election can lead to such concentration of power in a single hand.
    • So the new government needs to ensure such vast power is not gathered by a single domain through One Nation, One Election.

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  • J&K – The issues around the state

    What is J&K Roshni Act?

    | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    The J&K High Court has declared Roshni Act “illegal, unconstitutional and unsustainable” and a CBI probe has been ordered into the allotment of land under this law.

    Must read:

    [Burning Issue] One Year since the Repeal of Art. 370

    What is the Roshni Act?

    • The J&K State Lands (Vesting of Ownership to the Occupants) Act, 2001 is popularly known as the Roshni Act.
    • It envisaged the transfer of ownership rights of state land to its occupants, subject to the payment of a cost, as determined by the government.
    • It set 1990 as the cutoff for encroachment on state land.
    • The government’s target was to earn Rs 25,000 crore by transferring 20 lakh kanals (one-eighth of an acre) of state land to existing occupants against payment at market rates.
    • The government said the revenue generated would be spent on commissioning hydroelectric power projects, hence the name “Roshni”.

    What is the recent controversy?

    • In October this year, the High Court held the Roshni Act as ‘unconstitutional’.
    • The court also directed the UT government to make public names of those who grabbed the land under the scheme.
    • Last week, the UT government began publishing the names of beneficiaries on its websites.
    • The first set of names included prominent politicians and their relatives, hotels, and a trust connected each to the dominant parties of the Gupkar declaration.

    A scam being busted

    • Investigations into the land transfers subsequently found that land in Gulmarg had been given over to ineligible beneficiaries.
    • However several government officials illegally possessed and vested ownership of state land to occupants who did not satisfy criteria under the Roshni Act.
    • A report by the CAG estimated that against the targeted Rs 25,000 crore, only Rs 76 crore had been realized from the transfer of land between 2007 and 2013, thus defeating the purpose.
    • The report blamed irregularities including arbitrary reduction in prices fixed by a standing committee, and said this was done to benefit politicians and affluent people.

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  • Women Safety Issues – Marital Rape, Domestic Violence, Swadhar, Nirbhaya Fund, etc.

    UP Law against Forceful Inter-Faith Marriage and Conversions

    | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    The UP Cabinet has cleared a draft ordinance against forceful inter-faith conversions for marriage, amid similar steps by other states.

    Try this question:

    Q. In a world where religiosity is rising, the contemporary liberal ideas seem outdated and incapable of handling dangerous issues of religious bigotry. Critically comment.

    What is the proposed UP law on ‘love jihad’?

    • The proposed law defines punishment and fine for three different cases.
    1. Conversion done though “misrepresentation, force, undue influence, coercion, allurement or by any fraudulent means” would face jail term of one to 5 years, and a minimum fine of Rs 15,000.
    2. Conversion of a minor, a woman from the SC or ST would have to face a jail term from three to 10 years, with a minimum fine of Rs 25,000.
    3. If such conversion is found at the mass level, then those guilty would face jail term from three to 10 years, with a minimum fine of Rs 50,000.
    • It proposes among other things that a marriage will be declared “shunya” (null and void) if the “sole intention” of the same is to “change a girl’s religion”.

    Who can convert and how can they do it under the proposed law?

    • Under the new proposed law, anyone wanting to convert into another religion would have to give it in writing to the District Magistrate at least two months in advance.
    • The government is supposed to prepare a format for the application and the individual has to fill the application for conversion in that format.
    • However, under the new law, it would be the responsibility of the one going for the religious conversion to prove that it is not taking place forcefully or with any fraudulent means.
    • In case, any violation is found under this provision, then one faces a jail term from 6 months to 3 years and fine of minimum Rs 10,000.

    Need for such law

    • The state of UP is witnessing rising incidents of forced religious conversions or conversions through fraudulent ways.
    • The extreme right wing politicians in the state were quiet vocal against alleged religious conversions.
    • There are cases of being allegedly lured and honey-trapped by men and those girls now seeking their help to free themselves.

    Interfaith marriages and the Constitution

    • The right to marry a person of one’s choice is a guarantee under Article 21.
    • At the same time, freedom of conscience, the practice and propagation of a religion of one’s choice, including not following any religion, are guaranteed under Article 25.
    • One set of rights cannot invalidate the other.

    What do critics say?

    • Such law to regulate matrimonial relationships between two consenting adults is simply against the constitutional guarantees.
    • The right to marry a person of one’s choice flows from the freedom of individuality, naturally available to any individual.
    • Hence, interfaith marriages and religious conversions should not be the matter of concern for social watchdogs.
    • Hence, the mere statement of two consenting adults about the existence of their matrimonial relation is sufficient.

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  • Indian Navy Updates

    National Maritime Domain Awareness Centre (NMDAC)

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

    The Navy’s Information Management and Analysis Centre (IMAC), the nodal agency for maritime data fusion will soon become a National Maritime Domain Awareness (NMDA) centre.

    Try this question:

    Q“To be secure on Land, we must be Supreme at Sea”. In this context, discuss why India is primarily a Maritime Nation?

    What is IMAC?

    • The IMAC monitors movement of more than 120,000 ships a year passing through the Indian Ocean.
    • The cargo carried by these ships account for 66 per cent of world crude oil, 50 per cent of container traffic and 33 per cent of bulk cargo.
    • Thus, IMAC performs a very crucial role in collecting shipping information, analysing traffic patterns and sharing the inputs with the user agencies.
    • It tracks vessels on the high seas and gets data from the coastal radars, white shipping agreements, Automatic Identification Systems (AIS) transponders fitted on merchant ships, air and traffic management system and global shipping databases.

    Transforming to NDMAC

    • The IMAC will soon transform into a national NMDA centre, wherein it will be a multi-agency centre.
    • The NMDA project was launched in accordance with the vision of PM on SAGAR (Security and Growth for All in the Region).
    • Approved by the Defence Acquisition Council in 2012, the IMAC became operational in 2014 and is located in Gurugram.
    • It is the nodal centre of the National Command Control Communication and Intelligence System (NC3I), which was established to link the Navy and the Coast Guard.

    Why such a move?

    • India has a coast line of about 7500 km and an Exclusive Economic Zone(EEZ) of over 2 million sq kms.
    • In addition, we are endowed with abundant oceanic wealth comprising a large number of island territories and vast sea bed area, over 97 % of our national trade is carried by sea routes.
    • It is therefore, imperative that we modernize the Navy which always has to be in a high state of preparedness.

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  • [pib] SDG Investor Map for India

    IOCRPIB | Economics | Mains Paper 3: Issues relating growth and development, employment

    Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

    UNDP and Invest India have launched the SDG Investor Map for India, laying out 18 Investment Opportunities Areas (IOAs) in six critical SDG (Sustainable Development Goals) enabling sectors.

    Try this PYQ:

    Q.The Partnership for Action on Green Economy (PAGE), a UN mechanism to assist countries transition towards greener and more inclusive economies, emerged at:

    (a) The Earth Summit on Sustainable Development 2002, Johannesburg

    (b) The United Nations Conference on Sustainable Development 2012, Rio de Janeiro

    (c) The United Nations Framework Convention on Climate Change 2015, Paris

    (d) The World Sustainable Development Summit 2016, New Delhi

    SDG Investor Map for India

    • SDG Finance Facility platform at UNDP in partnership with Invest India, the investment promotion arm of the Government of India has developed this Map.
    • The map will help public and private sector stake-holders direct capital towards IOAs, and White Spaces (Areas of Potential) that can contribute to the sustainable development needs of the country.
    • The map has identified 18 IOAs and 8 White Spaces across 6 Priority Sectors including Education, Healthcare, Agriculture and Allied Services, Financial Services, Renewable Energy and Alternatives, and Sustainable Environment.

    Utility of this map

    • Investing in the SDGs at this point is crucial to ‘Building Back Better’ and making the economy and our societies more resilient and sustainable.
    • With the COVID-19 pandemic, the financing gap for the SDGs in India has only widened further and decades of development progress is nearly on the verge of reversal.
    • Enhanced productivity, technology adoption and increased inclusion are all critical factors that this map uses to identify the most attractive sectors for investors.

    Back2Basics: What are SDGs?

    • The SDGs or Global Goals are a collection of 17 interlinked goals designed to be a “blueprint to achieve a better and more sustainable future for all”.
    • They were set in 2015 by the United Nations General Assembly and are intended to be achieved by the year 2030.
    • They are included in a UN Resolution called the 2030 Agenda or what is known as Agenda 2030.
    • Countries are expected to take ownership and establish a national framework for achieving these Goals.
    • Implementation and success will rely on countries’ own sustainable development policies, plans and programmes.

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  • Importance of constitutional and public morality in democracy

    | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    Democracy has evolved in many ways with time. The article examines its evolution in the Indian context.

    Historical background of democracy

    • In recorded history, the Greeks were the first to experiment with models of government.
    • There were monarchies, oligarchies and democracies among the Greek city-states of the 5th Century BCE.
    • Aristotle wrote that while monarchies were for the benefit of the monarchs and oligarchies for the benefit of men with means, democracies were for the benefit of men without means.
    • Democracy has travelled a long way from those times.
    • In the world’s successful democracies like the US, UK and India, there is a fine balance between the elected and non-elected institutions with enough safeguards.

    How democracy worked in India

    • There was much scepticism about the idea of universal adult franchise during the making of the Indian Constitution.
    • But Rajendra Prasad assured the Assembly’s members about the raw political wisdom of the average Indian as also the strength of the other institutions to safeguard the democratic process.
    • However, the infamous Emergency exposed the flaws in Indian democracy.

    Gandhiji’s and B R Ambedkar’s approach

    • Mahatma Gandhi was not a big admirer of the parliamentary system.
    • Gandhi’s view was that in the British system, the parliament works only for partisan interest — and not for the national interest.
    • He wrote in Harijan in January 1937 that by political independence he meant system suitable to Indian context i.e. Ram Rajya — sovereignty of the people based on pure moral authority.
    • B R Ambedkar too described democracy in India as “only a top-dressing” on an Indian soil “which is essentially undemocratic”.
    • He underscored the importance of social democracy for the success of political democracy.
    • Gandhi was referring to the tyranny of the British rule and Ambedkar was responding to the oppressive caste system.
    • Neither was against democracy, but both were against the idea of “majoritarian rule”.
    • For Gandhi, democracy meant the weak getting the same chance as the strong.
    • For Ambedkar, it was about giving voice to the voiceless.
    • For democracies to succeed, both believed that the parliamentary majorities need to be restrained through constitutional ethics and public morality.
    • Constitutional ethics is about leaders respecting constitutional order, conventions and institutions.
    • Gandhi’s greater emphasis was on public morality.
    • He insisted that for India’s democracy to succeed, the Congress should convert itself into a lok sevak sangh and work at the grassroots level.

    Consider the question “Public morality and unelected institution are necessary checks on the elected government not inimical to it. Comment.”

    Conclusion

    India’s democracy, as envisaged by the makers of its Constitution, thrived essentially because of the respect of the leaders for ethical constitutionalism and moral activism of the grassroots activists. Neither should see the other as an enemy and try to bring them down.

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

    Steps needed to achieve Comparative advantage in Manufacturing

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

    The article suggests the policy approach to achieve industrial growth while avoiding the isolationist approach in pursuit of AtmaNirbharBharat.

    Issue of policy binary

    • The goals of the Make in India initiative and now the AatmaNirbharBharat Abhiyan are driving a major shift in policy.
    • Import duties are being raised.
    • Production-linked incentives are being offered to firms across a wide canvas of 10 priority sectors.
    • At the same time, there is considerable unease at the rolling back of trade liberalisation.
    • This binary is not very useful.

    Steps needed to gain competitive advantage

    1) Infrastructure

    • It would still take India many years to develop its physical infrastructure to the levels required for international competitiveness.
    • Until then, large industrial parks for textiles, electronics, toys or shipbuilding need to be developed by state agencies with soft financing.
    • Competitive logistics are essential.
    • This was critical for the success of the information technology (IT) industry where world-class infrastructure was created within the software parks.
    • High-speed broadband real-time connectivity to the US market was provided through public investment.
    • This was done well before general telecom modernisation began.

    2) Closing the financing gap

    • Long-term financing for world-class infrastructure is still a gap.
    • The central government can either use one of its existing financial institutions or create a new development financial institution to provide long-term low-interest rate debt.
    • The sovereign needs to provide risk-mitigation through an implicit guarantee. It can afford to do so.

    3)  Prevent real exchange rate appreciation

    • Before considering specific increases in import duties, real exchange appreciation should be undone.
    • This would have the effect of raising tariffs across the board.
    • It is high time the government and the Reserve Bank of India (RBI) agreed on this objective.

    4) Change the regime for SEZ

    • Allow SEZ to sell into the domestic area with import duties at the lowest applicable rate with any trading partner and the same value-addition norms.
    • Tax exemption on profits could be dispensed with while continuing to provide a duty-free import regime.
    • This would create a level-playing field for production vis-à-vis competitive locations overseas.
    • Large zones would have to be developed by the state.
    • The private sector can be partners in the process, but achievement of scale is only possible by the state.
    • Production for the domestic as well as the global market would become easier.

    5) Encourage domestic value addition

    • Domestic value-addition can be incentivised by-
    • 1) Reducing duties to zero for all primary raw materials and inputs.
    • 2) then progressively higher rates for intermediates with the highest rate for the finished product.
    • In short, have just the opposite of the inverted duty structure we have had for computers.
    • This would change investment and production decisions if other costs of production in India have been made competitive.

    6) Commitment of procurement of full production

    • In some industries, commitment of procurement of full production for a few years would suffice to get investment.
    • Bids could be invited for solar panels, or for battery storage for the grid, for annual supply for, say, five years with the condition that full value-addition has to be done in India.
    • Such commitment would provide for amortisation of the capital investment and make it a risk-free investment.
    • If the bid size is large enough, the best global firms would come and invest.
    • If the bids are repeated, prices would come down and a competitive industry structure would be created.

    7) Encourage public investment

    • Public investment in firms should not be ruled out altogether.
    • In some cases, it may be the best way to create competitive capacity.
    • Maruti Suzuki is a good example in India.
    • Volkswagen was set up by a state government in Germany, which is still a substantial shareholder.
    • This is a policy instrument that can be used to create competitive advantage.

    8) Creation of fund

    • There should also be willingness to create a fund that looks at modest returns, but aims at creating national and global champions through start-ups.

    Conclusion

    The foundation of China’s incredible success was laid by Deng Xiaoping with the maxim on economic policy that one should not bother about the colour of the cat as long as it caught mice. India’s policies have tended to be doctrinaire. We need a heavy dose of pragmatism to achieve our full potential.

    Source:-

    https://www.financialexpress.com/opinion/industrial-growth-the-right-policy-mix-for-success/2136735/

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  • Global Geological And Climatic Events

    Western Disturbances and winters in North

    | Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location

    For the past few days, Chandigarh and its neighbouring states have been experiencing unusually cold days although the night temperatures are normal.

    Try this PYQ:

    Consider the following statements:

    1. The winds which blow between 30°N and 60°S latitudes throughout the year are known as westerlies.
    2. The moist air masses that cause winter rains in the North-Western region of India are part of westerlies.

    Which of the statements given above is/are correct?

    (a) Only 1

    (b) Only 2

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    Temperature anomaly in North

    • Meteorological officials have attributed the trend to the cloud cover in the region which was absent until a few days ago.
    • It is the result of a western disturbance, which has brought about a spell of precipitation in the northwest Himalaya.

    Role of clouds

    • During the day, clouds obstruct the heat from the sun from reaching the surface of the earth, reflecting some of it back into space.
    • This lowers the temperature. Cold winds blowing down from snow-bound areas in the mountains also contribute to the cooling effect.
    • At night, however, clouds act like blankets – they help retain some of the heat energy radiated back by the earth’s surface.
    • Overcast weather at night, thus, increases greenhouse warming.

    What are western disturbances?

    • In northern India, winter rains and clouds are generally caused by moisture-bearing wind systems called western disturbances.
    • They originate and gather moisture over the Mediterranean region and flow eastwards towards the Indian subcontinent.
    • When some of these winds run into mountains of the northwest Himalaya, they are forced upward.
    • At higher altitudes, the temperatures drop and water vapour gets condensed. This leads to cloud formation and eventually rain and snow.

    Other factors for severe winters in North

    • In north India, the huge temperature difference between summers and winters is due to its continentality (distance from seas and oceans).
    • Air from oceans moderates the temperature as it moves onshore, but this effect is missing in continental interiors.
    • As a result, north India has greater seasonal differences as compared to peninsular India.
    • Temperature also reduces rapidly with altitude, and thus, the Himalayan region is colder still.

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