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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Finishing the unfinished task of reform in land and labour markets

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

    The article discusses the issues faced by the various sectors of the economy and how the reform measures introduced by the government could help these sectors.

    Exploitation of farmers and consumers

    • The Indian farmer has bee treated as captive sources of producing cheap food grain while living at subsistence levels.
    • There was no freedom to choose the point of sale for his produce, he could not decide the price of his product and had no say in selecting the buyer.
    • The end consumer was equally short-changed with frequent cycles of persistent high inflation.
    • The only beneficiaries of this perverse system were middlemen who thrived under political protection.

    How reforms will help farmers

    • The stifling nature of the Essential Commodities Act and the APMC Act have both been removed.
    • Contract farming is now nationally enabled, allowing private investment to come in.
    • Private investment will bring in technology, modern equipment, better seeds, know-how for in-between-season crops, improved yields, better logistics and freer access to national and international markets.
    • The Indian farm sector will now finally begin to see the benefits of economies of scale.

    Need for the reforms in various sectors

    • There were 44 different labour laws with more than 1,200 sections and clauses that demanded compliance if one even thought of becoming an entrepreneur.
    • Different inspectors and departments administered these laws and this stunted many entrepreneurs.
    • The Companies Act of 2013 completely paralysed risk-taking and quick decision-making among the private wealth creators.
    • There were a large number of organisations that called themselves “banks” but were completely outside the ambit of RBI regulation.
    •  The politicians who controlled these banks were the primary obstacles in introducing any reforms in these sectors.
    • Indian mainstream banks, contrary to international norms, had a peculiar practice of “grossing” their bilateral liabilities rather than “netting”.
    • As per estimates, this locked anywhere between Rs 50,000 to Rs 70,000 crore funds.

    Reforms made by the government

    • In place of the 44 central labour laws,  the Parliament has now put in place four labour codes that are much simpler — the Code on Wages, the Industrial Relations Code, the Social Security Code and the Occupational Safety, Health and Working Conditions Code.
    • The bilateral banking netting law has been passed and a large corpus of unproductive capital has been freed to be deployed in the market.
    • Cooperative banks will now be regulated by the RBI and its customers will have the same protections as those of other regular banks.
    • The problematic sections of the Companies Act 2013 have been done away with and the fear of criminal prosecution gone.

    Conclusion

    The reforms in various sectors of the economy are bound to help the faster recovery of the economy as well as help the farmers realising their full potential.

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  • Contention over South China Sea

    Quad

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

    The article discusses the future course of action for the Quad and issues it faces in the present circumstances.

    Evolution of the Quad

    • In 2007, the Quad (the United States, Japan, India, and Australia) was an idea whose time had not yet come.
    • The global financial crisis was yet to happen as America continued to enjoy its ‘unipolar moment’.
    • The American still expected China to become a ‘responsible stake-holder’.
    • America required Chinese goodwill in handling issues with North Korea and Iran, and the War on Terror.
    • Japan and Australia were riding the China Boom to prosperity.
    • If India was ambivalent at the time, it was because this mirrored the uncertainties of others.

    China’s reaction and naval expansion

    • When the idea of Quad was barely on the table; the Chinese, labelled it as an Asian version of the North Atlantic Treaty Organization.
    • The real reason for China’s hyperreaction was out of concern that such a grouping would “out” China’s plans for naval expansion by focusing on the Indo-Pacific maritime space.
    • Once the idea of Quad 1.0 had died down, China advanced a new claim — the Nine-Dash Line — in the South China Sea.
    • It undertook the rapid kind of warship building activity
    • It built its first overseas base in Djibouti.
    • It started systematically to explore the surface and sub-surface environment in the Indian Ocean beyond the Malacca Straits.
    • China’s dismissal of the Arbitral Award in the dispute with the Philippines on the South China Sea and its militarization of the islands has given a second chance to the Quad.

    Quad: A plurilateral mechanism

    • The Quad nations need to better explain that the Indo-Pacific Vision is an overarching framework being discussed in a transparent manner.
    • They should also explain that the objective of Indo-Pacific vision is of advancing everyone’s economic and security interests.
    • The Quad is a plurilateral mechanism between countries that share interest on specific matters.
    • In 2016, China itself established a Quadrilateral Cooperation and Coordination Mechanism with Afghanistan, Pakistan and Tajikistan.
    • The Quad is no exception.

    Way forward

    • The forthcoming Ministerial Quad meeting will be an opportunity to define the idea and chart a future path.
    • Needless provocation of China should be avoided.
    • Other countries might be invited to join in the future.
    • An outreach to the Indian Ocean littoral states is especially important since there are reports from some quarters suggesting that India is seeking to deny access to some extra-regional countries through the Indian Ocean.

    Conclusion

    A positive agenda built around collective action in humanitarian assistance and disaster relief, monitoring shipping for search and rescue or anti-piracy operations, infrastructure assistance to climatically vulnerable states, connectivity initiatives and similar activities, will re-assure the littoral States that the Quad will be a factor for regional benefit, and a far cry from Chinese allegations that it is some sort of a military alliance.

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  • Languages and Eighth Schedule

    Should India have one national Language?

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

    The article discusses the issues with excessive attention given to Hindi and how the neglect of another language could lead to the loss of language and the way of life associated with it as well.

    Debate in Constituent Assembly and issues in the adoption of Hindi

    • The issue of adopting a national language could not be resolved when the Constituent Assembly began drafting India’s Constitution.
    • Members from the Hindi-speaking provinces who moved a number of pro-Hindi amendments and argued for adopting Hindi as the sole national language.
    • Widespread resistance to the imposition of Hindi led to the passage of the Official Languages Act of 1963, which provided for the continued use of English for all official purposes.
    • Hindi became the sole working language of the Union government by 1965 with the State governments free to function in the language of their choice.
    • The constitutional directive for the Union government to encourage the spread of Hindi was retained within Central government entities in non-Hindi-speaking States.

    Issues with the Eighth Schedule

    • According to the 2001 Census, India has 30 languages that are spoken by more than a million people each.
    • The Constitution lists 22 languages and protects them in the eighth schedule.
    • Many languages are kept out of this schedule even if they deserve to be included.
    • This includes Tulu which is spoken by over 1.8 million people and has inscriptions dating back to the 14th and 15th centuries.
    • While Hindi, a much younger Indo-Aryan language, has been gaining prominence since before independence.
    • When a refined language loses its status in literary and daily interactions, the way of life associated with it also vanishes.
    • The Census found that while Hindi is the fastest growing language, the number of speakers of other languages has dropped.

    Way forward

    • While discussing Hindi and its use, let us also focus on the merit of other Indian languages.
    • Instead of focusing on one national language, we should learn a language beyond the mother tongue and get to know a different way of life too.

    Conclusion

    If we don’t protect and promote other well-evolved or endangered and indigenous languages, our future generations may end up never understanding their ‘real’ roots and culture

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  • Minority Issues – SC, ST, Dalits, OBC, Reservations, etc.

    Ambedkar Social Innovation and Incubation Mission (PIB)

    PIBPrelims Only | | Mains Paper 2: Schemes For Vulnerable Sections

    Union Social Justice Minister launched the Ambedkar Social Innovation and Incubation Mission(ASIIM) under Venture Capital Fund for SCs, with a view to promoting innovation and enterprise among SC students studying in higher educational institutions.

    What is ASIIM ?

    • Under Ambedkar Social Innovation Incubation Mission initiative, one thousand SC youth will be identified in the next four years with start-up ideas through the Technology Business Incubators in various higher educational institutions.
    • They will be funded 30 lakh rupees in three years as equity funding to translate their start-up ideas into commercial ventures.
    • Successful ventures would further qualify for venture funding of up to five Crore rupees from the Venture Capital Fund for SCs.

    Venture Capital Fund for SCs:

    • The Social Justice Ministry had launched the Venture Capital Fund for SCs in 2014-15 with a view to developing entrepreneurship amongst the SC and Divyang youth and to enable them to become job-givers.
    • The objective of this fund is to provide concessional finance to the entities of the SC entrepreneurs. Under this fund, 117 companies promoted by SC entrepreneurs have been sanctioned financial assistance to set up business ventures.

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  • Historical and Archaeological Findings in News

    Sawantwadi Toy (PIB)

    Prelims Only | History | Mains Paper 1: Arts & Culture

    Context- Online Release of Picture Postcard on Sawantwadi Toy by India Post.

    What are Sawantwadi toys ?

    • Sawantwadi toys refers to hand made works of art made of wood in Sawantwadi a town in Sindhudurg district of Maharashtra. Most of these toys are made in the village of Kolgaon in Sawantwadi taluka.
    • These toys are made from the wood of the Indian Coral tree (Erythrina variegata).
    • Craftsmen who make these toys belong to the Chittari community who came to Sawantwadi from Karwar and Goa.

     

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  • Modern Indian History-Events and Personalities

    Who was Kanaklata Barua ?

    ExplainedPrelims Only | | Mains Paper 1: Role Of Women & Women Organization

    A Fast Patrol Vessel (FPV) named ICGS Kanaklata Barua was commissioned in the Indian Coast Guard on Wednesday, in Kolkata. It is named after a teenage freedom fighter who was shot dead in Assam during the Quit India Movement.

    Who was Kanaklata Barua ?

    • One of the youngest martyrs of the Quit India Movement, Kanaklata Barua has iconic status in Assam. Barua.
    • Then 17, led the Mukti Bahini, a procession of freedom fighters to unfurl the Tricolour at Gohpur police station on September 20, 1942. When police did not let them move forward, an altercation led to firing, killing Barua at the head of the procession.
    • She had joined the Mrityu Bahini [a kind of a suicide squad] just two days before the incident. The squad strictly admitted members aged 18 and above but Kanaklata was an exception. She wanted to lead the procession and after much persuasion she was allowed to.
    •  Even as Barua fell to bullets, she did not let go of the flag. She did not want it to touch the ground. Another woman volunteer behind her — Mukunda Kakoty — came and held the flag, and she, too, was shot.

      How important is her legacy ?

    •  1940’s was a time where you saw a lot of women coming to the fore, leading processions, patriotic fervour was at its peak — and Kanaklata was a product of this time.
    • There are schools named after her, there are two statues, there is a ship. While we see her as an icon now, people in her village hated her then — she was a rebel, who questioned patriarchy.

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  • Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

    What are defence offsets ?

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

    What are defence offsets ?

    • In simplest terms, the offset is an obligation by an international player to boost India’s domestic defence industry if India is buying defence equipment from it.
    • Since defence contracts are costly, the government wants part of that money either to benefit the Indian industry, or to allow the country to gain in terms of technology.
    • The Comptroller and Auditor General (CAG) defined offsets as a “mechanism generally established with the triple objectives of: (a) partially compensating for a significant outflow of a buyer country’s resources in a large purchase of foreign goods (b) facilitating induction of technology and (c) adding capacities and capabilities of domestic industry”.

    When was the policy introduced?

    • The policy was adopted on the recommendations of the Vijay Kelkar Committee in 2005.
    • The idea was that since India has been buying a lot of defence equipment from foreign countries, so that India can leverage its buying power by making them discharge offset obligations, which is the norm world over.
    • The Sixth Standing Committee on Defence (2005-06) had recommended in December 2005 in its report on Defence Procurement Policy and Procedure that modalities for implementation of offset contracts should be worked out.
    • The first offset contract was signed in 2007.

    How can a foreign vendor fulfil its offset obligations?

    • There are multiple routes. Until 2016, the vendor had to declare around the time of signing the contract the details about how it will go about it. In April 2016, the new policy amended it to allow it to provide it “either at the time of seeking offset credits or one year prior to discharge of offset obligations”.
    •  Investment in ‘kind’ in terms of transfer of technology (TOT) to Indian enterprises, through joint ventures or through the non-equity route for eligible products and services.
    •  Investment in ‘kind’ in Indian enterprises in terms of provision of equipment through the non-equity route for manufacture and/or maintenance of products and services.
    •  Provision of equipment and/or TOT to government institutions and establishments engaged in the manufacture and/or maintenance of eligible products, and provision of eligible services, including DRDO (as distinct from Indian enterprises).
    • Technology acquisition by DRDO in areas of high technology.

    Will no defence contracts have offset clauses now ?

    • Only government-to-government agreements (G2G), ab initio single vendor contracts or inter-governmental agreements (IGA) will not have offset clauses anymore. For example, the deal to buy 36 Rafale fighter jets, signed between the Indian and French governments in 2016, was an IGA.
    • IGA is an agreement between two countries, and could be an umbrella contract, under which you can go on signing individual contracts. G2G is transaction specific, or an acquisition specific agreement.

     

    Why was the clause removed?

    •  Vendors would “load” extra cost in the contract to balance the costs, and doing away with the offsets can bring down the costs in such contracts.

    Conclusion-  The CAG is not very hopeful of the obligations being met by 2024. It said the audit “found that the foreign vendors made various offset commitments to qualify for the main supply contract but later, were not earnest about fulfilling these commitments”.

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  • Police Reforms – SC directives, NPC, other committees reports

    A demarcation in the interest of public order

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

    The article analyses how could the duel role assigned to an official leads to the problems in certain situations and so suggest the separation of the roles.

    Context

    • Delhi Police, having magisterial powers under the Criminal Procedure Code to take preventive action has been criticised for failing to maintain public order and prevent riots in Delhi.

    Issue with delegation: Confusion powers with the role

    • The distinction between independent actions, for which no political clearance is needed, by the District Magistrate to maintain public order and by the police to investigate crime and make arrests, was ignored.
    • Maintaining public order requires the District Magistrate to make hard choices but there can be no justification for lack of effective police action.
    • The District Magistrate is expected to consider protest as legitimate.
    • In Delhi, the police did not distinguish between wider political support and violence caused by a few.

    Distinction between “law and order” and “public order”

    • The Supreme Court has made a distinction between law and order, relating to individual crime, and public order.
    • Law and order consists of the analysis made by police of the situation in an area and their commitment to firm action and penalties under criminal law.
    • Public order is a duty imposed on the District Magistrate to assess whether it is necessary to rush to the spot where law and order has been breached to prevent violence.
    • The District Magistrate’s role is important in exceptional situations — for example, to prevent a breach of peace at a particular place.
    • If an official is allotted a dual role, this could lead to the displacement of one goal in favour of the other.

    Supreme Court’s guidelines

    • The Supreme Court has formulated certain guidelines and rules when it comes to these distinct duties.
    • 1) In Ram Manohar Lohia vs. State of Bihar, in 1965, the Supreme Court held that in the case of ‘public order’, the community or the public at large have to be affected by a particular action as it “embraces more of the community than ‘law and order’, which affects only a few individuals”.
    • 2) In the Madhu Limaye case, the Bench reiterated that “the emergency must be sudden and the consequences sufficiently grave” for imposition of restrictions.
    • 3) In Anuradha Bhasin vs. Union of India, the Supreme Court held that prohibitive orders should not prevent legitimate expression of opinion or grievance or exercise of democratic rights.
    • The Supreme Court has also specifically recognised the importance of the assessment of the role of the District Magistrate, distinct from that of the police.

    Way forward

    • Judicial review of roles and proportionality of decisions for maintaining public order requires a policy rethink.
    • Prevention through grievance redress and reliance on the least blunt instruments are critical for legitimacy.
    • The National Police Commission also recognises the coordinating role of the District Magistrate, having more leverage than the police.

    Conclusion

    The role of the District Magistrate needs to be clearly differentiated from the role of the Police Commissioner.

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  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    Code on Wages 2019

    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 discusses the issues in the Code on Wages (yet to be notified) 2019 and how it fails to achieve what it seeks to achieve.

    Code on Wages 2019

    • The Code on Wages, 2019 seeks to consolidate and simplify four pieces of legislation into a single code. These 4 legislations are-
    • 1) Payment of Wages Act, 1936.
    • 2) Minimum Wages Act, 1948.
    • 3) Payment of Bonus Act, 1965.
    • 4) Equal Remuneration Act, 1976.
    • Its object and reasons stated that even the Second National Commission on Labour- 2002 suggested consolidating all labour laws into four codes.

    Issues with the consolidation

    • While the previous four pieces of legislation had a total of 119 sections, the new Code has 69 sections.
    • Any consolidation will impact the length of the sections.
    • Further, all requirements for enforcing the Act, have been relegated to the Rules.
    • As a result, the delegated pieces of legislation (Rules) will be bigger than the Code; this is no way to condense prior pieces of legislation.
    • All the four repealed pieces of legislation were enacted historically at different points in time and to deal with different situations.
    • The combining of asymmetrical laws into a single code is not an easy task and will only create its own set of new problems.
    • The central government will have the power to fix a “floor wage”.
    • Once it is fixed, State governments cannot fix any minimum wage less than the “floor wage”.
    •  The concept should be for a binding minimum wage and not have dual wage rates — a binding floor wage and a non-binding minimum wage.
    • Neither the Code nor the Rules (presently, draft Rules) prescribe the qualifications and experience required for appointment of competent authority.
    • Anew provision (Section 52) has been introduced where an officer will be notified with power to impose a penalty in the place of a judicial magistrate.
    • An essential judicial function is now sought to be vested with the executive in contravention of Article 50 of the Constitution.

    Issue of MGNREGA wages

    • There were cases as to whether the Minimum Wages Act would have an over-riding effect over the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.
    • Several High Courts have placed the Minimum Wages Act to override MGNREGA.
    • That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.
    • That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.

    Conclusion

    The Code on Wages (yet to be notified) has neither succeeded in consolidation of laws nor will it achieve the expansion of the coverage of workers in all industries in the unorganised sector.

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  • Tax Reforms

    Lessons to learn from Vodafone ruling

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

    Context

    •  An Investor-State Dispute Settlement (ISDS) tribunal has ruled that India’s imposition of tax liability amounting to ₹22,000 crore on Vodafone is in breach of India-Netherlands bilateral investment treaty obligations.

    Background of the case

    • This case arose after the Indian Parliament in 2012 amended the Income Tax Act.
    • As per the amendment, income deemed to be accruing to non-residents, directly or indirectly, through the transfer of a capital asset situated in India is taxable retrospectively with effect from April 1, 1962.
    • This amendment was carried out to override the Supreme Court ruling in favour of Vodafone.
    • This amendment dented India’s reputation as a country governed by the rule of law, and shook the faith of foreign investors.

    Key lessons from Vodafone case

    • 1) All the three organs of the Indian state — Parliament, executive, and the judiciary — need to internalise India’s BIT and other international law obligations.
    • These organs need to ensure that they exercise their public powers in a manner consistent with international law, or else their actions could prove costly to the nation.
    • 2) India should learn that being a country that values the rule of law is an important quality to win over the confidence of foreign investors and international goodwill.
    • 3) It is likely that the government might challenge the award at the seat of arbitration or resist the enforceability of this award in Indian courts alleging that it violates public policy.
    •  It would mean that India does not honour its international law obligation.
    • 4) This ruling might have an impact on the two other ISDS claims that India is involved in with Cairn Energy and Vedanta on the imposition of taxes retrospectively.
    • 5) It is quite possible that India might use this award to further harden its antagonistic stand against ISDS and BITs.
    • India unilaterally terminated almost all its BITs after foreign investors started suing India for breaching BITs.
    • But the fact is that this case and several others are a result of bad state regulation.
    • 6) This decision shows the significance of the ISDS regime to hold states accountable under international law when in case of undue expansion of state power.
    • The case is a reminder that the ISDS regime, notwithstanding its weaknesses, can play an important role in fostering international rule of law.

    Consider the question “What were the issues involved in the Vodafone tax case? What are the implication of Investor-State Dispute Settlement ruling for India?”

    Conclusion

    If government is serious about wooing foreign investment, India should immediately comply with the decision.

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