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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

     [op-ed snap] Don’t be deterred by the ‘crowding out’ effect of the fisc

    30 January 2020 | op-ed snap | Economics
    Mains Paper 3: Government Budgeting

    Context

    Market borrowings of the government do not always squeeze credit for the private sector in India.

    What is ‘crowding out’ effect?

    • Increased government spending and borrowing: It refers to how increased government spending, for which it borrows more money, tends to reduce private spending.
      • Why does private spending reduce? This happens because when the government takes up the lion’s share of funds available in the banking system, less of it is left for private borrowers.
      • Relationship with interest rate: Higher borrowing by the government and subsequent crowding out also impacts interest rates in the economy.

    How the Government borrowing works and the role of RBI

    • Local borrowing local spending: Typically, the government funds its fiscal deficit by borrowing from the domestic bond market.
      • Its expenditure is also local in nature.
    • Overdraft from RBI: The Reserve Bank of India (RBI) is the official banker to the government-which spends money by first taking an overdraft from the central bank.
      • This overdraft gets repaid through bond market borrowings.
    • Why overdraft? The understanding is that any such government spending should ideally not affect the availability of funds to other borrowers in the market.
    • Excessive borrowing and effects on the interest rate: Excessive government borrowing from the bond market, many cautions, could lead to a rise in interest rates for the government itself and consequently for everyone else in the economy.

    Analysis of the effects of borrowing on other variables

    • Analysis of the data reveals the following trends.
    • No impact on other variables: Local borrowing and spending by the Indian government does not impact any other macroeconomic variables like-
      • The availability and cost of funds for other participants in the economy.
      • Inflation.
      • Deposit growth, at the current deficit level—that is, with the state and central combined figure above 6% of GDP.
    • What impacts the interest rate the most?
      • The two most important variables that impacted interest rates were inflation and the repo rate. Which tend to move together.
      • What does it indicate? This clearly indicates that RBI is extremely proactive in the way it manages interest rates.
    • Effects of funds on inflation: Such borrowings that are funded by the central bank could lead to inflation, the same is true for large external inflows to domestic money markets.
      • The foreign borrowings finally get reflected in the country’s foreign exchange reserves, which have a very strong relationship with inflation.
      • Effects on interest rates: Technically, any large inflow of a foreign currency sterilized by RBI does have the potential to move the inflation needle up, thus placing upward pressure on interest rates.
    • Relationship between borrowing and growth: It is clear that government borrowing and spending actually drives GDP growth.
      • Government borrowing should not impact bank lending to companies, as the sums borrowed return to the market almost immediately.
    • How RBI controls bond yield?
      • RBI ensures that bond yields don’t shoot up because of the excessive borrowing, by taking bonds onto its books to be released back into the market in good times.

    The uniqueness of the Indian money market

    • Why is it unique? India market is a unique money market, different from the rest of the world, for the following reasons-
      • We have investors who are explicitly required to invest in government debt.
      • Banks, non-banking financial companies, insurers, provident funds, and pension funds are all forced to invest in government debt as a condition for their licence to operate in India.
      • We also find that RBI works towards aiding the government borrowing programme rather effectively, ensuring that interest rates do not change too adversely.

    Conclusion

    The government should not be excessively worried about the government living beyond its means at this juncture. Government spending being the main driver for the country’s GDP growth, it could be a good way to put the economy on a higher growth trajectory. Perhaps it is time to revisit the entire FRBM framework.

     

     

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

    [op-ed snap] A road map for robust trade ties

    30 January 2020 | op-ed snap | Economics
    Mains Paper 3: Indian Economy

    Context

    The challenge for India and Australia is to transform people-to-people ties into a trade relationship.

    People-to-people the two countries

    • Soft power: Soft power rather than hard economics has traditionally been the driving force behind India-Australia relations.
      • Cricket is a dominant theme that connects the two countries.
      • The Indian diaspora in Australia is a vibrant community that plays a robust role in connecting their country of adoption with their country of origin.

    Trade relationship scenario

    • $31 bn bilateral trade: The trade between the two countries has been at a modest $31 billion, largely composed of resources like coal and other minerals.
    • No progress on FTA: Negotiations on a Free Trade Agreement, which began in 2011, have not moved forward significantly.
    • No progress on coal mining projects in Australia: The problems faced by the Adani Group to begin work on a coal mining project in Queensland did not go down too well with investors from India.
    • India Economic Strategy 2035 by Australia: One of the most widely commended initiatives has been the Australian government’s release of an India Economic Strategy 2035 Report.
      • It observes that no single market over the next 20 years will offer more growth opportunities for Australia than India.
      • It lays down a comprehensive road map for strengthening Australia’s trade engagement with India.

    Development in digital technology and the role of youth

    • Development of new architecture: Meanwhile India-Australia trade has been steadily evolving into a new architecture underpinned by developments in digital technology.
      • There is a rise of a younger generation of entrepreneurs and a noticeable shift in the trade basket from resources to services.
      • Technology and young entrepreneurship make a formidable combination and should set the agenda for the future of bilateral trade relations.
      • About 80% of the Australian small and medium-sized enterprises are managed by young professionals.
      • The young can see issues like immigration and outsourcing with far more equanimity than the older generation.
      • An important role of young Australians: Young Australians are thus emerging as great champions of India-Australia trade relations.

    Scope for engagement in innovation and trade relations

    • Tech. expertise of  Australia: There is also recognition that Australia is a laboratory of ideas, innovation, technology-led growth and university-industry partnerships.
    • Scope for India in innovation and trade: India is a large and demographically young market with a love for innovation and an appetite for new products and services.
      • These synergies should add momentum to a growing engagement in trade relations.

    India’s weakness and Way forward

    • Weakest link and way forward: The weakest link in India’s exports to Australia is in merchandise. India needs to look at three broad areas.
    • First-Focus on Market Research:  Despite globalisation, markets are country-specific and culturally sensitive.
      • Indian companies will need to invest a little more in market research on Australian consumer expectations and lifestyles.
    • Second-Brand creation: Australia is a brand-conscious market while India has not created a single consumer brand of international acceptance.
      • Only when products are visible across the world’s shopping malls and supermarkets displaying their own brands that India will be recognised as a major player in the global markets.
    • Third-Innovation: Innovation is emerging as the single-most-important factor for sustained success in every sphere. Global trade cannot be different.

     

     

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  • The Crisis In The Middle East

    Explained: West Asia Peace Plan

    30 January 2020 | Explained | International Relations
    Mains Paper 2: India & Its Neighborhood – Relations

    With West Asia Peace plan US plans to revive the stalled two-state talks between the Israelis and the Palestinians. Israeli PM Benjamin Netanyahu, who had earlier spoken against the two-state solution, has accepted the Trump plan.

    West Asia Peace Plan

    The West Asia peace plan unveiled by U.S. President Trump seeks to give the Israelis what they have long wanted — an expansive state with Jerusalem as its “undivided capital” and tight security control over a future Palestinian state.

    What’s the plan about?

    • The Trump plan seeks to address most of the contentious issues in the conflict such as the border of Israel, status of Palestinian refugees, Jewish settlements on the West Bank, land swap between Israel and Palestine, Israel’s security concerns and the status of the city of Jerusalem.
    • However US have proposed to almost all of these issues favour the Israeli positions.
    • For example, Israel would be allowed to annex the Jewish settlements on the West Bank as well as the Jordan Valley.
    • The Palestinian refugees, who were forced out from their homes during the 1948 Arab-Israeli war that followed the declaration of the state of Israel in the historic Palestine, would not be allowed to return.
    • They could move to the future Palestinian state, be integrated into the host countries or settled in other regional countries.

    Jerusalem: The undivided Capital

    • Jerusalem, perhaps the most contentious issue, would be “the undivided capital” of Israel, with Palestine gaining its capital in the east of the city — beyond the security border Israel has already built.
    • In return, Israel would freeze further settlement activities on the West Bank for four years — the time for negotiations.

    Land Swap

    • According to the Oslo Accords, the West Bank was divided into three areas and only one of them is under the direct control of the Palestinian Authority.
    • The plan proposes some land swap for the Israeli annexation of the West Bank Jewish settlements.
    • It seeks to enlarge Gaza and connect the strip with the West Bank through a tunnel.
    • The Arab towns in the southeast of Israel, which are close to Gaza, could become part of a future Palestinian state.

    Curb on Hamas

    • During this period, the Palestinian Authority should dismiss its current complaints at the International Criminal Court against Israel and refrain itself from taking further actions.
    • It should also crack down on “terrorist” groups such as Hamas and the Islamic Jihad.

    Investment Plans

    • US has also proposed $50 billion in investment over 10 years should Palestine accept the proposals.
    • In the final settlement, Palestine would get control over more land than what it currently controls.

    Implications for Palestine

    • The Palestine position is backed by most of the world powers is the formation of an independent, sovereign Palestinian state based on the 1967 border.
    • It means the whole of the West Bank and the Gaza Strip with East Jerusalem as its capital including the Old City that houses Haram esh-Sharif, also known as Temple Mount, a holy site for both Muslims and Jews.
    • Issues like the right of return of the Palestinian refugees are to be settled in final negotiations.
    • But US has effectively rejected the Palestinian claims outright and asked them to make more compromises.
    • He seeks to give Jerusalem and about 30% of the West Bank to the Israelis and has denied the right of return of the Palestinian refugees.
    • And for this, the Palestinians should take action against militant groups, stop supporting Palestinian families of those jailed or killed by Israel and refrain itself from questioning the occupation in international fora.

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  • Human Rights Issues

    Karnataka Anti-superstition Law

    30 January 2020 | Bills/Act/LawsStates | Governance
    Mains Paper 1: Social Empowerment

    A controversial anti-superstition law in Karnataka was formally notified by the current government.

    Provisions of the earlier drafts

    • The law, which was initially drafted as the Karnataka Anti Superstition Bill, 2013, was a pet project of former CM Siddaramaiah.
    • The model Bill held human dignity as its central tenet and sought eradication of irrational practices found in different communities.
    • The first draft made practices like inflicting self-wounds and conversion through bribery illegal.
    • Some of the proposals opposed by religious leaders and political parties in the early draft were the ban on practices such as the carrying of priests in palanquins, worshipping the feet of religious leaders.
    • It sought to ban Made Snana practised in the Dakshina Kannada region where Dalits roll over the remains of food consumed by upper castes.

    The current version

    • A Bill with sizable consensus across the political spectrum finally evolved in 2017. A total of 16 practices have been banned under the law.
    • The practice of Vaastu, astrology, pradakshina or circumabulation of holy places, yatras, parikramas performed at religious places were kept out of the purview of the law.
    • Made Snana was banned under the law with respect to having Dalits roll over leftover food.
    • The practice has now been modified to be voluntary and not involving leftover food.
    • Practices such as barring menstruating women from entering houses of worship and their homes, coercing people to take part in fire-walks, and beating up people by declaring them evil, are among the irrational practices that have been banned under the 2017 law.

    Penalties

    • The law stipulates “imprisonment for a term which shall not be less than one year but which may extend to seven years and with fine which shall not be less than five thousand rupees but which may extend to fifty thousand rupees”, as punishment for violations.
    • The law is to implemented by the state police with the appointment of vigilance officers under the law at police stations.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    [pib] The Medical Termination of Pregnancy (Amendment) Bill, 2020

    30 January 2020 | Bills/Act/LawsPIB | Governance
    Mains Paper 2: Health & Education

    The Union Cabinet has approved the Medical Termination of Pregnancy (Amendment) Bill, 2020 to amend the Medical Termination of Pregnancy Act, 1971.

    About the Bill

    • The Medical Termination of Pregnancy (Amendment) Bill, 2020 is for expanding access of women to safe and legal abortion services on therapeutic, eugenic, humanitarian or social grounds.
    • It aims to increase upper gestation limit for termination of pregnancy under certain conditions and to strengthen access to comprehensive abortion care, under strict conditions, without compromising service and quality of safe abortion.

    Salient features of proposed amendments:

    • Proposing requirement for opinion of one provider for termination of pregnancy, up to 20 weeks of gestation and introducing the requirement of opinion of two providers for termination of pregnancy of 20-24 weeks of gestation.
    • Enhancing the upper gestation limit from 20 to 24 weeks for special categories of women which will be defined in the amendments to the MTP Rules and would include ‘vulnerable women including survivors of rape, victims of incest and other vulnerable women (like differently-abled women, Minors) etc.
    • Upper gestation limit not to apply in cases of substantial foetal abnormalities diagnosed by Medical Board. The composition, functions and other details of Medical Board to be prescribed subsequently in Rules under the Act.
    • Anonymity of the person: Name and other particulars of a woman whose pregnancy has been terminated shall not be revealed except to a person authorised in any law for the time being in force.

    Benefits

    • It is a step towards safety and well-being of the women and many women will be benefitted by this.
    • Recently several petitions were received by the Courts seeking permission for aborting pregnancies at a gestational age beyond the present permissible limit on grounds of foetal abnormalities or pregnancies due to sexual violence faced by women.
    • The proposed increase in gestational age will ensure dignity, autonomy, confidentiality and justice for women who need to terminate pregnancy.

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  • AYUSH – Indian Medicine System

    [pib] National Commission for Indian System of Medicines

    30 January 2020 | | Governance
    Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies

    The Union Cabinet has given its approval for proposal of Official Amendments in the National Commission for Indian System of Medicine Bill, 2019 (NCIM) which is pending in the Rajya Sabha.

    About the Commission

    • The main objective of establishing NCIM is to promote equity by ensuring adequate supply of quality medical professionals and enforce high ethical standards in all aspects of medical services in Indian System of Medicine.
    • The Commission will promote availability of affordable healthcare services in all parts of the country.
    • The Commission has been structured to streamline the functions related to academic standards, evaluation, assessment and accreditation of educational institutions pertaining to Indian System of Medicine.

    Composition

    • The NCISM will consist of 29 members, appointed by the central government.
    • A Search Committee will recommend names to the central government for the post of Chairperson, part time members, and presidents of the four autonomous boards set up under the NCISM.
    • These posts will have a maximum term of four years.
    • The Search Committee will consist of five members including the Cabinet Secretary and three experts nominated by the central government (of which two should have experience in any of the fields of Indian System of Medicine).

    Functions

    Functions of the NCISM include:

    • framing policies for regulating medical institutions and medical professionals of Indian System of Medicine,
    • assessing the requirements of healthcare related human resources and infrastructure,
    • ensuring compliance by the State Medical Councils of Indian System of Medicine of the regulations made under the Bill, and
    • ensuring coordination among the autonomous boards set up under the Bill.

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  • Festivals, Dances, Theatre, Literature, Art in News

    Nagoba Jatara

    30 January 2020 | Prelims Only | History
    Mains Paper 1: Arts & Culture

    The month long Nagoba Jatara recently concluded in Adilabad dist. of AP.

    Nagoba Jatara

    • Nagoba Jatara is a tribal festival held in Keslapur village, Inderavelly Mandal[1] Adilabad district, Telangana, India.
    • It is the second biggest tribal carnival and celebrated by Mesaram clan of Gond tribes for 10 days.
    • Tribal people from Maharashtra, Chhattisgarh, Orissa and Madhya Pradesh belonging to the Mesram clan offer prayers at the festival.
    • It starts in pushya masam. A ceremony of ‘bheting’ is it’s integral part where the new brides are introduced to the clan god during first jatra afer their marriage
    • The few hundred Raj Gond and Pardhan Adivasis, men clad in pure white dhoti-kurta and the pagdi headgear and women in the traditional colourful nau-vari Maharashtrian style saree.
    • The temple for which a new structure is coming up is dedicated to the serpent god, known as Shri Shek to the aboriginal people, and is the centre of all activities during the week long festivities.

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  • Beating Retreat Ceremony

    30 January 2020 | Prelims Only | Trivia
    Mains Paper 1: Arts & Culture

    The Beating Retreat ceremony recently took place at Vijay Chowk. The ceremony, which takes place on January 29 every year, marks the culmination of the four-day Republic Day celebrations.

    What is the Beating Retreat function?

    • ‘Beating Retreat’ marks a centuries old military tradition, when the troops ceased fighting, sheathed their arms and withdrew from the battlefield and returned to the camps at sunset at the sounding of the Retreat.
    • The military tradition began in 17th century England, when King James II ordered his troops to beat drums, lower flags and organise a parade to announce the end of a day of combat.
    • The ceremony was then called ‘watch setting’ and took place at sunset after firing a single round from the evening gun.
    • The ceremony is currently held by Armed Forces in the UK, US, Canada, New Zealand, Australia, and India, among others.

    How did it begin in India?

    • Beating the Retreat’ has emerged as an event of national pride when the Colours and Standards are paraded.
    • The ceremony traces its origins to the early 1950s when Major Roberts of the Indian Army indigenously developed the unique ceremony of display by the massed bands.
    • Section D (Ceremonials) at the Ministry of Defence conducts the event.
    • The ceremony consists of musical performances by the bands, who each year play Indian and western tunes.

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  • No-fly List

    30 January 2020 | Prelims Only | Internal Security
    Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Four airlines in India have banned a stand-up comedian from taking flights after he allegedly heckled television news anchor on-flight.

    No-Fly List

    • In 2017, the government issued rules for preventing disruptive behaviour by air travellers and laid down guidelines for a no-fly list.
    • As per the rules, a complaint of unruly behaviour needs to be filed by the pilot-in-command, and this is to be probed by an internal committee to be set up by the airline.
    • During the period of pendency of the inquiry, the rules empower the concerned airline to impose a ban on the passenger.
    • The committee is to decide the matter within 30 days, and also specify the ban duration.
    • Any aggrieved person, upon receipt of communication of a ban from the airline, may appeal within 60 days from the date of issue of the order, to an Appellate Committee constituted by the Ministry of Civil Aviation.

    Three categories of unruly behaviour:

    • Level 1 refers to behaviour that is verbally unruly, and calls for debarment up to three months;
    • Level 2 indicates physical unruliness and can lead to the passenger being debarred from flying for up to six months;
    • Level 3 indicates life-threatening behaviour for which the debarment would be for a minimum of two years.

     

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

    [op-ed of the day] The many problems of delayed data

    29 January 2020 | op-ed snap | Governance
    Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Context

    Delay in releasing the crime data by NCRB reduces the utility of the data for the policymakers.

    Formidable challenges faced by NCRB

    • The First-Casual approach of the States: The first is the lackadaisical approach of some of the States in providing data.
      • The NCRB merely assembles the figures it receives from the State police forces and does not tinker with them to reach a predetermined conclusion.
      • States’ irregularity: Data collection hits a roadblock when a few States either don’t bother to send the figures or send them much after the volume is published.
    • The second-Utility of the released data: The second problem is that questions are raised over the utility of the data.
      • There was a two-year delay in releasing the crime statistics for 2017.
      • Just two months after it was published, the ‘Crime in India’ (CII) 2018 report was released.
      • Reduced utility from a policy point of view: These numbers are only relevant to researchers, not policymakers as it does not carry us far in understanding what is happening on the ground.
      • A fossilised CII is meaningless.
    • The third- Third problem lies with the police and the public.
      • The Reluctance of the police to register the complaint: The police are notorious the world over for not registering complaints.
      • They do this so that they can present a false picture of a decline in crime.
      • The reluctance of the public: The public is also not very enthusiastic about reporting crimes to the police.
      • Catch-22 situation: Public is fearful of being harassed at the police station or do not believe that the police are capable of solving the crime. This is a Catch-22 situation.

    Crimes difficult to bury

    • The positive role played by the media: However, the problem has declined slightly over the years due to public awareness and intense media scrutiny.
      • There are a few classes of offences which are becoming increasingly difficult to bury. This is attributable to the extraordinary interest evinced by the media in reporting crime.
    • The crimes which are difficult to bury: The following cases of crime are becoming difficult to bury.
      • Homicide: The first category of crimes that is difficult to bury is of homicides.
      • Matter of distress: India reports an average of 30,000 murders every year (29,017 were registered in 2018). Every murder is a matter of distress.
      • Nevertheless, the stabilisation of the figure at 30,000 is a mild assurance.
      • The corresponding figure for the period in the U.S. was around 16,200.
      • Need to study the US decline: Though the U.S. has about one-third of India’s population, the reported decline in murders in many major U.S cities is worth studying.
      • Crime against women: The common man in India does not lag behind others in reacting strongly to attacks on hapless women and men.
      • The growth of the visual media possibly explains this welcome feature in Indian society.
      • The hope of a decrease in crime: The nationwide outrage over the gang-rape in Delhi and the subsequent tightening of laws on sexual crimes generated the hope that attacks against women would decrease.

    The issue of under-reporting

    • Under-reporting of crime in rural areas: In 2018, there were 33,356 rapes, a higher number than the previous year.
      • But these figures do not fully reflect realities on the ground.
      • There is still the unverifiable suspicion that while in urban areas sexual violence cases are reasonably well-reported, the story is different in rural India.
      • The role played by money and caste: Money power and caste oppression are believed to play a significant role in under-reporting.
      • What is more significant is that a substantial number of such crimes are committed by the ‘friends’ and families of victims.

    Conclusion

    • To be fair to the NCRB, we must concede that the organisation has more than justified its existence. The CII is used extensively by researchers.
    • Need for educating the people on realities of crime and its reporting: There is scope for more dynamism on the NCRB’s part, especially in the area of educating the public on the realities of crime and its reporting.
    • Greater pressure on the States to stick to a schedule: The NCRB will also have to be conscious of the expectation that it should bring greater pressure on States to make them stick to schedules and look upon this responsibility as a sacred national duty.

     

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