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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Afghanistan issue and its implications for India

Context

The fall of Kabul in the wake of the American withdrawal from Afghanistan will prove to be a defining moment for the region and the future shape of its geopolitics.

Implications of the US withdrawal for India

1) Increase in threat from China

The manner in which the United States withdrew from Afghanist created the regional power vacuum in the Eurasian heartland.
An axis of regional powers such as China, Pakistan, Iran, Russia, and the Taliban, have already started filling this power vacuum.
Advantageous for China: The post-American power vacuum in the region will be primarily advantageous to China and its grand strategic plans for the region.
BRI expansion: Beijing will further strengthen its efforts to bring every country in the region, except India, on the Chinese Belt and Road Initiative bandwagon, thereby altering the geopolitical and geoeconomic foundations of the region
The much-feared Chinese encirclement of India will become ever more pronounced.
Even in trade, given the sorry state of the post-COVID-19 Indian economy, India needs trade with China more than the other way round.
Unless India can find ways of ensuring a rapprochement with China, it must expect Beijing to challenge India on occasion, and be prepared for it.

2) Terror and extremism

The U.S. presence in Afghanistan, international pressure on the Taliban, and Financial Action Task Force worries in Pakistan had a relatively moderating effect on the region’s terror ecosystem.
There is little appetite for a regional approach to curbing terrorism from a Taliban-led Afghanistan.
This enables the Taliban to engage in a selective treatment towards terror outfits present there or they have relations with.
It is unlikely that the Taliban will proactively export terror to other countries unless of course for tactical purposes, for instance, Pakistan against India.
The real worry, however, is the inspiration that disgruntled elements in the region will draw from the Taliban’s victory against the world’s sole superpower.

3) Impact on India’s regional interests and outreach to Central Asia

The return of the Taliban to Kabul has effectively laid India’s ‘mission Central Asia’ to rest.
India’s diplomatic and civilian presence as well as its civilian investments will now be at the mercy of the Taliban, and to some extent Pakistan.
Had India cultivated deeper relations with the Taliban, Indian interests would have been more secure in a post-American Afghanistan.

4) Impact on India’s foreign policy choices

Shift to Indo-Pacific: Given the little physical access India has to its north-western landmass, its focus is bound to shift more to the Indo-Pacific even though a maritime grand strategy may not necessarily be an answer to its continental challenges.
Improving relations with neighbours: India might also seek to cultivate more friendly relations with its neighbours.
India has already indicated that it would not challenge the junta on the coup and its widespread human rights violations.
The last thing India needs now is an angry neighbour rushing to China.
Stability in relations with Pakistan: The developments in Afghanistan could nudge India to seek stability, if not peace, with Pakistan.
Both sides might refrain from indulging in competitive risk-taking unless something dramatic happens which is always a possibility between the two rivals.
That said, stability between India and Pakistan depends a great deal on how politics in Kashmir plays out, and whether India is able to pacify the aggrieved sections in the Valley.

Consider the question “What would be the fallout of the Taliban’s return in Afghanistan for India? What steps India needs to take to mitigate the impact on its interests?”

Conclusion

The lesson for India in the wake of these developments is clear: It will have to fight its own battles. So it must make enemies wisely, choose friends carefully, rekindle flickering friendships, and make peace while it can.

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Parliament – Sessions, Procedures, Motions, Committees etc

How are Rajya Sabha members punished for misconduct in the House?

op-ed snap | Polity | Mains Paper 2: Parliament & State Legislatures

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article 20

Mains level: Paper 2- Provision for punishing the Members of Rajya Sabha for misconduct inside House

Context

The Chairman of the Rajya Sabha is reportedly contemplating action against MPs who, he thinks, were involved in the fracas in the House.

Provisions in House Rules of Rajya Sabha for punishing members

1) For conduct inside the House

Ground for punishment: Rule 256 of the Rajya Sabha’s Rules of Procedure specifies the acts of misconduct: Disregarding the authority of the chair, abusing the rules of the council by persistently and willfully obstructing the business thereof.
However, the power to suspend a member is vested in the House, not in the chairman.
Under the rule, the maximum period of suspension is for the remainder of the session.
By convention, a suspended member loses his right to get replies to his questions.
Thus, suspension from the service of the House is regarded as a serious punishment.
But, surprisingly, the rules do not spell out the disabilities of a suspended member.
These are imposed on them as per conventions or precedent.
Suspension for the remainder of the session makes sense only when they are suspended immediately after the misconduct has been noticed by the chair.
The rules of the House do not empower Parliament to inflict any punishment on its members other than suspension for creating disorder in the House.

2) Misconduct outside the House

For the acts of misconduct by the MPs outside the House, which constitute a breach of privilege or contempt of the House, usually the privilege committee investigates the matter and recommends the course of action and the House acts on it.
A special committee is appointed usually when the misconduct is so serious that the House may consider expelling the member.
Special committee was appointed in 2005 to inquire into the issue of MPs accepting money for raising questions in Parliament.
So, special ad-hoc committees are appointed only to investigate serious misconduct by MPs outside the House.

Issue in the present context

It appears that the Rajya Sabha secretariat has prepared a report on the incident in the Rajya Sabhi, which accuses some MPs of assaulting security personnel.
But special ad-hoc committees are appointed only to investigate serious misconduct by MPs outside the House.
No special committee is required to go into what happens before the eyes of the presiding officer inside the House.
As per the rules of the House, they need to be dealt with then and there.
The rules do not recognise any punishment other than suspension for a specific period and in this case, the Session is already over.
Article 20 of the Constitution prohibits a greater penalty than what the law provided at the time of committing the offence.

Conclusion

Punishing the MPs for their misconduct in the House is restricted by the provision in the House rules. These restrictions need to be looked into in the face of growing disruption by the members.

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Freedom of Speech – Defamation, Sedition, etc.

Arrest is not always a must, says Supreme Court

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Issues over arbitrary detention

The Supreme Court has held that merely because the law allows arrest does not mean the State can use the power indiscriminately to crush personal liberty.

What is an Arrest?

An arrest is a procedure in a criminal justice system.
It is the act of apprehending and taking a person into custody (legal protection or control), usually because the person has been suspected of or observed committing a crime.
After being taken into custody, the person can be questioned further and/or charged.

Distinction between arrest and detention

There exists a distinction between an investigatory stop or detention and an arrest.
The distinction tends to be whether or not the stop is “brief and cursory” in nature, and whether or not a reasonable individual would feel free to leave.

Article 21 of the Indian Constitution guarantees the protection of life and personal liberty to every individual and states that, “No person shall be deprived of his life and personal liberty except according to procedure established by law.”

Logic behind arresting

The Supreme Court has noted that:

The occasion to arrest an accused during investigation arises when the custodial investigation becomes necessary.
Or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond.
The court was emphatic that a distinction must be made between the existence of the power to arrest and the justification for the exercise of this power.

Sanctions for arrest as outlined by the Supreme Court

The Supreme Court clarified that:

(A) Avoiding arrests

Arrest isn’t a compulsion: Merely because an arrest can be made because it is lawful does not mandate that arrest must be made.
Justification for arrest: A distinction must be made between the existence of the power to arrest and the justification for the exercise of it, it noted.
Dignity of the undertrial: If an arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person.
Evidence protection: There should not be a compulsion on the officer to arrest the accused since many times there is no apprehension that an accused would abscond or tamper with evidence.

(B) Broad implications of Sec. 170 CrPC

Narrow interpretation: Section 170 of the Code of Criminal Procedure (CrPC) has been wrongly interpreted by the police and trial courts to make an arrest of the accused mandatory at the time of filing of the charge sheet.
Custody, not arrest: The word “custody” in Section 170 had been wrongly interpreted as ‘arrest’.The word ‘custody’ appearing in Section 170 does not contemplate either police or judicial custody.

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FDI in Indian economy

RBI, IRDAI nod must for FDI in bank-led insurance

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: FDI in insurance

Applications for foreign direct investment in an insurance company promoted by a private bank would be cleared by the RBI and IRDAI to ensure that the 74% limit of overseas investment is not breached.

What does one mean by Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
The company pools clients’ risks to make payments more affordable for the insured.
Insurance is a capital-intensive business so has to maintain a solvency ratio. The solvency ratio is the excess of assets over liabilities.
Simply put, as an insurance company sells more policies and collects premiums from policyholders, it needs higher capital to ensure that it is able to meet future claims.
In addition, insurance is a long gestation business. It takes companies 7-10 years to break even and start becoming profitable.

Types of Insurance

Insurance sector of India

The insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), mandates that insurers should maintain a solvency ratio of at least 150 percent.
The insurance industry of India has 57 insurance companies 24 are in the life insurance business, while 34 are non-life insurers.
Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
In addition to these, there is a sole national re-insurer, namely the General Insurance Corporation of India (GIC Re).
Other stakeholders in the Indian Insurance market include agents (individual and corporate), brokers, surveyors, and third-party administrators servicing health insurance claims.
In India, the overall market size of the insurance sector is expected to be $280 billion in 2020.

Recent developments

The chronological order of events:

Nationalization of life (LIC Act 1956) and non-life sectors (GIC Act 1972)
Constitution of the Insurance Regulatory and Development Authority of India (IRDAI) in 1999
Opening up of the sector to both private and foreign players in 2000
Increase in the foreign investment cap to 26% from 49% in 2015
Increase in FDI limit from 49% to 74% in March 2020

Issues with India’s insurance sector

Insurance is considered a sensitive sector as it holds the long-term money of people. Various attempts were made in the past to open up the sector but without much success.

Lower insurance penetration due to various economic reasons such as poverty, etc.
Domination of the Public Sector ex. LIC
Trust issues in private insurances due to insolvency of private players
Saving habits of the public

Significance of the recent amendment

The current amendment is an enabling amendment that gives companies access to foreign capital if they need it.
It is an important shift instance as the increase in the FDI cap means insurance companies can now be foreign-owned and -controlled as against the current situation wherein they are only Indian-owned and -controlled.
The move is expected to increase India’s insurance penetration or premiums as a percentage of GDP, which is currently only 3.76 percent, as against a global average of more than 7 percent.

What does this mean for Indian insurance companies?

India has more than 60 insurance companies specializing in life insurance, non-life insurance, and health insurance.
The number of state-owned firms is only six and the remaining are in the private sector.
A higher FDI limit will help insurance companies access foreign capital to meet their growth requirements.

How does this impact Indian promoters of insurance companies?

Most of the Indian promoters of insurance companies are either Indian business houses or financial institutions like banks.
Many entered into the insurance space when they were financially strong but are now struggling to cater to the constant need to infuse capital into their insurance joint ventures.
Over the years, the sector has seen large-scale consolidation and exits of many promoters.
A higher FDI cap will mean that more promoters could now completely exit or bring down their stakes in their insurance joint ventures.

What higher does FDI mean for policyholders?

Higher FDI limits could see more global insurance firms and their best practices entering India.
This could mean higher competition and better pricing of insurance products.
Policyholders will get a wide choice, access to more innovative products, and a better customer service and claims settlement experience.

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Back2Basics: Foreign Direct Investment

An FDI is an investment in the form of controlling ownership in a business in one country by an entity based in another country.
It is thus distinguished from a foreign portfolio investment by a notion of direct control.
FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
In a narrow sense, it refers just to building a new facility, and lasting management interest.

FDI in India

Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
There are two routes by which India gets FDI.

1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.

2) Government route: Prior approval by the government is needed via this route. The application needs to be made through the Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of the FDI application under the Approval Route.

India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
In 2015 India overtook China and the US as the top destination for Foreign Direct Investment.

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Foreign Policy Watch: India-Afghanistan

What is Shariah Law?

IOCR | International Relations | Mains Paper 2: India & Its Neighborhood - Relations

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Taliban seize of Afghanistan

The Taliban have pledged that women in Afghanistan will have rights “within the bounds of Islamic law,” or Shariah, under their newly established rule.

What is Shariah?

Shariah is based on the Quran, stories of the Prophet Muhammad’s life, and the rulings of religious scholars, forming the moral and legal framework of Islam.
The Quran details a path to a moral life, but not a specific set of laws.

Interpreting Shariah

The interpretations of Shariah are a matter of debate across the Muslim world, and all groups and governments that base their legal systems on Shariah have done so differently.
One interpretation of Shariah could afford women extensive rights, while another could leave women with few.
Critics have said that some of the Taliban restrictions on women under the guise of Islamic law actually went beyond the bounds of Shariah.
When the Taliban say they are instituting Shariah law, that does not mean they are doing so in ways that Islamic scholars or other Islamic authorities would agree with.

What does Shariah prescribe?

Shariah lists some specific crimes, such as theft and adultery, and punishments if accusations meet a standard of proof.
It also offers moral and spiritual guidance, such as when and how to pray, or how to marry and divorce.
It does not forbid women to leave home without a male escort or bar them from working in most jobs.

How has the Taliban previously interpreted Shariah?

When the Taliban controlled Afghanistan from 1996 to 2001, they banned television and most musical instruments.
They established a department for the Promotion of Virtue and the Prevention of Vice based on a Saudi model.

Restrictions imposed on Women

Restrictions on behavior, dress, and movement were enforced by morality police officers, who drove around in pickup trucks, publicly humiliating and whipping women who did not adhere to their rules.
In 1996, a woman in Kabul, Afghanistan, had the end of her thumb cut off for wearing nail polish, according to Amnesty International.
Other restrictions include a ban on schooling for girls, and publicly bashing people who violated the group’s morality code.
Women accused of adultery are stoned to death.

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Modern Indian History-Events and Personalities

Malabar Rebellion of 1921

Prelims Only | | Mains Paper 1: Modern Indian History

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Moplah Revolt

Mains level: Various tribal uprisings in India

This August 20, marked the centenary of the Malabar rebellion, which is also known as the Moplah riots.

Try this question from CSP 2020:

Q. With reference to the history of India, “Ulgulan” or the Great Tumult is the description of which of the following event?

(a) The Revolt of 1857

(b) The Mappila Rebellion of 1921

(c) The Indigo Revolt of 1859-60

(d) Birsa Munda’s Revolt of 1899-1900

Sign-in to post your answers here.

Malabar Rebellion

The Malabar Rebellion in 1921 started as resistance against the British colonial rule and the feudal system in southern Malabar but ended in communal violence between Hindus and Muslims.
There were a series of clashes between Mappila peasantry and their landlords, supported by the British, throughout the 19th and early 20th centuries.
It began as a reaction against a heavy-handed crackdown on the Khilafat Movement, a campaign in defence of the Ottoman Caliphate by the British authorities in the Eranad and Valluvanad taluks of Malabar.
The Mappilas attacked and took control of police stations, British government offices, courts and government treasuries.

Who was Variyankunna Kunjahammed Haji?

He was one of the leaders of the Malabar Rebellion of 1921.
He raised 75000 natives, seized control of large territory from the British rule and set up a parallel government.
In January 1922, under the guise of a treaty, the British betrayed Haji through his close friend Unyan Musaliyar, arresting him from his hideout and producing him before a British judge.
He was sentenced to death along with his compatriots.

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Also read

Important Rebellion

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Climate Change Impact on India and World – International Reports, Key Observations, etc.

Melting of the Greenland’s Snow Cover

Prelims Only | Enviro & Biodiversity | Mains Paper 1: Climatic Change

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Greenland

Mains level: Not Much

Recently the summit of Greenland received rain and not snow. This has sparked fear as scientists are pointing to it as evidence that Greenland is warming rapidly.

About Greenland

Greenland is the world’s largest island located between the Arctic and Atlantic oceans, east of the Canadian Arctic Archipelago.
It is an autonomous territory within the Kingdom of Denmark.
Though physiographically a part of the continent of North America, Greenland has been politically and culturally associated with Europe (specifically Norway and Denmark, the colonial powers).
The majority of its residents are Inuit, whose ancestors migrated from Alaska through Northern Canada, gradually settling across the island by the 13th century.
It has three-quarters of its surface covered with a permanent ice sheet, which is increasingly coming under threat because of climate change.

Rain at Greenland: The rarest phenomenon

At the highest point on Greenland’s ice sheet, the US maintains a Summit Station, a research facility that observes changes occurring over the island as well as in Arctic weather.
Researchers observed rain at the normally frigid summit, with the precipitation extending up to Greenland’s southeast coast.
The rain, coupled with warm conditions, caused a major melting event at the summit.
This led to rapid ice melting running off into the ocean in volumes, thus accelerating global sea-level rise.

A cause of worry

Greenland, which is two-thirds the size of India, already witnessed one of its most severe melting events.
It has lost 8.5 billion tons of surface mass in one day– the third such extreme event in the past decade.
The UN’s “code red” climate report released last week concluded that the burning of fossil fuels led to Greenland melting in the last 20 years.
The rapid melting is also threatening polar bears, which now have to make their way hundreds of kilometers towards Greenland’s interior from the coasts, where they usually find enough food.

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Modern Indian History-Events and Personalities

Places in news: Panjshir Valley

Prelims Only | International Relations | Mains Paper 2: India & Its Neighborhood - Relations

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Panjshir Valley

Mains level: Not Much

The Taliban has sent hundreds of its fighters to the Panjshir Valley, one of the few parts of Afghanistan not yet controlled by the group.

Panjshir Valley

Located 150 km north of Kabul, the Valley is near the Hindu Kush Mountain range.
It’s divided by the Panjshir river and ringed by the Panjshir mountains in the north and the Kuhestan mountains in the south.
The mountain tops are covered by snow throughout the year.
This difficult terrain makes the Valley a nightmare for invaders.

Why is it significant?

The Valley has repeatedly played a decisive role in Afghanistan’s military history, as its geographical position almost completely closes it off from the rest of the country.
The only access point to the region is through a narrow passage created by the Panjshir River, which can be easily defended militarily.
Famed for its natural defenses, the region tucked into the Hindu Kush mountains never fell to the Taliban during the civil war of the 1990s, nor was it conquered by the Soviets a decade earlier.
Panjshir Valley was among the safest regions in the country during the time of the NATO-backed government from 2001 to 2021.
The valley is also known for its emeralds, which were used in the past to finance the resistance movements against those in power.

Answer this PYQ:

Consider the following pairs

Towns: Country in news

Aleppo: Syria

Kirkuk: Yemen

Mosul: Palestine

Mazar-i-sharif: Afghanistan

Which of the pairs given above are correctly matched? (CSP 2018)

(a) 1 and 2

(b) 1 and 4

(c) 2 and 3

(d) 3 and 4

Post your answers here.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Liberalizing Trade in Agriculture Machinery

| Economics | Mains Paper 3: Agriculture and related issues,Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Significance of mechnisation of agriculture

Context

On July 15, the Centre issued a notification moving power tillers (PT) and their components from the “free” to “restricted” category indicating a clear intent to provide protection to the domestic industry.

How heterodox opening policies affects farming

Heterodox opening policies, being open on the export side while being closed on the import side, have long-term unintended consequences.

Productivity loss: One impact of heterodox policies is subpar mechanisation and productivity loss in agriculture.
India’s mechanisation coverage is around 40-45 per cent, compared to 90 per cent in developed countries.
At present, only Punjab, Haryana and western UP have mechanisation rates between 70 and 80 per cent whereas in eastern and southern states it is between 35 and 45 per cent, with even smaller coverage in North-Eastern states.
Comparatively high tariffs on agricultural machinery, placement under restricted trade hits the cog in the wheel of mechanisation.
Uncertainty and lower trade: A shift to restricted category and frequently changing tariffs engenders uncertainty and lowers trade.
Disincentivise innovation: Such policies also disincentivises domestic machine manufacturers to invest and innovate — the perils of protection.

What India can learn from Bangladesh on farm mechanisation

Starting lower, Bangladesh overtook India in mechanisation by 2006.
A perfect example of orthodox opening in the late 1980s, Bangladesh removed import bans on Power Tiller and other machinery like diesel engines.
By 1995, PT were made duty free and credit support was provided for purchases.
Studies have credited PT in increasing the rice yield in Bangladeh, which grew 2.1 per cent annually from 1990, compared to 1.6 per cent between 1960 and 1989.

Way forward

If productivity in agriculture and incomes of farmers were to go up significantly, Indian agriculture must hit the mechanisation frontier.

Liberal and Stable trade policies: Liberal and stable trade policies will increase access, competition will expand varieties and bring down the prices.
New trade economics teaches us that farmers would be successful in trading or accessing markets only when highly productive, which beckons large scale and intensive mechanisation.
Credit support: Bangladesh also shows the role of complementary policies such as credit support.
Once the farmers achieve sufficiently high productivity, they can access markets and even integrate with global value chains (GVC) if allowed by policy as intended in the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.

Conclusion

Liberal trade in machinery presents an opportunity to access distant and international markets. The key is to be both ways open.

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Foreign Policy Watch: India-Middle East

The Abraham Accords as India’s West Asia bridge

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Implications of Abrahams Accord for India

Context

The recent visit by the Indian Air Force chief, to Israel offers a window to study how India is taking advantage of the Abraham Accords deal signed between Israel and a consortium of Arab States led by the United Arab Emirates (UAE) in 2020.

Increasing defence cooperation between India and West Asia region

India’s trajectory towards an increased strategic footprint in West Asia has been in development for some time now.
Starting from the relatively low-key staging visit to Saudi Arabia conducted by the IAF in 2015.
India hosted visiting Iranian naval warships in 2018.
India takes an active part in the defence of the critical waterways in and around the Persian Gulf, the Arabian Sea and the extended Indian Ocean Region (IOR).
An Indian contingent of the Indian Air Force (IAF) will visit Israel in October to take part in multilateral military exercises.
India also conducted the ‘Zayed Talwar’ naval exercises with the UAE off the coast of Abu Dhabi, further deepening the fast-developing strategic cooperation between the two countries.
In December 2020, Indian Army chief visited the UAE and Saudi Arabia, becoming the first chief of the Indian Army to do so.
In 2017, India signed a deal with Oman, the home to Duqm Port for access to the facility, including dry dock use by the Indian Navy.

How Abraham Accords accelerated India’s engagement with West Asia region?

No need for balancing act: The signing of the Accords has removed a significant strategic obstacle for India — delicate balancing act India has had to play out between the Arab Gulf and Israel over the decades.
India had welcomed the Accords, highlighting its support for mechanisms that offer peace and stability in the region.
From the UAE’s perspective, Accords were to make sure the emirate along with its international centres of trade such as Dubai and Abu Dhabi do not become targets between Jerusalem and Tehran.
However, not all Arab States have been on board with the geopolitical shifts the Accords have pushed through.
Saudi Arabia has maintained a distance from this arrangement.

India’s West Asia construct and relations with Iran

Iran, as part of India’s ‘West Asia’ construct, will also play a significant part in India’s outreach in the months to come as the crisis in Afghanistan deepens.
Connectivity projects such as Chabahar Port and Chabahar-Zahedan rail project (project discussions are still on) amongst others remain critical.
Recently, strategic cooperation revitalised despite multiple obstacles in the bilateral relations, led by U.S. sanctions against Tehran and the general tensions between Israel, the Gulf and Iran via proxy battles in theatres such as Yemen, Syria and beyond.

Conclusion

India’s strategic play in West Asia will be reflective of its economic growth, and by association, an increasingly important place in the global order.

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

What India’s informal sector needs right now

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MGNREGA

Mains level: Paper 3- Issues of informal sector

Context

Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts.

Significance of informal sector

India’s large informal sector, which employs around 80 per cent of the labour force and produces about 50 per cent of GDP.
Of the 384 million employed in the informal sector, half work in agriculture, living mostly in rural India, and the other half are in non-agricultural sectors.
Of those, about half live in rural India and the remaining in urban areas.
Ignoring problems in the informal sector can be costly as it can lead to job and wage losses, higher inflation and even risk the livelihood of migrant workers.

Impact of pandemic on informal sector workers

Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts.
Such disruptions can be inflationary too.
India was one of the few countries with high inflation throughout pandemic-stricken 2020.
The 40 per cent in the informal non-agricultural sector is the most affected by the pandemic.
These workers are most vulnerable as they have borne the brunt of the economic disruption that the pandemic has unleashed.

Impact on the informal sector

Nominal GDP growth has been a good indicator of the formal sector corporate sales.
But during the pandemic and also during events like demonetisation, formal corporate sales have exceeded nominal GDP growth.
This means that some demand, which was previously supplied by the informal sector, began to be supplied by the formal sector.
Several surveys over this time also show a rise in urban unemployment and self-employment, with the latter category seeing the highest earnings loss.

Way forward

Formalisation on the back of policy changes: While traditionally associated with efficiency gains, if it comes at the cost of putting small informal firms out of business.
Formalisation that comes only on the back of external pressure or leads to deep distress in the informal sector, may not be sustainable.
By contrast, formalisation that happens on the back of policy changes that help small and informal firms grow over time into medium or larger formal sector firms is more sustainable.
Social welfare scheme: We need protection for informal sector workers via social welfare schemes so that the disruption they are facing does not lead to a permanent fall in demand.
There is a case for remaining generous with programmes such as the rural MGNREGA scheme for longer.
India doesn’t have an MGNREGA equivalent urban social welfare scheme.
Reforms: Steps to promote reforms that are needed to help small businesses grow are critical.
For example, lowering the regulatory burden associated with growing firms.

Conclusion

Bringing the informal sector to the forefront of policy decisions can lead to a significant payoff for the entire economy for years to come.

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

Is a caste census desirable?

| Indian Society | Mains Paper 1: Salient features of Indian Society

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Caste Census

Mains level: Need for and issues with Caste Census

With the 2021 Census coming up, several political parties have demanded a nationwide caste census.

What is Caste Census?

Every Census in independent India from 1951 to 2011 has published data on Scheduled Castes and Scheduled Tribes, but not on other castes.
Before that, every Census until 1931 had data on caste.
However, in 1941, caste-based data was collected but not published.
In the absence of such a census, there is no proper estimate for the population of OBCs, various groups within the OBCs, and others.
The Mandal Commission estimated the OBC population at 52%, some other estimates have been based on National Sample Survey data.
Some political parties make their own estimates in states and Lok Sabha and Assembly seats during elections.

Arguments for caste census

A caste census is not merely geared to the reservation issue.

Enumerating the marginalized: A caste census would actually bring to the particular the number of people who are at the margins, or who are deprived, or the kind of occupations they pursue, or the kind of hold that institutions like caste have on them.
Data for Policymaking: This information is absolutely necessary for any democratic policymaking.
Judicial backing: The courts in India have often emphatically said that it is important to have adequate data with regard to the reservation.
Caste offers privilege: Caste is not only a source of disadvantage; it is also a very important source of privilege and advantage in our society.
Caste doesn’t marginalize: We need to do away with the idea of caste being applicable to only disadvantaged people, poor people, people who are somehow lacking.
Rids away caste rigidities: Counting of caste doesn’t necessarily perpetuate caste or the caste system. Myths of caste elitisms can be debunked through a caste census.

Arguments against caste census

50% breach: It is argued that a Socio-Economic Caste Census is the only way to make a case to breach the 50% cap on reservation and rationalize the reservation matrix in the country.
Rising assertiveness: More the State ignores out caste, the more is the tendency to preserve caste, protect it. This has been observed in many states.
Chaos: Data gathering itself is a big problem because it can become very, very invasive. But we need to actually balance it with enabling people and asserting citizen equality.
Social friction: Caste identification can lead to friction amongst various classes.

Breaching the 50% cap

Judicial Substantiation: The 50% cap, as introduced by the court, has not really been argued through.
Questioning the sacrosanctity: Some feel that nothing sacrosanct about the 50% limit − it can be exceeded, if necessary, but a clear argument should be given for why this is being done.

Inefficacy of reservations

Fractional benefits: The way reservation is practiced has invariably led to elites among castes and communities.
Domination: These elites within the castes have tended to exercise their dominance over their very communities and not let them exercise the kind of freedoms, or search for equality, which any democratic polity deserves.
Welfare isn’t reservation: The state has helped privileged communities far more, even though this help has not taken the explicit form of programs like reservation.

Why is a caste census always controversial?

Data manipulation: This is a manifestation of the principle that those in power control data and information.
Censoring of data: We have had instances where this data has been collected but has not been made public.
Relative deprivation: Since a caste census is a necessity, it is not a happy thing, it is not a great achievement, it is just something that the State has to do circumstantially.
Vote bank politics: Vested interests of particular state governments in hunt for vote banks are also visible these days.

SECC has the solution

We have got locked into a mindset where we think only those communities which want welfare benefits from the state must be enumerated.
Many have argued that a Socio-Economic Caste Census would be the best way to rationalize reservation based on data and make a strong case for breaching this gap.
Earlier governments argued that counting caste will perpetuate it.

Conclusion

Favoring one caste becomes a disfavor for others. This is an undeniable fact of Indian society.
It seems that the caste census will happen unless something extraordinary happens in our polity.
There are also important questions of demands coming up because of mismatches between the numbers that we come out with and the share in resources that different communities have.
This is a kind of nightmare that all governments fear. So, they would much rather leave things vague.
The Backward Classes are more than 50% of the population. And this dispensation knows that it cannot afford to lose the support of the Backward Classes.

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Foreign Policy Watch: India-Middle East

Abraham Accords as India’s West Asia bridge

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Abraham Accord

Mains level: India's West-Asia plan

The recent visit by the Indian Air Force chief to Israel offers a window to study how New Delhi is taking advantage of the Abraham Accords deal signed between Israel and a consortium of Arab States.

Try this question:

What are Abraham Accords? Discuss how the Israel-Gulf synergy could impact India’s relations with Israel.

What are Abraham Accords?

The Israel–UAE normalization agreement is officially called the Abraham Accords Peace Agreement.
It was initially agreed to in a joint statement by the United States, Israel and the United Arab Emirates (UAE) on August 13, 2020.
The UAE thus became the third Arab country, after Egypt in 1979 and Jordan in 1994, to agree to formally normalize its relationship with Israel as well as the first Persian Gulf country to do so.
Concurrently, Israel agreed to suspend plans for annexing parts of the West Bank. The agreement normalized what had long been informal but robust foreign relations between the two countries.

Do you know?

Abraham was the first of the Hebrew patriarchs and a figure revered by the three great monotheistic religions—Judaism, Christianity, and Islam.

New friendships

For common enemy: Externally, Israel, the UAE and Bahrain share the common threat perception of Iran.
Upholding modern values: They are relatively more modern societies that share the overarching and immediate priority of post-pandemic economic resuscitation.
Extended cooperation: They have lost no time to set up logistics such as Internet connectivity and direct flights to pave the way for more active economic engagement.

India and the Gulf

Now India has stronger, multifaceted and growing socioeconomic engagements with Israel and the Gulf countries.
With over eight million Indian diasporas in the Gulf remitting annually nearly $50 billion, annual merchandise trade of over $150 billion.
It sources nearly two-thirds of India’s hydrocarbon imports, major investments, etc. Hence it is natural to ask how the new regional dynamic would affect India.
India has acquired a large and rewarding regional footprint, particularly as the preferred source of manpower, food products, pharmaceuticals, gem and jewellery, light engineering items, etc.
Indians are also the biggest stakeholders in Dubai’s real estate, tourism, and Free Economic Zones.
In the evolving scenario, there may be scope for a profitable trilateral synergy, but India cannot take its preponderance as a given.

The Israel-GCC synergy

Culture: Even the Israeli Arabs may find career opportunities to bridge the cultural divide. Israel is known as the start-up nation and its stakeholders could easily fit in the various duty-free incubators in the UAE.
Tourism: Tourism, real estate and financial service sectors on both sides have suffered due to the pandemic and hope for a positive spin-off from the peer-to-peer interactions.
Defense: Israel has niche strengths in defence, security and surveillance equipment, arid farming, solar power, horticultural products, high-tech, gem and jewellery, and pharmaceuticals.
Technology: Further, Israel has the potential to supply skilled and semi-skilled manpower to the GCC states, particularly from the Sephardim and Mizrahim ethnicities, many of whom speak Arabic.

The Iran link

Iran, as part of India’s ‘West Asia’ construct, will also play a significant part in India’s outreach in the months to come as the crisis in Afghanistan deepens.
The fact that New Delhi used Iranian airspace and facilities when evacuating its diplomatic staff from Kandahar in July showcases a level of strategic commonality.
Keeping this in mind, connectivity projects such as Chabahar Port and Chabahar-Zahedan rail project (project discussions are still on) amongst others remain critical.

Conclusion

India’s strategic play in West Asia will be reflective of its economic growth, and by association, an increasingly important place in the global order.

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Sugar Industry – FRP, SAP, Rangarajan Committee, EBP, MIEQ, etc.

Sugarcane Pricing in India

| Economics | Mains Paper 3: Issues Related To Farm Subsidies & Msp

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Sugarcane pricing mechanism

Mains level: Not Much

Earlier this month, the Supreme Court issued notices to States and major sugar producers to develop a mechanism to ensure that farmers are paid on time.

Who determines Sugarcane prices?

Sugarcane prices are determined by the Centre as well as States.

The Centre announces Fair and Remunerative Prices which are determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and are announced by the Cabinet Committee on Economic Affairs, which is chaired by Prime Minister.
The State Advised Prices (SAP) are announced by key sugarcane producing states which are generally higher than FRP.

Minimum Selling Price (MSP) for Sugar

The price of sugar is market-driven & depends on the demand & supply of sugar.
However, with a view to protecting the interests of farmers, the concept of MSP of sugar has been introduced since 2018.
MSP of sugar has been fixed taking into account the components of Fair & Remunerative Price (FRP) of sugarcane and minimum conversion cost of the most efficient mills.

Basis of price determination

With the amendment of the Sugarcane (Control) Order, 1966, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10.
The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
This is done in consultation with the State Governments and after taking feedback from associations of the sugar industry.

Try this PYQ:

Q.The Fair and Remunerative Price (FRP) of sugarcane is approved by the:

(a) Cabinet Committee on Economic Affairs

(b) Commission for Agricultural Costs and Prices

(c) Directorate of Marketing and Inspection, Ministry of Agriculture

(d) Agricultural Produce Market Committee

Post your answers here.

What is FRP?

FRP is fixed under a sugarcane control order, 1966.
It is the minimum price that sugar mills are supposed to pay to the farmers.
However, states determine their own State Agreed Price (SAP) which is generally higher than the FRP.

Factors considered for FRP:

The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:

a) cost of production of sugarcane;

b) return to the growers from alternative crops and the general trend of prices of agricultural commodities;

c) availability of sugar to consumers at a fair price;

d) price at which sugar produced from sugarcane is sold by sugar producers;

e) recovery of sugar from sugarcane;

f) the realization made from the sale of by-products viz. molasses, bagasse, and press mud or their imputed value;

g) reasonable margins for the growers of sugarcane on account of risk and profits.

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Tourism Sector

Places in news: Cattle Island on Hirakud Reservoir

Places in news | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Cattle Island

Mains level: Not Much

The Odisha Forest and Environment Department is all set to begin ‘Island Odyssey’ and ‘Hirakud Cruise’ ecotourism packages for tourists to islands inside the reservoir.

Cattle Island

‘Cattle island’, one of three islands in the Hirakud reservoir, has been selected as a sight-seeing destination.
When large numbers of people were displaced from their villages when the Hirakud dam was constructed on the Mahanadi river in 1950s, villagers could not take their cattle with them.
They left their cattle behind in deserted villages.
As the area started to submerge following the dam’s construction, the cattle moved up to Bhujapahad, an elevated place in the Telia Panchayat under Lakhanpur block of Jharsuguda district.
Subsequently named ‘Cattle island’, it’s surrounded by a vast sheet of water.

Other islands

Then there is an “island of bats”, also within the reservoir, just 1 km away from the Debrigarh ecotourism project.
It is the habitat of hundreds of bats.
Tourists also get a magnificent view of the sunset from the reservoir. ‘Sunset island’ is one of the three stops on the unique boat ride.

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Emergency award

| Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Emergency award

Mains level: Paper 3- Improving the arbitration in India

Context

The judgment delivered by the Supreme Court in the legal tussle between Amazon and the Future Group has laid the foundation for recognition and enforcement of emergency awards under the Indian arbitration law.

What is an emergency award?

It is an award rendered by an emergency arbitrator, appointed prior to the formal constitution of an arbitral tribunal by an arbitral institution.
It is a recent mechanism introduced by arbitral institutions to encourage parties to seek urgent interim relief from an arbitral institution rather than from a court.
Many leading arbitral institutions such as SIAC, ICC, and LCIA have provisions for the appointment of an emergency arbitrator.
As far as India is concerned, the 246th Law Commission Report had recommended an amendment in the Arbitration and Conciliation Act, 1996 (‘Indian Arbitration Act’) to grant statutory recognition to an emergency award.
Some of the indigenous arbitral institutions though, such as the Delhi International Arbitration Centre, have made provisions for emergency arbitration.

What is the tussle between Amazon and Future Group about?

In August 2020, Biyani Group and the Reliance Industries Group decided to amalgamate Future Retail Ltd. (FRL) with Reliance Industries and complete disposal of its retail assets in favor of the Group.
However, prior to the said transaction, Amazon had invested an amount of Rs 1,431 crores in Future Coupons Pvt. Ltd. (FCPL) based on rights granted to FCPL with regard to FRL.
So, Amazon initiated arbitration against the Biyani Group, including FRL, under Singapore International Arbitration Centre (SIAC) Rules.
Amazon made an application seeking urgent interim reliefs under SIAC rules and the appointment of an emergency arbitrator.
The emergency arbitrator appointed, made an award in favor of Amazon in October 2020, restricting the Biyani Group from proceeding ahead with the disputed transaction.
However, the Biyani Group proceeded with the disputed transaction, construing the emergency award as a nullity.

Issue of enforcement of the emergency award in India

Amazon filed an application before the Delhi High Court for enforcement of the award.
The court had the task of answering two novel legal questions —
1) Whether the emergency award is an interim order under section 17(1) of the Indian Arbitration Act,
2) Whether it can be enforced under section 17(2).
The Delhi High Court gave judgment in March 2021 against the Biyani Group.
The case eventually reached the Supreme Court.
Party autonomy: The Supreme Court judgment emphasized party autonomy in arbitration, which includes the right of the parties to choose institutional rules as the governing rules of arbitration.
Once chosen, the parties are bound by such rules.
The Supreme Court also held that the Indian Arbitration Act does not prohibit the parties from agreeing to a provision providing for an emergency arbitrator.
The Supreme Court also held that the term “during the arbitral proceedings” is wide enough to encompass emergency arbitration proceedings.
The Court ultimately held the emergency award to be an interim order under section 17(1) of the Indian Arbitration Act and enforceable under section 17(2).

Significance of the judgment for arbitration in India

This judgment has contributed to the development of Indian arbitration law.
In the broader scheme of things, it is a victory for Indian arbitration and a sigh of relief for arbitral institutions.

Conclusion

The judgment is a reaffirmation of the fact that India is gradually stepping towards being an “arbitration-friendly” jurisdiction.

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Insolvency and Bankruptcy Code

Getting the perfect haircut from the IBC

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: IBC 2016

Mains level: Paper 3- Right timing in the use of IBC matters

Understanding the role of IBC 2016

For reasons sometimes a company may experience stress, that is, is unable to repay the debt in time — implying that it has assets less than claims against it.
So, when a company has inadequate assets, the claim of an individual creditor may be consistent with its assets while claims of all creditors put together may not.
In such a situation, creditors may rush to recover their claims before others do, triggering a run on the company’s assets.
The IBC provides for reorganisation that prevents a value-reducing run on the company.
It aims to rescue the company if its business is viable or close it if its business is unviable, through a market process.
Restructuring: The claims of creditors are restructured, which may be paid to them immediately or over time.
In case of closure, the assets of the company are sold, and proceeds are distributed to creditors immediately as per the priority rule.
Reorganisation by financial creditor: The IBC entrusts the responsibility of reorganisation to financial creditors as they have the capability and the willingness to restructure their claims.

Why so much variation in haircut?

Where the company does not have adequate assets, realisation for financial creditors, through a rescue, may fall short of their claims known as haircut.
The IBC process yields a zero haircut (100% recovery of claimed amount) in one case and 100 per cent haircut (i.e. 0% recovery) in another.
Factors: It depends on several factors, including the nature of business, business cycles, market sentiments, and marketing effort.
It critically depends on at what stage of stress, the company enters the IBC process.
If the company has been sick for years, and its assets have depleted significantly, the IBC process may yield a huge haircut or even liquidation.
A haircut is typically the total claims minus the amount of realisation/amount of the claims.
But this formulation may not tell the complete story.
The realisation often does not include the amount that would be realised from equity holding post-resolution, and through the reversal of avoidance transactions and the insolvency resolution of guarantors — personal and corporate.
It also does not include realisations made in other accounts.
The amount of claim often includes NPA, which may be completely written off, and the interest on such NPA.
These understate the numerator and overstate the denominator, projecting a higher haircut.

Significance of IBC

A haircut should be seen in relation to the assets available and not in relation to the claims of creditors.
The market offers a value in relation to what a company brings on the table, not what it owes to creditors.
Value maximisation: So, the IBC maximises the value of existing assets, not of assets that probably existed earlier.
Market determined value: The IBC enables and facilitates market forces to resolve stress as a going concern.
Resolution applicants, who have many options for investment, including in stressed companies, compete to offer the best value.
If the best value offered by the market is not acceptable to creditors, the company is liquidated.
Maximum realisation: In addition to rescuing the company, the IBC realises, of the available options for creditors, the highest in percentage terms.

Conclusion

It is a tool in the hands of stakeholders to be used at the right time, in the right case, in the right manner.

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Back2Basics: Avoidable Transactions in IBC 2016

The UNCITRAL Legislative Guide on Law of Insolvency defines avoidance proceedings as “provisions of the insolvency law that permit transactions for the transfer of assets or the undertaking of obligations prior to insolvency proceedings to be cancelled or otherwise rendered ineffective and any assets transferred, or their value, to be recovered in the collective interest of creditors.”
It is very important for the Resolution Professional (RP) or the liquidator to identify such transaction and file applications to avoid it so that creditors can collect their claims.
The Insolvency and Bankruptcy Code, 2016 (IBC) contains four types of avoidable transactions- preferential, undervalued, defrauding creditors and extortionate transactions.
Usually, the avoidable transactions should be made within the prescribed relevant time or look back period.
Look back period is the relevant time up to which an RP or a liquidator can go back to scrutinize an expected avoidable transaction.

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Parliament – Sessions, Procedures, Motions, Committees etc

Role of Speaker

op-ed snap | Polity | Mains Paper 2: Parliament & State Legislatures

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Power of the Speaker

Mains level: Paper 2- Need to make Speakers independent and impartial

Context

The decline in the functioning of India’s Parliament — and state assemblies as well — is caused by one primary reason: The lack of independence and impartiality of the Speaker.

Important role of the Speaker

Our Constitution, after extensive debate, adopted the Westminster model of governance.
In the Lok Sabha, as in the United Kingdom, the Speaker is the supreme authority; he has vast powers and it is his primary duty to ensure the orderly conduct of the business of the House.
Constitutional law points out the two essential qualities of a Speaker: Independence and impartiality.
As the principal spokesperson of the Lok Sabha, the Speaker represents its collective voice.
Indeed, the supremacy of Parliament is emphasised by Article 75(3) of the Constitution: “The Council of Ministers shall be collectively responsible to the House of the People”.
Pandit Nehru referred to the Speaker as “the symbol of the nation’s freedom and liberty” and emphasised that Speakers should be men of “outstanding ability and impartiality”.

How role of Speaker matters in functioning Legislature

Power to allow debate or discussion: It is the Speaker’s duty to decide what issues will be taken up for discussion.
He has the sole discretion to permit an adjournment motion to be tabled or to admit a calling attention notice, if the issue is of urgent public importance.
The present practice of the Speaker continuing to be an active member of the ruling party has the inevitable result of his refusing to allow any debate or discussion that may be essential in national interest but may embarrass the ruling party.
This inevitably leads to constant disruption of Parliament by the Opposition.
The stalling of parliamentary proceedings has led to the passing of important bills in several sessions without any discussion.
Violation of separation of power between legislature and executive: The most dangerous consequence is the vastly increased powers that the executive — the bureaucracy — begins to command by default.
In 1951, a nine-judge bench of the Supreme Court (In Re Delhi Laws Act Case) held that essential legislative functions cannot be delegated to the bureaucracy; law-making must remain the domain of the legislature.
This constitutional mandate is now increasingly and consistently being violated by issuing rules and notifications that have far-reaching consequences.
The new rules on information technology and electronic commerce are clear instances of changes that should have come about by a parliamentary law.
And worse still is the power given to the executive to issue retrospective notifications — a step unknown to any civilised democracy.
Partisan conduct in anti-defection law issues: Several judgments on the anti-defection law have been rendered by the Supreme Court.
A common factor that shows up in these rulings is the blatant, partisan conduct of speakers in state assemblies.

Way forward

Speaker should resign from Party: It should be made mandatory that the Speaker ought to resign from his party and his sole allegiance must be to the Constitution and to maintaining the dignity of the House.
The separation of powers is part of the basic structure of our Constitution.
It is imperative that the Speaker of every legislature resigns from his party to honour his constitutional obligation of independence and impartiality.
This must be accepted as the primary responsibility of every ruling party, both at the Centre and in each state, and made into a constitutional convention.

Conlcusion

The option is a binary: Either allow Parliament and state legislatures to descend into terminal decline or make the Speaker truly independent and let every legislature perform its constitutional function.

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Judicial Appointments Conundrum Post-NJAC Verdict

Collegium recommends nine judges for Supreme Court

| Polity | Mains Paper 2: Executive & Judiciary

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Collegium system, NJAC

Mains level: Not Much

The Supreme Court Collegium, led by Chief Justice of India (CJI) N.V. Ramana has recommended to the government nine names for appointment as apex court judges.

Significant appointments

The Collegium has for the first time, in one single resolution, recommended three women judges.
It has thus sent a strong signal in favor of the representation of women in the highest judiciary.
The process scripted history by naming Karnataka High Court judge B.V. Nagarathna, who may become India’s first woman CJI.

What is Collegium System?

The Collegium of judges is the Indian Supreme Court’s invention.
It does not figure in the Constitution, which says judges of the Supreme Court and High Courts are appointed by the President and speaks of a process of consultation.
In effect, it is a system under which judges are appointed by an institution comprising judges.
After some judges were superseded in the appointment of the CJI in the 1970s, and attempts made subsequently to effect a mass transfer of High Court judges across the country.
Hence there was a perception that the independence of the judiciary was under threat. This resulted in a series of cases over the years.

Evolution: The Judges Cases

First Judges Case (1981) ruled that the “consultation” with the CJI in the matter of appointments must be full and effective.
However, it rejected the idea that the CJI’s opinion, albeit carrying great weight, should have primacy.
Second Judges Case (1993) introduced the Collegium system, holding that “consultation” really meant “concurrence”.
It added that it was not the CJI’s individual opinion, but an institutional opinion formed in consultation with the two senior-most judges in the Supreme Court.
Third Judges Case (1998): On a Presidential Reference for its opinion, the Supreme Court, in the Third Judges Case (1998) expanded the Collegium to a five-member body, comprising the CJI and four of his senior-most colleagues.

The procedure followed by the Collegium

Appointment of CJI

The President of India appoints the CJI and the other SC judges.
As far as the CJI is concerned, the outgoing CJI recommends his successor.
In practice, it has been strictly by seniority ever since the supersession controversy of the 1970s.
The Union Law Minister forwards the recommendation to the PM who, in turn, advises the President.

Other SC Judges

For other judges of the top court, the proposal is initiated by the CJI.
The CJI consults the rest of the Collegium members, as well as the senior-most judge of the court hailing from the High Court to which the recommended person belongs.
The consultees must record their opinions in writing and it should form part of the file.
The Collegium sends the recommendation to the Law Minister, who forwards it to the Prime Minister to advise the President.

For High Courts

The CJs of High Courts are appointed as per the policy of having Chief Justices from outside the respective States. The Collegium takes the call on the elevation.
High Court judges are recommended by a Collegium comprising the CJI and two senior-most judges.
The proposal, however, is initiated by the Chief Justice of the High Court concerned in consultation with two senior-most colleagues.
The recommendation is sent to the Chief Minister, who advises the Governor to send the proposal to the Union Law Minister.

Does the Collegium recommend transfers too?

Yes, the Collegium also recommends the transfer of Chief Justices and other judges.
Article 222 of the Constitution provides for the transfer of a judge from one High Court to another.
When a CJ is transferred, a replacement must also be simultaneously found for the High Court concerned. There can be an acting CJ in a High Court for not more than a month.
In matters of transfers, the opinion of the CJI “is determinative”, and the consent of the judge concerned is not required.
However, the CJI should take into account the views of the CJ of the High Court concerned and the views of one or more SC judges who are in a position to do so.
All transfers must be made in the public interest, that is, “for the betterment of the administration of justice”.

Loopholes in the Collegium system

Lack of Transparency: Opaqueness and a lack of transparency, and the scope for nepotism are cited often.
Judges appointing Judge: The attempt made to replace it by a ‘National Judicial Appointments Commission’ was struck down by the court in 2015 on the ground that it posed a threat to the independence of the judiciary.
Criteria: Some do not believe in full disclosure of reasons for transfers, as it may make lawyers in the destination court chary of the transferred judge.

Scope for transparency

In respect of appointments, there has been an acknowledgment that the “zone of consideration” must be expanded to avoid criticism that many appointees hail from families of retired judges.
The status of a proposed new memorandum of procedure, to infuse greater accountability, is also unclear.
Even the majority opinions admitted the need for transparency, now Collegium’s resolutions are now posted online, but reasons are not given.

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RBI Notifications

Government Securities Acquisition Programme (GSAP 2.0)

Prelims Only | Economics | Mains Paper 3: Mobilization Of Resources

Note4Students

From UPSC perspective, the following things are important :

Prelims level: G-Secs

Mains level: Not Much

The Reserve Bank of India (RBI) has announced that it will conduct an open market purchase of government securities of ₹25,000 crore under the G-sec Acquisition Programme (G-SAP 2.0).

Answer this PYQ in the comment box:

Q.Consider the following statements:

The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.

Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.

Treasury bills offer are issued at a discount from the par value.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 3 Only

(c) 2 and 3 only

(d) 1, 2 and 3

Post your answers here:

What are Government Securities?

These are debt instruments issued by the government to borrow money.
The two key categories are:

Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years

Note: T-Bills are issued only by the central government, and the interest on them is determined by market forces.

Why G-Secs?

Like bank fixed deposits, g-secs are not tax-free.
They are generally considered the safest form of investment because they are backed by the government. So, the risk of default is almost nil.
However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

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