Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Changing India-US relation dynamics in the new global order.
Context
Delhi needs to unlearn some of the assumptions about US policy as it prepares to host Trump next week. While the diaspora is important and could be of some value in dealing with Trump, it can’t override the deeper forces animating American politics.
Changing America under Trump
- Restriction on immigration: Trump’s America wants the Americans to come home but is shutting the door on unrestricted immigration from the rest of the world.
- Domestic critics say America has been a nation of immigrants and Trump is wrong to keep them out.
- Why the restriction on immigrants? But Trump has much support among the working people who know-
- Immigration keeps wages low.
- Helps the capitalist class and-
- Disrupts the familiar cultural and social landscape.
- Some want America out
- Some chancelleries in the world demand that America must go home.
- The president of the Philippines wants to end Manila’s century-old relationship with the US military.
- Iran wants America out of the Gulf.
- Russia and China would like to see the US forces out of Europe and Asia respectively.
- The world is paying serious attention to the possibility of Yankee going home.
Downsizing of the US role and how the world is responding?
- Downsizing
- In the Gulf, Trump wants the Asian powers to police the vital sea lines of communication.
- In Europe and Asia, he wants the allies to do more for their own security.
- How the world is responding?
- Europe’s response In Europe, France and Germany are now talking about creating new defence capabilities for the European Union amidst the prospect for American security retrenchment.
- How the Asian countries are responding? In Asia, Japan is debating a larger security role.
- In the Gulf, America’s Arab allies are scrambling to diversify their security dependence.
America First policy
- What is America First policy? The idea of downsizing America’s role, along with the rejection of free trade and open borders, is at the very heart of Trump’s America First policy.
- Resistance to the policy: To be sure there is deep resistance in the US to these ideas that run counter to America’s post-war internationalism.
- Wall Street on the East Coast and Silicon Valley on the West Coast along with the old foreign and security policy establishment in Washington all oppose Trump’s America First focus.
- Widespread support to the policy: Trump’s message, however, resonates across the political divide in the US.
- Many candidates for the presidential nomination of the Democratic Party agree with Trump’s goal of ending America’s “endless wars” in the Middle East.
- Many in the working classes, who traditionally supported the Democrats, believe Trump is right in arguing that free trade has hollowed out American industry and eliminated manufacturing jobs.
How the changes matter for India?
- Prepare for the changes: America is at an inflection point; India needs to come to terms with the profound changes unfolding in the US.
- No intervention policy: The Indian political classes castigated the US for excessive interventions in the affairs of other nations.
- Trump now says such interventions are counterproductive and all nations must strengthen their sovereignty.
- Critical of globalisation: Indians criticised the US for imposing globalisation on others; the US President is now one of the biggest critics of globalisation.
- Trump’s America is not the one we have known.
- India’s sensitivity to the US domestic politics: As India broadened its engagement with America in the last two decades, Delhi has become more sensitive to the US domestic political dynamics.
- In getting the US to ease off on Kashmir and nuclear issues, Delhi had to look beyond the foreign policy establishment to generate better US appreciation of India’s concerns and interests.
- Indian diaspora: One of the instruments that came in handy was the mobilisation of the Indian diaspora, it emerged as a key factor in elevating the bilateral relationship in the 21st century.
- While the diaspora is important and could be of some value in dealing with Trump, it can’t override the deeper forces animating American politics.
Conclusion
Delhi’s success with the US will depend on the kind of strategic imagination it can display on trade cooperation, securing Afghanistan after America’s withdrawal, stabilising the Gulf and developing a new global compact on migration that is sensitive to domestic political considerations and yet contributes to the collective economic development.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- The ambitious target of $5 trillion economy.
Context
The Indian government has set itself a big target, namely, that the Indian economy will have an aggregate income or gross domestic product (GDP) of $5 trillion by 2024-25.
Lack of clarity
- There is little effort to take it beyond a slogan.
- When it comes to targets and aims pertaining to the economy, it is important to have-
- The officials and advisers go beyond the headline.
- To lay out the details and the road-map for the target.
- Matter for investors: For international observers and particularly investors, not to see these details creates doubts about professionalism.
What growth rate is required to reach that target?
- How long will it take to achieve the target at the present growth rate?
- In 2018-19, India’s GDP was $2.75 trillion.
- India’s latest official growth rate happens to be 5 per cent.
- Target will be reached in 2032-33: Continue in the same fashion to compute the size of the GDP and it becomes clear that the target of $5 trillion will be reached not in 2024-25, but in 2032-33.
- What is the required rate? Set the target as $5 trillion dollars for 2024-25 the required rate turns out to be 10.48 per cent or, approximately, 10.5 per cent.
Why 10.5 rate is an ambitious target?
- The only example of any nation growing for six consecutive years at an average annual rate of over 10.5 per cent was China from 2003 to 2009.
- Can India achieve this rate?
- From 1947 till now, India’s economy grew at over 10 per cent only twice — in 1988-89 and 2007-8.
- Of these, the first may be dismissed because the previous year the economy had grown very slowly, by 3.5 per cent.
- What we can learn from the past growth rate?
- The only example to learn from: The only example from which we can learn is the remarkable growth in 2007-8, made all the more remarkable by the fact that India had been growing well for several years, starting from 2003.
- And from 2005, India was actually growing over 9 per cent.
- What factors played the role in high growth?
- This was a period of professional fiscal policy and steady effort at building infrastructure.
- India’s economy was making big news in the international media and investment poured in.
- India’s investment-to-GDP rate climbed to an all-time record of 39 per cent.
- Current investment-to-GDP ratio: Our investment-to-GDP ratio has crashed to 30 per cent and this takes time to re-build.
- If we can get back to a growth rate of 7 per cent we will be lucky.
Can inflation make the target achievable?
- Combination of real growth and inflation can make it possible: Virtually all serious commentators agree that in purely real terms, the $5-trillion target is unreachable.
- But maybe we can make it by a combination of real growth and inflation.
- How the combination will work? One way India can get to the target is if alongside say 7 per cent growth, India has inflation of say 3.5 per cent.
- Then India’s nominal GDP growth rate will be 10.5 per cent.
- Why the inflation argument is flawed?
- The five trillion target is in dollar terms.
- Inflation will lead to depreciation: Typically, if India has higher inflation than the US, the rupee would depreciate vis-à-vis the dollar to account for that.
- For the sake of pure arithmetic, assume US inflation is zero, India’s inflation is 10 per cent, and India’s real growth rate is 0.
- In that case, in rupee terms, India’s economy will grow by 10 per cent. But how much will India’s economy grow in dollar terms?
- The answer is zero.
- Why is it so? This is because the rupee will typically depreciate by 10 per cent to match the inflation differential, and so the larger GDP of India in rupee terms, when converted to dollars will show no growth.
- The other possibility of achieving the target?
- What if the dollar loses value? But this should immediately make it clear that there is another way of getting to the target.
- This can happen if the US dollar loses value.
- We can then get to the target of $5 trillion because that will mean less in real terms.
Conclusion
There are two routes to achieve the target of $5 trillion: A huge policy initiative to boost real growth or the luck of dollar depreciation. The luck of dollar would mean nothing for us in the real term so the best course of action for the government is to seek the first option and try to achieve it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Debate over suitablity of women in combat roles of Indian Army
- The Supreme Court brought women officers in 10 streams of the Army on a par with their male counterparts in all respects, setting aside longstanding objections of the government.
- The case was first filed in the Delhi High Court by women officers in 2003 and had received a favourable order in 2010. But the order was never implemented and was challenged by the government.
Women in Army: Background of the case
- The induction of women officers in the Army started in 1992.
- They were commissioned for a period of five years in certain chosen streams such as Army Education Corps, Corps of Signals, Intelligence Corps, and Corps of Engineers.
- Recruits under the Women Special Entry Scheme (WSES) had a shorter pre-commission training period than their male counterparts who were commissioned under the Short Service Commission (SSC) scheme.
- In 2006, the WSES scheme was replaced with the SSC scheme, which was extended to women officers. They were commissioned for a period of 10 years, extendable up to 14 years.
- Serving WSES officers were given the option to move to the new SSC scheme or to continue under the erstwhile WSES.
- They were to be, however, restricted to roles in streams specified earlier — which excluded combat arms such as infantry and armoured corps.
2 key arguments shot down
- The Supreme Court rejected arguments against a greater role for women officers, saying this violated equality under the law.
- They were being kept out of command posts on the reasoning that the largely rural rank and a file will have problems with women as commanding officers. The biological argument was also rejected as disturbing.
- While male SSC officers could opt for permanent commission at the end of 10 years of service, this option was not available to women officers.
- They were, thus, kept out of any command appointment, and could not qualify for government pension, which starts only after 20 years of service as an officer.
- The first batch of women officers under the new scheme entered the Army in 2008.
Arguments by the govt.
- The government put forth other arguments before the Supreme Court to justify the proposal on the grounds of permanent commission, grants of pensionary benefits, limitations of judicial review on policy issues, occupational hazards, reasons for discrimination against women and rationalization on physiological limitations for employment in staff appointments.
- The apex court has rejected these arguments, saying they are “based on sex stereotypes premised on assumptions about socially ascribed roles of gender which discriminate against women”.
- It has also said that it only shows the need “to emphasise the need for change in mindsets to bring about true equality in the Army”.
Implications of the judgement
- The SC has done away with all discrimination on the basis of years of service for grant of PC in 10 streams of combat support arms and services, bringing them on a par with male officers.
- It has also removed the restriction of women officers only being allowed to serve in staff appointments, which is the most significant and far-reaching aspect of the judgment.
- It means that women officers will be eligible to tenant all the command appointments, at par with male officers, which would open avenues for further promotions to higher ranks for them.
- It also means that in junior ranks and career courses, women officers would be attending the same training courses and tenanting critical appointments, which are necessary for higher promotions.
Way Forward
- The implications of the judgment will have to be borne by the human resources management department of the Army, which will need to change policy in order to comply.
- But the bigger shift will have to take place in the culture, norms, and values of the rank and file of the Army, which will be the responsibility of the senior military and political leadership.
- After the Supreme Court’s progressive decision, they have no choice but to bite the proverbial bullet.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RBI's accounting year
Mains level: Read the attached story
The Reserve Bank of India (RBI) is aligning its July-June accounting year with the government’s April-March fiscal year in order to ensure more effective management of the country’s finances.
- Accordingly, the next accounting year will be a nine-month period which starts from July 2020 and ends on March 31, 2021. Thereafter, all the financial years will start from April every year, the RBI said.
- The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a more transparent presentation of the RBI’s annual accounts and change in its accounting year from July to June to April to March from the financial year 2020-21.
How did the RBI’s July-June accounting year come to be?
- When it commenced operations on April 1, 1935, with Sir Osborne Smith as its first Governor, the RBI followed a January-December accounting year.
- On March 11, 1940, however, the bank changed its accounting year to July-June.
- Now, after nearly eight decades, the RBI is making another switch: the next accounting year will be a nine-month period from July 2020 to March 31, 2021, and thereafter, all financial years will start from April, as it happens with the central and state governments.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various species mentioned
Mains level: Highlights of the report
State of India’s Birds 2020 (SoIB) assessment was recently released.
Highlights of the report
- The SoIB was produced using a base of 867 species (among 1,333 birds ever recorded in India), and analysed with the help of data uploaded by birdwatchers to the online platform, eBird.
- Adequate data on how birds fared over a period of over 25 years (long-term trend) are available only for 261 species.
- Current annual trends are calculated over a five-year period.
Alarming declines
- The SoIB assessment raises the alarm that several spectacular birds, many of them endemic to the sub-continent, face a growing threat from loss of habitat due to human activity, widespread presence of toxins including pesticides, hunting and trapping for the pet trade.
- Diminishing population sizes of many birds because of one factor brings them closer to extinction because of the accelerated effects of others, the report warned.
- Over a fifth of India’s bird diversity, ranging from the Short-toed Snake Eagle to the Sirkeer Malkoha, has suffered strong long-term declines over a 25-year period.
- More recent annual trends point to a drastic 80% loss among several common birds.
Various species mentioned
- Of 101 species categorised as being of High Conservation Concern — 59 based on range and abundance and the rest included from high-risk birds on the IUCN Red List.
- Endemics such as the Rufous-fronted Prinia, Nilgiri Thrush, Nilgiri Pipit and Indian vulture were confirmed as suffering current decline.
- And all except 13 had a restricted or highly restricted range, indicating greater vulnerability to man-made threats.
- Peafowl, on the other hand, are rising in numbers, expanding their range into places such as Kerala, which is drying overall, and areas in the Thar desert where canals and irrigation have been introduced. Stricter protection for peacocks under law also could be at work.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SUTRA PIC
Mains level: Protecting indigenous breed of bovines
The government has unveiled SUTRA PIC programme to research on ‘indigenous’ cows.
SUTRA PIC
- SUTRA PIC stands for Scientific Utilization Through Research Augmentation-Prime Products from Indigenous Cows.
- To be funded by multiple scientific ministries, the initiative, SUTRA PIC, is led by the Department of Science and Technology (DST).
- It has the Department of Biotechnology, the CSIR, the Ministry for AYUSH (Ayurveda, Unani, Siddha, Homoeopathy) among others and the Indian Council of Medical Research as partners.
- It has five themes:
- Uniqueness of Indigenous Cows,
- Prime-products from Indigenous Cows for Medicine and Health,
- Prime-products from Indigenous Cows for Agricultural Applications,
- Prime-products from Indigenous Cows for Food and Nutrition,
- Prime-products from indigenous cows-based utility items
Aims and objectives
The proposals under this theme aim to:
- perform scientific research on the complete characterization of milk and milk products derived from Indian indigenous cows;
- scientific research on nutritional and therapeutic properties of curd and ghee prepared from indigenous breeds of cows by traditional methods;
- development of standards for traditionally processed dairy products of Indian-origin cow
Other facts
- In 2017, SEED constituted a National Steering Committee (NSC) for ‘Scientific Validation and Research on Panchgavya (SVAROP)’.
- Panchgavya is an Ayurvedic panacea and is a mixture of five (pancha) products of the cow (gavya) — milk, curd, ghee, dung and urine.
- Its proponents believe it can cure, or treat a wide range of ailments.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Battle of Çanakkale/Gallipoli
Mains level: Paper 1: World History
India issued a strong demarche to Turkey over its outspoken President Erdogan’s comments in Pakistan. Erdogan has criticised India’s policy in Jammu and Kashmir and compared it with that of Turkey during World War I.
Gallipoli campaign
- The Battle of Çanakkale, also known as the Gallipoli campaign or the Dardanelles campaign, is considered to be one of the bloodiest of World War I, during which the Ottoman army faced off against the Allied forces, leading to the slaughter of tens of thousands of soldiers on both sides.
- In March 1915, with the war in Europe stalemated in the trenches, Winston Churchill, then Britain’s First Lord of the Admiralty, devised a plan to take control of the Dardanelles.
- The plan was to capture strategic strait connecting the Sea of Marmara to the Aegean Sea and the Mediterranean Sea, and thus reach Constantinople (today’s Istanbul) at the mouth of the Bosporus.
- By taking Constantinople, the Allies hoped to break the Turks, who had recently entered the war on the side of Germany.
The massacre
- The Allies carried out a heavy naval bombardment of Turkish forts along the shores of the Dardanelles, and when that failed, followed up with what was the biggest amphibious landing in military history at the time.
- However, what the British and their allies had hoped would be the turning point in the war ended up as a catastrophe.
- In the nine months upto January 1916, when the Allies called off the campaign and evacuated, more than 40,000 British soldiers had been killed, along with 8,000 Australians. On the Turkish side, some 60,000 had perished.
Legacy of the battle
- The battle resulted in a demotion for Churchill and the emergence on the Turkish side of the young military hero, Mustafa Kemal Ataturk.
- But the legacy of Gallipoli goes far beyond its military aspects — the event is today one of the central pillars of the modern Turkish identity.
- The campaign is also seen to have seeded Australian and New Zealand national consciousness — April 25, the anniversary of the Gallipoli landings, is observed as ANZAC Day, the day of national remembrance for the war dead.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: State of Rampur
Mains level: Post independence consolidation and reorganization
Erstwhile royals of the state of Rampur in Uttar Pradesh are fighting over the assets and legacy of Nawab Raza Ali Khan, who acceded to the Indian Union at the time of Independence. The Supreme Court ended India’s longest-running civil dispute last year, and the process of evaluating the inheritance is currently ongoing.
The state of Rampur
- The state of Rampur was founded by Nawab Ali Muhammad Khan, the adopted son of Sardar Daud Khan, the chief of the Rohillas in Northern India.
- The Rohillas were Afghans who entered India in the 18th century as the Mughal Empire was in decline, and took control of Rohilkhand, at the time known as Katehr.
- In 1737, Nawab Muhammad Khan received the territory of Katehr from Emperor Muhammad Shah, only to lose everything to Nawab Wazir of Oudh in 1746.
- Two years later, he assisted Ahmad Shah Durrani in his conquest of India, recovering all his former possessions.
- Over the next two centuries the Rampur royals, earlier a warring clan, struck deep roots, and with the blessings of the British, began to build one of the richest principalities in the country.
Patrons of the arts, culture
- The Rampur royals have played an important role in the socio-cultural history of the Ganga-Yamuna belt.
- They run the Amir Raza library in Rampur, once known as the official darbar of the Nawab, which is home to some 15,000 manuscripts in Arabic, Urdu, Persian and Turkish, as well as a seventh-century Quran.
- The library also houses 2,500 specimens of Islamic calligraphy, 5,000 miniature paintings, and 60,000 printed books, besides the extremely rare Persian translation of Valmiki’s Ramayana, which is believed to have been Emperor Aurangzeb’s personal copy.
- In the 19th century, the royals established courts of law and a standing army, and built irrigation works. In the 20th century, they set up sugar and textile mills.
- Many Hindus were employed in senior administrative positions in the state. Nawab Raza Ali Khan was known to have written poetry in Bhojpuri for Holi.
- The Rampur court was also a great patron of the arts, and is known to have patronised Ghalib and Begum Akhtar, as well as the tabla player Ahmad Jan Thirakwa, sarangi player Bundu Khan, sarod player Fida Hussein Khan, been player Wazir Khan, and the kathak dancers Acchan Maharaj and Kalka Prasad.
After Independence
- Rampur, under Nawab Raza Ali, was the first kingdom to accede to India in 1949, becoming the only Muslim-majority district in Uttar Pradesh.
- Soon after accession, the Nawab handed over the official royal residence, the Rampur Qila or Fort, built in 1775, to the Indian government, along with several other properties.
- In return, the Indian government bestowed two key rights to the Nawab — he was granted full ownership of the properties, and guaranteed succession to the gaddi or rulership of the state based on customary law, which gave exclusive property rights to the eldest son.
- When Raza Ali Khan died in 1966, he had three wives, three sons, and six daughters.
- His eldest son Murtaza Ali Khan succeeded him as head of the state, as per custom.
- The government recognised him as the sole inheritor of all his father’s private properties and issued a certificate to this effect. But his brother challenged this in the civil court.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SHC scheme
Mains level: Soil health and its significance for farm productivity
The Soil Health Card Scheme has completed 5 years since its launch.
Soil Health Card Scheme
- Soil Health Card (SHC) is a Government of India’s scheme promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers’ Welfare.
- It is being implemented through the Department of Agriculture of all the State and Union Territory Governments.
- A SHC is meant to give each farmer soil nutrient status of his/her holding and advice him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run.
- The scheme was launched by PM on 19.02.2015 at Suratgarh, Rajasthan.
Details on the SHC
- SHC is a printed report that a farmer will be handed over for each of his holdings.
- It contains the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro – nutrients) ; and pH, EC, OC (Physical parameters).
- Based on this, the SHC also indicate fertilizer recommendations and soil amendment required for the farm.
- It provides two sets of fertilizer recommendations for six crops including recommendations of organic manures. Farmers can also get recommendations for additional crops on demand.
Other details
- The State Government will collect samples through the staff of their Department of Agriculture or through the staff of an outsourced agency.
- The State Government may also involve the students of local Agriculture / Science Colleges.
- It will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period.
- The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.
- Soil samples will be drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed area with the help of GPS tools and revenue maps.
Why needed such scheme?
- Soil testing is developed to promote soil test based on nutrient management.
- Soil testing reduces cultivation cost by application of right quantity of fertilizer.
- It ensures additional income to farmers by increase in yields and it also promotes sustainable farming.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Atal Bhujal Yojana
Mains level: Groundwater recharge and conservation efforts
The Government of India and the World Bank have signed a $450 million loan agreement to support the national programme to arrest the country’s depleting groundwater levels and strengthen groundwater institutions.
About the Programme
- The World Bank-supported programme will be implemented in the states of Gujarat, Maharashtra, Haryana, Karnataka, Rajasthan, Madhya Pradesh, and Uttar Pradesh and cover 78 districts.
- These states span both the hard rock aquifers of peninsular India and the alluvial aquifers of the Indo-Gangetic plains.
- They were selected based on several criteria, including degree of groundwater exploitation and degradation, established legal and regulatory instruments, institutional readiness, and experience in implementing initiatives related to groundwater management.
- This programme will contribute to rural livelihoods and in the context of climatic shifts, build resilience of the rural economy.
Objectives
The programme will, among others, enhance the recharge of aquifers and introduce water conservation practices; promote activities related to water harvesting, water management, and crop alignment; create an institutional structure for sustainable groundwater management; and equip communities and stakeholders to sustainably manage groundwater.
Particulars of the programme
- The programme will introduce a bottom-up planning process for community-driven development of water budgets and Water Security Plans (WSPs).
- Water budgets will assess surface and groundwater conditions (both quantity and quality) and identify current and future needs.
- The WSP, on the other hand, will focus on improving groundwater quantity and incentivize selected states to implement the actions proposed.
- Such community-led management measures will make users aware of consumption patterns and pave the way for economic measures that reduce groundwater consumption.
- Crop management and diversification will be the other focus areas.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- How to govern India's gig economy?
Context
The gig economy plays to employment patterns in India, where most of the workforce is engaged in “informal” jobs in the “unorganized” sector.
Employment pattern in India
- Non-contractual employment: A recent study of employment patterns over a 13-year period ended 2017 for the Prime Minister’s Economic Advisory Council finds that non-contractual employment grew by 68 million over the period.
- And “has been a hero of employment generation growing by about 5% annually“.
- There were 145 million people in non-contractual employment in 2017-18.
- Professionals constituted the most rapidly growing occupations, with older, better educated and skilled witnessing higher growth.
- Unorganised sector growing at much higher rate than organised sector: The study also found that unorganized sector employment grew by 65 million between 2004 and 2017, compared to only 27 million new jobs in the organized sector.
- What does the asymmetric rate suggests? It suggests that businesses are finding it more convenient to sustain themselves when they are below the radar of the government.
- Potential for growth of gig economy: As technology and business models take the gig economy across the country and implant it more deeply into the Indian economy, we can expect to see a lot more people find employment through online marketplaces and technology platforms.
Regulation of labour laws and expanding the tax base
- Social Security Code: In December, the government introduced legislation in Parliament that seeks to consolidate a number of labour laws into a Social Security Code.
- Who will be covered in the code? The new statute encompasses self-employed professionals, freelancers and platform workers, such as those employed by taxi aggregators and food delivery companies.
- Widening the tax base: The tax person is not far behind.
- Recent reports suggest that revenue officials are leaning on platforms and aggregators to get gig workers registered with the goods and services tax (GST) network.
- Need to reflect on how to govern the gig workforce? While it is just as well that the government is attempting to rationalize labour regulations and expand the country’s tax base, it is important to step back and reflect on how the gig workforce ought to be governed.
The new approach to classification of jobs: Income and volatility
- Classification on the basis of two fundamental characteristics: If we discard the mental model that has long classified jobs as formal and informal, and look at work afresh, we observe that jobs vary along with two fundamental characteristics:
- The level of income they generate and-
- The volatility of this income.
- Example: A security guard at a company might earn a few thousand rupees a month, but with the assurance of a regular monthly paycheque.
- More informative way: Instead of the old binary formulation of informal versus formal jobs, it is more informative to see jobs being distributed on a spectrum depending on how much they pay and how volatile the income flows they provide are.
- Wherever a job lies in this spectrum, the objective of public policy ought to be to ensure a “trimurti”.
Ensuring Trimurti
- Frist-Providing dignified working conditions: Promoting dignified working conditions include-
- Ensuring fairness.
- Respect.
- Safety.
- Protection against exploitation and-
- Arrangements for retirement.
- Need to ensure the obligation from employers: This means that even as labour laws are rationalized to eliminate outdated and hard-coded regulations, it is necessary to ensure that all employers retain an obligation to promote the dignity of all their employees.
- Second-Need to lower the barriers: Real wages grow not because the government imposes minimum wages, but when productivity rises.
- Productivity growth occurs when barriers to trade, investment and travel are lowered.
- A closed economy cannot be a successful gig economy.
- Finally-A re-imagined social security system: A re-imagined social security system for the 21st century must tap government, corporate and social contributions for insurance and retirement accounts.
- Such a multi-contribution system is possible today and the proposed Social Security Code is an opportunity to put in place such a future-proof framework.
How to handle the dispute arising out of the gig economy
- Start online dispute resolution system: The gig economy is perhaps the best place for India to start its first online automated dispute resolution system.
- You can’t govern the 21st-century economy with 18th-century technology.
Conclusion
While ensuring the application of the labour code to the gig economy and bringing them in the tax net the government also ensure the conducive environment for the gig economy to flourish and contribute significantly in the growth of the country.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Reforms in foodgrain management, the PDS and the fertiliser subsidy.
Context
Union budget missed the opportunity to undertake reforms in the grain management system and food security act.
The massive reduction in food subsidy and its implications
- Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
- For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
- No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
- The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
- An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
- Implications of the move–postponing of the crisis: In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
- One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
- Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
- By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.
Need to bring down the coverage: The Economic Survey
- Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
- The budget did not bite this bullet.
- Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
- The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.
Excessive stock with the FCI
- Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
- It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
- Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
- With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
- And that will be challenged in the WTO.
- The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
- FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.
Fundamental questions
- First: Is the government ignorant of the impending crisis of plenty?
- Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
- Third: Does the government have any plan to reform the public distribution system under NFSA?
Way forward
- Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
- With moving gradually moving away from grains to cash transfers.
- Think over implementing the Shanta Kumar Committee reports recommendations.
- Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
- This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
- Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
- The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
- The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
- Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
- It is feeling totally demoralised.
- No private player wants to come and invest in this sector.
Conclusion
Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- India-US relation in changing circumstances.
Context
US president’s visit comes when a mutually beneficial framework of bilateral relationship stands disrupted.
Significance previous U.S. President’s visits
- The Clinton visit: The Clinton visit occurred against the backdrop of a new assessment within the American strategic community of India’s potential role in the post-Cold War era and against the backdrop of the rise of China.
- Recognition of India’s nuclear power: He implicitly recognising India’s nuclear power status.
- Kashmir issue: He suggested that the line of control (LoC) between India and Pakistan should be viewed as the international border so as to bury the “Kashmir issue” forever and-
- Visas for Indians: increasing entry visas for Indians that has since contributed to the emergence of a sizeable community of Indian Americans.
- As a counter to China: It was suggested that the rise of democratic India would be in the interests of the US and so the latter ought to be supportive of the former.
- The Bush visit:
- Political context: The rise of China and of radical Islam and jihadi terrorism provided the geopolitical context.
- Economic context: The growth of an increasingly open Indian economy provided the economic context.
- Cooperation in civil nuclear energy: Influenced by this new thinking, President George Bush took the next steps in strategic partnership and led the initiative to promote cooperation in the field of civil nuclear energy that also explicitly recognised India as a nuclear weapons power.
- As heads of state, Clinton and Bush altered US-India bilateral relations in a fundamental way.
- The Obama visit:
- P2P relation: His second visit was more a recognition of the growing importance of people-to-people (P2P) relations and
- Defence sales to India: The visit also aimed at promoting defence sales to India.
- During the nuclear deal negotiations, US Congresspersons would often suggest that it was a “123 for 126” deal — that is, they would vote in favour of the 123 agreement in Congress in the hope that India would buy 126 fighter jets from the US.
- That hope remains as yet unfulfilled, with the French getting the Rafale deal and no decision taken on the purchase of US fighter jets.
America First policy of Trump
- The credit for laying the foundation for a new and supportive post-Cold War relationship between the US and India goes singularly to President Bush.
- Disruption with the arrival of Trump: The mutually beneficial framework that Bush helped create to promote the bilateral relationship has been rudely disrupted by the arrival of Donald Trump in Washington DC.
- End of GSP: Trump’s “America First” policy offers no space for offering India “special and differential” treatment on any front, least of all trade.
- Status of the Indian economy from the US perspective: With per capita annual national income of US $60,000, Trump’s America has no qualms declaring India, with a per capita annual average national income of US $2,000 a “developed economy” not deserving of any leniency in trade policy.
- Clubbing together with China: To club China, a $15-trillion economy, with a $3-trillion India on the trade front is not just stupid but an affront to Indian sensibilities.
What are the hopes and what could be the outcomes of the visit?
- No bi-partisan support to India’s rise: It has to be recognised that neither Democratic liberals nor Republican conservatives are any longer willing to be supportive of the Bush-Rice paradigm that views India’s rise in benign and mutually beneficial terms.
- Inward-orientation in both the countries: Today the relationship seems caught in the pincers between the inward-orientation of rightwing nationalists in both nations.
- No hope of change: There is no reason as yet to believe that this unfortunate state of affairs will be altered by the Trump visit next week.
- Stand on Pakistan or Kashmir: Trump has also moved away from the Clinton-Bush framework on India-Pakistan relations and moved closer to approach of wanting to insert the US into the equation on Kashmir.
- Appeasement of Pakistan: Trump’s motives are no different from those that initially drove Obama-namely, to appease Pakistan in the hope of securing a peaceful exit from Afghanistan.
- Expect differences to persist: At best, India can hope to limit the damage Trump may do to strategic stability in the region.
- Visa and investment: There will be much talk about US investments in India and increased visas for Indians going to the US.
- Corporate interests: Both are driven largely by US corporate interests.
- Given the direction of the Modi government’s trade policy, one cannot expect any dramatic concessions being made.
- Defence purchases: The best India can do for the US is to buy more defence equipment and ease up on some trade restrictions.
- Defence sales to India are an essentially commercial activity and much of it can go on even in the absence of strategic convergence and shared geopolitical perspectives.
- Brain-drain and need to focus on education: Much is made of Indian Americans heading US multinationals and the Great Indian Diaspora in the US.
- Outmigration of talent: The continued neglect of education in India is increasing the outmigration of talent, offering the US a reservoir of talent.
- Drain on national resources: While the Indian elite celebrates this out-migration, the fact is that it is a drain on national resources.
Conclusion
In sum, with the supportive Bush-Rice doctrine defining the post-Cold War US-India partnership virtually abandoned, and the new Trump doctrine treating India as a “developed” economy, demanding parity on trade, bilateral relations have become uncertain and testy. To hide the lack of substance in the relationship the Trump visit will focus on the hype and Prime Minister Modi has perfected the art of diplomacy as mass entertainment.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Significance of Judiciary: Impartial and independent of all external pressures
Recently a Supreme Court judge recused himself from hearing a petition filed against the government’s move to charge Omar Abdullah under the Public Safety Act. The case was finally heard by another bench.
Rules on Recusals
- There are no written rules on the recusal of judges from hearing cases listed before them in constitutional courts. It is left to the discretion of a judge.
- The reasons for recusal are not disclosed in an order of the court. Some judges orally convey to the lawyers involved in the case their reasons for recusal, many do not. Some explain the reasons in their order.
- The decision rests on the conscience of the judge. At times, parties involved raise apprehensions about a possible conflict of interest.
Why Judges need recusal?
- Recusal usually takes place when a judge has a conflict of interest or has a prior association with the parties in the case.
- For example, if the case pertains to a company in which the judge holds stakes, the apprehension would seem reasonable.
- Similarly, if the judge has, in the past, appeared for one of the parties involved in a case, the call for recusal may seem right.
- A recusal inevitably leads to delay. The case goes back to the Chief Justice, who has to constitute a fresh Bench.
Should the reasons be put on record?
- In his separate opinion in the NJAC judgment in 2015, Justice (now retired) Kurian Joseph, who was a member of the Constitution Bench, highlighted the need for judges to give reasons for recusal as a measure to build transparency.
- It is the constitutional duty, as reflected in one’s oath, to be transparent and accountable, and hence, a judge is required to indicate reasons for his recusal from a particular case, Justice Kurian wrote.
- One of his companion judges on the Constitution Bench, Justice (retired) Madan B. Lokur, agreed that specific rules require to be framed on recusal.
- The two judges were referring to senior advocate Fali Nariman’s plea to Justice J.S. Khehar, who was then in line to be the next Chief Justice, to recuse himself.
- But Justice Khehar refused to recuse himself though he admitted that Mr. Nariman’s plea left him in an “awkward predicament”.
- Justice Khehar reasoned that he did not recuse himself for fear of leaving an impression that he was “scared”.
What happened in the Judge Loya and Assam detention centres cases?
- In 2018, petitioners in the Judge Loya case sought the recusal of Supreme Court judges, Justices A.M. Khanwilkar and D.Y. Chandrachud, from the Bench as they both hailed from the Bombay High Court.
- The case banked on the written statements of two judges from that High Court, both saying that Judge Loya’s death was from natural causes. The court refused the request and called it a “wanton attack”.
- Recusal, the court observed, would mean abdication of duty. Maintaining institutional civilities are distinct from the “fiercely independent role of the judge as adjudicator”, the court explained.
- In May 2019, in the middle of a hearing of a PIL filed by activist Harsh Mander about the plight of inmates in Assam’s detention centres, the then-Chief Justice Ranjan Gogoi was asked to recuse himself.
- In a lengthy order, Justice Gogoi said a litigant cannot seek recusal of the judge. “Judicial functions, sometimes, involve performance of unpleasant and difficult tasks, which require asking questions and soliciting answers to arrive at a just and fair decision.
- If the assertions of bias as stated are to be accepted, it would become impossible for a judge to seek clarifications and answers,” the court observed.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: LPG, PM Ujjwala Scheme
Mains level: Pricing mechanism of LPG in India
Recently, LPG prices, which are revised on a monthly basis, went up yet again.
What influences LPG prices in India?
- Domestic prices of liquefied petroleum gas (LPG) are based on a formula — the import parity price (IPP), which is based on international LPG prices.
- Saudi Aramco’s LPG price acts as the benchmark for the IPP and includes the free-on-board price, ocean freight, customs duties, port dues and the like.
- This dollar-denominated figure is converted into rupees before local costs — such as local freight, bottling charges, marketing costs, margins for oil marketing firms and dealer commissions and the GST — are added.
- This helps the government arrive at the retail selling price for LPG.
- The government resets the LPG price every month, the decision being influenced by international prices and how the rupee has behaved against the dollar in the immediately preceding weeks.
Who will the price rise affect?
- The price increase will affect retail consumers who have given up the subsidy.
- The government has said that for those who avail subsidy, the increase would be mostly absorbed by the rise in subsidy.
- The Centre said the price of an unsubsidized cylinder would increase from ₹714 to ₹858.50 in Delhi, for example, and that the subsidy offered would go up from ₹153.86 to ₹291.48.
- Of the 27.76 crore retail consumers, 26.12 crore consumers avail LPG subsidy. Likewise, for Ujjwala consumers, the subsidy would go up from ₹174.86 to ₹312.48 per cylinder.
Does this help the government move to an open pricing regime?
- Prior to the latest round of the price increase, the government had raised LPG cylinder prices by ₹62, starting from August 2019.
- Compare this with the increase of ₹82 that had taken place over five years to mid-2019, indicating a penchant for increasingly lesser subsidy.
- In the latest round, though, the Centre has sought to absorb much of the increase for those availing subsidy.
- It looks like the most recent increase has been beyond its control and it is hence raising the subsidy levels to protect consumers, given that the economy is reeling from lack of consumer spending.
What is the outlook?
- With international crude prices on the downtrend, it is plausible the LPG prices too would see a slump.
- Aramco has lowered its propane price for February to $505 per metric tonne.
- Assuming we receive no surprises from the rupee-dollar tango, a softening of LPG prices in the domestic context may be expected.
What are the implications for the broader economy?
- At a time when consumer demand, in general, for goods and services in the country has slumped, more cash in the hands of the retail consumer may have helped spur demand.
- It is ironic that the government has had to raise LPG prices now.
- This sucks away even more disposable income from those consumers who pay market rates for LPG. As a result, household budgets are bound to go up, especially for those not availing the subsidy.
- The increase in LPG price could spur headline inflation even further. As it is, the consumer price index inflation has seen a rise over the past few months.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IRCTC, Train18 etc.
Mains level: Corporate Model of Indian Railways
The Kashi Mahakal Express is the country’s third ‘corporate’ train after the two Tejas Express trains between Delhi-Lucknow and Mumbai-Ahmedabad started over the past few months.
A new model
- This is a new model being actively pushed by Indian Railways- to ‘outsource’ the running of regular passengers’ trains to its PSU, the Indian Railway Catering and Tourism Corporation (IRCTC).
- This has been dubbed an ‘experiment’ as a natural extension of this model is to lease out 100 routes to private players to run 150 trains, something that is in the works.
How does the model work?
- In this model, the corporation takes all the decisions of running the service– fare, food, onboard facilities, housekeeping, complaints etc.
- Indian Railways is free from these encumbrances and gets to earn from IRCTC a pre-decided amount, being the owner of the network. This amount has three components- haulage, lease and custody.
- The haulage charge IRCTC is paying for the Tejas trains is in the range of Rs 800 per kilometer.
- This includes use of the fixed infrastructure like tracks, signalling, driver, station staff, traction and pretty much everything needed to physically move the rake.
Finances
- On top of that IRCTC has to pay the lease charges on the rake as Indian Railways coaches are leased to its financing arm, the Indian Railway Finance Corporation (IRFC).
- Added to that there is a per-day custody charge, of keeping the rake safe and sound while it is in the custody of the PSU.
- Roughly each of these components works out to be around Rs 2 lakh per day for the New Delhi-Lucknow Tejas rake.
- In other words, IRCTC has to pay Indian Railways a sum total of these three charges, roughly Rs 14 lakh for the Lucknow Tejas runs in a day (up and down) and then factor in a profit over and above this.
- This money is payable even if the occupancy is below expectation and the train is not doing good business.
What powers does IRCTC have?
- Being a corporate entity with a Board of Directors and investors, IRCTC insists that the coaches it gets from Railways are new and not in a run-down condition, as is seen in many trains.
- The quality of the coaches has a direct bearing on its business.
- In this model, IRCTC has full flexibility to decide the service parameters and even alter them without having to go to Railway ministry or its policies.
- To that end, the business of running trains can be run with the independence needed to run a business with profit motive.
- This, policymakers believe creates the environment for enhanced service quality and user experience for the passengers.
- IRCTC gets the freedom to decide even the number of stoppages it wants to afford on a route, depending on the needs of its business model.
What is Indian Railways’ benefit from this model?
- The bright side for Indian Railways is that it doesn’t have to suffer the losses associated with running these trains thanks to under-recovery of cost due to low fares and its own hefty overheads.
- The lease on its coaches is also taken care of.
Is this the same model for private train operators?
- The model in which private train operators are sought to be engaged is different wherein along with haulage of Rs 668 per kilometer the operator needs to agree to revenue sharing with Railways.
- The company willing to share the highest percentage of revenue will win the contract.
- Private players may not need to pay lease and custody charges as it is expected that they will bring in their own rolling stock.
- All this is because over the next five years, after the two dedicated freight corridors are operationalised and a lion’s share of freight trains move to the corridors, a lot of capacity will free up in the conventional railway lines for more passenger trains to run to cater to the demand.
- The government wants private players and maybe also its own PSU, along with Indian Railways, to share the load of pumping in more trains into the system.
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From UPSC perspective, the following things are important :
Prelims level: Dara Shikoh and his legacy
Mains level: Secular trends in Mughal Administration
The Ministry of Culture recently set up a panel of the Archaeological Survey of India (ASI) to locate the grave of the Mughal prince Dara Shikoh (1615-59) nearby Humayun’s Tomb complex in Delhi.
Dara Shikoh’s legacy
- The eldest son of Shah Jahan, Dara Shikoh was killed after losing the war of succession against his brother Aurangzeb.
- Dara Shikoh is described as a “liberal Muslim” who tried to find commonalities between Hindu and Islamic traditions.
- He translated into Persian the Bhagavad Gita as well as 52 Upanishads.
Antithesis to Aurangzeb
- Some historians argue that if Dara Shikoh had ascended the Mughal throne instead of Aurangzeb, it could have saved thousands of lives lost in religious clashes.
- Dara Shukoh was the total antithesis of Aurangzeb, in that he was deeply syncretic, warm-hearted and generous — but at the same time, he was also an indifferent administrator and ineffectual in the field of battle.
The remains of Dara Shikoh
- According to the Shahjahannama, after Aurangzeb defeated Dara Shikoh, he brought the latter to Delhi in chains.
- His head was cut off and sent to Agra Fort, while his torso was buried in the Humayun’s Tomb complex.
- Italian traveller Niccolao Manucci gave a graphic description of the day in Travels of Manucci, as he was there as a witness to the whole thing. That is the basis of the thesis.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Supergiant star ‘Betelgeuse’
Mains level: Big Bang Theory
Using the European Space Organization’s (ESO) Very Large Telescope (VLT), astronomers have noticed the unprecedented dimming of Betelgeuse.
Betelgeuse
- It is a red supergiant star (over 20 times bigger than the Sun) in the constellation Orion.
- Along with the dimming, the star’s shape has been changing as well, as per recent photographs of the star taken using the VISIR instrument on the VLT.
- Instead of appearing round, the star now appears to be “squashed into an ova”.
Why is it significant?
- Betelgeuse was born as a supermassive star millions of years ago and has been “dramatically” and “mysteriously” dimming for the last six months.
- While Betelgeuse’s behaviour is out of the ordinary, it doesn’t mean that an eruption is imminent since astronomers predict the star to blast sometime (supernova explosion, which is the largest explosion to take place in space) in the next 100,000 years or so.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UHU effect
Mains level: UHU effect
A recent study from IIT Kharagpur called “Anthropogenic forcing exacerbating the urban heat islands in India” noted that the relatively warmer temperature in urban areas, compared to suburbs, may contain potential health hazards due to heat waves apart from pollution.
About the study
- The research did study the difference between urban and surrounding rural land surface temperatures, across all seasons in 44 major cities from 2001 to 2017.
- It found evidence of mean daytime temperature of surface urban heat island (UHI Intensity) going up to 2 degrees C for most cities, as analysed from satellite temperature measurements in monsoon and post monsoon periods.
- Other researchers from elsewhere have also noticed similar rise in daytime temperatures in Delhi, Mumbai, Bengaluru, Hyderabad and Chennai.
What is an Urban Heat Island?
- An urban heat island (abbreviated as UHI) is where the temperature in a densely populated city is as much as 2 degrees higher than suburban or rural areas.
- This happens because of the materials used for pavements, roads and roofs, such as concrete, asphalt (tar) and bricks, which are opaque, do not transmit light, but have higher heat capacity and thermal conductivity than rural areas, which have more open space, trees and grass.
- Trees and plants are characterised by their ‘evapotranspiration’— a combination of words wherein evaporation involves the movement of water to the surrounding air, and transpiration refers to the movement of water within a plant and a subsequent lot of water through the stomata (pores found on the leaf surface) in its leaves.
- Grass, plants and trees in the suburbs and rural areas do this. The lack of such evapotranspiration in the city leads to the city experiencing higher temperature than its surroundings.
Latent impacts
- UHI s also decrease air quality in the cities, thanks to pollution generated by industrial and automobile exhaust, higher extent of particulate matter and greater amounts of dust than in rural areas.
- Due to this higher temperature in urban areas, the UHI increases the colonization of species that like warm temperatures, such as lizards and geckos.
- Insects such as ants are more abundant here than in rural areas; these are referred to as ectotherms.
- In addition, cities tend to experience heat waves which affect human and animal health, leading to heat cramps, sleep deprivation and increased mortality rates.
- UHIs also impact nearby water bodies, as warmer water (thanks to the pavements, rooftops and so on) is transferred from the city to drains in sewers, and released into nearby lakes and creeks, thus impairing their water quality.
Control of UHIs and mitigation
- Industrialization and economic development are vital to the country, but the control of UHIs and their fallouts are equally vital. Towards this, several methods are being, and can be, tried.
- One of them is to use greener rooftops, using light-coloured concrete (using limestone aggregates along with asphalt (or tar) making the road surface greyish or even pinkish (as some places in the US have done); these are 50% better than black, since they absorb less heat and reflect more sunlight.
- Likewise, we should paint rooftops green, and install solar panels there amidst a green background.
- The other is to plant as many trees and plants as possible
Why plant more trees?
Relevant to the present context are:
- they combat climate change; clean the surrounding air by absorbing pollutant gases (NXOy, O3, NH3, SO2, and others) and trapping particulates on their leaves and bark;
- they cool the city and the streets; conserve energy (cutting air-conditioning costs by 50%); save water and help prevent water pollution; help prevent soil erosion; protect people and children from UV light;
- they offer economic opportunities; bring diverse group of people together; encourage civic pride by giving neighborhoods a new identity; mask concrete walls, thus muffling sounds from streets and highways, and eye-soothing canopy of green; and the more a business district has trees, more business follows.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- How could higher import tariffs affect the Indian economy?
Context
It is important to have a stable tariff policy which would help to link effectively to global value chains.
Why countries levy tariff?
- The tariff is a tax levied on an imported good at the border.
- Countries use tariffs to-
- Provide easy market access or restrict them to protect domestic industry.
- It also serves the purpose of revenue collection and-
- To achieve some strategic objectives by giving/denying tariff concessions to countries.
Harmonised System in international trade
- What is it? Goods are classified at 2, 4, 6, 8 digits and some countries have even up to 10 digits, depending upon the level of trade potential of a country.
- WCO’s system of codes: The classification of these codes is streamlined under an international coding system called ‘Harmonized System’ (HS) under World Customs Organization (WCO) to which 138 countries are contracting parties and about 200 customs authorities are signatories.
- India’s national tariff lines are about 11,000 at HS 8-digit.
Historic background of the tariffs
- Colonial-era: During the colonial era tariffs were heavily used to protect the domestic industry, enjoy unbridled access to the colonized markets and raise tariffs against competitors.
- Adam Smith’s advocacy of free trade: Adam Smith in 18th Century challenged this idea of regimented trade with his advocacy of free trade that was convincingly brought out in his seminal work ‘Wealth of Nations’.
- Theory of comparative advantage: Further, in the 19th Century, David Ricardo, building on this concept, propagated the ‘theory of comparative advantage’.
- The theory proposes that nations should remain focused on their specific areas of competence and allowed to trade freely with other countries.
- This theory is against import substitution and considers raising tariffs as a drag on economic growth.
- What proponents of high tariff said? Proponents of high tariffs assert that-
- Developed countries dominated global markets for decades with high tariffs, developing countries should continue to enjoy differential tariff treatment until they catch up with the rest.
How countries calibrate tariffs?
- Each country calibrates its tariffs taking into account its-
- Domestic production.
- Demand and
- Sensitivities.
- Typically, tariff structures of a manufacturing country reveal a pattern:
- Low tariffs on raw materials and intermediate goods in the range of 0-5%.
- Slightly higher tariffs for finished goods in the range of 7-10%.
- Higher tariffs for agriculture products at above 15%, sometimes up to bound rates as allowed under WTO.
- As agriculture lines are politically sensitive, most countries zealously guard them with high tariffs.
Export-import linkage and effects of high tariffs
- How tariffs could harm export competitiveness: Availability of cheaper raw materials and intermediate products support making of competitively priced finished goods for export markets.
- The challenge for an entrepreneur is to find these cheaper inputs.
- If these inputs are not available domestically at competitive rates, they look to source them from outside.
- But as high tariffs act as barriers to sourcing cheaper inputs, they undermine export competitiveness of a product.
- Implications for MSMEs
- For MSMEs (micro, small and medium enterprises), this dependency linkage is even more critical, without which they might close down their operations under threat of persistent losses or low returns.
- Impact on jobs and economy: This would have consequential impact on jobs, income and consumer choices in an economy.
- Inefficiency and corruption at entry points: High tariffs could breed inefficiency and corruption at the entry points as it leaves much scope for discretion at the hands of officials, circumvention through under/over-invoicing and violation of rules of origin.
- Impairing demand: Overtime, high tariffs run the risks of impairing demand and paralyzing domestic manufacturing.
- Maintaining judicious balance: Leveraging tariffs for benchmarking domestic prices is not an uncommon practice in any country.
- But maintaining a judicious balance between the interests of primary producers and user industries is imperative, given that there exists an intimate link between imports and exports.
India and Global Value Chain (GVC)
- 80% trade through More than 80% of the global trade runs through Global Value Chains (GVCs) which have evolved extensively in various regions of the world.
- Low tariffs help GVCs to thrive, essentially for the purpose of sourcing and accessing foreign markets.
- Why stable tariff policy is important for India?
- For India to emerge as a global hub for “networked products” and make every district an ‘export hub’ for a specific item, as envisaged in this year’s Budget, it is important to have a stable and predictable tariff policy which would help to link effectively to GVCs.
- For investors: From an investor’s point of view a stable tariff policy is a huge motivation.
Free-trade agreements and hope of getting market access
- Market access: The assumption that tariff concessions under bilateral free trade agreements (FTAs) would help get market access is misplaced.
- Why the assumption is misplaced? In reality, this may not happen as same concessions can be offered by a country to other trading partners in a trade arrangement or throw open to all countries on an MFN (most favoured nation) basis.
- Inverted duties situation: Gradual tariff liberalization is a natural progression and failing to do so could result in a situation of inverted duties where finished products end up being cheaper than raw materials and intermediate goods
- Thus, calling for tariff correction in course of time.
Revenue Generation through tariffs
- Why it is not a good idea? The domestic consumers ultimately end up absorbing import duties as they get passed onto products they consume.
- Taxing own people: This is akin to taxing one’s own people in an indirect way by making them pay more for a product than in other markets.
- Revenue generation from enhanced activities: For these reasons, the idea of revenue collection from import duties is losing steam, and instead, revenue generation from enhanced economic activity is gaining wider acceptance as a dynamic process.
Conclusion
Increasing tariffs on the import can end up hurting the economy than benefitting it in the long run, so the government must reconsider the policy of tariff increase.
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