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  • India’s role in chaotic world order

    India

    Context

    • As the great powers get at each other’s throats, the prospects for multilateral agreements have diminished. On both the economic and political fronts, the conflict among the major powers has sharpened. That makes India’s chairmanship of G20 more challenging.

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    Historical understanding of major global events

    • Major wars and rebalancing: Major wars have always reshaped great power relations and rearranged the international system. Russia’s war against Ukraine will be no exception.
    • First world war: The First World War saw the collapse of the Ottoman, Austro-Hungarian, and the Russian empires. It also helped the Bolsheviks in Russia form the Soviet Union, gave birth to new nations in Europe, and accelerated the rise of Asian nationalism.
    • The Second World War: Hastened the demise of European colonialism and heralded the rise of the United States and the Soviet Union as the superpowers. Washington and Moscow managed an armed peace in a divided Europe during the Cold War. The process of decolonization saw the birth of a number of new nations in Asia and Africa.
    • The Cold War: It led to the collapse of the Soviet Union, undid its sphere of influence in East and Central Europe and led to the rise of the unipolar moment. The era of massive economic interdependence that followed the Cold War saw the rapid rise of China and a slower but definitive emergence of India as a major power.

    How Russia and China are colluding to change regional and global world order?

    • Asserting themselves against US: Moscow and Beijing, which were willing to acquiesce in the unipolar moment in the 1990s, began to assert themselves against the US-led international order in the 21st century. Europe focused on strengthening its economic and political integration, and sought greater strategic autonomy from the United States.
    • Apparent decline of USA: As they drew steadily closer over the last decade, Russia’s Vladimir Putin and China’s Xi Jinping bet that the apparent American decline was real and irreversible. That emboldened Putin to fancy his chances in ending Ukraine’s sovereignty.
    • China backed Russia against Europe: The seeming political disarray in the West also convinced Xi to back Putin’s attempt to reorder European regional security order. The partnership without limits and no forbidden areas of cooperation was unveiled less than three weeks before Putin invaded Ukraine on February 24, 2022.

    Outcome of Russia’s failed attempt to capture Ukraine

    • Only option is diplomacy: As the costs of war mount, the case for diplomacy will gain ground in 2023. While both sides talk about peace, they are also gearing up to fight through the harsh winter. Bridging that gulf between Russian and Ukrainian negotiating positions will occupy diplomacy in 2023.
    • Weaker Russia: Whatever the nature of the eventual settlement, Russia will come out weaker from this military misadventure. Putin’s attempts to eliminate Ukraine as an independent nation and roll back the eastward expansion of NATO have backfired. The war has consolidated Ukraine as a nation and NATO has expanded to include Sweden and Finland.
    • Self-defense Inability of Europe: The war has also demonstrated Europe’s inability to defend itself against Russia despite the EU’s economy being 10 times larger than that of Russia. But for now, and the near term, Europe will remain dependent on the US to defend it against an expansionist Russia. While Europe is weaker, trans-Atlantic NATO has become stronger.
    • US industries are winning: The US is emerging as a big winner from the Ukraine war. American oil companies are raking it in from high energy prices. US weapons like the HIMARS and its high technology companies like SpaceX with its Starlin satellite system and Palantir with its algorithms have actively shaped the battlefield in favour of Ukraine, the underdog in the war. Far more consequential is the fact that without being directly involved in the fight, the US is influencing the direction of the war and has the most leverage in defining the terms of peace in Ukraine.

    Impact of Chinese and Russian aggression on Mid-power countries

    • US as reliable partner: Thanks to the overreach of Putin and Xi, the US has become a valuable partner for the middle powers at the receiving end of Russian and Chinese bullying.
    • Eyeopener for Germany and Japan: Russian expansionism in Europe and Chinese aggressiveness in Asia have compelled Germany in Europe and Japan in Asia to boost their defence spending.
    • Regional security Policy: Poland in Europe and Australia and South Korea in Asia have embarked on ambitious regional security policies.

    What should be the approach of India?

    • India should rework its status: India that long relied on Russia to provide a regional balance of power will have to rework its great power sums. This should not be too hard, given India’s improving relations with the US and Europe and its focus on diversifying its defence partnerships.
    • Boosting the domestic capabilities: Delhi, however, will have to move much faster in developing the national capabilities and international partnerships to deter China’s aggressive actions on the border and balance Beijing’s power in the Indo-Pacific. Delhi certainly can’t take for granted that its current economic and political advantages will endure.
    • Prevent the breakdown of multilateral system: Finally, it is unlikely the world will return to the kind of multilateralism we got used to since the 1990s. India’s G20 leadership would be a success if it can prevent the complete breakdown of the multilateral system and generate major power consensus on a few issues.

    Conclusion

    • India should take the advantage of chaotic world order to strengthen itself. Indigenous military capabilities, double digit economic growth and securing core foreign policy interest should be the top priorities for India.

    Mains Question

    Q. Major wars in world have often culminated into rebalancing of international politics. Comment. What should be the India’s approach towards new emerging global order in the aftermath of Russia-Ukraine war?

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  • Blue economy and marine pollution

    Blue economy

    Context

    • Blue economy relates to presentation, exploitation and regeneration of the marine environment. It is used to describe sustainability-based approach to coastal resources. The worry is that the oceans are under severe threat by human activities, especially when the economic gains come at the cost of maintaining environmental sanity.

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    Blue economy

    From the beginning: The Blue economy

    • Origin of the concept: Gunter Pauli’s book, “The Blue Economy: 10 years, 100 innovations, 100 million jobs” (2010) brought the Blue Economy concept into prominence.
    • A project to find best nature inspired and sustainable technologies: Blue Economy began as a project to find 100 of the best nature-inspired technologies that could affect the economies of the world. While sustainably providing basic human needs potable water, food, jobs, and habitable shelter.
    • Inclusive approach and objective: This is envisaged as the integration of Ocean Economy development with the principles of social inclusion, environmental sustainability and innovative, dynamic business models
    • Environment friendly maritime infrastructure: It is creation of environment-friendly infrastructure in ocean, because larger cargo consignments can move directly from the mothership to the hinterland through inland waterways, obviating the need for trucks or railways

    Blue economy

    Significance of Maritime transport

    • One of the largest employers within ocean-related activities: Maritime transport plays a big role in the globalised market in the form of containerships, tankers, and ports, coastal tourism is the largest employer within ocean-related activities.
    • Eighty percent trade happens on the seas: Eighty per cent of world trade happens using the seas, 40 per cent of the world’s population live near coastal areas, and more than three billion people access the oceans for their livelihood.
    • Annual value makes up equivalent to seventh largest GDP: A healthy marine environment is essential for a sustainable future for people and the planet. Its value is estimated to be over $25 trillion, with the annual value of produced goods and services estimated to be $2.5 trillion per year, equivalent to the world’s seventh largest economy in gross domestic product (GDP) terms.
    • Ensures food security: The oceans, seas and coastal areas contribute to food security and economic viability of the human population. The ocean is the next big economic frontier, with the rapidly growing numerous ocean-based industries.

    What are the concerns?

    • Human induced Oceanic pollution: Marine activities have brought in pollution, ocean warming, eutrophication, acidification and fishery collapse as consequences on the marine ecosystems.
    • Oceans are rarely financial institutions: The ocean is uncharted territory, and rarely understood by financial institutions. Hence preparedness of these institutions in making available affordable long-term financing at scale is nearly zero.
    • Developing nations pay heavy price: In this journey of achieving blue economy goals, it is developing nations that pay a heavy economic price.
    • Lack of capacity is a critical hindrance: Many of the developing nations have high levels of external debt. Lack of capacity and technology for transition between agri economy and marine economy is also a critical hindrance.
    • Not having a elaborative guiding principles is a major concern: There is concern that without the elaboration of specific principles or guidance, national blue economies, or sustainable ocean economies, economic growth will be pursued with little attention paid to environmental sustainability and social equity.

    Blue economy

    What should be the approach towards achieving Blue economy?

    • Inclusive discussion and participation is must: The blue economy is based on multiple fields within ocean science and, therefore, needs inter-sectoral experts and stakeholders. It is imperative to involve the civil society, fishing communities, indigenous people and communities for an inclusive discussion.
    • SDG-14 journey cannot undermine the other SDGs: The UN stresses that equity must not be forgotten when supporting a blue economy. Land and resources often belong to communities, and the interests of communities dependent on the ocean are often marginalised, since sectors such as coastal tourism are encouraged to boost the economy.
    • Integrated marine spatial planning with national and global expertise is necessary: Developing the blue economy should be based on national and global expertise. It is important that any blue economy transformation should include using integrated marine spatial planning. This would provide collaborative participation of all stakeholders of the oceans, and would make room for debate, discussion and conflict resolution between the stakeholders.

    Where does India stand at this hour?

    • Suitable natural geography: Vast coastline of almost 7,500 kilometres, with no immediate coastal neighbours except for some stretches around the southern tip. In some sense, India has the advantage of its natural geography
    • Opportunity on G20 presidency: It is an opportunity for India to use its G20 Presidency to ensure environmental sustainability, while providing for social equity.
    • Rising role and significance: India’s engagement in the blue economy has been rising, with its active involvement in international and regional dialogues, and maritime/marine cooperation.

    Conclusion

    • Achieving the Blue economy goal would need tremendous human effort, and would call for global cooperation through various legal and institutional frameworks. This also includes the need to develop newer sectors such as renewable ocean energy, blue carbon sequestration, marine biotechnology and ex-tractive activities, with due attention paid to the environmental impacts.

    Mains question

    Q. What do you understand by mean Blue economy? Highlight the importance of maritime transport and discuss what need to be done to achieve blue economy in a true sense?

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  • Ministers’ Right to Free Speech and Issues

    minister

    The Supreme Court has held that there is no reason to impose “additional restrictions” on the right to free speech of Ministers and the government is not vicariously liable for disparaging remarks made by them, even if the comments are traceable to state affairs or meant to protect the government.

    Why are we discussing this?

    • Many politicians make unwarranted statements and tender an apology in return.
    • The PM or the CM does not have disciplinary control over the members of the Council of Ministers.
    • In a country like ours, where there is a multi-party system and where coalition Governments are often formed, it is not possible at all times for the whip to control the politician’s behavior.
    • A derogatory speech that closely resembles hate speech cannot fall within the ambit of the free speech right.

    Do ministers and lawmakers have absolute freedom of speech?

    • Scope: Ministers and lawmakers enjoy the freedom of speech and expression under Article 19(1) of the Constitution as other citizens and additional restrictions cannot be imposed to curb their right to free speech.
    • Restrictions: A five-judge Constitution bench held that curbs on free speech cannot extend beyond what is prescribed under Article 19(2) of the Constitution imposes reasonable restrictions and applies equally on all citizens.

    What is the case?

    • The proceedings in the case began when the top court took cognisance of a controversial statement made by former UP minister in July 2016.
    • He had allegedly termed a gang rape case as part of a “political conspiracy”. While he was let off with an unconditional apology, the Court agreed to examine the larger issue.
    • In October 2017, a three-judge bench referred the matter to the constitution bench to decide on various aspects of the matter.

    Key issues examined

    • Free speech and sensitive issues: The top priority was to examine whether ministers, public functionaries and lawmakers can claim freedom of speech while expressing views on sensitive matters.
    • Free speech and state matters: Another key aspect of the matter was whether a statement by a minister in relation to any affairs of the State or for the protection of government can be attributed vicariously to the government itself.

    What does Article 19 say?

    • Freedom: Article 19(1) (a) guarantees the freedom of speech and expression to all citizens. It is the first condition of liberty and plays an important role in forming public opinion.
    • Restrictions: As per Article 19(2), restrictions can be imposed upon the freedom of speech and expression in the interests of:
    1. Sovereignty and integrity of India,
    2. Security of the state,
    3. Friendly relations with foreign states,
    4. Public order, decency or morality, or
    5. In relation to contempt of court,
    6. Defamation, or
    7. Incitement to an offense

    What does the judgment say about free speech restrictions?

    • Citizens had the right to petition the Court for violations of Article 19 (freedom of expression) and Article 21 (right to life).
    • A statement made by the Minister, inconsistent with the rights of the citizens, may not by itself be actionable.
    • It is not possible to extend this concept of collective responsibility to any and every statement orally made by a Minister outside the House of the People/Legislative Assembly.

    Way forward

    • Legal framework: A proper legal framework was necessary before taking action as a constitutional tort.
    • Political will: Parliament could enact legislation or code to restrain citizens in general and public functionaries in particular from making disparaging or vitriolic remarks against fellow citizens.
    • Code of conduct: Likewise, political parties should come up with a code of conduct to regulate and control the actions and speech of their functionaries and members.

     

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  • Sixth Schedule and Ladakh

    ladakh

    A high-powered committee to ensure protection of land and employment for the people of Ladakh does not address the demand for inclusion of State under the Sixth Schedule of the Constitution.

    What is the Sixth Schedule?

    • The Sixth Schedule under Article 244 provides for the formation of autonomous administrative divisions — Autonomous District Councils (ADCs).
    • ADCs have some legislative, judicial, and administrative autonomy within a state.
    • The Sixth Schedule applies to the NE states of Assam, Meghalaya, Mizoram (three Councils each), and Tripura (one Council).

    Composition of ADCs

    • ADCs have up to 30 members with a term of five years.
    • It can make laws, rules and regulations with regard to land, forest, water, agriculture, village councils, health, sanitation, village- and town-level policing, inheritance, marriage and divorce, social customs and mining, etc.
    • The Bodoland Territorial Council in Assam is an exception with more than 40 members and the right to make laws on 39 issues.

    Why does Ladakh want to be part of the Sixth Schedule?

    • Tribal populations: According to the 2011 Census, the tribal population in the UT of Ladakh is 79.61% of the total population.
    • Local aspirations: There was much enthusiasm initially, mostly in Leh, after the repeal of Art. 370 which created two new UTs.
    • Negligence in erstwhile J&K state: Buddhist-dominated Leh district had long demanded UT status because it felt neglected by the erstwhile state government.
    • Denial of Legislature: The enthusiasm waned as it was understood that while the UT of J&K would have a legislature, the UT of Ladakh would not.
    • Inadequate representation: The administration of the region is now completely in the hands of bureaucrats with only 1 MP.
    • New domicile criteria: The changed domicile policy in Jammu and Kashmir has raised fears in the region about its own land, employment, demography, and cultural identity.
    • Statehood demands: A coalition of social, religious, and political representatives in Leh and Kargil has demanded full statehood for Ladakh.

    Cultural significance of Ladakh

    • Ladakh is historically perceived as a cosmopolitan region with centuries of multiple cultural settings.
    • It was an Asian pivot – the people here traversed diverse cultural boundaries and engaged with ideas.

    Can Ladakh be included in Sixth Schedule?

    • NCST Recommends: In September 2019, the National Commission for Scheduled Tribes recommended the inclusion of Ladakh under the Sixth Schedule.
    • Distinct culture: It was predominantly tribal (more than 97%), people from other parts of the country had been restricted from purchasing or acquiring land there, and its distinct cultural heritage needed preservation.

    Legal hurdles

    • Fifth schedule as an alternative: The Constitution is very clear, Sixth Schedule is for the Northeast. For tribal areas in the rest of the country, there is the Fifth Schedule.
    • Exclusive provision for NE: Notably, no region outside the Northeast has been included in the Sixth Schedule.
    • Requires Constitutional Amendment: It remains the prerogative of the government. For this, a constitutional amendment is required.

     

    Try this question from CSP 2015:

    Q.The provisions in Fifth Schedule and Sixth Schedule in the Constitution of India are made in order to-

    (a) Protect the interests of Scheduled Tribes

    (b) Determine the boundaries between States

    (c) Determine the powers, authority and responsibilities of Panchayats

    (d) Protect the interests of all the Border States

     

    [wpdiscuz-feedback id=”auf90w3qys” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

     

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  • Kalasa-Banduri Nala Project

    nala

    Karnataka’s decision to go ahead with a water diversion project on river Mahadayi has escalated its long-standing dispute on the issue with neighbouring Goa.

    What is the Kalasa-Banduri Nala Project?

    • The Kalasa Banduri Nala project aims to divert water from Mahadayi to satisfy the drinking water needs of Belagavi, Dharwad, Bagalkot and Gadag districts.
    • Though the project was first proposed in the early 1980s, it has remained on paper owing to a dispute between Karnataka, Goa and Maharashtra.
    • As per plans, barrages are to be built against Kalasa and Banduri streams — tributaries of Mahadayi — and water diverted towards Karnataka’s parched districts.

    The larger issue: Mahadayi dispute

    • Mahadayi originates inside the Bhimgad Wildlife Sanctuary in the Belagavi district of Karnataka and flows into the Arabian Sea in Goa.
    • Goa, under its then CM Manohar Parrikar, approached the Centre, urging it to assess the available resources in the river and allocate water to the three basin states — Goa, Maharashtra and Karnataka.
    • Due to the protests in Goa and also due to concerns over ecological damage, the project was put on hold by the then government.
    • The dispute gained steam in 2006, when Karnataka decided to start work on the project.
    • Goa then approached the Supreme Court, seeking the creation of a Tribunal to settle the water sharing dispute.
    • A Tribunal was finally set up by the UPA government in November 2010.

    What did the Tribunal award?

    • The Tribunal in 2018 awarded 13.42 TMC water from Mahadayi river basin to Karnataka, 1.33 TMC to Maharashtra and 24 TMC to Goa.
    • In Karnataka’s share, 5.5 TMC was to meet drinking water needs and 8.02 TMC was for hydro-electricity generation.
    • Of the 5.5 TMC, 3.8 TMC was to be diverted to Malaprabha basin through Kalasa and Banduri Nalas (canals).
    • This was notified by the Central government in February 2020.

    Issues raised with the Tribunals award

    • After the Tribunal award, Goa filed a Special Leave Petition in the Supreme Court in July 2019, challenging the quantum of allocation.
    • Subsequently, in October 2020, it filed a contempt petition before the SC, accusing Karnataka of illegally diverting water from the Mahadayi basin.
    • Civil appeals were also filed by Maharashtra over the dispute.

    Also read:

    In news: Interstate River Water Disputes Act, 1956

     

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  • India takes over leadership of the Asian Pacific Postal Union

    postal

    India took over the leadership of the Asian Pacific Postal Union (APPU) having its Headquarters in Bangkok, Thailand.

    About Asian Pacific Postal Union (APPU)

    • APPU is an intergovernmental organization of 32-member countries of the Asian-Pacific region.
    • It was formed by International treaty through an Asian-Pacific Postal Convention signed in Yogyakarta on 27 March 1981.
    • The organisation has origins dating back to 1961.
    • APPU is the only Restricted Union of the Universal Postal Union (UPU) in the region, which is a specialized agency of the United Nations.
    • Secretary General leads the activities of the Union and is also the Director of the Asian Pacific Postal College (APPC) which is the largest intergovernmental postal training institute in the region.

    Goals and objectives

    • The goal of APPU is to extend, facilitate and improve postal relations between member countries and to promote cooperation in the field of postal services.
    • As the regional center for various UPU projects, APPU also takes the lead in ensuring that all technical and operational projects of the UPU are fulfilled in the region.

    Significance of India’s chair

    • The Asia Pacific region accounts for around one-third of the world’s postal workforce and about half of the world’s mail volume.
    • India seeks to improve the regional coordination with postal players in the Asia Pacific region to improve the growth of the business through the postal network, to ensure the sustainability of the Union.
    • This is the first time an Indian is leading an international organization in the postal sector.

     

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  • Who was Savitribai Phule?

    phule

    Recently, 192nd birth anniversary of Savitribai Phule, w/o Jyotiba Phule (the pioneer of Satyashodhak Samaj) was celebrated.

    Who was Savitribai Phule?

    • A Dalit woman from the Mali community, Savitribai was born on January 3, 1831, in Maharashtra’s Naigaon village.
    • Married off at the age of 10, her husband Jyotirao Phule is said to have educated her at home.
    • Later, Jyotirao admitted Savitribai to a teachers’ training institution in Pune.
    • Throughout their life, the couple supported each other and in doing so, broke many social barriers.

    Pioneering first school for girls in India

    • At a time when it was considered unacceptable for women to even attain education, the couple went on to open a school for girls in Bhidewada, Pune, in 1848.
    • This became the country’s first girls’ school.

    Opposition to Phules’ schools

    • The Phules opened more such schools for girls, Shudras and Ati-Shudras (the backward castes and Dalits, respectively) in Pune.
    • This led to discontent among Indian nationalists like Bal Gangadhar Tilak.
    • They opposed the setting up of schools for girls and non-Brahmins, citing a “loss of nationality”, and believing not following the caste rules would mean a loss of nationality itself.
    • Savitribai herself faced great animosity from the upper castes, including instances of physical violence.
    • When serving as the headmistress of the first school in Bhide Wada, upper-caste men often pelted stones and threw mud and cow dung on her.

    Phule’s role as a social reformer, beyond education

    • Infanticide prevention: Along with Jyotirao, Savitribai started the Balhatya Pratibandhak Griha (‘Home for the Prevention of Infanticide’) for pregnant widows facing discrimination.
    • Child adoption: The Phules also adopted Yashwantrao, the child of a widow, whom they educated to become a doctor.
    • Reforms in marriages: Savitribai Phule also advocated inter-caste marriages, widow remarriage, and eradication of child marriage, sati and dowry systems, among other social issues.
    • Denouncing Brahmanical ritualism: As an extension, they started ‘Satyashodhak Marriage’ – a rejection of Brahmanical rituals where the marrying couple takes a pledge to promote education and equality.
    • Bubonic plague mitigation: Savitribai became involved in relief work during the 1896 famine in Maharashtra and the 1897 Bubonic plague. She herself contracted the disease while taking a sick child to the hospital, and breathed her last on March 10, 1897.

    Savitribai’s literary works

    • Savitribai Phule published her first collection of poems, called Kavya Phule (‘Poetry’s Blossoms’), at the age of 23 in 1854.
    • She published Bavan Kashi Subodh Ratnakar (‘The Ocean of Pure Gems’), in 1892.
    • Besides these works, Matushri Savitribai Phulenchi Bhashane va Gaani (Savitribai Phule’s speeches and songs’), and her letters to her husband have also been published.

     

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  • Levying the Wealth tax to reduce income inequality

    Wealth tax

    Context

    • The discourse on efficient, effective and equitable public spending often takes us into the realm of limited resources facing competing demands. India definitely needs to widen its revenue collection as well as base. In this context its time to consider a wealth tax.

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    What is wealth tax?

    • Wealth tax is a direct tax unlike the goods and services tax or value-added tax, can take several forms, such as property tax, inheritance or gift tax and capital gains tax.
    • It aims to reduce the inequalities of wealth.
    • It is based on the market value of assets owned by a taxpayer and charged on the net wealth of super rich individuals.

    Wealth tax

    Wealth Tax in India

    • Abolished wealth tax: The government abolished wealth tax as announced in the budget 2015. In its place, the government decided to increase the surcharge levied on the ‘super rich’ class by 2% to 12%. (Super rich are persons with incomes of Rs.1 crore or higher and companies that earn Rs.10 crores or higher).
    • Abolished to simplify tax structure and discourage tax evasion: The abolition was a move to do away with high costs of collection and also to simplify the existing tax structure thereby discouraging tax evasion.
    • No wealth tax at present: India presently does not have any wealth tax i.e., a tax levied on one’s entire property in all forms. It did not impose a one-time ‘solidarity tax’ on wealth in post-covid budgets that could have generated resources for essential public investment.

    What is the need for levying a wealth tax?

    • High inequality: India’s top 10% population owns 65% of the country’s wealth, while the bottom 10% owns only 6%, according to the World Inequality Database, 2022.
    • Massive accumulation of wealth in a few hands: A small section of people has access to a large share of economic assets and resources that remain almost completely untaxed and thus unavailable for public allocation.
    • Capital gains tax has limited base: Capital Gains tax exists in India, but applies only to transactions and hence is limited in its base.
    • Wealth largely depends on inheritance and privilege: Wealth, much less than even income, has little to do with one’s education, merit or efforts; it is largely dependent on inheritance and opportunities that come with the advantages associated with belonging to one of India’s privileged classes and castes.
    • India does not have inheritance tax: India scrapped its estate duty in 1985 and has no inheritance tax.
    • Almost entirely exemptions on gift tax: Although the receipt of gifts is subject to income tax in the beneficiary’s hands, it has various exemptions; it is almost entirely exempt if received from within the family, including the extended family of self and spouse. These exemptions shrink the base significantly, as most accumulated wealth is acquired through family, and that remains outside the gift tax’s ambit. Given the cultural context of wealth inheritance, some exemptions make sense, but upper thresholds can be easily added to make it more effective.

    Wealth tax

    Comprehensive PoV: Why wealth tax is necessary at present economic condition

    • Wealth of rich doubled during the pandemic but not channelised well to create productive resou: An Oxfam report has highlighted how India’s richest doubled their wealth during the pandemic. This happened for a variety of reasons. despite facing grave financial and economic challenges, has no means to convert any of this growing wealth into productive resources that can generate employment opportunities and push up the incomes of multitudes, which in turn can drive demand for goods something that is needed to counter an economic drag-down.
    • There is no sufficient increase in private investment: The government lowered the corporate tax rate significantly from 30% to 22% in 2019-20, which has continued despite the economic crises caused by the pandemic. However, this did not elicit much private investment. Obviously, there is something else at work, and one cannot assume that accumulated wealth in private hands will necessarily be invested in the domestic economy.
    • Not only investment is important but also the right application is important: It is not only investment that is important, but also where that investment is going and whether it is creating employment opportunities for the youth.

    Present status and economic projections

    • Data on youth unemployment: Data from diverse sources show high unemployment rates during May-July 2022 for the youth: 28.3% in the 15-24 age group and an even higher 43.3% for the 20-24 age-group.
    • Likely global recession overhead: The likelihood of a global recession and the related layoffs being announced by corporate giants will make the situation worse.
    • Jobless growth and wealth inequality: The recent economic growth experienced in India, especially in the post-covid recovery phase, has largely been jobless growth and can further deepen both income and wealth inequalities.
    • Economy cannot afford to have such high level of youth unemployment: No economy can afford to have such youth unemployment rates for long without adversely affecting economic growth and social cohesion.

    Way ahead

    • A number of Latin American countries, including Argentina, Peru and Bolivia, have either introduced or are introducing a progressive annual wealth tax levied on the wealth gains of each year or a one-time covid ‘solidarity’ tax.
    • There is no reason why India cannot do so too. This is the right time to introduce a progressive wealth tax along with other fiscal steps that can directly reverse the trend of growing inequalities in the country.

    Conclusion

    • India needs a shift in its fiscal policy, as suggested by a number of economists, to adopt measures that create employment opportunities and in turn drive demand for products made by small and medium level producers. This would also push up growth while not necessarily widening inequalities.

    Mains question

    Q. What is wealth tax? Why wealth tax abolished? Considering the present economic situation Discuss the need to levy wealth tax in India?

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  • Towards better Prison architecture

    Prison

    Context

    • Lieutenant-Governor of Delhi (L-G) Vinay Kumar Saxena directed the Delhi Development Authority (DDA) to allocate 1.6 lakh square metres of land to Delhi’s prison department to construct a district prison complex in Narela.

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    Background: Recent prison reform debate

    • Speech by president of India: At the Constitution Day celebrations organised by the Supreme Court in November 2022, President Draupadi Murmu shared a snippet of her journey with the audience.
    • Prisoners unaware of their rights: She reflected on her visits to prisons across India and the circumstances of those incarcerated. She highlighted that these individuals were often unaware of their fundamental rights and had been incarcerated for prolonged periods for minor offences, while their families, struggling with poverty, were unable to bail them out.
    • All organs of state must work together: President Murmu emphasised how the judiciary, executive, and legislature must work together to help them, and concluded by poignantly asking: How are we claiming that we are progressing as a nation, if we are still building prisons to address the issue of overcrowding?

    Prison

    What is the problematic architecture of Prison?

    • High security prison in Delhi: In phase 1, which is expected to be completed by April 2024, a high-security jail is to be built in the complex with a capacity to lodge 250 high-risk prisoners.
    • Stringent security measures: The prison administration has incorporated stringent security measures in the design such as constructing high walls between cells to prevent inmates from viewing others, and interacting with each other, as well as building office spaces between cells to facilitate surveillance.
    • Intention of torture: Architecture of prisons is often used as a tool to surveillance, torture, and break the souls of inmates.
    • Physical and mental health of prisoners: With this prison design, the Delhi prison administration is essentially creating solitary confinement which will have a severe detrimental effect on prisoners’ mental health.

    Prison

    Present condition of prisons in India

    • Governed by colonial act: Prisons in India are still governed by the Prisons Act, 1894, a colonial legislation which treats prisoners as sub-par citizens, and provides the legal basis for punishment to be retributive, rather than rehabilitative.
    • Caste biases in laws: These laws are also highly casteist, and remain largely unchanged since they were drafted by the British. For example, some jail manuals continue to focus on purity as prescribed by the caste system, and assign work in prison based on the prisoner’s caste identity.
    • Colonial mindset in prison governance: Organisations such as the Vidhi Centre of Legal Policy have taken us one step further in identifying colonial legal continuities that India must shred, and the manner in which she can do so.
    • SC/ST community suffers more: Furthermore, Dalits and Adivasis are over-represented in Indian prisons. The National Dalit Movement for Justice and the National Centre for Dalit Human Rights’ report ‘Criminal Justice in the Shadow of Caste’ explains the social, systemic, legal, and political barriers that contribute to this. Legislations such as the Habitual Offenders Act and Beggary Laws allow the police to target them for reported crimes.

    What should be way forward?

    • Preventive measures are necessary: We must take preventive measures before we realise that we have travelled far down this road, and have subjected several people to unnecessary trauma and confinement.
    • Prison reforms rather than more prisons: With the warning signs beseeching us, we must amplify President Murmu’s message on the need to de-carcerate and stop building more prisons, so that the L-G takes adequate steps in that direction.

    Conclusion

    • Many prisoners in India continue to suffer for petty crimes just because of lack education and legal assistance. More than 70% of them are economically poor people. Government must address the false cases by police and judicial delay before building more prisons.

    Mains Question

    Q. Critically examine the present condition of prisons in India? prisons reform should be prior step than building more prisons. Comment.

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  • Stock Trade and the Economy

    Stock

    Context

    • Even as the RBI steadily downgraded India’s growth forecasts for the year from 7.2 per cent in April to 6.8 per cent in December, and the benchmark Nifty50 index ended the year up a mere 4.1 per cent, a handful of stocks delivered outsized returns to investors.

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    Expansion of business and reward

    • Adani gained because of expansion: The top trade was undoubtedly that of Adani Enterprises with the stock more than doubling over the year. But that should not come as a surprise. After all, the group has embarked on a breathless pace of expansion (both organic and inorganic) that is perhaps unparalleled in recent times.
    • Unexpected rise in prices: Share prices of associated companies such as Adani Green have also seen a remarkable surge, catapulting the group into the top leagues of Indian conglomerates.
    • Risky price-to-rent ratio: One should be forgiven for thinking that residential real estate in Delhi, with a price-to-rent ratio that ranges between 40-50, is expensive. Adani Enterprises is currently trading at a price-to-equity ratio of 394 as per NSE. The Nifty50, in comparison, is trading just above 21.

    Performance of Public sector banks

    • SBI AND PNB gained: The year also belonged to Indian banks, more specifically to public sector banks, who at last seemed to have turned the corner. SBI is up more than 30 per cent, while Punjab National Bank is up almost 50 per cent. Others like Bank of Baroda and UCO Bank have more than doubled.
    • Outperforming private banks: While private sector bank stocks have also seen a sharp rise Axis is up almost 35 per cent, while ICICI is up 17 per cent, public sector banks have outperformed their private counterparts by a significant margin. The Nifty PSU bank index is up 70 per cent for the year, while in comparison, the private bank index is up only 21 per cent. This was perhaps to be expected.
    • Cleaning up balance sheet: Public sector banks have been on a multi-year drive to clean up their balance sheets, and shore up capital. And while there are still some concerns over possible slippages from accounts that were restructured during the pandemic, gross non-performing assets or bad loans were down to 6.5 per cent at the end of September 2022.
    • Rising lending rates: Moreover, lending is growing at a brisk pace. And banks’ spreads also have improved with the interest rate cycle on the upswing. In typical fashion, lending rates have risen faster than deposit rates. But, as credit growth picks up and competition for deposits among banks begins to intensify, deposit rates are likely to edge upwards, putting pressure on the spread.

    Status of Consumption and auto sector

    • Consumption is up: while concerns over the unevenness of the economic recovery persist, consumption stocks have fared well. ITC is up more than 50 per cent, as are Britannia (almost 20 per cent) and HUL (9 per cent).
    • Real wages have not increased: But with firms underlining the continuing pressure on volumes with elevated inflation, real wage growth has been subdued in rural areas it is likely that in some product segments, the formalisation theme is still playing out.
    • Size of market is not expanding: The bigger formal firms gaining market share even as the overall size of the market isn’t expanding as hoped.
    • Auto sector have done well: Among the auto stocks, M&M and Maruti are up 50 per cent and 12 per cent respectively, though Tata motors is down 22 per cent, while among the two-wheelers, both Bajaj and Hero are up.

    Better performance of Infrastructure

    • Moderate uptick in infrastructure: Infrastructure stocks are a mixed bag. Larsen & Toubro, often thought of as a proxy for the domestic capex cycle, is up almost 9 per cent, recently hitting a new high.
    • Impact of PLI scheme: Perhaps, this reflects a pick up in the public sector capex or the private sector push under the government’s production-linked investment scheme.
    • Mix picture of steel and cement: Among cement stocks, Ultratech is down, though ACC is up, while among steel stocks, SAIL is down, Tata steel is almost flat, but JSW Steel is up.

    IT sector was worst performing

    • IT NIFTY significantly down: The sector which has taken a beating has been IT. The Nifty IT index is down 26 per cent.
    • Heavy correction in market: All major IT firms from TCS to Infosys to Wipro have witnessed heavy correction.
    • Impact of slowdown in advanced economy: Valuations of the sector will be heavily influenced by market views over the slowdown in advanced economies which are major revenue centres for these firms.

    Conclusion

    • Though stock market doesn’t reflect the entirely true picture of economy but it certainly a good indicator of where the retail investor and common man invest his money. India’s stock market is going to be top 3 in the world. SEBI must protect the retail investor from this highly volatile terrain.

    Mains Question

    Q. Analyze the performance of the auto and IT sector in India through lenses of stock market? Why the balance sheet of public sector banks is improving?

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