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  • NITI Aayog’s plan for rollout of Digital Banks

    Last week, federal think tank NITI Aayog released a report on digital banks, offering a template for their licensing in India. It said India already has a technology stack to facilitate digital banks.

    What are the planned Digital Banks?

    • Digital Banks or DBs are full-scale banks to be licensed under the Banking Regulation Act.
    • Unlike traditional banks, which require brick-and-mortar infrastructure or physical access points, digital banks simply leverage technology to provide banking services through mobile applications and internet-based platforms.
    • DBs behave like any other scheduled commercial bank, accepting deposits, giving loans etc.
    • They will follow prudential and liquidity norms at par with the commercial banks.
    • Globally, terms like “digital banks”, “neobanks”, “challenger banks”, and “virtual banks” are often used interchangeably.

    What about digital banking units then?

    • The Union budget for FY23 proposed to establish digital banking units (DBUs) of scheduled commercial banks in 75 districts.
    • The objective is to ensure that the benefits of digital payments, banking and fintech innovations reach the grass-roots.
    • DBUs are treated as banking outlets, equivalent to a branch.
    • These units do not have a legal personality and are not licensed under the Banking Regulation Act.
    • Only existing commercial banks may establish DBUs. In contrast, digital banks will be licensed.
    • These banks are expected to ensure credit penetration to underserved MSMEs and retail customers.

    What purpose will digital banks serve?

    • Digital banks are expected to further innovation and support the underserved segments.
    • However, some believe that it will only cater to customers with some level of comfort with digital transactions.
    • According to them, RBI too is not comfortable with this model as the central bank believes that cash handling and credit decisions require physical branches.

    What does NITI Aayog suggest for DBs?

    • In the first phase, a restricted digital bank licence may be given, with limits in terms of volume/value of customers. In the second stage, the licensee will be put in a regulatory sandbox.
    • Finally, a ‘full-scale’ licence may be granted contingent on satisfactory performance.
    • A digital bank will be required to have initial capital of ₹20 crore while in the regulatory sandbox.
    • Upon progression from the sandbox, a full-stack digital business/consumer bank will be required to bring in ₹200 crore capital.

    What has been the global experience?

    • The UK has led the pack in terms of digital banks, with new entrants in the form of Monzo and Starling Bank.
    • Several jurisdictions in the South East Asian region have witnessed the rise of digital banks.
    • Hong Kong has issued separate licences for virtual banks.
    • As of May 2020, the Hong Kong Monetary Authority has licensed 8 entities out of 33 applications.
    • In South Korea, Kakao Bank and K Bank operate as internet banks licensed under the Banking Act.
    • The Philippines has approved six licenses for digital banks.

     

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  • Who was Raja Ravi Varma?

    Ahead of the 175th birth anniversary fete of the legendary artist Raja Ravi Varma, erstwhile royal family of Kilimanoor has urged the Union government to posthumously confer the Bharat Ratna, the country’s highest civilian award, on him.

    Raja Ravi Varma

    • Raja Ravi Varma was born in April 1848 in Kilimanoor, Kerala, to a family which was very close to the royals of Travancore.
    • Often referred to as the father of modern Indian art, he is widely known for his realistic portrayal of Indian gods and goddesses.
    • While he majorly painted for the royalty, he is also credited for taking art to the masses with his prints and oleographs.
    • At a young age, he would draw animals and everyday scenes on the walls in indigenous colours made from natural materials such as leaves, flowers and soil.
    • His uncle, Raja Raja Varma, noticed this and encouraged his talent.
    • Patronised by Ayilyam Thirunal, the then ruler of Travancore, he learnt watercolour painting from the royal painter Ramaswamy Naidu, and later trained in oil painting from Dutch artist Theodore Jensen.

    How he become an artist of the royals?

    • Varma became a much sought-after artist for the aristocrats and was commissioned several portraits in late 19th century.
    • Arguably, at one point, he became so popular that the Kilimanoor Palace in Kerala opened a post office due to the sheer number of painting requests that would come in for him.
    • He travelled across India extensively, for work and inspiration.

    Fame as a notable painter

    • Following a portrait of Maharaja Sayajirao of Baroda, he has commissioned 14 Puranic paintings for the Durbar Hall of the new Lakshmi Vilas Palace at Baroda.
    • Depicting Indian culture, Varma borrowed from episodes of Mahabharata and Ramayana for the same.
    • He also received patronage from numerous other rulers, including the Maharaja of Mysore and Maharaja of Udaipur.
    • As his popularity soared, the artist won an award for an exhibition of his paintings at Vienna in 1873.
    • He was also awarded three gold medals at the World’s Columbian Exposition in Chicago in 1893.

    Nature of his artforms

    • Much of his celebrated art also borrows heavily from Indian mythology.
    • In fact, he is often credited with defining the images of Indian gods and goddesses through his relatable and more realistic portrayals often painted with humans as models.
    • The depictions include Lakshmi as the goddess of wealth, Saraswati as the goddess of knowledge and wisdom, and Lord Vishnu with his consorts, Maya and Lakshmi.

    How he took Indian art to the masses?

    • Raja Ravi Varma aspired to take his art to the masses and the intent led him to open a Lithographic Press in Bombay in 1894.
    • The idea, reportedly, came from Sir T Madhava Rao, former Dewan of Travancore and later Baroda, in a letter where he pointed out to Varma that since it was impossible for him to meet the large demand for his work, it would be ideal for him to send some of his select works to Europe and have them produced as oleographs.
    • Varma, instead, chose to establish a printing press of his own.
    • The first picture printed at Varma’s press was reportedly The Birth of Shakuntala, followed by numerous mythological figures and saints such as Adi Shankaracharya.

    Major works

    • It is believed that he had made around 7,000 paintings before his death at the age of 58.
    • But only one painting is now left in ‘Chithrashala,’ the artist’s studio at Kilimanoor Palace — an unfinished portrait of ‘Parsi lady’ which was his last work.
    • Some of his popular works include ‘Lady in the Moonlight’, ‘Nair Lady Adorning Her Hair’, ‘Malabar Lady with Violin’, ‘Lady with Swarbat’, and ‘Maharashtrian Lady with Fruits’.

    Try this PYQ:

     

    There are only two known examples of cave paintings of the Gupta period in ancient India. One of these is paintings of Ajanta caves. Where is the other surviving example of Gupta paintings?

    (a) Bagh caves

    (b) Ellora caves

    (c) Lomas Rishi cave

    (d) Nasik caves

     

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    Back2Basics: Bharat Ratna

    • Bharat Ratna – ‘Jewel of India’ is the highest civilian award of the country.
    • It is conferred for exceptional Service to the nation in various fields such as Science arts, literature and recognition of public service of the highest order.
    • The award can be granted posthumously and since its establishment, seven awards were granted posthumously.
    • The award was established by formal President of India Rajendra Prasad on 2nd January 1954.
    • The concept of awarding this award posthumously was not there in the original statute declared in January 1954.
    • Provision to award posthumously was finally added in January 1966 statute of this prestigious award.
    • The medallion is cast in Bronze.
    • The medallion is designed like the leaf of a pipal tree with a sunburst in the centre and Bharat Ratna is engraved underneath it.

     

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  • Tribal Revolts President Murmu invoked in her inaugural speech

    Addressing the nation after being sworn in, President Murmu invoked four tribal revolutions that she said had strengthened tribal contribution to the freedom struggle.

    [1] Santhal revolution

    • On June 30, 1855, over 10,000 Santhals were mobilised by their leaders — Kanho Murmu, Chand Murmu, Bhairab Murmu and Sidho Murmu – to revolt against the East India Company over oppression by revenue officials, zamindars, and corrupt moneylenders.
    • The landmark event in tribal history, referred to as Santhal Hul, took place in Bhognadih village in present-day Jharkhand.
    • Soon after their open rebellion, Santhals took to arms to resist imposition of East India Company laws.
    • The seeds of the protracted rebellion, however, were sown in 1832 where the East India Company created Damin-i-koh region in the forested belt of Rajmahal hills, and invited the Santhals to settle there.
    • Over the years, Santhals found themselves at the receiving end of exploitative practices aided by the British.
    • After the rebellion broke out in 1855, both sides continued clashing till the uprising was crushed in 1856.
    • The British defeated the Santhals using modern firearms and war elephants in decisive action in which both Sidho and Kanho died.

    [2] Paika rebellion

    • In several recent descriptions, the 1817 Paika Rebellion in Odisha’s Khurda is referred to as the “original” first war of Indian Independence.
    • That year, the Paikas – a class of military retainers traditionally recruited by the kings of Odisha – revolted against the British colonial rulers mainly over being dispossessed of their land holdings.
    • In the run-up to the revolt, the British had dethroned and exiled the Khurda king in 1803, and then started introducing new revenue settlements.
    • For Paikas, who were into rendering martial services in return for hereditary rent-free land (nish-kar jagirs) and titles, this disruption meant losing both their estates and social standing.
    • The trigger for the revolt came as some 400 Kondhs descended from the Ghumusar area to rise against the British.
    • Bakshi Jagabandhu Bidyadhar Mohapatra Bharamarbar Rai, the highest-ranking military general of the banished Khurda king, led an army of Paikas to join the uprising of the Kondhs.
    • The Paikas set fire to government buildings in Banapur, killed policemen and looted the treasury and the British salt agent’s ship docked on the Chilika.
    • They then proceeded to Khurda and killed several British officials.
    • Over the next few months, the Paikas fought bloody battles at several places, but the colonial army gradually crushed the revolt.
    • Bakshi Jagabandhu escaped to the jungles, and stayed out of reach of the British until 1825, when he finally surrendered under negotiated terms.

    [3] Kol revolt

    • The Kols, tribal people from the Chhota Nagpur area, rose in revolt against the British in 1831.
    • The trigger here too was the gradual takeover of tribal land and property by non-tribal settlers who were aided by new land laws.
    • The simmering discontent over the economic exploitation of the original inhabitants led to an uprising led by Buddhu Bhagat, Joa Bhagat and Madara Mahato among others.
    • The Kols were joined by other tribes like the Hos, Mundas and Oraons.
    • The tribals fought with traditional weapons taking the battle to colonial forces who finally overpowered them with modern weaponry.
    • The uprising, which spread to areas like Ranchi, Hazaribagh, Palamau, and Manbhum and continued for almost two years before being snuffed out, mainly targeted colonial officials and private money-lenders.

    [4] Bhil uprising

    • After the British intruded into the Bhil territory in Maharashtra’s Khandesh region, the tribals pushed back fearing exploitation under the new regime in 1818.
    • The revolt was led by their leader, Sewaram and was brutally crushed using the British military might.
    • This uprising again erupted in 1825 as the Bhils sought to take advantage of reverses being suffered by the British in the first Anglo-Burmese war.

    Also read:

    Important Rebellions and Peasant Movements

     

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  • IIT-Bombay to help treat Mumbai’s Sewage with new tech

    To prevent sludge and sewage from stormwater drains from flowing into the sea, Brihanmumbai Municipal Corporation (BMC) has planned in-situ treatment of sewage from the drains with the help of N-Treat Technology developed by IIT-B.

    What is N-Treat technology?

    • N-Treat is a seven-stage process for waste treatment that uses screens, gates, silt traps, curtains of coconut fibres for filtration, and disinfection using sodium hypochlorite.
    • According to the detailed project report for N-Treat, it is a natural and environment-friendly way of sewage treatment.
    • It’s setup takes place within the nullahs channels that is through the in-situ or on-site method of treatment, and does not require additional space.

    What does the process involve?

    (1) Screening

    • The first stage involves screening to prevent the entry of floating objects such as plastic cups, paper dishes, polythene bags, sanitary napkins, or wood.
    • IIT-B has proposed to install three coarse screens, the first with 60 mm spacing for removal of large floating matter, the second with 40 mm spacing, and the third with 20 mm spacing.

    (2) Slit trap

    • The second stage has proposed construction of a silt trap, which creates an inclination and ‘parking spot’ on the bed of the nullah for sedimentation.

    (3) Bio zones

    • The next three stages are installation of ‘bio zones’ in the form of coconut fibre curtains that will act as filters and promote growth of biofilm to help in decomposition of organic matter.
    • A floating wetland with aquatic vegetation planted on floating mats has been proposed.

    (4) Florafts

    • Aside from a floating bed on the surface, IIT-B has proposed suspending floating rafts vertically, called florafts.
    • Their hanging roots would provide a large surface area for passive filtration as well as development of microbial consortium.
    • In the floating wetlands, plants acquire nutrition directly from the water column for their growth and development, thus reducing the organic as well as inorganic pollutants.
    • The final stage for sewage treatment will include disinfection using sodium hypochlorite, to kill the bacteria in the water.

    How will it be used by BMC?

    • A senior civic official said: “BMC approached IIT-B to submit a Detailed Project Report for the project.
    • The N-Treat method suggested to the civic body is cost-effective, as it does not require manual pumping, and saves electricity, and does not require extensive manpower for maintenance.”
    • The floating matter will be removed daily, silt deposits from the silt traps will be removed once in four months, and plants will be trimmed as required.
    • The floating matter collected every day will be disposed of at the nearest municipal waste collection point daily.

     

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  • Law panel to examine Simultaneous Elections

    The issue of holding simultaneous Lok Sabha and Assembly elections had been referred to the Law Commission for a practicable road map and a framework can be worked out, the Union Law Minister informed the Lok Sabha.

    What are simultaneous polls?

    • Currently, elections to the state assemblies and the Lok Sabha are held separately — that is whenever the incumbent government’s five-year term ends or whenever it is dissolved due to various reasons.
    • This applies to both the state legislatures and the Lok Sabha. The terms of Legislative Assemblies and the Lok Sabha may not synchronize with one another.
    • For instance, Rajasthan faced elections in late 2018, whereas Tamil Nadu will go to elections only in 2021.
    • But the idea of “One Nation, One Election” envisages a system where elections to all states and the Lok Sabha will have to be held simultaneously.

    Simultaneous polls in India

    • India had concurrent elections for the first two decades.
    • Starting from the first general elections of free India in 1951 and the next three cycles of elections, the country witnessed concurrent Lok Sabha and Assembly elections.
    • Exceptions to these were a few states like Kerala where a mid-term election was held in 1960 on the premature dissolution of the Assembly.
    • In Nagaland and Pondicherry where the Legislative Assembly was created only after the 1962 general elections.

    End of the era

    • The fourth Lok Sabha constituted in 1967 was dissolved prematurely in 1971 ahead of its normal term resulting in a mid-term Lok Sabha election.
    • This was the beginning of the end of simultaneous elections in India.
    • Extension of the term of Lok Sabha during the National Emergency declared in 1975 and the dissolution of Assemblies of some States after the 1977 Lok Sabha election further disturbed this cycle.
    • Currently, there are at least two rounds of Assembly general elections every year.

    Making simultaneous elections a reality

    • Sections 14 and 15 of the Representation of the People Act, 1951, empower the Election Commission to notify elections any time during the last six months of the term of the House and not earlier than that.
    • Therefore, if the terms of the Houses are expiring within a window of three to four months, it would be legally possible to hold elections simultaneously to constitute the new Houses.
    • In other words, to contemplate simultaneous elections, we need, as a starting point, a situation where the Lok Sabha and the Legislative Assemblies of all States and UTs have their terms ending together.

    Synchronizing the terms of the Houses

    • Both the Lok Sabha and Legislative Assemblies (ordinarily) have a term of five years.
    • Article 83 of the Constitution provides for the tenure of Lok Sabha. Identical provisions are present in Article 172(1) regarding the term of the Legislative Assemblies.

    There is no duplication of work in preparing the electoral rolls for the two elections and hence no extra labor or expenditure is involved on this count.

    What is required?

    • This necessarily calls for either extending the terms of several of the Houses or curtailing of terms or a combination of both, that too by two to three years in some cases.
    • For enabling such curtailing or extension of the term, the relevant Articles of the Constitution mentioned above will have to be suitably amended.

    Why Simultaneous Elections?

    Two seemingly relevant factors in favor of simultaneous elections, as opposed to separate elections, are:

    1. Effort saving: Simultaneous elections reduce labour, time and expenditure in the conduct of elections; and
    2. Instances of pause in governance are addressed if elections are conducted in one go instead of staggered elections.

    [1] How is effort saving possible?

    • Electoral roll: Polling stations for Lok Sabha and Legislative Assembly elections are the same. So is the electoral roll.
    • Labour: There is no duplication of work in preparing the electoral rolls for the two elections and hence no extra labour or expenditure is involved on this count.
    • Logistics: In the conduct of elections, all logistic arrangements are replicated for the two elections when the same drill can cater to both the elections if held together.
    • Security: This will also mean saving in terms of human resources. Another area of saving in simultaneous elections would be in the deployment of the Central Police Force.

    [2] Governance pause can be avoided

    • Instances of pause in governance is due to the Model Code of Conduct (MCC).
    • MCC is a set of behavior guidelines for candidates and political parties that comes into operation from the date election is announced by the Election Commission.
    • A crucial part of the MCC is the restrictions on the party in power.  If all elections are held together, the restrictions under MCC will be through in one go.

    [3] Help reduce campaign expenses

    • Simultaneous elections can bring considerable savings in the election propaganda campaign expenditure for the political parties.
    • Given that political funding is a major factor in the increasing menace of corruption, the move to reduce campaign expenditure is a welcome initiative.

    [4] Voter turnout

    • A nationwide election could push up the voter turnout since a once-in-five-years event is bound to attract more enthusiastic participation across all sections.
    • Frequent elections can bring in the election-fatigue factor at least among some sections of electors.
    • The simultaneous elections help address the fatigue element and the usually observed urban apathy in voting. Better electors’ participation will further add to the credibility of the election.

    Exceptions to this debate: Local Bodies’ Elections

    • The local bodies’ elections have not been considered for the analysis here.
    • This is for the reason that the elections to local bodies cannot be clubbed with the proposed simultaneous elections for the Lok Sabha.

    Why?

    • The elections to local bodies are conducted under the superintendence, direction, and control of a different constitutional authority, namely, the respective State Election Commission.
    • Holding local bodies’ elections along with the other elections will require the team of the same polling officials to report to and take instructions from two different authorities simultaneously.
    • There is a distinct set of polling stations too for local bodies’ elections.
    • Further, the litigation forum before which these elections can be challenged is different.

    Challenges in ensuring simultaneous elections in India:

    [1] Synchronizing the Houses

    • Bringing the terms of all the Houses to sync with one another necessarily calls for either extending the terms of several of the Houses or curtailing of terms or a combination of both.
    • This may be by two to three years in some cases.
    • For this, relevant Articles of the Constitution will have to be suitably amended.

    [2] Midterm dissolution cannot be controlled

    • Even if the terms of the Houses are in sync as a one-time measure, we will still need an adequate legal safeguard in place to avoid mid-term dissolution and protect the simultaneous elections cycle.
    • This can be a tough task in conventionally fragile states with smaller assemblies with coalitions.

    [3] EVM related expenses

    • One aspect that could offset the savings would be the doubling of expenses on electronic voting machines (EVMs).
    • Considering that the incidental recurring expense in the storage and security of the EVMs will also be a considerable amount.
    • The overall expenditure in holding elections may not see any substantial dip on account of simultaneous elections.

    Arguments against the idea

    • National and state issues are different, and holding simultaneous elections is likely to affect the judgment of voters.
    • Since elections will be held once in five years, it will reduce the government’s accountability to the people. Repeated elections keep legislators on their toes and increase accountability.
    • When an election in a State is postponed until the synchronized phase, President’s rule will have to be imposed in the interim period in that state.
    • This will be a blow to democracy and federalism.

    Way forward

    • We need an adequate legal safeguarding place to avoid mid-term dissolution and protect the simultaneous elections cycle.
    • For maintaining the electoral cycle, some countries have legal provisions to the effect that for a ‘no-confidence motion’.
    • Their proposed resolution also contains a constructive ‘vote of confidence in an alternative government to continue with the tenure.

     

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  • 26th July 2022 | Prelims Daily with Previous Year Questions

    26th July 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1070]

    [WpProQuiz_toplist 1070]

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  • 25th July 2022 | Prelims Daily with Previous Year Questions

    25th July 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1069]

    [WpProQuiz_toplist 1069]

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  • With partners, India and Japan can form credible deterrence

    Context

    Last week’s report on Asian nuclear transitions by Ashley Tellis of the Carnegie Endowment for International Peace and Japan’s debate on its atomic options underline the shared security challenges for Delhi and Tokyo.

    Common nuclear challenge for India and Japan and need for rethink

    • At the root of that common nuclear challenge is the continuing growth in Chinese military power and the rapid modernisation of Beijing’s nuclear arsenal.
    • 1] Modernising and expansion by China: China is modernising and expanding its nuclear arsenal as part of the general military transformation. Some estimates say China’s arsenal could grow to 1,000 warheads by 2030 from about 350 now.
    • 2] Muscular approach of China:  Xi Jinping’s China has taken a more muscular approach to its territorial disputes, including with India and Japan.
    • 3] Reluctance of the world to confront nuclear power: The Ukraine crisis has revealed that if a nuclear weapon power invades and seizes the territory of a neighbour, the rest of the world is reluctant to directly confront the aggression for fear of an escalation to the nuclear level.
    • Russia made this amply clear with its threat to use nuclear weapons if the US and NATO decide to join the war.

    Nuclear disarmament challenge

    • Indian and Japanese capacity to deter China is eroding steadily thanks to the problems with India’s minimum deterrence posture and the US nuclear umbrella over Japan.
    • India and Japan have long presented themselves as champions of nuclear disarmament.
    • Despite its call for total nuclear disarmament, India never agreed to give up its own nuclear weapons.
    •  Japan, as the world’s victim of nuclear bombing, had even a higher moral claim than India as the champion for the global abolition of nuclear weapons.
    • But Japan’s narrative is shaded by one reality—Tokyo’s reliance on the US nuclear umbrella.
    • Today neither Delhi nor Tokyo is ready to sign the 2017 Treaty on the prohibition of nuclear weapons.
    • It is the problem presented by the expanding Chinese nuclear arsenal and its growing sophistication.
    • Locked in a confrontation with the US, China is determined to raise its nuclear profile.
    • As China closes the economic and military gap with the US, there is a darkening shadow over the credibility of the US-extended deterrence for Japan.
    • This uncertainty is transforming the Japanese security debate.
    • For India, the question is whether its nuclear restraint and policy of minimum deterrence are enough to prevent China’s bullying.

    How Japan is responding to the challenge?

    • In Japan, former prime minister Shinzo Abe had called for a fresh look at Japan’s nuclear policy.
    • He was suggesting that Tokyo must consider “nuclear weapon sharing” with the US.
    • The model is Europe, where several countries including Belgium, Italy, Germany, Italy and the Netherlands have arrangements to participate in the US nuclear weapon deployment and use.
    • This proposal was rejected by the current prime minister.
    • While rejecting nuclear solutions to the problem of deterring China, Japan’s focus has been on raising the defence expenditure, developing sophisticated conventional weapons, beefing up the alliance with the US and widening the circle of Asian as well as European military partners,

    Suggestions in the report

    • Unlike Japan, India has no constraints on its nuclear weapons programme except the ones it has imposed on itself.
    • In the wake of the nuclear tests of 1998, India quickly announced a policy of minimum deterrence and a doctrine of no-first-use of nuclear weapons.
    • The big question is whether this conservatism in India’s nuclear posture can or should be sustained in the face of China’s military modernisation, nuclear expansion and strategic assertiveness.
    • Fresh debate on nuclear policies: The Tellis report, detailed and technical, should provide a basis for a fresh Indian debate about its nuclear weapons policies.
    • Revising US attitude to India’s nuclear weapons: Tellis also calls on the US to revise its attitudes to India’s nuclear weapons programme.
    • In the past, the US insisted on constraining India’s nuclear weapon programme.
    • Today a strong Indian nuclear deterrent against China is critical for the geopolitical stability of Asia and the Indo-Pacific and in the US interest.
    • Facilitating more sophisticated nuclear warheads: Tellis suggests that the US should be prepared to facilitate India’s development of more sophisticated nuclear warheads as well as improve the survivability of the Indian deterrent against the expanding Chinese nuclear arsenal.
    • The US should midwife an agreement under which France would help India accelerate the development of an Indian underwater deterrent based on ballistic missile carrying submarines (SSBN) as well as nuclear attack submarines (SSN),

    Conclusion

    Tellis is calling both Delhi and Washington to reconsider entrenched nuclear assumptions in the two capitals. While the resistance to his ideas will be strong, Delhi and Washington will have to respond, sooner than later, to the dramatic changes in the global environment triggered by the rise and assertion of China.

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    Back2Basics: Nuclear umbrella

    • At the dawn of the nuclear age, to encourage friendly countries to refrain from building nuclear weapons, the United States promised to protect them with U.S. nuclear weapons.
    • This arrangement came to be called the nuclear umbrella. The experts call it extended nuclear deterrence.
    • The umbrella covers the countries in the North Atlantic Treaty Organization (NATO), Japan, South Korea, and Australia.
    • It is not a binding legal arrangement included in their security treaties with the United States.
    • It is an informal assurance reinforced by dialogue and, in the case of NATO, cooperative arrangements to deliver U.S. nuclear weapons if authorized by a U.S. president.

  • Important role of vigilant Opposition in democracy

    Context

    Role of Opposition in indispensable in the democracy.

    Reasons for adopting parliamentary democracy

    • The Indian Constitution adopted the parliamentary system and not the presidential system.
    • B.R. Ambedkar provided the rationale for this: “A democratic executive must satisfy two conditions –
    • (1) It must be a stable executive and
    • (2) it must be a responsible executive.
    • Unfortunately it has not been possible so far to devise a system which can ensure both in equal degree.
    • Assessment of executive: In England, where the parliamentary system prevails, the assessment of responsibility of the executive is both daily and periodic.
    • Daily assessment: The daily assessment is done by members of Parliament, through questions, resolutions, no-confidence motions, adjournment motions and debates on addresses.
    • Periodic assessment: Periodic assessment is done by the electorate at the time of the election.
    • The daily assessment of responsibility which is not available under the American system it is felt far more effective than the periodic assessment and far more necessary in India.

    Role of Opposition in democracy

    • Democracy is the basic feature of the Constitution.
    • The presence of a vigilant Opposition is necessary not just for a vibrant democracy but for its very survival.
    • When the Opposition criticises the government or carries on an agitation to arouse public opinion against a party’s misdeeds, it is performing a duty that is assigned by the Constitution.
    • Without an effective Opposition, democracy will become dull and legislature will become submissive.

    Significance of anti-defection law

    • Encouraging defections from the parties in power in States will sound the death knell for democracy.
    • The Tenth Schedule has failed to serve its purpose.
    • The Supreme Court, in Kihoto Hollohan v. Zachillhu (1992), while upholding the 52nd Amendment said that: “On the one hand there is the real and imminent threat to the very fabric of Indian democracy posed by certain levels of political behaviour conspicuous by their utter and total disregard of well recognised political proprieties and morality… On the other hand, there are… certain side-effects which might affect and hurt even honest dissenters and conscientious objectors.”
    • In upholding the law, the court held: “But a political party functions on the strength of shared beliefs… Any freedom of its members to vote as they please independently of the political party’s declared policies will not only embarrass its public image and popularity but also undermine public confidence in it.”
    • What is whip? The whip system is part of the established machinery of political organisation in the House and does not infringe on a member’s rights or privilege in any way.
    • Some political thinkers have recognised as an additional device the ‘theory of recall,’ so that a member whose personal behaviour falls below standards expected of his constituents goes back and seek their approval.
    • This power is particularly apt when a member shows disloyalty to his party but declines to resign from his seat and to fight an immediate by-election.
    • The anti-defection law was supposed to be the justification underlying the power of recall.

    Way forward

    • Political parties, the judiciary and civil society must take steps to ensure that democracy does not fail.
    • The Opposition must be tolerated because if it is left for the party in power to decide what is healthy and unhealthy criticism, then every criticism of the latter will be treated as unhealthy.
    • while the Opposition must be credible and strong, it is for the Opposition to make itself credible and strong. It must feel the pulse of the people.
    • Unless it makes itself respectable, it cannot demand any respect. This is the biggest challenge facing the nation today.

    Conclusion

    The Opposition must also work constructively. Our constitutional goal was to establish a sovereign, democratic republic.

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  • Weighing in on India’s investment-led revival

    Context

    The Finance Minister, Nirmala Sitharaman, said recently that India’s long-term growth prospects are embedded in public capital expenditure programmes. She added that an increase in public investment would crowd in (or pull in) private investment, thus reviving the economy.

    Significance of public investment-led economic growth

    • Public investment-led economic growth forms a credible strand of explanation for India’s post-Independence economic growth. 
    • Revival after Asian financial crisis: When it was faced with a slow-down after the Asian financial crisis of 1997, the  government initiated public road building projects.
    • In the form of the Golden Quadrilateral and the Pradhan Mantri Gram Sadak Yojana, these initiatives sowed the seeds of economic revival, culminating in an investment and export-led boom in the 2000s; GDP grew at 8%-9% annually.
    • In comparison, the investment record during the 2010s has been dismal.
    • However, a recent uptick is evident in the real gross fixed capital formation (GFCF) rate — the fixed investment to GDP ratio (net of inflation).
    • The ratio recovered to 32.5% in 2019-20 from a low of 30.7% in 2015-16.

    Analysing the Investment distribution

    • As in the June edition of the Ministry of Finance’s Monthly Economic Review, the fixed investment to GDP ratio was 32% in 2021-22.
    • However, there is need for caution in reading the most recent data, as they are subject to revision.
    • Moreover, the budgetary definition of investment refers to financial investments (which include purchase of existing financial assets, or loans offered to States) and not just capital formation representing an expansion of the productive potential.
    • The National Accounts Statistics provides disaggregation of gross capital formation (GCF) by sectors, type of assets and modes of financing; over 90% of GCF consists of fixed investments.
    • No change in investment distribution: The investment distribution has hardly changed over the last decade, with the public sector’s share remaining 20%.
    • Fall in share of agriculture and industry: Between 2014-15 and 2019-20, the shares of agriculture and industry in fixed capital formation/GDP fell from 7.7% and 33.7% to 6.4% and 32.5%, respectively.
    • Services’ share rose to 52.3% in 2019-20 compared to 49% in 2014-15.
    • The rise in the services sector is almost entirely on transport and communications.
    • The share of transport has doubled from 6.1% to 12.9% during the same period.
    • Within transportation, it is mostly roads.
    • Decline in the share of investment: Its share in the investment ratio (column 2.1) fell from 19.2% in 2011-12 to 16.5% in 2019-20.
    • This indicates that ‘Make in India’ failed to take off, import dependence went up, and India became deindustrialised.
    • Import dependence on China is alarming for critical materials such as fertilizers, bulk drugs (active pharmaceutical ingredients or APIs) and capital goods.
    • Instead of boosting investment and domestic technological capabilities, the ‘Make in India’ campaign frittered away time and resources to raise India’s rank in the World Bank’s Ease of Doing Business Index.
    • Decline in foreign capital in GFC: The contribution of foreign capital to financing GCF fell to 2.5% in 2019-20 from 3.8% in 2014-15 (or 11.1% in 2011-12).
    • With declining investment share, industrial output growth rate fell from 13.1% in 2015-16 to a negative 2.4% in 2019-20, as per the National Accounts Statistics.

    Way forward

    • Need for balance: As roads and communications are classic public goods, investment in them is welcome.
    • However, for healthy domestic output growth, there is a need for balance between “directly productive investments” (in farms and factories) and infrastructure investments.
    • And this balance was missed.
    • The recent upturn in the aggregate fixed capital formation to GDP ratio is positive, though the rate is still lower than its mark in the early 2010s.

    Conclusion

    The claim that the investment revival is public sector driven is not borne out by facts. The budgetary figures refer to financial investment, not estimates of capital formation, indicating expansion of the economy’s productive capacity.

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    Back2Basics: Gross fixes capital formation

    • Gross fixed capital formation (GFCF), also called “investment”, is defined as the acquisition of produced assets (including purchases of second-hand assets), including the production of such assets by producers for their own use, minus disposals.
    • The relevant assets relate to assets that are intended for use in the production of other goods and services for a period of more than a year.
    • The term “produced assets” means that only those assets that come into existence as a result of a production process are included.
    • It therefore does not include, for example, the purchase of land and natural resources.
    • This indicator is available in different measures: GFCF at current prices and current PPPs in US dollars, and annual growth rates of GFCF at constant prices, as well as quarterly data for percentage change over previous period and percentage change over same period last year.
    • The indicator at current prices and current PPPs is less suited for comparisons over time, as developments are not only caused by real growth, but also by changes in prices and PPPs.

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