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  • Good economics must also make good politics

    The article suggests the reforms that should be included in the next budget to boost the Indian economy.

    Need for further reforms

    • Government has leveraged the Covid-19 slowdown as an opportunity for introducing transformative reforms.
    • The recently introduced reforms include liberalising agricultural markets, diluting the onslaught of labour laws, credit guarantees for SME loans, and a liberal PLI to stimulate manufacturing.
    • These reforms have created a cautious optimism among investors worldwide awaiting the forthcoming Budget.
    • India’s reforms require further acceleration, and a consensus that good economics makes good politics.

    Reforms required to attract investment

    • Cost of acquiring land has increased substantially, which needs to be reduced.
    • The government must categorise 44 central laws into compensation, social security, industrial relations, and health and safety—and draft a unified model labour law to replace archaic laws for adoption by states.
    • India’s trade-to-GDP ratio must improve.
    • Having turned away from the RCEP, India needs to conclude trade agreements with the UK and other major economies. Announcing such intent would be welcome.
    • Effective corporate tax rate for domestic companies is 25.17%, while that for foreign firms is 43.68%, India should maintain tax parity across domestic and foreign companies.
    • With such parity, India will enhance investment attractiveness.
    • In view of the recent international arbitration rulings, India should discontinue retrospective taxation.
    • Defence FDI could be raised from 74% to 100% under automatic route.
    • The rationale to maintain FDI in the insurance sector at 49% now holds limited logic, India could increase it to a majority stake or even 100%.
    • Bottled-in-origin and bulk spirits attract a high basic customs duty (150%), deterring companies eyeing the Indian market, and depriving India of the corresponding FDI.
    • Phased reduction of duty on these products to 75% and finally to 30% is advisable.

    Areas that need increased spending

    • Spending on public healthcare needs to rise from 1.3% to 3% of GDP with Covid-19 exposing glaring inadequacies.
    • Revising the National List of Essential Medicines to exempt inexpensively-priced medicines from price controls would help investments in innovation and API manufacturing.
    • If the New Education Policy is to be implemented properly, public spend on education and skill development must rise from 3% to 4.5% of GDP.
    • The government must raise defence allocations to over 2.5% of GDP given India’s new threat perceptions and increase capital component of total fiscal allocations for defence could be increased from 34% to 40%.

    Other measures to boost the economy

    • Developing data adequacy agreements with the UK and other key countries would facilitate cross-border movement of personal data based on a mutual adequacy basis.
    • The online gaming industry should be supported by a model law, tax regime and self-regulation so that the government accrues tax revenues estimated at Rs 15,000 crore.
    • Most countries tax domestic corporate dividends at lower rates and, therefore, FPIs’ dividend income should be taxed at 10%.
    • Foreign banks must be brought at par with Indian banks with 8.5% deduction for NPA provisioning.
    • Excluding financial services from the e-commerce equalisation levy would be appropriate.
    • PSU disinvestments have slowed, and the Budget needs to announce measures for their acceleration as a privatisation push would be transformative for India in the long run.

    Consider the question”What are the hurdles in making India the more attractive to the investors? Discuss the measures to make India more attractive for investors.” 

    Conclusion

    As developed countries contemplate relocating their manufacturing supply chains to destinations besides China, a progressive Budget would send positive signals to overseas investors and would propel India’s rightful ambition to be the world’s next manufacturing workshop, in consonance with the Atmanirbhar Bharat vision.

    Source:

    https://www.financialexpress.com/opinion/union-budget-fy22-good-economics-must-make-good-politics/2173553/

  • Issues with treating mineral sale proceeds as revenue or income

    The rate at which we are extracting mineral and spending the proceeds from it without consideration for the future generation needs a rethink. The article deals with this issue.

    The principle of Intergenerational Equity

    • We cannot compromise the ability of future generations to meet their needs, and this is reflected in the aim for the sustainable economy.
    • The principle of Intergenerational Equity would make it imperative for us to ensure future generations inherit at least as much as we did.
    • If we are successful in abiding by intergenerational equity, our children will be at least as well off as we are.

    Issues with our mineral policy

    • India’s National Mineral Policy 2019 states: “natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.”
    • The extraction of oil, gas, and minerals is effectively the sale of this inheritance.
    • Unfortunately, governments everywhere treat the mineral sale proceeds as revenue or income which is basically a sale of inherited wealth.
    • This results in governments selling minerals at prices significantly lower than what they are worth, driven by lobbying, political donations, and corruption.

    Error in accounting

    • Proceeds received by the government are treated as “revenue” and spent.
    • This is just not sustainable.
    • There is growing empirical evidence of large losses in mining from around the world.
    • There is also growing evidence from the International Monetary Fund that many governments of resource-rich nations face declining public sector net worth, i.e., their governments are becoming poorer.
    • Due to the high profits involved, the extractors are keen to extract as quickly as possible and move on.
    • More mining would make a bad situation significantly worse.
    • The Government Accounting Standards Advisory Board needs to correct this error in the standards for public sector accounting and reporting for mineral wealth.

    Way forward

    • If we extract and sell our mineral wealth, the explicit objective must be to achieve zero loss in value; the state as trustee must capture the full economic rent.
    • Any loss is a loss to all of us and our future generations, and makes some rich; that is patently unfair.
    • India’s National Mineral Policy 2019 says: “State Governments will endeavor to ensure that the full value of the extracted minerals is received by the State.”
    • Like Norway, the entire mineral sale proceeds must be saved in a Future Generations Fund.
    • The Future Generations Fund could be passively invested through the National Pension Scheme framework.
    • The real income of a fund of this nature may be distributed only as a citizens’ dividend, equally to all as owners.
    • For the Indian economy, this is sustainable — capital has been maintained; the savings rate would rise, making available more long-term domestic capital; it diversifies risk while likely improving returns.

    Consider the question “What are the issues with our mining policies? Suggest the changes to make it more sustainable.”

    Conclusion

    Through these changes, let us be the generation that changes the course of history for the better, not the one that consumed the planet.

  • Balance sheet of a Bad Bank

    The idea of setting up a bad bank to resolve the growing problem of non-performing assets (NPAs), or loans on which borrowers have defaulted, is back on the table.

    Q.What is Bad Bank? Discuss how it is different from an Asset Reconstruction Company (ARC)?

    Why in news?

    • Commercial banks are set to witness a spike in NPAs, or bad loans, in the wake of the contraction in the economy as a result of the pandemic.
    • Hence the RBI recently agreed to look at the proposal for the creation of a bad bank.
    • This is in the response to a six-month moratorium it has announced to tackle the economic slowdown.

    What is a Bad Bank?

    • A bad bank conveys the impression that it will function as a bank but has bad assets to start with.
    • Technically, it is an asset reconstruction company (ARC) or an asset management company that takes over the bad loans of commercial banks, manages them and finally recovers the money over a period of time.
    • Such bank is not involved in lending and taking deposits, but helps commercial banks clean up their balance sheets and resolve bad loans.
    • The takeover of bad loans is normally below the book value of the loan and the bad bank tries to recover as much as possible subsequently.

    Global examples of Bad Bank

    • US-based BNY Mellon Bank created the first bad bank in 1988, after which the concept has been implemented in other countries including Sweden, Finland, France and Germany.
    • However, resolution agencies or ARCs set up as banks, which originate or guarantee to lend, have ended up turning into reckless lenders in some countries.

    Do we need a bad bank?

    • The idea gained currency during Rajan’s tenure as RBI Governor.
    • The RBI had then initiated an asset quality review (AQR) of banks and found that several banks had suppressed or hidden bad loans to show a healthy balance sheet.
    • However, the idea remained on paper amid lack of consensus on the efficacy of such an institution.
    • ARCs have not made any impact in resolving bad loans due to many procedural issues.

    What is the stand of the RBI and government?

    • While the RBI did not show much enthusiasm about a bad bank all these years, there are signs that it can look at the idea now.
    • Experts, however, argue that it would be better to limit the objective of these asset management companies to the orderly resolution of stressed assets, followed by a graceful exit.

    Key suggestions

    Former RBI Dy. Governor Acharya suggested two models to solve the problem of stressed assets.

    1. The first is a private asset management company (PAMC), which is said to be suitable for stressed sectors where the assets are likely to have an economic value in the short run, with moderate levels of debt forgiveness.
    2. The second model is the National Asset Management Company (NAMC), which would be necessary for sectors where the problem is not just one of excess capacity but possibly also of economically unviable assets in the short to medium terms.

    Good about the bad banks

    • The problem of NPAs continues in the banking sector, especially among the weaker banks.
    • The bad bank concept is in some ways similar to an ARC but is funded by the government initially, with banks and other investors co-investing in due course.
    • The presence of the government is seen as a means to speed up the clean-up process.
    • Many other countries had set up institutional mechanisms such as the Troubled Asset Relief Programme (TARP) in the US to deal with a problem of stress in the financial system.

    Pandemic and the NPAs

    • Bad loans in the system are expected to balloon in the wake of contraction in the economy and the problems being faced by many sectors.
    • The RBI noted in its recent Financial Stability Report that the gross NPAs of the banking sector is expected to shoot up to 13.5% of advances by September 2021, from 7.5% in September 2020.
    • The report warned that if the macroeconomic environment worsens into a severe stress scenario, the ratio may escalate to 14.8%.

  • Supreme Court directive on Quota in Promotions

    The Supreme Court has asked Attorney General to compile the various issues being raised by States with regard to the 2006 M. Nagaraj case, which had upheld the application of creamy layer principle to members of the SC/ST communities in promotions.

    Must read edition: Reservation not a Fundamental Right

    What is the case about?

    • The Centre’s plea came despite the Supreme Court, in September 2018, in Jarnail Singh case, reiterating the Nagaraj judgment of 2006.
    • The 2006 judgment required the States to show quantifiable data to prove the ‘backwardness’ of a community to provide quota in promotion in public employment,
    • The 2018 judgment, which was authored by Justice Rohinton F. Nariman, had refused the government’s plea to refer the 2006 Nagaraj judgment to a seven-judge Bench.
    • It had while modifying the part of the Nagaraj verdict, rejected the Centre’s argument that Nagaraj misread the creamy layer concept by applying it to SC/ST.

    Nagaraj Case

    • In Jarnail Singh vs Lachhmi Narain Gupta (2018), the court dealt with a batch of appeals on the correctness of the Supreme Court’s judgment in M Nagaraj & Others vs Union of India (2006).
    • The Nagaraj case, in turn, had arisen out of a challenge to the validity of four Constitution amendments, which the court eventually upheld.

    What were the amendments?

    • 77th Amendment: It introduced Clause 4A to the Constitution, empowering the state to make provisions for reservation in matters of promotion to SC/ST employees if the state feels they are not adequately represented.
    • 81st Amendment: It introduced Clause 4B, which says unfilled SC/ST quota of a particular year, when carried forward to the next year, will be treated separately and not clubbed with the regular vacancies of that year to find out whether the total quota has breached the 50% limit set by the Supreme Court.
    • 82nd Amendment: It inserted a proviso at the end of Article 335 to enable the state to make any provision for SC/STs “for relaxation in qualifying marks in any examination or lowering the standards of evaluation, for reservation in matters of promotion to any class or classes of services or posts in connection with the affairs of the Union or of a State”.
    • 85th Amendment: It said reservation in the promotion can be applied with consequential seniority for the SC/ST employee.

    What is Art.335 about?

    • Article 335 of the Constitution relates to claims of SCs and STs to services and posts.
    • It reads: “The claims of the members of the SC’s and ST’s shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State.”

  • Task force on Age of Marriage for Women submits its report

    The task force set up to take a re-look at the age of marriage for women has submitted its report to the Prime Minister’s Office and the Ministry of Women and Child Development.

    Try this question for mains:

    Q.The different minimum age of marriage for women and men is a discriminatory provision. Analyse.

    What is the issue?

    • PM in his I-Day speech last year spoke about a panel formed to decide on the “right age of marriage” for women.
    • The minimum age of marriage, especially for women, has been a contentious issue.
    • The law evolved in the face of much resistance from religious and social conservatives.
    • Currently, the law prescribes that the minimum age of marriage is 21 years and 18 years for men and women respectively.

    Invoking ‘Majority’

    • The minimum age of marriage is distinct from the age of majority which is gender-neutral.
    • An individual attains the age of majority at 18 as per the Indian Majority Act, 1875.
    • The law prescribes a minimum age of marriage to essentially outlaw child marriages and prevents the abuse of minors.

    About the Committee

    • The Union Ministry for WCD had set up a task force to examine matters pertaining to the age of motherhood, imperatives of lowering Maternal Mortality Ratio and the improvement of nutritional levels among women.
    • The task force would examine the correlation of age of marriage and motherhood with health, medical well-being, and nutritional status of the mother and neonate, infant or child, during pregnancy, birth and thereafter.
    • It will also examine the possibility of increasing the age of marriage for women from the present 18 years to 21 years.

    How common are child marriages in India?

    • UNICEF estimates suggest that each year, at least 1.5 million girls under the age of 18 are married in India.
    • It makes our country home to the largest number of child brides in the world — accounting for a third of the global total.
    • Nearly 16 per cent adolescent girls aged 15-19 are currently married.

    Provisions for the minimum age for marriage

    • Personal laws of various religions that deal with marriage have their own standards, often reflecting custom.
    • For Hindus, Section 5(iii) of The Hindu Marriage Act, 1955, sets 18 years as the minimum age for the bride and 21 years as the minimum age for the groom.
    • However, child marriages are not illegal — even though they can be declared void at the request of the minor in the marriage.
    • In Islam, the marriage of a minor who has attained puberty is considered valid.
    • The Special Marriage Act, 1954 and the Prohibition of Child Marriage Act, 2006 also prescribe 18 and 21 years as the minimum age of consent for marriage for women and men respectively.
    • Additionally, sexual intercourse with a minor is rape, and the ‘consent’ of a minor is regarded as invalid since she is deemed incapable of giving consent at that age.

    Evolution of the law

    • The IPC enacted in 1860 criminalised sexual intercourse with a girl below the age of 10.
    • The provision of rape was amended in 1927 through The Age of Consent Bill, 1927, which declared that marriage with a girl under 12 would be invalid.
    • The law faced opposition from conservative leaders of the Indian National Movement, who saw the British intervention as an attack on Hindu customs.
    • A legal framework for the age of consent for marriage in India only began in the 1880s.

    Comes in: The Sarda Act

    • In 1929, The Child Marriage Restraint Act set 16 and 18 years as the minimum age of marriage for girls and boys respectively.
    • The law, popularly known as the Sarda Act after its sponsor Harbilas Sarda, a judge and a member of Arya Samaj, was eventually amended in 1978 to prescribe 18 and 21 years as the age of marriage for a woman and a man respectively.

    Contention over different legal standards

    • There is no reasoning in the law for having different legal standards of age for men and women to marry. The laws are a codification of custom and religious practices.
    • The Law Commission consultation paper has argued that having different legal standards “contributes to the stereotype that wives must be younger than their husbands”.
    • Women’s rights activists have argued that the law also perpetuates the stereotype that women are more mature than men of the same age and, therefore, can be allowed to marry sooner.
    • The international treaty Committee on the Elimination of Discrimination against Women (CEDAW), also calls for the abolition of laws that assume women have a different physical or intellectual rate of growth than men.

    Why is the law being relooked at?

    • Despite laws mandating minimum age and criminalizing sexual intercourse with a minor, child marriages are very prevalent in the country.
    • From bringing in gender-neutrality to reduce the risks of early pregnancy among women, there are many arguments in favour of increasing the minimum age of marriage of women.
    • Early pregnancy is associated with increased child mortality rates and affects the health of the mother.

    Upholding the Constitution

    • Petitioners, in this case, had challenged the law on the grounds of discrimination.
    • It is argued that Articles 14 and 21 of the Constitution, which guarantee the right to equality and the right to live with dignity, were violated by having different legal ages for men and women to marry.
    • Two significant Supreme Court rulings can act as precedents to support the petitioner’s claim.
    • In 2014, in the ‘NALSA v Union of India’ case, the Supreme Court, while recognising transgenders as the third gender, said that justice is delivered with the “assumption that humans have equal value and should, therefore, be treated as equal, as well as by equal laws”.
    • In 2019, in ‘Joseph Shine v Union of India’, the Supreme Court decriminalized adultery, and said that “a law that treats women differently based on gender stereotypes is an affront to women’s dignity”.

  • [pib] Second edition of India Innovation Index 2020

    NITI Aayog is set to release the second edition of the India Innovation Index 2020 tomorrow.

    *Statewise rankings will be updated tomorrow.

    Updated on 21st Jan, Thursday.

    India Innovation Index (III)

    • The release of the second edition of the index—the first was launched in October 2019—demonstrates the Government’s continued commitment towards transforming the country into an innovation-driven economy.
    • The index attempts to create an extensive framework for the continual evaluation of the innovation environment of 29 states and seven UTs in India.
    • It intends to perform the following three functions-
    1. Ranking of states and UTs based on their index scores
    2. Recognizing opportunities and challenges, and
    3. Assisting in tailoring governmental policies to foster innovation
    • The India Innovation Index 2019 is calculated as the average of the scores of its two dimensions – Enablers and Performance.
    • The states have been bifurcated into three categories: major states, north-east and hill states, and union territories/city-states/small states.

    Significance

    • The study examines the innovation ecosystem of Indian states and union territories.
    • The aim is to create a holistic tool which can be used by policymakers across the country to identify the challenges to be addressed and strengths to build on when designing policies.

  • Places in news: Harike Wetland

    Winter migratory waterbirds using the central Asian flyway have started making a beeline to Punjab’s Harike wetland, offering a delight for bird lovers.

    Try this PYQ:

    Q.In which one among the following categories of protected areas in India are local people not allowed to collect and use the biomass?

    (a) Biosphere reserves

    (b) National parks

    (c) Wetlands declared under Ramsar convention

    (d) Wildlife sanctuaries

    Harike Wetland

    • Harike Wetland also is the largest wetland in northern India in the border of Tarn Taran Sahib district and Ferozepur district of Punjab.
    • The wetland and the lake were formed by constructing the headworks across the Sutlej River in 1953.
    • The headworks is located downstream of the confluence of the Beas and Sutlej rivers just south of Harike village.
    • The rich biodiversity of the wetland which plays a vital role in maintaining the precious hydrological balance in the catchment with its vast concentration of migratory fauna.
    • It was accorded as a wetland in 1990, by the Ramsar Convention, as one of the Ramsar sites in India, for conservation, development and preservation of the ecosystem.

    Back2Basics: Ramsar Convention

    • The Convention on Wetlands of International Importance (better known as the Ramsar Convention) is an international agreement promoting the conservation and wise use of wetlands.
    • It is the only global treaty to focus on a single ecosystem.
    • The convention was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975.
    • Traditionally viewed as a wasteland or breeding ground of disease, wetlands actually provide fresh water and food and serve as nature’s shock absorber.
    • Wetlands, critical for biodiversity, are disappearing rapidly, with recent estimates showing that 64% or more of the world’s wetlands have vanished since 1900.
    • Major changes in land use for agriculture and grazing, water diversion for dams and canals and infrastructure development are considered to be some of the main causes of loss and degradation of wetlands.

  • 19th January 2021| Daily Answer Writing Enhancement

    Important Announcement:  Topics to be covered on 20th January

    GS-1  Contributions of moral thinkers and philosophers from India and world. 

    GS-4 Distribution of key natural resources across the world (including South Asia and the Indian subcontinent)

    Question 1)

    Examine the ideas and ideology of Jyotiba Phule. Can he be termed a radical? 10 marks

    Question 2)

    What are the issues with giving consent to online privacy policies? Suggest the measures to give users greater control over their digital destinies. 10 marks

    Question 3)

    What explains the apparent paradox in the India economy with evident divergence in its booming financial sector and subdued economy. What are the risks involved in such situations? Suggest the measures to deal with such situations. 10 marks

    Question 4)  

    What do you understand by impartiality? why is it one of the most important value for civil servants? Discuss with relevant examples. 10 marks

    Reviews will be provided in a week. (In the order of submission- First come first serve basis). In case the answer is submitted late the review period may get extended to two weeks.

    *In case your answer is not reviewed in a week, reply to your answer saying *NOT CHECKED*. If Parth Sir’s tag is available then tag him.

    For the philosophy of AWE and payment, check  here: Click2Join

  • [Burning Issue] Terrorism and the World

    India battles on multi-layered fronts to counter cross-border terrorism.

    Our security forces are constantly engaged in creating an environment of security in the country.  They have been quite successful in diagnosing and executing them.

    The airstrike after the Pulwama attack and the earlier surgical strike made clear the zero-tolerance policy of India towards terrorism.

    Context

    • International terrorism is one of the most serious threats to international peace and security.
    • Highlighting yet again the issue of terror at the UN, India has said terror has become a “means of waging war” and requires “global action”.

    Why in news?

    • Foreign Minister S Jaishankar has recently addressed the United National Security Council (UNSC) open debate over ’20 years after the adoption of resolution 1373’ on combating terrorism.
    • Describing terrorism as the greatest threat to mankind, he had proposed an eight-point action plan at the UNSC to ensure effective action against the menace of terrorism.

    What is Resolution 1373?

    • The Security Council Resolution 1373, adopted unanimously on 28 September 2001, is a counter-terrorism measure passed following the 9-11 terrorist attacks on the United States.
    • The resolution was adopted under Chapter VII of the United Nations Charter and is therefore binding on all UN member states.

    Major provisions of the resolution

    • The resolution aimed to hinder terrorist groups in various ways. 
    • UN member states were encouraged to share their intelligence on terrorist groups in order to assist in combating international terrorism.
    • The resolution also calls on all states to adjust their national laws so that they can ratify all of the existing international conventions on terrorism.
    • It stated that all States “should also ensure that terrorist acts are established as serious criminal offences in domestic laws and regulations and that the seriousness of such acts is duly reflected in sentences served.”

    How Terrorism has become a global issue?

    • The rise of ISIS and the growing problem of foreign fighters have led, in recent years, to some wider acknowledgment that terrorism is a global catastrophe.
    • 9/11, 26/11, Christchurch terror attacks have transformed the global belief of terrorism being a local problem.

    Impacts of Terrorism

    (1) Economic impacts

    Terrorism also thwarts economic growth indirectly by affecting macroeconomic variables, e.g., by reducing FDI, lessening domestic investment, increasing inflation, increasing non-development government expenditures (law and order and Security), damaging stock markets, and increasing unemployment, among others.

    (2) Political impacts: A Terror incident shakes the very foundation of a legitimate government and its establishments on moral grounds of accountability (for intelligence failure to avert terror incidences). This results in political instability.

    (3) Socio-cultural impacts: Terrorism is often associated with a particular religion or ethnicity. This often leads to paranoia towards a religion leading to communal tensions. Multi-diverse countries like India are the worst hit.

    (4) Loss of Life & Property

    This is the main impact of a terrorist event. But as we know, casualties are not the only way terrorists can achieve their goals. When people stop leaving their homes and carrying out their lives as normal due to real or perceived terrorist threats, businesses see the impact on their bottom line.

    The 8-Point Action Plan

    In a first intervention since India joined the UNSC as a temporary member on 1 January 2021, S. Jaishankar had put forward an eight-point action plan as part of his zero-tolerance policy for terrorism, saying there are “no good and bad terrorists” and there should be “no ifs and buts” around terrorist activities.

    1. Summon the political will to combat terrorism.

    Nor should we allow terrorism to be justified and terrorists glorified. All member states must fulfill their obligations enshrined in international counter-terrorism instruments and conventions.

    2. Do not countenance double standards in this battle.

    Terrorists are terrorists; there are no good and bad ones. Those who propagate this distinction have an agenda. And those who cover up for them are just as culpable.

    3. Reform the working methods

    Reform the working methods dealing with sanctions and counter-terrorism. The practice of placing blocks and holds on listing requests without any rhyme or reason must end.

    4. Firmly discourage exclusivist thinking that divides the world and harms our social fabric.

    Such approaches facilitate radicalization and recruitment by breeding fear, mistrust, and hatred among different communities. The UNSC should be on guard against new terminologies and misleading priorities that can dilute our focus.

    5. Enlisting and delisting

    Enlisting and delisting individuals and entities under the UN sanctions regimes must be done objectively, not for political or religious considerations.

    6. Curbing terror linkages

    Linkages between terrorism and transnational organized crime must be fully recognized and addressed vigorously.

    7. Combating terrorist financing

    It will only be as effective as the weakest jurisdiction. The Financial Action Task Force (FATF) should continue to identify and remedy weaknesses in anti-money laundering and counter-terror financing frameworks. Enhanced UN coordination with FATF can make a huge difference.

    8. Adequate funding

    Adequate funding to UN Counter-Terrorism bodies from the UN regular budget requires immediate attention. The forthcoming 7th review of the UN’s Global Counter-Terrorism Strategy offers an important occasion to strengthen measures to prevent and combat terrorism and building capacities of member states.

    Global facets of Terrorism

    Terrorism is the calculated use of violence to create a general climate of fear in a population and thereby to bring about a particular political or social objective.

    It has been practiced by political organizations with both rightist and leftist objectives, by nationalistic and religious groups, by revolutionaries, and even by state institutions such as armies, intelligence services, and police.

    Various attempts have been made to distinguish among types of terrorist activities. In general, there are three basic facets of terrorism – international terrorism, domestic terrorism and transnational terrorism.

    We need to be familiar with these five types of terrorism:

    • State-Sponsored terrorism, which consists of terrorist acts on a state or government by a state or government.
    • Dissent terrorism, which are terrorist groups which have rebelled against their government.
    • Terrorists and the Left and Right, which are groups rooted in political ideology.
    • Religious terrorism, which are terrorist groups which are extremely religiously motivated and
    • Criminal Terrorism, which are terrorists acts used to aid in crime and criminal profit.

    Terror tactics these days are more modernizing through new technologies such as:

    Bio-terrorism: It is the intentional release of biological agents to cause illness or death in humans, animals, or plants. These agents may be bacteria, fungi, toxins, or viruses. They may be naturally occurring or human-modified.

    Cyber-terrorism: It is the convergence of cyberspace and terrorism. It refers to unlawful attacks and threats of attacks against computers, networks, and the information stored therein when done to intimidate or coerce a government or its people in furtherance of political or social objectives.

    Why do people resort to terrorism?

    Individuals and groups choose terrorism as a tactic because it can:

    • Act as a form of asymmetric warfare in order to directly force a government to agree to demands
    • Get attention and thus political support for a cause
    • Directly inspire more people to the cause (such as revolutionary acts) – propaganda of the religion/separatism
    • Indirectly inspire more people to the cause by provoking a hostile response or over-reaction from enemies to the cause

    Somewhere in the roots of domestic terrorism, socio-cultural deprivation remains the prime mover.

    Terrorism in India

    Following are the types of terrorism which threatens India’s security and internal peace and tranquility.

    1. Ethnic terrorism
    2. Religious terrorism
    3. Ideological terrorism

    Ethnic Terrorism: Terrorism based on an identity crisis, resource crisis, and cultural imperialism among various ethnic groups is called ethnic terrorism. It is spread in the northeast region of India.

    Religious terrorism: The systematic violence propagated based on religion is called religious terrorism. The feeling of religious superiority is at the root of this terrorism. Religious terrorism in modern times is considered terrorism.

    Ideological terrorism: If the purpose of planned violence is motivated by communist elements, it is called Left Terrorism or Naxalism/Maoism.

    The UN and its handling of Terrorism

    The UN’s counter-terrorism work in recent years can be organized under three headings:

    First, a norm-setting role that includes-

    • the development and promotion of a Global Counter-Terrorism Strategy and efforts to counter violent extremism,
    • a set of international conventions, and
    • far-reaching UNSC  resolutions imposing counter-terrorism obligations on member states;

    Second, capacity-building activities to help countries meet some obligations (through FATF and all) and

    Third, Security Council-mandated sanctions, in the 1990s, against state sponsors of terrorism, and since 9/11 against hundreds of individuals and entities affiliated with Al Qaida.

    The UN has accumulated ample experience and a proven record of success in its efforts to end civil wars over the past two and a half decades.

    However, serious questions arise regarding the preparedness of the UN’s conflict management tools, in particular its peace operations, to deliver mandates in countries affected by terrorist insurgencies, such as Afghanistan, Iraq, Libya, Syria, Somalia, Yemen and Lebanon.

    Limitations to the UN

    The U.N. is too political, too uncoordinated, too focused on process rather than outcomes and follow-up, and too far removed from the people who actually deal with the problems of terrorism.

    • Invocation of a “war on terrorism” and adoption of reflexive security measures renders very serious pressure on any organization such as the UN.
    • As an intergovernmental organization catering to the needs and driven by the interests of national governments, the UN is constitutionally ill-equipped to implement counter-terror measures.
    • The UN’s comparative advantage may thus lie in supporting and mobilizing funding for networks that would allow for the sharing of best practices among such local actors.

    Need for a global action

    A high-level review of UN peace operations concluded in 2015 that the UN peacekeeping missions, due to their composition and character, are not suited to engage in counter-terrorism operations. This is mainly because-

    • The growing presence of religious terrorist groups in many of today’s civil war environments complicates the UN’s peacemaking.
    • This is because many of these groups pursue maximalist demands that are very difficult to meet or to incorporate into political settlements based on human rights and democratic governance.
    • Even where such groups may be motivated primarily by local, legitimate, and reversible grievances, key powers tend to discourage negotiations with them.
    • Again, extremists groups have proven difficult to engage around respect for humanitarian norms, which the UN has successfully employed elsewhere with other armed non-state actors.
    • The UN has increasingly become a target of such groups, which has led it to ever greater preoccupation with protecting itself rather than local civilians.
    • This has greatly hampered its ability to engage with the local population, win hearts and minds, and mediate local disputes.

    India’s action: Leading from the front

    India has been fighting insurgency and terrorism since its days of independence.

    • India has been at the forefront for a call of global action against terrorism which is increasingly becoming a global phenomenon.
    • India has been calling for the passing of the Comprehensive Convention on International Terrorism (CCIT) at the UN. CCIT calls for a common definition of terror and the criminalization of international terrorism.
    • A decade of relentless efforts by India to get Pakistan-based terror master Masood Azhar listed as a global terrorist by the UNSC finally came to fruition in 2019.
    • India has been successful in drawing attention to its problem of terrorism by casting Pakistan as a breeder and supporter of terrorist organizations.  To this testimony, India’s role play at the FATF against Pakistan is globally visible.

    This signifies India’s leadership in global counter-terrorism efforts.

    Way Forward

    • Indeed, around the world many governments continued to rely primarily on military and law enforcement tools in their counter-terrorism efforts often to the detriment of human rights and with insufficient attention paid to underlying drivers of extremism.
    • The world needs to shift its focus primarily from military and law enforcement tools towards a holistic approach.
    • This is because counter-terrorism efforts often tend to detriment the human rights and least attention is paid to underlying drivers of extremism.

    Endorsing the Christchurch Call

    Christchurch call of action is an initiative named after the New Zealand city where 51 people were killed in an attack on mosques.

    The attack had highlighted the urgent need for action and enhanced cooperation among the wide range of actors with influence over this issue, including governments, civil society, and online service providers, such as social media companies, to eliminate terrorist and violent extremist content online.

    The initiative outlines collective, voluntary commitments from governments and online service providers intended to address the issue of terrorist and violent extremist content online and to prevent the abuse of the internet.

    Such collaboration can be extended over various parameters of counter-terrorism moves by the global community.

    A note for the UN

    While it is true that the UN’s operational counter-terrorism activities have faced severe shortfalls and limitations; the UN has proven a useful venue for establishing the broad normative and cooperative frameworks for collective counter-terrorism action.

    • The UN needs to reflect on how it can adapt its peace operations to deliver on their mandate in theaters where terrorist networks are present.
    • Among the key questions the UN will need to confront are: how to identify elements among violent extremist groups that could potentially be engaged in mediation, peace and reconciliations processes.
    • The UN has to arrive at a how to adapt Disarmament, Demobilization, and Reintegration programs to the context of violent extremism.

    India has to be ‘all-alert ‘

    Looking to international organizations such as the UN has lost much of its appeal since the war in Iraq and Afghanistan. The loss of credibility renders it incapacity of any substantial action against these insurgents or the countries that harbor them.

    • Technological advancements and, arguably, new geopolitical alliances also bring with them new terrorist threats.
    • Despite myriad ideological and operational complexities when it comes to terrorist groups active in the country, India is outperforming its peers when it comes to meeting these challenges.
    • However, the fight against terrorism is far from over.
    • India must be prepared with its military and diplomatic options to eliminate these threats well in advance.

    Conclusion

    • Terrorism is not just a violent activity but it attacks the social, cultural, and defense fabric of the country and society and hinders its sustainable development.
    • All countries must solve problems like the socio-economic unjust, refugee crisis, human rights abuses globally, and stands unanimously against all forms of terrorism to end it.

    In conclusion it can be said, India’s war against terrorism remains largely her own problem.  For time to come, India will have to deal with its problem of terrorism on its own accord.

    References

    https://www.orfonline.org/research/one-year-since-the-christchurch-call-to-action-a-review/

    https://timesofindia.indiatimes.com/india/in-8-point-action-plan-against-terrorism-jaishankar-slams-pak-takes-a-dig-at-china/articleshow/80241500.cms

    https://www.thequint.com/news/india/eam-jaishankars-8-point-action-plan-in-unsc-to-combat-terrorism#read-more#read-more

    https://en.wikipedia.org/wiki/Terrorism_in_India

    http://www.ipcs.org/comm_select.php?articleNo=1657

  • Why Financial boom at a time of economic stagnation?

    Divergence in the financial sector and the overall economy

    • India’s major secondary stock market, the Sensex has been found tracking an upward path, from 40,817 on January 8, 2020, to 48,569 a year later, on January 8, 2021.
    • The trend indicates that GDP in India has been subdued while the financial sector has continued moving up.
    • This paradox has been found to be replicated in other developing as well as advanced economies.
    • These include the major emerging economies such as Brazil and Argentina along with advanced economies such as the United States and the United Kingdom.
    •  It remains an open question whether this paradox can sustain itself.
    • If this cannot sustain, it poses risk for those having large exposures in the financial market and also for the economy as a whole.

    Let’s understand the financial flows beyond the real economy

    • Finance as above, having no counterpart in the productive sector, was identified, first by Karl Marx, as fictitious capital.
    • Earnings from fictitious capital include interests, dividends, and capital gains as well as profits on derivatives.
    • All the above come in the category of unearned or rentier capital.
    • Financial assets, sold with capital gains at higher prices, are met with a rising rather than with the usual declines in demand.
    • Evidently, possibilities of accumulating assets turn even brighter with the high-value assets (used as collaterals), fetching credit for further business.
    • As for the stock prices, which reflect the stream of dividends over time discounted by interest rates, lower rates can help pitch stock prices higher.
    • Cuts in interest rates are often preferred as tools under mainstream prescriptions limiting expansionary policies, which evidently helps stock prices.
    • A journey as above for the financial circuit continues, is subject to market confidence.

    Role of state

    • To look at how finance has attained its present status we need to look at the evolving alliances between finance and the ruling state.
    • The path started with the financial deregulation in the late-1990s when banks were allowed to profit by dealing with securities and with the emergence of hedging devices such as futures and options in the market.
    • It also reflects the rise of non-bank financial institutions as well as shadow banks operating beyond regulations even at cost for the regular banks which had large exposures to the non-banks.
    • The state’s close proximity to big finance is also evident in the revamping of downhill finance, even with bailouts in the name of restoring financial stability.
    • It speaks even more of the pro-finance stance of the government in the neglect of upswings in the financial sector despite the continuing downslides in the real economy.

    Consider the question “What explains the apparent paradox in the India economy with evident divergence in its booming financial sector and subdued economy. What are the risks involved in such situations? Suggest the measures to deal with such situations.

    Conclusion

    Catastrophes, that comes with the sudden collapse of confidence in the financial sector, highlight the need for alternative policies on the part of the state as well as a bit of caution on part of individual investors — in a bid to usher in a sustainable and equitable path of growth for the economy as a whole.

     

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