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  • India needs a forward-looking strategy on Pakistan

    Context

    India’s approach in dealing with Pakistan today is very different from the framework that emerged at the dawn of the 1990s.

    Terms of engagement with Pakistan

    • From the 1990s, for nearly three decades, it was Pakistan that had the political initiative.
    • The turmoil in Kashmir, the international focus on nuclear proliferation, and the relentless external pressure for a sustained dialogue with Pakistan put Delhi in a difficult situation.
    • If Pakistan was on the political offensive, a series of weak coalition governments in Delhi were forced onto the back foot.
    • At the heart of Pakistan’s ambition was to change the status quo in Jammu and Kashmir.
    • Islamabad also played up to the concerns in Western chancelleries that the conflict in Kashmir might escalate to the nuclear level.
    • The new international consensus that Kashmir is the “world’s most dangerous nuclear flashpoint” aligned well with Pakistan’s strategy.
    • Delhi had no option but to respond, but any move to counter Pakistan would make the situation worse.
    • Under Prime Minister Narendra Modi, India has begun to reset the terms of the engagement agenda.
    • Change in regional and international context: Meanwhile, the regional and international context has also altered in many ways since the early 1990s essentially in India’s favour.

    Reset in engagement

    • India’s transformed relations with the US, the resolution of Delhi’s dispute with the global nuclear order, and getting the West to discard its temptation to mediate on Kashmir enormously improved India’s diplomatic position.
    • But the most consequential change has been in the economic domain.
    • The persistent neglect of economic challenges left Pakistan in an increasingly weaker position in relation to India.
    • If India has inched its way into the top six global economies, Pakistan today is broke.
    • Modi had the opportunity to build on these shifting fortunes of Delhi and Islamabad and develop a three-pronged strategy of his own.
    • 1] India bet that the heavens won’t fall if Delhi stops talking to Islamabad or negotiating with Pakistan-backed militant groups in Kashmir.
    • 2] Delhi has been unafraid of staring at nuclear escalation in responding to Pakistan’s cross-border terrorism.
    • 3] By changing the constitutional status of Kashmir in 2019, India has reduced the scope of India’s future negotiations with Pakistan on Kashmir.

    Way forward

    • Pakistan’s hand today is much weaker than in the 1990s and Delhi’s room for manoeuvring has grown, notwithstanding the challenges it confronts on the China border.
    • That opens some room for new Indian initiatives toward Pakistan.
    • Getting Pakistan’s army and its political class to be more practical in engaging India is certainly a tall order; but Delhi can afford to make a move.

    Conclusion

    While there can be much disagreement on Pakistan’s capacity to respond, Delhi’s new initiatives can reinforce the positive evolution of Indian foreign policy, and expand the space for Indian diplomacy in the region and beyond.

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  • (Last 24 hrs left) Re-orient your UPSC Mains strategy: Free 1-1 Session with Sukanya ma’am (mentored 120+ rankers) | How our toppers did differently in 2021! | Get toppers’ GS copy via email | Limited Slots

    (Last 24 hrs left) Re-orient your UPSC Mains strategy: Free 1-1 Session with Sukanya ma’am (mentored 120+ rankers) | How our toppers did differently in 2021! | Get toppers’ GS copy via email | Limited Slots

    We will email you the best Mains answer writing practices as followed by toppers and their GS Mains copies via email

    UPSC Prelims 2022 is over & now it’s time to cross the higher bar. Knowing the unpredictability of this journey, many believe that only hard work can make them luckier. But shockingly, even after working with all their might, 90% of them remain very much clueless about their “strategy” being right or wrong. 

    What are the things our toppers have done different this year?

    Moreover, a quick strategy re-orientation is required for 2022 Mains aspirants as no time is left now.

    Sukanya ma’am will be analyzing and dissecting toppers’ answers for you to highlight what makes their answers different from an average aspirant.

    Webinar Details:

    Strategies & Approaches, in This Free Live Webinar by Sukanya Ma’am!

    1. How CD’s Mains programs guaranteed  200+ aspirants to enter in UPSC 2021 final merit list. & what are the things they have done different this year. Best, authentic, minimum materials for UPSC-CSE Mains Preparation. Do’s & Dont’s, How to remake ‘Recognition of information’ into ‘recall, analyze & express’.
    1. Whether your answers ought to reflect the editorial standards of The Hindu! What should be the foolproof strategy? What subject to pick up first to start your Mains Preparation!
    1. How toppers prioritize speed over content, and content over structure. How to fix your answer writing structure, improve the content
    2. How to create a basic conceptual framework of the answer before committing anything to paper. Implications of overstretching your imagination.
    3. How to fetch maximum score in both ‘Essay’ & ‘Ethics’ papers to enhance your marks in total.
    4. What is the difference between ‘Opinion-based’ & ‘Fact-based’ questions will also be discussed thoroughly in this webinar?
    5. How & where to present the answer, replete with a Map/diagram/flowchart/, It will help to get extra 0.25-0.5 marks across 80 questions of GS papers. If the question is in two parts, sticking to the word limit, how to address the demand of each part. What is the way to enclose also any critical analysis you should have within the subheading?
    6. How to enhance writing patterns, where to take mock regularly, how many mock tests are fit, Etc. will be discussed in this live webinar.
    7. The untold secret of coverage of the Mains syllabus is that the syllabus can be covered 100%. The most brilliant of candidates will testify that even their coverage of the syllabus was not completely 100%.

    About Sukanya Rana Ma’am:

    Our Civilsdaily Mains Program Head Mrs. Sukanya Rana has been mentoring 1500+ students & 100+ Rankers across multiple stages from prelims to mains to interviews. She is part of Smash Mains as an Ethics Mentor and helped Civilsdaily topper to achieve their dream.

    She has firsthand experience of 4 mains and 2 interviews of UPSC. She has also appeared in the State PCS interview.

    Sukanya Ma’am has scored consistently 100+ marks in ethics and in 2019 her marks were 140 in GS 4. In 2020 and 2021, under her mentorship, many smash mains students were able to secure 110+ marks.

  • Challenges in global growth recovery

    Context

    The global economy was well on its path to recovery until the invasion of Ukraine by Russia.

    Uncertainties in global growth prospects

    • Divergent economic recoveries: Economic prospects have worsened since the Ukraine crisis, worsening the divergence between the economic recoveries of advanced economies and those of the developing ones.
    • The prevailing uncertainties in global growth prospects come in the aftermath of frequent disruptions to worldwide supply chains in the last two years.
    • Against this background, two key macroeconomic variables have a persistent effect on growth rebound.
    • 1] Price pressure: There is tenacious price pressure, leading to policy trade-offs especially in developing economies.
    • 2] Capital outflow: There have been capital outflows and a tightening of financial conditions, affecting investment and growth in the medium and long term.

    1] Price pressure

    • Global concern: In some of the advanced economies, inflation has reached its highest level in the last 40 years.
    • The major contributors to high inflation are energy and food prices.
    • A spike in oil and gas prices due to a tight fossil fuel supply and geopolitical uncertainty have led to substantial increases in energy costs worldwide.
    • In developing economies, rising food prices have had cascading effects, culminating in higher overall inflation.
    • This gets intensified if poor weather hits harvests and rising oil prices drive up the cost of producing and transporting fertilizers.
    • In developing economies, higher prices for food impacts different sections of the population differently, depending on the types of food consumed and the share of food expenditure in a household’s consumption basket.
    • Persistent short supply and increases in food and fuel prices could significantly increase the risk of social unrest as the poorer sections are pushed to the edge of heightened deprivation.

    2] Capital outflow

    • Emerging markets suffered their first portfolio outflows in a year in March 2022.
    • The Institute of International Finance (IIF) says “foreign net portfolio outflows for emerging markets came to $9.8 billion in March.
    • Investors have become more selective, as higher risk sensitivity mounts due to tighter monetary conditions and rising inflation.
    • Reasons for capital outflow: Interest rates tightening in the United States is associated with capital flow reversals from emerging markets.
    • Impact on developing economies: For developing economies, the result of sudden large capital outflows is currency depreciation and tighter external sector conditions, leading to growth fluctuations.

    Way forward

    • Monitor the pass-through of international prices: Though the factors contributing to high inflation (global supply shocks) are beyond the control of central banks, they need to carefully monitor the pass-through of rising international prices to domestic inflation to calibrate their responses.
    • Calibrate the pace of policy tightening: The pace of policy tightening needs to be attuned to prevailing economic situations and activity levels.
    • Communicate the importance of inflation targeting: Central banks could also signal a readiness to shift the monetary stance to maintain the credibility of their inflation-targeting frameworks by clearly communicating the importance of inflation stabilisation in their objectives and backing it with policy actions.
    • Foreign exchange interventions: As sudden capital flow reversals can threaten financial stability, foreign exchange interventions could address market imbalances.
    • Fiscal consolidation: There exists an imperative to prune expenditure and get back to the road of fiscal consolidation.
    • However, a push for consolidation should not prevent governments from prioritising spending to protect and help vulnerable populations affected by price increases and the pandemic.
    • Income support policies: In the post-pandemic global economy, there will be a likely cross-sectoral labour reallocation.
    •  These transitions require labour market and income support policies that are designed to provide safety nets for workers without hindering employment growth.

    Conclusion

    The message from the current phase of global growth is clear. Policymakers in the developing economies have to prepare for tighter financial conditions and spillovers from geopolitical volatility.

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  • Mains Manthan 2022  with 1-to-1 mentorship | Replicating 80% Success Rate for Mains 2021 results | Starts in June-100 Seats only

    Mains Manthan 2022 with 1-to-1 mentorship | Replicating 80% Success Rate for Mains 2021 results | Starts in June-100 Seats only

    Guys! The fundamental contrast between UPSC-CSE Prelims and Mains is that while the Prelims focus on recognition (of information) and requires an exhaustive study covering a wide variety of topics, Mains need the ability to recall, analyze and express (ideas and information, including one’s own thoughts) properly which can only be done through an intensive study of the topic. Therefore it is very important to evaluate in-depth, shun procrastination answering writing, and developing a skill does not happen magically after you clear prelims. the topics that you have picked for Mains, and in doing so you have to match your skills with the subject at hand. Using the right approach and picking the right parts of the syllabus for the intensive study will not only help manage time but also garner more marks in the end.

    The FLT program with One to One mentorship will focus on how to deliver a rule of thumb to answer only what the question demands.  In 2021, 82% of students in our smash mains program were able to clear the mains examination.

    The Hindu has acknowledged CD’s Mains answer writing & Mentorship programs.

    MEP – FLT EDITION 2022 Program Inclusion:

    ..Students will also get 250+ most important topics for mains 2022

    • 12 Full-length tests: After the prelims, it is time to go full gear. Practice 3 rounds of FLT based on 4 GS paper.
    • Quality Enrichment Program Notes: QEP is an intensive and holistic program for IAS Mains 2022 GS papers. We aim to cover up to 250 most relevant issues with a 360-degree view, covering all dimensions of each and every topic. Not only you’ll learn and analyze these issues but will also understand how to utilize them via Daily Answer Writing and Mains Test Series.
    • Additional Materials: Important keywords from economic survey, data, case studies & quality enhancement additional materials for good practices.
    • Personalized discussion in 1-to-1 mentorship: You doubt why you are scoring less or how you can improve your score for the next paper. No worries! Just schedule a call with our mentor to clear all your doubts and queries.
    • Civilsdaily’s handholding: You will be provided membership to Mains 2023 club on Habitat. There you can put up your doubts and queries. Also can be used to interact with peers on strategies to improve your mains writing. You can also contact mentors like Sajal sir, Sukanya ma’am, Sudhanshu sir and Poornima Ma’am. They all have interview-level experience, so utilize their experience to your benefit.
    • Civilsdaily magazine: Your current affairs will be covered with access to our 1-year subscription.

    MAINS GUIDANCE PLUS 2022 Program Inclusion:

    • Sectional Tests: 8 sectional tests to cover your static portions in detail. The scope will be spread over your core subjects like history, economics, polity, etc.
    • Full-length tests: 12 FLTs to help you practice for the final main examination. These FLTs are patterned on the UPSC Examination and have medium-to-high-quality questions. They will surely boost your preparation and test your analytical skills.
    • One-on-One Mentorship: After every test, a call with a mentor will be arranged and you can clear your doubts on the paper. This is important as, with your mentor, you can discuss your weaknesses and strategize for the next paper.
    • A Quality Enrichment Program Notes: QEP is an intensive and holistic program for IAS Mains 2022 GS papers. We aim to cover up to 250 of the most relevant issues with a 360-degree view, covering all dimensions of each and every topic. Not only will you learn and analyze these issues, but you will also understand how to utilize them via Daily Answer Writing and the Mains Test Series.
    • Civilsdaily’s handholding: You will be provided membership to Mains 2023 club on Habitat. There you can put up your doubts and queries. Also can be used to interact with peers on strategies to improve your mains writing. You can also contact mentors like Sajal sir, Sukanya ma’am, Sudhanshu sir and Poornima Ma’am. They all have interview-level experience, so utilize their experience to your benefit.
    • Civilsdaily magazine: Your current affairs will be covered with access to our 1-year subscription.

    Quality standards of questions in our test series

    Check our reviews at Quora

    https://www.quora.com/What-is-your-review-of-the-Civilsdaily-Mains-test-series-How-are-the-personalised-guidance-and-the-evaluation-of-copies/

    UPSC-CSE 2021 Rankers are saying…
    Mantri Mourya Bharadwaj AIR 28 UPSC CSE 2021 Hall of Fame
    Mantri Mourya Bharadwaj AIR 28
    Rohan Kadam AIR 295 UPSC CSE 2021 Hall Of Fame
    Soham Mandre AIR 267 UPSC CSE 2021 Hall Of Fame

    Our Philosophy behind FLT- 2022

    1. Question Formulation

    It happens under a team of experienced Civilsdaily faculty. Questions framed are from the most important UPSC relevant themes and papers are based on the latest pattern of UPSC.

    Our questions specifically state:

    • Whether they are straightforward or thought-provoking/analytical.
    • Whether they have sub-parts.
    • Why this question – similar to previous year’s questions, the importance of the theme, etc.

    CD Innovation – Red-green highlight – to let you know about the necessary and innovative points.

    2. One-to-One Discussion

    We believe in personalized individual attention. This is the biggest reason why you should join our TS. Students can schedule a call within 2 days of receiving their checked copies.

    A one-to-one discussion with your Mentor will not only highlight your weaknesses but will also help in tracking your improvements over the subsequent tests. It will also ensure consistency, continuity, and progressive improvement.

    3. Answer Checking

    Our evaluation focuses on multiple dimensions and parameters like structure, flow, presentation, contextuality, relevance to question, analytical excellence, and cross-domain inter-linkages than simply on superficial, memory-based lapses.

    4. Model Answers

    More than just simply providing information, our model answers cover all the aspects of a question and provide enriching points to the student. They also include:

    • For ‘thought-provoking/analytical’ type of questions, we’ll provide the best way to approach them.
    • Alternate introductions
    • Sub-headings and categorization to enhance readability and answer structure.
    • Colour coding for main arguments, reports, data, scholars, etc.
      OTB – Out of the box points for additional marks

    5. Civilsdaily’s Handholding

    You’ll be assigned to a special group on Civilsdaily’s Habitat, there you can interact with different mentors like Partha Sir, Sukanya ma’am, Ajay Sir, Swatantra sir, and others.

    6. Value-added material

    Current affairs magazines – Civilsdaily’s Magazines are the best in terms of comprehensive coverage, superb design, and high readability.

    Listicles and other relevant study material – Supplementary content provided will be helpful in covering multiple related questions.

    About Mentor & 3 Others:

    Sukanya Rana:

    Our Civilsdaily Mains Program Head Sukanya Rana has been mentoring 1500+ students & 100+ Rankers across multiple stages from prelims to mains to interviews. She is part of Smash Mains as an Ethics Mentor and helped Civilsdaily topper to achieve their dream. She has firsthand experience of 4 mains and 2 interviews of UPSC. She has also appeared in the State PCS interview. She aims to guide future aspirants in finding success. Sukanya Ma’am has scored consistently 100+ marks in ethics and in 2019 her marks were 140 in GS 4. In 2020, under her mentorship, many smash mains students were able to secure 110+ marks.

    👉 Acknowledging the need to ensure fastest mentorship response, Senior IAS mentor like Partha Sir, Swatantra Sir, will receive your call.

    The Hindu has acknowledged CD’s 80% success rate.

    👉

  • Implications of GST Council ruling

    Context

    The Supreme Court of India recently ruled that “The recommendations of the GST Council are not binding on either the Union or the States…”.

    About GST Council

    • The GST Council is a federal body that aims to bring together states and the Centre on a common platform for the nationwide rollout of the indirect tax reform.
    • Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of the Article 279A.
    • According to the article, the GST Council will be a joint forum for the Centre and the States. It consists of the following members:
    • 1] The Union Finance Minister will be the Chairperson.
    • 2] As a member, the Union Minister of State will be in charge of Revenue of Finance.
    • 3] The Minister in charge of finance or taxation or any other Minister nominated by each State government, as members.
    • The Council has to function as a platform to bring the Union and State governments together.
    • As a mark of cooperative federalism, the Council shall, unanimously or through a majority of 75% of weighted votes, decide on all matters pertaining to GST and recommend such decisions to the Union and State governments.
    • Article 279A (4) specifies that the Council will make recommendations to the Union and the States on the important issues related to GST, such as the goods and services will be subject or exempted from the Goods and Services Tax.
    • Article 246A confers simultaneous or concurrent powers on Parliament and the state legislatures to make laws relating to GST.
    • This article is in sharp contrast to the constitutional scheme that prevailed till 2017.

    Background of the case

    • In Union of India Anr. vs Mohit Minerals Pvt. Ltd., the Supreme Court of India on May 19, 2022 ruled on a petition relating to the levy of Integrated Goods and Services Tax (IGST) on ocean freight paid by the foreign seller to a foreign shipping company.
    • Mohit Minerals had filed a writ petition before the Gujarat High Court challenging notifications levying IGST on the ground that customs duty is levied on the component of ocean freight and the levy of IGST on the freight element in the course of transportation would amount to double taxation.
    • GST is paid by the supplier, but if the shipping line is located in a non-taxable territory, then GST is payable by the importer, the recipient of service.
    • Ocean freight is a method of transport by which goods and cargo is transported by ships through shipping lines.

    Important aspects of the judgement

    • Power to legislate simultaneously: Article 246A gives powers to the Union and State governments simultaneously to legislate on the GST.
    • In other words, the two tiers of the Indian Union can simultaneously legislate on matters of the GST (except the IGST, which is in the legislative domain of the Union government).
    • In this case, the Government of India had argued that “Neither can Article 279A override Article 246A nor can Article 246A be made subject to Article 279A.”
    • However, cooperative federalism is to operate through the GST Council to bring in harmony and alignment in matters pertaining to the GST from both governments.
    • Given this background, the Union government had almost delegated the powers to create laws under the GST Act Section 5(1) to the GST Council.
    • Persuasive value only: The Supreme Court of India adjudicated that the GST Council’s recommendations are non-qualified and the simultaneous legislating powers of the Union and State governments give only persuasive value to the Council’s recommendations.
    • The power of the recommendations rests on the practice of cooperative federalism and collaborative decision-making in the Council.

    Issues with voting rights in GST council

    • Inbalance in voting rights: The Union government holds one-third weight for its votes and all States have two-thirds of the weight for their votes.
    • This gives automatic veto power to the Union government because a resolution can be passed with at least three-fourths of the weighted votes.
    • This imbalance in the voting rights between the Union and State governments, makes democratic decision-making difficult.
    • Equal weight to all states creates political problems: Though all the States are not equal in terms of tax capacity, everyone has equal weight for their votes.
    • This creates another political problem as the smaller States with lesser economic stakes can be easily influenced by interest groups.
    • Debate on political lines: The debates in the GST Council will be on political lines rather than on the economics of taxation.
    •  When the States governed by Opposition parties are vocal on counter-points, the States governed by the same party at the Union government are mute spectators.

    Way forward

    • Work in a harmonised manner: The Supreme Court has recorded, “Since the Constitution does not envisage a repugnance provision to resolve inconsistencies between the Central and State laws on GST, the GST Council must ideally function, as provided by Article 279A(6) in a harmonised manner to reach a workable fiscal model through cooperation and collaboration.”
    • Cooperative federalism: The nuanced understanding of cooperative federalism shows that there is no space for one-upmanship in either of the two tiers of the Indian federal government and particularly for the Union government under a quasi-federal Constitution.

    Conclusion

    Given the lopsided power structure favouring the Union government in the GST Council, it is against the spirit of democracy and federalism that the finances of governments can be left to such bodies.

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  • [Burning Issue] India’s Afghan Outreach and Taliban

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

    Context

    • For the first time since the Taliban takeover on 15 August 2021, India has sent an official delegation to Afghanistan.
    • India discussed a host of issues that included resumption of stalled infrastructure projects, activation of diplomatic ties, and restarting the issue of visas for Afghan students and patients.

    Points of Discussion

    1. Has India officially recognized the Talibans?
    2. Tashkent held recently meet excluded Pakistan. Is Pakistan out of the Afghan security scenario?

    Highlights of the discussion

    • With this, it appears that the Indian is now less divided about the need to engage formally with the Taliban and prevent Afghan people getting marginalised.
    • Afghanistan is vital to India’s strategic interests in the region where the people’s (and even Taliban’s) affection for India is legendary.

    Expected outcomes of the meet

    • Recognition of the Taliban government is not on the cards yet.
    • The visit may have paved the way for the reopening of the Indian embassy, albeit a downgraded one.

    India and Taliban: A quick timeline of engagement

    • Initial reluctance: From 1996 to now, India’s journey from first opposition, then diffidence to engaging with the Taliban is in no small measure a story of India’s problematic relationship with Pakistan.
    • Beginning of Kashmir Insurgency: In 1996, when the Taliban fought their way through warring mujahideen factions into Kabul for the first time, in India, fearing a spillover on Kashmir insurgency (there was indeed some).
    • 1999 hijacking: During the hijacking of IC814, when the Pakistani hijackers took the plane to Kandahar, the then ruling Taliban acted as a support arm of the hijackers.

    Since then, any engagement was a standstill.

    When did India reach out to the Talibans?

    • 9-11 terror attacks: After 9/11, under the US umbrella, India invested money and energy into the rebuilding of Afghanistan.
    • But by 2010, with increasing doubts about the US continuance, India was again considering reaching out to the Taliban.
    • New Delhi did not want to be left out or marginalised in the Afghanistan of the future.
    • After the execution of Osama bin Laden in Pakistan in 2011, the Obama Administration was getting ready to declare an end to the war.

    Since then, the way was paved for the talks.

    How did its neighbors capitalize on the Afghan Crisis?

    • Pakistan had delivered the Taliban to the Trump Administration for talks.
    • Russia was backing the Taliban fully as the future ruler of Afghanistan, seeing in this sweet revenge for its own defeat in Afghanistan by US-financed, Pakistan-trained mujahideen.
    • Iran was also glad at America’s defeat at the hands of the Taliban.
    • China leveraged its relationship with Pakistan to get a foot into Kabul.

    India’s considerations: Counter-intuitive timing

    • Radicalism: India’s cautious opening to the Taliban has come at a time when the group has made it clear it has not changed from its previous satanical radicalism.
    • Restrictions on women: This has increased, from not being allowed to attend school to curbs on free movement in public spaces and at work.
    • Patronage to terror outfits: Taliban continues to remain close to Al-Qaeda, with a significant presence of its multinational fighting force in Afghanistan.
    • Threats in Kashmir: They also flag the JeM and LeT training camps in Nangarhar and Kumar, close to the Pakistan border.

    Why is India engaging with the Taliban now?

    https://thedailyguardian.com/wp-content/uploads/2022/02/22wheat-af.jpg
    • Reducing Pakistan’s footprint: It is time to de-hyphenate Pakistan from the Taliban, especially as the Pakistan security establishment is finding the going tough with the Kabul regime.
    • Inducing political insight: Another reason advanced for India’s change in policy is that the Taliban in power are more divided than they were as a fighting force.
    • Averting another crisis: This situation may provide room for a layered political and diplomatic engagement with different actors.
    • Eliminating terrorism: It has also helped that the Taliban have made no hostile statements on Kashmir since taking over in Kabul.
    • Afghanistan impacts India’s security: It has, in the past, provided space to al Qaeda with which the Taliban had a special relationship. Afghanistan has an ISIS presence too.
    • Humanitarian assistance: India aims at facilitating humanitarian assistance through international organizations, and paving the way for access to consular services.
    • Protecting its investment: India built vital roads, dams, electricity transmission lines and substations, schools and hospitals, etc. Total assistance is now estimated to be worth well over $3 billion.

    Way forward

    • An engagement with the Taliban would at least give an opportunity to convey Indian concerns directly.
    • The visit has encouraged those elements within the group who wish to open up its diplomatic choices.
    • All in all, the sooner India establishes a permanent presence in Kabul the better for the pursuit of national interests in the external sphere.
    • This is not an exercise in evangelism but the cold and undeterred pursuit of interests, which often requires supping with the devil — of course, with a long spoon.

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  • Understanding SEBI Rules on Passive Funds

    The Securities and Exchange Board of India (SEBI) recently issued a circular on passive funds covering matters related to transparency, liquidity and operational aspects of exchange-traded funds (ETFs) and index funds.

    What are Passive Funds?

    • A passive fund is an investment vehicle that tracks a market index, or a specific market segment, to determine what to invest in.
    • Unlike with an active fund, the fund manager does not decide what securities the fund takes on.
    • This normally makes passive funds cheaper to invest in than active funds, which require the fund manager to spend time researching and analysing opportunities to invest in.
    • Tracker funds, such as ETFs (exchange traded funds) and index funds fall under the banner of passive funds.

    What is a passive ELSS scheme?

    • Passive funds mimic an underlying index. By contrast active funds are actively managed by fund managers.
    • The SEBI has now introduced a passive equity-linked saving schemes (ELSS) category, which will give taxpayers another investment option to avail of tax benefits.
    • According to the circular, the passive ELSS scheme will be based on any index comprising equity shares from the top 250 companies in terms of market capitalization.
    • Beginning 1 July, a fund house will be able to either have an active ELSS scheme or a passive ELSS scheme, but not both.

    What are the norms for debt ETFs?

    • Passive debt funds are now divided into three categories:
    1. Corporate debt funds with exposure to corporate bonds
    2. G-Sec funds investing in government securities, and
    3. Hybrid funds where allocation is a combination of corporate bonds and government securities
    • Currently, debt funds in the passive category invest only in AAA-rated instruments.
    • The Sebi circular introduces norms for each debt fund category, including portfolio exposure limits to each sector, the issuer (based on rating) and group.
    • Application of these provisions should help mitigate concentration risk in debt ETFs/ index funds.

    What about tracking error?

    • As per Sebi’s circular, passive funds must disclose ‘tracking error’ and ‘tracking difference’ in their monthly fact sheets.
    • These metrics indicate how different the performance of the fund is compared to its underlying index—an effort to keep investors better informed.
    • The circular specifies limits for tracking error and tracking difference, which passive funds must follow.

    What is the mandate on disclosing NAVs?

    • Because of poor liquidity for ETFs in the secondary market in India, ETF prices could differ widely from the net asset value (NAV) of the fund.
    • The NAV of the fund represents the value of the underlying asset of the ETF.
    • The Sebi circular mandates disclosure of NAV (indicative) on a continuous basis throughout the day on the stock exchange.
    • While the practice is already in existence, Sebi rules institutionalize it.
    • Checking the NAV can help one avoid making a transaction at a significant premium or discount.

    Can one execute ETF transactions directly?

    • Investors can buy or sell units of ETFs only on stock exchanges.
    • But, large buy or sell transactions can also be directly placed with the fund house.
    • Sebi now says orders greater than ₹25 crore alone can be placed for redemption or subscription directly with the asset management company (AMC).

     

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  • What is a Not-for-Profit Company?

    The Enforcement Directorate (ED) has summoned Rahul Gandhi and Sonia Gandhi following a trial court order in a tax assessment case of his not-for-profit company.

    What is the case?

    • A case alleged cheating and misappropriation of funds on part of the leaders in acquiring the newspaper.
    • The alleged persons acquired it through a Section 25 company — in which they have 86% stake.

    What is a Section 25 company?

    • It is defined under the Companies Act, 1956.
    • It is a not-for-profit charitable company.
    • It is formed with the sole object of promoting commerce, art, science, religion, charity, or any other useful object.
    • It intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members
    • Section 8 of the Companies Act, 2013 includes other objects such as sports, education, research, social welfare and protection of the environment among others.

    Fiscal activities allowed

    • While it could be a public or a private company, a Section 25 company is prohibited from payment of any dividend to its members.
    • Section 25 states that by its constitution the company is required/ intends to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members.

    What are prominent examples of such companies?

    • According to details available with the Ministry of Corporate Affairs, a large number of companies have been formed under the Section.
    • Among these are Reliance Foundation, Reliance Research Institute, Azim Premji Foundation, Coca Cola India Foundation, and Amazon Academic Foundation.

    Why are such companies formed?

    • Most people looking to form a charitable entity go for forming a company under Section 25, now Section 8, rather than a Trust structure.
    • This is because most foreign donors like to contribute to a company rather than Trust because they are more transparent and provide more disclosures.
    • If a company has to be converted into a not-for-profit company, they can’t be converted into a Trust, however, they can be converted into a Section 25/ Section 8 company.

     

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  • How are Rajya Sabha MPs elected?

    Ahead of Rajya Sabha elections in four states, various parties have accommodated legislators from at least three states in resorts, away from potential poaching by rival parties.

    Do you know?

    • Only two UTs elect members to the Rajya Sabha, not all.
    • Polling is held only if the number of candidates exceeds the number of vacancies.
    • Independent members can also be elected etc.

    Read this newscard for all such interesting facts which can be directly asked in the prelims.

    Rajya Sabha Polls

    • A third of MPs in the Rajya Sabha (which is a permanent House and is not subject to dissolution), from each State, retire once in two years and polls are held to fill up the vacancies.
    • Only elected members of the State Legislative Assemblies can vote in a Rajya Sabha election.
    • The legislators send a batch of new members to the Upper House every two years for a six-year term.
    • In addition, vacancies that arise due to resignation, death or disqualification are filled up through by-polls after which those elected serve out the remainder of their predecessors’ term.

    Composition of Rajya Sabha

    • A bloc of MPs belonging to one or more parties can elect a member of their choice if they have the requisite numbers.
    • This is to avoid the principle of majority, which would mean that only candidates put up by ruling parties in the respective States will be elected.
    • The Delhi and Puducherry Assemblies elect members to the Rajya Sabha to represent the two UTs.

    What is the election process?

    • Polling for a Rajya Sabha election will be held only if the number of candidates exceeds the number of vacancies.
    • Since the strength of each party in the Assembly is known, it is not difficult to estimate the number of seats a party would win in the Rajya Sabha poll.
    • In many states, parties avoid a contest by fielding candidates only in respect to their strength. Where an extra candidate enters the fray, voting becomes necessary.
    • Candidates fielded by political parties have to be proposed by at least 10 members of the Assembly or 10% of the party’s strength in the House, whichever is less.
    • For independents, there should be 10 proposers, all of whom should be members of the Assembly.

    Voting procedure

    • Voting is by single transferable vote, as the election is held on the principle of proportional representation.
    • A single transferable vote means electors can vote for any number of candidates in order of their preference.
    • A candidate requires a specified number of first preference votes to win. Each first choice vote has a value of 100 in the first round.
    • To qualify, a candidate needs one point more than the quotient obtained by dividing the total value of the number of seats for which elections are taking place plus one.

    Example: If there are four seats and 180 MLAs voting, the qualifying number will be 180/5= 36 votes or value of 3,600.

    Why do not the Rajya Sabha polls have a secret ballot?

    • The Rajya Sabha polls have a system of the open ballot, but it is a limited form of openness.
    • As a measure to check rampant cross-voting, which was taken to mean that the vote had been purchased by corrupt means.
    • There is a system of each party MLA showing his or her marked ballots to the party’s authorised agent (called Whip), before they are put into the ballot box.
    • Showing a marked ballot to anyone other than one’s own party’s authorised agent will render the vote invalid.
    • Not showing the ballot to the authorised agent will also mean that the vote cannot be counted.
    • And independent candidates are barred from showing their ballots to anyone.

    Is there any NOTA option in voting?

    • The ECI issued two circulars, on January 24, 2014, and November 12, 2015, giving Rajya Sabha members the option to press the NOTA button in the Upper House polls.
    • However, in 2018, the Supreme Court struck down the provision, holding that the ‘none of the above’ option is only for general elections.
    • It cannot be applied to indirect elections based on proportional representation.

    Does cross-voting attract disqualification?

    • The Supreme Court, while declining to interfere with the open ballot system, ruled that not voting for the party candidate will not attract disqualification under the anti-defection law.
    • As voters, MLAs retain their freedom to vote for a candidate of their choice.
    • However, the Court observed that since the party would know who voted against its own candidate, it is free to take disciplinary action against the legislator concerned.

    Can a legislator vote without taking oath as a member of the Assembly?

    • While taking oath as a member is for anyone to function as a legislator, the Supreme Court has ruled that a member can vote in a Rajya Sabha election even before taking oath as a legislator.
    • It ruled that voting at the Rajya Sabha polls, being a non-legislative activity, can be performed without taking the oath.
    • A person becomes a member as soon as the list of elected members is notified by the ECI, it said.
    • Further, a member can also propose a candidate before taking the oath.

    Try this PYQ:

    Q. Consider the following statements:

    1. The Rajya Sabha has no power either to reject or to amend a Money Bill.
    2. The Rajya Sabha cannot vote on the Demands for Grants.
    3. The Rajya Sabha cannot discuss the Annual Financial Statement.

    Which of the statements given above is/are correct?

    (a) Only 1

    (c) 2 and 3 only

    (b) 1 and 2 only

    (d) 1, 2 and 3

     

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    Also read

    [Sansad TV] Perspective – Rajya Sabha: The Upper House

     

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