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  • Initial Public Offer (IPO) of LIC

    The government has started the process to launch the initial public offer (IPO) of Life Insurance Corporation (LIC) within this year.

    Read the complete thread here at:

    [Burning Issue] Divestment of LIC

    Try this question from CSP 2019:

    Q.In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below:

    (a) 1 and 2

    (b) 1, 3 and 4

    (c) 3, 4 and 5

    (d) 2 and 5

    About LIC

    • LIC is an state-owned insurance group and investment corporation owned by the Government of India.
    • It was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India.
    • Over 245 insurance companies and provident societies were merged to create the state-owned LIC.

    Why LIC IPO?

    • LIC is the largest investor in government securities and stock markets every year.
    • On an average, LIC invests Rs 55,000 crore to Rs 65,000 crore in stock markets every year and emerges as the largest investor in Indian stocks.
    • LIC also has huge investments in debentures and bonds besides providing funding for many infrastructure projects according to its Annual Report for 2017-18.

    Biggest IPO in Indian markets

    • The finance ministry has invited bids from transaction advisors, including consulting firms, investment bankers, and financial institutions, for assisting the government in the preparatory processes leading to the IPO.
    • The IPO is expected to be the biggest in the Indian capital markets given the size and scale of LIC, the country’s oldest and largest life insurer.

    What is the size and position of LIC in the insurance market?

    • Even if the government decides to sell 5-10 per cent of its equity in LIC through an IPO, the share sale of LIC, which was set up in 1956, is expected to be the largest.
    • The insurer’s total assets had touched an all-time high of Rs 31.11 lakh crore in 2018-19, an increase of 9.4 per cent.
    • The Corporation realized a profit of Rs 23,621 crore from its equity investment during 2018-19, down 7.89 per cent from Rs 25,646 crore in the previous year.
    • LIC would have at least one transaction of IPO of a size of at least Rs 5,000 crore, or a capital market transaction of at least Rs 15,000 crore.

    How does LIC fit into the overall disinvestment roadmap?

    • In the Budget 2020-21, the finance ministry had announced plans for IPO of LIC and a proposal to sell the government’s equity in the stressed IDBI Bank.
    • The government expects to raise Rs 90,000 crore through stake sale in LIC and IDBI Bank, and another Rs 1.2 lakh crore through other disinvestments.
    • LIC is also a majority shareholder in IDBI Bank.
    • The government had earlier listed the shares of General Insurance Corporation and New India Assurance through IPOs three years ago.

    What benefits can be expected through the IPO?

    • An IPO will certainly bring in transparency into affairs of LIC since it will be required to inform financial numbers and other market-related developments on time to the stock exchanges.
    • Investors can benefit from picking up equity in the insurer, which has been making underwriting profit as well as profits on its investments.
    • LIC’s investment in various equity and bond instruments will come under greater scrutiny after its lists on the exchanges.

    Back2Basics: IPO

    • IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public for the first time.
    • Offering an IPO is a money-making exercise. Every company needs money, it may be to expand, to improve their business, to better the infrastructure, to repay loans, etc.
    • A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares.
    • Through the IPO, the company gets its name listed on the stock exchange.

    Also read:

    Disinvestment Policy in India.

  • UN Arms Trade Treaty (ATT)

    China will join a global pact to regulate arms sales that has been rejected by the United States.

    The New START, INF, Open Skies and now the ATT …. Be clear about the differences of these treaties. For example- to check if their inception was during cold war era etc.

    What is the Arms Trade Treaty?

    • The Arms Trade Treaty is a multilateral treaty that regulates the international trade in conventional weapons. It entered into force on 4th December 2014.
    • The ATT is an attempt to regulate the international trade of conventional weapons for the purpose of contributing to international and regional peace; reducing human suffering; and promoting co-operation, transparency, and responsible action by and among states.
    • 105 states have ratified the treaty, and a further 32 states have signed but not ratified it.
    • India has abstained from voting for this Treaty

    Highlights of the treaty

    ATT requires member countries to keep records of international transfers of weapons and to prohibit cross-border shipments that could be used in human rights violations or attacks on civilians. The treaty would ensure that no transfer is permitted if there is a substantial risk that it is likely to:

    • be used in serious violations of international human rights or humanitarian law, or acts of genocide or crimes against humanity;
    • facilitate terrorist attacks, a pattern of gender-based violence, violent crime, or organized crime;
    • violate UN Charter obligations, including UN arms embargoes;
    • be diverted from its stated recipient;
    • adversely affect regional security; or
    • seriously impair poverty reduction or socioeconomic development.

    China’s agenda at ATT

    • Beijing saying it is committed to efforts to “enhance peace and stability” in the world.
    • It comes after the US announced plans last year to pull the United States out of the agreement which entered into force in 2014.
    • The US Senate never ratified the 2013 Arms Trade Treaty after former president Barack Obama endorsed it, and Trump has said he would revoke his predecessor’s signature.

    Why has India abstained?

    • From the beginning of the ATT process, India has maintained that such a treaty should make a real impact on illicit trafficking in conventional arms and their illicit use especially by terrorists and other unauthorized and unlawful non-state actors.
    • India has also stressed consistently that the ATT should ensure a balance of obligations between exporting and importing states.
    • However, the ATT is weak on terrorism and non-state actors (undoubtedly Pakistan) and these concerns find no mention in the specific prohibitions of the Treaty.
    • Further, India cannot accept that the Treaty is used as an instrument in the hands of exporting states to take unilateral force majeure measures against importing states parties without consequences.

    Also read:

    U.S. set to exit the ‘Open Skies Treaty’ Copy

  • ‘Decarbonizing Transport in India (DTI)’ Project

    http://www.newsonair.com/writereaddata/News_Pictures/NAT/2020/Jun/NPIC-2020622172010.jpg

    NITI Aayog in collaboration with International Transport Forum (ITF) is set to launch the “Decarbonising Transport in India” project with the intention to develop a pathway towards a low-carbon transport system for India.

    Note the following things about ‘Decarbonising Transport in India (DTI)’ Project:

    1. Associated international institution

    2. Whether the institution is a UN body or not

    3. If India is a member of that body

    The DTI Project

    • The India project is carried out in the wider context of the International Transport Forum’s “Decarbonising Transport” initiative.
    • It is part of the “Decarbonising Transport in Emerging Economies” (DTEE) family of projects, which supports transport decarbonisation across different world regions.
    • India, Argentina, Azerbaijan, and Morocco are current participants.
    • The DTEE is a collaboration between the ITF and the Wuppertal Institute, supported by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment.

    Objectives of the project

    • The project will design a tailor-made transport emissions assessment framework for India.
    • It will provide the government with a detailed understanding of current and future transport activity and the related CO2 emissions as a basis for their decision-making.

    About International Transport Forum (ITF)

    • The ITF is an inter-governmental organisation within the OECD (Organisation for Economic Co-operation and Development) system.
    • It is the only global body with a mandate for all modes of transport.
    • It acts as a think tank for transport policy issues and organises the annual global summit of transport ministers.
    • The ITF’s motto is “Global dialogue for better transport”.
    • India has been a member of ITF since 2008.

    Back2Basics: OCED

    • The OECD is an international, intergovernmental economic organization of 36 countries.
    • OECD was founded in the year 1961 to stimulate world trade and economic progress.
    • OECD originated in 1948, as the Organisation for European Economic Co-operation (OEEC).
    • The Organisation for European Economic Co-operation (OEEC) was founded to govern the predominantly US-funded Marshall Plan for post-war reconstruction on the continent.
    • The OEEC was instrumental in helping the European Economic Community (EEC). The EEC has evolved into the European Union (EU) to establish a European Free Trade Area.
    • India is NOT a member of OECD.

  • What is Foldscope?

    Indian researchers have explored and validated the clinical utility of Foldscope in the diagnosis of diseases using various patient samples.

    Though trivial, Foldscope is a significant invention with most crucial applications. It somehow offers an alternative to costly microscopes for some basic diagnosis.

    What is Foldscope?

    • Foldscope is an affordable origami-based microscopy device composed of a series of paper clippings.
    • Upon assembly, the device can hold a specimen slide for observation, and this specimen can be viewed via a mobile phone camera attached to it.

    How does it work?

    • Foldscope can be assembled using paper clips and mounted on a cell phone using coupler and glue drops.
    • To do the assessment, a patient sample like urine is smeared on a transparent glass slide and visualized under a Foldscope mounted on a cell phone.
    • Sample images can be enlarged using the zoom function of the mobile, which can be stored on the mobile memory card for later reference/patient records.
    • Foldscope visualizes calcium oxalate crystals, which are a major cause of kidney stones.

    Utility of Foldscope

    • Foldscope is particularly convenient to diagnose urinary tract infection (UTI) and monitor kidney stone.
    • The study evaluated the use of Foldscope in the clinical diagnosis of oral and urinary tract infections.
    • Using this tool, one can easily monitor own-kidney stone status at home with a simple glass-slide, a Foldscope and a phone in hand.
    • Such monitoring could perhaps avoid kidney stone reaching a painful state or surgery in recurring cases.
  • [Burning Issues] Eclipses This Year

    [Burning Issues] Eclipses This Year

     

    On June 21, 2020 India witnessed an Annular solar eclipse. Solar Eclipses have caused fear, inspired curiosity, and have been associated with myths, legends, and superstitions throughout history. Take for example myth 101: Don’t eat food. Why? Let’s leave the myths and superstitions behind and discuss the science behind eclipses.

     

    In the clouds of this pandemic, we are witnessing some spectacular celestial dances this year. Beginning with the Super Pink Moon and Lunar Eclipse this year, we recently witnessed the breathtaking ‘Ring of Fire’ Solar Eclipse.

    What are Eclipses?

    An eclipse takes place when one heavenly body such as a moon or planet moves into the shadow of another heavenly body.

    There are two types of eclipses on Earth: an eclipse of the Moon and an eclipse of the Sun.

    [I] A Lunar Eclipse

    • The moon moves in an orbit around Earth, and at the same time, Earth orbits the sun. Sometimes Earth moves between the sun and the moon.
    • When this happens, Earth blocks the sunlight that normally is reflected by the moon. (This sunlight is what causes the moon to shine.)
    • Instead of light hitting the moon’s surface, Earth’s shadow falls on it. This is an eclipse of the moon — a lunar eclipse.
    • A lunar eclipse can occur only when the moon is full. (But not every full moon is also a lunar eclipse. Can you guess why?)

    Observing a Lunar Eclipse

    • A lunar eclipse can be seen from Earth at night.
    • A lunar eclipse usually lasts for a few hours.
    • At least two partial lunar eclipses happen every year, but total lunar eclipses are rare.

    There are two types of lunar eclipses: total lunar eclipses and partial lunar eclipses.

    A total lunar eclipse occurs when the moon and the sun are on exact opposite sides of Earth. Although the moon is in Earth’s shadow, some sunlight reaches the moon.  The sunlight passes through Earth’s atmosphere, which causes Earth’s atmosphere to filter out most of the blue light. This makes the moon appear red to people on Earth.

    A partial lunar eclipse happens when only a part of the moon enters Earth’s shadow. In a partial eclipse, Earth’s shadow appears very dark on the side of the moon facing Earth. What people see from Earth during a partial lunar eclipse depends on how the sun, Earth and moon are lined up.

    In a penumbral lunar eclipse, only the more diffuse outer shadow of Earth – the penumbra – falls on the moon’s face. This third kind of lunar eclipse is much more subtle, and much more difficult to observe than either a total or partial eclipse of the moon.

    [II] A Solar Eclipse

    • Sometimes when the moon orbits Earth, it moves between the sun and Earth.
    • When this happens, the moon blocks the light of the sun from reaching Earth.
    • This causes an eclipse of the sun or solar eclipse.
    • During a solar eclipse, the moon casts a shadow onto Earth.

    There are three types of solar eclipses.

    The first is a Total Solar Eclipse

    A total solar eclipse is only visible from a small area on Earth. The people who see the total eclipse are in the centre of the moon’s shadow when it hits Earth. The sky becomes very dark as if it were night. For a total eclipse to take place, the sun, moon and Earth must be in a direct line.

    The second type is a Partial Solar Eclipse

    This happens when the sun, moon and Earth are not exactly lined up. The sun appears to have a dark shadow on only a small part of its surface.

    The third type is an Annular Solar Eclipse

    An annular eclipse happens when the moon is farthest from Earth. Because the moon is farther away from Earth, it seems smaller. It does not block the entire view of the sun. The moon in front of the sun looks like a dark disk on top of a larger sun-coloured disk. This creates what looks like a ring around the moon.

    During a solar eclipse, the moon casts two shadows on Earth. The first shadow is called the Umbra. This shadow gets smaller as it reaches Earth. It is the dark centre of the moon’s shadow.

    The second shadow is called the Penumbra. The penumbra gets larger as it reaches Earth. People standing in the penumbra will see a partial eclipse. People standing in the umbra will see a total eclipse.

    Observing a Solar Eclipse

    • Solar eclipses happen once every 18 months.
    • Unlike lunar eclipses, solar eclipses only last for a few minutes.

    Why don’t solar eclipses happen at every New Moon?

    To Go With 4

    The reason is that the Moon’s orbit tilts 5° to Earth’s orbit around the Sun. Astronomers call the two intersections of these paths nodes. Eclipses only occur when the Sun lies at one node and the Moon is at its New (for solar eclipses) or Full (for lunar eclipses) phase. During most (lunar) months, the Sun lies either above or below one of the nodes, and no eclipse happens.

    [III] Planet Transits

    When a planet comes between Earth and the Sun, it is called a transit. The only 2 planets that can be seen transiting the Sun from Earth are Venus and Mercury because they are the only planets that orbit inside Earth’s orbit.

    From 2000–2199, there will be 14 transits of Mercury. However, Venus transits are even rarer with only 2 this century, in 2004 and 2012.

     

    Before we end our article on eclipses, we leave you with some previous years’ questions to try:

     

    Q. 1) On 21st June, the Sun: (CSP 2019)

    (a) Does not set below the horizon at the Arctic Circle

    (b) Does not set below the horizon at Antarctic Circle

    (c) Shines vertically overhead at noon on theEquator

    (d) Shines vertically overhead at the Tropic of Capricorn

     

    Q.2) Variations in the length of daytime and night time from season to season are due to: (CSP 2013)

    (a) The earth’s rotation on its axis

    (b) The earth’s revolution around the sun in an elliptical manner

    (c) Latitudinal position of the place

    (d) Revolution of the earth on a tilted axis

     

    Q.3) Consider the following:

    1. Electromagnetic radiation
    2. Geothermal energy
    3. Gravitational force
    4. Plate movements
    5. Rotation of the earth
    6. Revolution of the earth

    Which of the above are responsible for bringing dynamic changes on the surface of the earth? (CSP 2016)

    (a) 1, 2, 3 and 4 only

    (b) 1, 3, 5 and 6 only

    (c) 2, 4, 5 and 6 only

    (d) 1, 2, 3, 4, 5 and 6

     

    Q.4) A person stood alone in a desert on a dark night and wanted to reach his village which was situated 5km east of the point where he was standing. He had no instruments to find the direction but he located the polestar, the most convenient way now to reach his village is to walk in the- (CSP 2012)

    (a) facing the polestar

    (b) opposite to the polestar

    (c) keeping the polestar to his left

    (d) keeping the polestar to his right

    References

    https://www.timeanddate.com/eclipse/eclipse-information.html

    https://www.nasa.gov/audience/forstudents/5-8/features/nasa-knows/what-is-an-eclipse-58/

    https://www.civilsdaily.com/news/ring-of-fire-solar-eclipse/

    https://www.civilsdaily.com/news/what-is-lunar-eclipse/

    https://www.celestron.com/blogs/eclipse-watch/frequently-asked-questions-about-solar-eclipses

  • 22nd June 2020 | Prelims Daily with Previous Year Questions

    [WpProQuiz 465]

  • Agri reforms and way forward

    At a time when the economy is going through the crisis, anything that could provide revenue to the government will be a real godsend. This article suggests two such areas to tap into. It also examines the effects of recently issued 3 ordinances related to agriculture.

    Rs. 1,50,000 crore: Value of excessive grain stock

    • There is one area which the government can tap to raise more than Rs 1,00,000 crore.
    • As on June 1, FCI had unprecedented grain stocks of 97 million metric tonnes (MMT) in the Central Pool (see Figure).
    • Even on July 1, when the procurement of rabi ends, FCI is likely to have grain stocks of about 91-92 MMT.
    • This will be against a buffer stock norm of 41.12 MMT that are required for the Public Distribution system (PDS), and some strategic reserves.
    • So, compared to this norm, on July 1, FCI will have “excess stocks” of at least 50 MMT.
    • Even if one takes a conservative and lower ballpark figure of Rs 30,000/tonne  as the combined economic cost of rice and wheat, the value of this “excessive stock”, beyond the buffer norm, is Rs 1,50,000 crore.
    • This is unproductive capital locked-up in the Central pool of FCI.
    • Unlock this by liquidating “excess stocks” through open market operations.
    • It will not recover its full economic cost, as they are much higher than the prevailing market prices, but by not liquidating it.
    • But FCI will keep incurring unnecessary interest costs of about Rs 8,000-10,000 crore per annum.
    • This is simply not a good food policy.

    How will amendment to ECA 1955 will help

    •  Amendment of the Essential Commodities Act, via the ordinance route, can instil confidence in the private sector for building large scale storage.
    • Now, stocking limits will not be imposed on the private sector, except under exceptional circumstances.
    • The government, however, delete the clause of “extraordinary price rise”.
    • Removing it will lead to private sector building large and modern storage facilities (silos).
    • It will propel investments in building more efficient food supply lines.
    • The only condition could be to register large storage facilities under the Warehousing Development and Regulatory Authority (WDRA) to know how much stock is there with the private sector, and where.

    How will amendment to APMC Act will help

    • The ordinance on APMC creates multiple channels for farmers to sell their produce outside the APMC mandi system.
    • It also helps towards an unrestricted all India market for agri-produce.
    • Of course, it will be resisted by many states that are taking undue advantage of the APMC mandis’ virtual monopoly power.
    • But if the central ordinance is implemented in its true spirit, it will be a game-changer.

    How will the ordinance on contract farming will help

    • It aims to encourage contract farming.
    • The basic idea behind this is that farmers’ sowing decisions should be made in view of the expected prices of those crops at the time of harvest.
    • It is forward looking and more aligned to the likely demand and supply situation.
    • The current practice, where farmers’ sowing decisions are more influenced by last year’s price, often leads to the problem of boom and bust.
    • Although honouring an assured price remains a challenge when actual market conditions differ widely at the time of the harvest.

    Relook at food subsidy is needed

    •  In the Union budget of 2020-21, a sum of Rs 1,15,570 crore has been provisioned for food subsidy.
    • This number is highly misleading as FCI has been asked to borrow from the National Small Savings Fund (NSSF).
    • As on March 31, 2020, borrowings from the NSSF were Rs 2,54,600 crore, on which FCI pays an interest rate of 8.4 to 8.8 per cent per annum.
    • So, the real food subsidy bill for 2020-21 amounts to Rs 3,70,170 crore.
    • The Economic Survey has suggested- 1) reducing the coverage under PDS; 2) linking issue price to at least half of the procurement price; 3) move gradually towards cash transfers.
    • These steps will save a minimum of Rs 50,000 crore annually.

    Consider the question “There was a mention of reforms related to agri-sector in the recently announced stimulus package. Examine the issues with segments of agri-sector which necessitated these reforms.”

    Conclusion

    Liquidating the excess grain stock and rationalising the PDS could provide the government with much needed resources at a time when it needs it the most. Also, reforms in the related to agriculture could remove the stumbling blocks in the way towards the prosperity of farmers.

  • Why bad loans won’t start piling right away

    Steps taken by the government have averted the piling up of the bad loans, though for the time being only. When the moratorium period ends, we will see the spike in the bad loans. This article explains the same.

    Why bad loans are expected to increase

    •  Consumer spending has collapsed over the last few months due to the pandemic.
    • Though lately there have been some signs of revival, it will take a while before spending comes anywhere near the pre-covid level.
    • This will mean that many businesses will start running out of cash pretty soon if they have not already.
    • A company that starts running out of cash will not be in a position to repay its loans and, thus, will ultimately default.

    How individuals will be affected

    • A recent estimate by rating agency Crisil suggests that about 70% of 40,000 companies have cash to cover employee costs for only two quarters.
    • This tells us that companies will fire employees, before, during, or even after defaulting on a loan.
    • If companies do not resort to employee retrenchment, they will cut salaries and many already have.
    • Past payments and future business with vendors and suppliers will be negatively impacted.
    • In this situation, the problem at the company level will impact individuals too.
    • When individuals start having a cash flow problem, it will lead to defaults on retail loans

    But why we are not seeing the defaults happening already?

    • A moratorium is a deferment of repayment to provide temporary relief to borrowers. The loan ultimately needs to be repaid.
    • The Reserve Bank of India has let banks and non-banking financial companies (NBFCs) offer a moratorium on loans.
    • Hence, until the end of August, borrowers have an option to not repay the loans, without it being considered as a default.
    • Hence, any loan defaults will start only after August but they won’t be immediately categorized as a non-performing asset or a bad loan.
    • Bad loans are largely those loans that have not been repaid for 90 days or more.
    •  Hence, defaulted loans will be categorized as bad loans only post-November.
    • This will be revealed when banks publish their results for October to December 2020, in January-February 2021.

    Conclusion

    Even if 20% of loans that end up under a moratorium are defaulted on, the quantum of bad loans, especially those of public sector banks, will go up big time.

  • What is lacking in our China policy

    While formulating our response to China’s aggressive policies in Ladakh, we should first understand their objectives. This article explains these objective and suggests the steps to deal with China’s policies.

    Statements on Aksai Chin and Pakistan

    • Statements over Aksai Chin and Pakistan-occupied Kashmir (PoK) by India have painted the image of India as a revanchist power in utter disregard of the country’s capabilities.
    • These statements also gave the impression that India precludes any attempt at changing the status quo on either front.
    • Though these statements were justifiable in terms of India’s legal rights to these territories, were ill-timed.

    How these statements were perceived by China

    • They were made when Beijing was feeling alarmed at the Indian government’s decision to separate Ladakh from Jammu and Kashmir.
    • The move augmented its perception that it was a prelude to India’s attempt to change the status quo in Aksai Chin.
    • India’s assertion of its claims on PoK that in China’s perception threatened the China-Pakistan Economic Corridor project.

    China’s 4 strategic objectives

    1. India and China are not equals

    • China wants India to understand that it is not in the same league as China.
    • China resorts to periodic assaults across the Line of Actual Control (LAC) if India tries to assume a position of equality.

    2. Keep India away from interfering in Indo-Pacific

    • China wants India not to actively oppose Chinese designs to dominate the Indo-Pacific region.
    • Also, China wants Indias to refrain from aligning with the U.S. and its allies — Japan and Australia, in particular — in an attempt to contain China.

    3. Keeping India preoccupied with problems

    • China’s strategy also includes keeping India preoccupied with problems in its immediate neighbourhood.
    • So with these problems, India cannot act as an alternative pole of power to China in the broader Asian region.

    4. Supporting Pakistan to neutralise India

    • As part of the last objective, China supports  Pakistan economically and militarily, including the sharing of nuclear weapons designs.
    • China uses Pakistan to neutralise India’s conventional power superiority vis-à-vis that country.

    An understanding of these objectives is essential to fashioning a realistic Indian response to China’s aggressive policies in Ladakh and elsewhere along the LAC.

    But, what about Pakistan?

    • Pakistan is at best an irritant for India. (so, focus on China)
    • Pakistan can be managed with the use of diplomatic tools, international opprobrium, and superior military force.
    • In fact, the Pakistani challenge to India has become magnified because of its nexus with China.

    What India should do?

    • India’s main strategic goal should be the adoption of carefully calculated policies that neutralise China’s diplomatic and military clout in the Asia-Pacific region.
    • While doing so, India should not appear as a surrogate for other powers.
    • And India should also ensure that in making alliances it in not sacrificing the autonomy of decision-making in foreign policy. 

    Consider the question “Understanding of China’s objective is essential to formulate a realistic response to its aggressive policies in Ladakh.” Comment.

    Conclusion

    Understanding the greater threat posed by China vis-a-vis Pakistan should be the basis of India’s policy towards China.

  • Explained: How are elections to the Rajya Sabha held?

    Another round of Rajya Sabha elections has been completed. There are several features that distinguish elections to the Council of States, or the Upper House of Parliament, from the general elections.

    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.

    What is so peculiar about the 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.

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