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  • RBI, government must act in coordination during an economically challenging period

    Context

    In the recent MPC meeting, the policy rate hike was widely expected, more anticipated were the MPC and the RBI Governor’s forward guidance on the trajectory of policy — on both monetary policy and liquidity instruments. So, how do we see monetary policy evolve over the rest of the year and beyond?

    Tightening of monetary policy

    • Repo rate at 5.4 per cent: In its latest meeting, the members of the monetary policy committee voted unanimously to increase the policy repo rate by 50 basis points to 5.4 per cent.
    • The repo rate was 5.15 per cent in February 2020.
    • So, in effect, the RBI’s policy has not only been normalised, but has actually tightened compared to the pre-pandemic level.
    •  Even the lower bound of the rate corridor, the Standing Deposit Facility (SDF) rate, at 5.25 per cent is now above the pre-pandemic repo rate.

    Forward guidance on stance

    • The MPS indicated the retaining the policy stance rather than shifting to “neutral”.
    • This retention of stance might be interpreted as being a bit more hawkish than “neutral”, which implies that rates might be both increased or cut, depending on economic conditions.
    • Now that policy is largely normalised, the pace of tightening is likely to moderate.
    • The urgency of aggressive rate hikes and tightening of liquidity has somewhat moderated, although risks remain.
    • RBI’s research suggests that the “real natural rate” — the rate at which policy is neither loose nor tight – is 0.8-1 per cent.
    • This operative interest rate is usually the three-month T-bill rate, which in “normal” times averages 10-15 basis points above the repo rate.
    • Considering that monetary policy is calibrated over a one-year horizon and using the RBI’s inflation forecast of 5 per cent for the first quarter of 2023-24, the “natural” repo rate will be around 5.85 per cent.

    Inflation and growth conditions

    • The RBI’s growth projection for 2022-23 has been retained at 7.2 per cent, with growth frontloaded in the first half.
    • CPI inflation is still forecast to average 6.7 per cent.
    • Inflationary pressures are likely to wane in the second half of 2022-23, particularly if the recent drop in industrial metals prices persists over the next few months.
    • A more or less normal monsoon might help in keeping food prices stable. However, risks remain.
    • Robust growth prospects: Demand for consumption goods seems to be resilient, enabling some further pass-through of input costs.
    • Combine this with tight labour markets and rising wage costs in some tech-oriented sectors.
    • High frequency indicators of economic activity have recovered after some weakness in June.
    • In addition to resilient demand, there is evidence of a closing of the “output gap”.
    • Global growth: Global growth and trade are forecast to significantly slow down in 2022 and 2023, largely due to aggressive tightening by G-10 central banks and a slowdown in China.
    • The IMF predicts global trade volume (both merchandise and services) to slow to 4.1 per cent and 3.2 per cent in 2022 and 2023, down from 10.1 per cent in 2021.
    • With world growth and trade flows moderating, along with a drop in commodities prices, India’s export growth is likely to be lower than last year.

    External financial condition

    • The current account deficit remains a concern.
    • India’s external balance sheet remains quite robust, as is evident from various balance of payments and debt metrics, and reportedly low unhedged foreign currency borrowings.
    • Continued tightening by global central banks, particularly the US Federal Reserve over the rest of 2022, will keep India’s external financial conditions tight and likely limit portfolio capital flows.
    • However, there are some signs emanating from these central banks that the hitherto front-loaded tightening might moderate going forward.
    • This will take some pressure off the rupee, though, exchange rate volatility management will remain a part of the overall monetary policy management framework.

    Challenge of surplus liquidity

    • During the earlier phase of policy normalisation and the recent tightening, liquidity management has played an important role in influencing short-term money market interest rates.
    • The current latent surplus liquidity — the existing funds with banks and the Union government’s unspent revenues parked with RBI — is over Rs 5 lakh crore.
    • While the extent of liquidity surplus during the Covid months has come down, these levels are still much higher than RBI estimates of non-inflationary levels of surplus, which is around Rs 1.8-2.4 lakh crore.
    • This will gradually fall with cash withdrawals and some potential RBI dollar sales in the coming months.

    Conclusion

    The central bank, in coordination with the government, has ensured an orderly evolution of economic conditions during a very complex and challenging environment. The exit process now will also need the same adroit use of policy instruments.

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    Back2Basics: Standing Deposit Facility rate

    • The Reserve Bank of India (RBI) in April 2022 introduced the Standing Deposit Facility (SDF), an additional tool for absorbing liquidity, at an interest rate of 3.75 per cent.
    • The main purpose of SDF is to reduce the excess liquidity  in the system, and control inflation.
    • In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral.
    • By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy.
    • The SDF is also a financial stability tool in addition to its role in liquidity management.
    • The SDF replaced the fixed rate reverse repo (FRRR) as the floor of the liquidity adjustment facility corridor.
    • The SDF rate will be 25 bps below the policy rate (Repo rate), and it will be applicable to overnight deposits at this stage.
    • It would, however, retain the flexibility to absorb liquidity of longer tenors as and when the need arises, with appropriate pricing.

  • India’s ‘wheat waiver’ WTO demand is risk-fraught

    Context

    The WTO ministerial meeting in June at Geneva did precious little to address the issue of public stockholding of food.

    Public stockholding issue at WTO

    • India’s PSH policy is based on procuring food from farmers at an administered price (minimum support price or MSP), which is generally higher than the market price.
    • PSH’s’ twin objectives: The PSH policy serves the twin objectives of offering remunerative prices to farmers and providing subsidised food to the underprivileged.
    • Trade distortion subsidy: Under WTO law, such price support-based procurement from farmers is counted as a trade-distorting subsidy, and if given beyond the permissible limit, breaches WTO law.
    • India in the World Trade Organization (WTO) — and rightly so — has been to find a permanent solution to the issue of public stockholding (PSH) of food to protect India’s food security (PSH policy).
    • Peace clause: Currently, India has temporary relief due to a ‘peace clause’ which bars countries from bringing legal challenges against price support-based procurement for food security purposes.
    • The WTO ministerial meeting in June at Geneva did precious little to address this issue.
    •  India’s concerns about the PSH issue have been taken on board.

    India’s concerns

    • For India, the real issue is not about maintaining adequate food stocks, which WTO rules do not prohibit, provided food is stocked by employing non-trade distorting instruments such as providing income support to farmers (cash transfers independent of crop production).
    • Use of MSP: India’s concern is that it should have the policy space to hold public food stocks using the MSP, which is a price support instrument.
    • However, there is no mention of price support in the Geneva declaration.
    • India’s demand for a permanent solution to the PSH policy has acquired a new dimension.
    • India insists that it should also be allowed to export food, most notably wheat, from the pool of the foodgrain procured under the MSP.
    • However, WTO law proscribes countries from exporting foodgrain procured at subsidised prices.
    • Paragraph 4 of the 2013 WTO decision on PSH for food security purposes, clearly states that countries procuring food for food-security purposes shall ensure that such procured food does not “distort trade or adversely affect the food security of other Members”.
    • The same spirit is reflected in paragraph 10 of the Geneva ministerial food security declaration, which states that countries may release surplus food stocks in the international market in accordance with WTO law.
    •  However, it is very unlikely that such a request will be acceded to.
    • As per Article IX.3 of the WTO Agreement, waivers can be adopted only in “exceptional circumstances”.

    Way forward

    • Developed countries have historically opposed India’s PSH programme as they apprehend that India might divert some of its public stock to the international market, thus depressing global prices.
    • India actively pushing for exporting food from its official granaries gives fresh ammunition to the PSH solution opponents.
    • Thus, India should revisit its stand on asking for a waiver for wheat exports from its public stockholding, which, in any case, was not a part of India’s PSH policy.
    • Spending scarce negotiating capital on this issue might dilute India’s core agenda of pushing for a permanent solution for its PSH programme to attain the goal of food security and providing remunerative prices to the farmers.
    • Negotiations at the WTO require crystal clarity of the core objectives that should be relentlessly pursued.
    • Adding newer objectives and shifting goalposts might result in falling between two stools.

    Conclusion

    Instead of asking for the waiver to export wheat from public stockholding, the laudable objective of helping countries facing food crises can be accomplished by strengthening India’s commitment to the United Nations World Food Programme.

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  • 31st August 2022 | Prelims Daily with Previous Year Questions

    31st August 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1100]

    [WpProQuiz_toplist 1100]

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  • 30th August 2022 | Prelims Daily with Previous Year Questions

    30th August 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1099]

    [WpProQuiz_toplist 1099]

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  • 29th August 2022 | Prelims Daily with Previous Year Questions

    29th August 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1098]

    [WpProQuiz_toplist 1098]

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  • Online Dispute Resolution in new-age digital commerce

    Context

    Despite the rapid advancement of digital platforms on the one hand and the pervasiveness of the Internet-enabled phone on the other, small enterprises such as local kirana stores have not gained from this. Online purchases from “near and now” inventory from the local store remain in a digital vacuum.

    Online revolution in country

    • Increased smartphone use: The rise in smartphone use fuelled by affordable data plans has catalysed an online revolution in the country.
    • Pandemic accelerated digital inclusion: The novel coronavirus pandemic has further accelerated the process of digital inclusion.
    • It is now not only routine to transact online it is also common to learn online, have medical consultations online, and even resolve disputes online.
    • Increased scope for innovation in digital space: These realisations have given India the opportunity to disrupt the status quo with its innovative abilities.
    • Systems such as the Unique Identification Authority of India (UIDAI) and Aadhaar, the Unified Payments Interface (UPI) and the Ayushman Bharat Digital Mission have reengineered markets.

    Why mall and medium sided businesses have not benefited from digital revolution?

    • Despite the rapid advancement of digital platforms small enterprises such as local kirana stores have not gained from this.
    • Cost of infrastructure: This is because, to sell on numerous platforms, sellers must maintain a separate infrastructure, which only adds costs and limits participation.
    • Distinct terms and conditions of platforms: The distinct terms and conditions of each platform further limit the sellers’ flexibility.
    • Consequently, small and medium-sized businesses have lost their freedom to choose and participate in the country’s e-commerce system at their will and on their terms.

    Way forward: Open Network for Digital Commerce

    • The Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India established the Open Network for Digital Commerce (ONDC) to level the playing field by developing open e-commerce and enabling access to small businesses and dealers.
    • The ONDC began its pilot in five cities in April 2022, i.e., New Delhi, Bengaluru, Coimbatore, Bhopal and Shillong.
    • Currently, the pilot has expanded to 18 cities, and there are immediate plans to add more cities.
    • The ONDC network makes it possible for products and services from all participating e-commerce platforms to be displayed in search results across all network apps.
    • For instance, a consumer shopping for a product on an e-commerce app named “X” would also receive results from e-commerce app named “Y”, if both X and Y integrated their platforms with the ONDC.

    Dispute resolution through ODR

    • Disputes will be the obvious by-product of this e-commerce revolution.
    • Therefore, it is imperative to support this initiative with a modern-day, cost-effective, timely and high-speed dispute resolution system.
    • Online Dispute Resolution, or ODR as it is popularly called, has the propensity to work alongside the incumbent setup and deliver quick, affordable and enforceable outcomes.
    • The ODR is not restricted to the use of legal mechanisms such as mediation, conciliation and arbitration in an online environment but can be tailormade for the specific use case keeping the participants in mind.
    • ODR commonly involves case management systems, integration of communication technologies such as email, SMS, WhatsApp, Interactive Voice Response, audio/video conferencing.
    • With appropriate data sets in place, it can also involve advanced automation, the use of technologies such as artificial intelligence and machine learning to enable resolutions at the same time as it would take to initiate a transaction over the network.
    • Many e-commerce companies have turned to the ODR with the realisation that in order to maximise transactions it is important to ensure a positive dispute resolution experience.
    • Adoption in India: The ODR is no more a distant dream for India as well.
    • The National Payments Corporation of India (NPCI) has mandated platforms in the UPI ecosystem to adopt the ODR for complaints and grievances connected to failed transactions.
    •  Ingram, SEBI SCORES (or the Securities and Exchange Board of India SEBI COm plaints REdress System), RBI CMS (or the Reserve Bank of India Complaint Management System), MahaRERA (or the Maharashtra Real Estate Regulatory Authority), MSME Samadhaan (or the Micro Small and Medium Enterprises Delayed Payment Monitoring System), and RTIOnline (or the Right to Information Online) are other examples of ODR systems that are widely used in the country.
    • Mitigating litigation risks: The ODR will help mitigate litigation risk and provide valuable insights into problems faced by consumers.
    • Consumers are provided with another choice for effective redress of their grievances, thereby building trust, confidence and brand loyalty.

    Advantages of ONDC

    • Wider choice for consumers: The ONDC achieves the dual objective of wider choice for consumers on the one hand and access to a wider consumer base for sellers on the other.
    • With India’s e-commerce industry set to reach $200 billion by 2027, this shift from a platform-centric paradigm to democratisation of the nation’s online market will catalyse the inclusion of millions of small business owners and kirana businesses.

    Conclusion

    A dispute resolution framework that includes a customised ODR process can play a role in the network achieving its steep five-year target of adding $48 billion in gross merchandise value to India’s e-commerce market, a network of 90 crore buyers and 12 crore sellers with the least hiccups.

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  • 31st August 2022| Daily Answer Writing Enhancement(AWE)

    Topics for Today’s questions:

    GS-1        Distribution of key natural resources across the world (including South Asia and the Indian sub-continent)

    GS-2        Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these.

    GS-3        Challenges in internal security

    GS-4        Public/Civil service values and Ethics in Public administration: laws, rules, regulations and conscience as sources of ethical guidance

    Question 1)

     

    Q.1 What are ferrous minerals? Give an overview of the distribution of iron ore in India with examples. (10 Marks)

     

    Question 2)

    Q.2 Discuss the role of the Departmentally Related Standing Committees in strengthening parliamentary democracy in India. (10 Marks)

    Question 3)

    Q.3 Do you think AFSPA is license to kill? Critically examine the utility of AFSPA today. (10 Marks)

    Question 4)  

    Q.4 Integrity and probity can be maintained in public life by empowering the human consciousness. Explain. (10 Marks)

     

    HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

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  • Q.4 Integrity and probity can be maintained in public life by empowering the human consciousness. Explain. (10 Marks)

    Mentor’s Comments-

    • Briefly define Integrity and Probity and their need in Public Life.
    • Discuss how can it be inculcated by empowering the human consciousness.
    • Conclude by summarizing the importance of integrity and probity.

  • India, Bangladesh discuss River Water Sharing issues

    India and Bangladesh discussed a wide range of River Water Sharing issues related to the major common rivers such as the Ganga, Teesta and several others during the 38th meeting of the Joint River Commission (JRC).

    Rivers between India and Bangladesh

    • Overall, India and Bangladesh have 54 transboundary rivers between them, all of which are part of the drainage system of the Ganga-Brahmaputra-Meghna (GBM) basin.
    • The Padma (the Ganga), the Jamuna (the Brahmaputra) and the Meghna (the Barak) and their tributaries are integral in maintaining food and water security in Bangladesh.
    • In most of these cases, Bangladesh is the lower riparian.
    • This causes concern in Bangladesh that India—being both the upper riparian and first to develop the water resources—can have far more disproportionate control over the rivers.
    • Compounded by the lack of transparent data regarding trans-boundary rivers, such concern can lead to a more serious conflict between the two otherwise friendly neighbours.

    Genesis of the disputes

    • The issues between India and Bangladesh regarding water resource allotment can be traced to the time Bangladesh was still East Pakistan.
    • In 1961, India began construction of the Farakka Barrage—which was to be operational by April 1975—to divert a portion of the dry-season flow and increase the navigability of Kolkata port.
    • When India began its preliminary planning for the project in 1950-51, Pakistan immediately expressed concerns over the potential effect of the project on East Pakistan.

    Moves for disputes resolution: Joint River Commission

    • Soon after the independence of Bangladesh in 1971, the Joint River Commission was formed between India and Bangladesh in 1972.
    • In a joint declaration issued on 16 May 1974, the PM of Bangladesh and India acknowledged the need for the flow augmentation of the Ganga in the lean season to meet the requirements of both countries.

    Often in news: Teesta River Dispute

    • The Bangladesh government has been insistent on sealing the Teesta Waters Agreement, which has eluded settlement so far.
    • Teesta River is a 315 km long river that rises in the eastern Himalayas, flows through the Indian states of Sikkim and West Bengal through Bangladesh and enters the Bay of Bengal.
    • It is a tributary of the Brahmaputra (known as Jamuna in Bangladesh), flowing through India and Bangladesh.
    • It originates in the Himalayas near Chunthang, Sikkim and flows to the south through West Bengal before entering Bangladesh.
    • Originally, it continued southward to empty directly into the Padma River but around 1787 the river changed its course to flow eastward to join the Jamuna river.
    • The Teesta Barrage dam helps to provide irrigation for the plains between the upper Padma and the Jamuna.

    What is the dispute about?

    • The point of contention between India and Bangladesh is mainly the lean season flow in the Teesta draining into Bangladesh.
    • The river covers nearly the entire floodplains of Sikkim while draining 2,800 sq km of Bangladesh, governing the lives of hundreds of thousands of people.
    • For West Bengal, Teesta is equally important, considered the lifeline of half-a-dozen districts in North Bengal.
    • Bangladesh has sought an “equitable” distribution of Teesta waters from India, on the lines of the Ganga Water Treaty of 1996, but to no avail.
    • The failure to ink a deal had its fallout on the country’s politics, putting the ruling party of PM Sheikh Hasina in a spot.

    Q.The hydrological linkages between India and Bangladesh are a product of geography and a matter of shared history. Discuss this statement in line with the Teesta water-sharing dispute.

    The deal

    • Following a half-hearted deal in 1983, when a nearly equal division of water was proposed, the countries hit a roadblock. The transient agreement could not be implemented.
    • Talks resumed after the Awami League returned to power in 2008 and the former Indian PM Manmohan Singh visited Dhaka in 2011.
    • In 2015, PM Modi’s visit to Dhaka generated more ebullient lines: deliberations were underway involving all the stakeholders to conclude the agreement as soon as possible.

    Issues from the Indian side

    • It remains an unfinished project and one of the key stakeholders — West Bengal CM is yet to endorse the deal.
    • Her objection is connected to “global warming. Many of the glaciers on the Teesta basin have retreated.
    • The importance of the flow and the seasonal variation of this river is felt during the lean season (from October to April/May) as the average flow is about 500 million cubic metres (MCM) per month.
    • The CM opposed an arrangement in 2011, by which India would get 42.5% and Bangladesh 37.5% of the water during the lean season, and the plan was shelved.

    Why does this deal matters?

    • India and Bangladesh have resolved border problems through the Land Boundary Agreement of 2015.
    • However, both nations have locked horns over the sharing of multiple rivers that define the borders and impact lives and livelihoods on both sides.

     

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  • Farmer suicide

    farmer suicideContext

    • An agricultural labourer died by suicide every 2 hours in 2021: NCRB
    • The national catastrophe of farmer suicide since the 1990s, often by drinking pesticides is attributed to their inability to repay loans mostly taken from landlords and banks.

    NCRB Stats on Farmers Suicide

    • Some 5,563 agricultural labourers died by suicide in 2021, according to the latest report of the National Crime Records Bureau (NCRB). The number of suicides increased by nine per cent from 2020 and by around 29 per cent from 2019.

    Causes of Farmers Suicide

    • Non sustainable cropping: Most of the suicides have occurred in areas of cash crops like cotton and sugarcane, which is high input, high output gambling, not based on the principle of sustained and resilient high yield.
    • Multiple causes: There is no consensus on what the main causes might be but studies show farmer suicide victims are motivated by more than one cause however the primer reasons being the inability to repay loans.
    • Combined causes: Major causes reportedly are bankruptcy/indebtedness, problems in the families, crop failure, illness and alcohol/substance abuse.

    farmer suicideFaulty measures

    • Low penetration of irrigation: Irrigation reaches less than half of India’s overall farmland, a picture that has not changed much over the past decade, and more than 60% of our farmers are susceptible to rainfall anomalies.
    • Dry land farming: Rain-fed farming yields are typically less than half those of irrigated farmland.
    • High input cost: Though India has caught up with global levels of fertilizer use, this is neither efficient nor environmentally sustainable. Both add to the cost of cultivation.
    • Slow R&D: Research on high-yielding crops has plateaued after an initial burst during the Green Revolution and farmers have to resort to patented seeds to draw more out of their scanty acres.

    farmer suicide7R’ model utility

    It looks at the prevention of farmer suicide

    • Remunerative agriculture,
    • Resilience building,
    • Rational expenditure,
    • Reassurance through connectivity,
    • Righteous conduct,
    • Religious support and
    • Responsible reporting

    farmer suicideWay Forward

    • Information technology promises to improve weather forecasting, crop identification as well as damage control, soil health monitoring, and mapping of available water resources.
    • Improvements in marketing and logistics can significantly raise the share that cultivators get of the money people pay for their food.
    • The govt. is using technology to connect farmers to a nationwide e-market, but the states need to amend their antiquated farm produce marketing laws that have squeezed farmers’ earnings.
    • An old problem of price signals failing to adjust demand and supply may also need fixing.
    • For agricultural incomes to rise, reforms, rather than cash transfers, loan waivers and the like, are the way ahead.

    Conclusion

    • Along with subsidies, increased farm profits, the focus should also be on resilience building and problem-solving skills of farming families.
    • In suicide-prone states, agricultural institutes and scientists should start distributing seeds of resilience, tolerance and contentment among farmers, suggested researchers.

    Mains question

    Q. Despite agricultural growth Indian farmers are committing suicides Discuss the causes and give dynamic way forward to address the issue.

     

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  • Q.3 Do you think AFSPA is license to kill? Critically examine the utility of AFSPA today. (10 Marks)

    Mentors comment –

  • Universal basic income

    universal basic income Context

    • New evidence from two Kenyan counties shows that universal basic income  and other income supplements reduce hunger, illness, and risk exposure during crises.
    • Countries should consider building universal basic income that can be activated at short notice to help people weather unanticipated shocks.

    Why in news?

    • When the COVID-19 pandemic and the resulting recession pushed 120 million people worldwide into extreme poverty in 2020, many countries relied on social-protection measures to cushion the blow.

    What is social protection?

    • Social protection is concerned with preventing, managing, and overcoming situations that adversely affect people’s well-being.
    • Social protection programs that assist low-income families, insure against shocks, and break poverty traps offer a potential solution.

    universal basic income Universal basic income meaning

    • Universal basic income (UBI) is a model for providing all citizens of a country or other geographic area with a given sum of money, regardless of their income, resources or employment status.
    • The purpose of UBI is to prevent or reduce poverty and increase equality among citizens.

    What is social security?

    • Social securityin India includes a variety of statutory insurances and social grant schemes bundled into a formerly complex and fragmented system run by the Indian government.
    • These are retirement, healthcare, disability, childcare, gratuity and provident fund and insurance programs.

    What is insurance simple words?

    • An agreement by which a person pays a company and the company promises to pay money if the person becomes injured or dies or to pay for the value of property lost or damaged.

    Constitutional mandate

    • The Directive Principles of State Policy, enshrined in Part IV of the Indian Constitution reflects that India is a welfare state.

    Interesting fact

    India operates the widest spectrum of social security schemes which cater to the largest number of people than any other country.

    What are the benefits of Universal Basic Income?

    • Ending poverty: Advocates for UBI say that it could help bring everyone’s income above the poverty line.
    • Discouraging low wages: UBI would give employees enough security to have bargaining power.
    • Redistributing wealth: The economic growth of high-income countries is making the rich richer, but having very little effect on the working classes.

    Case study / value addition

    Namibia

    Namibia had a basic income pilot program between 2008 and 2009. Every resident of Otjivero-Omitara was entitled to 100 Namibian dollars ($6.75) every month. The program was funded by donors from around the world.

    Findings from the pilot program showed that cases of child malnutrition had dropped significantly while school enrollment went up. Also, social crimes such as theft had significantly dropped.

    universal basic income Negative implications of UBI

    • Induce lethargy: UBI removes the incentive to work, adversely affecting the economy and leading to a labour and skills shortage.
    • Inequity: Universal basic income would be just that: universal. That means that everyone, regardless of how poor, or rich, they were would get the same amount of money.
    • Huge Cost: The cost of implementing UBI could be huge. In the United States it’s estimated to be about $3.9 trillion per year.
    • Motivation to work: One concern is that UBI would incite millions of workers to stop working. If people aren’t working, there is less taxable income.

    Some government initiatives

    • National Pension Scheme for Traders and Self Employed Persons.
    • Pradhan Mantri Suraksha Bima Yojana.
    • Employees’ State Insurance Scheme.
    • Minimum Wages for various employment roles.
    • National Pension System.

    Conclusion

    • One of the major criticisms of poverty alleviation programs is significant leakages. UBI is seen as a more efficient alternative. Though UBI has many advantages, there are many practical challenges too. The idea should be to save costs with better targeting. This will help create the necessary conditions for higher growth which will decisively lift people out of poverty.

    Mains question

    Q. India operates the widest spectrum of social security schemes which cater to the largest number of people than any other country. Do you think they are enough? Discuss in context of rising demand for universal basic income and its pros and cons for ensuring social security.

     

     

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  • Challenging the Special Marriage Act, 1954

    The Supreme Court has dismissed a writ petition challenging the Constitutional validity of certain provisions of the Special Marriage Act, 1954 under which couples seek refuge for inter-faith and inter-caste marriages.

    What is Special Marriage Act, 1954?

    • The Special Marriage Act, 1954 (SMA) was enacted to facilitate the marriage of couples professing different faiths, and preferring a civil wedding.
    • However, some practical problems arise in registering such marriages.
    • The law’s features on prior public notice being given and objections for the safety and privacy of those intending to marry across religions.
    • To overcome this, many settle for marriage under the personal law of one of them, with the other opting for religious conversion.

    What does the petition seek?

    • The Supreme Court dismissed a writ petition challenging the Constitutional validity of certain provisions of the SMA under which couples seek refuge for inter-faith and inter-caste marriages.
    • The writ petition has called these provisions violative of Article 21, which guarantees the right to privacy.
    • Under this act, the couples require to give a notice of 30 days before the date of marriage inviting objections from the public.
    • The provisions contravene Article 14 on prohibition of discrimination on grounds of religion, race, caste and sex as well as Article 15 on right to equality as these requirements are absent in personal laws.

    What did the court say?

    • The SC Bench rejected the writ petition on the grounds that the petitioner was no longer an aggrieved party as she had already solemnised her marriage under SMA.
    • The petitioner’s lawyers said that they were now deliberating on an alternative approach to initiate this litigation such as through a public interest litigation involving other victims.
    • Another writ petition is admitted by the Supreme Court in 2020 and the government’s reply to is awaited.

    What are the provisions that have been challenged?

    • Section 5 of the SMA requires couples getting married under it to give a notice to the Marriage Officer 30 days before the date of marriage.
    • Section 6 requires such a notice to be then entered into the Marriage Notice Book maintained by the Marriage Officer, which can be inspected by any person desirous of inspecting the same.
    • These notices have to be also affixed at a “conspicuous place” in the office of the Marriage Officer so that anyone can raise an objection to the marriage.
    • Section 7 provides the process for making an objection such as if either party has a living spouse, is incapable of giving consent due to “unsoundness of mind” or is suffering from mental disorder resulting in the person being unfit for marriage or procreation.
    • Section 8 specifies the inquiry procedure to be followed after an objection has been submitted.

    Why are these provisions contentious?

    • The provisions throw the personal information of the individuals open to public scrutiny. This may result into vigilantism.
    • This seriously damages one’s right to have control over her or his personal information and its accessibility.
    • By making the personal details of the couple accessible to everyone, the very right of the couple to be the decision makers of their marriage is being hampered by the state.

    How do these provisions make couples vulnerable?

    • These public notices have been used by anti-social elements to harass couples getting married.
    • For many who often marry without their parent’s consent this can be life-threatening.
    • Many states publicly share the details of couples marrying under SMA on their websites.
    • Many also complain about the behaviour of the staff at the SDM’s office who often delete or delay applications and dissuade couples from marrying under SMA.
    • With as many as 11 States passing anti-conversion (or so-called love-jihad) laws, parents and the State are now armed to punish and harass such couples.

     

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  • Q.2 Discuss the role of the Departmentally Related Standing Committees in strengthening parliamentary democracy in India. (10 Marks)

    Mentor’s Comments-

    • Give an overview of the Departmentally Related Standing Committees in India.
    • Highlight their role in strengthening parliamentary democracy in India.
    • Conclude accordingly.

  • Labour Codes

    Addressing to the National Labour Conference, Prime Minister said that the Centre had taken initiatives to abolish laws from “the period of slavery” that reflected a slavery mentality through the Labour Codes.

    New Labour Codes

    The four codes likely to be implemented in FY23 are:

    1. Code on Wages
    2. Industrial Relations Code
    3. Social Security Code, and
    4. Occupational Safety, Health and Working Conditions Code

    Objectives of the Labour Code

    • The new labor codes are aimed at facilitating ease of doing business in the country and seek to replace 29 cumbersome laws.
    • The objective is to encompass over 500 million organized and unorganized sector workers—90% of the workforce which has been outside labour laws.
    • The idea is to ensure that they receive wage security, social security and health security, gender equality in terms of remuneration, a minimum floor wage, make the lives of inter-state migrant workers easier.

    What is the current status of the codes?

    • The central government has completed the process of finalizing the draft rules, state governments are in the process of drafting the same.
    • With labor being a concurrent subject, states are in the process of pre-publishing draft rules for these reforms.

    How many labour laws do Indian states have?

    • The simplification of 29 labour laws into the four labour codes is expected be a watershed moment for labour reforms.
    • India currently has a web of multiple labour legislations, over 40 central laws and 100 state laws involving labour.
    • The Second National Commission on Labour (2002) recommended simplification to bring about transparency and uniformity.

    What are the major reforms in these codes?

    • Social security benefits: With organized sector workers being approximately 10% of the total workforce, the new codes may ensure that social security benefits are for all.
    • Take-home salary: As per the proposed labour codes, total allowances such as house rent, leave, travel etc. are to be capped at 50% of the salary, while basic pay should account for the remaining 50%.
    • Four days work: There could also be a permissible four-day work week of 12 hours per day.

    How will it affect ease of doing business?

    • Labour productivity: It is likely to improve with both employees and employers developing a sense of being partners in wealth creation.
    • Labour reform: A transparent environment in terms of workers’ compensation, clear definition of employee rights and employer duties.
    • Compliance un-burdening: Simplified labour codes making compliance easier are likely to attract investments.
    • Formalization of the economy: With more workers in the organized sector, leakage in terms of direct as well as indirect taxes may be plugged.

    Also read

    [Burning Issue] New Labour Laws

     

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  • Contract Enforcement in India

    Ease of doing business in India remains low, dragged down by the way contracts are enforced in the country. Recent reforms have improved the business climate somewhat, but there is a long way to go.

    What is the Ease of Doing Business index?

    • It is an index designed by the World Bank to rank 190 economies.
    • A higher rank (closer to 1) means the country’s regulatory environment is favourable to business operations.
    • India was ranked 63rd in the overall index in 2020.
    • World Bank has now discontinued the Doing Business index.

    Indicators used

    The ranking is calculated on the basis of indicators such as:

    1. Starting a Business
    2. Dealing with Construction Permits
    3. Getting Electricity
    4. Registering Property
    5. Getting Credit
    6. Protecting Minority Investors, Paying Taxes
    7. Trading across Borders
    8. Enforcing Contracts and
    9. Resolving Insolvency

    How is ‘Enforcing Contracts’ measured?

    • In 2020, in the parameter of ‘Enforcing Contracts’, India was ranked 163rd, against 186th in 2015. The parameter considers time, cost and quality of the judicial process.
    1. Time considers the number of days to resolve a commercial dispute in courts;
    2. Cost measures the expenses of attorney, courts and enforcement as a percentage of claim value; and
    3. Quality considers the use of best practices which can promote efficiency and quality i.e., court proceedings, case management, alternative dispute resolution and court automation.
    • Each of the three indicators have a 33.3% weightage.

    How is India doing on this parameter now?

    • At 163rd position in 2020, the country continues to struggle, with the time taken to resolve a commercial dispute being approximately 1,445 days in the Doing Business Report 2020.
    • However, as of August 2022, law ministry data shows a marked improvement of close to 50% in days taken to resolve a dispute to 744 days in New Delhi and 626 days in Mumbai.

    What are some of the reforms undertaken?

    • The Department of Justice, the nodal point for ‘Enforcing Contracts’ indicator along with the eCommittee of the Supreme Court, has undertaken a series of reforms.
    • Some of the steps include the establishment of dedicated commercial courts with monetary jurisdiction up to ₹3 lakh.
    • There also exists online case filing, e-payment of court fees, electronic case management, special courts for infrastructure project contracts, as well as automatic and random allocation of commercial cases thereby eliminating human intervention.

    What further steps are required?

    • An efficient judiciary instils confidence in investors and signals the commercial viability of transactions.
    • The number of court hearings should be minimized too; often, lawyers have an incentive to stretch out the process.
    • The judicial system should encourage out-of-court settlements through the respective lawyers as practised in advanced countries.
    • It is equally important that the judiciary leaves matters relating to economic governance to governments.

     

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  • Q.1 What are ferrous minerals? Give an overview of the distribution of iron ore in India with examples. (10 Marks)

    Mentor’s Comments-

    • Explain what you understand by ferrous minerals.
    • Discuss the locational distribution of iron ore in India.
    • Conclude accordingly.

  • One Nation One Fertiliser (ONOF) Scheme

    The Ministry of Chemicals and Fertilisers will implement One Nation One Fertiliser (ONOF) by introducing a Single Brand for Fertilisers and Logo under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).

    One Nation One Fertiliser (ONOF)

    • The single brand name for UREA, DAP, MOP and NPK etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK etc. respectively for all Fertiliser Companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs).
    • Also a logo indicating Fertiliser subsidy scheme namely Pradhanmantri Bhartiya Janurvarak Pariyojna will be used on said fertiliser bags.
    • Under the scheme, companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.
    • On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be shown.

    What is the government’s argument for introducing this scheme?

    The government’s logic for introducing a single ‘Bharat’ brand for all subsidised fertilisers being marketed by companies is as follows:

    (1) Subsidies normalization

    • The maximum retail price of urea is currently fixed by the government, which compensates companies for the higher cost of manufacturing or imports incurred by them.
    • The MRPs of non-urea fertilisers are, on paper, decontrolled.
    • But companies cannot avail of subsidy if they sell at MRPs higher than that informally indicated by the government.
    • Simply put, there are some 26 fertilisers (inclusive of urea), on which government bears subsidy and also effectively decides the MRPs;

    (2) Harmonizing markets

    • Apart from subsidising and deciding at what price companies can sell, the government also decides where they can sell.
    • This is done through the Fertiliser (Movement) Control Order, 1973.
    • Under this, the department of fertilisers draws an agreed monthly supply plan on all subsidised fertilisers in consultation with manufacturers and importers.
    • This supply plan is issued before the 25th of each month for the following month, with the department also regularly monitoring movement to ensure fertiliser availability as per requirement, including remote areas.

    (3) Farmers welfare

    • The government is spending vast sums of money on fertiliser subsidy (the bill is likely to cross Rs 200,000 crore in 2022-23).
    • By deciding where and at what price companies can sell, it would obviously want to take credit and send that message to farmers.

    What can be the drawbacks of the scheme?

    • It may disincentivise fertiliser companies from undertaking marketing and brand promotion activities.
    • They will now be reduced to contract manufacturers and importers for the government. Any company’s strength ultimately is its brands and farmer trust built over decades.
    • Currently, in case of any bag or batch of fertilisers not meeting the required standards, the blame is put on the company. But now, that may be passed on fully to the government.
    • Politically, the scheme might well boomerang rather than benefit the ruling party.

     

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  • NCRB releases ‘Crime in India’ Report

    A new edition of ‘Crime in India’, the annual report of the National Crime Records Bureau (NCRB), was released on August 29, for crime-related statistics in 2021.

    Why in news?

    • NCRB reports have been a valuable compilation of statistics over the years on offences ranging from crimes against women to economic and financial crimes.
    • It has provided honest and credible sets of crime related data in India.

    Crime in India: Key highlights

    • Overall, 2021 saw a 6 per cent decline in the number of crimes registered, as compared to 2020.
    • The crime rate per lakh population declined from 487.8 in 2020 to 445.9 in 2021.
    • However, crime statistics do not always tell the full story, and lower crimes reported in an area do not necessarily mean it is safe.
    • Crimes against women rose 15 per cent in India in 2021 and Delhi is the most unsafe metropolitan city.
    • Rajasthan reported the highest number of rape cases and Maharashtra topped the list when it comes to most suicides.
    • Around 1.73 lakh people died in traffic accidents. Uttar Pradesh saw the highest number of deaths (24,711) in traffic accidents.
    • Jammu and Kashmir registered the most Unlawful Activities (Prevention) Act (UAPA) cases under the ‘special and local laws’ in 2021, as per NCRB data.
    • Of the total 814 cases under the UAPA in India, J&K lodged 289 cases last year, followed by Manipur (157), Assam (95), Jharkhand (86) and Uttar Pradesh (83).
    • Jharkhand and Maharashtra filed the highest cases of communal riots last year with 100 and 77 cases respectively.

    Who publishes the NCRB report?

    • The NCRB was established in January 1986 with the aim of establishing a body to compile and keep records of data on crime.
    • It functions under the Union Home Ministry.
    • Apart from publishing annual reports, its functions include “Collection, coordination and exchange of information on inter-state and international criminals to the respective states”.
    • NCRB also acts as a “national warehouse” for the fingerprint records of Indian and foreign criminals, and assists in locating interstate criminals through fingerprint search.

    How does the NCRB collect information for its report?

    • The NCRB report contains data received from the 36 states and Union Territories across the country.
    • Similar data is furnished for 53 metropolitan cities, or those having a population of more than 10 lakh as per the 2011 census, by respective state-level crime records bureaus.
    • This information is entered by state/UT police at the police station/ district level, and is then validated further at the district level, then the state level, and finally by the NCRB.

    Issues with NCRB data

    • By its own admission, the NCRB says there are limitations to its data.
    • Since the publication caters to the ‘Principal Offence Rule’ for classification of crime, the actual count of each crime head may go under-reporting.
    • The Principal Offence Rule states that in a case where multiple offences are registered, only the “most heinous crime”, carrying the most stringent punishment, is considered when counting.
    • For example, ‘Murder with Rape’ is accounted as ‘Murder’, leading to undercounting of the crime of rape.
    • Vacancies or a shortage of police officers at the local level may hinder the collection of data.
    • Also the data record the incidence of registered crime rather than of actual crime.

    Antithesis to NCRB data

    • Reported crimes against women in Delhi rose significantly in the aftermath of the 2012 Nirbhaya Gangrape case.
    • This is not because the heinous crimes got trivialized.
    • It may have been a reflection of increased awareness about the need for registering crimes, both among those affected and the police, rather than an actual increase in the incidence of crime against women.

     

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  • PARAKH: A new regulator for ‘uniformity’ in all board exams

    The Centre is planning to draw up a benchmark framework ‘PARAKH’ to assess students at the secondary and higher secondary level to bring about “uniformity” across state and central boards.

    What is PARAKH?

    • PARAKH stands for Performance Assessment, Review and Analysis of Knowledge for Holistic Development.
    • The proposed regulator will act as a constituent unit of the NCERT.
    • It will also be tasked with holding periodic learning outcome tests like the National Achievement Survey (NAS) and State Achievement Surveys.
    • The benchmark assessment framework will seek to put an end to the emphasis on rote learning, as envisaged by the National Education Policy (NEP) 2020.
    • PARAKH, the proposed implementing agency, is also part of the NEP proposal.

    Response form States

    • Most states endorsed the proposal to hold board exams twice a year, including one for helping students improve their scores.
    • States are also on board regarding a proposal to offer two types of papers on mathematics — a standard exam, and another to test higher level competency.
    • It will help reduce the fear of maths among students and encourage learning.

    Significance of PARAKH

    • PARAKH will help tackle the problem of students of some state boards being at a disadvantage during college admissions as compared to their peers in CBSE schools.
    • It will develop and implement “technical standards for the design, conduct, analysis and reporting” of tests at all levels of school education.
    • PARAKH will eventually become the national single-window source for all assessment related information and expertise, with a mandate to support learning assessment in all forms, both nationally and where applicable, internationally.

     

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