The Khasi Hills Autonomous District Council (KHADC) in Meghalaya has called for a meeting of traditional heads to revisit the Instrument of Accession that made the Khasi domain a part of the Indian Union.
About KHADC
KHADC is an autonomous district council in the state of Meghalaya in India.
It is one of the three autonomous district councils within Meghalaya, and one of twenty-five autonomous regions of India.
Meghalaya is divided into three regions dominated by as many matrilineal communities — the Khasis, Garos and Jaintias.
The Khasi hills straddle 25 Himas or States that formed the Federation of Khasi States.
Why in news?
Some members of the KHADC agreed that the Instrument of Accession and Annexed Agreement signed with the Dominion of India between December 15, 1947 and March 19, 1948, should be studied.
The treaty was signed by Governor General of India, Chakravarti Rajagopalachari, on August 17, 1948.
What is Instrument of Accession?
It was a legal document first introduced by the Government of India Act, 1935.
It was used in 1947 to enable each of the rulers of the princely states under British paramountcy to join one of the new dominions of India or Pakistan created by the Partition.
The instruments of accession executed by the rulers, provided for the accession of states to the Dominion of India (or Pakistan) on three subjects, namely, defence, external affairs and communications.
Back2Basics: Autonomous District Council (ADC)
The Sixth Schedule of the Indian Constitution allows for the formation of autonomous administrative divisions which have been given autonomy within their respective states.
Most of these ADC are located in North East India with the exception of two in Ladakh and one in West Bengal.
Presently, 10 Autonomous Councils in Assam, Meghalaya, Mizoram and Tripura are formed by virtue of the Sixth Schedule with the rest being formed as a result of other legislations.
Powers and competencies
(1) Executive and legislative powers
Under the provisions of the Sixth Schedule, ADCs can make laws, rules and regulations in the following areas:
Land management
Forest management
Water resources
Agriculture and cultivation
Formation of village councils
Public health
Sanitation
Village and town level policing
Appointment of traditional chiefs and headmen
Inheritance of property
Marriage and divorce
Social customs
Money lending and trading
Mining and minerals
(2) Judicial powers
ADCs have powers to form courts.
They can hear cases where both parties are members of Scheduled Tribes (STs) and the maximum sentence is less than 5 years in prison.
(3) Taxation and revenue
Autonomous district councils have powers to levy taxes, fees and tolls on: building and land, animals, vehicles, boats, entry of goods into the area, roads, ferries, bridges, employment and income and general taxes for the maintenance of schools and roads.
Former NITI Aayog CEO Amitabh Kant has been picked as India’s new Sherpa for the G-20.
Who is a Sherpa (in IR context)?
A Sherpa is the personal representative of a head of state or government who prepares an international summit, particularly the annual G7 and G20 summits.
Between the G7 summits, there are multiple Sherpa conferences where possible agreements are laid out.
This reduces the amount of time and resources required at the negotiations of the heads of state at the final summit.
The name Sherpa—without further context—refers to Sherpa for the G7 summit, but the designation can be extended to different regular conferences where the participation of the head of state is required.
The Sherpa is generally quite influential, although they do not have the authority to make a final decision about any given agreement.
Etymology
The name is derived from the Sherpa people, a Nepalese ethnic group, who serve as guides and porters in the Himalayas, a reference to the fact that the sherpa clears the way for a head of state at a major summit.
They are Tibetan Buddhists of the Nyingmapa sect, and have drawn much of their religious tradition from the Rongphu monastery, located at 16,000 feet on the north side of Mount Everest.
About G20
Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
Aims and objectives
The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
It seeks to address issues that go beyond the responsibilities of any one organization.
Members of G20
The members of the G20 consist of 19 individual countries plus the European Union (EU).
The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
The European Union is represented by the European Commission and by the European Central Bank.
Its significance
G20 is a major international grouping that brings together 19 of the world’s major economies and the European Union.
Its members account for more than 80% of global GDP, 75% of trade and 60% of population.
India and G20
India has been a member of the G20 since its inception in 1999.
At least eight people have died after a cloudburst occurred at the Amarnath Cave Shrine near Pahalgam in south Kashmir.
What is a Cloudburst?
Cloudbursts are short-duration, intense rainfall events over a small area.
According to the IMD, it is a weather phenomenon with unexpected precipitation exceeding 100mm/h over a geographical region of approximately 20-30 square km.
What causes Cloudburst?
A study published last year studied the meteorological factors behind the cloudburst over the Kedarnath region.
They analysed atmospheric pressure, temperature, rainfall, cloud water content, cloud fraction, cloud particle radius, cloud mixing ratio, total cloud cover, wind speed, wind direction, and relative humidity during the cloudburst, before as well as after the cloudburst.
The results showed that during the cloudburst, the relative humidity and cloud cover was at the maximum level with low temperature and slow winds.
It is expected that because of this situation a high amount of clouds may get condensed at a very rapid rate and result in a cloudburst.
Impact of climate change
Several studies have shown that climate change will increase the frequency and intensity of cloudbursts in many cities across the globe.
As temperatures increase the atmosphere can hold more and more moisture and this moisture comes down as a short very intense rainfall for a short duration.
This results in flash floods in the mountainous areas and urban floods in the cities.
Also, there is evidence suggesting that globally short-duration rainfall extremes are going to become more intense and frequent.
Try this PYQ
Q.During a thunderstorm, the thunder in the skies is produced by the:
meeting of cumulonimbus clouds in the sky
lightning that separates the nimbus clouds
violent upward movement of air and water particles
Select the correct option using the codes given below:
The recent split in Shiv Sena and the subsequent political slugfest in Maharashtra has brought into focus the legal and constitutional framework to deal with issues when a party splinters and rival factions assert themselves as the recognised political party.
Culture of functioning political parties in India
What is a political party? A political party is an organised group of citizens who hold common views on governance and act as a political unit that seeks to obtain control of government with a view to further the agenda and policy they profess.
Political parties maintain a continuous connection between the people and those who represent them either in government or in the opposition.
Political parties in India are extra-constitutional, but they are the breathing air of the political system.
There are reportedly 2,598 registered political parties, eight national parties and 50 state parties.
The regulation of these parties and elections in the country is a crucial segment of India’s constitutional imagination.
Yet, the proliferation of political parties also means that established parties splinter.
A battle ensues for recognition of one faction or group as the recognised political party and securing the party symbol.
Legal and Constitutional framework
There is a legal and constitutional framework to deal with issues when a party splinters and rival factions assert themselves as the recognised political party.
Article 324 of the Constitution provides that the superintendence, direction and control of elections is vested in the Election Commission.
Conduct of Election Rules, 1961, Rule 5 specifies that the Commission shall specify the symbols that may be chosen by candidates at elections in parliamentary or assembly constituencies and the restrictions to which their choice will be subject.
Choice and allotment of symbol: The Election Symbols (Reservation and Allotment) Order 1968 provides for the choice and allotment of symbols in Parliamentary and Assembly constituencies and for recognition of political parties and matters connected.
Power to recognise party from splinter group: Paragraph 15 of this Order specifies that the Commission has the power to recognise as the party, from amongst splinter groups or rival sections.
Important case on recognition of faction
The classic case on recognition of a faction and accrual of the party symbol is Sadiq Ali v the Election Commission of India (1972).
Here, the Supreme Court was confronted with the case of the Indian National Congress which had split into two factions.
The Commission ruled in favour of Congress (J) being the recognised political party and the case reached to the Supreme Court,
The SC relied on the figures presented to the Commission and found that a substantial majority of the members of the Congress in both its legislative wing as well as the organisational wing supported the Congress (J).
The SC concludes that “numbers have importance in a democratic system of government or political set up, and it is neither possible nor permissible to lose sight of them. Indeed, it is the view of the majority which in the final analysis proves decisive in a democratic set-up.”
It was also concludes that paragraph 15, which gives the Commission power to settle such disputes pertaining to symbols between factions of a party, is entirely legal, for this power accrues from Article 324 that creates the Commission and vests in it the power of superintendence over elections.
Conclusion
In India’s 72nd year as a constitutional democracy, the free and fair regulation of political parties by the Election Commission and the courts is a crucial part of our political success as a nation. The Supreme Court’s thoughtful judgment decades ago is a realisation of the importance accorded to judicial oversight of our political parties.
The ‘States’ Startup Ranking 2021’ was recently released.
‘States’ Startup Ranking 2021’: Key Highlights
Gujarat and Karnataka are the top achievers in creating startup ecosystems for aspiring entrepreneurs.
Gujarat was recognized as having the best performance for the third time in a row.
The top performing states included Jammu and Kashmir, Kerala, Maharashtra, Odisha, and Telangana.
The leaders’category includes Punjab, Tamil Nadu, Uttarakhand, Uttar Pradesh, Andaman and Nicobar Islands, Arunachal Pradesh, and Goa.
Chhattisgarh, Delhi, Madhya Pradesh, Rajasthan, Chandigarh, Puducherry, and Nagaland are among the states and UTs that fall under the category of aspiring leaders.
Andhra Pradesh, Bihar, Mizoram, and Ladakh are among the states in the category of developing startup ecosystems, according to the study.
What are Startups?
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable economic model.
While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder.
At the beginning, startups face high uncertainty and have high rates of failure, but a minority of them does go on to be successful and influential. Some startups become unicorns.
Why do we need start-ups?
Start-ups make an indispensable contribution in the economic growth of a nation.
(1) Employment Generation
Entrepreneurship creates more avenues for new job in the economy. This would help harness the readily available employment in our country. This mission will reduce the burden from service and agricultural sector and enables condition of balance in economy.
(2) Creation of Wealth
Since entrepreneurs are attracting investors by investing their own resources, the people of the nation would get benefit when startups grow. Since the money is sharing with the society, wealth is creating within the nation.
(3) Better standard of living
Startups can implement innovations and technologies to improve the living of people. There are many startups who are working for rural areas to develop the community.
(4) Economic growth
GDP plays a vital role in enhancing the economic growth of a country. By supporting and encouraging more startups, it is possible to generate more revenue domestically and consumer’s capital will also flow around the Indian economy.
(5) Source for FDI
It has been noted that in recent years, the volume of foreign investments made in the Indian startup is quite huge. The foreign investments in the startups act as an easy capital raise and technological investment for the startups which makes them readily accept the investments coming towards them.
(6) Culture of Entrepreneurship
Startups encourage a culture of entrepreneurship and innovation which leads to create new job opportunities and provide support to the economy. Success stories motivate talented youth to start their own ventures and help them to become a job provider instead of a job seeker.
(7) Advancement in technology
Startups are more focused on new technologies and cutting-edge innovation. Free from a multilayered corporate bureaucracy, startups are more agile and able to build an idea into a product and improve it upon consumer demand with faster decision-making communications.
About Startup India Scheme
Startup India is an initiative of the Government of India.
The campaign was first announced by PM Modi during his speech on 15 August 2015 address from the Red Fort.
The action plan for this initiative is focusing on three areas:
Simplification and Handholding.
Funding Support and Incentives.
Industry-Academia Partnership and Incubation.
An additional area relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances.
It was organized by the Department for promotion of industry and internal trade (DPI&IT).
An evaluation of the Scheme
(A) Successes
Investment: $63 Bn has been invested in Indian startups in the last five years.
Growth: Between 2016 and August 2020, Startup India programme has recognised over 34.8K startups.
Rise of Unicorns: Unicorns are privately held, venture-capital-backed startups that have reached a value of $1 billion. From 17 Unicorns in 2018 the number went up to 38 in 2020 and it’s 71 and counting in 2021.
IPRs: Among these, 8.3K startups received intellectual property rights (IPR) fee benefits, while over 2.6 lakh people enrolled in the entrepreneurship-focused learning courses.
Gender inclusion: In terms of gender diversity across workspaces in India, just 9% of the board members of the top 20 unicorn startups in India are women.
(B) Failures
Clearances: The Startup India scheme had received around 1368 applications by mid-December last year out of which DPIIT has only accepted 502 application forms and recognized them as ‘startups’.
Delay: The delay and lack of efficiency is a cause for the startup plan to fail in some cases.
Funding: The concerns of domestic angel and VCs on capital gains tax remain largely unaddressed.
EODB issues: Venture capital firms and angel investors are more cautious while investing in Indian startups. It is because the conditions, the ease of capital flow and doing business are not stable enough.
Some lacunae of the scheme
Definitional issues: The scheme is criticized by professionals because of the definition of Start-up provided in the scheme. The definition states that a mere act of developing products or services that do not have the potential for commercialization or have no or limited incremental value for customers would not be a start-up.
Test of ‘Innovation’: Each startup is scrutinized by an Inter-Ministerial Board (IMB) to see if the startup is ‘innovative’ – i.e. if it is unique or a world first. Most of start-ups would lie outside the purview of this definition.
Red tapism: Further eligibility of start-up, lies under definition or not, shall be approved or certified by an inter-ministerial board which is a retrograde step and against the government policy of ‘Min Government Max Governance’.
Taxation mirage: A tax break of three years has been given in the scheme. Anyone who has business sense knows that only a few of start-ups will be profitable in the first three years and so this handful can avail them of the tax break.
Patenting terms: The other option for startups to get tax benefits is to get a patent. And we all know that it takes several years to register a patent in India, and if royalty profits accrue before then, the tax benefits will be denied.
Heavy concentration in megacities: Entrepreneurship continues to be “highly concentrated” in three megacities, namely, Mumbai, Bengaluru and Delhi NCR. Such concentration can lead to increased economic inequality and hinder the emergence of entrepreneurs from industries other than those belonging to the clusters.
Inherent challenges to Start-ups in India
Financial scarcity: Availability of finance is critical for startups and is always a problem to get sufficient amounts.
Lack of Infrastructure: There is a lack of support mechanisms that play a significant role in the lifecycle of startups which include incubators, science and technology parks, business development centers etc.
Regulatory bottlenecks: Starting and exiting a business requires a number of permissions from government agencies. Although there is a perceptible change, it is still a challenge to register a company and exiting it.
Compliance hurdles: For example earlier Angel tax, which stands removed no, falls under corruption and bureaucratic inefficiencies as it takes the focus of entrepreneurs away from building a product or service to responding to tax notices and filing appeals.
Low success rate: Several startups fail due to poor revenue generation as the business grows. As the operations increase, expenses grow with reduced revenues forcing startups to concentrate on the funding aspect, thus, diluting the focus on the fundamentals of business.
Lack of an Innovative Business Model: To be successful a startup must be innovative. Unfortunately, Indian startups are less innovative than startups elsewhere. Many Indian startups don’t have an original business idea that is disruptive and by which consumers will be provided with better service.
Non-competitive Indian Markets: Too many startups serving too few consumers are saturating the Indian market. Most startups serve the fraction of Indians who live in urban India. The majority of Indians who live in rural areas and small towns remain untouched by most startups.
Recent challenge: Downtime for Edu-techs
Pandemic accelerated edtech’s ascent:
Massive funding
High rates of enrollment and
Positive word of mouth
However, the metric that the tech companies are using to show their growth is the number of paid enrollments that they achieve by their army of salesmen and NOT the results or true learning outcomes.
They never cared to track learning outcomes through some randomized control trial which would take a lot of money and time.
Edtech companies sell their products without putting a thought if a particular student really needs them.
Their one-size-fits-all sales strategy is now backfiring. It helped them boost their revenue, but without results.
Various initiatives by the Govt.
There are numerous government initiatives to assist start-ups,
MUDRA Scheme: Through this scheme, start-ups get loans from the banks to set up, grow and stabilize their businesses.
SETU (Self-Employment and Talent Utilization) Fund: Government has allotted Rs 1,000 Cr in order to create opportunities for self-employment and new jobs mainly in technology-driven domains.
E-Biz Portal: Government launched e-biz portal, India’s first government to business portal that integrates 14 regulatory permissions and licenses at one source to enable faster clearances and improve the ease of doing business in India.
Credit Guarantee Fund: launched by the GoI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.
Fund of Funds for Start-ups (FFS): 10,000 Rs corpus fund established in line with the Start-up India action plan under Small Industries Development Bank of India (SIDBI) for extending support to Start-ups.
Tax Sops: Tax exemption on Capital gain tax, Removal of Angel tax, Tax exemption for 3 years and Tax exemption in investment above Fair Market Value.
Way Forward
The best of the Indian startup ecosystem still lies ahead.
There is a need for policies and progressive strategies from governments to encourage startups and provide access and assistance in key areas including tax clarity, incubation, affordability and licensing.
In any case, governments should be well prepared and dedicated to creating a culture of startups to impact the entrepreneurial ecosystem in their cities, countries and citizens.
Innovation and economic growth depend on being able to produce excellent individuals with the right skills and attitudes to be entrepreneurial in their professional lives.
It is critical, therefore, that nations set out to develop entrepreneurial skills, attitudes and behaviour in the school systems at all levels as a part of the lifelong learning process.
To produce effective entrepreneurs who can initiate change, governments need to cut ‘red tape’ and streamline regulations.
Funding, another daunting and difficult challenge, has to be resolved at earliest with liberal funding mechanisms.
Apart from all these concerns, Start-up India has potential to solve India’s problems and create jobs. Nonetheless, the challenges and changes are not to be dreaded but defeated.
Conclusion
The current economic scenario in India is in expansion mode. Indian Startups are now spread across the length and breadth of the entire country.
The Indian government’s policies like Make in India, Digital India, Atmanirbhar etc. shows the enthusiasm of centre to imbibe reforms.
With the government going full hog on Startups, it could arrest the brain drain.
Efforts are being made by diverse stakeholders in the Indian startup ecosystem to elevate domestic policies in concurrence with global trends.
The monumental indirect tax reform, the Goods and Services Tax (GST), has completed five years in existence. The article analyses the impact of GST on inflation.
Background
Before the implementation, it was said that it would be a boon to the economy in terms of higher revenue buoyancy, lower inflation, higher revenue, higher growth etc.
During the 12 months preceding GST implementation, the Consumer Price Index (CPI) inflation was 3.66%, while it increased to 4.24% post-GST in the next 12 months.
A similar pattern was observed in Australia, New Zealand, and Canada.
An Australian Competition and Consumer Commission study showed that GST initially increases inflation.
How GST can affect prices
In theory, implementing GST should not lead to a change in overall inflation.
The revenue-neutral rate (RNR) is calculated so that it would not cause higher inflation.
But revenue neutrality does not mean that prices would not go up or down in the economy.
This is because the weight of goods in the consumption basket and their contributions to indirect tax collections are not the same.
Importantly, the effect of GST on the prices of certain goods and services depends on the structure and design of taxation.
The RBI, in a 2017 report, showed that about half of the groups of items that GST covers are not in the CPI basket.
So, the effect of GST on prices was expected to be small.
Finally, prior to the GST implementation, it was expected that prices would go down because GST harmonises indirect tax rates and eliminates the cascading effect.
Thus, whether GST has any effect depends on how different factors affect each other.
So, how can we ascertain whether GST has had an inflationary impact in India?
Inflationary impact can be assessed by turning to statistical modeling?
Statistical results provide us with an interesting picture of the impact of GST on price levels.
First, we look into the overall price index (CPI).
Here, the actual CPI growth in the study period is 4.61%, whereas the counterfactual estimate of inflation is 3.24%.
This implies that without the GST implementation, the CPI inflation would have been 3.24%.
This indicates that with the implementation of GST, CPI increased by 1.37 percentage points (pp).
Second, CPI core inflation (which strips off volatile components such as food and fuel from the headline inflation) increased by 1.04pp in the post-GST period (actual inflation was 4.57%, counterfactual inflation was 3.53%).
Third, GST is found to have a significant positive impact on inflation of commodity groups such as paan, tobacco and intoxicants, clothing.
What explains rise in inflation post GST?
Rise in tax rate of some goods: The rise in inflation post-GST implementation could be due to the rise in the tax rate of some goods and services, the inclusion of business activities that were not taxed earlier, or the market structure.
The average weighted GST rate was designed to be neutral, so it might not have contributed much to the observed higher inflation.
Coverage of business activities under GST not taxed earlier would result in higher prices since the firms would pass on the cost to the consumers.
Market power: There is another possibility which would cause result inflation after the GST implementation.
As Joseph Stiglitz opined, rising market power is bad for the economy as it raises economic inefficiency and inequality and lowers the economy’s resiliency.
Further, taking advantage of market power, it is possible that most firms would have passed the taxes to end consumers.
With the existence of market power, firms’ price includes a significant mark-up over marginal costs.
Some results point out the possibility of profiteering in select segments after GST.
To pre-empt this possibility, the government set up National Anti-profiteering Authority (NAA).
Way forward
NAA should monitor the prices of critical or essential goods and services to see the price impact of GST.
Similarly, the Competition Commission of India should observe anti-competitive producer behaviour that hurts consumers via excessive price increases.
These measures may ensure that producers do not take advantage of the GST.
Conclusion
Statistical results suggest that GST implementation has resulted in a decrease in inflation of food items and raised inflation of non-food items.
All emerging markets (EMs), including India, are facing outflows of foreign portfolio investment as the US Fed tightens.
Inflatioon and exchange rate
Exchange rate as response to capital flow: Canonical inflation targeting wants exchange rates to float as the correct response to capital flows.
Policy should respond to exchange rate fluctuations only after they affect inflation or output.
Any interest rate defence of the exchange rate would reduce the focus on inflation.
But most EMs intervene in foreign exchange (FX) markets in order to reduce volatility.
A research paper by Edward F Buffie and co-authors indicate that FX intervention greatly enhances the efficacy of inflation targeting.
Two instruments for two targets work better than trying to do everything through the interest rate.
Excess depreciation of currency can raise inflation.
Other researches such as from the IMF, argues for the use of prudential capital flow management techniques and finds reserve accumulation and its use reduces risks and crises in EMs.
Policies followed by RBI to reduce volatility
Not fully convertible: RBI’s sequenced approach to capital account convertibility, where, for example, debt inflows are only allowed as a percentage of domestic markets, saved it from the kind of interest rate volatility Indonesia experienced during the taper tantrum and is helping it now.
More liberalisation measures can be taken when needed.
India’s large foreign exchange reserves have allowed rupee depreciation to be lower than most other countries as the dollar strengthens.
The cost of holding foreign exchange: There are costs of holding large reserves and of too much intervention.
The central bank ends up supporting the US and not its own government borrowing and it sacrifices interest income.
But holding reserves and then not using them when required is the most costly.
Again use of multiple instruments can mitigate over-reliance on intervention.
Much research and recent experience suggest that all available instruments should be used to moderate volatility in nominal variables.
Why increasing interest rates will be ineffective in reducing capital outflow
A common suggestion is to raise policy rates to maintain a historical gap with US Fed rates.
But such an interest rate defence did not prevent outflows during the taper tantrum or in 2018 and only triggered a slowdown.
It forgets that interest-sensitive flows are only about 8 per cent of India’s foreign liabilities.
There have been no debt outflows in 2022 despite a narrowing interest differential.
Equity outflows also seem to be tapering.
Monetary tightening that dampens expectations of growth, induces more outflows as country risk-premiums rise.
Issues with less intervention
Some want less intervention and more rupee depreciation in order to improve the current account deficit.
But less intervention can lead to a chaotic fall and jittery markets as we saw in 2011.
It is best for policy to prevent over-depreciation due to global risks.
After about 4 per cent nominal depreciation, India’s real effective exchange rate against a basket of 40 countries is approaching 100.
That implies the real exchange rate is too depreciated since India has had relatively more structural reform and productivity growth.
Future corrections toward equilibrium will require a rise of the rupee.
High oil prices are a risk for India’s balance of payments, but multiple types of adjustments have the best chance of succeeding.
Why sometimes policy changes are introduced as surprise?
Market participants want clear communication and no surprises for markets.
Forward guidance is an important part of inflation targeting. But when markets tend to overreact and are influenced more by the US than by Indian policy, the best way to introduce a policy change may be by surprise.
Thus markets had priced in excessive rate hikes after the US Fed began tightening.
The steep surprise hike in Indian repo rates prevented additional rate hikes from being priced in as domestic rate-rising began.
Conclusion
Inflation targeting is an art that requires skill, attention to context and an open mind.
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In the intro, mention the rupee touching the lowest ever value in recent times.
In the body, mention the factors such as rising inflation in the US, rising oil prices, withdrawal of investment from equity market, decreasing forex etc. In the next part mention challenges such as fear of the US fed increasing rates and oil prices driving factors behind the value of rupee and therefore reducing the effectiveness of the RBI intervention.
Conclude by mentioning the need it is hard to see when the pressure on the rupee will ease, despite RBI’s best efforts.
In the intro, mention the significant Indo-Pacific presence with the prime ministers of Australia, Japan, and New Zealand as well as the president of South Korea participation in a NATO summit.
In the intro, mention the tendency in small European countries to balance against Russia by aligning with US. On the similar lines Asian countries relates with the small European countries on that count against the expansive Chines policies. These countries are reacting by creating sophisticated national military capacities, resolving mutual differences and strengthening security cooperation and bolstering alliances with the US.
Conclude by mention that the egregious expansionism of Russia and China, the strategic integration of the Asian and European geopolitical theatres has now begun.
1. About Shruti Sharma- Her UPSC Journey & Hobbies
She started preparing for UPSC in JMIR coaching academy.
Name
Shruti Sharma
Age
26
Resident
Bijnor District, UP
Exam
UPSC 2021
AIR
1
Attempts
2
Optional Subject
History
Hobby
Reading Books, Watching Movies, Etc.
Shruti always desired to serve Indian by entering IAS. However, she couldn’t achieve success in her first attempt. After facing failure once, she realized her missteps and worked stronger in her second attempt to secure All India Rank 1 in the UPSC-CSE 2021. she was confident enough in the 2nd attempt about qualifying for the exam but was surprised when she found out that she topped it. She followed, from the beginning, her own strategy under her mentor’s guidance.
2. Family and Education
Father
Sunil Dutta Sharma. He is an architect engineer. Runs a school
Mother
An MSc. graduate.
Brother
A state Level Cricketer
Grand Father
Doctor
Her family consists of her parents, brother, and grand mother. Though all of them studied science but only Shruti pursued Arts.
Shruti’s Educational Background:
Early schooling from Cambridge Primary School. After that she passed 12th standard from Sardar Patel Vidyalaya.
Shruti completed her graduation in History honors from St. Stephen College
She pursued a Master’s Degree in Modern History from Jawaharlal Nehru University.
3. UPSC Strategy
Shruti has really gone through a different journey as a UPSC examinee. He did not blindly follow the advice of others. Rather, he followed his own strategies and methods that were appropriate for his level of intelligence.
My strategy was simply to focus on her own notes, emphasizing her practice of writing answers for the main exam. she was satisfied with her performance on the test and optimistic about a good result but it was excellent to be at the top of the merit list.
For prelims she practiced a lot.
For mains she regularly gave some effort to make answer structure better.
She started UPSC preparation 4 years ago by studying NCERTs.
Since current affairs are possibly the most significant part of the IAS exam She backed her preparation with day-to-day newspaper readings to give sufficient focus to the happenings nationally and internationally.
She joined a few online mock test series for Prelims and mains.
She was meticulous about study materials. she consolidated her study materials and revised them as many time as she could.
Be patient and stay focused all the time.
Always tried to improve her performance.
made her own notes.
From very starting, she carried her preparation under a senior teachers and mentors.
She didn’t follow any super different strategy of planning. She executed the same strategy differently.
4. Shruti Sharma’s Notes & Booklist
5. Motivation and inspiration
Shruti didn’t search for outer motivation. Her family was the biggest one. Shruti’s family dreamed of her being an IAS officer, so she fulfilled their dream of becoming an IAS officer. Passing the UPSC exam is not easy as it is the most difficult exam in the country and a person has to clear three rounds to become an IAS or become a collaborative service like IPS, IFS, etc. Besides her family, she showed her gratitude to her teachers and mentors who were the real torch bearer all along the crooked path of UPSC.
The Centre has extended the tenure of The Commission to Examine Sub-categorisation of Other Backward Classes (OBCs) headed by Justice G Rohini, former Chief Justice of Delhi High Court.
Why in news?
The Commission, constituted nearly five years ago, has got 10 extensions so far.
It now has a deadline until January 31 next year to submit its report.
Who are the OBCs?
Other Backward Class is a collective term used to classify castes which are educationally or socially disadvantaged.
It is one of several official classifications of the population of India, along with General Class, Scheduled Castes and Scheduled Tribes (SCs and STs).
The OBCs were found to comprise 55% of the country’s population by the Mandal Commission report of 1980, and were determined to be 41% in 2006.
What is the Sub-Categorization of OBCs?
The idea is to create sub-categories within the larger group of OBCs for the purpose of reservation.
OBCs are granted 27% reservation in jobs and education under the central government.
This has been a legal debate for other reservation categories too.
In September last year, a Constitution Bench of the Supreme Court reopened the debate on sub-categorization of SCs and STs for reservations.
Establishment of Rohini Commission
Only a few affluent communities among the over 2,600 included in the Central List of OBCs have secured a major part of the reservation.
Sub-categories within OBCs would ensure “equitable distribution” of representation among all OBC communities.
It was to examine this that the Rohini Commission was constituted on October 2, 2017.
What is the Commission’s brief?
It was originally set up with three terms of reference:
To examine the extent of inequitable distribution of benefits of reservation among the castes or communities included in the broad category of OBCs
To work out for a scientific approach for sub-categorization within such OBCs
To take up the exercise of identifying the respective castes or communities or sub-castes or synonyms in the Central List of OBCs
To study the various entries in the Central List of OBCs and recommend correction of any repetitions, ambiguities, inconsistencies and errors of spelling or transcription.
When was it meant to submit its report?
At the time it was set up, the Commission was given 12 weeks to submit its report, but has since been given 10 extensions.
There is a lot of work to be done.
The NCBC until December 2020, over Rs 1.92 crore had been spent on the Commission including salary, consultant fees and other expenses.
What progress has it made so far?
The Commission is ready with the draft report on sub-categorization.
Among the challenges it has faced, one has been the absence of data for the population of various communities to compare with their representation in jobs and admissions.
The Commission proposed for a all-India survey to estimate caste-wise population of OBCs.
Since then the government has been silent on this, whereas groups of OBCs have been demanding enumeration of OBCs in the Census.
What have its findings been so far?
In 2018, the Commission analysed the data of 1.3 lakh central jobs given under OBC quota over the preceding five years.
It examined OBC admissions to central higher education institutions, including universities, IITs, NITs, IIMs and AIIMS, over the preceding three years.
The findings were:
97% of all jobs and educational seats have gone to just 25% of all sub-castes classified as OBCs;
95% of these jobs and seats have gone to just 10 OBC communities;
983 OBC communities — 37% of the total — have zero representation in jobs and educational institutions;
994 OBC sub-castes have a total representation of only 2.68% in recruitment and admissions.
Conclusion
Thus it is visible that a small chunk of communities is enjoying almost the entire OBC reservation.
Hence it is a cause of worry and needs due cognizance at a larger level.
The Odisha government is chasing an ambitious target of completing the implementation of the Forest Rights Act (FRA) by granting all kinds of rights mandated under the historic Act by 2024.
What is Forest Rights Act (FRA)?
The symbiotic relationship between forests and forest-dwelling communities found recognition in the National Forest Policy, 1988.
The policy called for the need to associate tribal people in the protection, regeneration and development of forests.
The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, was enacted in this regard.
It aimed to protect the marginalised socio-economic class of citizens and balance the right to environment with their right to life and livelihood.
Provisions of the 2006 Act
The Act recognizes that tribal and other traditional forest-dwelling communities would be hard put to provide documentary evidence for their claims.
Rule 13 of the Act, therefore, stipulates that the Gram Sabhas should consider more than one evidence in determining forest rights.
The rule sanctions a wide range of evidence, including “statements by village elders”, “community rights” and “physical attributes such as houses, huts and permanent improvements made to land such as levelling, bunds and check dams”.
Why in news now?
The forest rights claims of these tribes and forest-dwellers are mostly rejected by the States.
Being poor and illiterate, living in remote areas, they do not know the appropriate procedure for filing claims.
The gram sabhas, which initiate the verification of their claims, are low on awareness of how to deal with them.
Why are forest rights important for tribals?
Aimed at undoing the “historic injustice” meted out to forest-dependent communities due to curtailment of their customary rights over forests, the FRA came into force in 2008.
It is important as it recognises the community’s right to use, manage and conserve forest resources, and to legally hold forest land that these communities have used for cultivation and residence.
It also underlines the integral role that forest dwellers play in the sustainability of forests and in the conservation of biodiversity.
It is of greater significance inside protected forests like national parks, sanctuaries and tiger reserves as traditional dwellers then become a part of management of the protected forests.
Try answering this PYQ
Q.Under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, who shall be the authority to initiate the process for determining the nature and extent of individual or community forest rights or both?
(a) State Forest Department
(b) District Collector/Deputy Commissioner
(c) Tahsildar/Block Development Officer/Mandal Revenue Officer
States of Nebraska, Minnesota and Illinois in the US were hit by a storm system called a Derecho which turned the skies green.
What is a Derecho?
A derecho is a widespread, long-lived, straight-line windstorm that is associated with a band of rapidly moving showers or thunderstorms.
The name comes from the Spanish word ‘la derecha’ which means ‘straight’.
Straight-line storms are those in which thunderstorm winds have no rotation unlike a tornado.
Being a warm-weather phenomenon, a derecho generally – not always – occurs during summertime beginning May, with most hitting in June and July.
However, they are a rare occurrence as compared to other storm systems like tornadoes or hurricanes.
Why does the sky turn green during the derecho?
Severe thunderstorms result in a ‘green sky’ due to light interacting with the huge amount of water they hold.
The big raindrops and hail scatter away all but the blue wavelengths due to which primarily blue light penetrates below the storm cloud.
This blue then combines with the red-yellow of the afternoon or the evening sun to produce green.
Are there different types of derechos?
They fall into three categories – progressive, serial and hybrid.
Progressive derecho is associated with a short line of thunderstorms that may travel for hundreds of miles along a relatively narrow path. It is a summer phenomenon.
Serial derecho, on the other hand, has an extensive squall line – wide and long – sweeping across a large area. It usually occurs during spring or fall.
Hybrid derecho are that ones have the features of both progressive and serial derechos.
Where do derechos usually occur?
They mostly occur across central and eastern parts of the United States.
Derechos have also been documented elsewhere across the world.
In 2010, Russia witnessed its first documented derecho.
They have also swept through Germany and Finland, and more recently in Bulgaria and Poland.
The judgment by a two-judge Bench of the Supreme Court dismissed the Special Leave Petition by Apex Laboratories to claim deduction on freebies given to doctors.
About the case
In the said case, the company was giving out freebies to doctors in order for them to create awareness about a health supplement it was manufacturing called Zincovit.
Prohibited by the law: Upholding a decision by the Madras High Court, the Bench said that the act of pharmaceutical companies giving freebies to doctors is clearly ‘prohibited by the law’.
Further, it cannot be claimed as a deduction under Section 37(1) of the Income Tax Act, 1961.
The judge said that in the process of interpretation of the law, it is the responsibility of the court to discern the social purpose which the specific provision subserves.
Invoking the principle of implied condition, the Court relied on the precedents in the case of P.V. Narasimha Rao (1998) 4 SCC 626 under the Prevention of Corruption Act, and Jamal Uddin Ahmad (2003) 4 SCC 257 under the Representation of the People Act.
Immoral practice
Breach of trust: Laying emphasis on the fiduciary relationship between doctor and patient, the Court noted that a doctor’s prescription is considered as the final word on medication by the patient even if the cost of such medication is unaffordable.
In a situation where such trust is reposed in doctors, having prescriptions manipulated by the lure of freebies is immoral.
Driving up the cost of medicine: The Court was conscious that the cost of such freebies is factored in the cost of medicines sold, in turn driving up their prices and perpetuating a publicly injurious cycle.
This fact was taken note of by the Parliamentary Standing Committee on Health and Family Welfare in its 45th report, dated August 4, 2010.
Report from the US: In its elaborate judgment, the Supreme Court bench also took note of a report issued by the United States Department of Health and Human Services Office called “Savings Available Under Full Generic Substitution of Multiple Source Brand Drugs in Medicare Part D”.
Here, it was stated that the beneficiaries could have saved over $600 million in out-of-pocket payments had they been dispensed generic equivalent drugs.
In the U.S., by the reason of the Physician Payments Sunshine Act 2010 also known as Section 6002 of the Affordable Care Act (ACA) of 2010, the law compels the manufacturers of drugs, devices, biologic and medical supplies to report to the Centers for Medicare and Medicaid Services, on three broad categories of payments or transfers of value.
Way forward
Keeping the price under control: Even though the Drug Price Control Order and Drugs and Cosmetics Act are there on the statute book, there is hardly any action to keep the sale price of medicines under control with due and proper investigation into their so-called research and development costs and keeping their profit margins within a prescribed limit.
The law should be amended to compel the manufacturer of drugs to sell at the verified genuine cost, that also factors in a reasonable profit margin for each product by bringing manufacturers, both foreign or domestic, under the control of the MCI or any other equivalent body.
This must be at a uniform rate throughout the country; further, classified life saving drugs should be sold at cost only or even at subsidised rates.
Conclusion
This judgment can also go far. It should be debated and applied to other unethical practices and expenditure out of public funds.
For the first time, the prime ministers of Australia, Japan, and New Zealand as well as the president of South Korea participated in a NATO summit.
How Ukraine war revived NATO
More than a decade ago — in 2010 — when NATO agreed on a strategic doctrine, it was discussing it with its Russian partners.
There was no reference to China in the 2010 strategic concept.
At that time, the West was trying to deepen ties with Russia and build expansive economic cooperation with China
In unveiling a new strategic conception for the alliance in the wake of the war in Ukraine, NATO has declared Russia “the most significant and direct threat to Allies’ security and to peace and stability in the Euro-Atlantic area”.
Not ignoring the threat from China: NATO has declared that China’s “stated ambitions and coercive policies challenge our interests, security and values.”
The last few months have seen a closing of ranks in NATO that is now determined to cope with the Russian threat.
Germany — which has long sought good political and commercial relations with Russia — has agreed to raise its defence spending and do more for European security.
Sweden and Finland have ended their historic neutrality and decided to join NATO.
The US is doubling down on its military commitments to Europe.
The last few decades of peace and prosperity in Europe and Asia had enormously increased the influence of Russia and China in their neighbourhoods.
But the imperial ambitions of both — rooted in a profound misreading of their leverage — have produced a massive geopolitical backlash.
Consolidation of old alliances: Rather than sharpen the contradiction between the US and its regional allies, Russian and Chinese actions have helped consolidate old alliances and gave birth to new security coalitions.
Why small European countries seek alliances and how it applies to Asia as well
Small countries seek alliances when their fears of more powerful neighbours become acute.
Russia’s invasion has sent countries on Moscow’s western flank looking for NATO cover.
Most Central European states don’t want to rely purely on a European response to the Russian challenge.
They suspect France and Germany are more likely to accommodate Moscow at their expense than stand up to Russia.
For the Central Europeans, it is the US that offers a real balance against Russia.
It should not be too difficult for India to understand why some Asian countries are turning to NATO.
After all, India’s own turn to the Quad was a direct consequence of Chinese actions on the disputed bilateral frontier.
How China’s expansionist policies are reshaping Asian security landscape
Way back in 2007 — when India conducted a mere joint naval exercise with the US, Japan, Australia and Singapore — Beijing called it a precursor to an “Asian NATO”.
Australia and New Zealand are a bit further away but are deeply tied to the Chinese economy.
For those like Japan, who face a direct threat from China, “Ukraine could well be about the future of Asian security”.
What has happened in case of Ukraine created fear in Asian, at a moment when China has become so much more powerful than its neighbours.
Improving national capability: Creation of more sophisticated national military capabilities has been the first priority of some of Beijing’s neighbours.
Resolution of differences: Resolving mutual differences and strengthening security cooperation — for example between Japan and South Korea — has been another.
Alliance with US: Boosting bilateral alliances with the US is yet another.
Diversification of security partnership: Even as nations in the region reboot ties with the US, Asia is also seeking to diversify its security partnerships.
Engagement with Europe: This has led to greater Asian engagement with Europe as well as the creation of new Indo-Pacific regional institutions – including the Quad, and the AUKUS.
Conclusion
Thanks to the egregious expansionism of Russia and China, the strategic integration of the Asian and European geopolitical theatres has now begun. Whether they like it or not, all countries in Europe and Asia will have to deal with the consequences.
