Policy Wise: India’s Power Sector

Power sector reforms

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Affordability of electricity

This article analyses the issue of affordability of electricity in the country and the factors making it expensive.

How recent changes increased subsidy burden

  •  Recent policy measures like the the “Saubhagya” scheme have remarkably improved the first 3 ‘A’s, i.e., awareness, accessibility and availability.
  •  It has also increased the cost of supply due to an increase in LT distribution network length necessitating more conductors, meters, transformers, etc.
  • Most of the newly-added consumers are from rural areas of low-income states like UP and Bihar.
  • They belong to subsidised consumer categories, viz. agriculture, rural-domestic, etc.
  • Thus, the subsidy burden of respective state governments has increased.

Affordability of subsidy by States

  • The state’s capacity to service power subsidy of its BPL consumers is dependent on its per capita income which varies from state to state.
  •  The central government provides no subsidy for this purpose.
  • Therefore, making electricity affordable for consumers becomes a priority for the power sector.
  •  Limiting focus only to reduction of the cross-subsidy burden of industries may not be fruitful.

Policy steps to make electricity affordable

1) Expedite overdue distribution reforms

  • While generation and transmission sectors have been unbundled, unbundling (segregation of carrier and content business) of distribution has been started yet.
  • Privatisation of, and governance reforms in, state-owned distribution companies are likely to unlock huge value and provide efficiency gains through loss reduction for making power affordable.

2) Capping of stranded capacity charges

  • As of now, we have surplus installed capacity of around 370 GW against a peak demand of 183 GW.
  • So, any fresh capacity addition should be limited to projected load demand growth and replacement of retiring power plants.
  • This will reduce the stranded capacity charges the discoms are currently paying to gencos under their long-term power purchase agreements without taking any power from them under availability-based tariff regime.

3) Scrap cost-plus regime

  • Now, when the country has sufficient installed capacity, it makes no sense to provide a risk-free 15.5% tax-free (or 22% after-tax) return on equity to the power companies.
  • No new project (except hydro and nuclear) should be allowed on cost-plus route or MoU route under section 62 of the Electricity Act.

4) Restructure normative debt-equity financing to 80:20

  • At present, the regulatory norm used for tariff computation of projects is 70:30 debt: equity.
  • Debt servicing is limited only to the term of the loan, i.e., up to 12 years, but Return of Equity is allowed in perpetuity even after the plant has fully depreciated.
  • This needs to be limited to the useful life of the unit.

5) No double-whammy for consumers:

  • National Clean Energy Fund was created as a non-lapsable fund in 2010 for promoting clean technology, and since then around Rs 1 lakh crore has been collected from coal cess.
  • However, most of it has been diverted and used for other purposes like funding to states for their GST losses, etc.
  • Asking gencos to install Fuel Gas Desulfurization and pass on the cost to the consumer amounts to a double whammy for the consumers who first paid the coal-cess and now will have to bear the FGD cost also.
  • We should stop using cess as a tax and NCEF should be used to fund the clean energy initiative and FGD installation etc.

Consider the question “What are the factors responsible for making the electricity costly in India. Suggest the pathways to make it affordable to all.”

Conclusion

Making electricity affordable following these steps would be instrumental in the progress of the nation.


Source: https://www.financialexpress.com/opinion/powering-reforms-bringing-power-psus-under-competitive-bidding-will-help-in-tariff-reduction/2057940/

B2BASICS

Electricty generation,transmission and Distribution

Saubhagya scheme

Forest Conservation Efforts – NFP, Western Ghats, etc.

Myth of the pristine forest

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Critical Wildlife Habitat (CHW) under FRA

Mains level : Forest dwellers role in its conservation

  • The COVID-19 pandemic has driven migrant workers back to their villages, including many situated inside or on the fringes of forested areas, including sanctuaries and national parks.
  • Even as they seek to remake livelihoods there, a new battle has emerged between the forest department (FD) and these local communities.
  • It pertains to the declaration of a Critical Wildlife Habitat (CWH), which a PIL in the Bombay High Court seeks to get the department to urgently notify.

Try this question for mains:

Forest dwellers are integral to the very survival and sustainability of the forest ecosystem. Analyse.

What is Critical Wildlife Habitat (CHW)?

  • CWH is a provision under the Forest Rights Act, 2006 (FRA).
  • The Act primarily focuses on recognising the historically-denied rights of forest-dwellers to use and manage forests.
  • The CWH provision, however, is an attempt to assuage concerns of wildlife conservationists.
  • It allows for the possibility that in protected areas (PAs) — wildlife sanctuaries and national parks — these rights could be attenuated, and, if absolutely necessary, forest-dwellers could be relocated in the interest of wildlife conservation.

Forest dwellers vs. Wildlife

  • Conservationists believe that wildlife needs absolutely “inviolate” areas — those devoid of humans and human activities.
  • Many others believe human-wildlife co-existence is generally possible and must be promoted if we are to have “socially just conservation”.

Achieving balanced conservation: The FRA provisions

  • A careful reading of the CWH provisions in the FRA shows that it is open to both possibilities, as long as they are arrived at through a rigorous and participatory process.
  • It requires setting up a multi-disciplinary expert committee, including representatives from local communities.
  • It also requires determining — using “scientific and objective criteria” and consultative processes — whether, and wherein the PA, the exercise of forest rights will cause irreversible damages.
  • It then requires determining whether coexistence is possible through a modified set of rights or management practices.
  • Only if the multi-stakeholder expert committee agrees that co-existence or other reasonable options are not possible, should relocation be taken up, again with the informed consent of the concerned gram sabhas.
  • For any such process to commence, the Act requires that all forest rights under the FRA must first be recognised.

Issues with the FRA

(1) Concerns of eviction

  • Hardline conservationists took FRA as a great opportunity to complete its agenda of evicting forest-dwellers from PAs.
  • It has been observed that many villages were resettled when they had rights claims pending, others had their claims illegally rejected or incompletely granted, and several had not even applied to this controversy erupted.
  • However, there are settlements in some of these PAs, and of course, people in villages adjacent to all the PAs are likely to have customary rights.
  • In spite of the court ordering rapid completion of the rights recognition process, there has been almost no progress on this front.

(2) Issues with expert committees

  • The constitution of the expert committees is faulty. They do not contain expert social scientists familiar with the area. Wildlife enthusiasts are sometimes substituted for experts in life sciences.
  • Many members have challenged the very constitutionality of the FRA, making a travesty of the idea of “objectivity” in the process.

(3) Criteria judging the damages

  • The criteria being used by the committees to determine the threat of “irreversible damage” to wildlife are quite extreme and are not supported by any consensus even among ecologists.
  • There are no objective criteria decided yet by these committees.

Conclusion

  • The FRA begins by recognising that forest dwellers “are integral to the very survival and sustainability of the forest ecosystem”.
  • In that context, the CWH provision should not be seen as simply a tool for evicting forest-dwellers to create so-called “inviolate” spaces.
  • It is an opportunity to rigorously and participatorily explore all avenues of co-existence.
  • Such co-existence is indeed possible. In general, forest-dwellers harbour both the knowledge and the attitudes needed for conservation.
  • Co-managing PAs is, therefore, the most effective and socially just long-term solution, and relocation should be seen as the absolute last resort.

B2BASICS

Forest Rights act

Making sense of population growth of India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : TFR

Mains level : Paper 1- Declining TFR in India

The article analyses and explains the declining trend in India’s total fertility rate. The aspirational revolution in the parents explains such decline. 

What the projections say

  • A new study was published in The Lancet, and prepared by the Seattle-based Institute for Health Metrics and Evaluation (IHME).
  • It argues that while India is destined to be the largest country in the world, its population will peak by mid-century.
  • And as the 21st century closes, its ultimate population will be far smaller than anyone could have anticipated, about 1.09 billion instead of approximately 1.35 billion today.
  • It could even be as low as 724 million, the study projects.
  • Until 2050, the IHME projections are almost identical to widely-used United Nations projections.
  •  It is only in the second half of the century that the two projections diverge with the UN predicting a population of 1.45 billion by 2100, and the IHME, 1.09 billion.

Present trends in India’s fertility rate

  •  In the 1950s, India’s Total fertility rate (TFR) was nearly six children per woman; today it is 2.2.
  •  Between 1992 and 2015, it had fallen by 35% from 3.4 to 2.2.
  • It is even below the replacement rate in 18 States and Union Territories.

What explains the trends

  • One might attribute it to the success of the family planning programme.
  • But family planning has long lost its primacy in the Indian policy discourse.
  • Punitive policies include denial of maternity leave for third and subsequent births, limiting benefits of maternity schemes and ineligibility to contest in local body elections for individuals with large families.
  • However, these policies are mostly ignored in practice.

Aspirational revolution

  •  It seems highly probable that the socioeconomic transformation of India since the 1990s has played an important role.
  • Over the years parents began to rethink their family-building strategies.
  • Smaller families when compared with a bigger family with same income level, invest more money in their children by sending them to private schools and coaching classes.
  • It is not aspirations for self but that for children that seems to drive fertility decline.

Consider the question “Examine the factors responsible for the declining trends in the total fertility rate for India. What are its implications for country?”

Conclusion

Demographic data suggest that the aspirational revolution is already under way. What we need to hasten the fertility decline is to ensure that the health and family welfare system is up to this challenge and provides contraception and sexual and reproductive health services that allow individuals to have only as many children as they want.

Goods and Services Tax (GST)

Making up for shortfalls in GST collection

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Various provision under GST

Mains level : Paper 3-GST compensation cess and issues

The article deals with the issue of shortfall in the GST compensation cess and the challenge Central government faces to pay the promised compensation to the states.

Background of the cess

  • GST subsumed several taxes, including those which were the preserve of the States.
  • Therefore it required an amendment to the Constitution of India.
  • The amendment affected the Seventh Schedule, so it required ratification by the legislatures of half the States.
  • Before the GST, States exporting goods to other States collected a tax.
  • But the GST is a destination-based tax, i.e., the State where the goods are sold receive the tax.
  • This implies that manufacturing States would lose out while consuming States would benefit.
  • So, in order to convince manufacturing States to agree to GST, a compensation formula was created.
  • Under which States were promised compensation for loss of revenue for a period up to five years.
  • The Act for compensation to states assumed that the GST revenue of each State would grow at 14% every year, from the amount collected in 2015-16.
  • This scheme is valid for five years, i.e., till June 2022.

Compensation cess fund

  • A compensation cess fund was created from which States would be paid for any shortfall.
  • An additional cess would be imposed on certain items and this cess would be used to pay compensation.
  • The Act states that the cess collected and “such other amounts as may be recommended by the [GST] Council” would be credited to the fund.
  • In the first two years of this scheme, the cess collected exceeded the shortfall of States.
  • In the third year, 2019-20, the fund fell significantly short of the requirement.

The problem and its source

  •  A key source of the problem is that the 2017 Act guaranteed a tax growth rate of 14%, which is unachievable this year.
  • The 14% target was too ambitious to start with.
  • Given the government’s inflation target at 4%, this implied a real GDP growth plus tax buoyancy of 9%.
  • But, the Central government is constitutionally bound to compensate States for loss of revenue for five years.

Solution to the problem

1) The Constitution could be amended to reduce the period of guarantee to three years thus ending June 2020.

  • But most States would be reluctant to agree to this proposal.
  • It could also be seen as going back on the promise made to States.

2) The Central government could fund this shortfall from its own revenue.

  •  The Centre’s finances are stretched due to shortfall in its own tax collection combined with extra expenditure to manage the health and economic crisis.

3) The Centre could borrow on behalf of the cess fund.

  • The tenure of the cess could be extended beyond five years until the cess collected is sufficient to pay off this debt and interest on it.

4) the Centre could convince States that the 14% growth target was always unrealistic.

  • If the Centre can negotiate with States through the GST Council to reset the assured tax level, it could then bring in a Bill in Parliament to amend the 2017 Act.

Consider the question “What were the reasons for making provisions under GST for paying the states compensation for tax revenue shortfall? What are the implications of the provision for the Central government?”

Conclusion

The Constitution makes it obligatory for the Centre to make up for shortfall by the States. The cess collected will not be sufficient for this purpose. The GST Council, which is a constitutional body with representation of the Centre and all the States, should find a practical solution.

B2BASICS

Source: https://www.thehindu.com/opinion/op-ed/making-up-for-shortfalls-in-gst-collection/article32319744.ece

Important Judgements In News

Issue of contempt of court

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Articles related to contempt of court

Mains level : Paper 2-Contempt of court

The concept of contempt of court has been in the news recently. This article analyses the issue and draws on the approach adopted by the British judiciary.

Issues with the concept of contempt

  • The concept of contempt is a centuries-old British law abolished in 2013.
  • At the time the British Law Commission said that one of the intentions for contempt of court was to hide judicial corruption.
  • The concept, therefore, clashed with the need for transparency but also freedom of speech.

Let’s look into some comment’s from judges

  • In1968, a British judge, had this to say of the Law of Contempt “We will not use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more important at stake. It is no less than freedom of speech itself. “
  • In a 2008 lecture by Justice Markandey Katju noted that “The test to determine whether an act amounts to contempt of court or not is this: Does it make the functioning of judges impossible or extremely difficult? If it does not, then it does not amount to contempt of court even if it’s harsh criticism”.

Way forward

  • Whilst justice is important, judges must not take themselves too seriously.
  • Even if their amour propre is offended, it does not mean the institution has been questioned or justice brought into disrepute.
  • Judges deliver justice, they do not embody it.
  • They should never forget their Court is supreme because it’s final not because it’s infallible.
  • When they lapse they can be criticised, but of course, politely and fairly.

Conclusion

Indian Supreme Court hopefully pay attention to this aspect while delivering the judgement on the contempt cases.

Coronavirus – Economic Issues

Restructuring to cushion impact on the economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : MPC

Mains level : Paper 3- Impact of covid and the role of government and the central bank

“The article analyses the present scenario of the economy and impact of the steps taken by the central bank and the government.” 

Context

  • Monetary policy committee (MPC) members, through a unanimous vote, decided to keep policy rates unchanged.
  • MPC also maintained an accommodative stance.
  • This was the result of inflation hovering around 6% i.e. above the MPCs target of 4%.

Restructuring package after moratorium ends

  • Moratorium on loans ends 31 August, RBI said the way forward is a restructuring package for businesses and households.
  • Recent data released by large banks indicate that there has been a sizeable reduction in moratorium in June from 50% in April for all scheduled commercial banks (SCBs).
  • As economic activity normalizes further, the need for restructuring will be even lower.

What do the trends indicate

  • Most indicators—manufacturing and services Purchasing Managers’ Index(PMI’s) electricity output, vehicle sales, exports, imports—point to economic momentum settling at 10-15% below covid levels in the near-term.
  • The RBI’s consumer confidence survey—gauge of consumer spending—was at its lowest in May, and the one-year outlook is not promising.
  • This implies that consumption demand, especially discretionary demand, will be far lower.
  • With muted consumption, capacity utilization, which had fallen to 68.2% last December, has fallen further in the last few months.
  • Thus, investment demand is not likely to see upward momentum in the near term, even with lower interest rates.

How RBI’s intervention made the difference

  • An economic slowdown of such proportions leads to an increase in risk premium.
  • Rating upgrade to downgrade ratio of the corporate sector had fallen to 0.05 as in May from a high of 1.11 in December 2018.
  • Spread between 3-year AAA corporate bonds and sovereign bonds rose to 276 basis points on 26 March.
  • But the spread has since fallen to 50bps.
  • This was possible because of the abundant liquidity made available by RBI and credit enhancement provided by the government.

Way forward

  • RBI and the government will have to work together to revive demand.
  • Centre has already expanded its gross borrowing to ₹12 trillion.
  • Even with net tax collections at 53% of last year’s levels, the Centre has increased its spending by 13% over 2019-20.
  • The government better understand that this is the time to apply Keynesian economics.
  • Global central banks have become large buyers of sovereign debt to support the larger roles being played the governments.
  • In India, too, the Centre and states will have to spend to crowd-in private sector spending.
  • RBI’s role will be important not only as the lender of last resort but also as a buyer of government securities.
  • It has carried out its function as a central bank well, and brought a semblance of stability to financial markets.
  • It will have to do the same in the sovereign bond market.
  • More importantly, it will have to remain vigilant of impending risks to growth and inflation, and be ready to act.

Consider the question “To what extent the steps taken by the RBI and the government to stabilise the economy battered by the covid pandemic were helpful? 

 Conclusion

As India’s central bank comes towards the end of its interest rate reduction cycle, it will have to navigate the economy through financial and macroeconomic stability. The government will also have to act in tandem with the central bank in steering the economy through this storm.

Original

articles:https://www.livemint.com/opinion/columns/opinion-restructuring-to-cushion-impact-on-the-economy-11596758908360.html

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

AI integration will be at the core of the transition

Note4Students

From UPSC perspective, the following things are important :

Prelims level : AI

Mains level : Paper 3- AI and its applications

The article tracks the latest developments in the field of AI by the leading technology companies.

Integrating AI in the phone

  • Over the last few years, most mobile phone manufacturers have been content with design upgrades, apart from specs.
  • Samsung launched a device which has been able to integrate artificial intelligence (AI) in its phones.
  • In the case of S-Pen, Samsung demonstrated that it has been able to reduce latency between pen operation and what appears on the screen to 9 milliseconds using predictive analysis.
  • Latency is a major concern in technologies like smart cars.
  • Samsung also showcased active noise cancellation, which again uses prediction analysis to drown out ambient noises.
  • Apple’s virtual event also focused on higher integration and more uses of AI.
  • Siri has become even smarter and is increasingly being integrated with more services.
  • The camera function of Apple devices, for instance, pieces together a picture using best angles to create the perfect image.
  • Samsung and Apple now can monitor health more accurately using their smartwatches.

Future scope

  • This indicates how much further we are moving towards a future with more edge computing.
  • This computing will power technologies like a smart car.
  • Given the progress in IoT, there is a huge likelihood that those betting early on AI integration will reap the biggest rewards of the connected living market.

Consider the question “What is artificial intelligence? How it could transform the world of technology?”

Conclusion

Integration of AI in the devices we use in everyday life holds a promising future for us. India must encourage its development.


Source-

https://www.financialexpress.com/opinion/ai-integration-will-be-at-the-core-of-the-transition-to-future-technologies-such-as-smarts-cars/2047309/

Pharma Sector – Drug Pricing, NPPA, FDC, Generics, etc.

Drug pricing and dependence on China

Note4Students

From UPSC perspective, the following things are important :

Prelims level : APIs, NLEM

Mains level : Paper 3-Issue of India's dependence on China for APIs.

Whether or not the drug pricing system in India resulted in the growing dependence on China for APIs is analysed in this article. 

Incentives for domestic production of APIs

  • The department of pharmaceuticals (DoP) has recently notified the Production-Linked Incentive (PLI) scheme.
  • The scheme aims to encourage domestic production of 41 active pharmaceutical ingredients (APIs), key starting materials (KSMs) and drug intermediaries (DIs).
  • A Drug Security Committee constituted by the DoP had identified 53 APIs with high dependence on China.

Did drug price control policy increase dependence on China?

  • India was self-reliant on APIs until the mid-1990s.
  • Liberalisation in import restrictions led to a gradual influx of APIs from China.
  • India had a more stringent price control policy before the 1990s.
  • If price control system were the culprit, India would not have been self-sufficient in APIs until the mid-1990s.
  • A cost-based price control system that existed until 2013 regulated the prices of both APIs and formulations.
  • The approach to price control shifted from a cost-based to a market-based one since 2013.
  • The new price control policy does not regulate the price of APIs.
  • New price control policy regulates the prices of formulations of those APIs, which figure in the National List of Essential Medicines (NLEM).
  • There are many APIs which do not fall under DPCO but are still imported in a significant way from China.

Understanding the growing dependence on China from the past perspective

  • Even though India now has a less stringent drug price control policy, the dependence on Chinese imports has been growing.
  • The share of China in India’s total import of APIs has increased from 61% in 2011 to 69% in 2019.
  • The experience in India was that firms would tend to rely on imported APIs if they have an option.
  • The Hathi Committee (1975), which had looked into why Indian firms were not engaging in the production of APIs, found that the capital invested to turnover ratio of APIs was much lower as compared to formulations.
  • This ratio was 1:1 for APIs at best and 1:2.6 for formulations on average, and in some cases, as high as 1:7.2.
  • Subsequently, various measures were adopted.
  • The ‘ratio parameter’ mandatorily required the producers of formulations to produce a certain quantity of APIs.
  • It was the government interventions to overcome the market failure that resulted in India attaining self-sufficiency in APIs.

Consider the question “What are the APIs? Examine the implications of India’s dependence on imports for API and suggest the measures to reduce such dependence.”

Conclusion

An enquiry into the causes of dependence on China needs to go much beyond price control policy and look into whether the state continued to play a proactive role during the post-1991 period to maintain an ecosystem to enhance the competence of Indian API industry.


Source-

https://www.financialexpress.com/opinion/drug-pricing-is-certainly-not-the-issue-in-growing-dependence-on-china/2046086/

Higher Education – RUSA, NIRF, HEFA, etc.

National Education Policy and current status of education

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- National Education Policy

The article contrasts the targets set in the National Education Polity with the present state of education in the country.

Key recommendations

  • Redesigning the school curriculum to accommodate early childhood care and education.
  • Ensuring universal access to education.
  • Increasing gross enrolment in higher education to 50% by 2035.
  • Improving research in higher education institutes by setting up a Research Foundation.

Let’s take stock of the current situation on the above-suggested parameters.

1) Universal Access to Education

  • Despite the Right to Education Act-2009 retaining children remains a challenge for the schooling system.
  • As of 2015-16, Gross Enrolment Ratio was 56.2% at senior secondary level as compared to 99.2% at primary level.
  • Data for all groups indicates a decline in GER as we move from primary to senior secondary for all groups.
  • This decline is particularly high in case of Scheduled Tribes.

NEP 2020 recommendations

  • The NEP recommends strengthening of existing schemes and policies which are targeted for such socio-economically disadvantaged groups.
  • Further, it recommends setting up special education zones in areas with a significant proportion of such disadvantaged groups.
  • A gender inclusion fund should also be setup to assist female and transgender students in getting access to education.

2) GER to 50% in higher education

  • The NEP aims to increase the GER in higher education to 50% by 2035.  
  • As of 2018-19, the GER in higher education in the country stood at 26.3%.
  • The annual growth rate of GER in higher education in the last few years has been around 2%.

NEP 2020 recommendations

  • The NEP recommends increasing capacity of existing higher education institutes by restructuring and expanding existing institutes.
  • It recommends that all institutes should aim to be large multidisciplinary institutes, and there should be one such institution in or near every district by 2030.
  • Further, institutions should have the option to run open distance learning and online programmes to improve access to higher education.

3) Restructuring of Higher Education Institutes

  • The NEP notes that the higher education ecosystem in the country is severely fragmented.
  • At present, there is complex nomenclature of higher education institutes (HEIs) in the country such as ‘deemed to be university’, ‘affiliating university’, ‘affiliating technical university’, ‘unitary university’.
  • These shall be replaced simply by ‘university’.

NEP 2020 recommendations

  • The NEP recommends that all HEIs should be restructured into three categories:
  • 1)  research universities focusing equally on research and teaching.
  • 2)  teaching universities focusing primarily on teaching.
  • 3) degree-granting colleges primarily focused on undergraduate teaching.
  •  All such institutions will gradually move towards full autonomy – academic, administrative, and financial.

4) National research foundation to boost research

  • The NEP states that investment on research and innovation in India, at only 0.69% of GDP, lags behind several other countries.
  • The total investment on R&D in India as a proportion of GDP has been stagnant at around 0.7% of GDP.
  • Of which 58% of expenditure was by government, and the remaining 42% was by private industry.

NEP 2020 recommendation

  • To boost research, the NEP recommends setting up an independent National Research Foundation (NRF).
  • The Foundation will act as a liaison between researchers and relevant branches of government as well as industry.
  • Specialised institutions which currently fund research, such as the Department of Science and Technology, and the Indian Council of Medical Research, will continue to fund independent projects.
  • The Foundation will collaborate with such agencies to avoid duplication.

5) Digital Education

  • The NEP states that alternative modes of quality education should be developed when in-person education is not possible.
  • But let’s look into the accessibility of such mode.
  • As of 2017-18, only 4.4% of rural households have access to a computer (excludes smartphones).
  • Nearly 15% have access to internet facility.  Amongst urban households, 42% have access to the internet.

NEP 2020 recommendations

  • Several interventions are recommended-
  • (i) developing two-way audio and video interfaces for holding online classes.
  • (ii) use of other channels such as television, radio, mass media in multiple languages to ensure the reach of digital content where digital infrastructure is lacking.

6) Increasing public spending on education to 6% of GDP

  • Public spending of 6% of GDP was first made by the National Policy on Education 1968 and reiterated by the 1986 Policy.
  • NEP 2020 reaffirms the recommendation of increasing public spending on education to 6% of GDP.
  •  In 2017-18, the public spending on education-includes spending by centre and states-was budgeted at 4.43% of GDP.
  •  In 2020-21, states in India have allocated 15.7% of their budgeted expenditure towards education.
  • States such as Delhi, Rajasthan, and Maharashtra have allocated more than 18% of their expenditure on Education for the year 2020-21.
  • On the other hand, Telangana (7.4%), Andhra Pradesh (12.1%) and Punjab (12.3%) lack in spending on education, as compared to the average of states.

Consider the question “Examine the provision with regard to increasing research in the country in the National Education Policy 2020.”

Conclusion

The National Education Policy is an ambitious document with the potential to transform. What is required is the zeal to implement and assess the progress by analysing the outcomes.


Source-

https://www.prsindia.org/theprsblog/national-education-policy-recommendations-and-current-scenario

Finance Commission – Issues related to devolution of resources

NPA issue in India:Complete analysis

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Finance commission and related constitutional provisions

Mains level : Implication in federal relation; scope for reforms

The Financial Stability Report (FSR) released by RBI recently has once again underlined the vulnerability of the Indian public sector banks (PSBs). They have been under a severe balance sheet crisis even before the pandemic, and the crisis created by the pandemic, and the moratorium offered, will explode when the chickens come to roost.

Current banking scenario in India

According to the FSR

  • The gross non-performing assets would go up from 11.3% in March 2020 to 15.2% in March 2021, and to 16.3% under a very severe stress scenario. 
  • The CRAR is estimated to deteriorate from 14.6% in March to 13.3% in the baseline scenario, and to 11.8% under a very severe stress scenario. 
  • The volume of recapitalisation required is humongous.

What is a Non-Performing Asset (NPA)?

  • You may note that for a bank, the loans given by the bank is considered as its assets. So if the principle or the interest or both the components of a loan is not being serviced to the lender (bank), then it would be considered as a Non-Performing Asset (NPA).
  • Any asset which stops giving returns to its investors for a specified period of time is known as Non-Performing Asset (NPA).
  • Generally, that specified period of time is 90 days in most of the countries and across the various lending institutions. However, it is not a thumb rule and it may vary with the terms and conditions agreed upon by the financial institution and the borrower.

Reasons for rise in NPA in India

  • Historical factors -Between early 2000’s and 2008 Indian economy were in the boom phase. During this period Banks especially Public sector banks lent extensively to corporate. However, the profits of most of the corporate dwindled due to slowdown in the global economy, the ban in mining projects, and delay in environmental related permits affecting power, iron and steel sector, volatility in prices of raw material and the shortage in availability of. This has affected their ability to pay back loans and is the most important reason behind increase in NPA of public sector banks.
  • Relaxed lending norms : One of the main reasons of rising NPA is the relaxed lending norms especially for corporate honchos when their financial status and credit rating is not analyzed properly. Also, to face competition banks are hugely selling unsecured loans which attributes to the level of NPAs.
  • Lack of contigency planning: Banks did not conducted adequate contingency planning, especially for mitigating project risk. They did not factor eventualities like failure of gas projects to ensure supply of gas or failure of land acquisition process for highways.
  • Restructuring of loan facility was extended to companies that were facing larger problems of over-leverage& inadequate profitability. This problem was more in the Public sector banks.
  • Unforseen economic shocks like Demonetization and Covid 19

What is the impact of NPAs?

  • Lenders suffer a lowering of profit margins.
  • Stress in banking sector causes less money available to fund other projects, therefore, negative impact on the larger national economy.
  • Higher interest rates by the banks to maintain the profit margin.
  • Redirecting funds from the good projects to the bad ones.
  • As investments got stuck, it may result in it may result in unemployment.
  • In the case of public sector banks, the bad health of banks means a bad return for a shareholder which means that the government of India gets less money as a dividend. Therefore it may impact easy deployment of money for social and infrastructure development and results in social and political cost.
  • Investors do not get rightful returns.
  • Balance sheet syndrome of Indian characteristics that is both the banks and the corporate sector have stressed balance sheet and causes halting of the investment-led development process.
  • NPAs related cases add more pressure to already pending cases with the judiciary.

What are the various steps taken to tackle NPAs?

1.Corporate Debt Restructuring – 2005

It is for reducing the burden of the debts on the company by decreasing the rates paid and increasing the time the company has to pay the obligation back.

2.5:25 rule – 2014

  • Also known as, Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries.
  • It was proposed to maintain the cash flow of such companies since the project timeline is long and they do not get the money back into their books for a long time, therefore, the requirement of loans at every 5-7 years and thus refinancing for long term projects.

3.Joint Lenders Forum – 2014

  • It was created by the inclusion of all PSBs whose loans have become stressed. It is present so as to avoid loans to the same individual or company from different banks.
  • It is formulated to prevent instances where one person takes a loan from one bank to give a loan of the other bank.

4.Mission Indradhanush – 2015

The Indradhanush framework for transforming the PSBs represents the most comprehensive reform effort undertaken since banking nationalization in the year 1970 to revamp the Public Sector Banks (PSBs) and improve their overall performance by ABCDEFG.

  • A-Appointments: Based upon global best practices and as per the guidelines in the companies act, separate post of Chairman and Managing Director and the CEO will get the designation of MD & CEO and there would be another person who would be appointed as non-Executive Chairman of PSBs.
  • B-Bank Board Bureau: The BBB will be a body of eminent professionals and officials, which will replace the Appointments Board for the appointment of Whole-time Directors as well as non-Executive Chairman of PSBs
  • C-Capitalization: As per finance ministry, the capital requirement of extra capital for the next four years up to FY 2019 is likely to be about Rs.1,80,000 crore out of which 70000 crores will be provided by the GOI and the rest PSBs will have to raise from the market.
Financial Year Total Amount
FY15-16 25,000 Crore
FY16-17 25,000 Crore
FY17-18 10,000 Crore
FY18-19 10,000 Crore
Total 70,000 Crore
  • D-DEstressing: PSBs and strengthening risk control measures and NPAs disclosure.
  • E-Employment: GOI has said there will be no interference from Government and Banks are encouraged to take independent decisions keeping in mind the commercial the organizational interests.
  • F-Framework of Accountability: New KPI(key performance indicators) which would be linked with performance and also the consideration of ESOPs for top management PSBs.
  • G-Governance Reforms: For Example, Gyan Sangam, a conclave of PSBs and financial institutions. Bank board Bureau for transparent and meritorious appointments in PSBs.

5.Strategic debt restructuring (SDR) – 2015

  • Under this scheme banks who have given loans to a corporate borrower gets the right to convert the complete or part of their loans into equity shares in the loan taken company. Its basic purpose is to ensure that more stake of promoters in reviving stressed accounts and providing banks with enhanced capabilities for initiating a change of ownership in appropriate cases.

6.Asset Quality Review – 2015

  • Classify stressed assets and provision for them so as to secure the future of the banks and further early identification of the assets and prevent them from becoming stressed by appropriate action.

7.Sustainable structuring of stressed assets (S4A) – 2016

  • It has been formulated as an optional framework for the resolution of largely stressed accounts. 
  • It involves the determination of sustainable debt level for a stressed borrower and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments which are expected to provide upside to the lenders when the borrower turns around.

8.Insolvency and Bankruptcy code Act-2016

  • It has been formulated to tackle the Chakravyuha Challenge (Economic Survey) of the exit problem in India.
  • The aim of this law is to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders by consolidating and amending the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner and for maximization of value of assets of such persons and matters connected therewith or incidental thereto.

9.Pubic ARC vs. Private ARC – 2017

  • This debate is recently in the news which is about the idea of a Public Asset Reconstruction Companies (ARC) fully funded and administered by the government as mooted by this year’s Economic Survey Vs. the private ARC as advocated by the deputy governor of RBI Mr. Viral Acharya.
  • Economic survey calls it as PARA (Public Asset Rehabilitation Agency) and the recommendation is based on a similar agency being used during the East Asian crisis of 1997 which was a success.

10.Bad Banks – 2017

  • Economic survey 16-17, also talks about the formation of a bad bank which will take all the stressed loans and it will tackle it according to flexible rules and mechanism. It will ease the balance sheet of PSBs giving them the space to fund new projects and continue the funding of development projects.

11.Prompt corrective action

  • PCA is a framework under which banks with weak financial metrics are put under watch by the RBI.
  • The RBI introduced the PCA framework in 2002 as a structured early-intervention mechanism for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability.
  • It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.

12.RBI’s revised stressed asset resolution norms

  • The RBI in June 2019 released a revised set of norms on stressed asset resolution which are substantially less stringent from the previous one.

About the February 2018 RBI circular

  • Through a notification issued on Feb 12, 2018 the RBI laid down a revised framework for the resolution of stressed assets, which replaced all its earlier instructions on the subject.
  • Banks were required to immediately start working on a resolution plan for accounts over Rs 2,000 crore, which was to be finalised within 180 days.
  • In the case of non-implementation, lenders were required to file an insolvency application.
  • RBI termed it necessary to substitute the existing guidelines with a harmonized and simplified generic framework for resolution of stressed assets.
  • Also, banks have to recognise loans as non-performing even if the repayment was delayed by just one day.
  • Not adhering to the timelines in the circular would attract stringent supervisory and enforcement actions.

What did the revised framework replace?

  • The circular went into effect on the same day that it was issued, and all existing schemes for stressed asset resolution were withdrawn with immediate effect.
  • The circular was ostensibly intended to stop the “evergreening” of bad loans the practice of banks providing fresh loans to enable timely repayment by borrowers on existing loans.
  • The RBI warned banks that not adhering to the timelines laid down in the circular, or attempting to evergreen stressed accounts, would attract stringent supervisory and enforcement actions.

New circular of the RBI

  • The new framework gives lenders a breather from the one-day default rule whereby they had to draw up a resolution plan (RP) for implementation within 180 days of the first default.
  • It gives lenders (scheduled commercial banks, all-India financial institutions and small finance banks) 30 days to review the borrower account on default.
  • During this review period, lenders may decide on the resolution strategy, including the nature of the RP and the approach for its implementation.
  • Lenders may also choose to initiate legal proceedings for insolvency or recovery.
  • The new circular is also applicable to small finance banks and systemically important non-deposit taking non-banking financial companies (NBFCs) and deposit-taking NBFCs.
  • In cases where the RP is to be implemented, all lenders have to enter into an intercreditor agreement (ICA)for the resolution of stressed assets during the review period to provide for ground rules for finalisation and implementation of the RP in respect of borrowers with credit facilities from more than one lender.
  • Under the ICA, any decision agreed to by the lenders representing 75 per cent of total outstanding credit facilities by value and 60 per cent by number will be binding upon all the lenders. In particular, the RPs will provide for payment which will not be less than the liquidation value due to the dissenting lenders.
  • In cases where the aggregate exposure of a borrower to lenders (scheduled commercial banks, all-India financial institutions and small finance banks) is ₹2,000 crore and above, the RP has to be implemented within 180 days from the end of the review period, and the reference date has been set as June 7, 2019.
  • In the case of borrowers in the ₹1,500 crore and above but less than ₹2,000 crore category, January 1, 2020 has been set as the reference date for implementing the RP. In the less than ₹1,500 crore category, the RBI will announce the reference date in due course.

 What if the Resolution Plan is delayed?

  • There is a disincentive for banks if they delay implementing a viable resolution plan.
  • In case the plan is not implemented within 180 days from the end of the review period, banks have to make additional provision of 20% and another 15% if the plan is not implemented within 365 days from the start of the review period.
  • The additional provisions would be reversed if resolution is pursued under Insolvency and Bankruptcy Code (IBC).

Further reforms needed

  • Banks have to accept losses on loans (or ‘haircuts’).
  • They should be able to do so without any fear of harassment by the investigative agencies.
  • The Indian Banks’ Association has set up a six-member panel to oversee resolution plans of lead lenders. To expedite resolution, more such panels may be required.
  • An alternative is to set up a Loan Resolution Authority, if necessary through an Act of Parliament.
  • Also, the government must infuse at one go whatever additional capital is needed to recapitalise banks — providing such capital in multiple instalments is not helpful
  • The quality of lending by PSB must be improved in future so that the same problem does not arise again.
  • To provide Public sector banks with greater autonomy the shareholding of the government can be reduced to less than 50 percent or 33 percent.
  • A second requirement is that public sector banks should become board-managed institutions, with the board responsible for all appointments, including that of the chief executive officer (CEO). If the shares of the government are actually transferred to a holding company, then decisions regarding appointments could be taken by the board of the new company on the recommendation of the board of the bank.
  • The objective of creating a genuinely commercial environment in which public sector banks can function and managements are made accountable can only be achieved if the government is willing to step back from exercising direct control. 

Digital India Initiatives

The digital lifeline provided by UPI

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UPI

Mains level : Paper 3- Examining the success of UPI

The UPI sets the template for India in its journey toward digitalisation. This article by WhatsApp head Will Cathcart explains the success story of UPI and the future scope to build on its success.

The success story of UPI

  • The UPI system set a national open standard for all of India’s banks, more than 155 of which have adopted it.
  • UPI is open standard that technology companies can adopt on an equal and level-playing field.
  • This means that no one company, foreign or domestic, can write the rules for the other.
  • Since its launch, the UPI system has grown to manage a 100 million-strong user base.
  • NPCI has also set a goal to increase UPI’s user base to 500 million by 2022, which if achieved, would be a true game-changer for Digital India.

What the success of UPI means

  •  UPI has set important new frameworks around security and efficiency.
  • Because of the strong rules that India has put in place, payment transaction information remains with the banks and within the country.
  • And as a platform built on Indian technology and governed by Indian rules, UPI benefits Indians now and holds great potential for further innovation and commerce.

Future scope for UPI

  •  It is imperative more tech companies are able to leverage the power of UPI to expand the digital ecosystem to accelerate financial inclusion.
  • UPI can also anchor a broader suite of fintech applications like micro-pensions, digital insurance products, and flexible loans.
  • These are custom solutions created by Indian technology companies, on the public infrastructure of UPI.
  • These solutions will first solve large social, business and financial problems in India and then become templates for other countries to deploy.
  • COVID-19 has only underscored the importance of these tools that will serve as critical lifelines for small and micro-enterprises and individuals as they look to recover.

Consider the question “Within a short period from its launch the UPI has transformed the payment landscape in India. Examine the factors that contributed to the success of UPI and elaborate on its future scope.”

Conclusion

With courage, ambition, and boundless potential, India can emerge from this pandemic stronger than ever before — a leading democratic digital powerhouse that will lead the world in the 21st century.

B2BASICS

What is Unified Payments Interface (UPI)?

Image for post

  • It was launched in April 2016 and in the last two years, the platform has emerged as a popular choice among users for sending and receiving money.
  • UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone.
  • UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords.
  • It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

Original article:

https://indianexpress.com/article/opinion/columns/coronavirus-india-economy-poverty-digital-payment-bhim-upi-6533171/

Higher Education – RUSA, NIRF, HEFA, etc.

National Education Policy needs scrutiny

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Provisions in the National Education Policy

Mains level : Paper 2- National Education Policy

National Education Policy, while comprehensive in its approach misses out on some crucial issues. These issues are discussed here.

Following are the issues with the National Education Policy-

1) Implications for SEDGs

  •  Implications of the policy for SEDGs-Socially and Economically Disadvantaged Groups-needs to be considered.
  • The term “caste” is absent from the document apart from a fleeting reference to Scheduled Castes.
  • Also absent is any mention of reservation in academic institutions, whether for students, teachers, or other employees.
  • Reservation is the bare minimum required in terms of affirmative action in the highly differentiated socio-economic milieu in which we exist.

2) Education in tribal areas

  • There is the passing reference to educational institutions in tribal areas, designated as ashramshalas.
  • While there are sections of the document that describe ways in which SEDGs are supposed to gain access to higher education institutions, there is no time-frame that is specified.
  • In a situation of growing privatisation how these policies will be implemented is a matter of concern.

3) Multi-disciplinarity misses some disciplines

  • Multi-disciplinarity is an attractive and flexible proposition, allowing learners to experiment with a variety of options.
  • While the list of the disciplines in which multi-disciplinary approach is allowed is unexceptionable, it is worth flagging what is missed out.
  • Fields of studies such as Women’s Studies or Gender Studies, Cultural Studies, Media Studies, Dalit Studies, Studies of Discrimination and Exclusion, Environmental Studies and Development Studies are missing.
  • Many of these have engaged with multi-disciplinarity/inter-disciplinarity in exciting and disturbing ways, bringing to the fore issues of diversity, difference and identity.

4) Problem of autonomy

  • While the documents mention autonomy and choice in the document, but there are limits.
  • For instance, the selection of vocational subjects in middle school is described as a fun choice.
  • At the same time, it is to be exercised “as decided by States and local communities and as mapped by local skilling needs”.
  • National Testing Agency, will be a centralised agency to conduct exams will be against the autonomy proposed in the policy.
  • HEIs will now be run by a Board of Governors backed by legislative changes where required.
  •  Further centralisation is envisaged through the setting up of “the National Higher Education Regulatory Authority (NHERA).

5) Depriving the HEI democratic functioning

  • Several universities and HEIs have evolved and sustained democratic mechanisms, including academic and executive councils.
  • What has made them vibrant institutions is the presence of faculty and students, elected, as well as on the basis of seniority and rotation.
  • Abandoning them will deprive members of HEIs of an opportunity to engage with the challenges of democratic functioning.

6) No mention of Fundamental Rights

  • Several values are identified as constitutional and there is an occasional mention of fundamental duties.
  • But there is no mention of fundamental rights.

Consider the question “Examine the provision for governance of education in the National Education Policy. Also, examine the issues with the policy.”

Conclusion

The Education Policy has many novel ideas with the potential to transform the education system in the country, however, the issues discussed here highlights the need to revisit it, before it is actually implemented.

Foreign Policy Watch: India-Middle East

The South Asian-Gulf Migrant Crisis

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Indian diaspora in the Gulf countries

The pandemic has exacerbated the plight of the migrant workers in the Gulf countries. This article examines the issue and suggests the ways to deal with it.

Context

  • The Covid-19 exposed the precarious conditions of migrant workers in the Gulf Cooperation Council (GCC) countries.
  • Employers have used the crisis as an opportunity to retrench masses of migrant labourers without paying them wages or allowances.

Impact of Covid-19

  • The South Asia-Gulf migration corridor is among the largest in the world.
  • The South Asian labour force forms the backbone of the Gulf economies.
  • The pandemic, the shutdown of companies, the tightening of borders, and the exploitative nature of the Kafala sponsorship system have all aggravated the miseries of South Asian migrant workers.
  • They have no safety net, social security protection, welfare mechanisms, or labour rights.
  • Now, thousands have returned home empty-handed from the host countries.
  • Indians constitute the largest segment of the South Asian workforce.
  • Gulf migration is predominantly a male-driven phenomenon.
  • A majority of the migrants are single men living in congested labour camps.
  • The COVID-19 spike in these labour camps has mainly been due to overcrowded and unsanitary living conditions.

Nationalisation of labour in Gulf

  • Now, the movement for nationalisation of labour and the anti-migrant sentiment has peaked in Gulf countries.
  • Countries like Oman and Saudi Arabia have provided subsidies to private companies to prevent native lay-offs.
  • However, the nationalisation process is not going to be smooth given the stigma attached to certain jobs and the influence of ‘royal sheikh culture’.

Challenges and solutions

  • The countries of origin are now faced with the challenge of rehabilitating, reintegrating, and resettling these migrant workers.
  • The Indian government has announced ‘SWADES’ for skill mapping of citizens returning from abroad.
  • But implementation seems uncertain.
  • Kerala, the largest beneficiary of international migration, has announced ‘Dream Kerala’ to utilise the multifaceted resources of the migrants.
  • Countries that are sending migrant workers abroad are caught between the promotion of migration, on the one hand, and the protection of migrant rights in increasingly hostile countries receiving migrants, on the other.

Way forward

  • The need of the hour is a comprehensive migration management system for countries that send workers as well as those that receive them.
  • No South Asian country except Sri Lanka has an adequate migration policy.

Conclusion

The pandemic has given us an opportunity to voice the rights of South Asian migrants and to bring the South Asia-Gulf migration corridor within the ambit of SAARC, the ILO, and UN conventions.

Original article:

https://www.thehindu.com/opinion/op-ed/the-south-asian-gulf-migrant-crisis/article32215146.ece

Foreign Policy Watch: India-United States

Global coalition of democracies amid Chinese assertion

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Global coalition of democracies

In the recent speed Mike Pompeo, the US Secretary of State, floated the idea of an ‘alliance of democracies’. This article discusses its implications for India.

Two propositions on China

  • The US Secretary of State laid out two propositions.
  • One is that nearly five decades of US engagement with China have arrived at a dead-end.
  • Second is that the US can’t address the China challenge alone and called for collective action.
  • He mused on whether “it’s time for a new grouping of like-minded nations, a new alliance of democracies.”

How it matters for India?

  • Both the propositions signal the breakdown of the relationship between the world’s two most important powers.
  • They also reflect on the need to create new frameworks to cope with emerging global challenges.
  • China, is a large neighbour of India and America, is India’s most important partner makes the new context rather different from the Cold War.

Concerns for India in the propositions

  •  Many in Delhi would like to know if the current direction of China policy will endure if Joe Biden wins the presidential election in November.
  • India must pay close attention to the unfolding China debate in the US.
  • India also note the structural changes in American engagement with China over the last two decades.
  •  Delhi will certainly avoid calling the group proposed by US Secretary of State an “alliance”.
  • India would rather have it described as a “coalition of democracies”.

Idea of ‘Coalition of democracies’

  • Over the last many years, India has become comfortable with the idea of a political partnership with the world’s leading democracies.
  • India also supported past US initiatives like-Clinton Administrations “Community of Democracies”, Bush Administrations democracy promotion fund at the UN.
  • Delhi has also welcomed President Trump’s initiative to convene an expanded gathering of the G-7 leaders.
  • The idea of democracies working together has an enduring appeal for the US.
  • India figures in this American vision is relatively new. So is Delhi’s readiness to reciprocate.

Consider the question “In the ongoing geopolitical situation the U.S. has proposed the idea of ‘alliance of democracies’. Where does India feature in this vision and what are the implications of it for India.”

Conclusion

Constructing a global coalition of democracies will take much work and quite some time. But engaging with that initiative, amidst the rise and assertion of China, should open a whole range of new possibilities for Indian foreign and security policies.


Original article:

https://indianexpress.com/article/opinion/columns/us-india-democracy-china-cold-war-global-economy-6526409/

Transition From MDG to SDG: Issues & Concern

SDGs amid Covid

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-Pandemic and SDGs

Context

  • As lockdown eases, return to business as usual is unimaginable in Asia and Pacific which was already off track to meet the Sustainable Development Goals (SDGs). 
  • Efforts to respond to the pandemic have revealed how many people in our societies live precariously close to poverty and hunger.

Progress towards SDGs in pandemic

  •  The SDGs  can serve as a beacon in these turbulent times.
  •  SDGs are a commitment to eradicate poverty and achieve sustainable development, globally, by 2030.
  • The pandemic has exposed fragility and systemic gaps in many key systems.
  • Countries have used workable strategies during pandemic to accelerate progress related to development goals and strengthen resilience.
  • Countries have taken steps to extend universal health care systems and strengthen social protection systems.
  • Accurate and regular data have been key to such efforts.
  • Innovating to help the most disadvantaged access financing and small and medium-sized enterprise credits have also been vital.
  • Several countries have taken comprehensive approaches to various forms of discrimination, particularly related to gender and gender-based violence.
  • Partnerships with the private sector and financing institutions, have played a critical role in fostering creative solutions.

Focus on green recovery in Asia-Pacific countries

  • Countries in Asia and the Pacific are developing ambitious new strategies for green recovery and inclusive approaches to development.
  • South Korea recently announced a New Deal based on two central pillars: digitisation and decarbonisation.
  • Many countries in the Pacific are focusing on “blue recovery,” which promote more sustainable approaches to fisheries management.
  • India recently announced operating the largest solar power plant in the region.
  • China is creating more jobs in the renewable energy sector than in fossil fuel industries.

Suggestions for policymaking

  • We need a revolution in policy mindset and practice- following are part of the transformations needed.
  • 1) Inclusive and accountable governance systems.
  • 2) Adaptive institutions with resilience to future shocks.
  • 3) Universal social protection and health insurance.
  • 4) Stronger digital infrastructure.

Consider the question “Pandemic has highlighted the fragility of our systems. But it also emphasised the need to strive to achieve the SDGs. Comment.”

Conclusion

With the onslaught of pandemic disrupting us, we should base our recovery and progress trajectory firmly towards achieving SDGs.

 


Back2Basics: SDGs

Sustainable Development Goals and India

  • The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
  • The 17 Goals build on the successes of the Millennium Development Goals, while including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities.
  • The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.
  • The SDGs work in the spirit of partnership and pragmatism to make the right choices now to improve life, in a sustainable way, for future generations.
  • They provide clear guidelines and targets for all countries to adopt in accordance with their own priorities and the environmental challenges of the world at large.

The SDGs are an inclusive agenda. They tackle the root causes of poverty and unite us together to make a positive change for both people and planet. “Poverty eradication is at the heart of the 2030 Agenda, and so is the commitment to leave no-one behind,” UNDP Administrator Achim Steiner said. “The Agenda offers a unique opportunity to put the whole world on a more prosperous and sustainable development path. In many ways, it reflects what UNDP was created for.”

The Goals

 

Case for presidential system

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Parliamentary vs presidential system

Mains level : Paper 2- Issues with the parliantary system of government

The article brings out the flaws in the parliamentary system of government in India and makes the case for the parliamentary system.

Problems with our parliamentary system

  • Our parliamentary system has created a unique breed of legislator, largely unqualified to legislate.
  • Those legislators has sought election only in order to wield executive power.
  • It has produced governments dependent on a fickle legislative majority.
  • Fickle majority leads the government to focus more on politics than on policy or performance.
  • Current system has distorted the voting preferences of an electorate that knows which individuals it wants to vote for but not necessarily which parties.
  • It has given rise to parties that are shifting alliances of selfish individual interests, not vehicles of coherent sets of ideas.
  • It has forced governments to concentrate less on governing than on staying in office, and obliged them to cater to the lowest common denominator of their coalitions.

Problems with party system in India

  •  Parliamentary system, devised in Britain — is based on traditions which simply do not exist in India.
  • The parties in England are clearly defined, each with a coherent set of policies and preferences that distinguish it from the next.
  • In India, a party is all-too-often a label of convenience which a politician adopts and discards frequently.
  • So, a politician changing a party is not treated as an unusual event in India.
  • In the absence of a real party system, the voter chooses not between parties but between individuals.
  • The candidates are usually chosen on the basis of their caste, their public image or other personal qualities.
  • So, voters vote for a legislature not to legislate but in order to form the executive.

4 Problems with choosing executive from Parliament

  • 1) It limits executive posts to those who are electable rather than to those who are able.
  • Though he can bring some members in through the Rajya Sabha, but it too has been largely the preserve of full-time politicians, so the talent pool has not been significantly widened.
  • 2) It puts a premium on defections and horse-trading. The anti-defection Act of 1985 has failed to cure the problem.
  • 3) Legislation suffers. Most laws are drafted by the executive — in practice by the bureaucracy.
  • The ruling party inevitably issues a whip to its members in order to ensure unimpeded passage of a bill.
  • The parliamentary system does not permit the existence of a legislature distinct from the executive.
  • Accountability of the government to the people, through their elected representatives, is weakened.
  • 4) For those parties who do not get into government Parliament or Assembly serves as a theatre for the demonstration of their power to disrupt.

Case for presidential system

  • A directly elected chief executive at Centre and State would be free from vulnerabilities of coalition support politics, would have the stability of tenure free from a legislative whim.
  • He/she will be able to appoint a cabinet of talents, be able to devote his or her energies to governance, and not just to government.
  • The Indian voter will be able to vote directly for the individual he or she wants to be ruled by.
  • The president will truly be able to claim to speak for a majority of Indians rather than a majority of MPs.

The risk of dictatorship

  • The only serious objection to the presidential system is that it carries with it the risk of dictatorship.
  • The fear is of an imperious president, immune to parliamentary defeat and impervious to public opinion, ruling the country by fiat.
  • But under the current parliamentary system, a leader with absolute majority and subservient legislature could act in the same manner.

Consider the question “Examine the differences between the presidential system and the parliamentary system of government. Do you think that the parliamentary system has served well in the Indian context?”

Conclusion

With the needs and challenges of one-sixth of humanity before our leaders, we must have a democracy that delivers progress to our people.

Foreign Policy Watch: India-South Korea

Deepening ties with South Korea

South Korea’s technological advancement and manufacturing capabilities can be helpful in India’s economic growth and human resource development. Seoul’s successful development story of the last few decades can complement Modi’s vision of making a “New India” by 2022.

Higher Education – RUSA, NIRF, HEFA, etc.

Transforming higher education

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Issues with higher education

The issues of quality of higher education explain the lack of employability of Indian youth. This article examines the issue and suggests the approach to deal with the issue.

Three learning outcomes

  • The first is to provide knowledge in the relevant discipline to the students.
  • Second, imparting students with the skills needed for their jobs/enterprises.
  • Third, students are expected to play a constructive role in shaping the society and the world at large, the values and ideals of a modern, progressive society.
  • The teaching-learning process is expected to mould their character accordingly.

Issues with the education system

  • Apart from a handful of institutions in the technology, management and liberal arts streams a vast majority of other students just meander through college and acquire a degree.
  • There is a huge gulf between the curriculum taught in the colleges and actual job requirements.
  • It is common to hear even the brightest of students mention that they learnt more on the job than through their curriculum in college.

Focus more on training

  • If most of the students learn so much on the job, it raises several questions.
  • Why should we bestow so much importance on a syllabus?
  • And why do we take such massive efforts to evaluate students’ knowledge of that syllabus through exams?
  • What we can do is completely re-evaluate the syllabus frequently considering the changing needs of the time.
  • We can have substantive industrial internships while retaining only a very basic outline of essential concepts.
  • The evaluation too can be a mix of regular assignments, performance in the internship.

Consider the question “The lack of employability in the youth of India could be a huge hurdle in India’s aim to reap the benefits of demographic dividend. Examine the reasons for and suggest the measures to deal with the issue.”

Conclusion

The higher education sector has multiple stakeholders and multiple vested interests. In normal times, maintaining the status quo or implementing incremental and marginal reforms was all one could hope for. The pandemic has opened the doors for ushering in massive, bold and transformational reforms. As John Lewis said, “If not now, then when?”

Digital India Initiatives

Key stakeholders in data regulation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Non-Personal Data

Mains level : Paper 3- Key stakeholder in the regulation of Non-Personal Data

The article examines the structures and role of key stakeholders in regulation of Non-Personal Data as per the report submitted by the committee headed by Kris Gopalakrishnan.

Context

  • There is a realisation that data should be unlocked in public interest beyond the use by a few large companies
  • Data, in many cases, are not just a subject of individual decision-making but that of communities, such as in the case of ecological information.
  • Therefore, it is critical that communities are empowered to exercise some control over how the data are used.
  • Recently the Non-Personal Data committee released a governance framework, which raises many concerns.

Following are the key stakeholder as defined in the report

1)Data principals

  • As per the report, the first keyholders are data principals, who/ which can be individuals, companies or communities.
  • The idea of communities as data principals is introduced ambiguously by the report.
  • The report does not address the translation of offline inequalities and power structures to data rights.

2) Data custodians

  • Data custodian is the one who undertake collection, storage, processing, and use of data in a manner that is in the best interest of the data principal.
  • The details in this section are unclear.
  • It is not specified if the data custodian can be the government or private companies only.
  • It is also not clear what best interest is, especially when several already vague and possibly conflicting principal communities are involved.
  • It is also not clear how communities engage with the custodian.
  • Suggestion that data custodians can monetise the data they hold is especially problematic as this presents a conflict of interest with those of the data principal communities.

3) Data trustees

  • The report talks about data trustees as a way for communities to exercise data rights.
  • Trustees can be governments, citizen groups, or universities.
  • There is no clarity on how “trust” is extended and fructified with the community, and how trustees are empowered to act on behalf of the community.
  • The principles of a legal trust and the fiduciary responsibility that come with role of trustees are critical.
  • Trustees, by definition, are bound by a duty of care and loyalty towards the principal and thus work in their best interests.
  • Trustee has to negotiate on behalf of Data Principals’ data rights with technology companies and regulators.
  • This thinking is not reflected in the report.
  •  Also, the relationship between the data principal communities and the trustees is not clear.

How will the ‘Trust’ function?

  • The report explains data trusts comprising specific rules and protocols for containing and sharing a given set of data.
  • Trusts can hold data from multiple custodians and will be managed by public authority.
  • But the power, composition and functions of the trust are not established.
  • One possible way to simplify the ecosystem would be to consider data trusts as a type of custodian.
  •  So that trustees can represent the community and act on behalf of the data principals.

Consider the question “What do you understand by Non-Personal Data. Examine its utility and need to treat as a public good.”

Conclusion

The committee should organise broader consultations to ensure that the objective of unlocking data in public interest and through collective consent does not end up creating structures that exacerbate the problems of the data economy and are susceptible to regulatory capture.

Railway Reforms

Privatisation of Indian Railways

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Issues with allowing operation of passenger trains by private players

Indian Railways has launched the process of opening up train operations to private entities on 109 origin-destination (OD) pairs of routes using 151 modern trains.

Objectives of privatisation

  • To introduce modern technology rolling stock with reduced maintenance.
  • Reduced transit time.
  • Boost job creation.
  • Provide enhanced safety.
  • Provide world-class travel experience to passengers.
  • Reduce demand-supply deficit in the passenger transportation sector.

Issues with the move

1) Responsibility issue

  •  Railway crew will work the trains (151 trains in 109 routes) which will be maintained by the private investor.
  • All the other infrastructure, track and associated structures, stations, signalling, security and their daily maintenance owned by the Railways will be fully utilised in running trains.
  • Thus, the responsibility of the private investor ends with investment in the procurement and maintenance of coaches.
  • Train operation, safety and dealing with every day problems rests with the Railways.
  • In case of an unfortunate event, fixing responsibility will be an issue.

2) Day-to-day problems

  • Provision of an independent regulator to resolve disagreement, discords and disputes.
  • But this regulator will not be able to solve day-to-day problems of dichotomy unless the basic issue is resolved.

3) Speed issue

  • Nearly all trunk routes in the existing network are speed limited to 110 kmph very few permit speeds of upto 120-130 kmph.
  • To raise it to 160 kmph, as proposed, there has to be track strengthening, elimination of curves and level crossing gates and strengthening of bridges.
  • There is no appreciable reduction in transit time for most proposed trains, when compared with the timings of the fastest train now operating on that route.

4) Passenger fare issue

  • In the proposal, the Railways or government have no role in fixing passenger fares.
  • Fares will be beyond the common man’s reach.
  • Fare concessions extended to several categories of people will not be made available by the private investor.
  • The very objective of commissioning the Railways as a public welfare transport organisation is defeated.

5) Reservation in Jobs

  • The private investor is not bound to follow reservation regulations in employment.
  • This, in turn, will deprive employment opportunities for those who are on the margins of society.

6) Limited Coverage:

  • An advantage of Indian Railways being government-owned is that it provides nation-wide connectivity irrespective of profit.
  • Privatisation of railways would mean the railways will become a profit-making enterprise, this would lead to the elimination of railways routes that are less popular.
  • Thus, the privatisation of railways can have a negative impact on connectivity and further increase the rural-urban divide.

7) Impact on the Economy:

  • Indian Railways is the backbone of India, it provides low fare transportation to agricultural and industrial trade.
  • Therefore, privatisation of Indian railways shall definitely affect the Indian economy at large.
  • Way forward
  • There should be no need for the government to take a dual role of a facilitator as well as a participant.
  • In the case of the metro railway services, Hyderabad, for example, an ideal PPP project, the concessionaire is solely responsible for daily maintenance, operation, passenger amenities and staff issues.
  • The State government steps in when it comes to land, power, permissions, law and order, etc. Fare determination is in consultation with the government.
  • Instead of a private entrepreneur, Indian Railway Catering and Tourism Corporation, a government undertaking which has gained experience in running the Tejas Express trains, could have been given the role.

Consider the question “Indian Railways often hailed as the lifeline of the country continues suffering from several issues. In light of this, evaluate the pros and cons of the privatisation of railways.”

Conclusion

This project of privatisation of trains should not result in the common man being deprived of travel facilities. The Indian Railways is a strategic resource for the nation hence it should not be judged solely on its profit-generating capability or market-based return on investment.