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Disinvestment in India

[op-ed of the day] Strategic disinvestment does not deserve the criticism it getsop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Pros and cons of strategic disinvestment.


Context

Air India is on the block.

Why disinvestment is not such a bad idea?

  • Wisdom lies in the use of resources to meet the emergent needs: True wisdom lies in the use of resources, including the so-called “family silver”.
    • To meet emergent needs.
    • As also for better returns.
    • Even individuals and private sector organizations committed to meeting their obligations or optimizing wealth creation take such initiatives routinely.
  • The weakening of Indian economy
    • This fiscal year’s second quarter growth in the gross domestic product (GDP) slipped to 4.5% and the portents of a slowdown have been quite apparent.
    • Private sector investment is sagging. Gross capital formation has dipped.
    • Aggregate demand has contracted.
    • Public sector expenditure is the single engine that’s driving economic growth.
  • Clamour for the government to open its purse and limited fiscal room.
    • Shrunk revenue growth: There is a clamour for the government to open its purse and help out. However, its revenue growth has shrunk.
    • Low direct tax collection: Direct tax collections registered a growth of only a little more than 6%.
    • The cautious approach by the RBI: The Reserve Bank of India has taken a rate cut pause, inter alia, to watch the government’s approach to the fisc.
    • Commitment to low inflation: The political executive seems determined to honour its commitment to low inflation and macroeconomic stability.
    • India facing Hobson’s Choice: India is thus faced with a Hobson’s choice—either to significantly revise its fiscal deficit target or monetize state assets.
  • The liberalized markets and optimizing wealth.
    • Perception in the capital market: Capital markets operate on perceptions. Valuations of public sector enterprises tend to be much lower than those of private sector companies even if their profit numbers are the same.
    • Why should India suffer suboptimal wealth creation?: The liberalized market philosophy that the country has pursued aims at optimizing wealth creation. In case a change in ownership structure can deliver higher wealth, why should Indian society retain the current ownership frame and suffer suboptimal wealth creation?
    • Need to make policies aimed at value creation: Given the limits on India’s resources, it is all the more important to see that policies are geared to ensure that value is created.
    • Stake sales can achieve value creation: For validation of this surmise, look at the rapid rise in the enterprise value of Bharat Petroleum, as indicated by its share price, since the announcement of its strategic disinvestment.
  • Not all private sector companies perform well: In those cases, the losses are not funded by innocent taxpayers.

Twin angles to welcome strategic disinvestment

  • One: The need for India to invest in fresh asset creation.
  • The fresh asset can be created by way of roads, ports and airports that would result in a cascade effect for the economy’s growth.
  • Two: The optimization of wealth generation from the country’s assets.
    • This, incidentally, will benefit individual shareholders, including employees with shares, who have invested in the equity of listed public-sector companies such as Bharat Petroleum.
    • Energy security of the country not harmed: As there are other state-owned petroleum companies undertaking exactly the same activities, such as refining and marketing crude oil, the sale of one company does not tamper with the energy security of the country.

Way forward

  • Caution against undervaluation: The government, however, must ensure that it is not taken for a ride. It must make a good judgment of the value of the company it decides to disinvest from and if the market conditions are not favourable for the move it must wait for the opportune moment.
  • Asset creation from the proceeds: Instead of using the proceeds from the disinvestment to fund revenue deficit the proceeds must be utilized strictly for new asset creation.

 

 

Government Budgets

[op-ed snap] The stress in state financesop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Effects of low growth rate on the State's finances.


Context

Lower tax devolution, delays in GST compensation are potential risks to the states.

Trends in the finances of the state

  • The unaudited fiscal data of 21 states:
    • These states account for around 90 per cent of India’s GDP in 2017-18. The data reveal some trends.
  • First Trend: Revenue receipt sliding down
    • From 15.6 to 4.6 %: At the aggregate level, revenue receipts of these 21 states have grown by a mere 4.6 per cent, sliding down from 15.3 per cent over the same period last year.
    • Decrease in Central tax devolution: The analysis shows that the states’ share in Central tax devolution has slowed the most, contracting by 2.3 per cent during this period, after having grown by 12.1 per cent over the same period last year.
  • Second trend: The Centre’s gross tax revenues are expected to fall short of the budgeted target by a considerable Rs 3- 3.5 trillion this fiscal year.
    • The aggregate tax devolution to all states may be as much as Rs 1.7 – 2.2 trillion lower in the current fiscal year than what was budgeted.
    • This is a key revenue risk staring at the state governments this year.
  • Third trend: States own tax and non-tax revenue contracting.
    • The states’ own non-tax revenues have contracted by 5 per cent during the first eight months of this fiscal year, after an expansion of 15.3 per cent over the same period last year.
    • Decreasing tax revenue: Growth of states’ own tax revenues, the largest source of their revenue receipts, eased to a tepid 2.2 per cent during this period from a healthy 16 per cent over the same period last year.
    • This is in part by the modest rise in collections of the State Goods and Services Tax (SGST).
  • Fourth trend: Increase in the grants from the Centre
    • The primary factor boosting the GST compensation seems to be the low growth in states’ GST revenues relative to the mandated 14 per cent annual growth for the five-year transition period.

Delay in receipt of the GST collection and the risk

  • Some state has voiced concerns over the delays in receipt of the compensation amount in recent months.
    • The delay has complicated their fiscal position and cash flow management.
    • Risk for the states: The timing of receipt of the compensation is the second major revenue risk facing state governments.
    • If compensation gets delayed to the next fiscal year, we may well find some traditionally revenue surplus states staring at a revenue deficit
    • Case of no GST compensation: But it seems states will have to start gearing up for life without the GST compensation.

The Rise in State Development Loans or Market borrowing by states

  • SDL rising in first three quarters: According to ICRA’s estimates, net SDL issuance of all states and UTs rose by 15.5 per cent to Rs 2,806 billion in the first three quarters of this fiscal year, up from Rs 2,429 billion last year.
    • The combined gross SDL issuance has expanded by a significant 34.9 per cent to Rs 3,874 billion this fiscal year (April-December), up from Rs 2,872 billion last year.
    • The calendar for state government market borrowings for the fourth quarter indicates tentative gross SDL issuances of Rs 2,086 billion in the quarter, implying a moderate 9.1 per cent growth.
    • But, this conceals a large dip in redemptions.
    • Net SDL issuances will expand by a staggering 55.7 per cent to Rs 1,766 billion in Q4FY20, up from Rs 1,134 billion last year, underlining the stress in state government finances this year.
  • About 25 % rise in borrowing this fiscal: If market borrowings in the fourth quarter are in line with the amounts indicated, total gross borrowing this fiscal year would rise by 24.6 per cent to nearly Rs 6 trillion, up from Rs 4.8 trillion last year.
  • Net borrowing by states as large as Central govt. borrowing: Net borrowings by states would rise by an even sharper 28.3 per cent to Rs 4.6 trillion this year, becoming nearly as large as the Central government’s net market borrowings of Rs 4.7 trillion that have been announced so far for this year.

Conclusion

The figure and the trends indicated the financial risk the states are staring at. The government must take measure to revive the economy in order to address the problems faced by the states and ensure that the states are not left in lurch while SGT compensation receipts get delayed.

 

 

Promoting Science and Technology – Missions,Policies & Schemes

[op-ed snap] Here’s looking at youop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Facial recognition technique and issues associated with it.


Context

Face recognition technology calls for a more comprehensive domestic framework that promotes the use of new technologies for the public good as well as imposes necessary constraints against their abuse.

Debate on finding the balance between regulation and promotion

  • Google calls for partial ban: TheGoogle CEO’s recent support for a temporary ban on facial recognition technologies seems uncharacteristic.
    • It is not often that companies developing a technology call for its ban.
    • Their interest is in promoting the use of technology, not proscribing it.
    • Not every one of the leading tech companies agrees with Google on facial recognition.
  • Microsoft against the ban: Microsoft has questioned the idea of a ban. Calling facial recognition a “young technology”, it said “it will get better.
    • To get better the technology has to be used: The only way to make it better is actually to continue developing it.
    • And the only way to continue developing it actually is to have more people using it.
  • IBM’s precision regulation: IBM has taken a step forward in developing the policies for the use of technology by setting up a “lab”.
    • The lab will generate actionable ideas for policymakers to manage the emergence of new technologies like facial recognition that are shaping our digital future.
    • Precision regulation vs. complete ban: The idea is to develop “precision regulation” rather than enforce “blunt” instruments like the ban.
  • The EU’s plans for temporary ban: The debate on finding the right balance between regulation and promotion of emerging technologies comes in the wake of leaked plans of the EU to issue a temporary ban.
    • The ban could be up to five years.
    • Ban on use in public places only: The proposed ban is not a comprehensive one and will be applicable to the use of facial recognition in public spaces.
  • India’s own plans for law enforcement agencies: The intensifying global debate also coincides with India’s own plans to roll out a massive project on deploying facial recognition technologies, essentially for law enforcement.
    • The international discourse provides the context for developing a broad and effective Indian policy framework for the use of facial recognition.

Background of the backlash against the tech companies

  • Techlash: Well before the EU had begun to discuss a temporary ban on facial recognition, there has been a “techlash” against the companies.
    • The companies faced backlash because they have so dramatically altered our lives in the last few years.
  • The idea of “digital is different”: For nearly two decades, the idea that “digital is different” and does not need public oversight had triumphed in most capitals of the world.
  • Problems with regulations: The main argument was that regulation constrains technological innovation and retards progress.
  • AI and Big data:  The urge to regulate has triggered widespread concerns about the dangers of digitalisation, especially the use of big data and AI by private companies as well as governments.

Major concerns against facial recognition

  • Surveillance capitalism and surveillance state: The companies were seen as monetising the data generated by the widespread use of digital platforms like Google and Facebook.
    • Surveillance state:  China became the prime example of states using data and information to exercise ever more control over its citizens.
  • Accuracy: At the other end are concerns that facial recognition is not entirely accurate and could lead to punitive actions against innocent people.
  • Racial bias misogyny: There is also a concern in the US that the algorithms behind facial recognition carry the baggage of racism and misogyny.
  • Concerns in India: It also remains a fact that the Indian state has always been tempted to empower itself against its citizens in the name of collective security.
    • It has also tended to weaponise information against political opponents and dissidents.

Potential Advantages

  • In the control of crime.
  • Better border controls and countering terrorism.
  • Aid the Police: In India, a severely under-policed nation, facial recognition surely offers many benefits.

Conclusion

The foreign office must reclaim India’s place in the international discourse on AI and facial recognition and develop a productive alignment between India’s national interests and the development of new digital norms.

 

Issues related to Economic growth

 [op-ed of the day] The convergence of rich nations with the rest has gone off trackop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Globalisation-Convergence of the rich and the poor economies- hopes and the reality.


Context

Sound policies are needed to put emerging economies back on a higher growth path and ameliorate regional inequalities.

The theory of convergence

  • The theory of convergence is one of the most powerful and noblest ideas in economics.
    • What is it? It is the concept that other things being equal, poorer economies should catch up with richer ones so that inequality between the rich and the poor attenuates, and conceivably even disappears over time.
  • Capital is more productive in poor economies: The premise driving convergence is that capital (whether physical or human) is more productive in poor economies than rich ones due to what economists call “diminishing marginal productivity”.
    • In layman’s terms, a small amount of investment yields a greater increase in output where there is less capital than where there is more.
    • Lesser the development more the development: Even more simply, the rate of return on investment is inversely related to the level of economic development.
  • Experience of Japan and Germany after WW 2: The experience of advanced economies gave economists reason to be optimistic that convergence occurs according to the script.
    • Thus, the devastated economies of Europe, along with Japan, quickly caught up with the advanced economies that had not been ravaged by World War II, most notably, the US.
    • Germany and Japan closing the gap: At the end of the war, with their capital stocks destroyed, Germany and Japan were much poorer than the US; by the 1960s, they had closed the gap.

Globalisation and the unfulfilled hopes of convergence

  • Replication of the rise of Japan and Germany? At one time, it appeared that the same play was at work between emerging economies and advanced economies.
    • Rise of India and China: Economies such as China and India, as well as others, were far outstripping the growth rates of the US and other rich economies,
    • Hope of closing gap: India and China gave hope that at least the more rapidly growing of the emerging economies would close the gap with the rich world within decades rather than centuries.
  • Adoption of technology at low cost: There was presumed to be an additional powerful force working toward convergence.
    • Poorer economies are, almost by definition, far away from the technological frontier at which the richest economies operate.
    • There is thus ample room to absorb newer technologies at relatively low cost and in a relatively short span of time, without encountering slowing growth like the rich economies,
    • In simpler terms, it is difficult and costly to innovate the latest Apple iPhone, but relatively easy to reverse engineers at least some of Apple’s technology.

Reality: Convergence is faltering

  • Recent evidence suggests that convergence is faltering.
  • World Bank report of retarding convergence: A recent World Bank report documents a worrying slowdown in productivity growth in emerging economies, significantly retarding convergence.
    • Lower productivity: The report’s calculations suggest that emerging economies have 14% lower productivity than they would have had if previous trends of high productivity growth were maintained.
    • Lower commodity exports: For commodity exporters, this is a whopping 19%.
  • The silver lining for faltering economies: According to the World Bank, the main driver of falling productivity are-
    • Insufficient investment in physical and human capital.
    • Insufficient mobility of machines and workers from less productive to more productive sectors of the economy.
  • India’s case: The Indian case clearly bears this out, with languishing investment and unfinished productivity-enhancing reforms, especially in the country’s labour market, being the key culprits behind the sharp slowdown in growth.

Way forward

  • Repair financial systems: Governments, including India’s, need to do the heavy lifting of repairing damaged financial systems overladen with bad debt.
  • Restore fiscal rectitude.
  • Inflation focused monetary policy: Ensure that monetary policy remains focused on stable inflation rather than being excessively loose as a risky substitute for structural reforms.
  • Reforms: Press ahead with unfinished reforms to capital, land and labour markets.
  • Address the regional disparities: There is a further critical dimension in the case of large multi-region economies such as India.
    • Not only has convergence been faltering between nations, but it has also been faltering between the richer and poorer regions of large nations such as India.

Conclusion

The data does not present an epistle of despair, but of hope. The pursuit of sensible and conventional sound economic policies ought to put emerging economies as a group back on a higher growth trajectory. Convergence may yet end up being a parable of promise rather than a fable of folly.

 

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

[op-ed snap] The hype over hypersonicsop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Avangard-HGV

Mains level : Paper 3- Hypersonic Glide Vehicle, whether India go for developing it- and challenges to Indian security.


Context

Russia announced that its new hypersonic glide vehicle (HGV), Avangard, had been made operational.

What HGV is and where the US and China stand

  • What is HGV and what is it capable of?
    • Speed over 5 Mach: A hypersonic delivery system is essentially a ballistic or cruise missile that can fly for long distances and at speeds higher than 5 Mach at lower altitudes.
    • Invulnerable to interception: This allows it to evade interception from current Ballistic Missile Defence (BMD).
    • High manoeuvrability: It can also execute a high degree of manoeuvres.
    • Avangard-Developed by Russia: Russia claims that this HGV can fly at over 20 times the speed of sound.
    • Invulnerable to interception: and is capable of such manoeuvring as to be invulnerable to interception by any existing and prospective missile defence means of the potential adversary.
  • China and the U.S. are also close on the heels: The U.S. has moved from the research to the development stage.
    • Where China stands: China demonstrated the DF-17, a medium-range missile with the HGV, at the military parade in October 2019.
  • What were the reasons for the development: The U.S. walked out of anti-ballistic missile treaty in 2002, prompted by the U.S. exit from the treaty and fear of the U.S. anti-ballistic missile defence system.

How would hypersonics complicate the security concerns?

  • First complication-Increase in the possibility of miscalculation: These missiles are being added to the military capabilities of countries that possess nuclear weapons.
    • For these nations, the concern is always an attack on nuclear assets to degrade retaliation
    • Destination ambiguities: Another layer of complication is added by the fact that these missiles bring in warhead and destination ambiguities.
    • Increasing tendency to assume worst: In both cases, when an adversary’s early warning detects such missiles headed in its direction, but cannot be sure whether they are conventional or nuclear-armed, nor ascertain the target they are headed towards, the tendency would be to assume the worst.
    • For an adversary that faces a country with a BMD but itself has a small nuclear arsenal, it would fear that even conventionally armed hypersonic missiles could destroy a portion of its nuclear assets.
    • The tendency to shift to trigger-ready postures: The tendency could then be to shift to more trigger-ready postures such as launch on warning or launch under attack to ostensibly enhance deterrence.
    • Risk of miscalculation: But such shifts would also bring risks of misperception and miscalculation in moments of crisis.
  • Second complication-Offence defence spiral: According to reports, the U.S. has begun finding ways of either strengthening its BMD or looking for countermeasures to defeat hypersonics, besides having an arsenal of its own of the same kind.
    • Possibility of arms race: The stage appears set for an arms race instability given that the three major players in this game have the financial wherewithal and technological capability to play along.
    • This looks particularly imminent in the absence of any strategic dialogue or arms control.
  • Third complication-Possibility of the arms race into outer space: A third implication would be to take offence-defence developments into outer space.
    • Sensors are already placed into space: Counter-measures to hypersonics have been envisaged through the placement of sensors and interceptors in outer space.
    • While none of this is going to be weaponisation of outer space would, nevertheless, be a distinct possibility once hypersonic inductions become the norm.

Conclusion

The induction of this technology would likely prove to be a transitory advantage eventually leading nations into a strategic trap. India needs to make a cool-headed assessment of its own deterrence requirements and choose its pathways wisely.

Important Judgements In News

[op-ed of snap] The four phases of constitutional interpretationop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Evolutionary phases through which the interpretation of Constitution by judiciary passed.


Context

The ways in which the Constitution of India is interpreted has undergone changes through four phases.

Constitution-An Ambitious political experiment

  • Indian Constitution was an ambitious political experiment for the following reasons-
    • Universal Adult Franchise: India began its journey with the universal adult franchise.
    • Federalism: Federalism in a region consisting of over 550 princely States.
    • The promise of Equality: The Constitution was a sort of social revolution in a deeply unequal society with the promise of equality.
    • Unique constitutional design: it was equally a unique achievement in terms of constitutional design.

The first phase of interpretation-Focus on text

  • A textualist approach-focusing on the plain meaning of the words: In its early years, the Supreme Court adopted a textualist approach, focusing on the plain meaning of the words used in the Constitution.
    • K. Gopalan v. State of Madras (1950) was one of the early decisions in which the Court was called upon to interpret the fundamental rights under Part III.
    • The leader of the Communist Party of India claimed that preventive detention legislation under which he was detained was inconsistent with Articles 19 (the right to freedom), 21 (the right to life) and 22 (the protection against arbitrary arrest and detention).
    • Fundamental rights separate from each other: The Supreme Court decided in A. K. Gopalan case that each of those articles covered entirely different subject matter, and were to be read as separate codes rather than being read together.
  • Unlimited Amendment Power: In its early years, the Court read the Constitution literally, concluding that there were no limitations on the Parliament’s power to amend the Constitution.

The second phase of interpretation-Focus on ‘basic structure’

  • Appeals to the structure and coherence: Appeals to the text of the Constitution were gradually overtaken by appeals to the Constitution’s overall structure and coherence.
    • Limited Amendment Power-Kesavananda Bharati case: In the leading case of Kesavananda Bharati v. State of Kerala(1973), the Court concluded that Parliament’s power to amend the Constitution did not extend to altering its “basic structure”.
    • What is the “Basic Structure”: The basic structure is an open-ended list of features that lie within the exclusive control of the Court.
    • When Parliament attempted to overturn this decision by amending the Constitution yet again, the Court, relying on structuralist justifications, decisively rejected that attempt.
  • Key takeaways from Kesavananda Bharati case
    • Limited Amendment Power: In this case, the Court pronounced that Parliament’s power to amend the Constitution is not unlimited.
    • Fundamental rights as a cohesive bill of rights: In this phase, the Court also categorically rejected the Gopalan approach in favour of a structuralist one.
    • Maneka Gandhi v. Union of India (1978):  Through decision, in this case, the Court conceived of the fundamental rights as a cohesive bill of rights rather than a miscellaneous grouping of constitutional guarantees.
    • Incremental interpretation of Right to Life: The right to life was incrementally interpreted to include a wide range of rights such as clean air, speedy trial, and free legal aid.
    • Courts playing role in governance: The incremental interpretation of Article 21 paved the way for the Supreme Court to play an unprecedented role in the governance of the nation.
  • What was common in the first two phases?
    • Interpretation done by Constitutional Benches: That significant decisions involving the interpretation of the Constitution were entrusted to Constitution Benches (comprising five or more judges of court) and were carefully (even if incorrectly) reasoned.
    • Little scope for precedential confusion: There was limited scope for precedential confusion, since matters which had been decided by Constitution Benches and which demanded reconsideration were referred to larger Constitution Benches.

Third Phase of interpretation-Eclecticism

  • Different opinions on the same issues: In the third phase the Supreme Court started to give different opinions on the same issues-i.e. it engaged in eclecticism.
    • Lesser reasoning: The Court often surrendered its responsibility of engaging in a thorough rights reasoning of the issues before it.
    • Two factors underpinned this institutional failure.
  • First-Change in the structure of the SC: The changing structure of the Court, which at its inception began with eight judges, grew to a sanctioned strength of 31; it is currently 34.
  • It began to sit in panels of two or three judges, effectively transforming it into a “polyvocal” group of about a dozen sub-Supreme Courts.
  • Second-expansion of own role by the SC-The Court began deciding cases based on a certain conception of its own role -whether as a sentinel of democracy or protector of the market economy.
  • The focus of the judgement on the result rather than reason: This unique decision-making process sidelined reason-giving in preference to arriving at outcomes that match the Court’s perception.
  • Consequences of the eclecticism
    • Rise of doctrinal incoherence and inconsistency: The failure to give reasons contributed not only to methodological incoherence but also to serious doctrinal incoherence and inconsistency across the law.
    • Conflicting decisions and interpretations: This approach can be best described as panchayati eclecticism, with different Benches adopting inconsistent interpretive approaches based on their conception of the Court’s role, and arriving at conclusions that were often in tension with one another.
    • Decision detached from precedents and established methods: The imagery that panchayati eclecticism is meant to invoke is that of a group of wise men and women (applying the analogy, sub-Supreme Courts), taking decisions based on notions of fairness that are detached from precedent, doctrine and established interpretive methods.

Fourth phase- based on the purpose

  • Purpose of enactment of the Constitution as critical: In the fourth phase, the Court has acknowledged as critical to its interpretive exercise the purpose for which the Constitution has been enacted.
  • The realisation of revolutionary and transformative potential: The Court is now beginning to interpret the Constitution in accordance with its revolutionary and transformative potential.
    • Renaissance in decisions: With about a dozen significant Constitution Bench decisions from the Supreme Court since September 2018, there has been a renaissance in decision-making by Constitution Benches.
    • The most important decisions of this period include-
    • Court’s decisions striking down Section 377 and the criminal offence of adultery.
    • And including the office of the Chief Justice of India within the scope of the Right to Information Act.

Conclusion

With the interpretation process entering in the fourth phase-realising the purpose of enactment of the Constitution- Indian judiciary is on the right track, however, facets of phase 3 continue to linger on it. The Supreme Court must avoid getting in phase three mode to in order to realise the purpose it was entrusted with.

 

 

 

 

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed of the day] Food for Expediencyop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- PDS and issue of excess food stock with FCI.


Context

A substantial rise in consumer food price inflation to 14.12% in December 2019, the highest ever in the past six years, has driven the retail price inflation in this country.

Discrepancies in the fiscal deficit

  • Policy dilemma for the RBI: Though the CPI was at 14.12% in December but with the core inflation rate still not overshooting the Reserve Bank of India’s (RBI) medium-term target of 4(+/- 2)%.
    • Speculations hover as to whether the RBI monetary policy committee will go for another rate cut in the coming month.
    • This is a policy dilemma for the central bank
    • Why is the dilemma? The dilemma is because the moot issues regarding the government’s key economic estimates, such as the fiscal deficit, largely remain unresolved.
  • Discrepancies flagged by the CAG: The CAG has stated that the current figures on deficit have been kept at a 1.5% to 2% low by not including the government’s off-budget borrowings from public accounts, such as the National Small Savings Fund (NSSF).
    • According to media reports, such off-budget expenditure of the current government stands at ₹1.5 lakh crore in 2019–20.
    • The major portion of off budged expenditure on food subsidy: About three-fourths of the incremental off-budget expenditure is on account of under-recoveries in food subsidies of the Food Corporation of India (FCI).
  • Low allocation but high expenditure on food subsidy: For instance, the 2019–20 Union Budget had provisioned food subsidy at₹1.84 lakh crore.
    • While the overdue of the FCI is already at₹1.86 lakh crore.
    • For these burgeoning overdue, FCI’s ­off-budget borrowings from the NSSF have been on the rise.

Excessive stock by the government and rising inflation

  • Issue of supply management: The issues of agricultural supply management are relegated to the background by the standard causality argument of “crop damages” caused by excessive rains and that the inflation will ease out once the new harvest comes in.
    • This argument can hold some water for horticulture crops like onions that saw an almost 200% rise in price in November and December.
    • Unable to explain inflation in wheat and other cereals: This argument may not find traction in explaining the price inflation of wheat and other cereals.
  • holding the excessive cereal stock: With the government currently stocking much higher quantities of cereals at the FCI than the buffer norms.
    • 45.8 million tonnes of wheat as against the buffer norm of 27.5 million tonnes and nearly double the amount of rice vis-à-vis the buffer norm of 13.5 million tonnes.
    • India is now a cereal surplus economy.
    • Why then the inflation in cereal prices? Is this artificially created by the government through its irrational stocking practice?
    • Some fundamental concerns are triggered at this juncture.
  • Concerns with excess stocks
    • First-Higher stock means higher subsidy bill-With the economic costs of the FCI being 12 times or more than the allocation cost of the grains through the public distribution system-higher stocks would imply higher subsidy bills.
    • SecondNo benefit of the stock: In tandem with the first, ad hoc releasing of the stocks will not bring about any major changes in the situation.
    • ThirdHiding fiscal deficit from the public: In this context, off-budget borrowing can serve various politically expedient purposes.
    • It has enabled the government to showcase a consistently low share (below 1%) of subsidies in national income.
    • Thereby diverted the public attention from two critical facts: the FCI’s tipping financials and the country’s (grossly) underestimated fiscal deficit.

Conclusion

The government must recall that the “illusion” of this acceptable limit of inflation potentially rests upon the savings of the common consumers, which is being unduly misemployed by the government.

 

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

[op-ed snap] Frame rules to govern how devices identify usop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Face recognition technique, its uses and related issue.


Context

Facial recognition technology is set to become an integral part of the law enforcement toolkit, but we should regulate this technology before it pervades our public spaces.

What are the issues with the use of facial recognition?

  • Enormous possibilities for law enforcement agencies:
    • Detectives have been using facial recognition to solve crimes for almost as long as the camera has been in existence.
    • Use of AI for facial recognition: It is but a logical extension of the modern crime solver’s toolkit to use artificial intelligence (AI) on the most identifiable physical feature of people, their face.
    • Screening faces within hours: An image captured at the scene of a crime can now be screened against photographs of entire populations for a match within a matter of hours.
  • Uneasiness with being watched: The idea of being watched by devices linked to vast databases far out of sight makes liberal societies uneasy.
  • Invasion of privacy:  The intrusion that is causing alarm, however, has nothing to do with the technology itself, and everything to do with the all-pervasive surveillance it enables.

Should there be no rules governing it?

  • Issue of accuracy: How accurately faces are identified by machines is a major point of concern. Deployed in law enforcement, false matches could possibly result in a miscarriage of justice.
    • Judicial scrutiny: Even a low rate of error could mean evidence faces judicial rejection. It is in the judiciary’s interest, all the same, to let technology aid police-work.
  • Racial bias: First up for addressal is the criticism that facial recognition is still not smart enough to read emotions or work equally well for all racial groups.
    • With iterative use, it will improve.
  • Mala fide use: Since such tools can be put to mala fide use as-rogue drones equipped with the technology, for example, should never be in a position to carry out an assassination.
    • Nor should an unauthorized agent be able to spy on or stalk anyone.
    • Caution in the developed countries:  Apart from California, the European Union has also decided to exercise some caution before exposing people to it.
  • Privacy as fundamental rights in India: India, which has recently accepted privacy as a fundamental right, would do well to tilt the Western way on this.

Conclusion

  • We need regulations that restrict the use of facial recognition to the minimum required to serve justice and ease commercial operations. For the latter, customer consent should be mandatory.
  • There will be some overlaps. Its use at an aerobridge to board an aircraft, for example, could serve the interests of both state security and the airline, but data-sharing could risk leakage.

 

 

Foreign Policy Watch: India – EU

[op-ed snap] It’s not yet Howdy, Modi!op-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- India-US ties, what are the issues that introduces friction in the ties between the two.


Context

Persistent in their efforts to remake their countries and their engagement with the world, Mr Modi and Mr Trump are shaking up the bilateral ties between the two countries, and the resultant flux could outlive their tenures.

The emergence of both the leaders on similar promises

  • Improvements over the legacy of their predecessors: Both leaders continuously reiterate that their predecessors were incapable of protecting national interest.
    • The compulsion to reframe the national interest: Such premises commits them both to reframe the national interest, and both have articulated it with clarity and force.
    • For instance, Mr Modi, in Houston in September 2019 and Mr Trump in Davos this week, went great lengths to lay out figures that presented their respective regimes as the most effective guardians.
  • Both have cultural and economic agenda: Both dispensations believe that “the people” had been given a raw deal by earlier regimes.
    • Both have a cultural and economic agenda.
    • National awakening: They are now leading a national reawakening, and working hard for the hard-working people.
    • Both believe that cultural nationalism is a force for the good.
    • Securing borders and entry barriers: Both believe that national borders need to be strengthened by stricter monitoring and setting new bars for entry.
    • Renegotiating the treaties: Both leaders try to renegotiate the contract between the union and the States, and between citizens and the state within their respective countries.
    • The supremacy of executive: They assert the supremacy of the executive over the legislature and the judiciary.
    • Shared values: The notion of shared values of India and the U.S. has acquired a whole new meaning under Mr Trump and Mr Modi.

Politics and governance

  • Hopes of status-quo in bilateral relations shattered: It was hoped that the stronger U.S.-India ties- that have autonomous drivers of convergence-would not be impacted by the nationalist politics of these two leaders.
    • But both leaders have been remarkably true to their politics in their governance.
    • Current tumult in the India-US ties: Shared values notwithstanding, national interests as perceived by these leaders have several points of divergence and therein lies in the current tumult in India-U.S. ties.
    • Opposition to the “world order”: Mr Trump has been outspokenly confrontational with the “world order” that he says has worked against American interests.
    • Dismantling the treaties: America under Mr Trump has wrecked treaties such as the Paris climate agreement and institutions such as the World Trade Organization and the United Nations, disrupting the “rule-based order”.
    • India’s relations with Bangladesh: India’s spirited outreach in the neighbourhood is still playing out. India’s historically warm ties with Bangladesh have been frayed after CAA.
  • India’s ambitions on the global level
  • The seat at the UNSC: India under continues to push for more space for itself in global affairs by seeking a permanent seat in the UN Security Council and membership.
  • NSG membership: India is also pushing for the membership of the Nuclear Suppliers Group.
  • The US actions at global levels
    • Expansion of the principle of the pre-emptive strike: America expanded the principle of pre-emptive strike to include the assassination of a senior official of Iran.
    • Renegotiating the treaties: After dismantling the North American Free Trade Agreement, Mr Trump forced Mexico and Canada to accede to his demands in a new trade deal.
  • The India-US relations and impact of U.S. relations with other countries
    • Impact on India-US ties: India’s ties with the U.S. are impacted by America’s ties with India’s adversaries and neighbours, China and Pakistan.
    • Hopes of alignment in the Indo-US ties: Mr Trump’s bluster against both had lit hope that there would finally be a near-complete alignment between India and the U.S. on strategy.
    • US-Iran conflict: Despite Mr Trump’s avowed opposition to America’s endless wars in West Asia, the US is going against Iran headlong, which is not in India’s interest.
    • Relations with Gulf Countries: Trump and Mr Modi share a strong bonding with the Gulf Cooperation Council kings, but their courses in the region are diverging.
    • US-Pakistan coming closer once again: The American President’s impatience to get out of Afghanistan has already pushed his administration closer to Pakistan, which is now further necessitated by his adventurist Iran policy.
    • The US disregard for China’s expansionist policies: Mr Trump has been singularly focused on one question-trade. He cares little about China’s expansionism and at any rate that is not a factor in his ties with other Asian countries.

India-US ties- Points of fission

  • On the trade front: Mr Trump has bracketed India and China as two countries that have duped his predecessors to gain undue advantage. Which is far from seeing India as deserving special concessions to counterbalance China as old wisdom demanded.
    • Ending GSP: The US ended India’s status under the World Trade Organization’s Generalized System of Preferences and took other punitive measures.
    • India trying to decrease the trade surplus: By increasing hydrocarbon imports from the U.S., the government is trying to reduce India’s trade surplus.
  • Restrictions on H1-B visa: The US has tightened the restrictions on the H1-B visa which is used by the Indian companies.
  • Decreasing bipartisan support in the US: The mobilisation of Indian diaspora in America by the government has resulted in the inevitable blowback.
    • Diaspora divided and bipartisan support waning: The diaspora has been divided, and the bipartisan support for India is now squandered. Progressive sections on the Democratic side and religious libertarians and evangelicals on the Trump side are both concerned over India’s actions back home.

Conclusion

Partnership with America is critical to India. India must take the steps to align the interest but whenever it diverges India must take measures to minimise its impact on India while furthering its interests.

ISRO Missions and Discoveries

[op-ed of the day] Lady Gaganautop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Skybot F-850: Robot sent by Russia to dock with the International Space Station.

Mains level : Paper 3-Vyommitra, India's human spaceflight in 2022.


Context

The first gaganaut-Vyomamitra- to head for space in an Indian craft will not be human, but humanoid.

What Vyomamitra would do on spaceflight?

  • Test the technological environment: Vyomamitra unveiled by ISRO will fly two missions to test the technological environment which human gaganauts will inhabit on India’s first demonstration of human spaceflight in 2022.
    • She will test the systems and instruments that they would use.
    • Vyomamitra cannot test the cabin ecosystem,  as she would not be able to breathe the air.
    • Other functions: Vyomamitra is perfectly capable of issuing commands, activating switches and, obviously, communicating with earth.
  • Give company to human travellers: Her prototype has already chatted with people at the Isro event where she was introduced to the public, and future iterations will be able to give company to human travellers at the loneliest frontier.

A shift from sending animals to humanoids

  • Performing roles previously performed by animals: Vyomamitra will be executing the pioneering role which has traditionally been given to animals – testing systems for survivability.
    • Fruit flies and monkeys were the first beings to lift off, riding V2 rockets with devices monitoring their vital signs.
  • Why using humanoid is more useful: Using a humanoid robot is more useful because it can be used to replicate the behavioural and operational responses of a human.
    • Indeed, robots need not remain pioneers testing survivability, or assistants to the human crew, but are expected to crew missions that are too prolonged or too dangerous for a human pilot.

Opportunities and the future of AI-powered humanoid

  • Russian robot in space: As India prepared for human flight, in August 2019, the Russian space agency Roscosmos sent up the anthropomorphic robot Skybot F-850 to dock with the International Space Station.
    • The mission has been halted because of technical issues.
    • Goals beyond survivability testing: If the nation which pioneered human spaceflight with Yuri Gagarin’s mission in 1961 is sending humanoid robots into space, survivability testing is not the only legitimate goal of missions powered by artificial intelligence and robotics.
  • Opportunity to develop new technologies: Humanoid in space also provide opportunities to test and develop these technologies under circumstances that do not prevail on earth.
    • The inputs, goals and skills learned are different and while AI on earth specifically focuses on creating systems which do not think like humans,
  • Human-like AI system need of industry: The space industry would value systems that are human-like, to stand in for crew.

Conclusion

Vyomamitra represents the very first iteration of AI in space, and later generations could prove to be as essential for spaceflight as cryogenic engines.

 

 

BRICS Summits

[op-ed snap] As India prepares to honour Bolsonaroop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- BRICS- challenges and areas of cooperation.


Context

India has invited the Brazilian President to be a guest of honour for Republic Day 2020. It is also a good opportunity for focusing on intra-BRICS partnership and trade.

Future of the BRICS

  • To move towards multi-polarity: This was set up as a move towards greater multi-polarity; hence the spread across three continents and both hemispheres.
    • Infirmities in the group: The BRICS combination accounts for about one-third of global output, but a glance at the GDP t and growth rates will show the infirmities of the group.
    • Differences in GDP: In terms of GDP, China occupies the second position; India the fifth; Brazil the ninth; Russia the 11th; and South Africa the 35th.
    • Differences in growth rate: In terms of growth rates, China grew at 6%; India at 4.5%, Russia 1.7%, Brazil 1.2% and South Africa 0.1%.
    • Both politically and economically, Brazil and South Africa have been the laggards in recent years. But there are certain similarities as well.
  • Similarities in the group: Each country has different economic and political leverage and its own burden of domestic and external issues.
    • Decision-making structure: They all share the benefits of autonomous decision making.
    • Non-affiliation: The members of the group have non-affiliation with any binding alliances.
    • Informal structure: The group’s informal structure is an advantage for coordination among the most influential non-Western countries.
  • Challenges to the survival of the group: The BRICS group can survive only if its members maximise their congruencies to the extent possible. Following are the challenges to the existence of the group-
    • The growing intensity of Sino-Russian ties.
    • The pro-American leanings in Brazil.
    • The socio-economic difficulties of South Africa after nine years under the controversial Jacob Zuma.
    • India’s many difficulties with China, including its abstention from the Regional Comprehensive Economic Partnership.

Achievement of the grouping

  • New Development Bank: The main achievement of BRICS is the New Development Bank, with each country contributing equally to its equity.
    • The bank has so far financed over 40 projects at a cost of $12 billion.
    • The BRICS countries are also developing a joint payments mechanism to reduce foreign trade settlements in U.S. dollars.
  • BASICS: An offshoot of the group, dealing with climate change, is BASIC (BRICS without Russia).
    • BASICS met at the Spain conference last month and reiterated its support to the Paris Agreement.
  • India’s lead role: India is taking the lead role in-
    • Digital health, Digital forensics
    • Film technology.
    • Traditional medicine.
    • Sustainable water management,
    • Internships and fellowships.

Brazil-India relation

  • Visa waiver for Indians: Brazil declared the decision to waive visa requirements for Indian citizens.
  • Potential for investments: There is potential for Brazilian investments in the sectors of space and defence, agricultural equipment, animal husbandry, post-harvest technologies, and bio-fuels.
  • Low two-way trade: The total two-way trade is at a paltry $8 billion, and the prospect of closer economic ties, however desirable, would require considerable optimism.

Conclusion

Both India and Brazil need to further deepen the ties and increase cooperation in various areas of cooperation. BRICS, despite the various challenges, need to focus on congruencies between them and work towards greater cooperation.

.

 

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

[op-ed snap] Budgeting for jobs, skilling and economic revivalop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Suggestions for revival of the Indian economy, unemployment in rural and urban areas and ways to increase it by investing in various sectors.


Context

With the unemployment rate at 6.1 (2017-18), not just the future of the economy, the future of the country’s youth depends on the Budget.

Unemployment and other indicators of the economy

  • Unemployment in urban youth: The unemployment rate for urban youth in the 15-29 years category is alarmingly high at 22.5%.
    • These figures, however, are just one of the many problems, as pointed out by the Periodic Labour Force Survey.
  • The decline in labour force participation: The Labour Force Participation Rate has come down to 46.5% for the ‘15 years and above’ age category.
    • It is down to 37.7% for the urban youth. Even among those employed, a large fraction gets low wages and are stuck with ‘employment poverty’.
  • The decline in investment: The aggregate investment stands at less than 30% of the GDP, a rate much lower than the 15-year average of 35%.
  • The decline in capacity utilisation: The capacity utilisation in the private sector is down to 70%-75%.

Where the Budget should focus to reduce rural employment?

  • Revive demand: The Budget should also focus on reviving demand to promote growth and employment.
    • PM-KISAN and MGNREGA: Schemes like PM-KISAN and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) are good instruments to boost rural demand.
    • Unutilised fund: a significant proportion of the budgetary allocation for PM-KISAN will go unutilised.
  • Why income transfers through such schemes matter?
    • Spend most of their income: Farmers and landless labourers spend most of their income. This means that income transfers to such groups will immediately increase demand.
    • Consumes a wide range of goods: Further, rural India consumes a wide range of goods and services; so, if allocation and disbursement are raised significantly, most sectors of the economy will benefit.
    • Immediate result: And such transfer will have the immediate payoff.
  • Allocate to irrigation and infrastructure projects
    • How allocation could matter: Rural unemployment can be reduced by raising budgetary allocation for irrigation projects and rural infrastructures like roads, cold storage and logistical chains.
    • These facilities, along with a comprehensive crop insurance scheme, can drastically increase agricultural productivity and farmers’ income.
    • The decrease in wastage and reduction in inflation shocks: Moreover, by integrating farms with mandis, such investments will reduce wastage of fruits and vegetables, thereby leading to a decrease in the frequency of inflationary shocks and their impact.

Where the Budget should focus to reduce urban unemployment?

  • Focus on construction and related activities: In urban areas, construction and related activities are a source of employment for more than five crore people.
    • Second only to agriculture: Across the country, the sector’s employment figures are second only to those of the agriculture sector.
    • Construction as the backbone of other sectors:  These projects, along with infrastructure, support 200-odd sectors, including core sectors like cement and steel.
  • Problems with the construction sector:
    • Construction sector at a halt due to legal disputes: Due to the crisis in the real estate and infrastructure sectors, construction activities have come to a grinding halt.
    • At present, many real-estate projects are caught up in legal disputes-between home-buyers and developers; between lenders and developers; and between developers and law enforcement agencies like the Enforcement Directorate.
    • Unsold inventories: The sector has an unsold inventory of homes, worth several lakh crores.
    • Multiple authority as regulator and problem in liquidation: Multiple authorities -the Real Estate Regulatory Authority (RERA); the National Company Law Tribunal (NCLT); and the many consumer courts -have jurisdiction over disputes.
    • Consequently, restructuring and liquidation of bad projects are very difficult, and in turn, is the main source of the problem of NPA faced by the NBFCs.
  • What should be done to increase the demand in the construction sector?
    • Raise the tax exemption limit: To revive demand for housing, the Budget can raise the limit for availing tax exemption on home loans.
    • Use the bailout fund: The ₹25,000-crore fund set up by the centre to bailout 1,600 housing projects should be put to use immediately.
    • The funds should be used to salvage all projects that are 80% complete and not under the liquidation process under the NCLT.
    • Single adjudication authority: Several additional measures can also help. For example, there should be a single adjudication authority.
    • NIP and its significance: The ₹102-lakh-crore National Infrastructure Pipeline (NIP) programme is a welcome step. If implemented successfully, it will boost the infrastructure investment over the next five years by 2%-2.5% of the GDP annually.

Problems with National Infrastructure Pipeline

  • Problems of 60% investment: The problem is that more than 60% of the planned investment is expected from the private sector and the States.
    • Regulatory certainty a must for the private sector: The government does not seem to realise that for private investment, regulatory certainty is as important as the cost of capital.
    • Regulatory hurdles: Many infrastructure projects are languishing due to regulatory hurdles and contractual disputes between construction companies and government departments.
    • The reason behind the non-availability of private capital: As a result of the regulatory hurdles infrastructure investment has come to be perceived as very risky.
    • This is the major reason behind the non-availability of private capital for infrastructure.
  • Role to be played by the Centre: This is a scenario, where the private sector has very little appetite for risky investments and State finances are shaky due to low GST collection.
    • Responsibility of the Centre: The onus is on the Centre to ensure that the programme does not come a cropper. The budgetary support to infrastructure will have to be much more than the NIP projection at 11% of the GDP.

Way forward to revive the economy

  • Focus on completing the incomplete projects:
    • Bidding a lengthy process: Bidding and contracting for new roads, highways, railway tracks and urban development projects is a lengthy process.
    • This is also the reason why several infrastructure-linked Ministries like those for civil aviation and roads have not been able to spend money allocated to them in the current fiscal year.
    • Completing the projects a priority: Therefore, rather than earmarking budgetary support for new projects, the focus should be on projects that are currently under implementation so as to complete them as soon as possible.
    • Funding should be front-loaded: That is, funding should be front-loaded. In addition to creating employment, timely completion of infrastructure projects will help increase the competitiveness of the economy.
  • Address the distress in SMEs: The distress among Small and Medium Enterprises (SMEs) is another area of concern.
    • GST anomaly and stuck money: For many products produced by these enterprises, the GST rates are higher for inputs than the final goods. Due to this anomaly, around ₹20,000 crore gets stuck with the government annually in the form of input tax credits.
    • This has increased cost of doing business for SMEs, which employ over 11 crore people.
  • Fill the vacancies in the Government jobs: According to some estimates, there are more than 22 lakh vacancies in various government departments.
    • Focus on vocational training program: The government needs to provide affordable and good quality vocational training programmes.
    • To stop the demographic dividend from becoming a national burden, there is a need to invest heavily in skilling of the youth.
    • Besides, the Budget should give tax incentives to companies and industrial units to encourage them to provide internships and on-site vocational training opportunities.

 

Genetically Modified (GM) crops – cotton, mustards, etc.

[op-ed of the day] The flawed spin to India’s cotton storyop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Introduction of Bt cotton, and various cropping patterns


Context

This year, India is expected to be the world’s largest cotton producer, surpassing China in output. However, India’s productivity (yield per unit area), is much lower than other major cotton-producing countries.

India’s experience with cotton

  • India is the only country growing hybrids: India is the only country that grows cotton as hybrids and the first to develop hybrid cotton back in 1970.
    • What are hybrids: Hybrids are made by crossing two parent strains having different genetic characters.
    • Greater yields: These plants have more biomass than both parents, and capacity for greater yields.
    • Require more inputs: They also require more inputs, including fertilizer and water.
    • Expensive seed production: Though hybrid cottonseed production is expensive, requiring manual crossing, India’s low cost of manual labour makes it economically viable.
    • Rest of the countries: All other cotton-producing countries grow cotton, not as hybrids but varieties for which seeds are produced by self-fertilization.
  • Key issues with the use of hybrids
    • Hybrid seed cannot be propagated over generations: A key difference between hybrids and varieties is that varieties can be propagated over successive generations by collecting seeds from one planting and using them for the next planting.
    • Purchasing the seeds is must: Hybrid seeds have to be remade for each planting by crossing the parents. So for hybrids, farmers must purchase seed for each planting, but not for varieties.
    • Pricing control to the companies: Using hybrids gives pricing control to the seed company and also ensures a continuous market.
    • Increased yield used as justification for high prices: Increased yield from a hybrid is supposed to justify the high cost of hybrid seeds.
    • However, for cotton, a different strategy using high-density planting (HDP) of compact varieties has been found to outperform hybrids at the field level.

Cotton planting strategies

  • What other countries do?
    • Compact and short-duration varieties: For over three decades, most countries have been growing cotton varieties that are compact and short duration.
    • 5kg seeds/acre: These varieties are planted at high density (5 kg seeds/acre).
    • These varieties have 5-10 bolls per plant.
  • What is done in India?
    • Low density and long duration: Hybrids in India are bushy, long duration and planted at a ten-fold lower density.
    • 0.5 kg seeds/acre: Hybrids are planted at a lower density of 0.5kg/acre.
  • Which strategy is more beneficial?
    • The lower boll production by compact varieties (5-10 bolls per plant) compared to hybrids (20-100 bolls/plant) is more than compensated by the ten-fold greater planting density.
    • Experience of Brazil: The steep increase in productivity for Brazil, from 400 to 1,000 kg/hectare lint between 1994 and 2000 coincides with the large-scale shift to a non-GM compact variety.

Why should India opt for short duration variety?

  • Cotton being a dryland crop: Cotton is a dryland crop and 65% of the area under cotton in India is rain-fed.
    • Advantage of short duration variety in the rain-fed area: Farmers with insufficient access to groundwater in these areas are entirely dependent on rain. Here, the shorter duration variety has a major advantage as it reduces dependence on irrigation and risk.
    • Particularly late in the growing season when soil moisture drops following the monsoon’s withdrawal.
    • This period is when bolls develop and water requirement is the highest.
  • Productivity and input costs of the varieties: It has more than twice the productivity.
    • Half the fertilizer (200 kg/ha for hybrids versus 100 kg/ha for varieties).
    • Reduced water requirement.
    • And less vulnerability to damage from insect pests due to a shorter field duration.

Impact of Policy

  • Why India persisted with hybrids during 1980-2002
    • Two phases of policy have contributed to this situation.
    • The first phase- Before GM cotton: The answers lie with the agricultural research establishment.
    • The second phase: The phase where the question of hybrids versus compact varieties could have been considered, was at the stage of GM regulation when Bt cotton was being evaluated for introduction into India.
    • International experience not taken into account: It would not have been out of place to have evaluated the international experience, including the context of the introduction of this new technology.
    • Agro-economic conditions were not taken into account: Importantly, agro-economic conditions where it would be used should have been a guiding factor.
    • The narrow scope of evaluation: The scope of evaluation by the GM regulatory process in India was narrow, and did not take this into account.
    • Consequently, commercial Bt hybrids have completely taken over the market, accompanied by the withdrawal of public sector cottonseed production.

Key takeaways

    • FristOutcome of technology depends upon the context: Outcome of using a technology such as Bt is determined by the context in which it is deployed, and not just by the technology itself.
      • Negative fallout: If the context is suboptimal and does not prioritise the needs of the principal stakeholders (farmers), it can have significant negative fallouts, especially in India with a high proportion being marginal and subsistence farmers.
    • SecondBetter consultation in policy: There is a need for better consultation in policy, be it agriculture as a whole or crop-wise.
      • Socioeconomic consideration in GMO risk assessment: India is a signatory to international treaties on GMO regulation (the Convention on Biological Diversity, and the Cartagena Protocol on Biosafety), which specifically provide for the inclusion of socio-economic considerations in GMO risk assessment.
      • However, socioeconomic and need-based considerations have not been a part of the GMO regulatory process in India.

Conclusion

Given the distress, the cotton-growing farmers are facing this is the right time to review the grounds on which Bt cotton was introduced in India.

Climate Change Impact on India and World – International Reports, Key Observations, etc.

[op-ed snap] Think climate change action, act glocalop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Climate change and India's SAPCCs. India acting at state level.


Context

The recent global climate summit, the annual Conference of the Parties (COP25), held in Madrid was a failure and that the multilateral process to address the climate crisis is broken. The growing global stalemate gives India the chance to focus on the State and sub-State levels.

COP 25 at Madrid and what future prospects

  • Wealthy countries disowning responsibility: At several discussions on finance, ambition, transparency of support and pre-2020 action, wealthy countries were recalcitrant.
    • Disavowing obligations: Although responsible for using the bulk of the carbon space in the atmosphere, they now disavow their obligations. With some even denying anthropogenic climate change.
    • Complete severance of science from negotiations: At this stage, there is a complete severance of climate science from the negotiations and agreements at the global level.
    • The question is, what can we do now?
  • What can happen at the next COP?
    • Hope of little change: The next COP will be held at Glasgow, U.K. (in late 2020) and there may be little change in the outcomes.
    • The global political order may not alter much. The fact that we live in an unequal and unjust world is not going to change either.
  • What else can happen on the global level?
    • Right leader: The right political leaders could nudge action in a new direction.
    • Green New Deal could pass: Younger members could be elected to the U.S. Congress and the Green New Deal could pass sometime in 2021.
    • Growing activism: In the meantime, climate activism is increasing awareness and having some success in removing insurance and financial support for fossil fuel companies. But these kinds of changes will occur slowly.
    • Participation of other stakeholders at next COP: At least one expert has called for a parallel action COP at future summits where sub-state actors, civil society groups, non-governmental organisations and academics can share ideas and nudge action.

The chance for India to develop climate change action at State and Sub-state level

  • Chance to develop climate change action: The stalemate at the global level offers India the opportunity to focus earnestly on developing its climate change action at State and sub-State levels.
    • Peripheral status of climate change: In the states, the environment and climate continue to be relegated to peripheral status.
    • Damage to the environment: This neglect has led to the destruction of ecosystems, forests, water-bodies and biodiversity.
    • Vulnerability and economic costs of the neglect: Numerous studies have shown the high economic and ecological costs and loss of lives due to extreme events.
    • We do not need more data to stimulate action. As is also well recognised, India is extremely vulnerable to the effects of warming.

Progress made by the states so far

  • The first round of SAPCCs: With support from bilateral agencies, States initially took different approaches in the first round of State Action Plans on Climate Change (SAPCCs).
    • Some of them set up separate climate change cells while some collaborated with academic institutions.
    • A few produced detailed action plans while others developed strategy documents.
    • Still, others integrated improvements in energy efficiency (contributing to reducing emissions), while almost all focused on adaptation.
  • The synergy between climate change and development:
    • Attention to climate change offers co-benefits to India for development. For instance-
    • Efficiency reduces pollution: Improving energy efficiency in industry reduces costs and local pollution.
    • Transport and congestion: Improving public transport reduces congestion, pollution and improves access.
    • Natural farming and fertilisers: Using natural farming methods reduces fossil fuel-based fertilizers, improves soil health and biodiversity.
    • These examples show that there are synergies in the steps to be taken for good development and climate change.
  • Next round of SAPCCs and strategies
    • The next round of the SAPCCs is being drawn up, under recommendations from the Centre.
    • Where should be the focus? The focus ought to be on integrating the response to climate change with the development plan in different departments.
    • States together to contribute NDCs: Since the States together are to deliver the Nationally Determined Contributions (NDCs) that India has promised, it means that they require guidance from the Centre.
    • Unfortunately, most State government departments are handling climate change as a fringe issue and do not seem to recognise its urgency.

Integration of various sectors for climate action

  • Identification of sectors: Line departments for government schemes and programmes in key development sectors, such as agriculture, transport and water, should be identified for carefully integrating actions that respond to climate change.
    • Integration at district level: This integration should also take place at district and sub-district levels. But only a demonstration of its success in some departments would show how this can be done.
    • The realisation of climate as an important issue: But first and foremost, States need to get the signal that climate is an urgent issue.
  • Funds for implementing SAPCCs
    • How funds for implementing SAPCCs will be obtained is not clear.
    • There will not be enough from the Green Climate Fund, Adaptation Fund and bilateral agencies to support all States unless new sources are found.
    • Use of coal cess: The coal cess in India is a good initiative, and as others have pointed out, could be used for environment and climate-related expenses.
    • Alternative sources: Alternative sources from high emissions’ industries and practices would be an option, but still probably insufficient.

Way forward

  • Performance analysis of first SAPCCs: There is also needs to be a clear analysis of how the first round of action plans fared.
    • Challenges and performance: What were the challenges and how did they perform?
    • Reasons for success and failures: Which approaches and projects were successful and ought to be scaled up and what lessons do the failures offer?
    • Finally, what institutional structure works best?
  • Need for the greenhouse gas inventory: The country needs reliable greenhouse gas inventories.
    • Individual research groups and the civil society initiative, GHG Platform India, have been producing such inventories.
    • Such inventories would be useful in synchronising and co-ordinating State and Central mitigation programmes.
  • Programmes with longer timelines: States must also develop their programmes with longer timelines.
    • With mid-course correction based on lessons and successes that can be integrated into the next stage of the plan.
    • If the second round of SAPCCs were treated as an entry point to long-term development strategy, the States and the country would be better prepared for climate change.
  • Ultimately, climate should be part and parcel of all thinking on development.

 

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

[op-ed snap] Where demand has goneop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Role of informal sector in Indian economy, How expansionary fiscal policy can help more than represented in the official data.


Context

That India is in the midst of a serious economic slowdown is no longer in question. The debates are now mostly about what to do about it.

Where is the GDP growth coming from?

Fall in consumption expenditure in absolute terms: The leaked National Sample Survey (NSS) consumer expenditure data -shows that real monthly per capita expenditure has in fact fallen in absolute terms between 2011-12 and 2017-18.

  • 8 % decline in a rural area: In rural areas, consumption expenditure decreased by 8.8 per cent.
  • 2% decline in an urban area: While in urban areas it increased by 2 per cent, leading to an all India decline of 3.7 per cent.
  • Where is the growth coming from: If average consumer expenditure is down, then where is the GDP growth coming from?
    • Consumer expenditure contribution: After all, according to National Accounts Statistics (NAS) consumer expenditure is around 60 per cent of the GDP.
    • And given the other contributors to GDP-investment and government spending- are not growing spectacularly, consumer expenditure should be growing rather than decreasing.
    • So, to get an overall 5 per cent growth rate, consumer expenditure should be growing at higher than 5 per cent.
  • NSS vs. NAS- a genuine puzzle: How can consumption expenditure be going down in absolute terms according to the NSS estimates and be growing at more than 5 per cent according to the NAS?
    • Variation in data a norm: That these two types of estimates of consumption expenditure do not match is well-known, and that is the case in other countries as well.
    • The discrepancy at alarming proportions: In the 1970s, consumer expenditure according to NSS estimates was around 90 per cent of consumer expenditure according to NAS, but in 2017-18 it was only 32.3 per cent.
    • Data from two different countries: It is as if we are looking at data from two different countries.
    • One where the consumption expenditure growth is positive and propping up the GDP growth rate and the other where it is actually falling.

A few inferences that pertain to the state of the economy and the policy options.

  • Reasons for the discrepancy between NSS data and NAS data.
  • First- Presence of large informal sector:
    • 50% contribution to GDP: Informal sector accounts for nearly half of the GDP and employs 85 per cent of the labour force.
    • Guesswork on performance: In national income accounts, growth in the informal sector is estimated by extrapolating from the performance of the formal sector. Which is largely guesswork.
  • Second- Making effects of the expansionary policy less pronounced:
    • Expansionary fiscal policy more effective than appear to be: Because of the presence of the informal sector, expansionary fiscal policy will be more effective than what would appear from official statistics, as a big part of its impact will be felt in the informal sector.
    • Why is it so? The reason is that a big segment of the population is located in the informal sector; they are poorer and tend to spend a much higher fraction of their income on consumption.
    • This group has been seriously affected by the economic slowdown.
  • Third-Results of expansionary policy would be apparent after a delay
    • Apparent effects of policy much worse than what it would be: The effect of an expansionary policy on the budget deficit will look much worse than what it would be since the estimates of its effect on income expansion and tax collection will be largely based on the formal sector.
    • Informal sector boosting the formal sector: Some of the income generated in the informal sector will boost demand in the formal sector through consumer demand for mass-consumption items (for instance, biscuits, as opposed to automobiles).
    • Good medium-term pictures: Therefore, in the medium term, once the engine of the economy starts moving, the income expansion and deficit numbers will look better.
  • Final-Tax cuts will achieve little
    • Only 3-5% population affected: The tax cut will affect barely 3-5 per cent of the adult population.
    • Contribution of taxes in GDP: Income tax revenues amount to around 5 per cent of the GDP and corporate income taxes around 3.3 per cent.
    • Rich tends to save more: Most of the tax is paid by the richest among these groups (the top 5 per cent taxpayers contribute 60 per cent of individual income tax revenue), and the rich tend to spend a smaller fraction of their income (and save more).
    • Little impact on GDP: Irrespective of the number of people affected, and even if they spend the entire increase in their income as a result of the tax cut, the overall economic impact will be small relative to the GDP.
    • The futility of tax cut: Therefore, a tax cut for the rich would be less effective in raising spending compared to an equivalent amount being given to poorer groups who spend a much higher fraction of their incomes.

Conclusion

The government should not underestimate the role of the informal sector in the economy. To get the engine of the economy revving, an expansionary fiscal policy that harnesses the energy of the informal sector to boost aggregate demand is the order of the day.

 

 

Climate Change Impact on India and World – International Reports, Key Observations, etc.

[op-ed of the day] Electricity 4.0: The future of power in the age of climate changeop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Climate change and adoption of clean and sustainable energy to tackle with it.


Context

Significance of electricity in our life

  • Interconnecting economic prosperity: Electrical energy is a juncture that inter-connects economic prosperity.
    • Amplifies social equity.
    • Ushers in a liveable environment for us.
    • No development in its true sense is possible if we leave aside energy and specifically sustainable energy.
    • It is almost indispensable for holistic and sustainable progress of any kind.

Burning of fossil fuel and climate change

  • Singular reliance on fossil fuel: Ever since the industrial revolution, development has almost singularly relied on the burning of fossil fuels, emitting huge volumes of carbon dioxide into the atmosphere.
    • 41% of electricity from coal: As per data by the World Coal Association, a little over 41% of all electricity generated is produced from coal.
    • Problems with coal: Burning coal for electricity production leads to-
    • High level of hazardous carbon emissions.
    • Rising levels of pollution: water and air pollution during mining and air pollution during burning.
    • Working condition of miners: Added to the disastrous working conditions of miners, coal cannot be regarded as a sustainable source of energy.
  • Global warming and climate change: Despite increasing awareness, not much is being done to mitigate climate change.
    • Rise over 1.5oC and Consequences: IPCC (Intergovernmental Panel on Climate Change) has reiterated that unless global temperature rise is not kept within 1.5 degrees Celsius, natural and human systems will be irreparably damaged.
    • Rise over  2o  C and Consequences: Even a slight increase in atmospheric temperature by 2 degrees Celsius will result in a substantial rise in sea levels.
    • Consequences for human life: The rise in sea level would, in turn, translate into a whopping 10 million more people going homeless and another 50% people facing severe water scarcity.
  • The aim of becoming carbon neutral: To join the efforts, many global public and private stakeholders have pledged their allegiance into becoming net-zero carbon emitters.
    • But we are still far from achieving our objectives, as the IEA (International Energy Agency) recently reported that the Earth’s temperature rise will range between 1.8 degrees Celsius and 2.7 degrees Celsius soon.

Sustainable energy as a necessity

  • Energy efficiency and energy management: As the world is evolving into an interconnected form of world-of work, life and more-energy efficiency and energy management have slowly come to be a central driving force.
    • Sustainable energy a necessity: In order to power smart homes, industries, hospitals and other mission-critical operations, sustainable energy is no more a matter of choice, but of necessity.
    • IoT to help achieve energy efficiency: Technology adoptions like IoT and connected services can greatly enhance energy efficiencies and many global behemoths are coming to terms with this reality.
    • Demand for an alternative source of energy: Environmental factors, coupled with rising costs and stringent regulatory guidelines, are adding to the demand for alternative sources of energy.
    • Alternate as well as sustainable: The alternate sources are expected not only to satiate the growing consumption needs but are proven to be a sustainable option in the long run.

Electricity 4.0

  • Electricity 4.0: That is, sustainable methods of energy generation and efficient and cost-effective usage of produced energy.
    • The sustainable energy need of the sustainable future: To lay the foundation stone for a sustainable future, there is a critical need to investigate how we create and consume energy.
    • The answer lies in renewables becoming the dominant source of power, globally.
  • A new form of energy mix: There is a growing need to build a new form of energy mix under Electricity 4.0, with renewable ways of electricity creation, at its very core. A new order where-
    • Electrical internet of things (EIOT).
    • Cloud computing.
    • Artificial intelligence.
    • And the tools of today’s digital era are fully leveraged to maximise energy efficiency.

Way forward

  • Given that the major cause of global warming is Carbon Dioxide, so the first step to combat it would be-
  • Electrifying the planet: The augmented proliferation of energy-efficient, electricity-based equipments that are prevalent now, such as e-mobility, electrical heating, innovative applications such as electric aviation fleets can be one way to do that.
  • Scale up the production of renewable energy: The immediate need is to scale up the production of renewable electricity and build conducive public-policy frameworks to further this goal.
  • Adoption of digital technology: It is imperative to adopt digital technology in order to optimise the efficiency of our energy consumption and electrical networks. Digital connectivity, software and artificial intelligence can well be dubbed as the fulcrum that will support our transition toward Industry 4.0.
  • Concerted efforts from all stakeholders: To reduce carbon dioxide (CO2) emissions or to promote energy decarbonisation, concerted efforts are required from all stakeholders – the community, regions, government and the private sector.

 

 

 

Climate Change Impact on India and World – International Reports, Key Observations, etc.

 [op-ed snap] Global warming puts forests, plantations in the country at riskop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Need to define the natural forests and effects of climate change on forests.


Context

Global warming, drought and El Niño may lead to increased forest fires.

The success story of India

  • Reduced deforestation: India has succeeded in reducing deforestation to some extent through an effective Forest Conservation Act and large-scale afforestation programme.
    • Comparison with other countries: India performed better when compared with other forest-rich tropical countries such as Brazil, Indonesia and the Democratic Republic of Congo.
    • Without the Forest Conservation Act and its reasonably effective implementation, India would have lost significant extent of forest area.
  • Increased afforestation: India has also been implementing significant scale afforestation, though the rates of afforestation have declined recently.
    • Agro-forestry, involving raising fruit tree plantations contribute to some extent.
    • Commercial plantations of eucalyptus, casuarina, teak, poplar, etc., have been raised by farmers for commercial purposes.
    • The above steps have resulted in potentially reducing the pressure on natural forests.

Need to measure ‘natural forest’

  • Increase in an area under forest: According to the latest biennial State of Forest Report (SFR) of the Forest Survey of India (FSI), an area under forests has been increasing.
  • Natural forests not specifically measured: It is not clear what percentage of increase in forest area is due to changes in natural forests which are generally rich in biodiversity.
    • The report doesn’t specify what percentage of change in area is due to commercial plantation and what percentage is contributed by horticulture or urban parks.
  • Need to define ‘natural forest’: What will be of most concern to forest and biodiversity conservation is to understand the status of natural forest and biodiversity.
    • India can use the same definition of forests but must estimate and report the area under natural forests and other forest plantation categories.
    • India needs to define ‘natural forests’ first, further, this would involve additional staff time and resources.
  • The resilience of natural forests to forest fires: Tropical forests rich in biodiversity are likely to be more resilient than monoculture dominated plantations or exotics.
    • Vulnerability to forest fires varies from forests to forests: Studies by the Indian Institute of Science (IISc) have shown that degraded forests, fragmented forests and biodiversity-poor forests are more vulnerable to climate change.

Climate change and its impacts

  • IPCC reports on large scale loss: The United Nations Intergovernmental Panel on Climate Change (IPCC) reports have repeatedly concluded that climate change will lead to large-scale loss of biodiversity, before the end of the current century or even earlier.
  • Modelling studies by IISc.: Preliminary modelling studies by Indian Institute of Science (IISc) have shown that about 20% of forests will be impacted by climate change.
    • No change to adapt: The modelling studies means that existing forest biodiversity and its structure and composition will not be able to adapt to the new climate and there could be mortality or forest dieback.
  • The threat of forest fires: Further, warming, drought and El Niño will lead to increased forest fires, and may even be favourable to forest pests.
    • Unfortunately, the models currently in use for assessing the impact of climate change are not suitable for the complex and highly diverse forest types that exist in India.

Conclusions

  • Given that global warming will continue, India will have to brace itself to adapt to the impending impacts. In India, there is very limited research on climate change and its impacts on forests, putting our famed biodiversity-rich country status under threat.
  • India needs to realistically assess, monitor and model climate change and its impacts and be prepared to adapt to impending climate change.
Foreign Policy Watch: India-Pakistan

[op-ed snap] Same country, different scriptop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-Foreign relations with Pakistan, Issues and need to resume the talks.


Context

Pakistan is changing significantly, which is good for itself and its neighbour as well.

Changing Pakistan

  • Major stakeholders in favour of peace: The civil society, the political parties, and even the military establishment of Pakistan have come to favour peaceful and cooperative relations with India.
  • Both the power-centre on the same page: Both Islamabad and Rawalpindi, Pakistan’s two centres of power, are now on the same page in seeking “honourable peace” with New Delhi on the basis of “sovereign equality”.
    • Heavy price paid by Pakistan: There is a broad consensus in Pakistani society and polity that their country has paid a very heavy price by supporting the forces of Islamist extremism and terrorism.
    • The futility of using terrorism as foreign policy: There is also consensus that using terrorism for achieving mistaken foreign policy ends in Afghanistan and India.

Conducive conditions for dialogues

  • Four factors have influenced the welcome winds of change in Pakistan.
  • First-Realisation that Pakistan has suffered a lot:
    • Harm at home and to the global image: There is the across-the-board realisation that Pakistan has suffered a lot, both domestically and in terms of damage to its global image, by supporting religious extremism and terrorism.
    • A large number of casualties: Terrorists have killed a shockingly large number of civilians -certainly far many more than in India. Several thousand soldiers have lost their lives in the army’s “war on terror”-more than the number of casualties in all the wars with India.
    • The threat of FATF blacklisting: Furthermore, Islamabad is under relentless pressure from the Financial Action Task Force (FATF) to act decisively and irreversibly against terrorist organisations.
  • Second-Decrease in religious radicalisation in Pakistan
    • The decrease in the financial support to radicalism: What has contributed to the diminished importance of religious radicalism is also the shrinking inflow of petrodollars from Saudi Arabia and Gulf countries that promoted this agenda.
    • The ideological influence of religious radicalisation on Pakistan’s civil society is clearly declining.
    • Change in Saudi Government Policy: Export of Wahhabism is no longer a foreign policy priority of the Saudi Arabian government.
    • Changing policies in UAE: The United Arab Emirates has gone a step further, under the leadership of Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan, it is pursuing inter-religious tolerance with a zeal that has surprised Muslims and non-Muslims alike.
  • Third-Interest of China
    • Rise of China as an economic and security partner: The third factor is China, which has emerged as Pakistan’s most important economic and security partner.
    • The China-Pakistan Economic Corridor (CPEC) and BRI: The flagship projects under Beijing’s BRI has begun to modernise Pakistan’s infrastructure spectacularly, but its security is which could be threatened by terrorism is also the concern for China.
    • Connection with China’s Xinjiang Province: China has urged Pakistan’s ruling establishment to take firm steps to curb the activities of Islamist groups because they can easily foment trouble in China’s Muslim-majority Xinjiang province.
    • India-China relation factor: Beijing is also engaged in a steady effort to improve relations with New Delhi, in recognition of India’s rising economic and geopolitical stature in Asia and globally.
    • Possibility of India-China-Pakistan cooperation: China’s President Xi Jinping even mooted cooperation among China, India and Pakistan at Mamallapuram summit.
  • Fourth-Military establishment in favour of peace.
    • The military establishment seems to be fully convinced of the need for normalisation of India-Pakistan
    • Opening of Kartarpur Sahib Corridor: The opening of the Kartarpur Sahib Corridor, perhaps the greatest confidence-building measure between the two countries since 1947, is almost entirely due to Gen. Bajwa’s personal commitment to the project.
    • The economic crisis in Pakistan: Bajwa’s is also said to be convinced of the need to open the doors for economic and trade cooperation between the two countries given a serious economic crisis Pakistan is going through.
    • Discussion on the Kashmir issue: The Pakistan Army may also be ready to discuss a solution to the Kashmir issue on the basis of a formula Gen. Pervez Musharraf had discussed with PMs Atal Bihari Vajpayee and Dr Manmohan Singh.

Conclusion

India needs to seize the opportunity to resume the talks with Pakistan on all the contentious issues and try to resolve the disputes so that the improved relations could help both the countries and the neighbouring countries.

WTO and India

[op-ed of the day] Delhi-Davos disconnect-India must find ways to take advantage of new opportunitiesop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Trade war, Globalization and effects on Indian economy.


Context

Given its increased heft in the global economic order, India ought to be at the leading edge of the current debate of the future of capitalism.

The emergence of “stakeholder capitalism”

  • Interests of all shareholder: Klaus Schwab, who founded the World Economic Forum 50 years ago, wants capitalists to look beyond their shareholders and consider the interests of all the stakeholders.
    • Long overdue debate: Some hope that the debate on stakeholder capitalism is a long-overdue recognition of the capitalist excesses of recent decades.
  • Generating value for customers: Last August, the Business Roundtable in the US, which brings together some of the top American corporates, said American companies must now generate value for customers.
    • Invest in their employees.
    • Deal fairly with suppliers and support the communities in which they operate even as they service their shareholders.
  • Scepticism over “interests of all shareholders”: Sceptics say that this is a nice way of saying the right things, repackaging old ideas on corporate social responsibility and creating illusions about reforming capitalism.
    • Cynics insist that it will be business as usual for the world’s capitalists.
    • Reflection of deeper crisis: Beyond this divide between optimists and pessimists, the discourse on “stakeholder capitalism” is a reflection of the deeper crisis afflicting the global economy today.

Three major challenges according to WEF

  • In its annual survey on global risks, the WEF has identified many challenges. Three of them stand out.
  • First Challenge: Polarised politics
    • In the US Trump is unlikely to be defensive.
    • While the dominant sentiments see Trump as the very embodiment of nationalism and populism that are polarising politics around the world.
    • Others point to the structural conditions that have bred these forces.
    • America’s working-class whose wages haven’t risen in decades, whose jobs are less secure than ever rallied behind Trump.
    • Politics in the US: Much the same happened in the British elections last year.
    • Tory leader Boris Johnson won a sweeping mandate by breaking into the working-class strongholds of the Labour Party.
  • Second Challenge: Trade war
    • Trump had a long record of denouncing free trade.
    • Many had hoped that Trump will moderate his anti-globalist rhetoric once in office.
    • Attack on a core principle of globalisation: Trump has taken a pickaxe to the core principles of the globalised economic order – free trade, open borders and multilateralism.
    • Renegotiating the treaties: The US has renegotiated a 25-year old trade agreement with America’s neighbours, Canada and Mexico.
    • The threat of all-out-trade war with China: Trump’s threat of an all-out trade war with China over the last couple of years has led to an interim agreement.
    • The agreement commits Beijing to reduce its trade surplus with the US by importing more.
    • The trade deficit of the US with EU: At Davos, Trump is expected to turn his ire on the EU, which has a near $200 billion trade surplus with the US.
  • Third challenge: Technology
    • War in technology domain: The trade wars among the world’s major capitalist centres is accentuated by the technological revolution, especially in the digital domain.
    • Need for coordination: The Davos report on global risks argues that the realisation of the full potential of new technologies depends on unprecedented coordination among all stakeholders.
    • Digital fragmentation: What is emerging instead is “digital fragmentation” marked by the extension of geopolitical and geo-economic rivalries into the new domain.
    • Digital issues have come to the front and centre of American arguments with Europe.

Conclusion

  • India must find ways to take advantage of the new opportunities from the unfolding rearrangement of the global capitalist system.

 

Foreign Policy Watch: India – EU

[op-ed snap] Acting in concertop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- India-EU relations and scope and areas of cooperation.


Context

The EU-India Strategic Partnership has come a long way in recent years. The relationship is based on long-standing shared values and interests. There are numerous opportunities to unleash the full potential of EU-India cooperation.

India-EU Cooperation on Climate Change

  • The EU has committed to becoming carbon neutral by 2050.
  • But EU member states together only account for 9 per cent of global emissions.
  • Need to engage with the rest of the world:  EU-India cannot solve this problem unless they engage with the rest of the world to address it.
    • India’s commitment, as one of the biggest democracies in the world, is a key part of the solution.
    • The mixed outcome of the COP25 Climate Conference shows how much more remains to be done.
    • Clean Energy and Climate Partnership (CECP): In 2016 Prime Minister Narendra Modi and European leaders agreed on an EU-India Clean Energy and Climate Partnership (CECP).
    • EU and International Solar Alliance: In 2018, the EU joined efforts with the International Solar Alliance, headquartered in India.

Cooperation in trade

  • Both are the members of WTO: India and EU both agree on the vital role of the World Trade Organisation (WTO) and the need to overcome the crisis of the dispute settlement system.
    • Ministerial dialogue: The launch of a regular ministerial dialogue on economic, trade and investment issues could give additional impetus to the relations.

Cooperation on security

  • Indian Navy vessels are now escorting World Food Programme ships in the framework of the EU Atlanta operation against piracy off the coast of Somalia.
  • Cooperation on anti-terrorism: Counter-terrorism experts from Europe and India exchange experiences and best practices.
    • As a result, an enhanced working relationship between our police officers is taking shape.

Digital economy and cyber

  • Need to deepen cooperation: EU and India should deepen cooperation to protect fundamental freedoms in cyberspace and the free flow of data – and counter the drift towards high-tech “de-coupling”.
  • India-EU does not want a split in cyberspace, forcing both to “choose sides” between competing systems and standards.
  • India and EU both believe in fair competition, based on global standards, for 5G, AI, big data and the internet of things.

Conclusion

There is much that the EU and India have accomplished in recent years. But there is even more to be done to further strengthen our dynamic dialogue and cooperation in all areas of mutual interest and as players on the world stage.