Note4Students
From UPSC perspective, the following things are important :
Prelims level: UAPA
Mains level: Paper 2- Misuse of anti-terror laws
The recent Delhi High Court order granting bail to the student activists charged with the UAPA has brought into focus the issue of misuse of anti-terror laws by the policy. The article deals with this issue.
Misuse of anti-terror laws
- In the period 2015-2019, as many as 7,840 persons were arrested under the UAPA (Unlawful Activities (Prevention) Act) 1967 but only 155 were convicted by the trial courts.
- Under TADA, till 1994, though 67,000 people were detained, just 725 were convicted in spite of confessions made to police officers being made admissible.
- In Kartar Singh (1994), the Supreme Court of India had observed that in many cases, the prosecution had unjustifiably invoked provisions of TADA.
- It added that such an invocation of TADA was ‘nothing but the sheer misuse and abuse of the Act by the police’.
The definition of terrorism
- There is no universal definition of the term ‘terrorism’ either in India or at the international level.
- Accordingly, neither TADA nor UAPA has a definition of the crucial terms ‘terror’ and ‘terrorism’.
- Section 15 of UAPA merely defines a terrorist act in extremely wide and vague words: ‘as any act with intent to threaten or likely to threaten the unity, integrity, security, or sovereignty of India or with intent to strike terror or likely to strike terror in the people….’.
- In Yaqoob Abdul Razzak Memon (2013), the Supreme Court said that terrorist acts can range from threats to actual assassinations, kidnappings, airline hijacking, car bombs, explosions, mailing of dangerous materials, use of chemical, biological, nuclear weapons etc.
- In Hitendra Vishnu Thakur (1994), the Supreme Court had defined terrorism as the ‘use of violence when its most important result is not merely the physical and mental damage of the victim but the prolonged psychological effect it produces … on the society as a whole’.
- In Kartar Singh (1994), the Supreme Court held that a mere disturbance of public order that disturbs even the tempo of the life of community of any particular locality is not a terrorist act.
- By this interpretation, the CAA protests in a few localities of Delhi cannot be termed as terrorist activity.
- In the PUCL judgment (2003), the Supreme Court included within its meaning amongst other things the ‘razing of constitutional principles that we hold dear’, ‘tearing apart of the secular fabric’ and ‘promotion of prejudice and bigotry.
- Accordingly, in the CAA protest case the Delhi High Court concluded that since the definition of a ‘terrorist act’ in UAPA is wide and somewhat vague, it cannot be casually applied to ordinary conventional crimes.
- The Delhi High Court said that the act of the accused must reflect the essential character of terrorism.
Distinction between ‘law and order’, ‘public order’ and ‘security of state’
- In Ram Manohar Lohia (1966), the Supreme Court explained the distinction between the above three terms.
- Law and order represents the largest circle within which is the next circle representing ‘public order’, and the smallest circle represents the ‘security of state’.
- Accordingly, an act may affect ‘law and order’ but not ‘public order’.
- Similarly, an act may adversely affect ‘public order’ but not the ‘security of state.’
- In most UAPA cases, the police have failed to understand these distinctions and unnecessarily clamped UAPA charges for simple violations of law and order.
Conclusion
Radicalisation generally succeeds only with those who have been subjected to real or perceived injustices. Let us remove injustice to combat terrorism. The creation of a truly just, egalitarian and non-oppressive society would be far more effective in combating terrorism.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Testing the constitutionality of section 124A
The article highlights the issues with section 124A of the Indian Penal Code and suggests a review of its constitutionality in Kedar Nath judgement by a larger bench.
About section 124A of IPC
- Section 124A of the IPC contains the law of sedition.
- This law was enacted by the British colonial government in 1870 with the sole object of suppressing all voices of Indians critical of the government.
- The gist of the offence is: bringing or attempting to bring the government into contempt or hatred, or exciting or attempting to excite disaffection towards the government.
- It categorises four ways sources of seditious acts: spoken words, written words, signs or visible representations.
- There are three explanations attached to this section.
- The first explanation says that ‘disaffection’ includes disloyalty and all feelings of enmity.
- The second and third explanations say that one can comment on the measures of the government without bringing or attempting to bring it into contempt or hatred or exciting or attempting to excite disaffection towards the government.
What did Supreme Court say in Kedar Nath case (1962)
- In the ultimate analysis, the judgment in Kedar Nath which read down Section 124A and held that without incitement to violence or rebellion there is no sedition.
- It says that ‘only when the words written or spoken etc. which have the pernicious tendency or intention of creating public disorder’ the law steps in.
- So if a policeman thinks that a cartoon has the pernicious tendency to create public disorder, he will arrest that cartoonist.
- The Kedar Nath judgment makes it possible for the law enforcement machinery to easily take away the fundamental right of citizens.
Violation of Article 19
- Sedition, as defined in Section 124A of the IPC, clearly violates Article 19(1)(a) of the Constitution which confers the Fundamental Right of freedom of speech and expression.
- Further, this section does not get protection under Article 19(2) on the ground of reasonable restriction.
- However, the Supreme Court invoked the words ‘in the interest … of public order’ used in Article 19(2) and held that the offence of sedition arises when seditious utterances can lead to disorder or violence.
- This act of reading down Section 124A brought it clearly under Article 19(2) and saved the law of sedition from being declared unconstitutional.
Consider the question “What are the issues with section 124A of Indian Penal Code? Examine the interplay between Article 19 and section 124 of IPC.”
Conclusion
People will display disaffection towards a government which has failed them. The law of sedition which penalises them for hating a government which does not serve them cannot exist because it violates Article 19(1)(a) and is not protected by Article 19(2). Therefore, an urgent review of the Kedar Nath judgement by a larger Bench has become necessary.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Privatisation of PSUs
The article suggests the privatisation of public sector enterprises by analysing their performance and devising strategy for privatisation accordingingly.
Three categories of public sector enterprises
1) Sick for long time and beyond redemption
- There is the category of enterprises which have been sick for a long time.
- Their technology, plants and machinery are obsolete.
- They should be closed, and assets sold.
- The labour in these enterprises have had a political constituency which has prevented closure.
What should be done with these enterprises?
- The Government should close these in a time-bound manner with a generous handshake for labour.
- After selling machinery as scrap, there would be valuable land left.
- Prudent disposal of these plots of lands in small amounts would yield large incomes in the coming years.
- All this would need the creation of dedicated efficient capacity as the task is huge and challenging.
- These enterprises may be taken away from their parent line Ministries and brought under one holding company.
- This holding company should have the sole mandate of speedy liquidation and asset sale.
2) Financially troubled but can be turned around
- Private management through privatisation or induction of a strategic partner is the best way to restore value of these enterprises.
- Air India and the India Tourism Development Corporation (ITDC) hotels are good examples.
What should be done with these enterprises?
- Air India should ideally be made debt free and a new management should have freedom permitted under the law in personnel management to get investor interest.
- As valuation rises, the Government could reduce its stake further and get more money.
- If well handled, significant revenues would flow to the Government.
3) Profitable enterprises
- Pragmatism instead of ideology should guide thinking about them.
- The Chinese chose to nurture their good state-owned enterprises as well as their private ones to succeed in the domestic and global markets by increasing their competitiveness in cost, quality, and technology.
- The Chinese chose to promote both their public as well as their private sector enterprises to rise.
- Both have made China the economic superpower that it is today.
What should be done with profitable enterprises?
- The Government can continue to reduce its shareholding by offloading shares and even reducing its stake to less than 51% while remaining the promoter and being in control.
- Calibrated divestment to get maximum value should be the goal instead of being target driven to get a lower fiscal deficit number to please rating agencies.
- In parallel, managements may be given longer and stabler tenures, greater flexibility to achieve outcomes, and more confidence to take well-considered commercial risks.
Challenges
- First, the number of Indian private firms which can buy out public sector firms are very few.
- Their limited financial and managerial resources would be better utilised in taking over the large number of private firms up for sale through the bankruptcy process.
- Then, these successful large corporates need to be encouraged to invest and grow both in brownfield and greenfield modes in the domestic as well as international markets.
- Sale at fair or lower than fair valuations to foreign entities, firms as well as funds, has adverse implications from the perspective of being ‘Atma Nirbhar’.
- Again, greenfield foreign investment is what India needs and not takeovers.
- Public sector enterprises provide for reservations in recruitment.
- With privatisation, this would end and unnecessarily generate social unrest.
Conclusion
Would it be in India’s interest to lose the strategic capacity that its ownership of public enterprises including financial ones provide it? It would be better to think carefully now.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SDGs
Mains level: Paper 3- Climate change and its implications for hunger
The article suggests pathways to achieve SDG-2 by the adoption of climate-friendly agriculture practices.
Food and SDG
- Food is a common thread linking all 17 UN Sustainable Development Goals (SDGs) and critical to achieving overall goals within the timeframe.
- NITI Aayog recently released the SDG India Index 2020-21, highlighting the national and states’ progress on SDGs.
- The report states that 34.7% children aged under five in India are stunted.
- 40.5% of children between 6-59 months are anaemic.
- 50.3% of pregnant women between 15-49 years are anaemic.
- India shares a quarter of the global hunger burden.
- Four out of 10 children in India are not meeting their full human potential because of chronic undernutrition or stunting.
- NFHS-5 shows many states have not fared well on nutrition indicators.
- In addition to the malnutrition challenges, India’s food system faces negative consequences of the Green Revolution technologies.
Pathways to follow in meeting the targets under SDG-2 (Zero Hunger)
- Crop diversification especially in those areas where the existing practices are ecologically unsustainable should be promoted.
- While Indian agriculture is a significant contributor to GHG emissions.
- As per third Biennial Update Report submitted by Government of India to UNFCCC, agriculture sector contributes 14% of the total emissions.
- Some of the climate-smart interventions like conservation agriculture, organic farming and agro-ecological approaches can effectively address the environmental concerns while ensuring food security and nutrition.
- Crop-residue burning has become a huge problem in parts of the country.
- This is mainly propelled by monoculture and a package of subsidies.
- Conservation agriculture offers solutions to such problems with good agronomy and soil management such as zero-tillage or no-till farming, crop rotation, in-situ crop harvest residue management/mulching, etc, and industrial uses like baling and bio-fuel production.
- Use of botanical pesticides, green-manuring, biological pest control, etc. are nature-friendly and such practices lead to eco-conservation.
- The organic movement, fortunately, is catching up in Sikkim, Himachal Pradesh, and a few other states.
- Modifying consumer behaviour forms an essential ingredient to transform Indian food systems and correlate positively with crop and diet diversity.
- POSHAN Abhiyaan, India’s national nutrition mission, can play an effective role in addressing the issues of persistent malnutrition.
- According to FAO estimates, 40% of the food produced in India is either lost or wasted in every stage of supply chain.
- Winning the fight against food loss and waste can save India $61 billion in 2050 through increased industry profitability and reduced food insecurity, as well as reduced GHG emissions, water usage, and environmental degradation.
- Shifting towards a circular economy can enable India progress towards the SDGs including halving food waste by 2030 and improving resource efficiency.
Conclusion
India’s success is essential to achieve the planetary goal of Zero Hunger. There is a need for transformation towards sustainable, nutritious and resilient food systems to achieve the goal of zero hunger.
Source:-
https://www.financialexpress.com/opinion/fighting-hunger-needs-fighting-climate-change/2279369/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: India-Africa Forum Summit
Mains level: Paper 2- India's policy for African countries
The article deals with India’s strategy to deepen the ties with African nations and suggest a critical review of the implementation of India’s strategy.
Need for review of India’s foreign policy for Africa
- Africa is considered a foreign policy priority by India.
- Even as the COVID-19 era began in March 2020, New Delhi took new initiatives to assist Africa through prompt despatch of medicines and later vaccines.
- But now the policy implementation needs a critical review.
Four factors that explain need for a review of policy implementation
1) Declining trade
- Declining trade: Bilateral trade valued at $55.9 billion in 2020-21, fell by $10.8 billion compared to 2019-20, and $15.5 billion compared to the peak year of 2014-15.
- Decline in investment: India’s investments in Africa too saw a decrease from $3.2 billion in 2019-20 to $2.9 billion in 2020-21.
- The composition of the India-Africa trade has not changed much over the two decades.
- Mineral fuels and oils, (essentially crude oil) and pearls, precious or semi-precious stones are the top two imports accounting for over 77% of our imports from Africa.
- India’s top five markets today are South Africa, Nigeria, Egypt, Kenya and Togo.
- The countries from which India imports the most are South Africa, Nigeria, Egypt, Angola and Guinea.
2) Covid impact
- COVID-19 has brought misery to Africa.
- As on June 24, 2021, Africa registered 5.2 million infections and 1,37,855 deaths.
- A recent World Health Organization survey revealed that 41 African countries had fewer than 2,000 working ventilators among them.
- Despite these shortcomings, Africa has not done so badly.
- Sadly though, with much of the world caught up in coping with the novel coronavirus pandemic’s ill effects, flows of assistance and investment to Africa have decreased.
- While China has successfully used the pandemic to expand its footprint by increasing the outflow of its vaccines.
- Unfortunately India’s ‘vax diplomacy’ has suffered a setback.
3) Global competition for influence
- Africa experienced a sharpened international competition, known as ‘the third scramble’, in the first two decades of the 21st century.
- A dozen nations from the Americas, Europe and Asia have striven to assist Africa in resolving the continent’s political and social challenge.
- These nations, in turn, stand to benefit from Africa’s markets, minerals, hydrocarbons and oceanic resources, and thereby to expand their geopolitical influence.
4) Geopolitical tensions in Asia
- Geopolitical tensions in Asia and the imperative to consolidate its position in the Indo-Pacific region have compelled New Delhi to concentrate on its ties with the United Kingdom, the EU, and the Quad powers, particularly the U.S.
- Consequently, the attention normally paid to Africa lost out.
- This must now change.
Way forward for India-Africa relation
- For mutual benefit, Africa and India should remain optimally engaged.
- The third India-Africa Forum Summit was held in 2015.
- The fourth summit, pending since last year, should be held as soon as possible, even if in a virtual format.
- Fresh financial resources for grants and concessional loans to Africa must be allocated, as previous allocations stand almost fully exhausted.
- The promotion of economic relations demands a higher priority.
- Industry representatives should be consulted about their grievances and challenges in the COVID-19 era.
- To impart a 21st-century complexion to the partnership, developing and deepening collaborations in health, space and digital technologies is essential.
- India should continue its role in peacekeeping in Africa, in lending support to African counter-terrorism operations, and contributing to African institutions through training and capacity-enhancing assistance.
- To overcome the China challenge in Africa, increased cooperation between India and its international allies, rates priority.
- The recent India-EU Summit has identified Africa as a region where a partnership-based approach will be followed.
- When the first in-person summit of the Quad powers is held in Washington, a robust partnership plan for Africa should be announced.
Conclusion
India should review the policy implementation and make changes in line with the changing geopolitical realities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 15
Mains level: Paper 2- Rights of sexual minority
The article highlights the plight of sexual minorities despite the landmark judgments by the Supreme Court.
Role played by the judiciary
- The Delhi High Court’s verdict in Naz Foundation vs Government of NCT of Delhi (2009) was a landmark in the law of sexuality and equality jurisprudence in India.
- The court held that Section 377 offended the guarantee of equality enshrined in Article 14 of the Constitution, because it creates an unreasonable classification and targets homosexuals as a class.
- In a retrograde step, the Supreme Court, in Suresh Kumar Koushal vs Naz Foundation (2013), reinstated Section 377 to the IPC.
- However, the Supreme Court in Navtej Singh Johar & Ors. vs Union of India (2018) declared that the application of Section 377 IPC to consensual homosexual behaviour was “unconstitutional”.
- This Supreme Court judgment has been a great victory to the Indian individual in his quest for identity and dignity.
- It also underscored the doctrine of progressive realisation of rights.
No legal sanction to same-sex marriage
- Despite the judgments of the Supreme Court, there is still a lot of discrimination against sexual minorities in matters of employment, health and personal relationship.
- The Union of India has recently opposed any move to accord legal sanction to same-sex marriages in India.
- The Union of India stated that the decriminalisation of Section 377 of the Indian Penal Code does not automatically translate into a fundamental right for same sex couples to marry.
- The U.S. Supreme Court, in Obergefell vs Hodges (2015) underscored the emotional and social value of the institution of marriage and asserted that the universal human right of marriage should not be denied to a same-sex couple.
- Indian society and the state should synchronise themselves with changing trends.
Need to amend Article 15 to prohibit discrimination based on gender or sexual orientation
- Article 15 secures the citizens from every sort of discrimination by the state, on the grounds of religion, race, caste, sex or place of birth or any of them.
- The grounds of non-discrimination should be expanded by including gender and sexual orientation.
- In May 1996, South Africa became the first country to constitutionally prohibit discrimination based on sexual orientation.
- The United Kingdom passed the “Alan Turing law” in 2017 which ‘granted amnesty and pardon to the men who were cautioned or convicted under historical legislation that outlawed homosexual acts’.
Way forward
- Justice Rohinton F. Nariman had directed in Navtej Singh Johar & Ors., the Government to sensitise the general public and officials, to reduce and finally eliminate the stigma associated with LGBTQ+ community through the mass media and the official channels.
- School and university students too should be sensitised about the diversity of sexuality to deconstruct the myth of heteronormativity.
- Heteronormativity is the root cause of hetero-sexism and homophobia.
Conclusion
It is time for change, but the burden should not be left to the powers that be. The onus remains with the civil society, the citizenry concerned and the LGBTQ+ community itself.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Factors affecting currency's value
Mains level: Paper 3- Factors affecting rupee's value
The article explains the factors affecting the Indian rupee’s value against the dollar in implications of change in value for the Indian economy.
Factor’s affecting rupee’s value
- First, India’s foreign exchange reserves need to be considered, which have been increasing quite rapidly.
- Second, there are daily fluctuations caused by foreign portfolio investment (FPI) flows.
- Third, there is the external factor of the dollar, when the US currency strengthens against the euro, the rupee tends to decline and vice-versa.
- Fourth, there is the concept of the real effective exchange rate (REER), a construct of economists in which relative inflation comes into play.
- If inflation in India is higher than in countries associated with its export basket of currencies, then the rupee is overvalued and will correct through depreciation.
- Fifth, at what stage will the RBI intervene by buying or selling dollars to stabilize the Indian currency also matters.
Let’s look at some of these factors in detail.
Impact of the U.S. economy and Fed
- The dollar is driven by the US economy as well as its Federal Reserve’s policies.
- The Fed’s recent indication that it would raise its policy rate of funds in the years ahead was enough to strengthen the dollar and weaken the rupee. As an increase in US rates could see global investor money flocking back to the US, the dollar gained in relative value.
- The dollar should logically be strengthening, given improving US growth, now reinforced by the Fed.
Inflation factor
- The inflation factor, however, has been curious.
- Indian inflation will be high in India and hence also the rupee’s REER.
- To the extent the market understands this concept and uses it for valuation, it should be pushing the rupee downwards.
- But the pressure will be less this time as global inflation is also being raised by rising commodity prices.
- Indian inflation may not be so much higher as to warrant a deep depreciation.
Increase in Forex reserves
- An increase in forex reserves is an indication that India is getting in more dollars than we are spending.
- This also means that our combined current and capital accounts are in surplus zone.
- However, India’s current account will go into a deficit this year, as imports will be greater than exports, but will not be very high. Maybe 0.5-1% of GDP.
- The capital account can get tricky.
- Inward foreign direct investment was high in 2020-21.
- At $60 billion in equity and $80 billion overall, it was one of the world’s highest.
- Therefore, capital flows should remain strong.
- External commercial borrowings could slow down amid weak investment within India.
- So the fundamentals suggest that the rupee should be stable, with a tilt towards depreciation.
The RBI intervention
- The RBI’s surplus liquidity and accommodative stance have not worked in favour of the rupee.
- In response to its April policy, when RBI affirmed its dovish stance, the rupee began falling on expectations that if RBI kept rates low at a time of high inflation and excessive market borrowing by the government, investors will potentially move out.
- This pushed the rupee towards the 75 level against the dollar, but reverted with time as RBI kept infusing liquidity and managed the yield curve.
- In April, RBI bought $4.2 billion worth of the US currency.
- Exports have grown smartly in the first two months of 2021-22, and at this stage, the central bank would not want to that trend by stalling the rupee’s depreciation.
Conclusion
Taking all these factors into account, one can foresee the rupee moving in the range of ₹74-75 to the dollar, unless there’s a shock of some sort, though none looks likely at present.
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From UPSC perspective, the following things are important :
Prelims level: MFIs
Mains level: Paper 3- Freeing up microfinance institutions
The microfinance institutions (MFI) faced several restrictions by RBI which were not applicable to banks, NBFC and small finance banks. This denied the MFIs level playing field. A recent Consultative document by the RBI frees MFIs from such restrictions. The article explains this in detail.
Background of regulation of MFI’s by RBI
- RBI first allowed informal self-help groups to open savings accounts in banks and bank lending to these groups in 1991-92.
- In 2000, RBI permitted all types of institutions to offer microcredit and bank loans extended to these institutions for on-lending were treated as part of the priority sector lending.
- Beyond these, RBI was unwilling to bring in any regulations on the plea that as long as these are not deposit-taking institutions there is no need to regulate them.
- That was the stand of various RBI-appointed committees too, including the Vyas Committee of 2004.
- Based on the Malegam Committee recommendations, RBI came out with detailed guidelines for microfinance institutions (not the microfinance sector) in 2011.
- These guidelines introduced a new category of NBFCs, viz NBFC-MFIs (microfinance institutions).
- It also set norms for income criteria for clients of MFIs, repayment period, borrower loan limits, interest rate norms and caps, limits on a number of lenders to a borrower and a host of other norms and criteria.
How these norms created the issue of a level playing field?
- After 2015-16, the entry of small finance banks, eight of which were MFIs, into the microfinance space started to create issues.
- MFIs discovered to their dismay that while they had to adhere to a set of regulations, it was a free-for-all for non-MFIs (banks, SFBs and NBFCs).
- The main issue was that non-MFIs need not adhere to the norm of number of lenders (two in the case of NBFC-MFIs) and per-borrower loan limits.
- It prompted non-MFIs to target borrowers identified and nurtured by MFIs with higher loan amounts, leading to high levels of borrower indebtedness.
- In addition, the interest rate cap (2.75 times the base rate declared quarterly by RBI) was squeezing the margins of small and medium MFIs, as none of them get loans from the biggest banks.
Way forward
- The recent Consultative Document by RBI frees MFIs from the restriction imposed by the 2011 regulations and gives them a level-playing field.
- Another important feature for MFIs is that by doing away with the 50% income generation loans criteria and the repayment period norms.
- RBI is facilitating credit flow into lifecycle needs like housing, water sanitation, education, health, renewable energy, etc, which are now as important as income generation.
- On the interest rate front, initially, some upward correction could be there by medium and small MFIs based on their borrowing rates.
- The document enhances the role for the regulator as the adoption of Board-approved policies to determine the norms of household indebtedness and to fix a transparent rate of interest by each institution and their implementation need a rigorous supervisory oversight
Conclusion
Providing a level playing field to the MFI is critical to their development, the document by RBI rightly does that. It will help in providing credit to those who remain outside the formal banking network.
Source:
https://www.financialexpress.com/opinion/unfettering-microfinance-recent-rbi-consultative-document-frees-mfis-from-shackles-imposed-by-2011-regulations/2277925/
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From UPSC perspective, the following things are important :
Prelims level: Bad bank
Mains level: Paper 3- Lessons from China as India operationalise its new bad bank
The article suggests drawing the lessons from China’s experience with the bad bank as India India gets ready to operationalise a new bad bank.
Bad bank in China and issues
- In the aftermath of the Asian financial crisis, China set up dedicated bad banks for each of its big four state-owned commercial banks.
- These bad banks were meant to acquire non-performing loans (NPLs) from those banks and resolve them within 10 years.
- In 2009, their tenure was extended indefinitely.
- Chinese banks can currently transfer NPLs only to the national or local bad banks.
- One of China’s biggest bad banks is the China Huarong Asset Management Co. Ltd. (Huarong).
- The Chinese government is its principal shareholder.
- Recently this bad bank stoked financial stability concerns when it skirted a potential bond default.
- An incentive to conceal: Recent research at the National University of Singapore and others highlights that Chinese bad banks effectively help conceal Non-Performing Loans.
- The banks finance over 90 per cent of NPL transactions through direct loans to bad banks or indirect financing vehicles.
- The bad banks resell over 70 per cent of the NPLs at inflated prices to third parties, who happen to be borrowers of the same banks.
- The researchers conclude that in the presence of binding financial regulations and opaque market structures bad bank model could create incentives to hide bad loans instead of resolving them.
- Broadening of tenure: In case of Huarong, the main source of the problem appears to be the gradual broadening of the original mandate and tenure of Chinese bad banks.
Four lessons for India
- India is about to operationalise a new bad bank, the National Asset Reconstruction Company Ltd. (NARCL).
- The Chinese experience holds four important lessons for India.
1) Finite tenure of bad bank
- A centralised bad bank like NARCL should ideally have a finite tenure.
- Such an institution is typically a swift response to an abrupt economic shock (like Covid) when orderly disposal of bad loans via securitisation or direct sales may not be possible.
- The banks could transfer their crisis-induced NPLs to the bad bank and focus on expanding lending activity.
- The bad bank in turn can restructure and protect asset value.
- Over time, it could gradually dispose of the assets to private players.
2) Narrow mandate
- A bad bank must have a specific, narrow mandate with clearly defined goals.
- Transferring NPLs to a bad bank is not a solution in itself.
- There must be a clear resolution strategy.
- Otherwise, allowing a bad bank to exist in perpetuity risks a potential mission creep, which might in the long run threaten financial stability itself.
3) Diversify the sources of funds for ARC
- Indian banks remain exposed to these bad loans even after they are transferred to asset reconstruction companies (ARCs).
- The RBI Bulletin (2021) notes that sources of funds of ARCs have largely been bank-centric.
- The same banks also continue to hold close to 70 per cent of the total security receipts (SRs).
- To address this problem, RBI has tightened bank provisioning while liberalising foreign portfolio investment norms.
4) Resolution of bad loans should be through market mechanism
- In a steady state, the resolution of bad loans should happen through a market mechanism and not through a multitude of bad banks.
- In India, the Narasimham Committee (1998) had envisaged a single ARC as a bad bank.
- Yet, the SARFAESI Act, 2002 ended up creating multiple, privately owned ARCs.
- As a result, regulations have treated ARCs like bad banks, although functionally they are closer to stressed asset funds registered as Alternative Investment Fund Category II (AIFs).
- With the setting up of NARCL as a centralised bad bank, the regulatory arbitrage between ARCs and AIFs must end.
- While AIFs should be allowed to purchase bad loans directly from banks and enjoy enforcement rights under the SARFAESI Act.
- ARCs should be allowed to purchase stressed assets from mutual funds, insurance companies, bond investors and ECB lenders.
- ARC trusts should be allowed to infuse fresh equity in distressed companies, within IBC or outside of it.
- Lastly, the continued interest of the manager/sponsor of ARCs should be at par with AIFs, that is, at least 2.5 per cent in each scheme or Rs 5 crore, whichever is lower.
Conclusion
The Chinese experience should nudge Indian policymakers to limit the mandate and tenure of NARCL, while facilitating market-based mechanisms for bad loan resolution in a steady state.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Blended learning
Mains level: Paper 2- Blended learning and related issues
Blended mode of teaching and its advantages
- A recent circular by the University Grants Commission (UGC) proposes that all higher educational institutions (HEI) teach 40% of any course online and the rest 60% offline termed as blended learning (BL).
- The UGC argues that this “blended mode of teaching” and learning paves the way for:
- 1) Increased student engagement in learning.
- 2) Enhanced student-teacher interactions.
- 3) Improved student learning outcomes.
- 4) More flexible teaching and learning environments, among other things.
- 5) Other key benefits such as the increased opportunity for institutional collaborations at a distance and enhanced self-learning accruing from blended learning (BL).
- 6) BL benefits the teachers as well. It shifts the role of the teacher from being a “knowledge provider to a coach and mentor”.
- 7) The note adds that BL introduces flexibility in assessment and evaluation patterns as well.
Challenges
- All India Survey on Higher Education (2019-20) report shows that 60.56% of the 42,343 colleges in India are located in rural areas and 78.6% are privately managed.
- Only big corporates are better placed to invest in technology and provide such learning.
- Second, according to datareportal statistics, Internet penetration in India is only 45% as of January 2021.
- This policy will only exacerbate the existing geographical and digital divide.
- Third, BL leaves little room for all-round formation of the student that includes the development of their intelligent quotient, emotional quotient, social quotient, physical quotient and spiritual quotient.
- The listening part and subsequent interactions with the teacher may get minimised.
- Also, the concept note assumes that all students have similar learning styles and have a certain amount of digital literacy to cope with the suggested learning strategies of BL.
- This is far from true. Education in India is driven by a teacher-centred approach.
Suggestions
- The government should ensure equity in access to technology and bandwidth for all HEIs across the country free of cost.
- Massive digital training programmes must be arranged for teachers.
- Even the teacher-student ratio needs to be readjusted to implement BL effectively.
- This may require the appointment of a greater number of teachers.
- The design of the curriculum should be decentralised and based on a bottom-up approach.
- More power in such education-related policymaking should be vested with the State governments.
- Switching over from a teacher-centric mode of learning at schools to the BL mode at the tertiary level will be difficult for learners.
- Hence, the government must think of overhauling the curriculum at the school level as well.
- Finally, periodical discussions, feedback mechanisms and support services at all levels would revitalise the implementation of the learning programme of the National Education Policy 2020, BL.
- It will also lead to the actualisation of the three cardinal principles of education policy: access, equity and quality.
Conclusion
Government must take steps to address the concerns with blended learning before implementing it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GDP Deflator
Mains level: Paper 3- Impact of inflation on various stakeholders
Recently, CPI inflation crossed the RBI’s upper limit of 6%. The article explains the implications of this for various stakeholders.
How inflation benefits government as a borrower
- Rising inflation hurts lenders and benefits borrowers.
- To that extent, the government, one of the biggest borrowers, stands to benefit as high inflation will lower the national debt load in relation to the size of the economy.
- The Union budget 2021-22 assumed a 14.4 per cent growth in nominal GDP, however, actual growth is set to exceed this.
- The GDP deflator, which measures the difference between nominal and real GDP, is a weighted average of WPI and CPI, with a higher weightage to WPI.
- And given that nominal GDP is used as a base for computing the fiscal ratios, all of these will get deflated.
- The value of past debt and debt servicing costs thus gets pared in real terms as inflation rises.
- Viewed from a debt dynamics perspective, as the gap between growth and interest rates rises, the debt/GDP ratio falls.
Impact on other stakeholder
- That inflation reduces purchasing power and hits private consumption is well known.
- Overall food CPI inflation (5 per cent) was lower than non-food inflation (7.1 per cent) in May.
- Lower food inflation, coupled with higher non-food inflation means reduced purchasing power for farmers.
- Inflation trends, specifically input prices (reflected better by WPI), matter for corporate performance as well.
- While producers seem to be bearing a part of the burden of rising input costs for now, these could get passed on in greater measure to consumers once demand recovers.
- Rising inflation reduces returns on fixed income instruments, including bank deposits, which account for over 50 per cent of households’ financial savings.
- This has already induced a shift to riskier asset classes such as equities, which has ramifications for overall financial stability.
Way forward
- The RBI will have to closely monitor inflation trends and calibrate its policy response.
- It has not intervened on high inflation since the onset of the pandemic and, rightly so, in order to support growth.
- But the current spell of inflation is over a high base and a continuation of recent trends will persuade it to turn the focus back on inflation.
- Given the need for monetary policy to stay accommodative, it might be time to consider other supply-side interventions such as cuts in excise rates on petroleum products to soften the inflation blow.
Consider the question “As a one of the largest borrowers, how rising inflation benefits the government? How high inflation affects the other sections of the economy?”
Conclusion
Given the impact rising inflation has for the braoader sections of the economy, it is time for RBI to turn its attention to inflation.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Poverty line
Mains level: Paper 3- Counting the number of the poor
Counting the number of the poor
- If the state of the Indian economy is to be repaired, we need to meticulously count the number of the poor and to prioritise them.
- The World Bank $2-a-day poverty line might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.
- A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower-middle-income country bracket.
- Since 2013 three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted.
- The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73.
- Second is the fall of India in the Global Hunger Index to ‘serious hunger’ category.
- Third, health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health.
- A fourth statistic, Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect.
Increase in number of poor in India
- In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016.
- Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide.
- In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’.
- In 2020, India contributed 57.3% of the growth of the global poor.
- This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s.
- Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.
Debate on the poverty line
- In 2011, the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population.
- The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee.
- In 2014, C. Rangarajan Committee estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.
- The National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised.
- The Commission’s conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.
Why counting the poor matters?
1) Helps in forming public opinion
- Knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers.
- The world outside India has moved onto propose high fiscal support, as economic rationale and not charity.
- In India too, a dramatic reorientation would get support only once numbers are honestly laid out.
2) It helps in evaluating success of policies
- Recording the data helps to evaluate all policies on the basis of whether they meet the needs of the majority.
- Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority?
- This would be possible to transparently evaluate only when the numbers of the poor are known and established.
3) Helps in addressing the concerns of real majority
- If government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority.
- Such data would also help in creating a climate that demands accountability from public representatives.
4) To gauge the rising inequality
- India has clocked a massive rise in the market capitalisation and the fortunes of the richest Indian corporates, even as millions of Indians have experienced a massive tumble into poverty.
- To say that the stock market and the Indian economy are ‘not related’ is ingenuous.
- Indians must have the right to question whether there is a connection and if the massive rise in riches is not coincidental, but at the back of the misery of millions of the poor.
- If billionaire lists are evaluated in detail and reported upon, the country cannot shy away from counting its poor.
Conclusion
The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Soft-power comparison with China
The article compares India with China in terms of soft-power both countries exert based on the measures produced by Lowy Institute in Australia.
What is soft power?
- Joseph Nye, who gave us the notion of soft power, suggests that it consists of foreign policy, cultural and political influence.
- Foreign policy influence comes from the legitimacy and morality of one’s dealings with other countries.
- Cultural influence is based on others’ respect for one’s culture.
- Political influence is how much others are inspired by one’s political values.
- Soft power is difficult to measure.
The Lowy Institute in Australia has produced various measures which correspond roughly to foreign policy influence, cultural influence and political influence.
1) India’s foreign policy influence
- In diplomatic influence, overall, India ranks sixth and China ranks first among 25 Asian powers.
- On networks, India nearly matches China in the number of regional embassies it has but is considerably behind in the number of embassies worldwide (176 to 126).
- Multilaterally, India matches China in terms of regional memberships, but, crucially, its contributions to the UN capital budget are completely dwarfed by Chinese contributions (11.7 per cent to 0.8 per cent of the total).
- In surveys of foreign policy leadership, ambition, and effectiveness, China ranks first or fourth on four measures while India ranks between fourth and sixth in Asia.
2) Cultural influence
- Lowy’s overall measure of cultural influence ranks India in fourth place and China in second place in Asia.
- Cultural influence is then divided into three elements, of which “cultural projection” and “information flows” are the most important.
- In cultural projection, India scores better on Google searches abroad of its newspapers and its television/radio broadcasts.
- India also exports more of its “cultural services” defined as “services aimed at satisfying cultural interests or needs”.
- China does better on several other indicators.
- For instance, India has only nine brands in the list of the top 500 global brands whereas China lists 73.
- On the number of UNESCO World Heritage sites, India has 37 while China has 53.
- Respect for the Indian passport also lags.
- Chinese citizens can travel visa-free to 74 countries while Indians can only do so to 60.
- In terms of information flows, in 2016–17, India hosted a mere 24,000 Asian students in tertiary education institutions whereas China hosted 2,25,000.
- On total tourist arrivals from all over the world, India received 17 million, while China received 63 million.
3) Political influence
- In 2017 the two were not ranked that far apart in political influence.
- The governance effectiveness index shows India scoring in the top 43 per cent countries worldwide and ranked 12th and China scoring in the top 32 per cent and ranked 10th.
- On “political stability and absence of violence/terrorism”, India ranked 21st, and China ranked 15th.
Consider the question “What do you understand by the term soft-power? How would you assess India’s soft-power potential in terms of various parameters?”
Conclusion
Soft-power theorists suggest that the ability to persuade rests on the power of attraction. We in India may think we are more attractive than China. The numbers show otherwise.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issues with UAPA 1967
Recent judgements involving UAPA highlights the issues with certain provisions resulting in long years of undertrial imprisonment.
Context
In the past week, three seminal judgments involving the Unlawful Activities (Prevention) Act, 1967 (UAPA) have been delivered. While these judgments are welcome developments, they also remind us that thousands continue to languish under the UAPA regime.
Issues with the provisions of UAPA
- Originally enacted in 1967, the UAPA was amended to be modelled as an anti-terror law in 2004 and 2008.
- The period of detention is increased, enlarging the period of custody prior to which default bail cannot be granted.
- Regular bail is subject to the satisfaction of the judge that no prima facie case exists.
- Bail apart, the dilatory trial procedures ensure lengthy periods of pre-trial incarceration for the accused who are presumed guilty of heinous terror crimes.
NCRB data reveal long years of undertrial imprisonment
- As per the National Crime Records Bureau (NCRB) data, a total of 4,231 FIRs were filed under various sections of the UAPA between 2016 and 2019.
- While the number of acquittals is low, the real picture emerges in the pendency rates.
- The pendency rate at the level of police investigation is very high, at an average of 83 per cent.
- This denotes that chargesheets are filed by the police on an average in about 17 per cent of the total cases taken up for investigation.
- The rate of pendency at the level of trial is at an average of 95.5 per cent.
- This indicates that trials are completed every year in less than 5 per cent cases.
What did the courts say in various judgements?
- The Supreme Court, in Union of India v K A Najeeb, held that despite restrictions on bail under the UAPA, constitutional courts can still grant bail on the grounds that the fundamental rights of the accused have been violated.
- In Asif Iqbal Tanha v State of NCT of Delhi, the Delhi High Court took this reasoning a step further, holding that it would not be desirable for courts to wait till the accused’s rights to a speedy trial are entirely vitiated before they are set at liberty.
- Courts should exercise foresight, and in cases with hundreds of prosecution witnesses where a trial will not see a conclusion for years to come, courts should apply the principles laid down in Najeeb.
Way forward
- Even within the constraints of the UAPA, much can be achieved if a responsive and independent judiciary follows the basic principles of natural justice and due process.
- But access to the judiciary remains limited for most of the thousands incarcerated under this widely-used law.
Conclusion
The governments need to consider the issue of pendency of cases under UAPA and take steps to address the issues by either repealing certain provisions or ensuring speedy trials.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CSR norms in India
Mains level: Paper 3- Sustainability and capitalism
The article calls the corporates to adopt new capitalism in the aftermath of the pandemic which involves alongside the profit motives the commitment to giving back.
Capitalism in the aftermath of Covid-19
- The 2008 crisis was caused by the excesses of global finance, whereas the 2020 economic crisis was caused by a pandemic that spilled over to the economy.
- While the current pandemic is the first of its kind in nine decades, the dire economic consequences are very similar to that global financial crisis just a decade ago.
- What is also similar is the policy response that has followed both the 2008 and 2020 crises — the Keynesian prescription of the government stimulating a depressed economy by using monetary and fiscal instruments.
- Cheap liquidity preserves the wealth of the asset-owning classes even as the real economy stalls.
- However, over-stretched governments head towards a debt/fiscal crisis which eventually forces austerity, hitting those dependent on government handouts.
- It is this inequality in outcomes that is unlikely to happen this time.
- Already, the G-7 has pledged to maintain a minimum level of corporation tax.
- There have also been calls for additional taxation, particularly on the assets of the wealthy.
What corporates can do
- Instead of waiting for governments to react under popular pressure, corporates must themselves set out on a different path.
- Covid-19 has brought home the fragility of human life and the deeply interconnected fate of humanity.
- Outside of the pandemic, there is no better example of this than climate change which, if left uncontrolled, could devastate the world.
- While governments negotiate, corporates must respond with voluntary commitments to mitigate climate change.
- Climate change mitigation should be at the core of all business models going forward.
- In addition, promoters need to come forward to pledge more of their wealth towards philanthropy.
- India implemented the concept of corporate social responsibility as part of its legal framework a decade ago.
Investor pressure for action towards environment
- The ability of the private sector to work for the greater good seems implausible.
- But it is already happening — not because of government regulation, but because of investor pressure.
- Progressive actions towards the environment and society are being rewarded by investors.
- The absence of such progressive actions is being penalised.
- Market forces are, after all, embedded in society.
- They are perfectly capable of moving beyond profit.
Threat of new-age tech capitalism
- The real challenge for society, government and capitalists comes from the new-age tech capitalists.
- They are the new monopolists or oligopolists who don’t exercise their power over society by charging a supernormal price.
- In fact, a lot of them provide goods and services at hefty discounts.
- Instead, what they seek is to control information and influence choices.
- Many of the promoters of such enterprises are philanthropists but society and governments have a different set of concerns on how they exercise power.
Conclusion
An imperfect world is passing through a perfect storm. There will be big changes on the other side. Capitalism will survive. It could thrive by choosing its own pathway or it could stumble along under the hammer of big government fuelled by populist backlash.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Agri-exports from India
Mains level: Paper 3- Issues with India's agri-exports
The article highlights the unsustainability of agri-exports owing to their water-intensive nature and subsidies provided in their production.
India’s agri-exports
- Agri-exports touched $41.8 billion in FY 2020-21, registering a growth of 18 per cent over the previous year.
- Amongst the various agri-commodity exports, rice ranks first with 17.7 million tonnes valued at $8.8 billion, roughly 21 per cent of the total value of agri-exports.
- It is followed by marine products ($6 billion), spices ($4 billion), bovine (buffalo) meat ($3.2 billion) and sugar ($2.8 billion).
Trend analysis of agri-exports
- During the last seven years, agri-exports have remained lower than the level reached in FY2013-14 ($43.3 billion).
- That was when the highest agri-trade surplus (exports minus imports) was generated ($27.8 billion).
- That was also when Indian agriculture was most globally integrated, with agri-trade (exports plus imports) touching 20 per cent of the agri-GDP.
- It has slid to 13.5 per cent by FY2020-21, indicating India is becoming less globally competitive in exports and more protectionist in imports, presumably in the name of Atmanirbhar Bharat.
- It is high time to review current agri-trade policies and accompanying tariff structures.
Why sustainability of agri-exports is a concern?
- From a strategic point of view, however, one must ask whether this growth rate can be sustained over a longer period, and the implications it has for Indian agriculture.
- Water consumption: India is a water-stressed country with per capita water availability of 1,544 cubic metres in 2011, down from 5,178 cubic metres in 1951.
- It is well known that a kg of sugar has a virtual water intake of about 2,000 litres.
- In 2020-21, India exported 7.5 million tonnes of sugar, implying that at least 15 billion cubic metres of water was exported through sugar alone.
- Rice, needs around 3,000 to 5,000 litres of water for irrigating a kg, depending upon topography.
- Also, rice cultivation contributes to more than 18 per cent of the GHG emission generated from agriculture.
- Subsidies: Power and fertiliser subsidies account for about 15 per cent of its value in states like Punjab and Haryana.
- If these subsidies are withdrawn, rice will not be as preferred a crop with farmers as it is today.
Way forward
- Farming practices such as alternate wetting drying (AWD), direct-seeded rice (DSR) and micro-irrigation will have to be taken up on a war footing.
- Farmers may be incentivised and rewarded to save water, switch from paddy and sugar to other less water guzzler crops, and reduce the carbon footprint.
- It is high time that policymakers revisit the entire gamut of rice and sugar systems from their MSP/FRP to their production in an environmentally sustainable manner.
- At least in the case of rice, procurement will have to be limited to the needs of PDS, and within PDS, it is high time to introduce the option of direct cash transfers.
Consider the question “Rice and sugar forms the part of India’s agri-basket. However, there are concerns over their sustainability. What are the reasons for concerns and suggest the measure to deal with these concerns”
Conclusion
To maintain the sustainability of the agri-exports, crops must be produced efficiently and with minimal subsidies. The government needs to take steps to ensure that with rice and sugar.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Role of the States in health crisis
The States are better equipped to deal with the health emergencies and the Centre needs to augment them in their efforts. The article deals with this issue.
Role of the States in health crisis
- Covid-19 pandemic is a national crisis calling for concerted efforts by both, the Government of India (GoI) and state governments.
- Health is a state subject, and the states have been pioneering many health programmes on their own, some with support and funding from the GoI, for a very long time.
- The number of employees in the health wing of the GoI is negligible as compared to that in any state government.
- The GoI must help them, motivate them to do better and assist them in their task.
- Also, the GoI must and can play a major role is in vaccination.
Role of the Central government
- It must try to augment supplies by encouraging companies to produce more and through imports/gifts.
- However, whatever it procures must be allotted to states in proportion to their eligible population.
- State governments must be involved in this policy.
- The vaccination policy may be left to the state governments based on the allocation.
- The GoI must also augment supplies of critical medical goods through imports and donations from friendly nations in view of their acute shortage.
- It must distribute them to the needy states transparently and equitably.
Steps that need to be taken
- Lockdowns need to be lifted in a calibrated manner depending on local conditions.
- Lockdowns are not the solution, they just buy breathing time which can be used by governments to ramp up capacity.
- State governments must set up efficient and well-functioning control rooms and telemedicine centres to guide people on home treatment and timely admission to hospitals.
- The private sector can also be fully involved in these efforts.
- Bed capacity must be increased in both private and public sectors, with all necessary requirements such as oxygen, medicines, and health workers.
- It is also important to put in place a standard guidance protocol for health workers and control rooms to guide patients through the disease.
- Enforcement of masks and distancing in public places must go on till the country is fully vaccinated.
- The measures suggested above require hard work and efficient management by state governments, by a team of reputed professionals and civil servants.
- Daily briefing by a professional, not a politician, is the need of the hour at both the Centre and state level, giving some confidence and assurance to the public.
Consider the question “In dealing with the health crisis the Union Government and the State governments are better placed for certain roles. In light of this, examine the important role of the States in dealing with the Covid pandemic and how the Union government can complement it.”
Conclusion
The central government must realise that states are on the forefront in this war, and therefore, play a supporting and proactive role. It has only a minor, behind-the-scenes role in the health sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Net-zero emission targets and G-7
The article highlights G-7 countries’ emphasis on adoption of net-zero emission target and its implications for India.
Shifting responsibility to developing countries
- The Cornwall G7 summit sought to re-establish a common purpose among the richest democracies of the world.
- The G7 agreed “collectively” to net-zero GHG emissions by 2050 and called on “all countries, in particular, major emitting economies” to join as part of global efforts.
- And, ODA (official development assistance) has been made contingent on net-zero emissions by 2050 and deep cuts in emissions in the 2020s.
- G7 made an equal effort to shift the responsibility to the large developing countries.
- However, “common and differentiated responsibilities” is the agreed guiding principle for tackling climate change.
- Differentiation underscores the responsibility of the industrialised countries to lead.
India’s climate actions
- India has been a leading stakeholder in climate action and is among the few in the G20 in line to meet their commitments under the Paris Accord.
- It has also taken on a most ambitious target of 450 GW of renewable power by 2030.
- India has shown the world the way forward on solar power with producers now offering ultra-competitive tariffs.
India’s concerns
- Coal was particularly in the eye of the G7 which stressed “that international investments in unabated coal must stop now” .
- India, that continues to rely on coal, could face a crunch in assistance in thermal power.
- BASIC, comprising India, China, Brazil and South Africa, has so far led the efforts of large developing countries in climate negotiations.
- But with possible differences of opinion on net zero, BASIC’s clout in future global negotiations is questionable.
Way forward
- Finance and technology are the key areas where the industrialised West can and must lead.
- The collective developed countries’ commitment of $ 100 billion per year was made in Copenhagen in 2009 and is nowhere near being reached.
- A smallish sum of $2 billion was committed by G7 to accelerating the transition from coal.
- For India, with its huge developmental needs and global high-table aspirations that require carbon and policy spaces, the imperative is strong diplomatic partnerships with large developing economies that have an inherent interest in GREEN-Growth with Renewable Energy, Entrepreneurship and Nature.
Conclusion
India, which has huge developmental needs and global high-table aspirations that require carbon and policy spaces, must protect its interests.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Issues of Discoms
The article highlights the need for frequent financial aids to the discoms by the Centre and discusses the factors responsible for this.
Frequent rescue packages for discoms
- Recently, there was a sharp decline in the dues owed by power distribution companies, discoms, to power generating companies.
- Discoms have paid off their dues in part by drawing down a liquidity facility arranged by the Centre last year.
- This rescue package was arranged to prevent the entire power sector chain from suffering because of the discoms’ inability to meet their obligations.
- In the initial years after the introduction of UDAY some states did, in fact, witness an improvement in their financial and operational indicators.
- But it wasn’t sustained, There has been a sharp deterioration in several parameters.
Low performance of Discoms
1) On the basis of AT&C losses
- A key metric to measure the performance of discoms is AT&C losses.
- The UDAY scheme had envisaged bringing down these losses to 15 per cent by 2019.
- However, as per data on the UDAY dashboard, the AT&C losses currently stand at 21.7 per cent at the all-India level.
- In the case of the low-income north and central-eastern states — Uttar Pradesh, Bihar, Jharkhand and Chhattisgarh — the losses are considerably higher.
2) On the basis of cost and revenue per unit
- On another metric — the gap between discoms’ costs and revenues — the difference, supposed to have been eliminated by now, stands at Rs 0.49 per unit in the absence of regular and commensurate tariff hikes.
- For the high-income southern states of Tamil Nadu, Andhra Pradesh, and Telangana, this gap between costs and revenues is significantly higher.
What are the factors responsible for inefficiencies?
1) Electrification push without cost restructuring
- The government’s push for ensuring electrification of all have contributed to greater inefficiency.
- To support higher levels of electrification, cost structures need to be reworked, and the distribution network would need to be augmented — in the absence of all this, losses are bound to rise.
2) Economic fallout of the pandemic
- With demand from industrial and commercial users falling, revenue from this stream, which is used to cross-subsidise other consumers, has declined, exacerbating the stress on discom finances.
- A turnaround in the economy will provide some relief, but will not form the basis of a sustained improvement in finances.
3) Lack of consumer data and metering
- Even six years after UDAY was launched, various levels in the distribution chain — the feeder, the distribution transformer (DT) and the consumer — have not been fully metered.
- As a result, it is difficult to ascertain the level in the chain where losses are occurring.
- Other than discoms in metros like Delhi and Mumbai, there is also limited data on which consumer is attached to which DT.
- This lack of data makes it difficult to isolate and identify loss-making areas and take corrective action.
4) No tariff hike
- The continuing absence of political consensus at the state level to raise tariffs or to bring down AT&C losses signal a lack of resolve to tackle the issues plaguing the sector.
Way forward
- One of the solution centres around a national power distribution company.
- Another option is to deduct discom dues, owed to both public and private power generating companies, from state balances with the RBI forcing states to take the necessary steps to fix discom finances.
- The Centre has linked additional state borrowings to the completion of distribution reforms to incentivise states to act.
Consider the question “Despite several efforts by the Centre to improve the efficiency, discoms continue to perform dismally requiring frequent financial aids. What are the factors responsible for this? Suggest the way forward.”
Conclusion
Short of radical measures — privatisation remains a chimera — it is difficult to see how a sustainable turnaround in the financial and operational position of discoms can be engineered. As the amounts involved rise, minor tinkering isn’t likely to produce the desired results.
Back2Basics: AT&C losses
- Distribution loss consists of two parts:
- a. Technical loss
- b. Commercial loss.
- It is also called AT&C loss.
- AT&C loss is nothing but the sum total of technical and commercial losses and shortage due to non-realization of billed amount.
- AT&C Loss = (Energy input – Energy billed) * 100 / Energy input.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Regulation of social media and related issues
The article discusses the need for regulation of social media and counters against placing social media on a higher pedestal for the application of reasonable restrictions.
Social media and its regulation
- Social media is a commercial product that connects people all over the globe.
- It allows people to converse with each other through profiles both known and anonymous.
- The object is purely commercial, that is to make money.
- The fact that a commercial product could be used for a social purpose does not make the product a social good.
- The new Information Technology Rules, 2021 formulated by the Government of India attempts to bring in a minimum regulatory standard to social media.
- The present amendment to the rules is to formulate a broad and soft-touch regulation mechanism for use of the product, just like one would for a good like a car or a service like chartered accountancy.
Issues with regulation of social media
1) Immunity from content posted on platforms
- Social media companies enjoy an immunity — they are not considered responsible for the contents posted on them.
- The immunity is granted on the ground that social media is merely a platform or a sort of a glorified postbox.
- It is incorporated under the Information Technology (Intermediary Guidelines) Rules, 2011 framed under Section 79 of the Information Technology Act.
- This protection is itself unique as it is not extended to newspapers, magazines or even websites.
- This protection is given by the government as an exceptional measure.
- The present amendment to rules only tries to update and make these rules workable considering the latest global developments.
2) Constitution allows for restriction of freedom of speech
- The Constitution itself gives us a restricted right to freedom of speech under Article 19(1)(a) and 19(2).
- The argument that social media is entitled to some form of higher protection because it exists on the internet is an untenable argument.
- The Constitution doesn’t recognise a hierarchy of rights depending on the medium through which the freedom of speech is exercised.
3) Important for political and commercial speech
- Social media has become so crucial to commercial and political speech in this country, there is an urgent need to regulate it.
- It has effectively become a public square in which the most important conversations on politics and society are discussed.
- The function of social media is clearly a public function at the lowest and as a public utility at the high end, and, therefore, automatically subject to regulation and the writ jurisdiction of the courts.
Conclusion
For all its significance and importance, social media needs to be regulated. However, the regulations should not hamper the freedom of expression and free speech.
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