Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Using technology to use water sustainably in agriculture
The article examine the use of water for sugarcane and rice cultivation in India and its impact.
Water availability and usage in India
- As per the Central Water Commission’s reassessment of water availability, India receives a mean annual precipitation of about 3,880 billion cubic meters (BCM) but utilises only 699 BCM (18 percent) of this; the rest is lost to evaporation and other factors.
- The demand for water is likely to be 843 BCM in 2025 and 1,180 BCM by 2050.
- As per the UN’s report on Sustainable Development Goal-6 (SDG-6) on “Clean water and sanitation for all by 2030”, India achieved only 56.6 per cent of the target by 2019.
- Further, as per the Niti Aayog’s Composite Water Management Index (2019), 75 per cent households in India do not have access to drinking water on their premises.
- India ranks 120th amongst 122 countries in the water quality index.
- India is identified as a water-stressed country with its per capita water availability declining from 5,178 cubic metre (m3)/year in 1951 to 1,544 m3 in 2011 — this is likely to go down further to 1,140 cubic metre by 2050.
How free or highly subsidised electricity skews water use pattern
- Despite decades of large public and private investments in irrigation, only about half of India’s gross cropped area:198 million hectares is irrigated.
- Groundwater contributes about 64 per cent, canals 23 per cent, tanks 2 per cent and other sources 11 per cent to irrigation.
- This results primarily from incentive policy of free or highly subsidised power, particularly in the country’s north-west, the site of the erstwhile Green Revolution.
- Overexploitation of groundwater has made this region amongst the three highest water risk hotspots.
- Overall, about 1,592 blocks in 256 districts in India are either critical or overexploited.
Need to focus on rice and sugarcane
- Agriculture uses about 78 per cent of fresh water resources.
- As per a NABARD-ICRIER study on Water Productivity Mapping, these crops alone consume almost 60 per cent of India’s irrigation water.
- We need a paradigm shift to increase land productivity measured as tonnes per hectare (t/ha), and to maximise applied irrigation productivity measured as kilogrammes, or Rs, per cubic metre of water (kg/m3).
- Figure 1 shows applied irrigation water productivity against land productivity for rice and sugarcane in important growing states.
- Note that while Punjab scores high on land productivity of rice, it is at the bottom with respect to applied irrigation water productivity.
- In the case of sugarcane, irrigation water productivity in Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu is only 1/3rd of that in Bihar and UP (Figure 2).
- There is, thus, a need to realign cropping patterns based on per unit of applied irrigation water productivity.
Use of technology
- There are technologies to produce the same output of rice and sugarcane with almost half the irrigation water.
- Jain Irrigation, for instance, has set up drip irrigation pilots for paddy and sugarcane.
- The results of these pilots indicate while it takes 3,065 litres of water to produce 1 kg of paddy grain (yield level 7.75 t/ha) under traditional flood irrigation, under drip, it can be reduced to just 842 litres.
- The benefit cost ratio of drip with fertigation in case of sugarcane in Karnataka is observed to be 2.64.
- An extension to this is the “Family Drip System” innovated by Israel-based — Netafim.
- The company has also launched its largest demonstration project in Asia at Ramthal, Karnataka.
- Technologies like Direct Seeded Rice (DSR) and System of Rice Intensification (SRI) can also save 25-30 per cent of water compared to traditional flood irrigation.
Need for right pricing policies
- Technological solutions cannot make much headway unless pricing policies of agri-inputs are put on the right track and farmers are incentivised for saving water.
- The Punjab government, along with the World Bank and J-PAL, has started some pilots with an innovative policy of “Paani Bachao Paise Kamao” to encourage rational use of water among farmers.
Consider the question “Examine the impact of rice and sugarcane cultivation on the groundwater table in India. How technological solutions can help use water more sustainably for agriculture?”
Conclusion
Overall, it seems it is time to switch from the highly subsidised price policy of water/power (and even fertilisers) to direct income support on a per hectare basis, and investment policies that help with newer technologies and innovations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Election of the Deputy Speaker of the Lok Sabha
Mains level: Paper 2- Deterioration in functioning of the Parliament and way forward
The article highlight the deterioration in the function of Parliament and its implications.
Declining seating of houses of Parliament
- The current Budget session of Parliament ended on Thursday, two weeks ahead of the original plan.
- This follows the trend of the last few sessions:
- The Budget session of 2020 was curtailed ahead of the lockdown.
- A short 18-day monsoon session ended after 10 days as several Members of Parliament and Parliament staff got affected by COVID-19.
- The winter session was cancelled.
- As a result, the fiscal year 2020-21 saw the Lok Sabha sitting for 34 days (and the Rajya Sabha for 33), the lowest ever.
- This has implications for the proper legislative scrutiny of proposed legislation as well as government functioning and finances.
- There is no reason why Parliament could not adopt remote working and technological solutions, as several other countries did.
Passage of important bills without scrutiny
- During this session, 13 Bills were introduced, and not even one of them was referred to a parliamentary committee for examination.
- The Government of National Capital Territory of Delhi (Amendment) Bill, 2021 was passed by the Parliament.
- This bill shifts governance from the legislature and the Chief Minister to the Lieutenant Governor.
- The Mines and Minerals (Development and Regulation) Amendment Bill, 2021, amends the Mines and Minerals Act, 1957 to remove end-use restrictions on mines and ease conditions for captive mines.
- This Bill was passed by both Houses within a week.
- The National Bank for Financing Infrastructure and Development (NaBFID) Bill, 2021 — to create a new government infrastructure finance institution and permit private ones in this sector was passed within three days of introduction.
- The Insurance (Amendment) Bill, 2021 which increases FDI in insurance companies from 49% to 74% also took just a week between introduction and passing by both Houses.
- In all, 13 Bills were introduced in this session, and eight of them were passed within the session.
- This quick work should be read as a sign of abdication by Parliament of its duty to scrutinise Bills, rather than as a sign of efficiency.
- Also, the percentage of Bills referred to committees declined from 60% and 71% in the 14th Lok Sabha (2004-09) and the 15th Lok Sabha, respectively, to 27% in the 16th Lok Sabha and just 11% in the current one.
Money Bill classification issue
- The Finance Bills, over the last few years, have contained several unconnected items such as restructuring of tribunals, introduction of electoral bonds, and amendments to the foreign contribution act.
- Some of the earlier Acts, including the Aadhaar Act and Finance Act, have been referred to a Constitution Bench of the Supreme Court.
- It would be useful if the Court can give a clear interpretation of the definition of Money Bills and provide guide rails within which Bills have to stay to be termed as such.
Passage of Budget without discussion
- The Constitution requires the Lok Sabha to approve the expenditure Budget of each department and Ministry.
- The Lok Sabha had listed the budget of just five Ministries for detailed discussion and discussed only three of these; 76% of the total Budget was approved without any discussion.
- This behaviour was in line with the trend of the last 15 years.
No Deputy Speaker
- Article 93 of the Constitution states that “… The House of the People shall, as soon as may be, choose two members of the House to be respectively Speaker and Deputy Speaker….”
- A striking feature of the current Lok Sabha is the absence of a Deputy Speaker.
- By the time of the next session of Parliament, two years would have elapsed without the election of a Deputy Speaker.
Way forward
- In order to fulfil its constitutional mandate, it is imperative that Parliament functions effectively.
- This will require making and following processes:
- 1) Creating a system of research support to Members of Parliament.
- 2) Providing sufficient time for MPs to examine issues.
- 3 )Requiring that all Bills and budgets are examined by committees and public feedback is taken.
Consider the question “Parliament as a representative body is expected to examine all legislative proposals, understand their nuances and implications and decide on the appropriate way forward. Yet, more and more Bills are passed without enough deliberations. What are the implications of it? Suggest the measures to deal with it.”
Conclusion
In sum, Parliament needs to ensure sufficient scrutiny over the proposals and actions of the government.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Whether or not India should consider net zero emission target by 2050?
There are several issues with the adoption of net zero-emission targets. One of the most important being the lack of equity. This article deals with this issue.
About net-zero emission targets
- The “net zero” idea is inspired by an IPCC report that calls for global net emissions – GHG emissions minus removal of GHGs through various means to reach zero by mid-century.
- This builds on a clause in the Paris Climate Agreement, calling for a balance between sources and sinks of emissions by the second half of the century.
- It is worth underscoring that none of this implies that each country has to reach net-zero by 2050.
- Net-zero announcements signals a progressive direction of travel and has the apparent merit of presenting a simple and singular benchmark for assessing the performance of a country.
3 Issues with net zero targets
- First, it potentially allows countries to keep emitting today while relying on yet-to-be-developed and costly technologies to absorb emissions tomorrow.
- Second, its focus on long-term targets displaces attention from meaningful short-term actions that are credible and accountable.
- Third., it calls into question concerns of equity and fairness.
Balancing the concerns of developing and developed countries
- The Paris Agreement, while urging global peaking as soon as possible, explicitly recognises that peaking will take longer for developing countries.
- The Paris Agreement calls for achieving balance in developing and developed nation “on the basis of equity” and in the context of “sustainable development and efforts to eradicate poverty”.
- Therefore, the Paris Agreement does not advocate uptake of net-zero targets across developed and developing countries, as currently being advocated by many countries.
- Rather, the emphasis in the agreement on equity, sustainable development and poverty eradication suggests a thoughtful balancing of responsibilities between developed and developing countries.
Factors India should consider before taking zero-emission target
- Our first nationally determined contribution (NDC) submitted under the Paris Agreement has been rated by observers as compatible with a 2 degrees Celsius trajectory.
- We are ahead of schedule in meeting our contribution.
- Now, India will need to decide whether to join a growing number of countries (over 120 at last count) that have pledged to reach “net zero” emissions by 2050.
- But it is not clear that enhancing mitigation action can definitively deliver net-zero emissions by 2050, given that our emissions are still rising, and our development needs are considerable.
- There is a possibility that a not fully thought-through mid-century net-zero target would compromise sustainable development.
- Moreover, such a major shift in our negotiating position will have implications for the future, including our ability to leverage additional finance and technology to help shift to low-carbon development pathways.
- Our 2 degrees Celsius compatible NDC, bolstered by the Prime Minister’s announcement in 2019 that we would achieve 450 GW of renewables by 2030, could be strengthened.
- Building on this track record suggests an alternate and equally, if not more, compelling, way to indicate climate ambition in the future than uncritically taking on a net-zero target.
Way forward
- We would benefit from taking stock of our actions and focusing on near-term transitions.
- This will allow us to meet and even over-comply with our 2030 target while also ensuring concomitant developmental benefits, such as developing a vibrant renewable industry.
- We can start putting in place the policies and institutions necessary to move us in the right direction for the longer-term and also better understand the implications of net-zero scenarios before making a net-zero pledge.
- It would also be in India’s interest to link any future pledge to the achievement of near-term action by industrialised countries.
- That would be fair and consistent with the principles of the UNFCCC.
Consider the question “Growing number of countries have been setting net-zero emission target. In light of this, examine the issues India should consider before setting itself the net zero emission targets.”
Conclusion
India, like others, have a responsibility to the international community, we also have a responsibility to our citizens to be deliberate and thoughtful about a decision as consequential as India’s climate pledge.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Bangladesh relations in 50 years
The article highlights the areas of cooperations and issues between the India and Bangladesh as it celebrates the golden jubilee of its independence from Pakistan.
New era of cooperation
- In the last decade, India-Bangladesh relations have warmed up, entering a new era of cooperation.
- These ties have moved beyond historical and cultural ties to become more assimilated in the areas of trade, connectivity, energy, and defence.
- Bangladesh and India have achieved the rare feat of solving their border issues peacefully by ratifying the historic Land Boundary Agreement in 2015.
- The Bangladesh government led by Prime Minister Sheikh Hasina has uprooted anti-India insurgency elements from its borders.
Bilateral trade and tourism
- Bangladesh today is India’s biggest trading partner in South Asia with exports to Bangladesh in FY 2018-19 at $9.21 billion and imports at $1.04 billion.
- India has offered duty free access to multiple Bangladeshi products.
- While India has given duty-free access to a number of Bangladeshi goods, its physical enormity precludes circumstances that could have Bangladesh enhance the quantum of exports.
- Trade could be more balanced if non-tariff barriers from the Indian side could be removed.
- Bangladeshis make up a large portion of tourists in India with one in every five tourists being a Bangladeshi.
- Bangladesh accounts for more than 35% of India’s international medical patients and contributes more than 50% of India’s revenue from medical tourism.
Cooperation on development
- India extended three lines of credit to Bangladesh in recent years amounting to $8 billion for the construction of roads, railways, bridges, and ports.
- However, in eight years until 2019, only 51% of the first $800 million line of credit has been utilised.
- Barely any amount from the next two lines of credit worth $6.5 billion has been mobilised.
- This has been mostly due to red-tapism from India’s end, and slow project implementation on Bangladesh’s end.
Connectivity
- Connectivity between the two countries has greatly improved.
- A direct bus service between Kolkata and Agartala runs a route distance of 500 km, as compared to the 1,650 km if it ran through the Chicken’s Neck to remain within India.
- There are three passenger and freight railway services running between the two countries, with two more routes on their way to be restored.
- The inauguration of the Chilahati-Haldibari railway link has been a significant move in enhancing connectivity between the countries.
- Recently, a 1.9 kilometre long bridge, the Maitri Setu, was inaugurated connecting Sabroom in India with Ramgarh in Bangladesh.
- Bangladesh allows the shipment of goods from its various ports.
- This allows landlocked Assam, Meghalaya and Tripura to access open water routes through the Chattogram and Mongla ports.
Issues
- Despite the remarkable progress, the unresolved Teesta water sharing issue looms large.
- While smuggling needs to be dealt with firmly, it is not acceptable for Bangladeshis that rather than apprehending people trying to make an illegal entry into India, the BSF has been shooting them.
- Indian government’s proposal to implement the National Register of Citizens across the whole of India reflects poorly on India-Bangladesh relations.
Way forward
- India-Bangladesh relations have been gaining positive momentum over the last decade.
- As the larger country, the onus is on India to be generous enough to let the water flow and ensure that people are not killed on the border for cattle.
Consider the question “As Bangladesh celebrates the golden jubilee of its independence, it is also time for celebrating the enduring Indo-Bangladesh ties despite hiccups that have sometimes disturbed the waters. In light of this, examine the areas of cooperation and issues between the two countries.“
Conclusion
To make the recent gains irreversible, both countries need to continue working on the three Cs — cooperation, collaboration, and consolidation
Source:
https://www.thehindu.com/opinion/op-ed/remove-the-wedges-in-india-bangladesh-ties/article34163863.ece
https://indianexpress.com/article/opinion/columns/india-bangladesh-relations-narendra-modi-visit-7245361/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Electoral bonds
Mains level: Paper 2- Issues with electoral bond scheme
The article highlights the constitutional objections to the electoral bond scheme.
Context
- The Supreme Court, after a brief hearing on March 24, reserved orders on the question of whether or not to stay the electoral bond scheme, ahead of the upcoming State elections.
Issues
1) Against democracy
- When citizens cast their votes they have the right to do so on the basis of full and complete information.
- And there is no piece of information more important than the knowledge of who funds political parties.
- The Indian Supreme Court has long held — and rightly so — that the “right to know”, especially in the context of elections, is an integral part of the right to freedom of expression under the Indian Constitution.
- By keeping this knowledge from citizens and voters, the electoral bonds scheme violates fundamental tenets of our democracy.
2) Aids role of money in influencing politics
- It is equally important that if a democracy is to thrive, the role of money in influencing politics ought to be limited.
- In many advanced countries, for example, elections are funded publicly.
- The purpose of this is to guarantee a somewhat level playing field, so that elections are a battle of ideas and not money.
- The electoral bonds scheme, however, removes all pre-existing limits on political donations, and effectively allows well-resourced corporations to buy politicians by paying immense sums of money.
3) Creates asymmetry in donation
- Electoral bonds allow receiving limitless donation and that too asymmetrically.
- Since the donations are routed through the State Bank of India, it is possible for the government to find out who is donating to which party, but not for the political opposition to know.
- This, in turn, means that every donor is aware that the central government can trace their donations back to them.
- Statistics bear this out: a vast majority of the immensely vast sums donated through multiple electoral cycles over the last three years, have gone to the ruling party.
Issues with the government’s defence
- The government has attempted to justify the electoral bonds scheme by arguing that its purpose is to prevent the flow of black money into elections.
- It is entirely unclear what preventing black money has to do with donor anonymity, making donations limitless, and leaving citizens in the dark.
- Indeed, as the electoral bonds scheme allows even foreign donations to political parties.
- With this the prospects of institutional corruption including by foreign sources increases with the electoral bonds scheme, instead of decreasing.
Constitutional objections
- The objections to the electoral bonds scheme, highlighted above, are not objections rooted in political morality, or in public policy, they are constitutional objections.
- The right to know has long been enshrined as a part of the right to freedom of expression.
- Uncapping political donations and introducing a structural bias into the form of the donations violate both the guarantee of equality before law, as well as being manifestly arbitrary.
Judiciary must act
- Governments derive their legitimacy from elections.
- However, for just that reason the process that leads up to the formation of the government should be policed with particular vigilance.
- In other words, the electoral legitimacy of the government is questionable if the electoral process has become questionable.
- The courts is the only independent body that can adequately umpire and enforce the ground rules of democracy.
Consider the question “How electoral bond scheme can play role in preventing black money in elections? What are the issues with the electoral bond scheme?
Conclusion
The government should take into account the distorting effect of the electoral bonds scheme and take measures to remove the provisions in the scheme that leaves the scope for its misuse.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Uneven economic recovery at the global level and policy challenges it poses
The article highlights how the faster recovery of the U.S. economy aided by the faster vaccination and stimulus packages may pose a policy challenge to the emerging economies.
About the fiscal stimulus in the U.S.
- With the recent passage of Biden’s $1.9 trillion coronavirus relief package, the cumulative fiscal stimulus amounts to 25 per cent of GDP.
- This reliance on fiscal stimulus is in sharp contrast to the policy response in the aftermath of the 2008 global financial crisis (GFC) when monetary policy was the main tool.
- The over reliance on fiscal measures is because of the “liquidity trap” — interest rates are already treading close to zero.
So, what does this mean for the US and emerging economies?
- From the US perspective, this is good news.
- The U.S. economy is expected to converge to the pre-pandemic GDP projection after the third quarter of 2021, exceeding it by 1 per cent in the fourth quarter.
- The impact on emerging economies is less certain.
- A booming US economy generally bodes well for global growth as higher demand “spills over” to the rest of the world.
- However, the sectoral contribution to US growth presents a different picture this time.
- Private consumption of goods (tradable) is already back to pre-pandemic levels, while consumption of services remains significantly below pre-pandemic levels.
- As the vaccination drive gathers pace in the US and the economy slowly opens up, it should be fair to assume that the non-tradable sector would be driving growth.
- But given the expected nature of the underlying growth, the positive impact on emerging economies will perhaps be softer.
- With smaller fiscal stimulus in emerging economies and the slower vaccine roll, the US recovery largely being led by the non-tradable sector will result in a divergence in growth between the US and emerging countries.
Policy challenge for emerging economies which is different from GFC
- Post-GFC, a combination of zero interest rates and quantitative easing in advanced economies led to a significant surge in capital inflows to emerging countries in search of higher yield leading to an appreciation of their currencies.
- Now, the situation is exactly the opposite.
- The differential rate of recoveries has already led to capital outflow from emerging economies.
- The rise in yield in the U.S. may further fuel capital outflows in coming days leading to tighter monetary conditions in emerging markets.
What should be India’s policy response
- As far as India is concerned, the macro-economic fundamentals are much stronger than during the taper-tantrum days.
- The foreign exchange reserves remain at historically high levels, the current account situation is comfortable and the inflation rate remains within the target band of the RBI.
- In the event of capital outflows, the RBI should let the currency depreciate as the first line of defence to preserve India’s external competitiveness and intervene only to smoothen out extreme volatility.
- It should avoid the temptation to increase interest rates at the risk of hurting the pace of economic recovery.
Consider the question “Uneven economic recovery on the global level poses a policy challenge to India. In this context, discuss the possible impact of uneven recovery and suggest the policy measures to deal with it.”
Conclusion
Uneven recovery at the global level demands an unconventional policy approach. The policy approach of India should be based on this premise.
Back2Basics: Taper Tantrum
- The phrase, taper tantrum, describes the 2013 surge in U.S. Treasury yields, resulting from the Federal Reserve’s (Fed) announcement of future tapering of its policy of quantitative easing.
- The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy.
- The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- How fiscal deficit financed government spending leads to wealth inequality
The article highlights the issues with government expenditure driven by the selling of public sector assets.
How public asset selling could affects private investment decisions
- Public sector assets are not bought by reducing consumption or investment.
- Current investment expenditure depends on decisions taken in the past and is more or less pre-determined.
- Investment decisions that are taken today for fructification tomorrow that may be scaled down by such a purchase.
- However, if investment decisions taken today are scaled-down, then it results in crowding out and such a strategy should be avoided anyway.
- This implies that selling public sector assets therefore does not release any resources from private use for government spending.
How selling public asset has same macroeconomic effect as fiscal deficit
- In case of fiscal deficit, the government puts its bonds in private hands; in sale of a public asset, the government puts its equity held in public sector assets in private hands.
- The macroeconomic consequences of a fiscal deficit on the economy are no different from those of selling public assets.
- However, finance capital, and institutions like the IMF treat the sale of public assets on a different footing from a fiscal deficit, for ideological — not economic — reasons, because they ideologically favour a dismantling of the public sector.
How fiscal deficit leads to wealth inequality
- In a situation of demand-constraints, where unutilised capacity and unemployed workers exist aplenty, if an appropriate monetary policy is pursued, it can have no adverse effects whatsoever, except one: It increases wealth inequality.
- The government expenditure financed by the fiscal deficit creates additional aggregate demand that increases output and incomes until the additional savings generated out of such incomes exactly match the fiscal deficit.
- These additional savings accrue to the savers without their having to reduce their consumption, compared to the initial situation (that is, prior to government expenditure increase).
- Since savings represent additions to wealth, this amounts to putting extra wealth into the hands of the rich.
- Selling public assets puts into private hands public assets, and that too at prices well below the capitalised value of earnings.
- This increases wealth inequality for two reasons:
- First, it does so exactly as a fiscal deficit does.
- Second, the public asset it puts in private hands is under-priced.
Why tax financed government spending should be preferred
- If the same government expenditure is financed by taxation, no matter who was taxed, then there would be no addition to private wealth and hence no increase in wealth inequality.
- Which is why tax-financed government expenditure should always be preferred to fiscal-deficit-financed government expenditure.
What alternative government have
- The obvious one is wealth taxation.
- Taxing away the private wealth created by a fiscal deficit leaves private wealth inequality unchanged at its initial level; it does not exacerbate it.
- If the government is unwilling to impose higher wealth or profit taxes, it can raise GST rates on several luxury goods.
Consider the question “How fiscal deficit financed government spending differs in its impact on weath inequality from the tax-financed government spending?”
Conclusion
Thus, selling public assets to finance government spending is both undesirable and unnecessary.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Taiwan ties
25 years of friendship
- India and Taiwan are celebrating 25 years of their partnership.
- Mutual efforts between Delhi and Taipei have enabled a range of bilateral agreements covering agriculture, investment, customs cooperation, civil aviation, industrial cooperation and other areas.
- This growing relationship indicates that the time has come to recalibrate India-Taiwan relations.
Recalibrating relationship
1) Creating political framework
- Both partners have increasingly deepened mutual respect underpinned by openness, with democracy and diversity as the key principles for collective growth.
- To make this relationship more meaningful, both sides can create a group of empowered persons or a task force to chart out a road map in a given time frame.
2) Cooperation in healthcare
- Taiwan’s handling of the pandemic and its support to many other countries underlines the need to deepen healthcare cooperation.
- India and Taiwan already collaborate in the area of traditional medicine.
- The time is ripe to expand cooperation in the field of healthcare.
3) Bio-friendly technologies
- Stubble burning and an associated decline in air quality has become a challenge for Indian government.
- Taiwan could be a valuable partner in dealing with this challenge through its bio-friendly technologies.
- Such technologies convert agricultural waste into value-added and environmentally beneficial renewable energy or biochemicals.
- This will be a win-win situation as it will help in dealing with air pollution and also enhance farmers’ income.
- Further, New Delhi and Taipei can also undertake joint research and development initiatives in the field of organic farming.
4) Cultural exchange
- India and Taiwan need to deepen people-to-people connect.
- Cultural exchange is the cornerstone of any civilisational exchange.
- However, Taiwanese tourists in India are a very small number.
- The Buddhist pilgrimage tour needs better connectivity and visibility, in addition to showcasing incredible India’s diversity. .
- With the Taiwan Tourism Bureau partnering with Mumbai Metro, Taiwan is trying to raise awareness about the country and increase the inflow of Indian tourists.
5) Deepening economic ties
- India’s huge market provides Taiwan with investment opportunities.
- The signing of a bilateral trade agreement in 2018 was an important milestone.
- Taiwan’s reputation as the world leader in semiconductor and electronics complements India’s leadership in ITES (Information Technology-Enabled Services).
- This convergence of interests will help create new opportunities.
- Despite the huge potential, Taiwan investments have been paltry in India.
- Taiwanese firms find the regulatory and labour regime daunting.
Consider the question “Though mutual efforts between Delhi and Taipei have enabled a range of bilateral agreements, the time has come to recalibrate India-Taiwan relations” In light of this, discuss the ways in which the two countries can deepen bilateral relations and increase cooperation.
Conclusion
The two countries have much to cooperate and build the relationship on. What is needed is the political will to recalibrate the relationship.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Provision of MTP Act
Mains level: Paper 2- Issues with the MTP bill
The article highlights key changes the Medical Termination of Pregnancy (Amendment) Bill, 2021 seeks to make in the 1971 Act and also deals with the issues with some of these changes.
Key changes
- The 1971 Act had moral biases against sexual relationships outside marriage, adopts an ableist approach and carries a strong eugenic emphasis.
- In addition to preventing danger to the life or risk to physical or mental health of the woman, “eugenic grounds” were recognised as a specific category for legally permissible abortions.
- To deal with these issues the Medical Termination of Pregnancy (Amendment) Bill, 2021 was passed by the parliament.
- The bill is being hailed for two reasons:
- First, the bill replaces “any married woman or her husband” with “any woman or her partner” while contemplating termination of pregnancies resulting from contraception failures, thus ostensibly destigmatising pregnancies outside marriage.
- Second, the time limit within which pregnancies are legally terminable is increased.
Issues with the Bill
1) Scope for executive overreach
- The bill raises the upper gestational limits for the two categories of permissible abortions envisioned in Section 3(2) of the 1971 Act.
- Limit for the first category in which pregnancies are terminable subject to the opinion of one medical practitioner is raised from 12 weeks to 20 weeks.
- The limit for the second category in which pregnancies are terminable subject to the opinion of two medical practitioners is raised to include those exceeding 20 but not exceeding 24 weeks, instead of the present category of cases exceeding 12 but not exceeding 20 weeks.
- However, the second category is left ambiguous and open to potential executive overreach insofar as it may be further narrowed down by rules made by the executive.
2) Rejection of the bodily autonomy of women
- Pregnancies are allowed to be terminated only where:
- 1) Continuance of the pregnancy would “prejudice the life of the pregnant woman.
- 2) Or cause grave injury to her mental or physical health”
- 3) Or “if the child were born it would suffer from any serious physical or mental abnormality.”
- As such, the bill seeks to cater to women “who need to terminate pregnancy” as against “women who want to terminate pregnancy.”
- By not accounting for the right to abortion at will the Bill effectively cripples women’s bodily autonomy.
3) Ableist approach
- A woman’s right to terminate the pregnancy of a child likely to suffer from physical or mental anomalies or one diagnosed with foetal abnormalities, on socio-economic grounds or otherwise, merits recognition.
- However, in treating “physical or mental disability” or “foetal abnormalities” as separate categories amounting to heightened circumstances for termination of pregnancies, the bill reveals its ableist approach.
- This evidences a presumption that certain people are by default societally unproductive, undesirable and somehow more justifiably eliminable than others.
- This ableism becomes stark when the said 24-week limit, which is purportedly dictated by scientific and legislative wisdom, is completely lifted where the termination of a pregnancy involves “substantial foetal abnormalities”.
4) Dichotomy in allowing termination beyond 24 weeks
- When read together with Section 3(2B) of the bill, a strange dichotomy emerges:
- 1) It is either the case that medical advancement is such that a safe abortion is possible at any point in the term of pregnancy, and hence, the bill allows it in case of “substantial foetal abnormalities” .
- Or that, a 24-week ceiling is scientifically essential and abortions beyond the said limit would pose risks to the health of the pregnant woman or the foetus.
- If it is the former, then allowing termination only in cases of “substantial foetal abnormalities” is a fictitious and moralistic classification.
- If it is the latter, then the secondary status of women’s safety and the dominant eugenic tenor of the bill once again becomes evident.
Need to sensitise healthcare provider
- Access to abortion facilities is limited not just by legislative barriers but also the fear of judgment from medical practitioners.
- It is imperative that healthcare providers be sensitised towards being scientific, objective and compassionate in their approach to abortions notwithstanding the woman’s marital status.
Consider the question “What are the changes the Medical Termination of Pregnancy (Amendment) Bill, 2021 seeks to make in the 1971 Act. Discuss the issues with the changed provision in the Act.
Conclusion
In KS Puttaswamy v Union of India, the Supreme Court recognised women’s constitutional right to “abstain from procreating” was read into the right to privacy, dignity and bodily autonomy. The MTPA Bill falls short of meeting this constitutional standard and its own stated objectives.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- How Atmanirbhar Bharat policies can help in post-covid recovery
The article highlights how Atmanirbhar Bharat policies can play important role in India’s post-pandemic recovery.
Decline of trade-led catch-up growth
- The Asian Development Bank identifies India as an outlier, with the country’s GDP growth likely to range between eight and 10 per cent — as against 7.7 per cent for China and seven per cent for the Asian region.
- The convergence between the rich and poor countries in the 1990s and 2000s was founded on high relative growth rates driven by globalisation and export-led growth.
- The World Bank and many international think tanks are now projecting a process of de-globalisation, reduction in exports, and reduced service exports from the tourism, travel and hospitality sector in response to COVID.
- So, the phenomenon of trade-led catch-up growth is declining.
How Atmanirbhar Bharat is different from past strategies
- India’s import substituting growth strategy of the 1960s did not succeed because the high protective customs barriers led to the growth of non-competitive industries.
- The current Atmanirbhar Bharat project is different because tariffs are low and public investment is focused on non-tradable infrastructure rather than commodity production.
1) Atmanirbhar in heath: Atmirbhar Swasth Bharat
- Atmanirbhar Swasth Bharat is a domestic non-trade dependent initiative which will invest over Rs 64,000 crore in setting up 17,800 rural and 11,000 urban health and wellness centres and 602 critical care hospitals in the country’s districts.
- Today India has 29 health workers per 10,000 population, while we need 60 such professionals per 10,000 people, as per WHO norms.
- Creating such a cadre will mean nearly four million new jobs, which can be self-paying.
2) Infrastructure
- China and emerging markets like Russia and Brazil have a fairly advanced transport and energy infrastructure.
- India has a huge potential to renew its railways and highways and shift to solar energy from its current dependence on coal.
- In fact, the country’s long-neglected fourth largest rail network in the world is undergoing rapid transformation.
- While rail track coverage expanded by 5,000 km during 2010 to 2014-15, nearly 7,000 km of tracks were added between 2015 and 2020.
- The Railways now aim to lay 9.5 km of track daily and have raised adequate capital for the same by leveraging domestic insurance funds.
- Railways are also aiming for 100 per cent electrification and zero carbon footprint by 2024.
- Electrified track has doubled from 20,000 km in 2012/13 to nearly 40,000 km in 2020.
- The Centre’s decision to invest heavily in urban mass transit systems since 2014 has led to the rapid expansion of such services.
- The resolution of financial problems of blocked PPP projects and smooth land acquisition process has increased the pace of construction of national highways.
- Pace of construction of the national highway increased from 3,330 km per year during 2009-20014 to nearly 9,450 km in 2020-21.
3) Renewable energy
- Today over 55 per cent of India’s energy comes from coal but the share of renewable has been steadly increasing.
- Starting with only 10 MW of solar power in 2010, India has installed nearly 35 GW of solar power by 2020.
- This has been propelled by economic reforms which drove solar power prices down from Rs 17 per unit in 2010 to Rs 2.44 per unit in 2020.
- The target of reaching 100 GW by 2022 can drive growth further.
- Currently nearly 25 per cent of India’s electricity is used for pumping underground water for irrigation.
- Providing irrigation energy from decentralised solar grids — solar power can be generated at the points on consumption.
- This will reduce huge transmission losses and the associated carbon footprint of non-renewable energy sources.
4) Privatising public sector outfits
- The Centre’s shift towards privatising public sector outfits including banks, insurance companies and other PSUs can fund the growth of rail, road and energy infrastructure.
- This will also foster efficiency in India’s credit system.
- China achieved supernormal growth in infrastructure without access to international financing in the initial decades.
- Recent studies have revealed that China’s financial decentralisation and commercial exploitation of state-owned lands was critical for the success.
- In India, too, regional development authorities like the Mumbai Metropolitan Regional Development Authority and Maharashtra Industries Development Corporation have financed the metro, trans-harbour links and industrial infrastructure through a similar commercial land allocation model.
- This model can be extended throughout the country to finance infrastructure expansion.
Consider the question “How Atmanirbhar Bharat policies differ from the past import-substituting growth strategy? Examine the role Atmanirbhar Bharat can play in the post-pandemic recovery?”
Conclusion
In such a way, Atmanirbharta with its various facets will pave the road of post-pandemic recovery.
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From UPSC perspective, the following things are important :
Prelims level: Bad bank
Mains level: Paper 3- Advantages of bad bank
The article explains the important role bad bank can play in cleaning up the balance sheets of the banks.
How India banks dealt successfully with pandemic
- Indian banks were written off in the early days of the pandemic due to expectations of an exponential jump in non-performing assets.
- Only after the banks consistently talked about the lower number of restructuring requests, and the higher provision coverage ratios that the markets began to get convinced.
- What finally turned the corner were the budget announcements related to the financial sector
- There are several reasons for this good performance by the banks.
- First, banks in India and globally were much better capitalised prior to the pandemic.
- Second, Indian banks had built up a sizeable buffer to provide for bad assets negating any surprise on balance sheets during and even after the pandemic.
- Third, independent research shows that as the size of the middle class grows to about two-thirds of Asian households.
- Banks in Asia, including in India, have begun to adjust for this steady growth in the size of pie by experimenting with new business models, rationalising costs and providing faster and superior customer digital experience, as was clear during pandemic.
- Fourth, Indian banks and the RBI brought about financial discipline much before the pandemic.
Creation of Bad Bank
- The budget this year has the provision for reation of a bad bank.
- The proposed structure envisages setting up of a National Asset Reconstruction Company (NARC) to acquire stressed assets in an aggregated manner from lenders, which will be resolved by the National Asset Management Company (NAMC).
- A skilled and professional set-up dedicated for Stressed Asset Resolution will be ably supported by attracting institutional funding in stressed assets through strategic investors, AIFs, special situation funds, stressed asset funds, etc for participation in the resolution process.
- The net effect of this approach would be to build an open architecture and a vibrant market for stressed assets.
How it will work
- Banks may first transfer those assets to the proposed bad bank with a 100 per cent provision on its book and then based on the experience they will decide on transferring assets with less than 100 per cent provisioning at a later date.
- It is also being speculated that of the total amounts recovered, a specified percentage will be in the form of security receipts.
- These receipts will reside in the bank balance sheets, but will carry a zero-risk weight, with full government guarantees for a specified period of time.
How it will benefit the banks
- The benefits of this process includes the recovered value, and significant lending leverage because of three factors:
- One, capital being freed up from less than fully provisioned bad assets.
- Two, capital freed up from security receipts because of a sovereign guarantee.
- Three, cash receipts that come back to the banks and can be leveraged for lending, also freeing up provisions from the balance sheet.
- There are several international success stories of a bad bank accomplishing its mission and there is no reason to believe why India cannot accomplish its objective.
- The current Indian approach will drive consolidation of stressed assets under the AMC for better and faster decision making.
- This will free up management bandwidth of banks enabling them to focus on credit growth, leading to an enhancement in their valuations.
- Governance of the AMC and its independence is central to its successful functioning, there are multiple suggestions to make.
- These include keeping majority ownership in the private sector, putting together a strong and independent board, a professional team, and linking AMC compensation to returns delivered to investors.
Consider the question “What is a bad bank? How its creation could help the banking sector?”
Conclusion
The creation of a bad bank will help the banking sector contribute more in the growth of the country
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Lessons to improve India-Pakistan relations
There is a sharp contrast between India’s relations with its neighbours two neighbours: Pakistan and Bangladesh. The article suggest drawing on the lessons from Indo-Bangladesh relations to mend Indo-Pak relations.
Indo-Bangladesh relations
- Prime Minister of India will travel to Dhaka this week to commemorate Bangladesh’s Declaration of Independence from Pakistan 50 years ago.
- From being one of the world’s poorest countries in 1972, Bangladesh is now racing to be in the world’s top 25 economies by the end of this decade.
- It is also a time for deeper reflection — on the inability of the region to come to a closure on the two Partitions of the subcontinent, the first in 1947 and the second in 1971.
- Delhi and Dhaka have started finding ways to overcome the tragedy of the Partition to chart a new course of bilateral and regional cooperation.
- Prime Minister Sheikh Hasina has provided strong leadership in advancing ties with India over the last decade and more.
- Recently the Indian government mobilised enough political support to get a boundary settlement agreement with Bangladesh approved by the Parliament.
- India also backed an international tribunal’s award resolving the maritime territorial dispute with Bangladesh.
- The steady improvement in bilateral relations over the last decade has reflected in growing trade volumes, expanding trans-border connectivity, mutual cooperation on terrorism, and widening regional cooperation.
Applying lessons from Indo-Bangladesh relations to Indo-Pak relations
- Positive changes in India’s relations with Pakistan have been elusive.
- Hopes have been rekindled by the agreement late last month between the two military establishments to a ceasefire on the border and to address each other’s concerns.
- Following are the lessons we can learn and apply productively to Indo-Pak relations
1) Importance of political stability
- First lesson is the importance of political stability and policy continuity that have helped Delhi and Dhaka deepen bilateral ties over the last decade.
- In contrast, the political cycles in Delhi and Islamabad have rarely been in sync.
- Pakistan’s mainstream civilian leaders have all supported engagement with India.
- In fact, it is the military that is yet to make up its collective mind.
2) Concerns for mutual security
- Cooperation in countering terrorism built deep mutual trust between Dhaka and Delhi.
- That trust helped deal with many complex issues facing the relationship.
- In the case of Pakistan, its army has sought to use cross-border terrorism as a political lever to compel India to negotiate on Kashmir.
- If sponsoring terror seemed a smart strategy in the past, it has now become the source of international political and economic pressure on Pakistan.
3) Depoliticise national economic interests
- Delhi and Dhaka have steadily moved forward on issues relating to trade, transit and connectivity by dealing with them on their own specific merits.
- Pakistan, on the other hand, has made sensible bilateral commercial cooperation and regional economic integration hostages to the Kashmir question.
- It is not clear if Pakistan is ready to separate the two and expand trade ties while talking to India on Kashmir.
Consider the question “The steady improvement in bilateral relations with Bangladesh over the last decade can offer valuable lessons to be applied to India-Pakistan relations. In light of this, examine the factors that India and Pakistan need to focus on to achieve improvement in bilateral relations.”
Conclusion
Both India and Pakistan need to recognise the importance of pursuing the national well being through regional cooperation. That is exactly what Bangladesh has done in the last decade.
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From UPSC perspective, the following things are important :
Prelims level: JCPOA
Mains level: Paper 2- Role IAEA can play in rescuing JCPOA
The article explains how IAEA could play an important role in finding a solution to the stalemate between the U.S. and Iran on JCPOA.
Issue of Iran’s return to JCPOA
- There is uncertainty between the U.S. and Iran on the Joint Comprehensive Plan of Action (JCPOA) as to whether Iranian compliance comes first or the lifting of sanctions by the U.S.
- In this context, the International Atomic Energy Agency (IAEA) is back on the stage to rescue the JCPOA.
- The U.S. tried to pressurise Iran by proposing a resolution in the IAEA Board of Governors meeting criticising Iranian non-compliance with the JCPOA and its alleged IAEA safeguards violations.
- This comes amidst rumours that Iran might withdraw from the Non-Proliferation Treaty (NPT).
Iran may follow Indian model on creating a deterrent
- Foreign Policy recently noted that Iranian society increasingly see the weapon not just as an ultimate deterrent but as a panacea for Iran’s chronic security problems and challenges to its sovereignty by foreign powers.
- If the stalemate continues on JCPOA, because of the U.S. pressure, public opinion may shift towards the Indian model of creating a deterrent and then seeking a special dispensation to avoid severe sanctions.
- But the risks involved in such a policy will be grave, including the possibility of military action by Israel.
Relation between IAEA and NPT
- The IAEA is neither the Secretariat of the NPT nor is it empowered to request States to adhere to it.
- . It does, however, have formal responsibility in the context of implementing Article III of the Treaty.
- At the broadest level, the IAEA provides two service functions under the NPT.
- 1) It facilitates and provides a channel for endeavours aimed at further development of the applications of nuclear energy for peaceful purposes.
- 2) It administer international nuclear safeguards, in accordance with Article III of the Treaty, to verify fulfilment of the non-proliferation commitment assumed by non-nuclear-weapon States party to the Treaty.
- The NPT assigns to the IAEA the responsibility for verifying, at the global level, through its safeguards system, that non-nuclear weapon States fulfil their obligations not to use their peaceful nuclear activities to develop any nuclear explosive devices of any kind.
How IAEA could play role in JCPOA
- Accordingly, the Iranian file could go back to the IAEA to start fresh negotiations to restrain Iran to remain within the permissible level of enrichment of uranium.
- This may mean going back to the pre-six nation initiative, when the IAEA could not certify that Iran was not engaged in weapon activities.
- With the experience of the JCPOA, any new arrangement has to ensure the following:
- 1) Iran must have sanctions relief.
- 2) The stockpile of enriched uranium should not exceed the limits established.
- 3) There should be guarantees that Iran will not violate the safeguards agreement.
- The test is whether these can be accomplished within the framework of the IAEA.
Way forward
- Since the IAEA is a technical body, its deliberations may be kept at the technical level.
- At the same time, since it is open for the IAEA to report to the Security Council for necessary action, the IAEA will have the necessary clout to insist on the implementation of the NPT and its additional protocol.
- A new avenue may open for Iran to continue its peaceful nuclear activities as permitted in the NPT.
Consider the question “Examine the role played by IAEA under NPT. How this role can help IAEA in breaking the ice between Iran and the U.S. on JCPOA?”
Conclusion
Thus, IAEA can play an important role in ending the statement JCPOA finds itself in and ensure compliance from Iran on JCPOA and lifting sanctions by the U.S.
Back2Basics: Article III of NPT
- This article provides for the application of safeguards to ensure that nuclear material in non-nuclear weapon states (NNWS) isn’t diverted to nuclear weapons or other nuclear explosive devices.
- NNWS must place all nuclear materials in all peaceful nuclear activities under IAEA safeguards.
- Each nuclear weapon state (NWS) will not provide nuclear materials or equipment to a NNWS without an IAEA safeguards agreement.
- The safeguards should comply with Article IV of the NPT, and should not hamper peaceful uses of nuclear technology or economic/technical development in general.
- Safeguards agreements can be concluded on an individual or group basis.
- After the entry into force of the NPT, state parties had 180 days to commence negotiation of a safeguards agreement. Currently, state parties must begin negotiations by the date they deposit their instruments of ratification or accession.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Factors driving FDI in India
The article explains the four factors that explain the FDI inflows in India.
India’s economic decade
- Almost every major global company is either contemplating or operating on the assumption that India is a key part of their growth story.
- Google, Facebook, Walmart, Samsung, Foxconn, and Silver Lake have been just a handful of the firms that made huge investments in Inda.
- As a result, India saw the fastest growth in Foreign Direct Investment (FDI) inflows among all the major economies last year.
- Meanwhile, India’s latest FDI totals still lags behind the highest tallies in other markets such as China and Brazil.
Issues faced by investors and factors driving investment
- Frequent shifts in the policy landscape and persistent market access barriers are standard complaints levied against India by the business community.
- The government’s push to build a “self-reliant” India has also rattled skittish investors and smaller companies that lack the resources to navigate on-the-ground hurdles.
- Still, investors recognise that doing business in India — or any emerging market — comes with inherent risks but that adaptation in approach is critical to success.
- Four core dynamics drive this calculus and explain why multinational companies are making India an essential part of their growth story.
4 Factors driving FDI in India
1) India’s population
- What India offers through its nearly 1.4 billion people and their growing purchasing power is uniquely valuable for multinationals with global ambitions.
- No other country outside of China has a market that houses nearly one in six people on the planet and a rising middle class of 600 million.
2) Shifting geopolitics
- Rising U.S.-China competition is forcing multinationals to rethink their footprints and production hubs.
- Savvy countries such as Vietnam have capitalised on this opportunity to great effect, but India is finally getting serious about attracting large-scale production and exports.
3) Digital connectivity
- Cheap mobile data have powered a revolution across India’s digital economy and connected an estimated 700 million Indians to the Internet.
- More than 500 million Indians still remain offline, this is a key reason why leading global tech companies are investing in India and weathering acute policy pressure.
- Domestic Indian companies have also demonstrated their ability to innovate and deliver high quality services at scale.
- The partnerships and FDI flows linking multinationals and Indian tech firms will continue to unlock shared market opportunities for years to come.
4) National resilience
- Despite facing the scourge of the novel coronavirus head on, India has managed the pandemic better than many of its western peers and restored economic activity even before implementing a mass vaccination programme.
- These are remarkable developments, and yet they speak to India’s underlying resilience even in the face of historic challenges.
Shared value creation
- Unlocking opportunities in the Indian market cannot take the form of a one-way wealth transfer.
- Companies need to demonstrate their commitment to India.
- Successful companies do this by placing shared value creation at the heart of their business strategy.
- They tie corporate success to India’s growth and development.
- They forge enduring partnerships and lasting relationships, elevate and invest in Indian talent, align products with Indian tastes, and ultimately tackle the hardest problems facing India today.
Consider the question “Despite the issues faced by the investors, India witnessed the fastest growth in the FDI inflows among all the major economies amid pandemic. In light of this, examine the factors driving the FDI in India.”
Conclusion
For leading companies with global ambitions and a willingness to make big bets, the rewards of investing in the Indian market are substantial and well worth pursuing.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India's nuanced approach to Quad
The article discusses the outcomes of the recently concluded first Quad Summit in the context of India.
Message to China after Quad summit
- The first Learders’ Summit of the Quadrilateral Framework was held on March 12.
- This Summit conveyed a three-pronged message to China:
- 1) Under the new U.S. President, “America is back” in terms of its desire to play a leading role in other regions.
- 2) It views China as its primary challenger for that leadership.
- 3) The Quad partnership is ready to mount a counter-challenge, albeit in “soft-power” terms at present, in order to do so.
- For both Japan and Australia the outcomes of the summit, both in terms of the “3C’s”working groups established on COVID-19 vaccines, Climate Change and Critical Technology and in terms of this messaging to the “4th C” (China) are very welcome.
4 Outcomes of Quad Summit for India
- For India the outcomes of the Quad Summit need more nuanced analysis.
1) COVID-19 Vaccine
- India is not only the world’s largest manufacturer of vaccines (by number of doses produced, it has already exported 58 million doses to nearly 71 countries.
- It is also manufacturing a billion doses for South East Asia (under the Quad), over and above its current international commitments.
- India has also planned to vaccinate 300 million people as originally planned by September.
- All this comes down to total 1.8 billion doses which will require a major ramp up in capacity and funding, and will bear testimony to the power of Quad cooperation, if realised.
- However, the effort could have been made much easier had India’s Quad partners also announced dropping their opposition to India’s plea at the World Trade Organization.
- India had filed the plea along with South Africa in October 2020, seeking waiver from certain provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights for the prevention, containment and treatment of COVID-19.
2) Climate change
- On climate change, India has welcomed the return of the U.S. to the Paris accord.
- Mr. Biden has promised to restart the U.S.’s funding of the global Green Climate Fund, which Mr. Trump ended.
- India still awaits a large part of the $1.4 billion commitment by the U.S. to finance solar technology in 2016.
- Mr. Biden might also consider joining the International Solar Alliance, which the other Quad members are a part of, but the U.S.
3) Critical technology
- India will welcome any assistance in reducing its dependence on Chinese telecommunication equipment and in finding new sources of rare-earth minerals.
- India would oppose Quad partners weighing in on international rule-making on the digital economy, or data localisation.
- Such a move had led New Delhi to walk out of the Japan-led “Osaka track declaration” at the G-20 in 2019.
4) Dealing with China
- On this issue, it is still unclear how India can go on the Quad’s intended outcomes.
- While India shares the deep concerns and the tough messaging set out by the Quad on China, especially after the year-long stand-off at the Line of Actual Control (LAC) and the killings at Galwan that India has faced, it has demurred from any non-bilateral statement on it.
- India is the only Quad member not a part of the military alliance that binds the other members.
- India is also the only Quad country with a land boundary with China.
- And it is the only Quad country which lives in a neighbourhood where China has made deep inroads.
- Indian officials are still engaged in LAC disengagement talks and have a long way to go to de-escalation or status quo ante.
3 long term impacts on strategic planning
- The violence at the LAC has also left three long-term impacts on Indian strategic planning:
- First, the government must now expend more resources, troops, infrastructure funds to the LAC and ensure no recurrence of the People’s Liberation Army April 2020 incursions.
- Second, India’s most potent territorial threat will not be from either China or Pakistan, but from both i.e. “two-front situation”.
- Third, that India’s continental threat perception will need to be prioritised against any maritime commitments the Quad may claim, especially further afield in the Pacific Ocean.
Consider the question “The Quad’s ideology of a “diamond of democracies” can only succeed if it does not insist on exclusivity in India’s strategic calculations given that India shares a special place among the Quad members when it comes to its relationship with China. Comment”
Conclusion
Despite last week’s Quad Summit, India’s choices for its Quad strategy will continue to be guided as much by its location on land as it is by its close friendships with fellow democracies.
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From UPSC perspective, the following things are important :
Prelims level: MPC
Mains level: Paper 3- Analysing the performance of inflation targeting policies in India
The article analyses the success of the inflation targeting mechanism in India and its impact on the growth of the economy.
Background of the inflation targeting policy in India
- It has been three decades since inflation targeting was first adopted in New Zealand and subsequently by 33 other countries.
- India adopted it in 2016.
- The primary goal of inflation targeting was to contain inflation at around 4 per cent, within the allowable range of 2 to 6 per cent.
- The RBI has announced a formal review of the policy instrument now.
- At the first meeting of the RBI Monetary Policy Committee in October 2016, it was also formally announced that the MPC considered a real repo rate of 1.25 per cent as the neutral real policy rate for the Indian economy.
- By a neutral real policy rate, the RBI meant a policy rate consistent with growth at potential (i.e. growth at full employment).
Has inflation targeting worked in India
- The evaluation of IT must provide answers to the following two questions:
- Did inflation decline post the adoption of inflation targeting and what was the role of IT in the decline in inflation?
- Was the adoption of inflation targeting associated with the policy of the highest real repo rates in India — ever — for almost three years 2017-2019?
- The answer is yes to the latter, but it also needs to be acknowledged that high real repo rates were the primary cause of the GDP growth decline in India from 8 per cent to 5 per cent.
Need to take into account the global context of inflation
- An interesting feature of the Indian defence of inflation targeting is that very few take into account the global context of inflation in which the decline in inflation has occurred in India.
- A research paper by Balasubramanian, Bhalla, Bhasin and Loungani at ORF evaluates inflation targeting in a global context and separately for Advanced Economies (AEs) and Emerging Economies (EES).
- Some facts from the paper are the following.
- First, the annual median inflation in AEs has been consistently low, so low that many central banks have official campaigns to raise the inflation rate.
- One conclusion might be that IT succeeded beyond anyone’s dreams in these economies.
- But attributing this decline in inflation to IT would be erroneous.
- Inflation is global and price-taking by millions of producers in the world means that no one producer or one country can influence the price of any item.
- Oil has ceased to be a factor in global inflation, at least post the mid-1980s.
- The lowest inflation in Indian history occurred during 1999-2005, averaged only 3.9 per cent.
- The average median rate among EM targetters during 2000-04 was 4 per cent, and among the non-targeting countries was 3.8 per cent.
Did fiscal deficit play role in inflation targeting
- In 2003, India passed the FRBM act to control fiscal deficits and inflation.
- There is precious little evidence, either domestically or internationally, about fiscal deficits affecting inflation.
- For three consecutive years preceding the FRBM announcement, the consolidated Centre plus state deficits registered 10.9 per cent(in 2001), 10.4 and 10.9 per cent.
- For the seven-year 1999-2005 period, consolidated fiscal deficits averaged 9.4 per cent of GDP.
- Yet, that these years represented the golden period of Indian inflation — without FRBM and without IT.
Cost of inflation targeting in India
- There are also costs to inflation targeting in India.
- It led to higher real policy rates, in the mistaken belief that high policy rates affect the price of food, oil, or anything else.
- But high real rates affect economic growth, by affecting the cost of domestic capital in this ultra-competitive world.
- It is very likely not a coincidence that potential GDP growth, as acknowledged by RBI, was reached just before the MPC took over decision making in September 2016.
- Since then there was a steady increase in real policy rates, and a steady decline in GDP growth.
Consider the question “How far has the inflation targeting mechanism been successful in India? Give reasons in support of your argument.”
Conclusion
So, in the inflation targeting mechanism has not been successful in containing the inflation though there had a cost associated with it which we paid in the form of growth.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Digital lending and challenges
Digital lending has been on the rise in India. However, there are several concerns about the model. The article discusses these concerns and suggests the policy approach.
3 digital lending models
- Presently, there are three digital-lending models, seen through the regulatory-approach lens:
- 1) Bank/NBFC-owned digital platforms operating under the direct regulatory purview of RBI.
- 2) Fintech companies’ proprietary digital platforms, working in partnership with banks/NBFCs.
- Being mere intermediaries, these platforms are not required to seek any registration with RBI, and are only indirectly regulated through RBI’s outsourcing guidelines applicable to Banks/NBFCs.
- 3) Peer-to-peer (P2P) lending platforms, which usually involve the otherwise unregulated retail lenders.
- RBI has mandated such platforms to seek registration as NBFC-P2P; thus, they are directly regulated by RBI.
Issues with digital lending
- The specific issues are unauthorised lenders, exorbitant rates of interest, use of coercive repayment methods, and non-consensual collection or use of user data.
- These issues entail serious adverse implications for borrowers and have systemic implications, hampering the rise of legitimate fintech players.
Steps taken
- With a view to curb such practices, RBI, in 2020, issued a notification to Banks/NBFCs mandating additional disclosures/compliances, and an advisory to borrowers warning them against such platforms.
- Following the notification, Google removed several such loan apps from its PlayStore.
- The Digital Lenders’ Association of India (DLAI) also issued guidelines to help borrowers identify such unscrupulous platforms.
- In the regulatory pipeline on this front is the report of the working group on digital lending, constituted by RBI in January 2021.
Framing effective policy solutions
- Given the significant contribution of legitimate fintech players, it is important to ensure that any policy solutions to address such issues do not impede the growth of such players.
- The key to this lies in adoption of light-touch regulation, along with the effective implementation of the already proposed regulatory initiatives.
- For instance, the primary cause of the rising supply of unauthorised lending platforms is the existing credit information asymmetry that genuine lenders face in respect of small borrowers.
- Here, operationalising and on-scale implementation of RBI’s proposed ‘Public Credit Registry’ and the ‘Open Credit Enablement Network’ (an infrastructure protocol enabling digital low cost lending to small borrowers through access of consented data) would lead to increased participation of legitimate players and curb proliferation of unauthorised lenders.
- Another foundation for framing effective policy solutions lies in leveraging the interdependence and impact of each individual constituent of the digital lending ecosystem, on other constituents.
- Apart from lenders/platforms/borrowers, these constituents also include the digital lending industry associations, consent managers and technology developers.
- Regulators and industry associations working together can provide the necessary foundations for addressing these issues.
- Other solutions spear-headed by industry associations could be to establish ‘certification system’ based maintenance of a repository of lending platforms for easy identification of genuine players.
- Similarly, on the data protection aspect, a structural solution through coordinated efforts of various digital lending constituents is required.
Consider the question “Examine the factors aiding the growth of digital lending in India. What are the challenges the sector face? Suggest the measures to deal with these challenges.”
Conclusion
For the continued development of the Indian digital lending economy, it is important to implement policy solutions that adequately protect the borrowers from malpractices, while, at the same time, do not dampen innovation in this fast-evolving sector.
Source:-
https://www.financialexpress.com/opinion/soft-touch-regulation-for-digital-lending/2215702/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Making lateral entry a success
It has been a while since the government introduced the provision of lateral entry into civil services. This article suggests the changes that need to be made in the system to attract the best talent and facilitating their success.
Administrative reforms in India
- The lack of administrative reform in India has frustrated many stakeholders for a long time.
- One of the key focus areas of such reform is enabling lateral entry into an otherwise permanent system of administrators.
- Eight professionals were recruited for joint secretary-level positions in various ministries.
- Some other positions at the joint secretary and director-level have been advertised.
Changes needed
1) Entry requirements need to be relaxed
- In the permanent system, IAS officers get promoted to joint secretary level after 17 years of service and remain at that level for ten years.
- If similar experience requirements are used for lateral entry, it is unlikely that the best will join because in the private sector they rise to the top of their profession at that age.
- To attract the best talent from outside at the joint secretary level, entry requirements need to be relaxed so that persons of 35 years of age are eligible.
2) Facilitating lateral entrants for success
- There are many dimensions to this. For a start, there are several joint secretaries in each ministry who handle different portfolios.
- If assigned to an unimportant portfolio, the chances of not making a mark are high.
- A cursory look at the portfolios of the eight laterally-hired joint secretaries doesn’t suggest that they hold critical portfolios.
- There must also be clarity in what precisely is the mandate for the lateral entrant.
- To be disrupters, lateral entrants need to be able to stamp their authority on decision making.
- For this to happen, there need to be more lateral entrants at all levels in ministries.
- In the functioning of government, there is a long chain in decision-making and a minority of one cannot override it.
- Also, it requires an understanding of the system and an ability to work with the “permanent” establishment.
- No training or orientation is provided for this.
Consider the question “What are the advantages of lateral entry in the civil services? What are the challenges in the success of lateral entrants? Suggest the measures to improve it.”
Conclusion
Lateral entry, like competition in any sphere, is a good thing. But serious thinking is required on entry requirements, job assignments, number of personnel and training to make it a force for positive change. Some reform of the “permanent” system — particularly its seniority principle — may be a prerequisite.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- E-commerce to aid MSMEs
Facilitating manufacturing through MSMEs
- A significant major contributor to the India growth story is going to be manufacturing.
- Manufacturing by small units, cottage units and MSMEs, if effectively facilitated, will be the game changer.
- For MSMEs to be sustainable and effective, the need of the hour is not just better automation but also more channels for accessing greater markets and opportunities to become a part of the national and global supply chains.
- E-commerce marketplaces are today the best possible enablers for this transformation at minimal cost, innovation and investment.
Need to invest in digital transformation and technology
- China captured the world market through the traditional method of having guilds and business centres.
- Today, digital empowerment is the key differentiator.
- Without that, our MSMEs will not be future ready.
- E-commerce allows products even from hinterlands to get to the national market, thus, providing opportunities to artisans and small sellers from Tier-2/3 towns to sell online to customers beyond their local catchment.
- By investing in supply chains, the e-commerce sector provides opportunities for MSMEs to partner them in supply and delivery networks.
- Start-ups and young brands are also finding opportunities to build national brands and even going global.
- This leads to additional income generation through multiple livelihood opportunities.
- Many offline stores are also adopting e-commerce to leverage these opportunities and the traditional and modern retail models are moving towards more offline and online collaborations.
Challenges in building robust e-commerce sector
1) No GST threshold exemption
- Sellers on e-commerce marketplaces do not get advantage of GST threshold exemption (of Rs 40 lakh) for intra–state supplies.
- Online suppliers have to “compulsorily register” even though their turnover is low.
- Offline sellers enjoy this exemption up to the turnover threshold of Rs. 40 lakh.
2) Principal place of business issue
- Today, the sellers, as in offline, are required to have a physical PPoB which, given the nature of e-commerce, is not practical.
- The government would do well to simplify the “Principal Place of Business” (PPoB) requirement especially for online sellers by making it digital.
- Replace physical PPoB with Place of Communication.
- Eliminating the need for state specific physical PPoB requirement will facilitate sellers to get state-level GST with a single national place of business.
3) Support MSMEs to understand e-commerce
- MSMEs should be provided with handholding support to understand how e-commerce functions.
- The government can collaborate with e-commerce entities to leverage their expertise and scale to create special on-boarding programmes.
- These can be provided by state governments.
- There is need to examine the existing schemes and benefits for MSMEs, which were formulated with an offline, physical market in mind.
4) Build infrastructure
- There is a need to build infrastructure — both physical and digital infrastructure is important for digital transformation.
- The road and telecom network will facilitate access to the consumer and enable the seller from remote areas to enter the larger national market as well as the export market.
- A robust logistic network and warehouse chains created by e-commerce platforms enable similar access and reach.
- The National Logistics Policy should focus on e-commerce sector needs.
5) Skilling policies for e-commerce sector
- Dovetail the skilling policy and programmes with the requirements of the e-commerce sector to meet future demand of the sector.
6) Steps to increase export via e-commerce
- We need to take specific steps to increase exports via e-commerce.
- There is a need to identify products that have potential for the export market, connect e-commerce with export-oriented manufacturing clusters, encourage tie-ups with sector-specific export promotion councils, leverage existing SEZs to create e-commerce export zones.
- India Posts can play a significant role by creating e-commerce specific small parcel solutions at competitive rates, building a parcel tracking system, and partnering with foreign post offices to enable customs clearances.
Way forward
- There is an urgent need to create a consolidated policy framework for e-commerce exports.
- Policies like the upcoming Foreign Trade Policy needs to be fully leveraged.
- The Foreign Trade Policy should identify areas and include e-commerce export specific provisions in the revised policy that comes into effect in April this year.
Consider the question “E-commerce marketplaces can help MSMEs in accessing greater markets and provide opportunities to become a part of the national and global supply chains. In light of this, examine the opportunities provided by e-commerce also mention the challenge the sector faces in India.”
Conclusion
By facilitating and supporting e-commerce, we can leverage the potential of MSMEs in manufacturing which could help in the economic growth of the country by creating job opportunities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fiscal deficits
Mains level: Paper 3- State budgets belies the hopes of public spending led recovery
The article highlights the trends emerging from the State budgets which dashes the hopes of public-spending led economic recovery.
State-level budget trends
- Over the past few weeks, several state governments have presented their budgets for the financial year 2021-22.
- The states, put together, account for a larger share of general government spending than the Centre.
- States’ spending stance is pivotal to the hopes of a government spending-led economic recovery.
5 Broad trends from the state budgets
- The broad state-level budget trends are based on 11 states that account for a little over 60 per cent of India’s GDP.
1) Offsetting the additional spending by Centre
- There is a collapse in states’ revenues and transfers from the Centre.
- Along with it, there is a “reluctance” among some states to borrow more to spend.
- Thus, the aggregate level spending by these states in 2020-21 will end up being lower than what they had budgeted for before the onset of the pandemic.
- The revised estimates peg their total expenditure to decline by around 6 per cent in 2020-21 from their budget estimates.
- If these trends were to hold for the other states as well, then it would imply that the additional spending by the central government, over and above its budget estimate is likely to be offset by the decline in spending by states.
2) From revenue surplus to revenue deficit
- This year, states which typically run revenue surpluses will run revenue deficits.
- The collapse in revenues meant that states that usually borrow to finance capital expenditure have had to borrow to finance their recurring expenditure (revenue expenditure) as well.
- As a consequence, capital spending by states has been cut sharply.
- States, though, expect the situation to reverse in the coming fiscal year, with most projecting a return to revenue surpluses even as the Centre will continue to run revenue deficits.
- This anomaly is unlikely to be resolved unless the root cause of the situation — the nature of the fiscal compact between the Centre and the states — is addressed.
3) Reluctance by states to borrow
- The Centre had raised the ceiling on their market borrowings from 3 to 5 per cent of GSDP.
- Of this 2 percentage point increase in the borrowing limit, part was unconditional while the remaining was subject to fulfilling Centre-mandated reforms.
- As per ICRA’s estimate, 17 states qualified based on the One Nation One Ration Card reforms, 15 qualified based on the ease of doing business reforms, seven partially completed power sector reforms, while six had completed the urban local body reforms.
- But, it is only the low-income states of Bihar, Rajasthan and Madhya Pradesh with already stretched finances that seem to have availed the additional borrowing space.
- The high-income states of Gujarat, Maharashtra and Karnataka, all of whom had greater fiscal headroom going to the crisis, and were better placed to borrow more and spend, have not done so.
4) Aggressive fiscal consolidation
- As is the case with the Centre, states have, remarkably, budgeted for aggressive fiscal consolidation next year.
- The average fiscal deficit across these states is expected to fall by more than 1 percentage point of GSDP, more than twice the decline recommended by the 15th finance commission.
5) Ambitious revenue assumptions
- The aggressive consolidation next year is expected to be achieved not by expenditure compression, as is the case with the Centre, but by significant revenue enhancement.
- However, some revenue assumptions are quite ambitious, to say the least — some states have pegged their GST and VAT collections to grow far in excess of 30 per cent in 2021-22.
- A deterioration in fiscal marksmanship will mean that expenditure in the coming fiscal year will also end up being lower than what has been budgeted for.
Consider the question “The pandemic has upended the States’ fiscal space, which is evident in their budgets. In light of this, examine the trends emerging from the budgets of the States and their implications for the economy.”
Conclusion
Subdued general government spending during these tumultuous years heightens the risks to economic recovery. Considering the possibility of the economy exiting from this period with lower medium-term growth prospects, there is a strong case for greater government spending during these years.
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