Note4Students
From UPSC perspective, the following things are important :
Prelims level: CrPC provisions
Mains level: Paper 2- Reduction in the time for investigation and issues with it
Andhra Pradesh’s Disha Bill of 2019 seeks to reduce the time period for investigation of some crimes to seven days. Such a move could have several consequences. The article deals with that issue.
State governments reducing the period of investigation
- The proposed Maharashtra Shakti Act of 2020 will have a provision to complete the investigation within 15 days.
- Maharashtra has taken cur from the Andhra Pradesh’s Disha Bill of 2019.
- Disha mandated completion of investigation within seven working days for offenses such as harassment of women, sexual assault on children, and rape, where “adequate conclusive evidence” is available.
- The interpretation of “adequate conclusive evidence” by the police shall remain a problem.
What are the CrPC provisions?
- The Criminal Procedure Code (CrPC) provides that investigations relating to offenses punishable with imprisonment up to 10 years must be completed within 60 days.
- For offenses with higher punishment (including rape) the time limit is of 90 days of detaining the accused, else he or she shall be released on bail.
- To speed up the process, the CrPC was amended in 2018 and the period of investigation was reduced from 90 to 60 days for all cases of rape.
Factors that decide the time required
- Generally, the time of investigation depends on several factors like the severity of the crime, the number of accused persons and agencies involved.
- This is besides the fact that in many cases of rape, the victim remains under trauma for some time and is not able to narrate the incident in detail.
- The speed and quality of investigation also depend on whether a police station has separate units of investigation and law and order.[ a long-pending police reform]
- It also depends on the number of available IOs and women police officers, and the size and growth of the FSL and its DNA unit.
Consider the question “Examine the reasons for the high crime rate in India? Recently, some state governments have reduced the duration for the investigation of crime. How such move could impact the investigation?”
Conclusion
Setting narrow timelines for investigation creates scope for procedural loopholes that may be exploited during the trial. Therefore, instead of fixing unrealistic timelines, the police should be given additional resources so that they can deliver efficiently.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Agreement on Agriculture
Mains level: Paper 3- Challenges of farm subsidies and declining farm incomes
The article examines the reasons for declining farm incomes and the contribution of farm subsidies.
Contribution of agriculture
- India’s agriculture, which also supports the rural workforce, was, forever, living beyond its means.
- In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on it was close to 70%.
- Today, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
- The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.
- Agriculture has been facing adverse terms of trade over extended periods since the 1980s, and even during the phases when the terms of trade have moved in its favour, for instance in the 1990s and again since 2012-13, there was no distinct upward trend.
Reason for fall in farm incomes: falling investment
- The decline in farm incomes was triggered by growing inefficiencies.
- This decline, in turn, was caused by a lack of meaningful investment in agriculture.
- The share of this sector in the total investment undertaken in the country consistently fell from about 18% in the 1950s to just above 11% in the 1980s.
- In the most recent quinquennium for which data are available (2014-15 to 2018-19), the average share of agriculture was 7.6%.
India’s dismal performance in term of yields of major crops
- If one ranks countries in terms of their yields in wheat and rice — India’s two major crops — the country’s ranks were 45 and 59, respectively, in 2019.
- This ranking would go down sharply if the areas recording high yields, such as Punjab and Haryana, are excluded.
- In other words, for farmers in most regions of the country, it is an uphill battle for survival amid low yields.
Need for coherent policy for agriculture
- The lack of a coherent policy for agriculture must surely be regarded among the most remarkable failures of the governments in post-Independence India.
- Compare this failure with the United States, with less than 2% of its workforce engaged in agriculture, has been enacting farm legislations every four years since the Agricultural Adjustment Act was enacted in 1933.
- These policies comprehensively address the needs of the farm sector through proactive support from the respective governments.
Issue of the farm subsidies in India
- The subsidies are the price that the country pays for the failure of the policymakers to comprehensively address the problems of the farm sector.
- Wanton distribution of subsidies without a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
- And, yet, the fundamental ills of Indian agriculture are not adequately addressed.
- Members of the World Trade Organization (WTO) are expected to notify their agricultural subsidies as a part of their commitment under the Agreement on Agriculture (AoA).
- India’s latest notification, for 2018-19, shows that the subsidies provided were slightly more than $56 billion.
- In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) is provided to “low income or resource-poor farmers”, a terminology that the AoA uses.
- However, the designation of this category of farmers is left to individual members.
- India has notified that 99.43% of its farmers are low income or resource-poor.
- According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.
- Thus, almost the entire farm sector comprises economically weak farmers.
Comparing subsidies given by various countries
- America provided $131 billion in 2017 and the EU, nearly €80 billion (or $93 billion) in 2017-18.
- Instead of absolute numbers; the ratios of subsidies to agricultural value addition for the three countries give a much better picture.
- Thus, for 2017, India’s farm subsidies were 12.4% of agricultural value addition, while for the U.S. and the EU, the figures were 90.8% and 45.3%, respectively.
- This then is the reality of farm subsidies that India provides.
Consider the question “Indian agriculture has been contributing beyond its means since Indian independence. However, agri incomes have shown a gradual decline. What are the reasons for such a decline? How far has farm subsidies succeeded in solving the low-income problem?”
Conclusion
India needs a comprehensive Agri policy to deal with the distortion created by the subsidies.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Paris Agreement
Mains level: Paper 3- Climate change policies and issues with them
The article highlights the issues with the current climate policies which are centred on the inequality.
Inequality and climate change
- Inequity is built into the climate treaty, which considers total emissions, size, and population, making India the fourth largest emitter.
- According to the United Nations, the richest 1% of the global population emits more than two times the emissions of the bottom 50%.
- .China, with four times the population of the U.S., accounts for 12% of cumulative emissions.
- India, with a population close to that of China’s, for just 3% of cumulative emissions that lead to global warming.
- In an urbanized world, two-thirds of emissions arise from the demand of the middle class for infrastructure, mobility, buildings, and diet.
- Well-being in the urbanized world is reflected in saturation levels of infrastructure.
- Growth in the developed countries is consumption-driven not production driven.
- The vaguely worded ‘carbon neutrality’, balancing emitting carbon with absorbing carbon from the atmosphere in forests is a triple whammy for latecomers like India.
- Such countries already have less energy-intensive pathways that will not encroach on others’ ecological space, a young population, and are growing fast to reach comparable levels of well-being with those already urbanized and in the middle class.
What changes are required in the policies
- At present, the focus is on physical quantities which indicates effects on nature.
- The solutions require analysis of drivers, trends, and patterns of resource use.
- This anomaly explains why the link between well-being, energy use, and emissions is not on the global agenda.
- Modifying unsustainable patterns of natural resource use and ensuring comparable levels of well-being are societal transformations.
- New thinking must enable politics to acknowledge transformational social goals and the material boundaries of economic activity.
India’s unique national circumstances
- India must highlight its unique national circumstances.
- For example, the meat industry, especially beef, contributes to one-third of global emissions.
- Indians eat just 4 kg of meat a year compared to those in the European Union who eat about 65 kg.
- Also to be noted is the fact that the average American household wastes nearly one-third of its food.
- Transport emissions account for a quarter of global emissions.
- Transport emissions are the symbol of Western civilization and are not on the global agenda.
- Rising Asia uses three-quarters of coal drives industry and supports the renewable energy push into cities.
- India, with abundant reserves and per capita electricity use that is one-tenth that of the U.S., is under pressure to stop using coal.
Way forward
- India has the credibility and legitimacy to push an alternate 2050 goal for countries currently with per capita emissions below the global average.
- These goals should include well-being within ecological limits, the frame of the Sustainable Development Goals, as well as multilateral technological knowledge cooperation around electric vehicles, energy efficiency, building insulation, and a less wasteful diet.
Conclusion
Emissions are the symptom, not the cause of the problem. India, in the UN Security Council, must push new ideas based on its civilizational and long-standing alternate values for the transition to sustainability.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Provisions in the act
Mains level: Paper 3- Provisions in the new farm laws and their purpose
Some provisions of the new farm laws are opposed by the farmers. The article explains the utility of these provisions.
Major objections to farm laws
- The first objection is that the Agricultural Produce Market Committees (APMC) will be eventually closed,
- The second objection is that Minimum Support Prices (MSP) will be stopped,
- The third fear is that corporates will take over the agriculture trade, and farmers’ land will be taken over by powerful corporates.
Why reforms were needed
- The gap between the agri-income of a farmer and that of a non-agriculture worker increased from ₹25,398 in 1993–94 to ₹1.42 lakh in 2011-12.
- Aggregate food demand has fallen short of domestic production necessitating the export of a large quantity to prevent domestic prices from falling very low.
- India is sitting on an excess stock of 60 lakh tons of sugar and nearly 72 million tons of extra buffer stock of wheat and rice which is causing a huge drain on fiscal resources.
- India’s agri-exports are facing difficulty, imports are turning attractive as domestic prices are turning much higher.
- Rural youth are looking for jobs outside agriculture and there is a serious problem of unemployment in the countryside.
- There are numerous instances of market failure to the detriment of producers and consumers.
- This is turning farmers to look at the government for remunerative prices through MSP for most agricultural products.
- The growth rate in agriculture is driven by heavy support through various kinds of subsidies and output price support.
- These costs and losses and subsidies will take away most of the tax revenue of the central government.
3 Provisions and their utility
1) Relation between MSP and APMC
- APMC has nothing to do with the payment of the MSP.
- The necessary and sufficient conditions for the MSP are procurement by the government, with or without the APMC.
- Experience shows that even after fruits and vegetables were de-notified from the APMC, they continued to arrive at APMC mandis in large quantities while farmers got additional options.
- The protesting farmers have raised concerns to keep the level-playing field for the APMC and private players, and the government has shown agreement to address this fully.
2) Criteria for traders
- Protesting farmers are also opposing the provision of the simple requirement of a PAN card for a trader.
- After having a PAN card, even a farmer can go for trading, his son can do agri-business and other rural youth can undertake purchases of farm commodities for direct sale to a consumer or other agribusiness firms.
- If stringent criteria such as bank guarantee, etc. are included in the registration, then the spirit of the new law to facilitate farmers and rural youth to become agribusiness entrepreneurs will be lost.
3) Mistaking contract farming with corporate farming
- Critics and protesting farmers are mixing contract farming with corporate farming.
- The new Act intends to insulate interested farmers (especially small farmers), against market and price risks.
- The Act is voluntary and either party is free to leave it after the expiry of the agreement.
- It prohibits the transfer, sale, lease, mortgage of the land or premises of the farmer.
- The Act will promote diversification, quality production for a premium price, export, and direct sale of produce, with desired attributes to interested consumers.
- It will also bring new capital and knowledge into agriculture and pave the way for farmers’ participation in the value chain.
Conclusion
The policy reforms undertaken by the central government through these Acts are in keeping with the changing times and requirements of farmers and farming. If they are implemented in the right spirit, they will take Indian agriculture to new heights and usher in the transformation of the rural economy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- The possibility of three-front war
The possibility of a two-front war has been debated for long in the Indian security establishment. However, the Galwan valley incident has added an urgency to that possibility.
Two front situation
- In the Indian military’s thinking, while China was the more powerful, the chance of a conventional conflict breaking out was low.
- The Chinese intrusions in Ladakh in May this year, the violence that resulted from clashes have now made the Chinese military threat more apparent and real.
- This comes at a time when the situation along the Line of Control (LoC) with Pakistan has been steadily deteriorating.
- Between 2017 and 2019, there has been a four-fold increase in ceasefire violations.
- The larger challenge for India’s military would come if the hostilities break out along the northern border with China.
- In such a situation, it is unlikely that Pakistan would initiate a large-scale conflict to capture significant chunks of territory as that would lead to a full-blown war between three nuclear-armed states.
China-Pakistan relationship
- China has always looked at Pakistan as a counter to India’s influence in South Asia.
- There is a great deal of alignment in their strategic thinking.
- Military cooperation is growing, with China accounting for 73% of the total arms imports of Pakistan between 2015-2019.
- It would, therefore, be prudent for India to be ready for a two-front threat.
The dilemma for India: In resources and strategy
- It is neither practical nor feasible to build a level of capability that enables independent warfighting on both fronts.
- A major decision will be the quantum of resources to be allocated for the primary front. This is the dilemma of resources.
- If a majority of the assets of the Indian Army and the Indian Air Force are sent towards the northern border, it will require the military to rethink its strategy for the western border.
- This is the second dilemma.
- Even though Pakistan may only be pursuing a hybrid war, should the Indian military remain entirely defensive?
- Adopting a more offensive strategy against Pakistan could draw limited resources into a wider conflict.
Way forward
- We need to develop both the doctrine and the capability to deal with this contingency.
- Capability building also requires a serious debate, particularly in view of the country’s economic situation.
- We need to focus on future technologies such as robotics, artificial intelligence, cyber, electronic warfare, etc.
- The right balance will have to be struck based on a detailed assessment of China and Pakistan’s war-fighting strategies.
- Diplomacy has a crucial role to play.
- India would do well to improve relations with its neighbors so as not to be caught in an unfriendly neighborhood.
- The engagement of the key powers in West Asia, including Iran, should be further strengthened.
- Relationship with Moscow should not be sacrificed in favor of India-United States relations given that Russia could play a key role in defusing the severity of a regional gang up against India.
- Political outreach to Kashmir aimed at pacifying the aggrieved citizens would help in easing the pressure from the western front.
Consider the question “India faces the possibility of a two-front war. What strategy India should follow to deal with such a challenge?”
Conclusion
A politically-guided doctrine, comprehensive military capability, and exploring other options will help to deal with the China-Pakistan threat.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Challenges ahead of India in 2021 on foreign policy and economic front
The article deals with the challeges India has to deal with in 2021 on the various front like foreign policy and economy.
Major challenge of 2020
- The COVID-19 pandemic, which embraced every segment of Indian society was the most insidious threat.
- Since April, India has confronted an unprecedented situation on the border with China in eastern Ladakh.
- Ever since, the border has remained live; as of now there is no end in sight.
- Chinese behaviour at the border has led to a grave hiatus in India-China relations.
- Internal problems such as Naxalite violence and Jammu and Kashmir endured during much of 2020.
- The economy is in recession. India has slipped further down the scale in the Human Development Index.
- Slippages have occurred in the Global Economic Freedom Index.
How India should deal with the challenges ahead
1) China challenge and foreign policy
- In foreign policy India must not remain content or satisfied with the current stand-off with China in the Ladakh sector.
- The conflict with China is enabling many of its neighbours to play China against India.
- So, India should think of what better options are available to it to resolve that conflict
- To tackle China, India must come up with a whole new paradigm of ideas on which further actions can be formulated.
2) State of the economy
- India must seek to enhance its competitive advantage vis-a-vis other nations.
- India should focus on export-oriented economic strategy instead of looking inward to enlarge its economy.
- India should enhance its export capacity.
- India’s strength lies in its diversity, and its ability to utilise all available opportunities.
- The other pressing challenge in 2021 would be job creation for the youth, who are India’s most abiding asset.
- The government must take urgent steps to set right the disruptions in the labour market caused by the pandemic.
- Creating new jobs in new industries should be a critical requirement.
- Stimulating demand would ensure growth in job opportunities, and this should go hand in hand with this task.
- The importance of such measures must not be underestimated.
3) Restoring confidence in constitutional practices
- The government to restore confidence in constitutional proprieties, practices and principles.
- There is a crisis of confidence which is affecting the body politic.
- The starting point would be effecting an improvement in Centre-State relations, particularly between Centre and States.
- As digital technology advances, concerns that an unduly centralised Central government could use this to further reduce the independent authority of States will again need to be dispelled.
- Effective cooperation between the Centre and the States must be restored as early as possible to instil confidence about India’s democratic future.
Consider the question “What are the challenges ahead for Indian economy in the wake of economic disruption caused by the pandemic? Suggest the way to deal with these challenges.”
Conclusion
As 2020 comes to a close, it might be worthwhile to take a hard look at these issues to ensure that 2021 does not become another wasted year.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Relation between inequality and inflation
Mains level: Paper 3- Rising inequality in the economic recovery
As Indian economy recovers from the economic disruption caused by the pandemic, there are dangers of rising inequality and cosequently the rising inflation. The article deals with these issues.
3 features of Indian recovery
- 1) The number of new cases has fallen while the fatality rate continues to drop.
- 2) India has rolled out one of the smallest fiscal support packages globally, with central government spending flat so far this year.
- 3) Inflation is now a big problem, with consumer prices above the 6 per cent tolerance level for the past eight months.
Consequences of low fiscal spending
- It may seem that India is back on the path to recovery.
- But the low level of fiscal spending could leave behind other problems, such as rising inequality.
- Although, in India there was a focus on vulnerable section, there were some misses, such as the urban poor being left out, and the overall outlay was small.
- For instance, demand for the rural employment guarantee programme continues to outstrip supply.
- There is the rise in inequality between large and small firms, which is likely to be felt by individual employees.
- Large firms were helped by cost-cutting, low interest rates, access to buoyant capital markets and increased spending in the formal economy probably helped.
- The smaller listed firms did not do as well.
- Small firms are more labour intensive than large firms.
- If small firms do poorly, it impacts a large number of people.
- All this could impact demand over time.
- Rising inequality could stoke inflation (in services particular).
- Consumption patterns show that the rich in India tend to consume more services than the poor.
- And rising inequality could, therefore, stoke inflation.
Possibility of services inflation
- 1) As a vaccine comes into play, there could be a release of pent-up demand for high-touch services.
- 2) As large firms and their employees do relatively well, they are likely to demand more services, stoking prices.
- 3) Many service providers did not do a regular annual price reset in 2020, so they may raise prices to cover the two years once demand picks up.
- If inflation does become persistent and leads to tighter monetary policy, that could weigh on growth over time.
Way forward
- To control inflation in 2021, the RBI may have to take steps such as:-
- 1) Gradually drain the excess liquidity in the banking sector,
- 2) Provide a floor for short-term rates, which have fallen below the reverse repo rate.
- 3) Narrow the policy rate corridor by raising the reverse repo rate.
- A quicker exit from loose monetary policy could become another area where India differs from the world.
Consider the question “What are the consequences of economic recovery in the wake of pandemic? Suggest the ways to deal with these consquences.”
Conclusion
Putting all of this together, it seems India will come full circle in 2021. For a while it was worried more about weak growth than high inflation. But as growth recovers, inflationary concerns could reappear.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 15 and 16
Mains level: Paper 2- Reservation and issues related to it
The Supreme Court in recent judgement in Saurav Yadav Vs. State of Uttar Pradesh made it clear that reservation and merit are not mutually exclusive. The article deals with this issue.
Vertical Vs. Horizontal reservation
- Articles 15(4) and 16(4) enable vertical reservation based on slotting the population in terms of SC, ST, OBC, and General Category.
- But there is also a class of reservations that cuts across all these categories and are referred to as horizontal reservation.
- Horizontal reservation includes a reservation for women differently-abled persons, freedom fighters, army veterans, etc.
Specifying the relationship between horizontal and vertical reservation
- In cases like Anil Kumar Gupta v/s State of Uttar Pradesh, the Court had made it clear that horizontal reservation ought to be generally understood in compartmentalized terms: recognition of inequalities within each vertical category.
- In a particular case, candidates were excluded from competing from the General Category positions even though they have scored more, simply because they were OBC.
- However, some state governments are trying to use the open category seats as a quota for general category candidates.
- The High Courts had been giving contrary directions: Uttar Pradesh and Madhya Pradesh excluded reserved category women for consideration in the general category.
- Rajasthan and Gujarat, amongst others, included them.
- The Supreme Court, in a three-judge bench, ruled against the UP government and clarified the relationship between horizontal and vertical reservations.
Analyzing the judgment
- The judgments reiterate the principle that groups eligible for horizontal reservation cannot be excluded from the open category seats because they are from other vertically reserved category communities, like SC or OBC.
- Women from all categories are eligible to be considered for the open category.
- It also made it clear that the open category seats are not meant to be a quota for the non-reserved categories.
Merit Vs. Reservation
- The Court has often contrasted merit with reservation.
- But this has always been a mistaken view of the relationship between merit and reservation.
- In principle, reservation is an instrument for identifying merit in individuals from historically marginalized communities.
- The Court is saying that by excluding the adjustment of OBC women who had scored higher against general category seats, the UP government was ironically using the General Category to exclude meritorious candidates.
- When the Court is using the term merit, it is simply pointing out that certain selection criteria are being used.
- Such selection criteria are also within particular reserved categories: which is also a function of selection criteria, in this case, marks.
- From this point of view, even those who advocate reservation do not fully give up on the meritocratic criteria of selection — they just apply it differentially.
- What the Court was concerned with is fairness in the application of the selection criteria within the overall framework of reservation.
Conclusion
What the court is trying to say something more interesting: Members of the reserved category must be fully considered as falling under the rubric of being potentially meritorious.
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From UPSC perspective, the following things are important :
Prelims level: Article 356
Mains level: Paper 2- Misuse of article 356
Article 356 and the word ‘otherwise’ in it has led to the recent Andhra Pradesh High Court order. The order raises several questions. The article deal with this issue.
Controversial High Court order
- Recently the Andhra Pradesh High Court directed the Andhra Pradesh government to come prepared to argue on the ‘breakdown of constitutional machinery in the state’.
- The order opens up the possibility of use or even misuse of Article 356 by the judiciary.
- The Supreme Court of India has stayed the order.
- However, we need to go deeper into this observation and look at the controversial provision of Article 356 due to which the High Court could make such an observation.
Historical background of the article
- Both India and Pakistan borrowed this provision from the Government of India Act, 1935.
- Interestingly, the leaders of our freedom struggle were so very opposed to this provision that they forced the British government to suspend it.
- The provision which we had opposed during our freedom struggle was incorporated in the Constitution strangely in the name of democracy, federalism and stability.
- It was agreed in the Constituent Assembly that the Governor could use this emergency power.
- By this time the Governor was supposed to be elected by the people of the State rather than nominated by the Centre.
- After several revisions, provision became Article 278 (now Article 356).
The issue with the word ‘otherwise’
- H.V. Kamath criticised the word ‘otherwise’ and said only god knows what ‘otherwise’ means.
- As the Governor had been made a nominee of the Centre by this time, he asked why the President could not have confidence in his own nominees.
- ‘Otherwise’ can include anything including a presidential dream of breakdown of constitutional machinery in a state.
- The Andhra Pradesh High Court could pass such an order due to this very term ‘otherwise’.
- This word negates the ideals of constitutionalism by giving unlimited powers to the Centre, also allowed the High Court to overstepped the line.
- But this is not the first instance of judicial overreach on this issue.
- On August 13, 1997, a Patna High Court had observed that the High Court could also report to the President about the breakdown of constitutional machinery in the State.
Repeated misuse of Article 356
- In the very first invocation of Article 356 in 1951, central government removed the Gopi Chand Bhargava ministry in Punjab though he enjoyed the majority.
- In 1959, it was used against the majority opposition government of the E.M.S. Namboodripad government in Kerala.
- Indira Gandhi used Article 356 as many as 27 times.
- The most notable case of non-use of Article 356 was the refusal of the P.V. Narasimha Rao government prior to the demolition of the Babri Masjid.
Consider the question “Examine the contest in which the word ‘otherwise’ in Article 356 leads to judiciary exercising its powers. What are the concerns in such case?”
Conclusion
Ideally, the word ‘otherwise’ should be deleted from Article 356 and the provision be used only sparingly and to never remove a majority government.
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Paper 2- Reforms in the Governing Council of the Central Universities
Central Universities need reforms in their Governing Councils to make them realise their potential.
Central Universities in the need of reforms
- There are 55 central universities.
- These are endowed with prime land, extensive funding from the central government and there is a long line of students waiting to get in.
- However, they are in turmoil. In recent years, six vice-chancellors (VCs) of central universities have been sacked.
- Some of these institutions have seen their glory days, yet increasingly, the energy is going out of the system.
- However, not a single new private university has so far been able to create a true broad-based Vishwa Vidyalaya with the full range of humanities, social and natural sciences, and professional disciplines.
- Therefore, to save academia in India, central universities must be saved.
Organizational structure
- Each of the 55 central universities is governed by a separate Act. but the broad structure is as follows.
- The Visitor of the university is the President of India.
- On his behalf, the Ministry of Education recommends an eminent citizen as the chancellor, whose role is mostly ceremonial.
- The Ministry also constitutes a search committee for the post of VC, which comes up with a list of 3 candidates.
- From this list, the government picks a VC.
- Separately, and through a different process, the governing council (GC) is chosen.
- The governing council (GC) of the university usually have nominees from various stakeholders, including the government, faculty, students, and citizens.
- The university’s work is carried out by the executive council chaired by the VC, who also appoints the registrar.
- A separate finance committee is constituted, headed by a chief finance officer, who is often a civil servant on secondment to the university.
- This arrangement is designed to maintain financial checks and balances.
Issues with the governance
- The GC has no say in the selection of the VC.
- The GC typically meets only once a year and its size is usually very large.[Delhi University has 475 members]
- In theory, the VC presents and gets approval for the annual plan of the university from the GC.
- In practice, after much grandstanding on both sides, the plan is rubberstamped.
- After that, throughout the year, there is the minimal direction or monitoring from the GC, which may or may not meet again.
- There are typically no quarterly updates, and there is little oversight.
- Under the circumstances, the high number of failures should not come as a surprise, since effectively, there is minimal governance.
Comparing with provisions in IIM Bill
- The new IIM Bill very sensibly limits the GC to at most 19 members.
- They are expected to be eminent citizens, with broad social representation and an emphasis on alumni.
- This GC chooses the director, provides overall strategic direction, raises resources, and continuously monitors his or her performance.
- Within the guidelines provided by the GC, the director has full autonomy but also full accountability.
Way forward
- The governing councils of all central universities, IITs, and all other central institutions, need to be restructured by an Act of Parliament.
- The most eminent alumni of these institutions must be brought on their boards.
- The dynamism and exposure that these alumni bring to the table will promptly lead to world-class innovations.
Conclusion
To allow central universities, the IITs and other public institutions to truly blossom, we need to reform their Governance. There is no time to waste.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Provisions related to sessions of legislatures
Mains level: Paper 2- Declining number of sittings of state legislature
Recently, Governor turned down the recommendation of the Kerala government to convene the session of the state legislature. It also points to the trend of declining seating of the state legislature and issues with it.
Governor-Government conflict
- The Kerala government made a recommendation to the governor for summoning the state’s legislature for a one-day session.
- The government wanted to discuss the situation arising out of the farmers’ protest in the legislative assembly.
- Media reports suggest that the governor turned down the government on the grounds that there is no emergent situation for which the state assembly should be called to meet at short notice.
- Earlier this year, the Rajasthan governor had rejected the recommendation of the government to call a session.
- The chief minister wanted a session of the legislature called so that he could prove his majority on the floor of the house.
Constitutional provisions
- The Constitution is clear: The government has the power to convene a session of the legislature.
- The council of ministers decides the dates and the duration of the session.
- Their decision is communicated to the governor, who is constitutionally bound to act on most matters on the aid and advice of the government.
- The governor then summons the state legislature to meet for a session.
- The refusal of a governor to do so is a matter of concern.
Declining sittings of the state legislature
- In the last 20 years, state assemblies across the country, on average, met for less than 30 days in a year.
- But states like Kerala, Odisha, Karnataka are an exception.
- The Kerala Vidhan Sabha, for example, has on average met for 50 days every year for the last 10 years.
- The trend across the country is that legislatures meet for longer budget sessions at the beginning of the year.
- Then for the rest of the year, they meet to fulfill the constitutional requirement that there should not be a gap of six months between two sessions.
Why is it a matter of concern
- Close scrutiny: Continuous and close scrutiny by legislatures is central to improving governance in the country.
- Voice to public opinion: Legislatures are arenas for debate and giving voice to public opinion.
- Accountability institutions: As accountability institutions, they are responsible for asking tough questions of the government and highlighting uncomfortable truths. So, it is in the interest of a state government to convene lesser sittings of the legislature and bypass their scrutiny.
- Prevent ordinance: Lesser number of sitting days also means that state governments are free to make laws through ordinances. And when they convene legislatures, there is little time for MLAs to scrutinize laws brought before them.
Way forward
- Convening legislatures to meet all around the year.
- In many mature democracies, a fixed calendar of sittings of legislatures, with breaks in between, is announced at the beginning of the year.
- It allows the government to plan its calendar for bringing in new laws.
- It also has the advantage of increasing the time for debate and discussion in the legislative assembly.
- And with the legislature sitting throughout the year, it gets rid of the politics surrounding the convening of sessions of a legislature.
Conclusion
Continuous and close scrutiny by legislatures is central to improving governance in the country. Increasing the number of working days for state legislatures is a first step in increasing their effectiveness.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Essential Commodities Act
Mains level: Paper 2- Importance of parliamentary procedure in the passage of laws
A key lesson from the farmers’ opposition to the farm laws is that following the parliamentary procedure in the passage of legislation always pays dividend more so if the changes introduced by the legislation bring substantial changes.
Vested interests resulting in opposition to legislation
- There are strong indications that the new legislation is desirable and will bring in much-needed market reforms in the overregulated farm sector.
- There is no contrary evidence that the new proposals will adversely affect farmers in the long run.
- There is no justification for a minimum support price regardless of demand and supply.
- Legislation that benefits the nation but hurts vested interests will always meet with vehement opposition.
How liberalisation helps: Lessons from non-agricultural sector
- The benefits of liberalising the non-agricultural sector of the economy in 1991 established that market forces cannot be ignored.
- For the first 30 years, under the Essential Commodities Act, 1955, several control orders were passed.
- Orders under ECA were passed on products such as cement and steel, and these were intended to ensure their availability at fair prices.
- The result was just the opposite: Severe shortages, a huge black market and massive corruption.
- Equally disastrous were laws relating to monopolies and industrial development.
Importance of parliamentary procedures
- At the heart of a constitutional democracy based on the Westminster model is the importance of Parliament, which is the fountainhead of all laws.
- But, Parliament includes the Opposition as well and even though a bill may be certain to become the law, it is necessary that the established procedure is followed.
- In the face of opposition to the farm laws, it is necessary that the benefits of a new law are demonstrated through debate and discussion.
- There must be empirical or other evidence that shows the deleterious economic consequences of continuing with the status quo.
- As the farm bills marked a radical departure from the existing system of selling agricultural produce, the least that could have been done was to refer them to a Select Committee.
- It is a matter of concern that fewer and fewer bills are being referred to Select Committees or even deliberated upon.
- While 71 per cent of the bills were referred to a Select Committee in the 15th Lok Sabha (2009-14), only 25 per cent were so referred in the 16th Lok Sabha (2014-19).
Way forward
- A new law can always come into force at a later date and can even be made applicable piecemeal.
- It is also possible to notify it to apply to select states or districts.
- If laws are likely to meet with opposition by vested interests, the best way to demonstrate their beneficial effects is to implement the laws in select states or districts for a year.
- It is worthwhile considering the implementation of a controversial law on a trial basis.
Consider the question “Describe the important role played by the Select Committee in the passage of the bill. Why the decline in the number of bills referred to the Select Committees is the matter of concern?”
Conclusion
The biggest lesson for the goverment is that following constitutional conventions always pays dividends — it benefits the nation and preserves the dignity of Parliament.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Labour codes
Mains level: Paper 2- Challenges of contractual labour despite the provision of fixed-term employment
The recent incident of violence at the iPhone manufacturing factory brought into focus the issue of contract labour. The article explains the reasons for its persistence despite the provision of fixed-term employment.
Difference between a contract worker and fixed-term worker
- Contract workers, who are hired via an intermediary (contractor) and are not on the payrolls of the company on whose shop floors they work.
- Fixed-term employees can be directly hired by employers without mediation by a middleman.
- They are ensured of the same work hours, wages, allowances, and statutory benefits that permanent workers in the establishment are entitled to.
- Employers are not required to provide retrenchment benefits to fixed-term employees.
- With an aim to discourage the use of contract workers the government introduced the option of fixed-term employment in the Code on Industrial Relations (2020).
Issues with the provision of fixed-term employment
- Fixed-term employment in India is indeed quite open-ended.
- The Code does not specify a minimum or maximum tenure for hiring fixed-term employees.
- Nor does it specify the number of times the contract can be renewed.
- The absence of such safeguards can lead to an erosion of permanent jobs.
- Workers may find themselves moving from one fixed-term contract to another, without any assurance of being absorbed as permanent workers by their employer.
So, why firms still hire contract workers?
- The cost of hiring contract workers continues to remain lower than the cost of hiring fixed-term employees. who are required to be paid pro-rata wages and social security including gratuity.
- In addition, the monitoring, legal compliance, and litigation costs are shifted onto the contractor in case of contract workers, thereby reducing the transaction costs of recruitment to firms.
- To encourage a shift away from contract workers to fixed-term employees, the government should have completely prohibited the use of contract labor in core activities
- Instead of completely prohibiting contract workers in core activities the Labour Code on Occupational Safety and Health has allowed it under certain conditions.
- Such a provision encourages the use of contract workers, undermining the initiative of introducing fixed-term employment.
Using PLI and Atmanirbhar Bharat to boost formal job creation
- The production linked incentive scheme (PLI) offers government subsidies for a limited period which is five years for mobile handsets.
- The objective of the PLI scheme is to create “good jobs”.
- It may have been more useful to link these incentives for which a financial outlay of Rs 1.45 lakh crore has been approved over five years for 10 sectors explicitly to job creation.
- Significantly, under the Atmanirbhar Bharat Rozgar Yojana, the government is offering provident fund subsidies to employers for hiring new formal workers.
- Both these programs could jointly be leveraged to give a big boost to formal job creation in the manufacturing sector.
Consider the question “Examine the reasons for the persistence of contractual labour despite the option of fixed-term employment. Also suggest the ways to increase the employment opportunities that are secure.”
Conclusion
The government should focus on the creation of employment opportunities that are secure through policies and laws.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Targets under the Paris Agreement
Mains level: Paper 3- 5 years of Paris Agreement and actions of EU and India
This article by the Ambassador of the European Union underscores the need for implementation and action on the commitments made in the Paris Agreement to deal with climate change.
EU’s commitment to implement Paris Agreement
- In December 2019, the European Commission launched the European Green Deal — roadmap to achieve climate neutrality in the EU by 2050.
- “Next Generation EU” recovery package and our next long-term budget earmark more than half a trillion euros to address climate change.
- Recently EU leaders unanimously agreed on the 2030 target of reducing greenhouse gas emissions by at least 55% compared to 1990 levels.
Impact on low carbon technologies
- These actions and commitments of the EU towards Paris Agreement will further bring down the costs of low carbon technologies.
- The cost of solar photovoltaics has already declined by 82% between 2010 and 2019.
- Achieving the 55% target will even help us to save €100 billion in the next decade and up to €3 trillion by 2050.
EU working with India on climate actions
- No government can tackle climate change alone.
- India is a key player in this global endeavour.
- The rapid development of solar and wind energy in India in the last few years is a good example of the action needed worldwide.
- India has taken a number of very significant flagship initiatives such as the International Solar Alliance, the Coalition for Disaster Resilient Infrastructure and the Leadership Group for Industry Transition.
- India and Team Europe are engaged to make a success of the forthcoming international gatherings: COP 26 in Glasgow on climate change and COP 15 in Kunming on biodiversity.
Way forward
- The international community should come forward with clear strategies for net-zero emissions and to enhance the global level of ambition for 2030.
- Our global, regional, national, local and individual recovery plans are an opportunity to ‘build back better’.
- We will also need to foster small individual actions to attain a big collective impact.
Conclusion
With climate neutrality as our goal, the world should mobilise its best scientists, business people, policymakers, academics, civil society actors and citizens to protect together something we all share beyond borders and species: our planet.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: League of Nations
Mains level: Paper 2- Changing global order and opportunities for India
Despite China’s rise, the world will remain committed to multi-polar order. The article highlights the emerging trends in the global order against the backdrop of a pandemic and explains how there could be an opportunity for India.
Changing geopolitical landscape and choices India face
- As the world is slowly recovering from the disruption caused by the pandemic, there are worrying intimations of other crises looming round the corner.
- Geopolitics has been transformed and power equations are being altered.
- There are a new set of winners and losers in the economic changes.
- Technological advancement will magnify these changes.
- India will need to make difficult judgements about the world that is taking shape and find its place in a more complex and shifting geopolitical landscape.
- As the pandemic recedes, the world could draw the right lessons and proceed on a more hopeful trajectory.
Unlearnt lessons: lack of international cooperation
- Most challenges the world faces are global, like the pandemic.
- However, international cooperation in either developing an effective vaccine or responding to its health impacts has been minimal.
- The pre-existing trend towards nationalist urgings, the weakening of international institutions and multilateral processes continues.
- Even in the distribution of vaccines, we are witnessing a cornering of supplies by a handful of rich nations.
Need for a collaborative solution
- Global challenges such as climate change, cybersecurity, space security, terrorism, drug trafficking, money laundering and ocean and terrestrial pollution demand collaborative, not competitive solutions.
- The challenges require some display of statesman-like leadership to mobilise action on a global scale.
- The nation-state will endure but its conduct will need to be tempered by a spirit of internationalism and a sense of common humanity.
Role of China and Asia
- The pre-pandemic shift in the centre of gravity of the global economy and political power and influence, from the trans-Atlantic to the trans-Pacific, has been reinforced under the impact of the crisis.
- East Asian and South-East Asian countries are the first to register the green shoots of recovery.
- China has been the first large economy to witness a significant rebound in its growth rate.
- The regional supply chains centred on China have been reinforced rather than disrupted.
- China will emerge in pole position in the geopolitical sweepstakes commencing in 2021.
- The power gap with its main rival, the US, will shrink further.
Why should India prefer multi-polar world order
- As the power gap between India and China is expanding, the threat from China will intensify and demand asymmetrical coping strategies.
- Despite China emerging a relative gainer from the pandemic the trend towards multi-polarity is here to stay.
- Neither the US nor China can singly or as a duopoly manage a much more diffused distribution of economic and military capabilities across the globe.
- This is only possible through multilateral approaches and adherence to the principle of equitable burden-sharing.
- But a multipolar order can only be stable and keep the peace with a consensus set of norms, managed through empowered institutions of international governance and multilateral processes.
- India’s instinctive preference has been for a multipolar order as the best assurance of its security and as most conducive to its own social and economic development.
- India now has the opportunity to make multipolar order as its foreign policy priority as this aligns with the interests of a large majority of middle and emerging powers.
- This will be an important component of a strategy to meet the China challenge.
The favourable geopolitical moment for India
- Due to China’s aggressive posture across the board and its unilateral assertions of power, there is a significant push-back even from smaller countries, for example, in South-East Asia and Africa.
- China’s blatant “weaponisation of economic interdependence” such as action against Australia, has made its economic partners increasingly wary.
- In this context, India is seen as a potential and credible countervailing power to resist Chinese ambitions.
- The world wants India to succeed because it is regarded as a benign power wedded to a rule-based order.
- India can leverage this propitious moment to encourage a significant flow of capital, technology and knowledge to accelerate its own modernisation.
Consider the question “Though it may sound counterintuitive, India which is dealing with pessimism about its economic prospect in the wake of the pandemic, may be located at favourable geopolitical moment” Comment.
Conclusion
India should seize the opportunity and make multi-polar world order a pillar of its foreign policy to counter China threat while trying to leverage the moment to attract the flow of capital, technology and knowledge to accelerate its own modernisation.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: TRAI
Mains level: Paper 3- Ensuring the success of radio spectrum
The article analyses the factors influencing the outcome of the spectrum auction and suggests the measures to ensure the success and avoid the repeat of 2016 auction.
Details of the auction
- Based on the recommendation of the Telecom Regulatory Authority of India (TRAI), the government is planning to auction spectrum in the sub GHz bands of 700, 800, and 900 MHz along with mid-band frequencies in bands of 1800, 2100, 2300, and 2500 MHz across the 22 Licensed Service Areas (LSAs) of the country.
- The cumulative reserve price — and hence the potential revenue accrual to the government at reserve prices — is about $50 billion.
- The total reserve price of spectrum put on auction in 2016 was about $90 billion while the realized value was just about one-tenth of that.
- Hence, while the 2016 auction could be considered as a failure from the auctioneer’s point of view.
Factors determining the success of the spectrum auction
1) Right reserve price
- Research on a cross-country spectrum database shows that the reserve price significantly and positively correlated to the winning bid price.
- However, a higher reserve price also inhibits bidders from bidding for more spectrum blocks.
- If the quantity effect is more than the price effect, then it results in reduced revenues for the government exchequer, as happened in 2016.
2) Role of Over The Top (OTT) provider
- Over The Top (OTT) providers who are providing substitute goods such as Voice Over Internet Protocol (VoIP); and capturing a greater mind share of customers while remaining relatively invisible to government regulators.
- The rise of VoIP subscribers could have a positive effect on winning bid prices.
- However, the erosion of the position of telcos in the overall digital value network of devices, connectivity, and apps, could result in a lower willingness to pay.
3) Allocation of unlicensed spectrum for WiFi
- By off-loading mobile data, Wi-Fi supplements the carrier network and reduces the demand for mobile network capacity.
- A number of countries including the United States have unlicensed the V-band spectrum in 60 GHz — pencil beam band.
- Referred to as “wireless fiber”, the 60 GHz spectrum provides huge capacities in a limited area.
- Wi-Fi 6 (a.k.a. IEEE 802.11 ax) that operates in the 2.4/5 GHz unlicensed band requires additional unlicensed spectrum allocation to provide Gigabit speeds.
- The more the unlicensed spectrum allocation, the lower will be the demand for licensed spectrum.
4) Clarity on the availability of spectrum for auction
- While there is an indication by the government that the spectrum for the 5G auction, namely 3.4-3.6 GHz, will be held in late 2021, the amount of spectrum that will be made available is not clear.
- There is still uncertainty about the release of 26 GHz by the Department of Space for mobile services.
- With this limited visibility, the bidders will be in a quandary whether to acquire the spectrum now or wait for subsequent auctions.
- Further, some part of the current spectrum holding of all the operators is coming up for renewal in mid-2021, and hence there is additional pressure on them to retain them in the forthcoming auction.
Steps need to be taken
- A re-visit of reserve prices and lower it further, especially that of 700 MHz which is the “golden band” for covering the hinterlands of the country.
- Releasing more unlicensed spectrum in 2.4/5/60 GHz for proliferating Wi-Fi as a suitable complement to [the] carrier network.
- This will also augment the deployments of the Public Wi-Fi project which the cabinet approved recently.
- Provide visibility of future auctions, especially the quantum of the spectrum that can be put on the block in 3.3/3.6/26/28 GHz.
- The government should release guidelines on how OTT platforms will be regulated and what will be regulated so that the telcos and OTTs can join hands to provide superior services for the benefit of the consumers.
Conclusion
The government should follow the steps mentioned here to make the auction of the spectrum a success.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Role of intermediaries in governance
The article highlights the important role played by the intermediaries in connecting the citizens with the government.
Addressing the connect between government and citizens
- By exploring how digitally excluded communities engage with governance we understand that humans are significant in brokering trust between governments and citizens.
- This is true even for the ‘Digital India’.
- However, only a few States have built a cadre of individuals for last mile governance.
- Andhra Pradesh, for instance, rolled out a ward secretariat programme with over 16,000 ward secretaries and volunteers for delivering government services at citizens’ doorstep.
Understanding the role played by intermediaries
- Intermediaries help citizens overcome barriers to awareness of availability of digital services and rights from the state and ability.
- Intermediaries support individuals by placing complaints, directing them to the right authorities, and following up.
- Intermediaries are crucial offline architectures that enable the state to do its work better.
- Community-based organisations and NGOs see their work as allied to their core work.
Way forward
- Various types and forms of intermediation emerge based on regional, social, cultural and economic contexts.
- Equally, it is essential to pay attention to the varying incentives of intermediaries and not romanticise the benefits.
- We need to see intermediaries as crucial to the realisation of governance outcomes.
- India has formalised intermediation in traditional markets such as mutual funds from which we can learn.
- In these areas, formal governance mechanisms, structured capacity building, widespread awareness campaigns, and process re-engineering enabled growth and usage.
- At a broader level, increasing digitisation of governance across domains including healthcare, financial inclusion, justice and social services should be considered.
Conclusion
By acknowledging the role of intermediaries and supporting them, we will be able to support the process of responsible, responsive and data-driven governance across domains.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ayushman Bharat
Mains level: Paper 2- Importance of public investment in health care
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Lack of resources such as 1:1,700, doctor: citizen ratio, well below the minimum ratio of 1:1,000 stipulated by WHO.
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Rural areas and smaller towns of India are the worst sufferers, where even basic health services remain inaccessible, many cases were reported where ward boys and alone found running the primary healthcare center.
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Inadequate government spending on healthcare and lack of access to health insurance to a large section of society.
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The quality of public health services in India continues to remain below expectations which hamper the economic growth of the country.
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Government’s inability to build sufficient capacity and infrastructure, difficulty in reaching out to poor and vulnerable groups.
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An undersized skilled workforce and the absence of upgraded technology is a major challenge in the health sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Custodial torture and challenges in dealing with it
Installation of cameras would help in curbing the custodial torture to some extent but ending the menace requires comprehensive reforms.
Installation of CCTV cameras to curb custodial torture
- The Supreme Court recently mandated that CCTV cameras be installed in police stations and offices of other investigative agencies.
- However, previous decisions with similar recommendations have been poorly implemented.
- The present decision shows a marked difference from the earlier ones in its approach.
- It shows more care by listing out areas of police stations where cameras must be installed to ensure that there are no blind spots.
- It asks for oversight committees to be set up to monitor the functioning of the cameras.
- It also specifies that the cameras must be equipped with night vision and be able to record audio and visual footage.
- The recordings will have to be preserved for at least 12 months.
Issues with installing CCTV cameras
- Alteration of a video to conceal an object, an event, or change the meaning conveyed by the video is a well-documented reality in the United States.
- Indian courts have also expressed their apprehension of police tampering with CCTV footage.
- The judgment does not assuage these concerns.
- Cameras in police stations will not foreclose the possibility of torture in other locations.
- Multiple works on torture in India suggest that torture is often not inflicted in police stations, but in isolated areas or police vehicles.
- Victims are illegally detained and tortured in undisclosed locations before officially arrested and brought to the police station.
Challenges in fixing criminal responsibility
- Since torture is not recognized as an offense per se under Indian law, the judgment refers to the use of force resulting in “serious injuries and/or custodial deaths” unwittingly creates a high threshold for what amounts to torture.
- It fails to acknowledge the existence of forms of physical and psychological torture that leave behind no marks on the body.
- Requiring prior sanction from the government operates as the foremost hurdle in initiating criminal complaints.
- The absence of statutory guidelines mandating independent investigation results in police officers from the same police station investigating the crime and suppressing evidence.
- Between 2005-2018, with respect to 1,200 deaths in police custody, 593 cases were registered, 186 police personnel were charge-sheeted, and only seven were convicted (National Crime Records Bureau).
- Evidentiary concerns frequently arise since often the only witnesses are the victims themselves.
- The Supreme Court (1995) has noted that police officials remain silent to protect their colleagues as they are “bound by brotherhood” and held that courts should not insist on direct or ocular evidence in these cases.
- This position is rarely applied and many cases result in acquittal for want of evidence.
Conclusion
Monitoring the police through CCTVs is an important step towards combating torture but its effectiveness is contingent on broader reforms. The Supreme Court needs to ensure a robust implementation of its order and simultaneously plug the gaps so that incidents of torture are curtailed.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Investment rate
Mains level: Paper 3- Steps India needs to take to compensate for the economic loss due to pandemic.
To ease the damage inflicted by the pandemic on the economy, India needs to act on multiple fronts. The article suggests the trajectory India should follow to compensate for the economic loss due to pandemic.
Economy picking up
- As the restrictions were slowly withdrawn, the economy has also started picking up.
- There are many indicators such as collection of Goods and Services Tax (GST), the improved output of coal, steel, and cement, and positive growth in manufacturing in October 2020 which point to better performance of the private sector.
- In Q1, the economy declined by 23.9%; it declined by 7.5% in Q2, when the relaxations were eased.
- Reductions in the first half of GDP in 2020-21 as compared to the first half of 2019-20 is 7.66% of the 2019-20 GDP.
- If the Indian economy at least maintains the second half GDP in 2020-21 at the level of the previous year, the full-year contraction can be limited to about 7.7%.
Steps need to be taken
- If the Indian economy grows at 8% in 2021-22 will we be compensating for the decline in 2020-21.
- Thus, it is imperative that the Indian economy grows at a minimum of 8% in 2021-22.
- This should be possible if by that time restrictions imposed because of COVID-19 are withdrawn and the nation goes back to a normal state.
- Some sectors can act as lead sectors or engines of growth with increased government capital expenditures in them.
- The private sector seems to be revising its future prospects.
- Many new issues in the capital market have met with good response.
- The attitude to trade must also change.
- Closing borders may appear to be a good short-term policy to promote growth.
- A strong surge in our exports will greatly facilitate growth, i.e. 2021-22.
- However, much of Indian’s growth must rest on domestic factors.
- Growth must not only be consumption-driven but also investment-driven.
- It is the investment-driven growth in a developing economy that can sustain growth over a long period.
The important role of monetary policy
- The stance of monetary policy in 2020-21 has been extremely accommodating.
- Three major elements in the policy are:
- 1) A reduction in interest rate.
- 2) Providing liquidity through various measures.
- 3) Regulatory changes such as moratorium.
- There has been a substantial injection of liquidity into the system.
- With a large injection of liquidity, one should expect inflation to remain high.
- In the final analysis, inflation is determined by the overall liquidity or money supply in the system in conjunction with the availability of goods and services.
- While there may be sufficient justification for an accommodative monetary policy in a difficult year such as 2020, there will be a need to exercise more caution as we move into the next year.
Role of government expenditure
- Government expenditures play a key role in a situation such as the one we are facing.
- The stimulus policies involving higher government expenditures were expected to arrest the contractionary momentum.
- The government expenditures should be speeded up from now on so that the contraction in the current fiscal year as a whole can be reduced.
- In 2021-22, government revenues should pick up with the rise in GDP.
- The process of bringing down the fiscal deficit must also start.
- What is required is a sharp increase in government capital expenditures which can act as a stimulus for growth.
- A detailed investment plan of the government and public sector enterprises must be drawn up and presented as part of the coming Budget.
Increasing investment
- Over the past decade, the investment rate has been falling.
- In 2018-19, the rate fell to 32.2% of GDP from 38.9% in 2011-12.
- Some of the recent measures including corporate tax rate changes may help in augmenting investment.
- A strong effort must be made to improve the investment climate. The National Infrastructure Pipeline is a good initiative.
- But the government must come forward to invest more on its own.
Reforms with consensus
- Reforms are important in the context of rapid development.
- However, timing, sequencing, and consensus-building are equally important while introducing them.
- Labor reforms, for example, are best introduced when the economy is on the upswing.
Consider the question ” Growth must not only be consumption-driven but also investment-driven. It is the latter which in a developing economy can sustain growth over a long period. In light of this, suggest the policy imperatives that India should follow to make good of the decline in 2020-202.”
To achieve the level of $5 trillion, we need to grow continuously at 9% for six years from now. That is the challenge before the economy. Jobs and employment will come from growth. They are not independent of growth. For that policymakers should eschew other considerations and focus only on growth.
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