Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Issue of wage growth
The article discusses the threat posed to the Indian economy by the subdued demand following the return of the labourers to their urban jobs.
Rural employment issue
- About 30 million migrant workers rushed home to their villages during the pandemic.
- About 60 per cent of out-migration from rural India is aspiration-led.
- Income earned in urban jobs is 2.5 higher than earned in rural area.
- Though rural economy has been recovering faster than the urban economy, this optimism could prove short-lived, as eventually the more long-lasting determinants of rural wages could prevail.
What are the determinants of rural wages
1) NREGA wages
- The government has raised the rural employment guarantee programme (NREGA) wages and outlays.
- Demand for the scheme is outpacing supply.
- This demand-supply mismatch means that it may not be an effective driver of higher rural wages.
2) Low construction activities
- Many rural Indians, especially those without land, have become building labourers.
- 70 per cent of construction is related to real estate and property developers are dependent on funding from struggling non-banking financial companies.
- Until this type of lending restarts, construction may not normalise.
- And that means rural wages may not rise quickly either.
3) Rising debt level
- The increase in borrowing and fall in inflation over the last few years has increased the “real” indebtedness of rural Indians.
- This affected particularly the landowners who pay villagers to farm their land.
- This is likely to hurt their ability to pay high wages.
3 Reasons why wage outlook could be dimmer
- As migrant labours start to return to their urban jobs, their wage outlook appears to be bleak for 3 reasons.
- 1) As during demonetisation, workers could find jobs again, but at lower wages.
- 2) There could be a second-round of pandemic-led labour market weakness, driven by job losses and falling wages from the first round.
- 3) We find that both rural and urban wages are driven by economic growth, India’s post-pandemic medium-term growth falling by one percentage point to 5 per cent does not bode well.
Way forward
- Weak wages could keep demand subdued. To offset this policymakers have an important role to play.
- 1) In particular, policymakers may have to ensure that capital is allocated efficiently.
- After all, investment is the only way to increase the economy’s capacity to create well-paying jobs.
- 2) Bringing back investment growth would also involve capital re-allocation.
- This means taking it away from sectors that are not working and redeploying it in sectors that are.
- Improving the Insolvency and Bankruptcy Code procedure is a key step here.
- 3) Another important step is to improve the health of banks as they are the ones allocating capital by giving loans.
- Implementation of the 5-Rs — recognition, restructuring, resolution, recapitalisation and reforms — for the banking sector may be particularly useful here.
Consider the question “After supply-side disruption is over, India’s growth may suffer from the subdued wage growth. Suggest the steps to avoid this from happening.”
Conclusion
Supply disruption caused by reverse migration won’t last long, but led by lower wages, demand could remain weak, requiring policy intervention.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-China relations
The article charts out the plan to leverage the potential and the present size of the India markets to settle the boundary dispute with China.
Boycott of Chinese goods: view and counterview
- After Galwan incident, there have been calls for the boycott of Chinese goods.
- Counter views have been expressed that the Indian economy is so dependent on China that the costs would be disproportionately higher for India.
- Our dependence can be reduced substantially if there is a national will and resolve to do so.
Need for mutually acceptable boundary agreement
- China may not be willing to go back substantially from the areas they have occupied.
- Agreeing on maintaining peace and tranquillity or clarification of the LAC has left space for the Chinese to create border incidents which have now led to casualties.
- So India needs to get China to seriously negotiate a mutually acceptable boundary agreement.
India could use its market as leverage
- Size of Indian market: The size of the Indian market and its potential in the coming years provides India considerable leverage.
- But to use this leverage, Indians, individual consumers as well as firms, have to accept that there would be a period of adjustment in which they would have to pay higher prices.
- The Chinese have a competitive advantage and are integral to global supply chains.
- But whatever they sell is, and can be, made elsewhere in the world.
- Indian can produce everything imported by China: Most of what we import from China was, is and can be made in India itself.
- With volumes and economies of scale, the cost of production in India would decline as it did in China.
Steps need to be taken to use market as leverage
- Focus on those imports from China which have been increasing: The initial focus should be on items which are still being made in India and where imports from China have been increasing.
- Depriciate Rupees: If the RBI let the currency depreciate in real terms it would be equivalent to an increase in import duties of about 10 per cent.
- China-specific safeguard duties and use of non-tariff trade barriers should be used in segments like electrical appliances to let Indian producers expand production and increase market share.
- Government Finances for expansion: The government should also facilitate the flow of finances for expansion and provide technical support for testing, improving quality and lowering costs of production.
- Look for other players: In critical areas such as Active Pharmaceutical Ingredients, we need a vigorous approach to procure from elsewhere and have early production in India.
- The government could provide support for environmental compliance to bring down costs of production.This would create demand for domestic goods and services.
- There are strategic sectors where we should reduce vulnerability: Like scrutiny of -Chinese FDI, Chinese 5G participation etc.
- Assured government procurement: In critical areas like solar panel and grid storage batteries private investment for manufacturing in India would be triggered by assured government procurement.
Consider the question “Size and potential of India market could be leverage by India to settle the issues it has with its neighbour. What India needs to achieve this is a strategy and its implementation. Comment.”
Conclusion
A sustained and graded economic response to the recent Chinese conduct on the border is needed. We should signal India’s firm resolve and willingness to bear the cost. China could choose to settle the border amicably and have full access to our market. We could then work together to make this the Asian century.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- National Recruitment Agency
Recruitment reform in the form of National Recruitment Agency will resolve many issues faced by the youth appearing for the multiple government exam.
Context
- On average, 2.5-3 crore candidates appear for about 1.25 lakh vacancies in the central government every year.
- But from next year, the NRA will conduct the CET and based on the score, one can apply for a vacancy with the respective agency.
NRA: Composition and functioning
- The NRA will have representatives from the Ministry of Railways, Ministry of Finance/Department of Financial Services, Staff Selection Commission (SSC), Railway Recruitment Boards (RRBs) and Institute of Banking Personnel Selection (IBPS).
- A multi-agency body, the NRA will conduct a Common Eligibility Test (CET) to screen/shortlist candidates for the Group B and C (non-technical) posts.
- The NRA shall conduct a separate CET each for the three levels of graduate, higher secondary (12th pass) and the matriculate (10th pass) candidates for those non-technical posts to which recruitment is presently carried out by the SSC, RRBs and IBPS.
How it will benefit youth
- It will eliminate multiple tests and save time as well as resources.
- It will give a big boost to transparency.
- The multiple recruitment examinations are a burden on the candidates, as also on the respective recruitment agencies, involving avoidable/repetitive expenditure, law and order/security-related issues and venue-related problems.
- The NRA is a combination of convenience and cost-effectiveness for candidates.
- Examination centres in every district would greatly enhance access to the candidates located in far-flung areas, with a special focus on creating examination infrastructure in the 117 Aspirational Districts.
- This will prove a great boon to crores of aspirants residing in hilly, rural and remote areas and most importantly, for female candidates.
- Taking job opportunities closer to the people is a radical step that would greatly enhance ease of living for the youth.
Consider the question “Recruitment reform in the form of National Recruitment Agency is a radical step that would greatly enhance ease of living for the youth.”
Conclusion
Taking job opportunities closer to the people is a radical step that would greatly enhance ease of living for the youth.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Opportunities and challenges in outer space
The article analyses opportunities and challenges the outer space technology offers to us.
Emerging trends in space industry
- The price for reaching low Earth orbit has declined by a factor of 20 in a decade.
- It enhances human space travel possibilities by leveraging new commercial capabilities.
- According to a Bank of America Report, the $350 billion space market today will touch $2.7 trillion by 2050.
- Starlink, the constellation being constructed by SpaceX to provide global Internet access, plans more than 10,000 mass-produced small satellites in low Earth orbit.
- In a decade, 80,000 such satellites could be in space compared to less than 3,000 at present.
- Companies such as Planet, Spire Global and Iceye are using orbital vantage points to collect and analyse data to deliver fresh insights in weather forecasting, global logistics, crop harvesting and disaster response.
- Space could prove attractive for high-tech manufacturing too.
- In short, an exciting new platform is opening up for entrepreneurs.
3 Challenges
1) Governance of outer space
- Framework for governance of outer space as it becomes democratised, commercialised and crowded is becoming obsolescent.
- The Outer Space Treaty of 1967 enshrines the idea that space should be “the province of all mankind” and “not subject to national appropriation by claims of sovereignty”.
- The Rescue Agreement, Space Liability Convention, and the Space Registration Convention expanded provisions of the Outer Space Treaty.
- The Moon Treaty of 1979 was not ratified by major space-faring nations.
- Space law does not have a dispute settlement mechanism, is silent on collisions and debris, and offers insufficient guidance on interference with others’ space assets.
- These gaps heighten the potential for conflict in an era of congested orbits and breakneck technological change.
2) Acknowledging role of non-state entities
- The legal framework related to outre space is state-centric, placing responsibility on states alone.
- However, non-state entities are now in the fray for commercial space exploration and utilisation.
- Some states are providing frameworks for resource recovery through private enterprises.
- Some scholars and governments view this as against the principle of national non-appropriation, violating the spirit if not the letter of the existing space law.
- The lack of alignment of domestic and international normative frameworks risks a damaging free-for-all competition for celestial resources involving actors outside the space framework.
3) The arms race in outer space
- The space arms race is difficult to curb, especially since almost all space technologies have military applications.
- For example, satellite constellations are commercial but governments could acquire their data to monitor military movements.
- Investment in technologies that can disrupt or destroy space-based capabilities is under way.
- Despite concerns about military activity in outer space for long, not much progress has been made in addressing them.
- The UN General Assembly passes a resolution on Prevention of an Arms Race in Outer Space since 1982.
- The current geopolitical situation does not hold hope for addressing concerns of a space arms race.
Need for space legislation in India
- India has invested enormous resources in its space programme through the Indian Space Research Organisation.
- More importantly, our space assets are crucial for India’s development.
- The proposed involvement of private players and the creation of an autonomous body IN-SPACe for permitting and regulating activities of the private sector are welcome efforts.
- However, the space environment that India faces requires us to go beyond meeting technical milestones.
- We need a space legislation enabling coherence across technical, legal, commercial, diplomatic and defence goals.
Consider the question “Outer space technology is expanding its horizon day by day. However, there are certain challenges the expansion of the space technology faces. What are these challenges and suggest ways to deal with such challenges.”
Conclusion
Our space vision also needs to address global governance, regulatory and arms control issues. As space opens up our space vision needs broadening too.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NUE by the RBI
Mains level: Paper 3- Digital currency by the central bank and its advantages
The article discusses the idea of digital currency supported by the RBI and its advantages.
Purpose of NUE
- RBI recently released the framework for the establishment of a new umbrella entity (NUE) for retail payments.
- NUE would help reduce payments concentration risk with Unified Payments Interface (UPI) facilitating over 1.5 bn transactions a month.
- Given the sticky adoption and only a few payments apps dominating the UPI market, RBI intends to create a parallel retail system.
5 requirements payment systems should fulfil
- 1) The payments system should reduce the cost and time for government support to reach unbanked and underbanked people.
- 2) It should ensure ease of access to credit for small and medium businesses.
- 3) Improve the effectiveness of the implementation of monetary policy.
- 4) The new payment system should effectively counter risk from unregulated new digital currencies like Bitcoin.
- 5) It should discourage money laundering and tax evasion.
CBDC: Solution to the above 5 requirements
- CBDC is the digital form of fiat money, a digital equivalent of banknotes and coins.
- A Central Bank Digital Currency (CBDC) could potentially solve the above problems.
- Retail CBDCs can be issued directly by the central bank to people without going through traditional banks.
- Individuals would have CBDC accounts directly on the central bank core ledger.
- CBDC can reduce the cost and time for government support to reach people during desperate times (like pandemic).
- CBDC can also enable many financial entities to settle directly with RBI.
- In the current set up only a few large banks can settle directly with RBI.
- With a digital currency, the settlement can be instantaneous and, as a result, more payments services providers like NBFCs could connect with RBI, thereby, reducing credit and liquidity risk.
- CBDC lending would build MSMEs history and make further lending easier.
- For India to be a $5 tn economy, businesses need credit, and that can happen when we have more banks.
- India had 97 banks in 1947; today we are still at 95!
- Interest bearing CBDCs can also improve monetary policy effectiveness by enabling real-time pass-through of the policy rate to the lending markets.
- CBDCs can also allow for direct deposits into accounts of low-income households, senior citizens dependent on pensions and help cushion their purchasing power from the low-level interest rates during the times of economic downturn.
- CBDC can thwart some competition against privately issued foreign currency-denominated digital currencies.
Roles and responsibility of RBI with respect to CBDC
- In terms of managing roles and responsibilities, RBI would only hold the accounts and implement monetary policies as it does now.
- Fintech companies can become the channel for retail CBDC transmission and manage client relationships.
- Fintechs can complement the commercial banks and can draw small businesses/poor households into the formal economy.
- These companies could leverage their data to estimate customers’ creditworthiness and share their findings to banks for more efficient allocation of credit.
Consider the question “A digital currency backed by the central bank could transform the retail payment landscape in India. Discuss.”
Conclusion
India has been at the forefront of the fintech revolution, and other developed countries have been following its path. While the world watches the melee between the Greenback and the Renminbi, it is time India also lays the foundation for a strong currency. CBDC may just be one of the ways to do it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Manufacturing sector in India
The article analyses the issues of increasing manufacturing in India while dealing with the constraints faced by it. It also suggests the important role States can play.
Why companies are expected to exit China
- In the aftermath of the pandemic manufacturing companies are expected to exit China due to three primary reasons.
- 1) Realisation that relying heavily on China for building capacities and sourcing manufacturing goods is not an ideal business strategy due to supply chain disruptions in the country caused by COVID-19.
- 2) Fear of Chinese dominance over the supply of essential industrial goods.
- 3) The growing risk and uncertainty involved in operating from or dealing with China in the light of geopolitical and trade conflicts between China and other countries, particularly the U.S.
Where India stands in comparison with China
- China ranks first in contribution to world manufacturing output, while India ranks sixth.
- Against India’s target of share of manufacturing in Gross Domestic Product (GDP) to 25% by 2022, its share stood at 15% in 2018, only half of China’s figure.
- Industry value added grew at an average annual rate of 10.68% since China opened up its economy in 1978, India’s grew at 7% after India opened up its economy.
- Next to the European Union, China was the largest exporter of manufactured goods in 2018, with an 18% world share.
- India is not part of the top 10 exporters who accounted for 83% of world manufacturing exports in 2018.
Constraints faced by manufacturing sector in India
India faces numerous constraints in promoting the manufacturing sector.
- They chiefly include infrastructure constraints, a disadvantageous tax policy environment, restrictive trade policies, a non-conducive regulatory environment, rigid labour laws.
- Constraints also include high cost of industrial credit, poor quality of the workforce, Low R&D expenditure, delays and constraints in land acquisition, and the inability to attract large-scale foreign direct investment into the manufacturing sector.
What role States can play?
- They can contribute land: Federal government system in India demands the participation of States for the lasting solution to the constraints on the sector.
- An important requirement for the development of the manufacturing sector is the availability of land area.
- This could be one of the reasons why manufacturing activity is mainly concentrated in Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh.
- However, what is of concern is that some States that also have large land area contribute disproportionately little in manufacturing GSDP.
- These states include Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, Odisha, Rajasthan, Telangana, and West Bengal.
Way forward
- Identify reasons: The reasons for less manufacturing activity in these States have to be carefully examined.
- State-specific industrialisation strategies: Based on such reasons, State-specific industrialisation strategies need to be devised and implemented in a mission mode with active hand-holding by the Central government.
- State specific reforms: Policy actions on the part of individual States would improve India’s overall investment climate, thereby boosting investments, jobs, and economic growth.
- Policy actions of the Centre and the States should be well coordinated: Strategy Group consisting of representatives from the Central and State governments along with top industry executives to instil teamwork and leverage ideas through sharing the best practices of the Centre and States could be formed.
Consider the question “What are the constraints faced by the manufacturing sector in India? Suggest the ways to deal with these constraints highlighting the important role States can play in boosting manufacturing.”
Conclusion
Both the States and the Central government needs to work in tandem to boost the manufacturing in India and transform the economic landscape of India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-China relations
The article analyses the India’s efforts to establish strategic equilibrium with assertive China and how that idea clashes with China’s desire to form an Asian order with itself at the top.
Strategic equilibrium
- External Affairs Minister S Jaishankar articulated that India is seeking strategic equilibrium with an increasingly aggressive China.
- It is hoped that with China’s growing differences with the U.S. China would pay attention to India’s sensitivities.
- In achieving equilibrium with China, India has bravely been confronting a face-off in the Himalayas for the past several months.
- India has been building issue-based alliances with the US and Asian majors like Japan, Korea, Vietnam and Indonesia, and Australia.
- It has taken initiatives in the direction of economic de-coupling with China in the name of “atmanirbharata”.
Hierarchical Asian order with China at top
- China is not interested in equilibrium with any of its Asian neighbours, least of all with India.
- China’s efforts are clearly to build a hierarchical Asian order, with itself at the top.
- It is acutely conscious of India’s economic strength, military modernisation and overall capabilities.
- It knows that India is also far behind on these counts.
- China is ruthlessly resisting India’s access to global governance bodies, such as the UNSC and NSG.
- To keep India tied at that level, China is objecting to India’s growing strategic proximity to the US. I
- It is encircling India strategically and economically through its strategic and economic corridors — BCIM (Bangladesh, China, India and Myanmar), CPEC and the Trans-Himalayan Connectivity Network.
- It is raising issues like Kashmir at the UN and establishing footprints in the Indian Ocean.
What should India do
1. Adjust with China, at least tactically.
- Such an adjustment could be based on mutual give and take.
- For India, our first priority could be the resolution of the border dispute.
- Secondly, since China has offered to mediate between India and Pakistan, it should be asked to prevail over Pakistan to resolve the Kashmir issue.
- In return for these “takes” India could offer access to Chinese commercial cargos to sea, through the Nathula pass.
- India could also join China’s BRI on mutually acceptable terms.
- India may also show its willingness, at least tactically, to join CPEC as both Pakistan and China have asked for, provided, India is allowed to undertake projects in PoK and Balochistan.
2.India should revisit its Tibet policy, which is a core irritant for China.
Consider the question “China seeking to establish an Asian order with itself at the top comes in the way of India establishing strategic equilibrium with China. Comment.”
Conclusion
It is possible that this “give” and “take” may not be acceptable to China. Even if it does not work out as planned, India would have made a bold diplomatic initiative and a huge tactical move towards thinking through out-of-the-box solutions and displaying that it can undertake risks to pursue its long-term national interests.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Evolution of the idea of strategic autonomy
The article analyses the evolution of India’s approach to strategic autonomy from the unipolar world dominated by the U.S. to now when the Chinese threat has been looming large.
Context
- Addressing a Southeast Asian forum last week, external affairs minister outlined India’s new quest for “strategic autonomy” in its global economic engagement.
Connection with Atmanirbhar Bharat
- This new quest for “strategic autonomy” is the natural external complement to new economic strategy, described as “Atmanirbharata” or “self-reliance”.
- The concept carries so much ideological baggage, its revival by Government inevitably raised many questions
- Senior ministers and officials of the NDA government sought to reassure India’s partners that Delhi was not marching backwards.
- When applied to the foreign policy framework, “self-reliance” becomes “strategic autonomy”.
Evolution of the idea of strategic autonomy
- America towered over the world after the collapse of the Soviet Union in 1991.
- India’s past emphasis on strategic autonomy was in the context of the “unipolar moment” [dominated by the U.S.] that emerged after the Cold War.
- On the one hand, India needed Western capital as well as technology and better access to its markets.
- On the other hand, Delhi had to protect some of its core national interests from the threats of US intervention.
India-U.S. Relations: Evolution after the Cold war
- In the early 1990s, the Clinton Administration strong desire to resolve the Kashmir dispute between India and Pakistan.
- The Clinton Administration saw the nuclear and Kashmir disputes as one and the same thing.
- Indian diplomacy for the next two decades tried to change the US policy on both Kashmir and nuclear issues.
- Under President George W Bush, the US discarded the long-standing temptation to insert itself in the Kashmir dispute.
- The US also went out of the way to resolve the nuclear dispute with India by changing its domestic laws and international norms on nuclear proliferation.
- The Obama and Trump Administrations have stayed the course since then.
China challenge for India
- On the atomic front, as the US sought to lift the prolonged atomic blockade against India, China sought to block the process.
- China turned an obstacle to India’s membership of the Nuclear Suppliers Group.
- China takes up the Kashmir issue regularly in the United Nations Security Council.
- Today, India’s strategic autonomy is about coping with China’s challenge to India’s territorial integrity and sovereignty.
- China today is viewed in Delhi as a major threat to India’s economic development.
- The bilateral trade deficit reached nearly $55billion in 2019.
- India pulled out of an Asia-wide free-trade arrangement called the Regional Comprehensive Economic Partnership late last year, sensing the threat posed by China-led economic order.
- Ladakh aggression forced India to go from a passive commercial withdrawal to an active economic decoupling from China.
Way forward
- The logic of strategic autonomy from China nudges India to look for strong security partnerships with the US, Europe, Japan and Australia.
- On the economic front, India is exploring various forms of collaboration with a broad group of nations that have a shared interest in developing trustworthy global supply chains.
Consider the question “Delineate the evolution of India’s approach towards the idea of strategic autonomy. How it differs from the past?”
Conclusion
Threats to either territorial integrity or economic prosperity are powerful enough on their own to compel drastic changes in any nation’s policies. Coming together, they promise to make strategic autonomy from an assertive China an enduring theme of India’s economic and foreign policies in the years ahead.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSMEs
Mains level: Paper 3- MSMEs issues and opportunities
MSMEs in India has huge untapped potential. This article suggest the ways to tap it and make the MSMEs major contributor to India’s growth.
What is an issue with MSMEs
- Despite MSME contributing 20% of the GDP and employing about 110 million workers, we have failed to make bold policy-moves to make it more productive and competitive.
- MSMEs are not becoming ‘larger’ and more dynamic, with 99% of the estimated 60 million being micro-enterprises with limited aspirations.
- At the core of this lack of competitiveness is a structural issue.
Addressing the structural challenges
Size
- Consider India’s largest textile cluster vs Bangladesh’s largest.
- More than 70% of the units in Tirupur are micro-enterprises with less than 10 employees while only 20% of the units in Narayanganj in Bangladesh have less than 10 employees.
- This factor makes the cluster in Bangladesh more competitive and helping Bangladesh’s exports grow faster than India’s.
- Though Bangladesh has other advantages also, but this structural difference is critical.
Relation between size and productivity
- Productivity data from manufacturing MSMEs in OECD show that the productivity of medium firms (50-250 people) could be as much as 80-100% higher than that of micro firms (<9 employees).
- Growth in scale allows them to invest in people to improve skills, in better technology & processes, and in innovation.
- The most-competitive of them grow from their small beginnings to become world-beaters.
- This push to grow and improve capabilities and productivity is central to dynamism of any country’s industrial structure.
- This dynamism of micro-enterprises has been one of the less-reported policy levers behind China’s rise as an industrial powerhouse.
What stops MSMEs in India from growing?
- Our policy-legacy of highly restrictive asset-based definition which has only recently been relaxed, coupled with a mindset, and, policies, to support the ‘small is beautiful’ narrative.
- Overly complex regulatory regime doesn’t differentiate enterprises on their scale, other than the really tiny ones, in terms of compliance needs.
- For example, if a unit has more than six employees, the trade union law becomes applicable, If a unit has more than 10 employees, the Factories Act is applicable.
- Small enterprises thus face the same multitude of regulatory requirements as larger ones, and end up having compliance costs account for a higher percentage of revenue.
- For the tiny/micro units, there is simply no incentive to grow and enter the formal economy.
Policy intervention needed
1) Getting MSMEs into formal credit system
- To do this, we need to adopt an approaches that can help banks and NBFCs move away from asset-backed lending, towards some form of cash-flow-based lending.
- Small retailers are outside the formal credit system, unable to invest, modernise and grow, given they lack fixed ‘assets’.
- But, all of them are linked to, and sell, brands of well-known, large companies.
- If banks and NBFCs work with these companies and use anonymised data on sales and credit-performance to develop credit-scores for lending to them?
- Similar innovative ways could help cover other micro-unit segments.
2) Simplified tax and regulatory regime
- The second policy intervention needed is to de-average and implement a simplified tax and regulatory regime for MSMEs.
- This would also reduce the cost of compliance.
3) Development of digital platform
- The third intervention, appropriate for digital era, is to develop a comprehensive ‘digital platform’ for the sector.
- This will call for a mandatory, unique identifier for all.
- The platform will have to be linked to different relevant databases.
Consider the question “MSMEs in India continues to play an important role in India’s development yet it suffers from structural challenges which hinders it from fueling India’s growth. In light of this, examine the challenges MSMEs faces and suggest the policy interventions.”
Conclusion
As India launches the Atmanirbhar Bharat Abhiyan to reignite growth of the economy for a post-COVID world, building such a globally-competitive MSME has to become one of the initiative’s core pillars. Only then can our industry improve and sustain its global competitiveness.
Source-
https://www.financialexpress.com/opinion/the-missing-large-in-msmes-a-globally-competitive-indian-mittelstand-is-the-need-of-the-hour/2063155/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GST
Mains level: Paper 3- GST and its benefits to various stakeholders
The article analyses the instrumental role played by the GST in transforming nation into a single market dismantling the barriers across the states.
Reduced tax burden on consumers
- In the pre-GST era, the total of VAT, excise, CST and their cascading effect led to 31 per cent as tax payable, on an average, for a consumer.
- In its first two years, as the collections improved, the GST Council kept reducing the tax burden on consumers.
- Most items have been brought in the 18 per cent, 12 per cent or even 5 per cent category.
- Most items of daily common use are in the zero to 5 per cent slab.
- An analysis by the Reserve Bank of India (RBI) observes that since the roll out of GST, the rate changes have brought down the GST incidence from 14 per cent to 11.6 per cent.
- This explains the revenue loss stated above. The consumer pays less tax now under the GST.
Flexibility and increased compliance
- Taxation threshold for goods was increased to Rs 40 lakh.
- The composition limit was increased from Rs 75 lakh to Rs 1.5 crore.
- For manufacturers, composition tax rate was lowered from 2 per cent to 1 per cent.
- The composition scheme was extended to services as well.
- Special lower rates without Input Tax Credit (ITC) were prescribed for construction and restaurants.
- As per an RBI calculation, the weighted GST rate at present is 11.6 per cent.
- The revenue-neutral rate determined at the time of GST introduction by its own committee was 15.3 per cent.
Widened tax base
- Today, there are 1.2 crore GST assessees compared to 65 lakh at the time of introduction of the tax regime.
- The average revenue collected per month for the nine months (July-March) in 2017-18 was Rs 89,700 crore in 2018-19 it rose by 10 per cent to Rs 97,100 crore.
- In FY 2019-20, the revenue per month was Rs 1,02,000 crore.
- This steady increase was despite the various concessions and rate reductions mentioned above.
Simplification
- GST is an IT-enabled platform.
- Accounting and billing software is provided free to the small taxpayers.
- Those with nil return to file can do so with an SMS.
- Since the registration is completely online, the refund process is also fully automated.
- The Centre is the only refund disbursal authority and no physical interface is required.
Agriculture sector under GST
- Concessions are extended to the agriculture sector under GST, agricultural inputs such as fertilisers, machinery have seen a considerable reduction in rates.
- Other inputs such as cattle/poultry/aquatic feeds are kept at the nil rate.
- Agricultural produce such as vegetables, fruits, flowers and foodgrains are exempt from GST.
- Dairy products — milk, curd, lassi, buttermilk and minor forest produce such as lac, shellac and sisal leaves are also exempt.
- Silk cocoon, raw silk, wool, jute fibre are nil rated.
- In the pre-GST era, many of these were in the 5 per cent slab.
- Service inputs to agriculture are similarly treated.
- Before the introduction of GST, many such items were taxed at a standard rate of 15 per cent.
MSME under GST
- Micro, small and medium enterprises (MSMEs) have consistently received sensitive treatment under the GST regime.
- Items that have large employment creating activities, rough diamond/precious stone sorting and polishing for example, have seen a GST reduction from 3 per cent to 0.25 per cent.
- Services rendered by MSMEs have also received such sensitive treatment.
Concerns
- Tax reduction in some cases has led to an inversion of duty structure.
- Manufactured goods in lower slabs have suffered due to inversion in the duty structure.
- With lockdowns and consequential deferrals in tax payments, compensation payments to the states is a concern that the Council has taken cognisance of.
Consider the question “Elaborate on how the GST has been benefiting the various stakeholders and helped in transforming India into a single market?”
Conclusion
The states have shown maturity and understanding. The spirit of collective responsibility and statesman-like thinking have kept mutual trust and confidence high. The much talked about cooperative federalism is actually in action in the GST Council.
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Paper 2-Increasing the age of marriage for girls and implications
The article examines the issue of the age of marriage of girls and its relation with their education level and economic status.
Trends in early marriage
- The National Family Health Survey (NFHS-4) data 2015-16 points to certain trends in early marriages:
- That rural women are likely to marry earlier than their urban counterparts.
- The higher up a woman is on the wealth quintile, the later she marries.
- Most importantly, it establishes a direct causal link between education levels and delayed age of marriage.
- Women with 12 years or more of schooling are most likely to marry later.
- Only 8 per cent rural girls who drop out in the age group 6 to 17 years cite marriage as the reason.
Impact on STs and SCs
- According to the wealth quintile data, the poorest households are concentrated in rural India.
- The lowest quintile, which is most likely to marry off their girls early out of socio-economic necessities, have 45 per cent of the Scheduled Tribe (ST) and 25.9 per cent Scheduled castes.
- The NFHS-4 data on women aged 15-49 by number of years of schooling completed shows that 42 per cent ST women and 33 per cent SC women have received no schooling.
Issues
- Marriages in India are governed by various personal laws which set varying minimum ages for girls as also the Prohibition of Child Marriage Act (PCMA), 2006, where it is 18 years for girls and 21 for boys.
- This is compounded by The Protection of Children from Sexual Offences (POCSO) Act, 2012, that increased the age of consent, from 16 years to 18 years.
- Several studies have shown how this has criminalised self-arranged adolescent marriages as parents often misuse it to punish couples marrying without their approval, especially in cases of inter-caste marriages.
Way forward
- The National Human Rights Commission showed how higher education levels lead to a lower likelihood of women being married early and recommended that the Right to Education Act, 2009, be amended to make it applicable up to the age of 18 years.
- Noting the law’s patriarchal underpinnings, the 18th Law Commission report (2008) asked for uniformity in the age of marriage at 18 years for both men and women and lowering the age of consent to 16 years. Government could act on such a recommendation.
Consider the question “What are the advantages of increasing the minimum age of marriage for girls. Also, examine the issues with the move.
Conclusion
The median age at first marriage for both men and women in India has registered a significant decadal improvement with more people now marrying later than ever before. Any attempt to leapfrog through quick-fix and ill-conceived punitive measures will only considerably reverse these gains.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Naga peace process
The article analyses the issue of Naga peace process and the problem of identifying the stakeholders in the process.
Naga Polity and aspirations
- The Nagas family comprises over 25 tribes.
- Each of these is a proud owner and inheritor of a distinct culture, language, tradition and geography, supporting a distinct world view.
- However, many Nagas aspire to Naga unity, and they view those tribal loyalties as residues of a premodern past and an obstacle to Naga solidarity.
- Naga nationalism is connected with the idea Naga homeland that includes contiguous areas in a number of Northeastern states, and even parts of Myanmar.
“Unique history” formulation
- The source of the phrase can be traced back to a joint communiqué that NSCN-IM General Secretary Thuingaleng Muivah and former Home Secretary K Padmanabhaiah signed in Amsterdam on July 11, 2002.
- Meaning of the phrase “unique history” is not self-explanatory.
- Despite the lack of clarity, it is adopted by officials and political leaders intended to accept two things-
- (a) the characterisations long favoured by security bureaucrats of the Naga political struggle as a separatist insurgency or a terrorist movement that makes false claims to Naga unity, are inaccurate and
- (b) rejecting those labels [ such as separatist insurgency or terrorist movement] is a necessary condition for negotiations based on mutual respect.
- Those are significant achievements that should not be allowed to wither away.
Negotiating with NSCN-IM and issues with it
- NSCN-IM had declared the Shillong Accord of 1975 a sellout, and a betrayal of the Naga cause.
- But it emerged as a serious political force precisely because it stood for Naga unity.
- However, it is argued that NSCN-IM’s appeal is limited to the Tangkhul tribes of Manipur only.
Consider the question “The issues of identifying the stakeholders in the Naga peace process is at the root of the solution to the peace problem. Also, examine the other factors which make the resolution elusive. Suggest the measures to resolve the issue.”
Conclusion
That a more nuanced negotiating strategy is now emerging is a positive development. But the fundamental question about who all the stakeholders in the Naga conflict are, still needs a satisfactory answer, one that is based on an in-depth mapping of the conflict. Only then can we expect peaceful dialogue and patient negotiations to end the conflict and bring about a durable peace.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Increasing the age of marriage for girls
The article analyses the issues with objectives of increasing the age of marriage for girls.
Poverty of mother: Important factor
- Raising the age of marriage is the could be the way to improve the health and nutritional status of mothers and their infants.
- An article published in the journal The Lancet Child and Adolescent Health analyses data on stunting in children and thinness in mothers in the latest round of the National Family Health Survey 4 (2015-16).
- The authors examine the strength of the association between many different causal factors.
- As it turns out, the poverty of the mother plays the greatest role of all by far.
- Instead of early pregnancy causing malnourishment, they may both be the consequences of poverty.
- The best way to go about breaking such a cycle would be to pick the factors perpetuating it, it would be the poverty of the mother in this case.
Declining fertility rate in India
- India’s fertility rates have been declining to well below replacement levels in many States, including those with higher levels of child marriage.
- This could be the reason for the shift from fuelling fears about booming populations to expressing concern for the undernourishment of children.
- So, the problem of “populations explosion” is not the real problem as the demographic data suggests.
Concern
- The change in the marriage age will leave the vast majority of Indian women who marry before they are 21 without the legal protections.
Conclusion
The proposal and the objective to be achieved through raising the age of marriage needs reconsideration for the reasons cited above.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3-Areas to put work on to put India on the path of growth
The article suggests the three areas on which country should work on to make it resilient in the future. These three areas include the labour laws for informal employment, conditions of our cities and the strength of our rural economy.
Background
- The Prime Minister, while addressing the Confederation of Indian Industry (CII) annual meeting urged to think big and partner with the government in putting India on the path to growth.
- There is much that we can be achieved if government and industry work towards the same objective, and in a spirit of mutual trust.
Let’s look into some areas
1) Employment
- Over 85 per cent of employment in India is in the informal sector.
- The Centre for Monitoring the Indian Economy (CMIE) estimates that between mid-March and mid-April, 120 million people lost their jobs.
- With this unemployment rise to an all-time high of 27 per cent.
- There was reverse migration on an unprecedented scale — some 10 million people abandoned cities to return to their native villages.
- As economic activity has restarted in cities, CMIE reports that unemployment is now down to around 9 per cent.
3 Problems we must address
1) Need for labour regulation
- We have stringent labour laws to protect workers, but this covers only the 15 per cent formal sector employment.
- The 85 per cent of our workforce who are informally employed have almost no protection, and employers have almost complete flexibility.
- We need to address both the formal and informal labour spectrum to get the balance right between flexibility and protection for all labour.
Way forward
- Everyone must have a minimum level of protection, and every employer a minimum level of flexibility.
- This calls for a new social contract to define a well-calibrated social security system.
- This huge project demands good faith and strong leadership by industry, labour and government.
2) Living conditions of our cities
- We need a massive private home-building programme.
- It probably needs much more liberal land-use regulations — our cities have among the least generous floor-space indices (FSI) in the world.
- New York, Hong Kong, and Tokyo have an FSI five times Mumbai’s.
- Again, this is a multi-year project, and it involves state and city governments partnering with private developers.
- India is unique in having 70 per cent of our population still residing in rural areas.
- We must encourage the migration of people to higher productivity occupations in our cities.
- And we must ensure that clean, affordable and accessible housing is available for all in our cities.
3) Strength of our rural economy
- Reverse migration is also an opportunity to collaborate in spreading the geography of development.
- We need a three-pronged approach:
- 1) As Ashok Gulati has often argued, the easiest way to grow farmer incomes is by having them grow more value-added crops.
- Exports of fruits and vegetables must be consistently encouraged.
- The cultivation of palm plantations with potential for huge import substitution, we need corporate farming as the gestation period of seven years for the first crop is too much for the average farmer to handle.
- The Atmanirbhar agricultural reforms, which permit contract farming, and open up agricultural markets, are major medium-term reforms. Implemented right, they can transform agricultural markets.
- 2) We need to encourage agro-processing near the source.
- Fostering entrepreneurship in rural and semi-urban areas would combine nicely with local processing.
- 3) We need to invest even more massively in rural connectivity.
- Today, we would add digital connectivity to road connectivity to level the playing field for all regardless of where they live.
Consider the question “What are the vulnerabilities in our economic structure that were highlighted by the covid pandemic? Also suggest the measures to make our rural economy strong and resilient to such shocks.”
Conclusion
The task is huge, and only collaboration between all levels of government (Union, state, and city) and our dynamic private sector can hope to make substantial progress.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Women's right to parents' property
The Supreme Court in its latest judgement clarified that women’s right to their parents’ property is their birthright and clarified the air of confusion surrounding the issue due to previous judgements.
What was said in the judgement
- The judgement highlighted the patriarchal practices of the Mitakshra School of Hindu law — the guiding force of the Hindu Succession Act, 1956.
- It settled the confusion created by two of its own antagonistic judgments.
- In Prakash vs Phulawati (2016), it had ruled that the amendments to the Hindu Succession Act (2005) applied only to women whose parents were alive on September 9, 2005, the date of the notification of the act.
- In Danamma @ Suman Surpur vs Amar (2018) cases, it inferred that coparcenary rights were birthrights.
- The Supreme Court has now set forth the idea that coparcenary rights are birthrights free from limitations imposed by the dates of any legal notifications.
Issues that need to be addressed
1) Stree dhan issue
- Section 14 (1) of the Hindu Succession Act 1956 provides that women can acquire property as a full owner, and it can be carried over or retained post marriage as stree dhan.
- There are cases where the movable property may have been given to a daughter by her father as an intentionally undeclared and informal settlement between his descendants.
- At the same time, it is quite true that stree dhan over time gave way to the unethical and illegal practices of dowry.
- But the issue of stree dhan needs to be explained further in the light of this judgment.
- The ruling might impact dowry transactions that continue despite stringent anti-dowry laws.
2) Issues in claiming the right to property
- In the rural context, where most of the property is in the form of agricultural land claiming the property may not be easy.
- With patriarchy, it is doubtful if male heirs will share property-related documents, information.
3) Challenge of societal change
- On occasion, the law and courts may turn out to be progressive.
- However, we can not expect society to readily accede to progressive reforms.
- The challenge for economically dependent women in far-flung rural areas who are denied literacy, dignity and, sometimes, even a name and identity, in securing their rights is immense.
- In parts of Bihar, there are areas where women are still addressed by their village names or more commonly as someone’s wife.
Conclusion
Women are asserting their rights, both in conjugal and property matters. However, there are significant cultural, religious, educational barriers and caste and class inequalities that require a massive overhauling of social attitudes to overcome.
Back2Basics: Mitakshra School of Hindu law
- In the Mitakshara School, the allocation of parental property is based on the rule of possession by birth.
- Moreover, a man can leave his property in his will.
- The joint family property goes to the group known as coparceners.
- Ther are the people who belong to the next three generations.
- Hence, the joint family property by partition can be, at any time, converted into a separate property.
- Therefore in Mitakshara School, sons have an exclusive right by birth in the joint family property.
Coparcener
- Coparcenary is a term often used in matters related to the Hindu succession law, and coparcener is a term used for a person assumes a legal right in his ancestral property by birth.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issues with autonomy and graded autonomy
The article analyses the issues the graded with the graded autonomy to the Higher Education Institutes.
Background
- NEP 2020 provided for phasing out of the system of affiliated colleges and the grant of greater autonomy in academic, administrative and financial matters to premium colleges.
Concerns with the autonomy
- The move has raised concerns about the politico-bureaucratic interference in the internal functioning of universities.
- It has also raised concerns about the substantial burden on universities which have to regulate admissions, set curricula and conduct examinations for a large number of undergraduate colleges.
- Concerns have long existed about over-centralisation, due to constraints imposed on the potential for premium affiliated colleges to innovate and evolve.
- These apprehensions about the autonomy came to be used by successive governments to build a case for the model of graded autonomy.
The push towards graded autonomy
- Successive governments have pushed through measures that have largely allowed for greater penetration of private capital in higher education.
- Recommendations of recent education commissions have promoted the unequal structure of funding for higher education.
- Under this, hierarchy in higher education was created: Central government-funded universities, provincial Central government-funded universities, regional universities and colleges funded by State governments, etc.
- The National Knowledge Commission (2005) stated that good undergraduate colleges are constrained by their affiliated status… the problem is particularly acute for undergraduate colleges which are subjected to the ‘convoy problem’ as they are forced to move at the speed of the slowest.
- In turn, the dominant policy discourse vocally propagates “graded autonomy” for better performing Higher Educational Institutions.
- Under which academic excellence can be supported through a grant of special funds and allowing greater power to such institutions.
- This basis has been gradually enforced with the UGC in 2018 granting public-funded universities the right to apply for autonomy based on whether they are ranked among top 500 of reputed world rankings or have National Assessment and Accreditation (NAAC) scores above 3.26.
NEP 2020: Centralisation and autonomy
- NEP 2020 is a combination of enhanced centralising features and specific features of autonomy.
- Deeper centralisation is indicative in the constitution of the government nominated umbrella institution, Higher Education Council of India (HECI); Board of Governors, the National Education Commission etc.
Concerns
- The model of graded autonomy will encourage hierarchy that exists between different colleges within a public-funded university, and between different universities across the country.
- While the best colleges gain the autonomy to bring in their own rules and regulations, affiliated colleges with lower rankings and less than 3,000 students face the threat of mergers and even closure.
- A shrinking of the number of public-funded colleges will only further push out marginalised sections.
- Autonomy could lead to more inaccessibility as the independent rules and regulations of autonomous colleges and universities shall curtail transparent admission procedures.
- Graded autonomy can be expected to trigger a massive spurt in expensive self-financed courses as premium colleges, which will lead to exclusion.
Conclusion “Examine the issues with the autonomy of Higher Education Institutes in the NEP 2020.”
Conclusion
More than deliverance, autonomy represents the via media for greater privatisation and enhanced hierarchization in higher education.
Sources: https://www.thehindu.com/opinion/op-ed/privatisation-via-graded-autonomy/article32396753.ece
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MPC
Mains level: Paper 3- Role of the RBI and contradictions in its functions
Limitations and contradictions in the functioning of RBI
- The Reserve Bank of India, along with the monetary policy committee, has undertaken measures to address the fallout of the COVID-19 pandemic.
- Their actions are guided by multiple considerations — inflation and growth management, debt management and currency management.
- These multiple considerations have inadvertently exposed the limitations of and the inherent contradictions in the central banking framework in India.
Monetary policy functions
- The MPC is guided by the goal of maintaining inflation at 4 plus/minus 2 per cent.
- In its August policy, despite dire growth prospects, MPC chose to maintain the status quo.
- This decision was driven by elevated inflation i.e. above 4 plus/minus 2 per cent.
- This raises the question: At the current juncture, should the MPC be driven by growth considerations or should short-term inflation concerns dominate?
Understanding the nature of current inflation
- The current rise in inflation is driven by supply-chain dislocations owing to the lockdowns.
- This is evident from the growing disconnect between the wholesale and consumer price index.
- Since April, while WPI has been in negative territory, CPI has been elevated.
- The MPC’s mandate is to deliver stable inflation over long periods of time, not just a few months.
- Yet, it would appear as if it is more concerned about elevated inflation in the short run.
- Equally puzzling is the refusal of MPC to provide any firm projection of future inflation.
Manager of government debt
- As manager of the government debt, the RBI is tasked with ensuring that the government’s borrowing programme sails through smoothly.
- To this end, it has carried out several rounds of interventions popularly known as operation twist.
- in operation twist government RBI intended pushing down long-term Gsec yields, and exerting upward pressure on short-term yields as a consequence.
- In doing so, the RBI ended up doing exactly the opposite of what the MPC was trying to achieve by cutting short term rates, well before it reached the lower limit of its conventional policy response.
3) RBI’s intervention in currency markets
- The RBI’s interventions in the currency market have constrained its ability to carry out open market operations as these would have led to further liquidity injections into the system.
- Put differently, its debt management functions have run up against its currency management functions.
- Underlining the complexity of all this is the talk of sterilisation — the opposite of injecting liquidity in the system.
Consider the question “RBI’s functions at the current juncture suffers from contradicting functions. Examine such contradictions in its role and suggest the ways to avoid such contradictions.”
Conclusion
The central bank must develop a clear strategy on what to do. At this juncture, there is a strong argument to look past the current spurt in inflation, and test the limits of both conventional and unconventional monetary policy. At the other end, while it may want to intervene to prevent the rupee’s appreciation, in doing so, it is constricting its debt management functions which will have its own set of consequences. There are no easy answers.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- People's right to know
This article analyses the importance of peoples’ right to know and instrumental role judiciary played in harmonising it with the Official Secrets Act 1923.
Context
- A High Level Committee (HLC) chaired by a retired judge of the Gauhati High Court was constituted by the Home Ministry through a gazette notification.
- Its mandate was, among others, to recommend measures to implement Clause 6 of the Assam Accord and define “Assamese People”.
- The HLC finalised its report by mid-February 2020 and submitted it to the Assam Chief Minister and through him to the Central government.
- With the Central government apparently “sitting idle” over the report, the All Assam Students’ Union (AASU), which was represented in the HLC, released the report.
The right to know
- The right to know was recognised nearly 50 years ago and is the foundational basis or the direct emanation for the right to information.
- In State of U.P. v. Raj Narain (1975), the Supreme Court carved out a class of documents that demand protection even though their contents may not be damaging to the national interest.
- Court held that “the people of this country are entitled to know the particulars of every public transaction in all its bearing”.
- This view was endorsed in S.P. Gupta v. President of India (1981) and a few other decisions.
- In Yashwant Sinha v. Central Bureau of Investigation (2019), the Supreme Court referred to the decision of the U.S. Supreme Court in New York Times v. United States (1971) wherein court declined to recognise the right of the government to restrain publication of the Pentagon Papers.
- Our Supreme Court held that a review petition based on three documents published by The Hindu was maintainable since the provisions of the Official Secrets Act, 1923 had not been violated.
- The SC held that there is no provision by which Parliament had vested power in the government either to restrain the publication of documents marked as secret or from placing such documents before a court.
- Section 8(2) of the Right to Information Act, 2005 provides that a citizen can get a certified copy of a document even if the matter pertains to security or relationship with a foreign nation if a case is made out.
- Therefore, it is clear that the right to know can be curtailed only in limited circumstances and if there is an overriding public interest.
Consider the question “Analyse the importance of citizens’ right to know and how the judiciary harmonised the peoples right to know with the Official Secrets Act 1923? “
Conclusion
We must keep in mind observation made by the Supreme Court in S.P. Gupta: “If secrecy were to be observed in the functioning of government and the processes of government were to be kept hidden from public scrutiny, it would tend to promote and encourage oppression, corruption and misuse or abuse of authority, for it would all be shrouded in the veil of secrecy without any public accountability.”
B2BASICS
Official secrets act
- OSA has its roots in the British colonial era and was originally known as The Indian Official Secrets Act (Act XIV), 1889.
- The act was primarily mandated to gag the voice of a large number of newspapers that came up in several languages, and were opposing the Raj’s policies, building political consciousness and facing police crackdowns and prison terms.
- The act was amended and made more stringent in the form of The Indian Official Secrets Act, 1904, during Lord Curzon’s tenure as Viceroy of India.
- In 1923, a newer version was notified. The Indian Official Secrets Act (Act No XIX of 1923) was extended to all matters of secrecy and confidentiality in governance in the country.
- It was further amended after India got independence in 1951 and 1967. The act in its present form deals with two aspects — spying or espionage and disclosure of other secret information of the government.
- Secret information can be any official code, password, sketch, plan, model, article, note, document or information. Under the act both the person communicating the information, and the person receiving the information, can be punished.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Threat to sovereignty of the Arab countries and India's role
The article analyses the threat the Arab countries faces from the new geopolitical realignment and India’s role in it.
Geopolitical realignment in the middle east
- Agreement on the normalisation of relations between the United Arab Emirates and Israel was signed recently.
- At the same time, there is an equally significant reorientation of the Subcontinent’s relationship with the region.
- This is marked by Pakistan’s alignment with non-Arab powers.
Deteriorating relation of Pakistan with Arab world
- Pakistan has been angry with UAE’s invitation to India to address the Organisation of Islamic Cooperation in early 2019.
- Saudi Arabia’s reluctance to convene a meeting to condemn Indian actions in Kashmir last August has angered Pakistan.
- While Pakistan appears to be dreaming of a new regional alliance with Turkey and Iran.
- Pakistan is also betting that a rising China and an assertive Russia will both support this new geopolitical formation as part of their own efforts to oust America from the Middle East.
Threat to the Arab world
- Saudis and Emiratis see sharpening existential threats to their kingdoms from both Turkey and Iran.
- Both Turkey and Iran now intervene with impunity in the internal affairs of the Arab world.
- Two other states have joined this Great Game.
- Malaysia’s Mahathir fancied himself as a leader of the Islamic world.
- Arab Qatar, which is locked in a fraternal fight with the Saudis and the Emiratis, wants to carve out an outsized role for itself in the Middle East.
India’s should follow five principles for Arab Sovereignty
- 1) India must resist the temptation of telling the Arabs what is good for them.
- India should support their efforts to reconcile with non-Arab neighbours, including Israel, Turkey and Iran.
- 2) Oppose foreign interventions in the Arab world. In the past, those came from the West and Israel.
- Today, most Arabs see the greatest threat to their security from Turkish and Iranian interventions.
- 3) Extend support to Arab economic integration, intra-Arab political reconciliation and the strengthening of regional institutions.
- 4) Recognise that India’s geopolitical interests are in close alignment with those in the moderate Arab Centre — including Egypt, Jordan, Saudi Arabia, the UAE and Oman.
- 5) India can’t be passive amidst the unfolding geopolitical realignment in West Asia.
- Some members of the incipient alliance — Turkey, Malaysia and China — have been the most vocal in challenging India’s territorial sovereignty in Kashmir.
Consider the question “Examine the importance of India’s relations with Arab countries. What are the threats the region faces to their sovereignty and how India can play an important role to ensure their sovereignty.”
Conclusion
Standing up for Arab sovereignty and opposing the forces of regional destabilisation must be at the very heart of India’s new engagement with the Middle East.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 239AA and Article 239AB
Mains level: Paper 2- Conflict between Lt. Governor and the Delhi Government
The article analyses the tussle between the Delhi Government and the Lt. Governor.
What the 2018 SC judgement was about
- The Supreme Court in Government of NCT of Delhi vs. Union of India (2018) decided on the conflicts between the government of NCT and the Union Government and its representative, the Lieutenant Governor.
- It reminds the Lt. Governor what his real functions are.
- It tells the State government that it should remember that Delhi is a special category Union Territory.
- It lays down the parameters to enabling the harmonious functioning of the government and the Lt. Governor.
- It did not very clearly delineate the issues in respect of which the Lt. Governor can refer a decision taken by the Council of Ministers to the President in the event of a difference of opinion between the Lt. Governor and the State government.
Settled issues and clarifications
- The Supreme Court affirming that the Lt. Governor is bound to act on the aid and advice of council of ministers except in respect of ‘Land’, ‘Public Order’ and the ‘Police’.
- The Court has also made it clear that there is no requirement of the concurrence of the Lt. Governor and that he has no power to overrule the decisions of the State government.
- However, Article 239AA (4) (proviso) which says that in the case of a difference of opinion between the Lt. Governor and his Ministers on any matter, the Lt. Governor shall refer it to the President for decision and act according to that decision.
- If the Lt. Governor thinks that the matter is urgent he can take immediate action on his own.
How Article 239 AA(4) matters
- Lt. Governor can frustrate the efforts of the government, by declaring that there is a difference of opinion on any issue and refer it to the President.
- Refering matter to the President in reality means the Union Home Ministry.
- The Lt. Governor being its representative, it is easier for him to secure a decision in his favour.
- The State government will be totally helpless in such a situation.
- The recent appointment of prosecutors for conducting the Delhi riot cases in the High Court is a case in point.
- When the government decided to appoint them, the Lt. Governor referred it under proviso to Article 239AA (4) to the President stating that there is a difference of opinion.
- This episode clearly points to the fault lines which still exist in the power equations in the capital’s administrative structure.
But, can Lt. Governor refer routine administrative matter to the President?
- A close reading of the Supreme Court judgment in the NCT Delhi case (supra) would reveal that he cannot.
- The Supreme Court says “The words ‘any matter’ employed in the proviso to Article 239AA (4) cannot be inferred to mean ‘every matter’.
- Court also says that “The power of the Lieutenant Governor under the said proviso represents the exception and not the general rule”.
- The President is the highest Constitutional authority and his decision should be sought only on constitutionally important issues.
Executive powers and legislative powers
- Parliament can legislate for Delhi on any matter in the State List and the Concurrent List.
- But the executive power in relation to Delhi except the ‘Police’, ‘Land’ and ‘Public Orders’ vests only in the State government headed by the Chief Minister.
- The executive power of the Union does not extend to any of the matters which come within the jurisdiction of the Delhi Assembly.
- The only occasion when the Union Government can overrule the decision of the State government is when the Lt. Governor refers a matter to the President under the proviso to clause (4).
Consider the question “What are the parameters laid down by the Supreme Court in the Government of NCT of Delhi vs. Union of India (2018) to avoid the conflict between Lt. Governor and the Delhi Government? Also examine the scope of referring any matter to the consideration of the President by the Lt. Governor.”
Conclusion
In the Constitutional scheme adopted for the NCT of Delhi Lt. Governor should not emerge as an adversary having a hostile attitude towards the Council of Ministers of Delhi; rather, he should act as a facilitator.
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