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Type: op-ed snap

  • Tax Reforms

    Taxing cryptocurrency transactions

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Taxing cryptocurrencies

    Context

    Notwithstanding the eventual introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill in Parliament, cryptocurrencies continue to proliferate.

    Provisions in Income Tax Act 1961 to tax cryptocurrencies

    • Cryptocurrencies not mentioned in Income Tax Act, 1961: Although the Income Tax Act, 1961 (“IT Act”) does not specifically mention cryptocurrencies, it does cast a wide enough net to bring crypto transactions under its ambit.
    • Capital asset: Trading in cryptocurrency may be classified as transfer of a ‘capital asset’, taxable under the head ‘capital gains.
    • Business income: If such cryptocurrencies are held as stock-in trade and the taxpayer is trading in them frequently, the same will attract tax under the head ‘business income’.
    • Even if one argues that crypto transactions do not fall under the above heads, Section 56 of the IT Act shall come into play, making them taxable under the head ‘Other sources of income’.

    Challenges in taxing cryptocurrencies

    • The above provisions in themselves are not sufficient in order to put in place a simple yet effective taxation regime for cryptocurrencies.

    [1] Varied interpretations:

    • First, the absence of explicit tax provisions has led to uncertainty and varied interpretations being adopted in relation to mode of computation, applicable tax head and tax rates, loss and carry forward, etc.
    • For instance, the head of income under which trading of self generated cryptocurrency (currencies which are created by mining, acquired by air drop, etc.) is to be taxed is unclear.
    • Since there is no consistency in the rates provided by the crypto-exchanges, it is difficult to arrive at a fair market value.
    • Similarly, when a person receives cryptocurrency as payment for rendering goods or services, how should one arrive at the value of the said currency and how should such a transaction be taxed?

    [2] Identifying tax jurisdiction

    • It is often tricky to identify the tax jurisdiction for crypto transactions as taxpayers may have engaged in multiple transfers across various countries and the cryptocurrencies may have been stored in online wallets, on servers outside India.

    [3] The anonymity of taxpayer

    • The identities of taxpayers who transact with cryptocurrencies remain anonymous.
    • Exploiting this, tax evaders have been using crypto transactions to park their black money abroad and fund criminal activities, terrorism, etc.

    [4] Lack of third party information on crypto transaction

    • The lack of third party information on crypto transactions makes it difficult to scrutinise and identify instances of tax evasion.
    • One of the most efficient enforcement tools in the hands of Income Tax Department is CASS or ‘computer aided scrutiny selection’ of assessments, where returns of taxpayers are selected inter alia based on information gathered from third party intermediaries such as banks.
    • However, crypto-market intermediaries like the exchanges, wallet providers, network operators, miners, administrators are unregulated and collecting information from them is very difficult.

    [5]  Physical goods/services may change hand in return for cryptocurrencies

    • Even if the crypto-market intermediaries are regulated and follow Know Your Customer (KYC) norms, there remains a scenario, where physical cash or other goods/services may change hands in return for cryptocurrencies.
    • Such transactions are hard to trace and only voluntary disclosures from the parties involved or a search/survey operation may reveal the tax evaders.

    Steps need to be taken

    • Statutory provision: The income-tax laws pertaining to the crypto transactions need to be made clear by incorporating detailed statutory provisions.
    • Awareness generation: This should be followed by extensive awareness generation among the taxpayers regarding the same.
    • Separate mandatory disclosure: The practice of having separate mandatory disclosure requirements in tax returns (as is the case in the United States) should be placed on the taxpayers as well as all the intermediaries involved, so that crypto transactions do not go unreported.
    • Strengthen international legal framework: Additionally, the existing international legal framework for exchange of information should be strengthened to enable collecting and sharing of information on crypto-transactions.
    • This will go a long way in linking the digital profiles of cryptocurrency holders with their real identities.
    • Training tax officers: the Government must impart training to its officers in blockchain technology.
    • The United Nations Office on Drugs and Crime’s ‘Cybercrime and Anti-Money Laundering’ Section (UNODC CMLS) has developed a unique cryptocurrency training module, which can aid in equipping tax officers with requisite understanding of the underlying technologies.

    Consider the question “What are the provision in Income Tax Act 1961 to tax the cryptocurrencies? What are the challenges in taxing cryptocurrencies? “

    Conclusion

    It is certain that cryptocurrencies are here to stay. A streamlined tax regime will be essential in the formulation of a clear, constructive and adaptive regulatory environment for cryptocurrencies.

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  • Indian Army Updates

    How women cadets benefit the army

    op-ed snap | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Women in Indian army

    Context

    Last year, the Supreme Court threw open the hallowed portals of the National Defence Academy for women. Something to truly celebrate on January 15, Army Day, this year.

    Background

    • The first batch of women officers was inducted into the Indian Army in non-medical roles via the Short Service Commission in 1992.
    • Since 2008, women were inducted as permanent commissioned officers in the legal and education corps  and as permanent commissioned officers in eight more non-combative corps in 2020.

    The low number of women in Army

    • As recent as 2020, women officers in the Indian army (excluding the medical corps) numbered just about three per cent.
    • Compare this to 16 per cent in the US, 15 per cent in France and 10 per cent in both Russia and the UK.

    Significance of allowing women to NDA

    • When in February 2020, the Supreme Court decreed that women officers should get command positions on par with male officers, it also effectively dismissed the military’s earlier objection that it would lead to “operational, practical and cultural problems”.
    • The SC went on to say that denying women commands based on the above argument was discriminatory and reinforced stereotypes.
    • Last year, the Supreme Court threw open the National Defence Academy for women to compete for the seats and subsequent permanent commission in the Indian army in any corps they desire, including the combat ones.
    • Addressing the shortage of officers: This may effectively address the long-standing shortage of officers in the Indian army in general. In response to a question in Rajya Sabha a month ago, the Minister of State for Defence said the Army has a shortage of 7,476 officers.
    • This torch may also help confront the chauvinism, often misspelt as chivalry, that indisputably exists in the Army.

    Conclusion

    The move promises to change the composition of this arm of the defence force not just quantitatively, but also qualitatively — both dire requirements of the force at present.

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    Back2Basics: Permanent Commission (PC) Vs. Short Service Commission (SSC)

    • SSC means an officer’s career will be of a limited period in the Indian Armed Forces whereas a PC means they shall continue to serve in the Indian Armed Forces, till they retire.
    • The officers inducted through the SSC usually serve for a period of 14 years.
    • At the end of 10 years, the officers have three options.
    • A PC entitles an officer to serve in the Navy till he/she retires unlike SSC, which is currently for 10 years and can be extended by four more years, or a total of 14 years.
    • They can either select for a PC or opt-out or have the option of a 4-years extension.
    • They can resign at any time during this period of 4 years extension.

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  • Minimum Support Prices for Agricultural Produce

    MSP is necessary to make farming viable

    op-ed snap | Agriculture | Mains Paper 3: Issues Related To Farm Subsidies & Msp

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MSP

    Mains level: Paper 3- Making farming viable through legal MSP

    Context

    There has been debate on the issue of MSP with some arguing against it while some favouring it.

    The issues with MSP

    • The broad strands of argument against MSP are:
    • MSP hinders the price discovery: Providing MSP does not allow the market to discover the prices; if market cleared prices are less than MSP, then the only buyer would be the government; this would render the government bankrupt.
    • FPO as a mechanism to deal with markets: If markets have any distortions, the way to negotiate it is through Farmer Producer Organisations (FPOs) — as demonstrated by Amul.
    • Provide income support through DBT: A better way to address the possible income gap is to give an income support-based direct benefit transfer (DBT).

    Why MSP is necessary?

    1] Barriers in agri-markets

    • Through tariffs and other measures, we have built a national barrier on markets, where gates are opened on the basis of strategic intent.
    • If we were to open our borders for free movement of grains from elsewhere, we may even argue for unlocking agricultural land for more lucrative purposes without worrying about food self-sufficiency, buffer stocking and domestic food safety.
    • We may have to accept a national food safety for at least the essential foodgrains and pulses.

    2] Role of MSP as price signalling and why it needs to be given as legal guarantee

    • Disproportionate risk: If we were to look at farming, we realise that this exposes itself to disproportionate risks. 
    •  First, there is no stop-loss mechanism after sowing the seed, except for destroying the crop for the season.
    • This enterprise not only has the usual business risks but also has the enhanced risk of the force majeure elements that destroy the enterprise — a sudden hail storm, drought, unseasonal showers, a pest attack, a locust attack — there are too many things that the farmer cannot control.
    • Therefore, an MSP provides a powerful signal to the farmer to exercise the choice of sowing a particular crop because the farmer can back-calculate the expected margin.
    •  If MSP is a signal that helps the farmer to choose a crop, then it must remain a choice at the harvest time as well.
    • The significance of MSP is only when the markets do not clear the price.
    • In such a situation, the farmer gets a return less than the MSP and by this argument we are escorting the farm fraternity towards bankruptcy.
    • A legal guarantee is, therefore, needed.
    • The argument that the state will have to procure all the floating stock in the market and may become bankrupt is fallacious.
    • The intervention of the state in the markets usually covers information asymmetry, arbitrage and cools the markets when they get overheated.

    3] Why not opt for income support instead of MSP?

    •  Income support does not address the issue of viability of the farming operations.
    • There is no doubt that we need to make farming viable.
    •  It is important to address the prices of each crop as a strategic signalling mechanism: For crops that would be encouraged and those that would be discouraged.

    4] Issues with drawing parallels with AMUL

    •  While the Amul model recognised the inherent power of markets, it took about five decades to make the system competitive — the investments were made in breed improvement, free veterinary services, better cattle feed, capital subsidy for processing plants, and return-free capital as investments.
    • The nature of subsidies was smart and innovative.
    • Dairying was the last bit to be liberalised, and it enjoyed protection even when we opened up in 1991.

    Way forward

    • Modernise the markets: We need to modernise the markets and storage and processing facilities.
    • There is no point in conflating modernisation with liberalisation.
    • Investment: If we need to take Indian agriculture on the path of Amul, we need to start making those investments now.

    Consider the question “What are the objectives of providing MSP? How legal basis to MSP could help in making agriculture viable in India?”

    Conclusion

    Let us use the MSP framework smartly on diversified crops, on a decentralised basis while we develop the markets. A legal guarantee will only assure the farmers that they will not be bankrupted.

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  • Foreign Policy Watch: India-China

    The Indo-Pacific opportunity

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: AUKUS

    Mains level: Paper 2- Indo-Pacific challenge

    Context

    The geopolitics of the Indo-Pacific, which is changing fast. As it moves into 2022, the region will carry the imprint of the past five years, and will have to chart a course through inter-state tensions and crises, using both diplomacy and military preparedness.

    What will shape the geopolitics and geoeconomics of the Indo-Pacific?

    • Key players in the region: The region is central to world economy and peace, and nine countries are key players: the US, China, Japan, India, Germany, the UK, Russia, Australia and France.
    • The geopolitics and geo-economics of the Indo-Pacific will be largely shaped by the interplay of relations among these nations.
    • US-China relations: Of paramount importance is the US-China equation.
    • Expect this relationship to be marked by continually adversarial, competitive and cooperative traits.
    • Beijing’s south/east China policy, aggressive postures towards Taiwan, human rights violations in Xinjiang, the subjugation of Hong Kong’s citizenry and assertive economic outreach in the Indo-Pacific — these will weigh heavily on US-China relations.

    A significant role of groupings and individual nations

    • In this standoff, the role of new groupings and individual nations is significant.
    • Role of Quad: Foremost are the Quad, a strategic partnership between the US, India, Japan and Australia and the militaristic AUKUS (Australia, UK, US). 
    • India-Australia ties: Meanwhile, India and Australia are on track to deepen ties, not only bilaterally but also with the other two Quad powers.
    • The next Quad summit, probably hosted by Japan, will cement the grouping.
    • EU’s role: The EU’s Indo-Pacific strategy, announced last September, aims at increasing its economic and security profile in, and linkages with, the region.
    • UK’s role: Only by being more strategic and less mercantilist, more candid and assertive with China, and more cooperative with partners such as India, can the EU — and its former member the UK — hope to become vital players in the Indo-Pacific.
    • ASEAN, located in the middle of the Indo-Pacific waters, faces the heat of China’s aggression and the sharpening great power rivalry.
    •  It must enhance its realism and shed its tendency of wishing away problems.

    Suggestions for India

    • 1]Strengthen the Quad – especially by ensuring that the grouping fulfils its commitment to deliver at least one billion vaccine doses to Indo-Pacific nations by December 2022.
    • India must protect its established relationship with Russia, and show some resilience in dialogue with Beijing.
    • 2] Enhance relations with ASEAN nations: It must enhance cooperation with key Southeast Asian partners —Indonesia, Vietnam, Philippines and Thailand — while humouring ASEAN as a grouping.
    • 3] Give attention to African and Indian Ocean island states: The eastern and southern planks of Africa and the Indian Ocean island states need continued high policy attention and financial resources.
    • A clear economic and trade agenda to follow the flag in this vital region, is certain to yield long-term dividends.

    Consider the question “Indo-Pacific will present India strategic and economic opportunities that India must not miss. However, the region will have to chart a course through inter-state tensions and crises. Comment.”

    Conclusion

    India has done well by fulfilling its humanitarian duties during the pandemic. Learning how to convert them smartly into economic and strategic opportunities in its periphery is the focused task for the nation in 2022.

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  • Foreign Policy Watch: India-ASEAN

    China does not have it all its way in the South China Sea

    op-ed snap | International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Countries involve in South China sea dispute

    Mains level: Paper 2- South China sea issue

    Context

    South-East Asian countries are increasingly wary of their giant neighbour.

    Background of dispute

    • Disputes in the South China Sea go back decades.
    • But it was only ten years ago that China, which makes maritime claims for nearly the whole sea, greatly upped the ante.
    • Countries involved: They involve Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam, all with contesting claims.
    • China provoked a stand-off that left it in control of an uninhabited atoll, Scarborough Shoal, which under un maritime law clearly belongs to the Philippines.
    • Then China launched a massive terraforming exercise, turning reefs and rocks into artificial islands hosting airstrips and bases.

    China’s strong-arm tactics

    • China’s long-term aim is to project Chinese power deep into the South China Sea and beyond, and to hold the Americans away during any conflict.
    • The immediate aim, though, is to dominate politically and economically as much as militarily.
    • China has challenged oil-and-gas activity by both Indonesia and Malaysia, and sent drilling rigs to both countries’ eezs and continental shelves.
    • It has bullied foreign energy companies into dropping joint development with Vietnam and others.

    Implications

    • China has paid a diplomatic price.
    • Impact on relations with ASEAN: Had Mr Xi engaged in none of the terraforming and bullying, China would be better admired among members of the ten-country Association of South-East Asian Nations (ASEAN).
    • Naval presence of the US: The United States and its Western allies have upped their naval presence in the sea, welcomed by most ASEAN members.

    Negotiation on Code of conduct on South China Sea

    • For years China dragged its feet on agreeing with ASEAN a code of conduct on the South China Sea, a principle agreed on 20 years ago in order to promote co-operation and reduce tensions.
    • These days, China likes to play willing.
    • China is demanding, in effect, the right of veto over ASEAN members’ naval exercises with foreign powers.
    • It also wants to keep out foreigners from joint oil-and-gas development.
    • Such demands are unacceptable to members.

    Conclusion

    Despite China’s efforts to establish its wild claims of sovereignty, China has been facing sustained resistance from the ASEAN countries.

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  • A new form of socialism powered by cooperative economic enterprises is required

    op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Need for democratic socialism based on cooperative economic enterprises

    Context

    Inequalities of wealth have increased around the world and India is becoming one of the world’s most unequal countries.

    Role of globalisation and privatisation in increasing economic distress

    • Economic despair is feeding the rise of authoritarianism, nationalism, and identity politics.
    • Role of Globalisation: Opening national borders to free trade became an ideology in economics in the last 30 years.
    • Taxes of incomes and wealth at the top were also reduced.
    • The ideological justification was that the animal spirits of ‘wealth creators’ must not be dampened.
    • With higher taxes until the 1970s, the U.S. and many countries in Europe had built up their public health and education infrastructure and strengthened social security systems.
    • The rich are now being taxed much less than they were.
    • The pie has grown larger but the richest few have been eating, and hoarding, most of it themselves.
    • Role of privatisation: ‘Privatisation’ of everything became another ideological imperative in economics by the turn of the century.
    • Selling off public enterprises raises resources for funds-starved governments.
    • Another justification is efficiency in delivery of services, setting aside ethical questions of equity.
    • When ‘public’ is converted to ‘private’, rich people can buy what they need.
    • The gaps between the haves and the have-nots become larger.

    How liberal economic policies are creating illiberal societies

    • Liberal economists, promoting free markets, free trade, and privatisation, are worried by nationalism and authoritarian governments.
    • They rail against “populist” policies of governments that subsidise the poor and adopt industrial strategies for self-reliance and jobs for their citizens.
    • Liberals must re-examine their ideas of economics, to understand their own culpability in creating authoritarian and identitarian politics.

    The failure of capitalism and communism

    • While communism had lifted living standards, and the health and education of masses of poorer people faster than capitalism could, communism’s solution to the “property” question — that there should be no private property — was a failure.
    • It deprived people of personal liberties.
    • Capitalism’s solution to the property problem — replacing all publicly owned enterprises with privately owned ones (and reducing taxes on wealth and high incomes) has not worked either.
    • It has denied many of their basic human needs of health, education and social security, and equal opportunities for their children.
    • The private property solution has also harmed the natural environment.

    Way forward

    • Climate change and political rumblings around the world are both warnings that capitalism needs reform.
    • Economic policies must be based on new ideas.
    • Thought leaders and policymakers in India must lead the world out of the rut of ideas in which it seems to be trapped.
    • Principles of human rights must not be overpowered by property rights.
    • A new form of “Gandhian” democratic socialism, powered by cooperative economic enterprises, is required in the 21st century, to create wealth at the bottom, not only at the top, and save humanity and the planet.

    Conclusion

    A new form of ‘Gandhian’ democratic socialism powered by cooperative economic enterprises is required.

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  • Freedom of Speech – Defamation, Sedition, etc.

    How to deal with hate speech

    op-ed snap | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters,Parliament & State Legislatures

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Dealing with hate speech

    Context

    On January 12, 2022 , the Supreme Court of India agreed to hear petitions asking for legal action to be taken against the organisers of, and speakers at, the “Hardwar Dharma Sansad”.

    What constitutes hate speech

    • Hate speech is speech that targets people based on their identity, and calls for violence or discrimination against people because of their identity.
    • There is an absence of any legal or social consensus around what constitutes “hate speech.”
    • As societies around the world have long understood, the harm in hate speech is not restricted to direct and proximate calls to violence.
    • Inciting discrimination is part of hate speech: Hate speech works in more insidious ways, creating a climate that strengthens existing prejudices and entrenches already-existing discrimination.
    • This is why – with the exception of the United States of America – most societies define hate speech in terms of both inciting violence, but also, inciting discrimination.

    Challenges in dealing with hate speech

    • Legal challenge: Our laws – as they stand – are unequipped to deal with the challenges of hate speech.
    • The laws commonly invoked in such cases are section 295A of the Indian Penal Code (blasphemy) and section 153A of the Indian Penal Code (creating enmity between classes of people).
    • Hate speech will not always be self-evident: Hate speech, by its very nature, will not always trumpet itself to be hate speech.
    • Rather, it will often assume plausible deniability – as has been seen in the Hardwar case, where statements, worded with the right degree of ambiguity, are now being defended as calls to self-defence rather than calls to violence.
    • Any comprehensive understanding of hate speech is a matter of judgment, and must take into account its ambiguous and slippery nature.
    • Lack of social consensus against hate speech: No matter how precise and how definite we try to make our concept of hate speech, it will inevitably reflect individual judgment. 
    • If, therefore, social and legal norms against hate speech are to be implemented without descending into pure subjectivity, what is needed – first – is a social consensus about what kind of speech is beyond the pale.
    •  In Europe, for example, holocaust denial is an offence – and is enforced with a degree of success – precisely because there is a pre-existing social consensus about the moral abhorrence of the holocaust.

    Conclusion

    Achieving this social consensus is an immense task, and will require both consistent legal implementation over time, but also daily conversations that we, as a society need to have among ourselves.

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  • How the Seventh Schedule affects delivery of public goods

    op-ed snap | Polity | Mains Paper 2: Federalism,Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 246

    Mains level: Paper 2- Need for review of the Seventh Schedule

    Context

    Without delegation of funds, functions and functionaries, local governments are unable to respond to pressure from citizens who demand greater efficiency.

    Background of the Seventh Schedule

    •  Article 246 of the Constitution mentions three lists in the Seventh Schedule — union, state and concurrent lists.
    • The present Seventh Schedule and union (at that time Federal) list, state (at that time Provincial) list and concurrent lists are inherited from that 1935 piece of legislation.
    • It states that “Notwithstanding anything in the two next succeeding subsections, the Federal Legislature has, and a Provincial Legislature has not, power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to this Act.”

    Delivery of public goods

    • Ignoring that narrow and technical definition of public good, loosely, we understand “public good” as something that must be delivered by the government.
    • It cannot, or should not, be delivered by the private sector.
    • Notwithstanding the use of private security guards, most people will agree “law and order” is a public good.
    • Most public goods people will think of are efficiently delivered at the local government level, not Union or state level.
    •  There is a Seventh Schedule issue that is thus linked to the insertion of a local body list.
    • Countervailing pressure by citizens increasingly demands efficient delivery of such public goods.
    • But without delegation of funds, functions and functionaries, presently left to the whims of state governments, local governments are unable to respond.

    Need for the review of the Seventh Schedule Lists

    • No local body list: Most public goods people will think of are efficiently delivered at the local government level, not Union or state level.
    • There is a Seventh Schedule issue that is thus linked to the insertion of a local body list.
    •  But without delegation of funds, functions and functionaries, presently left to the whims of state governments, local governments are unable to respond.
    • The Rajamannar Committee — formally known as Centre-State Relations Inquiry Committee suggested constitution of a High Power Commission to examine the entries of Lists I and III in the Seventh Schedule to the Constitution and suggest redistribution of the entries,”.
    • Changes in the past led to greater centralisation: Items have moved from the state list to the concurrent list and from the concurrent list to the union list.
    • Such limited movements have reflected greater centralisation, such as in 1976.
    •  N K Singh, Chairman of 15th Finance Commission has also often made this point, in addition to scrutiny of Article 282.

    Conclusion

    For the sake of better governance, it’s not an issue that should be ducked and the basic structure doctrine doesn’t stand in the way.

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  • Electoral Reforms In India

    Need to recast the selection process of the ECs

    op-ed snap | Polity | Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 324

    Mains level: Paper 2- Need to change the selection process of Election Commissioners

    Context

    The attendance of the Chief Election Commissioner (CEC) and his Election Commissioner (EC) colleagues at an “informal” meeting with the Principal Secretary to the Prime Minister has brought renewed focus on the independence and impartiality of the Election Commission of India (ECI).

    Need for changes in the appointment process

    • The changes in the appointment process for ECs can strengthen ECI’s independence, neutrality and transparency. 
    • The appointment of ECs falls within the purview of Article 324(2) of the Constitution, which establishes the institution.
    • Article 324(2) contains a ‘subject to’ clause which provides that both the number and tenure of the ECs shall be “subject to provisions of any law made in that behalf by Parliament, be made by the President.”
    • Apart from enacting a law in 1989 enlarging the number of ECs from one to three, Parliament has so far not enacted any changes to the appointment process.
    • In 1975 itself, the Justice Tarkunde Committee recommended that ECs be appointed on the advice of a Committee comprising the Prime Minister, Lok Sabha Opposition Leader and the Chief Justice.
    • This was reiterated by the Dinesh Goswami Committee in 1990 and the Law Commission in 2015.
    • The 4th Report (2007) of the Second Administrative Reforms Commission additionally recommended that the Law Minister and the Deputy Chairman of the Rajya Sabha be included in such a Collegium.
    • Violation of Article 14 and 324: Three Writ Petitions, with one pending since 2015, are urging the Supreme Court to declare that the current practice of appointment of ECs by the Centre violates Article 14, Article 324(2), and Democracy as a basic feature of the Constitution.
    • Precedent does exist in the case of Rojer Mathew v South Indian Bank Ltd, to argue against the Executive being the sole appointer for a quasi-judicial body.
    • The Supreme Court had recognised that “Election Commission is not only responsible for conducting free and fair elections but it also renders a quasi-judicial function between the various political parties including the ruling government and other parties.”
    • In such circumstances, the executive cannot be a sole participant in the appointment of members of Election Commission as it gives unfettered discretion to the ruling party.

    Way forward

    • Establishing a multi-institutional, bipartisan committee for fair and transparent selection of ECs can enhance the perceived and actual independence of ECI.
    • Such a procedure is already followed with regard to other Constitutional and Statutory Authorities such as the Chief Information Commissioner, Lokpal, Vigilance Commissioner, and the Director of the Central Bureau of Intelligence.

    Consider the question “What is the procedure for the appointment of Election Commissioners? What are the issues with this procedure? Suggest the way forward.”

    Conclusion

    ECI’s constitutional responsibilities require a fair and transparent appointment process that is beyond reproach, which will reaffirm our faith in this vital pillar of our polity.

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  • Reaping India’s demographic dividend

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 1- Demographic dividend

    Context

    Countries like Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped to achieve incredible economic growth by adopting forward-looking policies and programmes.

    The window of demographic opportunity

    • With falling fertility (currently 2.0), rising median age (from 24 years in 2011, 29 years now and expected to be 36 years by 2036), a falling dependency ratio (expected to decrease from 65% to 54% in the coming decade taking 15-59 years as the working age population), India is in the middle of a demographic transition.
    • This provides a window of opportunity towards faster economic growth. India has already begun to get the dividend.
    • As fertility declines, the share of the young population falls and that of the older, dependent population rises.
    • If the fertility decline is rapid, the increase in the population of working ages is substantial yielding the ‘demographic dividend’.
    • The smaller share of children in the population enables higher investment per child.
    • Therefore, the future entrants in the labour force can have better productivity and thus boost income.
    • With the passage of time, the share of the older population rises and that of the working age population begins to fall and hence the dividend is available for a period of time, ‘the window of demographic opportunity’.

    Need for forward-looking policies

    • Without proper policies, the increase in the working-age population may lead to rising unemployment, fueling economic and social risks.
    • This calls for forward-looking policies incorporating population dynamics, education and skills, healthcare, gender sensitivity, and providing rights and choices to the younger generation.

    Lessons for India

    • Countries like Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped.
    •  There are important lessons from these countries for India.
    • 1) NTA data: The first is to undertake an updated National Transfer Accounts (NTA) assessment.
    • Using NTA methodologies, we find that India’s per capita consumption pattern is way lower than that of other Asian countries.
    • A child in India consumes around 60% of the consumption by an adult aged between 20 and 64, while a child in China consumes about 85% of a prime-age adult’s consumption.
    • The NTA data for India needs to be updated to capture the progress made on such investments since 2011-12.
    • 2) Invest more in children and adolescents: India ranks poorly in Asia in terms of private and public human capital spending.
    • It needs to invest more in children and adolescents, particularly in nutrition and learning during early childhood.
    • 3) Make health investments: Health spending has not kept pace with India’s economic growth.
    • The public spending on health has remained flat at around 1% of GDP.
    • Evidence suggests that better health facilitates improved economic production.
    • Hence, it is important to draft policies to promote health during the demographic dividend.
    • 4) Make reproductive healthcare services accessible on a rights-based approach: We need to provide universal access to high-quality primary education and basic healthcare.
    • The unmet need for family planning in India at 9.4% as per the latest National Family Health Survey-5 (2019-21) is high as compared to 3.3% in China and 6.6% in South Korea, which needs to be bridged.
    •  5) Bridge gender differentials in education: The gender inequality of education is a concern.
    • In India, boys are more likely to be enrolled in secondary and tertiary school than girls. This needs to be reversed.
    • 6) Increase female workforce participation: As of 2019, 20.3% of women were working or looking for work, down from 34.1% in 2003-04.
    • New skills and opportunities for women and girls befitting their participation in a $3 trillion economy is urgently needed.
    • It is predicted that if all women engaged in domestic duties in India who are willing to work had a job, female labour force participation would increase by about 20%.
    • 7) Address the diversity between StatesWhile India is a young country, the status and pace of population ageing vary among States.
    • Southern States, which are advanced in demographic transition, already have a higher percentage of older people.
    • These differences in age structure reflect differences in economic development and health – and remind us of States’ very different starting points at the outset of the 2030 Sustainable Development Goals Agenda.
    • But this also offers boundless opportunities for States to work together, especially on demographic transition, with the north-central region as the reservoir of India’s workforce.
    • 8) Governance reform: A new federal approach to governance reforms for demographic dividend will need to be put in place for policy coordination between States on various emerging population issues such as migration, ageing, skiling, female workforce participation and urbanisation.

    Conclusion

    In India, the benefit to the GDP from demographic transition has been lower than its peers in Asia and is already tapering. Hence, there is an urgency to take appropriate policy measures.

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