Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- How UPI is transforming payment and settlement, what makes UPI a success.
Context
India has crossed the target of a billion monthly digital payments. Now, to a billion transactions a day.
The story of payment revolution and financial inclusion in India
- Progress on the financial inclusion: India was long a financially excluded nation –only 17 per cent of Indians had a bank account in 2011.
- 50 more years estimate: The World Bank suggests it would have taken 50 more years for 80 per cent of Indians to get a bank account at the pre-2011 speed.
- Yet, we reached that milestone in 2018.
- How? A magical combination of
- Political will (Jan Dhana Yojana and Aadhaar embedding).
- A proactive central bank (creating a non-profit market participant entity and levelling the playing field between non-banks and banks).
- And a technology stack with three layers (identity, payments, and data).
- The rise of UPI
- The swift rise in use: The digital payment transactions on the Universal Payment Interface (UPI) platform rising from 0.1 million in October 2016 to 1.3 billion in January 2020.
- Result of working together: This represents the magic of entrepreneurs, nonprofits and policymakers working together.
- And gives us a new target — a billion transactions a day.
- India’s Payment revolution
- What are the components of the payment revolution: India’s payment revolution comes from-
- A clear vision: Shifting the system from low volume, high value, and high cost to high volume, low value, low cost.
- A clear strategy: Regulated and unregulated private players innovating on top of public infrastructure.
- And trade-offs balanced by design: Regulation vs innovation, privacy vs personalisation, and ease-of-use vs fraud prevention.
- What consumers wanted?
- Consumers wanted a payment experience that was mobile-first, low-cost, 24/7, instant, convenient, interoperable, fintech friendly, inside banking, and safe.
- Answers lies in UPI.
- What did UPI achieve?
- Interoperability: UPI created interoperability between all sources and recipients of funds -consumers, businesses, fintechs, wallets, 140 member banks.
- Instant settlement: UPI settles instantly inside the central bank in fiat money -state-issued money declared by the sovereign to be legal tender.
- Blunted data monopolies: Big tech firms have strong autonomy but weak fiduciary responsibilities over customer data, it was taken care of by UPI.
5 Policy lessons from the success of UPI
- First- how the India stack: Interconnected yet independent platforms or open APIs — are a public good that-
- Lowers costs, spur innovation and blunts the natural digital winner-takes-all.
- Replication in other areas: Replicating this in education, healthcare, and government services are likely to be a harbinger of large scale multi-domain collaborative innovation.
- Second-collaboration: Collaboration can create ecosystems that overcome the birth defects of its constituents–
- The execution deficit of government, the trust deficit of private companies, and the scale deficit of nonprofits.
- Third-policy intervention: Complementary policy interventions are important.
- Demonetisation and GST are changing the stories that firms and individuals tell themselves around cash and informality.
- Fourth-human capital and diversity matter: This revolution needed career bureaucrats to partner with academics, tech entrepreneurs, venture capitalists, global giants and private firms.
- The final lesson-Western model is not needed always: India doesn’t need to be Western or Chinese to be modern. If our policymakers had copied Alipay or US banks, we wouldn’t have leapfrogged their birth defects.
Way forward
- Fix the deadline: The central government must deadline digitising all its payments.
- RBI implement 100+ action items: The RBI must implement the 100-plus action items arising from its own Vision 2021 document and the Nandan Nilekani Committee for Deepening Digital Payments.
- UPI for inward remittances: RBI must also make UPI and RuPay fit for use in our $70 billion inward remittances that currently come through exploitative financial institutions which don’t have clients but hostages.
- Replication of UPI in bank credit: The RBI must replicate the core design of UPI — fierce but sustainable private and public competition in bank credit-
- Our 50 per cent credit-to -GDP ratio is one of the reasons India is poor.
- China’s 300 per cent is the wrong number, but reaching the OECD average of 100 per cent needs the RBI to do many things-
- Raising its human capital and technology game in regulation and supervision.
- Catalysing an ecosystem for lending against the rapidly expanding digital exhaust of small firms and individuals.
- Issuing more private bank licences, facilitating management changes in old private banks with market caps that signal questions about book value, and shepherding governance and human capital revolution at PSU banks.
Conclusion
Converting the collective independence our citizens got in 1947 to individual freedom surely involved universal financial inclusion. The gap between this aspiration and reality was not a lie but a disappointment because our capital got handicapped without labour and our labour got handicapped without capital. Change has begun -the RBI, the finance ministry, and many individuals deserve our gratitude and dues for a billion digital payments a month. We now ask you for a billion digital payments a day.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- Medical Termination of Pregnancy Act amendment and issues involved.
Context
The Union Cabinet’s approval of the amended Medical Termination of Pregnancy (MTP) Bill 2020 was reported on January 29. This amendment was long due and has made some anticipated changes demanded by women’s groups and courts, including the Supreme Court.
Why the amendment was necessitated?
- Abortion (unsafe) accounts for almost 10 per cent of maternal deaths in India.
- No provision to avoid unsafe abortion: The amended Act doesn’t have any new substantial provisions to avoid unsafe abortions.
- The right to safe abortion (at least till 12 weeks, when it is safer) would have made the state responsible to provide safe abortion services.
- Reduce the burden on judiciary: The proposed amendments will definitely reduce the burden on the judiciary, especially given the plethora of cases seeking permission for abortion beyond the prescribed duration of 20 weeks.
- Two types of Court cases: The court cases are broadly two types.
- The first group of cases: These are pregnancies that extend beyond 20 weeks of gestation as a result of rape, incest or of minor women.
- The new Act rightly addresses these by extending prescribed period abortion to 24 weeks.
- However, such cases form a minuscule proportion of the total number. For such cases, even the 24-week cap can be done away with, provided the abortions can be safely done.
- The second group of cases
- These are of pregnancies that become unwanted after congenital foetal anomalies are found upon testing.
- With advancements in prenatal foetal screening/diagnostic technologies, more such cases are knocking at the doors of courts.
- Marginal interval under the current act: Anomalies detected at 17-20 weeks provide only a marginal interval to conduct an abortion under the current Act.
- The extension to 24 weeks seems to give cover to these cases for abortion services, reducing the burden on courts.
How the law could be misused?
- Possibility of using any anomaly as a ground for abortion: The amendments have opened up the possibility for any congenital anomaly to be used as grounds for abortion.
- Anomalies which are incompatible with life provide grounds for access to abortion at any time during pregnancy -not just 24 weeks of gestation-as long as the woman desires it and it doesn’t endanger her health.
- But with advancements in diagnostic technologies, more anomalies will be detected, including those which are compatible with life.
- Social acceptability and anomaly: What constitutes an anomaly changes depending on what is considered socially desirable.
- Issue of raising children with disability: Technology-aided detection of “undesirability” could now find social support, as has been the case with female foetuses.
- This raises concerns that raising children with disability, especially in the absence of state support and poor social attitudes, could go down a similar path.
The risk to the life of women
- Abortion beyond 12 weeks carries serious health risks.
- 12 weeks provision under current law: Current law requires the expert opinion of two registered medical practitioners for the abortion beyond 12 weeks.
- Extending the limit to 20 weeks and risk involved: 12-week requirement has been delayed till 20 weeks, though the physiology of pregnancy and risks associated with procedures for second-trimester abortions haven’t changed significantly.
- Possibility of more complications: Without the strengthening of public services, easing second-trimester abortions between 12-20 weeks opens the possibilities of more complications and endangers the life of the woman.
Conclusion
With congenital anomalies as a ground for abortion, the eugenic mindset of having socially desirable children could push more women into risky late abortions. The approach of medical boards advising courts in cases of late abortions under this Act will be critical to balancing women’s right to choose with risk to the woman and the motives for abortion. The rules framed under the Act must address this in no uncertain terms.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- Suggest the ways to ensure the neutrality of the Speaker in cases under 10th Schedule.
Context
Recently the Supreme Court of India recommended that Parliament should rethink as to whether disqualification petitions ought to be entrusted to a Speaker as a quasi-judicial authority when such a Speaker continues to belong to a particular political party either de jure or de facto.
What the SC recommended?
- Provision of a ‘Permanent Tribunal’: The SC was of the opinion that Parliament may seriously consider a Constitutional amendment to substitute-
- The Speaker of the Lok Sabha and Legislative Assemblies with a ‘permanent Tribunal headed by a retired Supreme Court judge or a retired Chief Justice of a High Court.
- Or some other outside independent mechanism.
- What the ‘Permanent Tribunal’ achieve?
- Impartiality and timely decisions: This is to ensure that such disputes are decided both swiftly and impartially.
- Proper functioning of the democracy: It will give teeth to the provisions contained in the Tenth Schedule, which are so vital in the proper functioning of India’s democracy’.
Range of functions of the Speaker
- What is the nature of the duties of the Speaker?
- Role under 10th schedule: Under 10th Schedule, the nature of duties of the Speaker, is as an “arbiter” or a “quasi-judicial body”. But it also extends to a range of its functions.
- What other functions are performed by the Speaker? While facilitating the business of the House and to maintain decorum in the House, the Speaker has ‘extensive functions to perform in matters regulatory, administrative and judicial, falling under her domain.
- She enjoys vast authority under the Constitution and the Rules, as well as inherently’.
- Ultimate interpreter: She is the ‘ultimate interpreter and arbiter of those provisions which relate to the functioning of the House. Her decisions are final and binding and ordinarily cannot be easily challenged.
- She decides the duration of debates, can discipline members and even override decisions by committees.
- A representative of the House: She represents the collective voice of the House and is the sole representative of the House in the international arena’
Issue of alleged bias
- Allegations of bias by the Speaker: On several occasions, the Speaker’s role has been questioned on the allegation of bias. The office has been criticised for being an agent of pernicious partisan politics.
- The Supreme Court has observed in Jagjit Singh versus State of Haryana“…certain questions have been raised about the confidence in the matter of impartiality on some issues having political overtones which are decided by the Speaker in his capacity as a Tribunal.”
- As a minority view, Justice J.S. Verma in Kihoto Hollohan vs Zachillhu And Others observed: “The Speaker being an authority within the House and his tenure being dependent on the will of the majority therein, the likelihood of suspicion of bias could not be ruled out.”
- What is the problem with the neutrality of the Speaker? Howsoever desirable the proposition of neutrality maybe, in the present circumstances, it would be unrealistic to expect a Speaker to completely abjure all party considerations.
- Structural issues: There are structural issues regarding the manner of appointment of the Speaker and her tenure in office.
- Why the Speaker prefers to maintain party membership: A member is appointed to the office of the Speaker if a motion nominating her is carried in the House.
- Since the electoral system and conventions in India have ‘not developed to ensure protection to the office, there are cogent reasons for Speakers to retain party membership.
- Elections are not always by consensus and there have been cases when different parties have fielded their own candidates.
- All political parties campaign in the constituency of the Speaker.
- Even if the Speaker is re-elected to the House, the office of the Speaker in India is still open for elections’.
- Way forward
- Revamp the structure: What is required is not merely incidental changes in the powers of the Speaker; rather a major revamp in the structure of the office itself is necessary.
- How to ensure the neutrality of the Speaker? The scheme should be brought wherein Speakers should renounce all political affiliations, membership and activity once they have been elected, both within the Assembly and in the country as a whole.
- Replicating the UK model:
- Reference can be sought from the United Kingdom where the ‘main characteristic of the Speaker of the House of Commons is neutrality.
- Once elected, the Speaker gives up all-partisan affiliation, as in other Parliaments of British tradition, but remains in office until retirement, even though the majority may change.
- She does not express any political views during debates and is an election candidate without any ticket.
- Impartiality, fairness and autonomy in decision-making are the hallmarks of a robust institution.
- It is the freedom from interference and pressures which provide the necessary atmosphere where one can work with an absolute commitment to the cause of neutrality as a constitutional value.
Conclusion
At a time when India’s fall in ranks in the latest Democracy Index has evoked concern, it is expected that Parliament will pay heed to the reasoning of the Supreme Court and take steps to strengthen the institution of the Speaker.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- How could focusing on inclusive growth help spur the Indian economy.
Context
As the Indian economy is going through a severe crisis, a major solution to the present economic crisis is to go in for inclusive growth; it also means shared prosperity.
Where India stands on poverty and how the slowdown is impacting the poor.
- Bottom 30-40% adversely impacted: The slowing economy has had an adverse impact on the bottom 30%-40% of the population.
- Absolute poverty on the rise: The incidence of absolute poverty, which has been falling since 1972-73, has increased to 30% (4% jump).
- 44% population below the multi-dimensional Poverty line: The Human Development Report (2019) has shown, more than 44% of the Indian population is under the multi-dimensional poverty line.
- Rising inequality: The poorest 50% population at present owns only 4.1% of the national wealth.
- While the richest 10% of people own 73% of the total wealth in India (Suisse Credit 2019).
- Rampant malnourishment: India has 15.2% population malnourished (women 15%) as against 9.3% in China.
- And 50% of the malnourished children in the world are in India.
- At 112th position on global hunger: India’s global hunger rank has gone up to 112 while Brazil is 18, China is 25 and South Africa, 59.
- Dismal performance on education: In the field of education as per a UN report (2015), overall literacy in India is 74.04% (more than the 25% are totally illiterate) against 94.3% in South Africa, 96.6% in China and 92.6% in Brazil.
- Almost 40-45% population is either illiterate or has studied up to standard 4.
- Poor quality of education: Given the quality of education in India, the overall population is very poorly educated, with the share of ‘educated unemployment’ rising by leaps and bounds.
What needs to be realised?
- Focus on domestic demand: It needs to be realised that when exports are declining, the economy will have to depend on domestic demand for growth.
- It is no more feasible for the top 20-25% population to continue growing without depending on the demand from the bottom 40-45% population.
- Demand by the bottom 40% a must: There is thus a strong reason now for the economy to increase effective demand of this bottom 40-45% population at least to continue growing-to reach a $5-trillion economy by 2024.
What is wrong with the growth process?
- Bottom 40% not getting the fair share of growth: A major reason for the crisis is that the growth process has marginalised the bottom 40-plus% of the population.
- It is in the sense that they do not get a fair share of the economic growth, and are more or less deprived of productive employment with a decent income.
- They have not been used as active participants in the growth process. Their potential has not been promoted.
- Less spending for the poor and its consequences: Though the bottom population depends on the government for basic health and elementary education (and also for access to higher educational opportunities)-
- The government spends just 4% of GDP on health (against the norm of 4-6% of GDP) and 3% of GDP on education (against the norm of 6-8% of GDP).
- How this dismal spending affects the poor: As a result of this below norm spending, these people are left hardly literate and sick, with poor nutrition and high morbidity.
- They are incapable of acquiring any meaningful skills or participating actively when new technology is spreading in the rest of the economy.
- The sub-optimal use of labour force: This sub-optimal use of the labour force in the economy is not likely to enable India to achieve optimal growth with proper use of the national resources -the labour force.
Inclusive growth- a solution to the present economic crisis
- Inclusive growth also includes shared prosperity: Here, inclusive growth does not mean only including all sections of the population in the growth process as producers and beneficiaries; it also means “shared prosperity”.
- Since India has already committed to sustainable and inclusive growth at the UN General Assembly, India is definitely obliged to implement inclusive growth.
- This should be our “New India”.
- What “New India” would involve?
- Improve the capability and opportunities: To start with, to improve the capabilities of the masses as well as their well-being by expanding productive employment opportunities for them.
- What expanding productive employment mean? The main steps to expand productive employment for all in the economy should be made up of-
- A process of inclusion.
- Expanding the quality of basic health for all.
- And ensuring quality education to all.
- How will “New India” help?
- Which will by itself generate large-scale employment in the government.
- Having a well-educated and healthy labour force will ensure high employability.
- Such people will be able to participate actively in the development process.
- The cycle of more productive employment: Having a well-educated labour force will help start-ups and MSMEs, in turn triggering a cycle of more productive employment in the economy.
- Global competitiveness increase: This will also improve the global competitiveness of our production units.
- Labour absorption potential of MGNREGA: Employment guarantee schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) will also increase employment.
- Assets generated under MGNREGA will expand capital formation in the economy, thereby raising the labour-absorbing capacity of the mainstream economy.
- Why this strategy is advantageous?
- Such a strategy has multiple advantages:
- First– it will raise incomes and the well-being of those who need it most urgently.
- Second– it will raise effective demand rapidly, which is so badly needed in the economy today to raise economic growth.
- Third– growth will be equitable and sustainable.
Way forward
- Finally, how does one raise resources to increase new public investments in the selected sectors?
- Raise direct taxes: One major strategy is to raise direct taxes, both capital tax and wealth tax.
- Past growth has failed to reach the poor: Growth led by providing tax cut and extra incentives, but this growth does not much percolate to the poor.
- Consequently, taxing the rich has to be a major strategy to raise government revenue.
- Treat public expenditure as an investment: The public expenditure on raising capabilities should be treated as social investment rather than social welfare, policymakers will be willing to spend on this capital formation.
- Let the fiscal deficit slip: Finally, there was no sound economic reason to control fiscal deficit ratio. Sound macroeconomics never supports this.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- India-France relations
Context
Defence cooperation has been one of the fundamentals of the bilateral relationship between India and France, which developed a close and ambitious strategic partnership for over 20 years.
Defence cooperation between France and India
- A long history of cooperation: The defence cooperation between our two countries can be traced back to the first few years following India’s Independence.
- As early as 1953, the Indian Air Force was equipped with a hundred Toofani fighter jets from Dassault, then the Mystère IV, which defended India in tough times.
- This marked the first page in the history of cooperation in military aviation, which also recorded the supply of 60 Mirage 2000s in the 1980s.
- Rafale deal: The ongoing delivery of 36 Rafales is being done as per the schedule.
- The first batch of aircraft, currently being used to train Indian pilots, will land at Air Force Station Ambala within a few months.
- Partnership in maritime domain: Today, the partnership has been deployed in the maritime domain, in support of our joint strategic vision for the maintenance of stability and security in the Indo-Pacific.
- As far as naval equipment is concerned, the Indian Navy has already commissioned two of the six submarines built in Mumbai as part of an industrial partnership between Mazagon Dock Shipbuilders Limited (MDL) and Naval Group.
Industrial cooperation between the two countries
- Support to indigenous production: As for industrial cooperation, the French approach has always been, whenever possible, to offer partial indigenous production in India.
- France was largely a precursor with regard to Make in India, with HAL manufacturing the light helicopters Cheetah and Chetak, and BDL’s Milan anti-tank missile in India in the 1960s.
- It continues this policy today. The plant built under the Dassault Aviation and Reliance joint venture will enable, for example, the complete production of the Falcon 2000 business jet here in India by 2022.
- Transfer of technology: After the delivery of the first two Scorpene submarines, transfers of technology provided by the Naval Group enabled MDL to be solely in charge of building the next four submarines.
- The design of these submarines has thus become largely Indian knowhow.
- Safran will soon inaugurate an aircraft wiring systems factory in Hyderabad and also build another major facility to manufacture LEAP turbofan engine components.
- Thales is investing massively in engineering works in Bengaluru, MBDA is building a plant in Coimbatore and French aeronautical equipment manufacturer Latécoère recently inaugurated a factory in Belgaum.
Opportunities for further cooperation
- Developing the supply chain at all the levels: The French aerospace industries association, GIFAS, and GICAN, the French Marine Industry Group, are organising a seminar focused on this subject during DefExpo.
- Along with the Society of Indian Defence Manufacturers (SIDM), they are exploring opportunities for developing Indo-French industrial partnerships at all stages of the production chain.
- Promoting Make in India: India can count on France being by its side for its Make in India enterprise.
Conclusion
India and France both share the same vision for a new balanced multipolar world, which must be based on the rule of law. They also share the same vision on the main challenges of the times, be they security developments in Asia and the Indo-Pacific, or combating international terrorism. But it is by possessing the capability of ensuring national security and making strategic choices that most efficiently defend their shared principles and visions.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Expanding the India's sphere of influence in IOR and humanitarian assistance in the region.
Context
Earlier this week, India sent an amphibious warship, INS Airavat, to Madagascar in the Indian Ocean Region (IOR) to help in rescue efforts after the island nation was hit by a cyclone.
Humanitarian operations- Key component of peacetime strategy
- A key component in IOR: In recent years, humanitarian operations have emerged as a key component of the Indian Navy’s peacetime strategy in the IOR.
- In March 2019, the Navy deployed four warships for relief operations when Mozambique was hit by Cyclone Idai.
- Indian naval teams played a stellar role in search and rescue operations and even set up medical camps.
- A few months later, the Navy sent two warships to Japan to assist in rescue efforts following Typhoon Hagibis.
- A year earlier, Indian vessels had delivered urgent medical assistance to Sulawesi, Indonesia, after it was struck by a high-intensity earthquake.
- Operation Samudra Maitri was launched after a telephonic conversation between Prime Minister Narendra Modi and Indonesian President Joko Widodo, with naval planners mobilising assets and relief material in quick time.
- India’s vision for IOR: The Navy’s new humanitarian approach, many says, is a maritime manifestation of India’s vision for the IOR, christened SAGAR (Security And Growth for All in the Region).
- Lesson’s from tsunami: The Navy’s turn towards human-centred maritime security isn’t recent. It was in the aftermath of the 2004 tsunami that naval commanders first recognised the importance of large-scale relief and rescue missions in the IOR.
- For over a decade, considerable resource and energy have been spent developing specialist capability and skills for naval humanitarian operations.
India- A regional security provider
- What is changing in India’s stance: What’s new today is New Delhi’s resolve to burnish its ‘regional security provider’ credentials.
- The Navy has reached out to countries across the Indo-Pacific region, with greater deployment of assets, personnel and specialist equipment, showcasing an ability to undertake complex and diverse missions.
- The highpoint for India: The highpoint of the Navy’s ‘benign’ efforts was the evacuation of over 1,500 Indian expatriates and 1,300 foreign nationals from Yemen in 2015 amid fighting for control of Aden.
- Three years later, Indian naval ships were in Yemen again, to evacuate 38 Indians stranded in the cyclone-hit Socotra Island.
How the new role could help India?
- India’s desire to be the linchpin of security: The Navy’s humanitarian impulse stems from a desire to be a linchpin of security in the IOR.
- The concept of the first responder: At the core of the evolving operations philosophy is the concept of ‘the first responder’, with the capability and willingness to provide assistance.
- Extension of the sphere of influence: The above approach has the potential to create an extended sphere of Indian influence in the IOR.
- Projection of soft power: Naval leaders recognise that benign missions help project Indian soft power and extend New Delhi’s influence in the littorals.
- Creating goodwill: Prompt response during a humanitarian crisis helps generate political goodwill in the neighbourhood.
Cause for caution with maritime presence
- The issue with prolonged presence: While low-end naval assets in humanitarian mode create strategic equity for India, the prolonged presence of front-line warships in foreign waters has the potential to make partners anxious.
- Shaping perception over naval presence: Naval power, experts underline, must be deployed discreetly, shaping perceptions in subtle ways.
- Need to hide the underlying intent: The key is to not let the underlying intent of a mission appear geopolitical.
- To ensure that motives aren’t misunderstood, and the assistance provided is efficient and cost-effective, it is best to use dedicated disaster-relief platforms.
- India lacking inventory hospital ship: However, unlike the U.S. and China that have in their inventory hospital ships fully equipped for medical assistance, India deploys regular warships and survey ships converted for medical aid.
- India’s improvised platforms do not match the U.S. Navy’s medical ship USNS Mercy or the People’s Liberation Army Navy’s Peace Ark.
Need for greater coordination
- The Navy’s expanding array of humanitarian missions reveals a need for greater coordination with the Indo-Pacific navies
- In particular the U.S. Navy, the Royal Australian Navy and the Japanese Self-Defense Forces- which possess significant experience and assets to mitigate humanitarian threats.
Conclusion
As natural disasters in the IOR become more frequent and intense, India’s regional security role is likely to grow exponentially. At the forefront of disaster scenarios, the Indian Navy and Coast Guard would find themselves undertaking demanding missions. Humanitarian operations could serve as a springboard for a larger cooperative endeavour in the maritime commons.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- India's role and interest's in IMO and consequences.
Context
The International Maritime Organization (IMO), had mandated that merchant ships should not burn fuel with sulphur content greater than 0.5% beginning January 1.
Why the new sulphur content limit matters?
- The previous limit of 3.5 %: Before the ban, fuel had a comfortable sulphur content limit of 3.5%, which was applicable to most parts of the world.
- Problem with low content fuel: Many industry professionals feared that the new very-low-sulphur fuel would be incompatible with the engines and other vessel equipment.
- Problems with past US limits: Past mandates on sulphur limits in American waters had led to many technical problems. There have been instances of ships having been stranded after fine particles separated out from the fuel, damaging equipment and clogging up devices.
How such regulations matter for India?
- Sulphur cap one of the many problems: The global sulphur cap is only one of the many environment-related regulations that have been shaking up the shipping industry.
- The industry is generally risk-averse and slow to accept changes.
- For instance, efforts are ongoing to reduce nitrogen oxides (NOx) and ozone-depleting gases.
- IMO project to decarbonise shipping: Further, the IMO has announced an ambitious project to decarbonise shipping in order to reduce carbon emissions.
- How it matters for India? These regulations are triggering massive technological, operational and structural changes.
- They come at a price which will have to be borne to a large extent by developing countries such as India.
- India among 10 countries: The IMO currently lists India as among the 10 states with the “largest interest in international seaborne trade”.
- Inadequate participation of India: But India’s participation in the IMO to advance its national interests has been desultory and woefully inadequate.
- How it could matters: The sulphur cap, for instance-
- Will reduce emissions.
- Reduce the health impact on coastal populations but-
- Ship operational costs are going up since the new fuel product is more expensive.
- Refineries struggling to meet demand: As refineries including those in India struggle to meet the demand, freight costs have started moving up, with a cascading effect on retail prices.
Significance of shipping and the role of IMO
- Significance of shipping: Shipping, which accounts for over 90% by volume and about 80% by value of global trade.
- Role of IMO: It is a highly regulated industry with a range of legislation promulgated by the IMO.
- The IMO currently has 174 member states and three associate members; there are also scores of non-governmental and inter-governmental organisations.
- The IMO’s policies or conventions have a serious impact on every aspect of shipping including the cost of maritime trade.
- How IMO functions
- The IMO, like any other UN agency, is primarily a secretariat, which facilitates decision-making processes on all maritime matters through meetings of member states.
- How treaties are made? The binding instruments are brought in through the conventions -to which member states sign on to for compliance -as well as amendments to the same and related codes.
- Structure of IMO: Structurally, maritime matters are dealt with by the committees of the IMO –
- The Maritime Safety Committee (MSC).
- Marine Environment Protection Committee (MEPC).
- Technical Cooperation Committee.
- Legal Committee and the Facilitation Committee.
- Each committee is designated a separate aspect of shipping and supported by sub-committees. Working groups and correspondence groups support the subcommittees.
- Role of subcommittees of IMO: The subcommittees are the main working organs, where the proposals from a member state are parsed before they are forwarded to one of the main committees.
- The main committees, thereafter, with the nod of the Assembly, put the approved proposal for enactment through the Convention, amendments, and codes or circulars.
India’s inadequate efforts at protecting the interest
- How other countries deal with the issues: To ensure that their maritime interests are protected, the European countries move their proposals in unison and voting or support are given en bloc.
- Permanent representative: China, Japan, Singapore, Korea and a few others represent their interests through their permanent representative as well as ensuring that a large delegation takes part and intervenes in the meetings.
- How India is falling short? While these countries have fiercely protected their interests, India has not.
- No permanent representative: For example, its permanent representative post at London has remained vacant for the last 25 years.
- Representation at meetings is often through a skeletal delegation
- India’s presentation inadequate: A review of IMO documents shows that the number of submissions made by India in the recent past has been measly and not in proportion to India’s stakes in global shipping.
- “High-Risk Area” demarcation issue: The promulgation of “High-Risk Areas” when piracy was at its peak and dominated media headlines.
- What happened in the issue? The IMO’s demarcation resulted in half the Arabian Sea and virtually the entire south-west coast of India being seen as piracy-infested, despite the presence of the Indian Navy and Coast Guard.
- The “Enrica Lexie” shooting incident of 2012, off the coast of Kerala, was a direct fallout of the demarcation.
- What were the consequences of the demarcation issue?
- Increase in insurance costs: The “High-Risk Area” formulation led to a ballooning of insurance costs; it affected goods coming into or out of India.
- It took great efforts to revoke the promulgation and negate the financial burden.
- The episode highlighted India’s apathy and inadequate representation at the IMO.
- NavIC introduction difficulty: There was also great difficulty in introducing the indigenously designed NavIC (NAVigation with Indian Constellation) in the worldwide maritime navigation system.
- What could be the consequences in future?
- EU’s documented procedure: In contrast, the European Union has a documented procedure on how to influence the IMO.
- Agenda driven by developed countries: New legislative mandates, fitment of new equipment and changes to ship structural designs being brought on have been driven by developed countries.
- Consequences for India: All the issues pushed by developed countries are not entirely pragmatic from the point of view of India’s interests.
- Further, it will not be mere speculation to see them as efforts to push products and companies based in the West.
Conclusion
So far, India’s presence and participation in the IMO has been at the individual level. India should now make its presence felt so that its national interests are served. It is time India regained its status as a major maritime power.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Government budget- allocations to various sectors-how it could help revive the economy.
Context
The disconnect between Budget and Economic Survey is much greater this year.
Background of the economy as the budget is introduced
- The 2020 Budget was presented against the background of-
- Slowing economy.
- Poor investment climate.
- Declining consumption demand and
- Stagnant exports.
- The steady deceleration in growth, which registered at 4.5 per cent in the second quarter of the current fiscal — the lowest in the last 26 quarters — presented a challenge as well as an opportunity.
Infrastructure investment
- The hope of substantial increase in allocation for infra: The hope was that there will be a substantial increase in infrastructure investment, which in turn will trigger investment demand, but the actual allocations are not promising.
- This was particularly surprising in the wake of the recent announcement that there will be an investment of Rs 103 trillion in the next five years to leapfrog India to a $5-trillion economy.
- Private sector expected to contribute: Much of the investment for this will have to be made by the private sector and it is hoped that the allocation of Rs 20,000 crore in equity in specified infrastructure finance companies will help them to leverage more than Rs 1 lakh crore of investment support.
Budgetary allocation for capital expenditure
- 1.7% of GDP to 1.8 %: The budgetary allocation for capital expenditure for the current year, which is estimated at 1.7 per cent of GDP this year, is budgeted at 1.8 per cent in 2020-21.
- Agriculture, irrigation and rural development: The Budget also contained 16 action points on agriculture, irrigation and rural development and the Rs 2.83 lakh crore allocation is higher than the budget estimate for the previous year by just 2.5 per cent and revised estimate by 13.2 per cent.
- But the allocation looks impressive only because there was a massive cut (Rs 26,000 crore) in the budget estimate over the revised estimate.
- Transport infrastructure: The allocation to transport infrastructure in the Budget- at Rs 1.7 lakh crore-is just 7.6 per cent higher than the revised estimate for 2019-20.
- MGNREGA and PM-Kisan Samman Nidhi: The allocations to schemes like the MGNREGA has been cut from Rs 71,002 crore (RE) in the current year to Rs 61,500 crore in 2020-21.
- PM Kisan Samman Nidhi: For schemes like PM Kisan Samman Nidhi, it is just as much as was budgeted for 2019-20.
- As a consequence, not much is expected in terms of propping up the consumption demand.
Slippage in fiscal deficit
- Increase in fiscal deficit expected: The slippage in fiscal deficit from the target set in the budget estimate in 2019-20 was expected for the following reasons-
- Below expected nominal GDP growth: Nominal GDP growth was 7.5 per cent as against the estimated 12 per cent in the budget.
- Overestimation in the growth of tax revenue at 18.3 per cent over the pre-actuals of the previous year.
- Missed disinvestment target: The slippage in achieving the disinvestment target of Rs 1.03 lakh crore.
- Thus, it is not surprising that the fiscal deficit for the current year stands estimated at 3.8 per cent of GDP and for the next year at 3.5 per cent.
- Off-budget financing: The major concern is that the reported off-budget financing is almost 0.85 per cent. This does not capture the bills and refunds payable by the government.
Would the budgeted and revised estimates realise?
- On disinvestment front: The disinvestment revenue is estimated at Rs 65,000 crore though the realisation so far has been just Rs 18,000 crore, which implies another Rs 47,000 crore will have to be mobilised in the next two months.
- On tax revenue front: The RE of tax revenue for the current year is over 14 per cent higher than the actual for 2018-19.
- This is perhaps predicated on the hope that the scheme, “Vivad se Vishwas”, which allows the settlement of disputed tax to be paid without interest and penalty.
Tax reforms in the budget
- DDT abolition: On tax reforms, the abolition of dividend distribution tax (DDT) was expected.
- Complicating Income tax: The reforms in individual income tax complicates the tax by creating six brackets.
- The best practice approach to tax reform is to broaden the base, reduce the rates and reduce the number of brackets to make it a simple tax.
- What could have been done? The government could have simply-
- Phased out the tax concessions.
- Indexed the brackets for inflation and
- Reduced the rates of tax with an appropriate adjustment in the brackets.
Conclusion
The impact of fiscal developments on the states’ finances is clearly adverse. The shortfall in tax devolution in 2019-20 from the budgeted amount works out to Rs 1.53 lakh crore and the total shortfall in transfers amounted to Rs 1.41 lakh crore. Besides starving funds for various projects, this has serious repercussions on budget management at the state level.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- India's preparedness for the public health response to outbreak of epidemic.
Context
In some ways, China is setting the standard for a public health response that may become a way of life in the 21st century.
Origin of the outbreak and deadly it could turn out?
- Outbreak of unknown virus: In December 2019, an outbreak of viral pneumonia of unknown etiology emerged in Wuhan, a city in the central Chinese province of Hubei.
- Discovery of novel coronavirus: A few weeks later, the World Health Organization (WHO) and Chinese health authorities announced the discovery of a novel coronavirus, known now as 2019-nCoV, as being responsible for the pneumonia.
- Important questions: The two most important questions asked in a fast-evolving pandemic of this nature are:
- 1) How deadly is the disease, and;
- 2) Can it be contained?
- The latest available figures suggest that the death toll in China is 304 and 14,411 have been infected. The current fatality rate estimate of 2% is unstable and is likely to fall as more cases are detected.
Containment attempts by China and spread to the other countries
- Unprecedented attempt by China: The attempt at containment started late, but has never been attempted in the fashion that China has gone about it.
- Wuhan lockdown: Belatedly, on 23 January, China locked down Wuhan and 12 other cities, quarantining 52 million people in one sweeping action.
- This is the first known case in modern history of any country locking down an entire large city.
- Reports of confirmed cases from other countries: Confirmed cases have since been reported from Hong Kong, Macau, Taiwan, Thailand, South Korea, Japan, Singapore, Australia and the US.
- India reported its first case from Kerala of a medical student from Wuhan University, followed by two more.
- Singapore and the US have now banned foreign nationals who have recently been in China from entering the country.
- Russia, Canada, the UK and India have begun evacuating citizens from Hubei province.
Research on coronavirus so far
- Coronaviruses (CoVs) are characterized by club-like spikes that project from their surface, an unusually large RNA genome and a unique replication strategy.
- CoVs cause a variety of diseases in mammals and birds, ranging from enteritis in hoofed animals to potentially lethal human respiratory infections.
- Genome sequence: The 2019-nCov genome was sequenced in China in early January and reported in The Lancet last week.
- It suggests that the original host of this coronavirus was a bat reservoir, though it is unclear whether there was an intermediate host.
- A recent entry to the human host: The uniformity of the sequenced genome suggests that the virus has entered human hosts very recently.
- Recent emergence from the animal reservoir: Several other countries, including the US and France, have sequenced the RNA of the 2019-nCoV as well. These sequences and their similarity to the initial samples from China suggest a single, recent emergence from an animal reservoir.
Tests and vaccine development
- How is the virus tested? Testing for 2019-nCoV requires a reverse transcription polymerase chain reaction test (RT-PCR) which converts RNA into DNA, making study and comparison easier.
- No vaccine yet: There are no vaccines yet for this virus, but promising paths have been identified, borrowed from the SARS related vaccines.
- Development of an effective vaccine may only come after the 2019-nCoV is contained, but it may still be useful if there were to be a subsequent outbreak.
- The frequency of future outbreaks is only likely to increase because of climate change, global travel and fast mutating viruses.
What lessons can India learn?
- Develop framework and capacity: For India, this global health emergency should serve as an eye-opener.
- If lockdown turns out to be a useful tool to prevent the spread of a deadly virus, India will need to develop the framework and capacity to implement such a drastic measure.
- Under-equipped municipalities: Our municipalities are hopelessly under-equipped to implement strict isolation and containment strategies.
- We will need to develop the capacity to build large facilities for housing patients in isolation wards.
- Use of pre-cast: This will require India to accelerate the use of construction methods like pre-cast technology.
- Protocol and instructions: The National Centre for Disease Control (NCDC) has been proactive in updating its protocol related to the 2019-nCov and has clear instructions for reporting and assay preparation.
- Develop capacity in geographically diverse regions: Samples in India need to be sent to the National Institute of Virology in Pune.
- While the public health and epidemic escalation framework appears capable of handling a small number of cases well, it is not clear how it will stand up to a large number of cases in a specific geographic region.
Conclusion
“Nothing happens quite by chance. It is a question of accretion of information and experience,” said Jonas Salk, the virologist who developed the polio vaccine, in some ways, China is setting the standard for a public health response that may become a necessary way of life in the 21st century. India must use this as a guidepost to greater preparedness.
Context
On January 31, 2020, the United Kingdom left the European Union, the EU project will be taken forward by the 27 member states.
A structured exit
- Minimum disruption: This is largely thanks to the Withdrawal Agreement that was negotiated with the U.K., which enabled “an orderly Brexit”.
- One that, at least for now, minimises disruption for our citizens, businesses, public administrations, as well as for our international partners.
- An arrangement of the transition period: Under this agreement, the EU and the U.K. agreed on a transition period, until the end of 2020 at least.
- During which the U.K. will continue to participate in the EU’s Customs Union and in the Single Market, and to apply EU law, even if it is no longer a Member State.
- During this period, the U.K. will also continue to abide by the international agreements of the EU, as we made clear in a note verbale to our international partners.
Building a new partnership between the EU and the UK
- Degree of continuity: With the transition period in place, there is a degree of continuity. This was not easy given the magnitude of the task.
- By leaving the Union, the U.K. automatically, mechanically, legally, leaves hundreds of international agreements concluded by or on behalf of the Union.
- Building new partnership: That work will start in a few weeks as soon as the EU 27 Member States have approved the negotiating mandate proposed by the European Commission, setting out our terms and ambitions for achieving the closest possible partnership with a country which will remain EU’s ally, partner and friend.
- Links and shared values: The EU and the U.K. are bound by history, by geography, culture, shared values and principles and a strong belief in rules-based multilateralism. Our future partnership will reflect these links and shared beliefs.
- Working on topics beyond trade: Both sides want to go well beyond trade and keep working together on security and defence, areas where the U.K. has experiences and assets that are best used as part of a common effort.
- Cooperation on the wide topics: In a world of big challenges and change, of turmoil and transition, we must consult each other and cooperate, bilaterally and in key regional and global fora, such as the United Nations, the World Trade Organization, the North Atlantic Treaty Organization or the G20.
- Collective responses to handle global challenges: Today’s global challenges- from climate change to cybercrime, terrorism or inequality — require collective responses.
- The more the U.K. is able to work in lockstep with the EU and together with partners around the world, the greater would be chances of addressing these challenges effectively.
Way forward
- Continuing project forward as 27: At the very core of the EU project is the idea that it is stronger together; that pooling resources and initiatives is the best way of achieving common goals. Brexit does not change this, and efforts must be taken to continue this project forward as 27.
- Note for the partners: EU’s partners can be sure that EU will stay true to an ambitious, outward-looking agenda-be it on trade and investment, on climate action and digital, on connectivity, on security and counter-terrorism, on human rights and democracy, or on defence and foreign policy.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Paper 3- Government budget, $5tn dollar economy
Context
The Budget was a workmanlike exercise, more a statement of account, around which was woven many strands of intent and vision, which, read in its entirety and by connecting interlocking dots, framed a strategy of moving towards a $5 trillion economy over the next five years.
Fiscal arithmetic of the Budget
- A clearer picture of off-balance-sheet borrowings: To a large extent, the Budget has done this, giving a much clearer picture of the off-balance-sheet borrowings, which add to the government’s debt and its obligations to pay.
- Increasing the credibility of government: This move will enhance credibility among the investor community while taking decisions on committing capital for India’s future.
- Possibility of nominal 10 % growth: The nominal growth projected for 2020-21 at 10 per cent is feasible, with a stretch, given the expected rise in inflation, which will add around 4 per cent to a projected 6 per cent real growth.
- Aggressive revenue projection: The revenue projections are more aggressive, assuming a buoyancy which can be attributed in large measure to checking evasion using data analytics.
- Disinvestment and privatisation revenue: The major boost to revenues is expected from disinvestment and privatisation of central public sector enterprises, together with asset monetisation.
- The target is up sharply to Rs 2.25 lakh crore.
- This initiative has been one of the core focus areas of the government, has to be lauded for-
- The effects of increasing efficiency in operations and-
- Restricting the losses to the public balance sheet.
- Disinvestment revenues are likely to be augmented with higher dividend receipts, including, from higher profits of the Reserve Bank of India.
- Optical allocation by the Govt.: Spending, which depends on revenue collection, has also been optimally allocated, with capital expenditure budgeted to increase faster than revenue.
- High revenue expenditure: Capital expenditure is still a much smaller fraction of total expenditure compared to the committed revenue spending on interest payments, salaries and pensions and subsidies.
The slowdown in the economy and squeeze in the credit flow
- Three aspects of the current slowdown that makes it different
- First– Multiple engines of growth have synchronously decelerated-
- Consumption, investment, exports and sporadically, government spending — compared to earlier ones when one or some of these drivers were still functioning
- Second- Demand led slowdown:
- This is more a demand-led slowdown, versus the earlier ones, which tended to originate with a supply shock, whether from oil or foreign capital.
- Third– the trigger for this episode was a financial shock-
- NBFC lending — which tipped the weaknesses building in the system into deep deceleration.
- Squeeze in the credit flow of the banks
- Drastic reduction in credit flows: A telling statistic released by the RBI shows that compared to Rs 8 lakh crore of loans provided to borrowers during April-September 2018, credit flow fell to Rs 90,000 crore in the six months of 2019.
- MSMEs worst affected by the credit squeeze: Bank credit has continued to remain very weak. In the context of the broader slowdown, credit to micro, small and medium enterprises (MSMEs) has been one of the worst affected.
Whether the slowdown is more cyclical or structural-conundrum for policymakers
- If it is more cyclical, aggressive use of monetary and fiscal counter-cyclical policy could yield the desired result.
- If not, then the wait is likely to be longer and will involve more sector-specific de-bottlenecking initiatives.
- Signs of structural constraints: While there is certainly a cyclical component in the manufacturing segment- the proximate source of the slowdown- there are signs of deeper structural constraints.
- Quintuple problem– This problem has now expanded into almost quintuple problems, encompassing the government, households, NBFCs along with the banks.
- Overlaid on these structural impediments is a sharp weakening of consumer, investor and corporate confidence.
Conclusion
Implementation, as always, will be key to achieving the $5-trillion goal. The arena for the next set of reforms and actions for sustained growth is at the state level: Agriculture, land, electricity, and even labour. The Budget acknowledges this. A federal approach to tackling the slowdown, in a coordinated fashion, will probably be the most effective.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Government budget and allocations for various sectors and schemes.
Context
The Budget can be judged in terms of its effect on rural demand, investment and private sentiments– all critical elements for recovery. While the Budget offers hope on the last count, it leaves much to be desired on several other parameters.
Skill development allocation- 3000 Crore
- Unmet Demand: There is a huge, unmet demand for teachers, paramedical staff and caregivers, and skilled workers.
- Need for quality education and skills: Well-paying jobs are created in the organised services and industry but require candidates with quality education and skills.
- Both elude India’s youth due to the poor quality of education and lack of opportunities to acquire practical skills.
- Skilling will require massive investment and concerted efforts.
- What could have been done? The Budget could have given tax incentives to companies to provide internships and on-site vocational training to unemployed youth.
- The country cannot afford to let the world’s largest workforce waste this way.
On flagship welfare schemes
- The MGNREGA is allocated ₹61,500 crore, which is less than ₹71,000 crore for the current fiscal year.
- PM-KISAN: Going by the last year, disbursement under the PM-KISAN will also be less than budgeted, unless the beneficiary base is expanded.
- Good schemes for increasing demand: These two schemes are good instruments for income transfers to small and marginal farmers, landless labour who spend most of their income and generate demand for a wide range of goods and services.
- Higher disbursement under these schemes would have benefited most sectors of the economy. Budgetary allocations for health and education are also well below what is needed.
- Micro-irrigation schemes for 100 water-stressed: Focus of schemes such as micro-irrigation schemes for 100 water-stressed districts is welcome and so is a modest increase in allocations for agriculture and rural development schemes.
- Rural roads, cold storage, and logistical chains are crucial for the growth of income and employment in rural India, as the multiplier effects of rural infrastructure investment on growth and employment are large and extensive.
- ₹1.7 lakh crore for transportation infrastructure: The allocation of ₹1.7 lakh crore for transportation infrastructure is also a welcome step. If the public investment infrastructure actually materialises, it will lend credence to the government’s stated commitment to revive the investment cycle –to spur job-creating growth.
- To pull in private investment, public funding should be front-loaded in under-implementation projects.
- Small irrigation and rural road projects are also relatively easy to complete and deliver immense benefits to several sectors.
Bonds Market development and startups
- Need for the corporate bond market: The fundamental problem of infrastructure finance is the asset-liability mismatch which can be addressed only by developing a vibrant ‘corporate bond market.
- No focus on the corporate bond market: The focus of the Budget is the multiple schemes for government bonds mainly through additional room for foreign portfolio investors and exchange-traded funds in government bonds.
- Need for the well-developed market: Government’s moves are welcome but not enough. A well-developed bond market should draw upon-
- Domestic insurance funds.
- Pension funds and
- Mutual funds-which are capable of investing in corporate bonds across different schemes.
- Startups: The other leg of the “aspirational” Budget is the startups.
- Some relief on the tax they have to pay and on taxation of the Employee Stock Option Plans is welcome.
- Reluctance to abolish angel tax: But the reluctance to abolish the angel tax that results in harassment of start-ups and their investors is unfathomable.
Scheme for NBFC
- Allowing NBFCs into TReDS: Another welcome feature is the scheme to allow the non-banking financial companies into the Trade Receivables Discounting System (TReDS).
- TReDS is an ecosystem that aims to facilitate the financing and settling of trade-related transactions of small entities with corporate and other buyers, including government departments and public sector undertakings.
Changes in provisions for SMEs and their problems
- Audit threshold increased to 5 crore: To reduce the compliance burden on small retailers, traders and shopkeepers who comprise the Small and Medium-sized Enterprises (SMEs) sector, the threshold for audit of the accounts has been increased from ₹1 crore to ₹5 crores for those entities that carry out less than 5% of their business transactions in cash.
- Restructuring window increased: A provision in the budget extended the window for the restructuring of loans for micro, small and medium-sized enterprises till March 31, 2021.
- Problems faced by the SMEs
- Input tax rate higher for input than for the final goods: For many products produced by these enterprises, the tax rates are higher for inputs than the final goods.
- High taxes on imports and exports: In addition, many SMEs suffer from high taxes on imports of raw material and exports of intermediary services by them.
Other provision made to revive the private sector
- Recognising the need to revive the dying spirit of the private sector, several provisions have been made in the budget to revive the spirit of the private sector like-
- Decriminalisation of several civil offences by firms under the Companies Act.
- The abolition of dividend distribution tax (DDT).
- The assurance that tax-related disputes will be considered with compassion.
- The scheme to reimburse to exporters assorted duties, such as excise duty on transport fuels and electricity.
Conclusion
Everything considered the future of the economy will turn on whether the government delivers on the promises of public investment and the promises made to different sections of society including the taxpayer and companies. When it comes to reviving private sentiments, actions will speak much louder than the budgetary promises.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Cyber security in the wake of Huawei ban and concerns over cyber security in 5G age.
Context
India should grab cybersecurity opportunities instead of focusing on smaller issues like import tariffs during Trump’s visit.
Opportunity for India in the US-China trade war
- Technology will be an important front in the emerging trade war between the US and China.
- It will create significant opportunities for India as global supply chains re-adjust to geopolitical pushes and pull.
- In manufacturing: The immediate opportunity is in across-the-board manufacturing, especially if the Government puts in place a special task force to unclog the regulatory issues.
- In cybersecurity: Beyond manufacturing, the unfolding US-China technology war is creating opportunities for India in the cybersecurity space on a scale that could match Y2K.
Balance national security and industry economics
- The UK’s approach: It is a carefully constructed middle path.
- Not allowing high-risk vendors: The UK decided that “high-risk vendors” will not be permitted in its core networks.
- High regulatory and security oversight: High-risk vendors will also be subject to higher levels of regulatory and security oversight.
- Ability to switch: Operators are expected to have the ability to switch away from such vendors should the government so require.
- 35% restriction: The UK restricted to less than 35% of the equipment base of each telecom operator.
- The EU approach: The European Union is likely to adopt some variant of the British approach.
- This means Chinese-made equipment will be deployed across EU countries but under tighter surveillance, audit and assurance regime.
How is it going to create opportunities?
- 5G and more need for more security professionals
- More base stations: 5G networks will employ many more base stations than existing networks.
- The internet of things (IoT) is set to bring billions of connected sensors and devices online.
- The requirement of security professionals: Tightening security norms will require both telecom firms and their customers to employ a lot of cybersecurity professionals in a wide range of roles, of varying levels of sophistication and sensitivity.
- Shortage of cybersecurity professionals
- The problem is: the world is already short of cybersecurity professionals.
- Even before 5G networks are rolled out, estimates suggest that there are 2 to 3 million unfilled cybersecurity vacancies around the world.
- Scrutiny of the Chinese vendors and employment opportunities: The more stringent the security regimes around Chinese vendors, the greater the demand for cybersecurity professionals security regimes around Chinese vendors, the greater the demand for cybersecurity professionals.
- Where is the opportunity for India? The industry is responding to this shortage by employing more automation.
- But demand for human will increase: The demand for trustworthy, reliable and competent human beings to keep an eye on cyber threats will only increase.
- Where can hundreds of thousands of technology professionals who might be able to fill this gap come from? India and China.
- Advantage India: Chinese firms and individuals are unlikely to be chosen to keep an eye on Chinese equipment makers and state-linked cyber attackers, it is advantage India.
Can India grab this opportunity?
- Inadequate professionals in India: India doesn’t have adequate numbers of cybersecurity professionals either.
- Skill initiative by the government: The government has launched a skills initiative to plug the shortage, but we’re far away from addressing our own cybersecurity needs.
- India has all the necessary conditions to become as big a player in the global cybersecurity market.
- India has the numbers, the companies and the market-driven economic models that can produce the skills that the industry wants.
- Private sector’s role: During the 1990s’ information technology boom, India produced hundreds of thousands of software engineers not because of any government skills development programme, but because private firms popped up and supplied the skills that people and their employers wanted.
Way forward
- Government to government arrangements: Unlike the Y2K days, the global demand for cybersecurity professionals has entry barriers that firms and individuals cannot easily cross on their own. Government-to-government arrangements can help Indian firms and individuals get clearances for cybersecurity roles.
- Developing cybersecurity partnership: India will have to work on developing cybersecurity partnerships with the US, UK and the EU, focused on opening up their markets to Indian firms.
- Win the trust: The latter, for their part, must work on gaining the trust of the West’s national security establishments.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- Dealing with outbreaks of infectious disease.
Context
The World Health Organization (WHO) has declared the coronavirus outbreak a global emergency, as the outbreak continues to spread outside China.
Coronavirus outbreak and Chinese response
- What is coronavirus? Normally, coronavirus is a large family of viruses that are often the source of respiratory infections, including the common cold.
- A small number of common infecting virus: Most of the viruses are common among animals and only a small number of them infect humans.
- Mutation of animal base virus: Sometimes, an animal-based coronavirus mutates and successfully finds a human host.
- Dangers of rapid urbanisation: Rapid urbanisation that forces animals and humans into closer proximity (as in the “wet market” in Wuhan) creates a perfect petri dish from where such zoonotic outbreaks can originate.
Concern for India
- Reported case in Nepal and cause of concern for India: For India, the most critical is cases being reported in Nepal since India and Nepal share an open border though so far.
- All tests undertaken in India have been negative.
- A tweet by the Ministry of Health and Family Welfare on January 30 said that one positive case of a novel coronavirus patient
Understanding the new virus
- The possible mode of transmission: According to the World Health Organization, during previous outbreaks due to other coronavirus, human-to-human transmission occurred through droplets, contact and fomites (objects or materials which are likely to carry infection, such as clothes, utensils, and furniture).
- This suggests that the transmission mode of the 2019-nCoV can be identical.
- The transmission even in incubation period: More significant is the new understanding that the virus is contagious even during incubation, that is even before a patient exhibits any symptoms.
- This characteristic amplifies
Experience from the past outbreaks
- Comparison with SARS: Comparisons are being drawn the Severe Acute Respiratory Syndrome) outbreak in 2002-03.
- Zoonotic case: SARS is also a zoonotic case, part of the coronavirus family with clues pointing to horseshoe bats in China as the likely source.
- Late reporting by China in SARS:
- The first incidents were reported in Guangdong province in November 2002 but WHO was officially informed only after three months.
- Different response this time: Comparison with SARS: Comparisons are being drawn the Severe Acute Respiratory Syndrome) outbreak in 2002-03.
- Zoonotic case: SARS is also a zoonotic case, part of the coronavirus family with clues pointing to horseshoe bats in China as the likely source.
- Late reporting by China in SARS: The first incidents were reported in Guangdong province in November 2002 but WHO was officially informed only after three months.
- Different response this time: This time around, the Chinese government has been more open but the question being asked is whether it has been open enough?
- The difference in time to develop vaccine: For SARS, it took 20 months from the genome sequencing to the first human vaccine trials; for the 2019-nCoV, authorities in the U.S. are working on a deadline of 90 days.
Lessons from Kerala in Nipah outbreak
- Managing an outbreak with few casualties: Kerala managed to curtail the Nipah outbreak with few casualties.
- Nipah is also zoonotic and made the jump from fruit bats to humans.
- Though there were 17 deaths in India, effective quarantine measures by local authorities prevented the spread.
- Infectious disease on the rise: Infectious diseases including those of the zoonotic variety are on the rise in India.
- In addition, regions in India suffer from seasonal outbreaks of dengue, malaria and influenza strains.
- The nation-wide disease surveillance programme needs to be strengthened.
Conclusion
India should brace itself for the possible outbreak of infectious diseases and frame policies to deal with such outbreaks in fast and effective ways.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Green Growth Equity Fund
Mains level : Paper 3- Climate change, Steps taken by India to mitigate the impact, collaboration in innovation with other countries.
Context
Both India and the UK are exploring how best to develop the technology and investment needed to spur the transition from fossil to renewable fuels and make this a beneficial trajectory for everyone.
Areas of collaboration with the UK
- Resilience to climate change: To build resilience to climate risks, the U.K. is working with the Mahatma Gandhi National Rural Employment Act to build flood defences and river structures to encourage aquifer replenishment.
- Monsoon forecasting: Together with India’s Ministry of Earth Sciences, we are gathering land, sea and atmospheric data to help deliver a decisive step forward in monsoon forecasting.
- Electric mobility: On electric mobility, a major joint venture between UK’s EO Charging and India’s Yahhvi Enterprises will deliver world-class smart charging infrastructure for electric vehicles across India.
- Finance of Green Growth Equity Fund: On finance, the U.K. government committed 240 million pounds of anchor capital in the Green Growth Equity Fund.
- Its first investment going to Ayana Renewable Power, which is developing 800MW of solar generation capacity.
India’s efforts to tackle climate change
- India’s size and ecological diversity have placed it on the frontlines of global warming.
- India walking the talk on climate change: It is on course to deliver the target of 40 per cent electricity generation from non-fossil fuels by 2030.
- ISA: India has already demonstrated this personal commitment on the world stage with the India-led International Solar Alliance.
- CDRI: India also announced the global Coalition for Disaster Resilient Infrastructure, both of which the UK a part of.
- India and the UK can also work together on–
- Resilience and adaption.
- Clean energy.
- Green finance and nature-based solutions.
- Infrastructure development.
- Sustainable energy and smart cities.
Conclusion
India and the UK need to make sure that the present partnership on climate and the environment go from strength to strength in the future.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- India's foreign relations with the EU and concerns raised over CAA in EU parliament.
Context
The European Union Parliament’s discussion recently on India’s Citizenship (Amendment) Act or CAA, is a cause of concern.
Reactions in the West over the act
- In the U.K. and the U.S.: Parliamentarians in the U.K. and U.S. Congressmen, including Democratic presidential contenders, have asked India to “reconsider” the law and to “engage” with the protesters.
- Resolution in the EU parliament: The EU parliamentarians went a step further.
- Six critical resolutions: The EU parliament put out six different and extremely critical resolutions.
- One of the six articles spoke of the possible risk by the CAA and the proposed National Register of Citizens, of creating “the largest statelessness crisis in the world”.
- A sixth less critical resolution, but which worried about the “brutal crackdown” on protesters, was dropped.
- Diplomatic outreach by India
- After India’s intense diplomatic outreach, the parliamentarians agreed to put off voting on the resolution until after External Affairs Minister and the PM visit Brussels.
- The hope is that with the U.K. scheduled to leave the EU on January 31, interest in the anti-CAA resolutions will wane.
- Finally, the government has held that the CAA is India’s internal law.
India’s Reaction
- The sovereign right of India: While the government is right about India’s sovereign right, it would be deluding itself if it thinks any of these explanations are passing muster with the EU parliamentarians.
- Dilution of case against foreign interference: The government diluted its own case against foreign interference when it facilitated a visit by EU MEPs to Srinagar last year.
- By engaging the EU MEPs to avoid a vote in the EU Parliament this week, and offering to explain the reasons behind CAA, the government is diluting it further.
- Need to stop reference to Pakistan: New Delhi must also consider the impact of its repeated reference to Pakistan as the sole mover of any motion against it at world legislatures and fora.
- 626 MEPs of the total 751 were members of the groups that originally drafted the six resolutions, and it seems unlikely that Islamabad could have achieved such a majority.
Diplomatic toll
- Cumulative toll: The government must reflect on the cumulative toll on its diplomatic heft following international alarm over the CAA, plans for an NRC and the dilution of Article 370.
- Instead of pushing a positive agenda for India or handling global challenges, Indian diplomats seem to be overwhelmed keeping out any negative references to India at official fora.
Conclusion
India must take steps to address the concerns raised at the global level over the act and also prepare itself for the possible impact of such actions.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Provisions in the budget to revive the economy-need for the fiscal stimulus, policies of the Government with respect to agriculture.
Context
The stimulus needs to continue and the reforms will help to keep the economy going. If gross savings and investment rates keep on falling it is difficult to revive the economy.
What was expected in the last budget?
- Increase in pubic investment: The first thing, it said, was to increase public investment and not play statistical or token announcement games.
- The upswing in manufacturing growth, from negative to slightly less than 3 per cent (not industrial growth, because that includes mining and electricity), needed consolidation.
- Real outlays in infra did not go up: Real outlays on the infrastructure needed to go up, but they did not.
- So the push to private demand and a virtuous cycle of growth was missed.
- The implicit numbers in the Budget math comprise growth of around 7 per cent, assuming a 5 per cent inflation rate.
Prospects of the Agri-sector
- A good sign in Agri in midterm: For agriculture, in the medium-term, we are alright. Kharif grain production was 6.4 per cent higher than the previous five-year average output.
- Kharif oilseeds output around eleven lakh tonnes above the earlier year.
- This was, however, based on a delayed monsoon which caused problems and anxieties in the second quarter of this year.
- Nightmare of government unloading grain in the market: Foodgrains are doing well and we have huge food stocks.
- But, instead of a blessing, the government turned public operations in grain into a nightmare by announcing that FCI will unload grain at a reserve price less than MSP.
- Rabi acreage recovered and is now 8 per cent more than last year, but the policy of government operations to reduce the market price of grain by its intervention is a nightmare.
- This is bound to affect input growth in the expanded acreage in the winter crops.
Wrong policy in Agriculture
- Terms of trade against agriculture: The terms of trade are going against agriculture, according to CACP (Commission for Agricultural Costs & Prices) estimates, and selling of the grain will make it worse.
- While the fundamentals are alright, to wallop the farmer with a “cut in the reserve price” would harm the farmers.
- The rabi report of CACP will say that the terms of trade have gone down more.
Conclusion
The Government should continue with the stimulus and opt for the reforms in the economy only to keep the economy going. If the gross savings and investment rates keep falling it would be difficult to revive the economy. If savings keep up, the government will have actual space to divert some real resources to infrastructure investment.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- 6th Schedule, Demand for separate states in North-East.
Context
It is to be seen if the pact will lead to true autonomy, true peace, and true development.
What the pact involved?
- Which groups signed the deal?
- Four factions of the National Democratic Front of Bodoland (NDFB), along with an influential Bodo students’ organization and a Bodo civilian pressure group, signed the peace agreement with the central and Assam governments.
- What are the major concessions given?
- The Bodoland Territorial Area Districts, the name given to Kokrajhar, Baksa, Chirang and Udalguri, the four contiguous districts bordering Bhutan and Arunachal Pradesh, will now be known as Bodoland Territorial Region.
- Acknowledgement of Bodo homeland: The changed nuance from districts to the region is significant as it acknowledges a Bodo homeland within the state of Assam, without separating from Assam.
- Why this acknowledgement matters: This is dialled down from earlier rebel demands for a breakaway state and later suggestions for Union territory status.
- What is the significance of the change from district to the region?
- Satisfying identity aspiration: The renaming is designed to satisfy the identity and aspirations of the Bodo people.
- Not ceding territory solved tricky matter: Renaming also solved the politically tricky matter of ceding territory for the government of Assam.
- Ceding territory would also have fuelled similar demands from the other parts of the state like- Karbi Anglong, Dima Hasao and Cachar, which also have homelands of non-Ahom ethnicities.
- Avoiding similar demand from other states: Indeed, it could have affected the ongoing Naga peace process, leading Naga rebels to demand territorial and administrative autonomy in Naga homelands in Manipur.
Scope of the success of the pact
- Inherent vulnerability: There is already an inherent vulnerability to the Bodo peace deal even without the overhang of ceding territory.
- This is rooted in the birth of the Bodo rebellion, which began in the 1980s on account of administrative and development apathy of the state of Assam.
- Feeling of subsuming in Bodo: A feeling that Bodo, the people, the language, the identity, was subsumed by the Assamese and migrants.
- The relation between NDFB and the Front: The Bodoland People’s Front, is in majority in the District council. Will the front be comfortable with newly peaceable colleagues of NDFB?
Conclusion
The Government of Assam needs to ensure that the pact signed changes the situation on the ground and leads to a development on the ground. The state also needs to allay the fears in the Bengali-speaking minority. Moreover, true autonomy, true peace, and true development are always worth more than the paper on which they are promised.
Note4StudentsFrom UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3- Digital payments in India, growth potential, various security challenges and how to tackle it.
Context
Digital payments in India are witnessing consistent growth at a compound annual growth rate (CAGR) of 12.7%.
Growth potential and challenges involved in digital payments
- Expected growth in mobile wallet payment: The mobile wallet market is expected to continuously grow at a CAGR of 52.2% by volume between 2019-23, according to a recent report by KPMG.
- This digital explosion can be seen in the accelerating rise in the download and use of electronic wallets as well as an unprecedented increase in digital transactions/payments.
- UPI/IMPS use growth: Payment systems such as UPI/IMPS are likely to register average annualised growth of over 100%, according to RBI’s 2021 vision document.
- Challenge of Cybersecurity: Cybersecurity is one of the most critical challenges faced by stakeholders of the digital payment ecosystem.
- Types of risks involved: With more and more users preferring digital payments, the chances of getting exposed to cybersecurity risks such as-
- Online fraud
- Information theft.
- Malware or virus attacks are also increasing.
- Digital payment frauds account for about half of all bank frauds in India.
Steps taken by the RBI
- Guidelines issued: In view of risks, the Reserve Bank of India (RBI) has also issued some guidelines as security and risk mitigation measures for digital payments.
- It has also issued guidelines that limit the liability of customers on unauthorised electronic banking transactions
- Steps taken: The central bank has taken steps for securing card transactions, internet banking, electronic payments, ATM transactions, and prepaid payment instruments (PPIs).
Securing the fintech revolution
- Fraudsters building advanced technologies: The changing nature of cybersecurity attacks such as-
- Web application attack.
- Ransomware.
- Reconnaissance.
- The DDoS attack clearly establishes cyber-risk as a new reality.
- What needs to be done to secure the fintech revolution?
- A robust regulatory framework.
- An effective customer redressal framework.
- Foolproof security measures to enable confidence and trust.
- Incentives for larger participation and benefits similar to cash transactions- are some measures that can help ensure long-term success for digital payments.
- Leveraging technology: Technology can be leveraged for making popular methods of cashless payments secure.
- Biometric authentication-enabled cards can provide a greater layer of security by enabling replacement of the traditional PIN.
- Through biometric authentication, consumers can authenticate transactions by placing their finger on a fingerprint sensor embedded in the card.
- Ensuring security: Safety is ensured as the consumer’s fingerprint is stored only in the secure chip within the card and the same chip is used to match the scanned fingerprint with the stored one.
- The biggest advantage: The biggest advantage is that the bank or merchant cannot access the consumer’s biometric data, which also counters potential privacy concerns.
Conclusion
To reap the advantages of the promising fintech revolution steps must be taken to secure the digital environment.
Context
The policy currently being pursued is intended primarily to incentivise potential investors while social objectives and help in indigenisation are being jettisoned.
Call for more liberalisation and its possible impacts
- What reforms are asked for?
- Reforms such as labour market liberalisation and removal of constraints on the acquisition of land for industrial purposes are demanded.
- What could be their possible impacts?
- The negative impact such reform measures are likely to have on the incomes, living conditions and the economic security of the workers and the agricultural class.
- Counterproductive labour policy: The policy of freedom of hiring and firing of labour will be counterproductive as it would squeeze demand further in a situation of huge demand deficit.
Social sector and demand
- Neglect of human infrastructure: While talks of economic revival focus on infrastructure there is little talk of investment in human infrastructure, particularly in education and
- Conditional expenditure: On the contrary, the expenditure in social sectors is made conditional upon a higher rate of growth.
- The flawed premise of long term impact: Most mainstream economists believe that public expenditure in social sectors can only have a long- term impact on growth. Which is not entirely correct.
- The benefit of investment in human infrastructure:
- Increases demand in short-run: Investment in social sectors results in creating demand in the short run by way of opening avenues for large-scale employment.
- Competitiveness and sustainability: It imparts competitiveness and sustainability to the Indian economy in the medium and long run.
- Example of RTE, teacher employment and demand creation
- The recruitment of 5.7 million additional teachers over a period of, say, five years, can create huge scale demand.
- And, this is only one factor essential for universalising quality school education.
- There is also a large gap between the requirement of infrastructure in the schools and that available and built recently.
- The gap between requirement and availability: According to government data, only 12.5% of the schools covered by the RTE Act were compliant with RTE norms.
- Meeting these norms has the potential of creating employment on a large scale.
- Importance of health and education
- Education has a crucial role to play for an individual in gaining employment and retaining employability.
Conclusion
The gestation period of projects in social sectors is not as long as it is made out to be. It is, therefore, time for reprioritising education and health in the scheme of development strategy and the allocation of budgetary resources.
