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Type: Op-ed

  • RBI must tackle surplus liquidity on way to policy normalisation

    Context

    Monetary Policy Committee (MPC) voted to maintain status quo on policy rates, with one member continuing to dissent on the “accommodative” stance of policy.

    What is accommodative stance of policy?

    Accommodative monetary policy is when central banks expand the money supply to boost the economy. Monetary policies that are considered accommodative include lowering the Federal funds rate. These measures are meant to make money less expensive to borrow and encourage more spending.

    Overview of RBI policy measures during Covid-related lockdown

    • Cut in policy rates and injection of liquidity: The RBI had moved proactively to cut the repo and reverse repo rate and inject unprecedented amounts of funds into banks and other intermediaries.
    • The short-term interest rate at reverse repo level: a combination of the lower reverse repo rate and the large liquidity injection had resulted in a drop in various short-term rates down to (and occasionally below) the reverse repo rate, making it the effective operating rate of monetary policy.
    • Gap between repo and reverse repo increased to 65 bps: In addition, both the repo and reverse repo rates had been cut to 4.0 and 3.35 per cent, respectively, with the gap – the “corridor” – between the rates widening from the usual 25 basis points to 65 bps.

    Central bank’s role in modern monetary policy

    • Determining basic overnight interest rate: A central bank’s main role in modern monetary policy operating procedures is to determine the basic overnight interest rate, deemed to be consistent with prevailing macroeconomic conditions and their economic policy objectives, in balancing the ecosystem for sustained growth together with moderate inflation.
    • This is achieved through buying and selling very short-term (predominantly overnight) funds (mainly) from banks to keep a specified operating rate (the weighted average call rate in our case) very close to the policy rate.

    Liquidity management: Key pillar of monetary policy normalisation

    • Liquidity management: Liquidity management in the extended banking and financial system (which includes non-banking intermediaries like NBFCs, mutual funds and others) will now be the key pillar of normalisation.
    • This process is the domain of RBI and not MPC.
    • These operations will be conducted within RBI’s liquidity management framework.
    •  There are two sources of liquidity additions:
    • (i) Exogenous: which are largely due to inflows of foreign currency funds and outflows of currency in circulation (cash) from the banking sector.
    • (ii) Voluntary or endogenous: which is the result of the creation of base money by RBI through buying and selling of bonds, thereby injecting or extracting rupee funds.

    How RBI is managing liquidity surplus?

    • Stopped GSAP and OMOs: Post the October review, RBI had stopped buying bonds under the Govt Securities Asset Purchase (GSAP) and done negligible Open Market Operations (OMOs), thereby stopping addition of voluntary liquidity injection into the system, our own version of “tapering”.
    • Union government balances with RBI, arising from cash flow mismatches between receipts and expenditures, has hybrid characteristics and also impacts liquidity.
    • Use of reverse repo window: RBI has used the reverse repo window to absorb almost all this liquidity surplus from banks.
    • Allowed repaying TLRTOs: It has again allowed banks the option to prepay the outstanding borrowings from the Targeted Long Term Repo Operations (TLTROs), thereby potentially extracting another Rs 70,000 crores.

    How RBI is managing interest rate in the policy normalisation process

    • Increased rates and closed the gap between repo and reverse repo: RBI – post the October review – has gradually guided short-term rates up with a sure hand from near the reverse repo rate to close to the repo rate.
    • It has shifted its liquidity absorption operations from the predominant use of fixed rate reverse repos (FRRR) into (largely) 14-day variable rate reverse repo (VRRR) auctions to guide a rise in interest rates.
    • Since early October, these rates had steadily moved up in a smooth and orderly fashion up to 3.75-3.9 per cent.
    • The VRRR rates moving up have also resulted in various short-term funding interest rates like 90-day Treasury Bills, Commercial Papers (CP) and banks’ Certificates of Deposits (CD) moving up from the reverse repo rate or below in September to 3.5 per cent and higher since December.
    • The OMO and GSAP operations have also helped in managing medium- and longer-term interest rates in the yield curve.

    Way forward

    • There is a likelihood of further additions to exogenous system liquidity.
    • Other instruments to absorb surpluses: There might consequently be a need for other instruments to absorb these surpluses apart from VRRR auctions.
    • Liquidity surplus of non-banking intermediaries: Managing liquidity surpluses of the non-banking intermediaries, especially mutual funds, will be another challenge since they do not have direct access to VRRR operations.

    Consider the question “Since the onset of the Covid-related lockdowns, RBI had moved proactively to cut the repo and reverse repo rate and inject unprecedented amounts of funds into banks and other intermediaries. In this context, what are the challenges in monetary policy normalisation as RBI plans to absorb the excess liquidity and increase the interest rates ?”

    Conclusion

    The shift to the tightening phase, with hikes in the repo rate, is likely towards the late months of FY23, with shifts “if warranted by changes in the economic outlook”.

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    Back2Basics: Monetary Policy Corridor

    • The Corridor in monetary policy of the RBI refers to the area between the reverse repo rate and the MSF rate.
    • Reverse repo rate will be the lowest of the policy rates whereas Marginal Standing Facility is something like an upper ceiling with a higher rate than the repo rate.
    • The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.

  • Need for closer scrutiny of reduced out-of-pocket expenditure on health

    Context

    The National Health Accounts (NHA) report for 2017-18 is being celebrated widely as it shows that total public spending on health as a percentage of GDP has increased to a historic high of 1.35% of GDP.

    India’s total public spending on health

    • One of the lowest in the world: India’s total public spending on health as a percentage of GDP or in per capita terms has been one of the lowest in the world.
    • Majority spent by the States: The Union government traditionally spends around a third of the total government spending whereas the majority is borne by the States.
    • There has been a policy consensus for more than a decade now that public spending has to increase to at least 2.5% of GDP.
    • However, there has not been any significant increase so far.
    • Despite several pronouncements, it has continued to hover around 1%-1.2% of GDP.

    Why NHA report is being celebrated?

    • The National Health Accounts (NHA) report capture spending on health by various sources, and track the schemes through which these funds are channelised to various providers in a given time period for a given geography.
    • The National Health Accounts (NHA) report for 2017-18 is being celebrated widely as it shows that total public spending on health as a percentage of GDP has increased to a historic high of 1.35% of GDP.
    • The increase shown in NHA 2017-18 is largely due to increase in Union government expenditure.
    • Increase in Centre’s share: For 2017-18, the Centre’s share in total public spending on health has jumped to 40.8%.
    • However, if we study the spending pattern of the Ministry of Health and Family Welfare and the Ministry of AYUSH, we see that expenditure increased to 0.32% of GDP from 0.27% in 2016-17 — insufficient to explain the overall jump.

    Issues with NHA report

    • Expenditure of DMS included: Much of this increase has actually happened on account of a tripling of expenditure of the Defence Medical Services (DMS).
    • Compared to an expenditure of ₹10,485 in 2016-17, it increased to ₹32,118 crore.
    • Though the increasing spending for the health of defence personnel is a good thing, such spending does not benefit the general population. 
    •  Within government expenditure, the share of current health expenditure has come down to 71.9% compared to 77.9% a year ago.
    • Capital expenditure included: This essentially means, capital expenditure has increased, and specifically in defence.
    • There is a problem in accounting capital expenditure within the NHA framework.
    • Why capital expenditure needs to be left out: Equipment brought or a hospital that is built serves people for many years, so the expenditure incurred is used for the lifetime of the capital created and use does not get limited to that particular year in which expenditure is incurred.
    • The World Health Organization proposes to leave out capital expenditure from health accounts estimates, instead focus on current health expenditure.
    • Incomparable to other countries: In NHA estimates in India, in order to show higher public investment, capital expenditure is included; thus, Indian estimates become incomparable to other countries.
    • The NHA estimate also shows that out-of-pocket expenditure as a share of GDP has reduced to less than half of the total health expenditure.
    • NSSO 2017-18 data suggest that during this time period, utilisation of hospitalisation care has declined compared to 2014 NSSO estimates for almost all States and for various sections of society.
    • Sign of distress: The decline in out-of-pocket expenditure is essentially due to a decline in utilisation of care rather than greater financial protection.
    • Actually, the NSSO survey happened just after six months of demonetisation and almost at the same time when the Goods and Services Tax was introduced.
    • The disastrous consequences of the dual blow of demonetisation and GST on the purchasing power of people are quite well documented.
    • Another plausible explanation is linked to limitations in NSSO estimates. The NSSO fails to capture the spending pattern of the richest 5% of the population (who incur a large part of the health expenditure).
    • Thus, out-of-pocket expenditure measured from the NSSO could be an under-estimate as it fails to take into account the expenditure of the richest sections.

    Conclusion

    The reduction of out-of-pocket expenditure is a sign of distress and a result of methodological limitations of the NSSO, rather than a sign of increased financial protection.

     

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  • To check stubble burning, monitor policy implementation

    Context

    Every October and November, parts of north India are engulfed by a dense fog. Farmers resort to the practice due to the limited time they have between the harvesting of kharif paddy and sowing of the rabi wheat.

    Government initiatives to stop the stubble burning

    • Policy measures: In 2014, the Ministry of Agriculture and Farmers Welfare developed a National Policy for the Management of Crop Residue.
    • Ban by NGT: In 2015, the National Green Tribunal banned stubble burning in Rajasthan, Uttar Pradesh, Delhi, Haryana and Punjab.
    • Weak enforcement: The enforcement of the ban has, however, been weak, largely due to inadequate political will.
    • Legal measures: Stubble burning was considered an offence under Section 188 of the Indian Penal Code and in the Air and Pollution Control Act, 1981.
    • However, it has now been decriminalised as per a recent government announcement.
    • The Central Scheme on Promotion of Agricultural Mechanisation for In-Situ Management of Crop Residue was introduced in 2018-19.
    • Over 1.5 lakh crop residue management machineries have been supplied to farmers and custom hiring centres between 2018-19 to 2020-21.

    How successful were the measures?

    • As a result of these efforts, the number of crop residue burning events declined from 2016 to 2019.
    • This year satellite data did show an almost 50 per cent decline in the number of stubble burning events in Punjab, Haryana and UP in October.
    • However, after including burning events till November 21, the decline reduced to about 8 per cent.
    • Experts suggest that the respite in October was temporary as the initial decline can be attributed to the delayed withdrawal of monsoon.
    • It is thus evident that despite various government initiatives, substantial stubble burning continues in several states.

    Suggestions

    • Subsidise operational cost for crop residue management: To ease farmers’ financial burden, the government could consider subsidising operational costs along with providing farmers capital subsidy on crop residue management equipment.
    • Ex-situ management of crop residue: Ex-situ management of crop residue can also be explored under the schemes covering products such as bales and pellets for biomass power generation and supplementary feedstock in coal-fired power plants.
    • Awareness generation: Awareness generation and trust building exercises should be undertaken with the support of local civil society organisations.
    • Adopt targeted and cluster-based approach: Stubble burning is fairly concentrated in regions within states.
    • A targeted and cluster-based approach can be undertaken by identifying districts with a higher number of stubble burning incidents.
    • Central and state government interventions can then be concentrated in these districts.
    • Monitoring system at local level: To make these interventions effective, there is a requirement for formulating a robust monitoring system at the local level to track the progress of different activities.

    Consider the question “Stubble burning by farmers of the adjacent states contributes significantly to the air pollution in Delhi. In this context, examine the initiatives taken by the government to deal with the problem and suggest the way forward.”

    Conclusion

    Dealing with the practice of stubble burning requires efforts on multiple levels. A combination of these measures can complement the existing initiatives to encourage farmers to adopt zero stubble burning practices.

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  • Why India will be scrutinised at Summit for Democracy

    Context

    On December 9 and 10, US President Joe Biden will host a virtual “summit for democracy”, which will bring together leaders of 100 countries, civil society and private sector representatives.

    Challenges to India’s democratic image

    • India categorised as partly free: The US-based Freedom House’s “Freedoms of the World” index categorises India as only “partly free”; the Swedish V-Dem calls India an “electoral autocracy”.
    • Others lump India with Hungary, Turkey and the Philippines, where authoritarian leaders rule the roost.
    • Factors affecting India’s image: Rights violations in Kashmir, suspension of internet services in Kashmir, the conflation of political dissent with the colonial-era crime of sedition, the use of anti-terrorism laws to silence critics, the failure of the state to ensure freedoms guaranteed by the Constitution, the anti-Muslim amendments to citizenship laws have all but shredded India’s democratic image.

    Agenda of the summit

    • The agenda of the summit holds contemporary resonance in India.
    • Three broad themes: According to the State Department, the summit will convene around three broad themes — defending democracy against authoritarianism, addressing and fighting corruption, and promoting respect for human rights.
    • Leaders will be “encouraged” to announce “specific actions and commitments” to meaningful domestic reforms and international initiatives that advance the summit’s goals.

    Why India’s contribution to the agenda will be scrutinized closely

    • Cultural relativisms: One theme that emerges from these observations is that of cultural relativism — the “Indianness of India’s democracy”— “as India becomes ever more democratic, democracy will become ever more Indian in its sensibilities and texture”.
    • Role of civil society: A second theme is the role of civil society.
    • It has been accused of “defaming” or bringing harm to India, as espoused most recently in statements by the National Security Adviser, who also called them “the new frontier of a fourth-generation war”.
    • Ensuring democratic rights: Another noticeable theme is around the responsibility for ensuring democratic rights.

    Challenges for India

    • India has to reconcile the paradox inherent in submitting to international gaze at a global assembly where it is apparently required to make commitments adhering to “western” standards of democracy while claiming there is an Indian model.
    • In March this year, External Affairs Minister Jaishankar dismissed global standards and international metrics of democracy as rubbish.
    • For perspective, this is what China says too.
    • When President Biden brought up Beijing’s human rights record, President Xi Jinping told him there was no “uniform model” of democracy, and that dismissing other “forms of democracy different from one’s own is itself undemocratic.
    • The summit may intensify these differences, particularly because the host has no shining credentials either.
    •  If democracy-building was never the US goal in Afghanistan, as Biden declared, why make the unfreezing of Afghan assets overseas conditional to the Taliban turning democratic and inclusive overnight?

    Conclusion

    India’s expected participation in the summit will come against a rather bleak backdrop of relativism, misinformation, confusion, obfuscation and polarisation on issues of democracy, civil society and rights.

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  • The brush with crypto offers some lessons for regulation

    Context

    The fact that crypto exchanges successfully managed to signal legitimacy for their services and offer these tokens to a mostly-uninformed public for over a year provides lessons on how the government and sectoral regulators may need to act before the game gets out of hand.

    Regulating the technology innovation

    • Technology innovation typically remains a step ahead of regulatory frameworks, which are designed with current practices in mind.
    • Problems occur when these innovations push the envelope beyond accepted codes of social and ethical behaviour.
    • Digital lending apps: The joint parliamentary committee (JPC) on a proposed data privacy law that recently released its controversial report has pointed to dubious “digital” lending apps proliferating on the Android platform.
    • Blockchain technology, of which cryptos are a part, is an innovation that can facilitate transactions across assorted functions.

    Issues with unregulated cryptocurrencies in India

    • Some estimates show that over 15 million Indians have invested in cryptos, many of whom live in Tier-II or Tier-III towns.
    • But crypto exchanges in India have pushed the boundaries of this invention.
    • Important disclaimer not communicated properly: They have been advertising aggressively across media platforms often announcing important disclaimers at warp speed.
    • These provisos were supposed to communicate that cryptos are neither currencies nor strictly “assets”, and that these trading platforms are not truly “exchanges”, that crypto values are not determined by the usual dynamics governing other income-yielding assets, and that investing in cryptos was an exceedingly risky proposition.
    •  In the meantime, with advertising overload stimulating viewer interest, many scam crypto issuers and exchanges have sprung up in attempts to separate the gullible from their savings.

    Regulation challenges and how government is tackling it

    • The government has now stepped in, seized with the political perils of speculative investments turning sour.
    •  Unfortunately, sectoral regulators, such as the Reserve Bank of India (RBI) and Securities Exchange Board of India (Sebi), were unable to step in and act earlier because they are governed by specific Acts which do not mention cryptos as a category that needs regulation.
    • Need for enabling clauses: This episode provides a valuable lesson on how these Acts should perhaps include some enabling clauses that allow financial sector regulators to intervene whenever any intermediary tries to sell a financial service or any new innovative financial service poses the risk of disrupting financial stability.
    • Two important documents have recently been released which discuss entry norms into formal banking, both further strengthening RBI’s hands.
    • Think-tank Niti Aayog’s paper on licensing digital banks recommends an evolutionary path for digital banks that’s RBI-regulated at all stages: first a restricted licence, then a regulatory sandbox offering some relaxations, and finally a “full-stack” digital banking licence.
    • Simultaneously, RBI has accepted some of the suggestions of its internal working group and modified a few to make entry norms stricter, but has maintained silence on the entry of private sector corporate houses into banking.
    • The JPC’s concerns over unregulated digital lending have also focused attention on an RBI-appointed committee’s report on digital lending, given that multiple fintech-based online lenders have mushroomed during the pandemic.

    Conclusion

    This highlights the need for principle-based regulations, rather than rule-based regulations, to allow for flexibility and adaptability in a fast-changing technology environment.

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  • What the NFHS data reveals about inequality in India

    Context

    The release of the NFHS data (and the Niti Aayog’s study on developing a multi-dimensional index of poverty — MPI) has led to a considerable amount of discussion, and justifiably so.

    Understanding the progress and development: MPI

    • The MPI is an Oxford-based initiative that develops an exclusive broadly non-monetary living standard index of poverty.
    • MPI indices are the third in the series of global studies on poverty.
    • Global studies on poverty: Global studies started with the World Bank’s income/consumption-based measure of absolute poverty.
    • The UN expanded the monetary index adding health and education indicators via the Human Development Index (HDI).

    Evolution of poverty over time

    • Like with the other poverty indices (World Bank and HDI), most information and useful policy analysis comes via a study of the inter-temporal evolution of poverty. 
    • Regional inequality: Ajit Ranade acknowledges that regional inequality has existed for some time, but he argues that poverty incidence across Indian states even as per the MPI is astoundingly unequal.
    • T N Ninan talks about the simultaneous existence of Africa’s Sahel region and the Philippines in India.
    • He finds that the two Indias are not getting any closer.
    • Indeed, India’s development trajectory has not been uniform, but the regional imbalance of development cannot be viewed at a fixed point in time.

    Analysing the NHFS data

    • A detailed examination of the summary statistics reported in the NFHS data (large and small states of India for the two years 2015-16 and 2019-21), reveals the opposite result.
    • Convergence: The analysis reveals remarkable convergence in living standards, a convergence possibly unparalleled in Indian history and in the space of just five years.
    • NFHS reports the averages for all states, and for 131 variables, for two years 2015-16 and 2020-21.
    • Seventeen of these 131 welfare indicators are used to construct indices under four classifications.
    • Improvement in lives of girls/women: The first classification concerns itself with the improvement in the lives of girls/women (five indicators, for example, sex ratio, fertility, female education).
    • Housing conditions: The second bucket consists of housing conditions (three indicators, for example, improved sanitation, clean fuel).
    • Children’s welfare: The third list consists of children’s welfare (four indicators such as adequate diet, stunting)
    • Women’s welfare: The fourth classification includes women’s empowerment (five indicators, for example, owning a house, less spousal violence).
    • Given that Niti Aayog’s report primarily relies on the NFHS-4, these findings can be used as the baseline scenario to evaluate the delta — that is, the per cent change in indicators between NFHS-4 and NFHS-5.
    • The table reports the results for several states.

    • Seventeen indicators imply a maximum possible score of 1,700.
    • Kerala performs the best with an aggregate index of 1,300 in NFHS-5 — a very small 1.5 per cent increase from its 2015-16 value.
    • In contrast, Bihar increases its index by 56 per cent.
    • Punjab does better than Tamil Nadu and today has a higher index – 1,240 versus 1,178 in 2020-21.
    • UP (along with Rajasthan and MP) performs the best — a 60 plus per cent increase in the welfare index, more than five times the increase in the rich states.

    Major findings from the NHFS data

    • Convergence: Higher improvement by less developed states is evidence in support of catch-up, which suggests that regional imbalances are reducing, and in some indicators, rapidly so.
    • States such as UP, Bihar and Jharkhand are fast approaching similar standards for select indicators as some of the “developed” states.
    • Result of targeted intervention: This acceleration in catch up is no coincidence, but rather an outcome of an approach that involves targeted interventions to improve developmental outcomes.
    • The approach was not just limited to sanitation, proper fuel or electricity — interventions that are targeted to an individual household — but also to the holistic development of an entire region.

    Consider the question “What does NHFS-5 data reveal about the inequality in India?”

    Conclusion

    India has been, and was, not one but several Indias. What is remarkable about its recent history is the rapid process of uneven change — where progress is considerably higher for the poorer states — the convergent, and inclusive pattern of development. That is the real story behind the NFHS-4 and NFHS-5 numbers.

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  • Unresolved constitutional cases

    Context

    As 2021 draws to a close, a look at the Supreme Court of India’s docket reveals a host of highly significant constitutional cases that were long-pending when the year began, and are now simply a year older without any sign of resolution around the corner.

    How delay in judicial process matters differently for the State and individual?

    • While the violation of rights — whether through executive or legislative action — is relatively costless for the state, it is the individual, or individuals, who pay the price.
    • Making the Constitution effective: Consequently, a Constitution is entirely ineffective if a rights-violating status quo is allowed to exist and perpetuate for months, or even years, before it is finally resolved.
    • This point, of course, is not limited to the violation of rights, but extends to all significant constitutional questions that arise in the course of controversial state action.
    • Missing the accountability: Issues around the federal structure, elections, and many others, all involve questions of power and accountability, and the longer that courts take to resolve such cases, the more we move from a realm of accountability to a realm of impunity.
    • The longer such cases are left hanging without a decision, the greater the damage that is inflicted upon our constitutional democracy’s commitment to the rule of law.

    Significant cases that are unresolved

    [a] Challenge to the dilution of Article 370

    • There is the constitutional challenge to the Presidential Orders of August 5, 2019, that effectively diluted Article 370 of the Indian Constitution, and bifurcated the State of Jammu and Kashmir into two Union Territories, controlled by the Centre.
    • It raises the question of whether the Centre can take advantage of an Article 356 situation in a State — a time when no elected government and Assembly is in existence — to make permanent and irreversible alterations in the very structure of the State itself.
    •  Implications for federal structure: The answer will have important ramifications not just for Jammu and Kashmir but for the entire federal structure:
    • India has a long history of the abuse of Article 356 to “get rid of” inconvenient State governments, and a further expansion of the power already enjoyed by the Centre will skew an already tilted federal scheme even further.
    • Power of the Parliament to alter convert State into UT: The case also raises the question of whether, under the Constitution, the Union Legislature has the authority not simply to alter State boundaries (a power granted to it by Article 3 of the Constitution), but degrade a State into a Union Territory.
    • If it turned out that the Union Legislature does have this power, it would essentially mean that India’s federal structure is entirely at the mercy of Parliament.

    [2] Constitutional challenge to the electoral bond scheme

    • Opaque and structurally biased: The electoral bonds scheme authorises limitless, anonymous corporate donations to political parties, making election funding both entirely opaque to the people, as well as being structurally biased towards the party that is in power at the Centre.
    • Impact on integrity and right of the citizens to informed vote: In numerous central and State election cycles in the last four years, thousands of crores of rupees have been spent in anonymous political donations, thus impacting not only the integrity of the election process but also the constitutional right of citizens to an informed vote.
    • However, other than two interim orders, the Supreme Court has refused to accord a full hearing to the constitutional challenge.

    [3] Other significant cases

    • Statutory basis of the CBI: As far back as 2013, the Gauhati High Court held that the Central Bureau of Investigation (CBI) was not established under any statutory authority.
    • This verdict was immediately stayed when it was appealed to the Supreme Court, but in the intervening years, it has never been heard.
    • Challenge to the CAA: More recently, constitutional challenges to the Citizenship (Amendment) Act (CAA), filed in the immediate aftermath of the legislation’s enactment, remain unheard.
    • Challenge to the UAPA: The challenges to the much-criticised Section 43(D)(5) of the Unlawful Activities (Prevention) Act, which makes the grant of bail effectively impossible, and is responsible for the years-long incarceration of several people.
    • The challenge to Section 43(D)(5) is perhaps the case that most directly affects civil rights, as the section continues to be applied on a regular basis.

    Implications of the delay

    • Favouring one party: The Supreme Court’s inaction is not neutral, but rather, favours the beneficiaries of the status quo.
    • In other words, by not deciding, the Court is in effect deciding — in favour of one party — but without a reasoned judgment that justifies its stance.
    • Impact on accountability: Judicial evasion of this kind is also damaging for the accountability of the judiciary itself.
    • The Court’s inaction plays as significant a role on the ground as does its action, there is no judgment — and no reasoning — that the public can engage with.
    • Impact on the rule of law: For obvious reasons, this too has a serious impact on the rule of law.

    Consider the question “What are the implications of the delay in deciding the constitutionally significant cases? Suggest the way forward.”

    Conclusion

    The current CJI has been on record stressing the importance of the rule of law and the independence of the judiciary. One way of demonstrating that in action might be to hear — and decide — the important constitutional cases pending before the Court.

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  • Centre and states must work together to tackle the pollution in the NCR

    Context

    Supreme Court (SC) judges have pulled up the Delhi and central governments for not doing enough to correct the dire air quality situation. They also remarked on what message we are sending to the world.

    The pollution problem raises doubt about the quality of urbanisation in India

    •  If one looks at the capitals of G20 countries, Delhi’s air quality index (AQI) during November 1-15, is by far the worst at 312, as per World Air Quality Index Project.
    •  India’s distinction goes beyond Delhi.
    • As per the World Air Quality Report of 2020, prepared by IQAir (a Swiss organisation), of the 30 most polluted cities in the world, 22 are in India.
    • The problem is much deeper, raising doubts about the quality of our urbanisation.

    Contributing sources and their share

    • Contributing sources: As per the report of the Ministry of Environment, Forest, and Climate Change submitted to the UN Framework Convention on Climate Change following sources contribute in the given proportion:
    • Energy generation (largely coal-based thermal power) is the biggest culprit with a share of 44 per cent in greenhouse gas emissions,
    • Energy generation is followed by manufacturing and construction-18 per cent.
    • Agriculture-14 per cent.
    • Transport-13 per cent industrial processes and product use- 8 per cent and waste burning- 3 per cent.

    Suggestions to tackle Delhi’s pollution

    • As per the System of Air Quality Forecasting and Research (SAFAR), the reasons for poor AQI differ day to day.
    • On a particular day, say November 7, stubble burning contributed 48 per cent of Delhi’s air pollution, which fell to just 2 per cent on November 18.
    • Reduce rice cultivation: The Centre needs to sit down with neighbouring states and come up with a plan to reduce the rice area in this belt, which is already depleting the water table, creating methane and nitrous oxide, to incentivise farmers to switch to other crops through better returns than in rice cultivation.
    • Adopt EVs: To tackle vehicular pollution, we need a massive drive towards electric vehicles (EVs), and later towards green hydrogen when it becomes competitive with fossil fuels.
    • Charging stations: Scaling up EVs quickly demands creating charging stations on a war footing.
    • Develop carbon sink: Delhi also needs a good carbon sink.
    • Rejuvenating the Ridge area with dense forests and developing thick forests on both sides of the Yamuna may help.

    Enhancing farmers income through solar farming

    •  The Prime Minister has done a commendable job in Glasgow to commit that 50 per cent of India’s energy will be from renewable sources by 2030.
    • To replace coal in energy generation, solar and wind is the way to go at the all-India level.
    • The current model in solar energy is heavily tilted towards companies.
    • They are setting up large solar farms on degraded or less fertile lands.
    • We can supplement that model by developing solar farms on farmers’ fields.
    • This would require solar panels to be fixed at a 10 feet height with due spacing to let enough sunlight come to the plants for photosynthesis.
    • These “solar trees” can then become the “third crop” for the farmers, earning them regular income throughout the year, provided the law allows them to sell this power to the national grid.
    • The Delhi government’s pilot in Ujwa KVK land on these lines showed that farmers can earn up to Rs 1 lakh per acre per year from this “solar farming”.
    • This is on top of the two crops they can keep growing under those solar trees.
    • This will double farmers’ income within a year.

    Conclusion

    As deteriorating air quality grips the whole country, we need to work on multiple levels with coordination to tackle the problem.

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  • Realising the potential of India-Russia ties

    Context

    The Russian president is on visit to India. Visits by Russian presidents to India always invoke a sense of nostalgia. The Moscow-Delhi relationship dates back to the Cold War era and it has been strong ever since.

    Factors limiting the possibilities for bilateral partnership

    • The conflict between Russia and the West: One factor is the continuing conflict between the Kremlin and the West.
    • Absence of trade between India and Russia: The other is the absence of a thriving commercial relationship between India and Russia.
    • India-US relations: India’s relations with Washington has never been as intense as it is today.
    • Russia-China relations: Moscow’s embrace of Beijing is tighter than ever.
    • The US-China rivalry: That the US and China are now at each other’s throats makes the great power dynamic a lot more complicated for India and Russia.

    Importance of trade ties

    • Need for robust business ties: That Delhi and Moscow have problems with the best friend of the other would have been more manageable if business ties between India and Russia were solid.
    • Where India and Russia have greater freedom is in the economic domain, but their failure to boost the commercial relationship has been stark.
    • India-Russia annual trade in goods is stuck at about $10 billion.
    • Slow progress on enhancing trade and investment ties: During the last 20 summits with Putin, the two sides have repeatedly affirmed the importance of enhancing trade and investment ties; but progress has been hard to come by.
    • How to fix the problem? The problem clearly can’t be fixed at the level of governments.
    • The Russian business elites gravitate to Europe and China. The Indian corporations are focused on America and China.

    Russia-US ties and its implications for India

    • Implications for India? The structural constraints posed by the great power dynamic and vastly different appreciation of the regional security environment could be reduced if matters improve between Washington and Moscow.
    • In Washington, the Biden administration recognises the importance of ending this permanent crisis in US-Russian relations.
    • Winning a strategic competition with China: The Biden administration, which is focused on winning the intensifying strategic competition with China, values a stable relationship with Russia.
    •  Nothing pleases Moscow more than the image of being Washington’s equal on the global stage.
    • Relief for India: A less conflictual relationship between Washington and Moscow will be a huge relief for India; but Delhi can’t nudge them closer to each other.

    Why the partnership with India matters to Russia

    • Dangers of excessive reliance on China: Persistent conflict with the US, Europe, and Japan have moved Moscow ever closer to Beijing.
    • But Moscow knows the dangers of relying solely on a neighbour which has risen to greatness — the Chinese economy at nearly $15 trillion today is nearly 10 times larger than that of Russia.
    • Sustaining the traditional partnership with India: While resetting Russia’s relations with the West is hard, sustaining the traditional partnership with Delhi is of some political value to Moscow.
    • Longstanding defence ties: Russia is pleased that the S-400 missile sale has gone through despite strong US opposition.
    • For it signals Delhi’s commitment not to let Washington roll back India’s longstanding defence ties with Russia.
    • Russia knows India’s strategic cooperation with the US has acquired an unstoppable momentum; and Delhi knows it has no veto over the Sino-Russian strategic partnership.
    • Moscow and Delhi are learning to live with this uncomfortable unreality and stabilising their political ties within that context.

    Consider the question “While both India and Russia have drifted apart from the depth of past partnerships, there is a need for stabilising their political ties within the changed context.Comment.”

    Context

    Delhi and Moscow have no reason to be satisfied with the poor state of their commercial ties. The success of Monday’s summit lies not in squeezing more out of bilateral defence ties, but in laying a clear path for expansive economic cooperation, and generating a better understanding of each other’s imperatives on Afghanistan and the Indo-Pacific.

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  • The NIRF’s ranking of education institutions on a common scale is problematic

    Context

    The ranking of State-run higher education institutions (HEIs) together with centrally funded institutions using the National Institutional Ranking Framework, or the NIRF, is akin to comparing apples and oranges.

    Institute data

    • According to an All India Survey on Higher Education (AISHE) 2019-20 report, there are 1,043 HEIs.
    • Of these, 48 are central universities.
    • 135 are institutions of national importance,
    • 1 is a central open university,
    • 386 are State public universities,
    • 5 are institutions under the State legislature act,
    • 14 are State open universities,
    • 327 are State private universities,
    • 1 is a State private open university,
    • 36 are government deemed universities,
    • 10 are government aided deemed universities.
    • 80 are private deemed universities.

    Comparison of financial health of State HEI with Central HEIs

    • A close study of the above data shows that 184 are centrally funded institutions (out of 1,043 HEIs in the country) to which the Government of India generously allocates its financial resources in contrast to inadequate financial support provided by State governments to their respective State public universities and colleges.
    • The Central government earmarked the sums, ₹7,686 crore and ₹7,643.26 crore to the IITs and central universities, respectively, in the Union Budget 2021.
    • Ironically, out of the total student enrolment, the number of undergraduate students is the largest (13,97,527) in State public universities followed by State open universities (9,22,944).

    How NIRF ranks the education institutions?

    • Parameters set by the core committee of experts: The NIRF outlines a methodology to rank HEIs across the country, which is based on a set of metrics for the ranking of HEIs as agreed upon by a core committee of experts set up by the then Ministry of Human Resources Development (now the Ministry of Education), Government of India
    • The NIRF ranks HEIs on five parameters: teaching, learning and resources; research and professional practice; graduation outcome; outreach and inclusivity, and perception.

    Where do State HEIs lag on NIRF parameters?

    • Teaching, learning and resources include metrics viz. student strength including doctoral students, the faculty-student ratio with an emphasis on permanent faculty, a combined metric for faculty with the qualification of PhD (or equivalent) and experience, and financial resources and their utilisation.
    • Low faculty strength in State HEIs: In the absence of adequate faculty strength, most State HEIs lag behind in this crucial NIRF parameter for ranking.
    • The depleting strength of teachers has further weakened the faculty-student ratio with an emphasis on permanent faculty in HEIs.
    • Research and professional practise encompasses a combined metric for publications, a combined metric for quality of publications, intellectual property rights/patents and the footprint of projects, professional practice and executive development programmes.
    • Need for modernisation of laboratories: As most laboratories need drastic modernisation in keeping pace with today’s market demand, it is no wonder that State HEIs fare miserably in this parameter as well while pitted against central institutions.

    Issues with comparing State HEIs with Central HEIs

    • The difference in financial allocations diregarded: The financial health of State-sponsored HEIs is an open secret with salary and pension liabilities barely being managed.
    • Hence, rating such institutions vis-à-vis centrally funded institutions does not make any sense.
    • No cost-benefit analysis carried out: No agency carries out a cost-benefit analysis of State versus centrally funded HEIs on economic indicators such as return on investment the Government made into them vis-à-vis the contribution of their students in nation building parameters such as the number of students who passed out serving in rural areas, and bringing relief to common man.
    • While students who pass out of elite institutions generally prefer to move abroad in search of higher studies and better career prospects, a majority of State HEIs contribute immensely in building the local economy.
    • Issues in embracing technologies: State HEIs are struggling to embrace emerging technologies involving artificial intelligence, machine learning, block chains, smart boards, handheld computing devices, adaptive computer testing for student development.

    Consider the question “What are the challenges in the ranking of Higher Education Institutions in India? What are the issues faced by State HEI?”

    Conclusion

    Ranking HEIs on a common scale purely based on strengths without taking note of the challenges and the weaknesses they face is not justified. It is time the NIRF plans an appropriate mechanism to rate the output and the performance of institutes in light of their constraints and the resources available to them.

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