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Type: Op-ed

  • Melting of the Arctic ice and its geopolitical footprints

    Melting of the ice in the Arctic region has as much impact on the geopolitics as it has on the environment. The article explains in detail the geopolitics involved.

    Melting of Arctic ice and its impact on climate

    • Arctic region is warming up twice as fast as the global average.
    • The ice cap is shrinking fast — since 1980, the volume of Arctic sea ice has declined by as much as 75 percent.
    • The loss of ice and the warming waters will affect sea levels, salinity levels, and current and precipitation patterns.
    • The Tundra is returning to the swamp, the permafrost is thawing, sudden storms are ravaging coastlines and wildfires are devastating interior Canada and Russia.
    • The rich biodiversity of the Arctic region is under serious threat.
    • These changes are making the survival of Arctic marine life, plants, and birds difficult while encouraging species from lower latitudes to move north.
    • The Arctic is also home to about 40 different indigenous groups, whose culture, economy, and way of life are in danger of being swept away.

    Opportunities in the melting of the Arctic

    • The Northern Sea Route (NSR) which connects the North Atlantic to the North Pacific through a short polar arc was once not open for navigation.
    • The melting ice has now made it a reality and a trickle of commercial cargo vessels have been going through every summer since the last decade.
    • The opening of the Arctic presents huge commercial and economic opportunities, particularly in shipping, energy, fisheries, and mineral resources.
    • Oil and natural gas deposits, estimated to be 22 percent of the world’s unexplored resources, mostly in the Arctic ocean, will be open to access along with mineral deposits.

    Challenges in exploiting opportunities

    • Navigation conditions are dangerous and restricted to the summer.
    • There is a lack of deep-water ports, a need for ice-breakers, a shortage of workers trained for polar conditions, and high insurance costs.
    • Mining and deep-sea drilling carry massive costs and environmental risks.
    • Unlike Antarctica, the Arctic is not a global common and there is no overarching treaty that governs it, only the UN Convention of Law of the Sea (UNCLOS).
    • Large parts of it are under the sovereignty of the five littoral states — Russia, Canada, Norway, Denmark (Greenland) and the US — and exploitation of the new resources is well within their rights.

    Geopolitics of the Arctic

    • Russia, Canada, Norway, and Denmark have put in overlapping claims for extended continental shelves.
    • The US, not a party to UNCLOS, is unable to put in a formal claim but is under pressure to strengthen its Arctic presence.
    • For the present, Russia is the dominant power, with the longest Arctic coastline, half the Arctic population, and a full-fledged strategic policy.
    • Russia anticipates huge dividends from commercial traffic including through the use of its ports, pilots, and ice-breakers.
    • China, playing for economic advantage, has moved in fast, projecting the Polar Silk Road as an extension of the BRI, and has invested heavily in ports, energy, undersea infrastructure, and mining projects.

    What are the concerns for India

    • India’s extensive coastline makes it vulnerable to the impact of Arctic warming on ocean currents, weather patterns, fisheries, and most importantly, our monsoon.
    • Scientific research in Arctic developments, in which India has a good record, will contribute to our understanding of climatic changes in the Third Pole — the Himalayas.
    • The strategic implications of an active China in the Arctic and it’s growing economic and strategic relationship with Russia are self-evident and need close monitoring.

    Way forward

    • India has observer status in the Arctic Council, which is the predominant inter-governmental forum for cooperation on the environment and development (though not the security) aspects of the Arctic.
    • India should leverage its presence in Arctic Council for a strategic policy that encompassed economic, environmental, scientific, and political aspects.

    Consider the question “Melting of the Arctic opens the door for geopolitical game in the region and India cannot be immune to its implications. In the context of this, examine the developments in the region and how it impacts India’s interests?”

    Conclusion

    India must strive to protect its interest and strive for strategic policy for the region.

  • Issues with NEP’s regulatory architecture

    The article deals with the idea of single regulator for higher education in the country and the challenges it could fece.

    Recommendations for regulation of higher education

    • Regulatory bodies came up in response to the rapid growth of private participation since the 1980s.
    • Due to multiplicity of regulatory bodies in higher education, nearly all advisory panels appointed since 2005 have been asked for a single regulator.
    • National Knowledge Commission (NKC) concluded in 2007 that the plethora of agencies attempting to control entry, operation, intake, price, size, output and exit had rendered the regulation of higher education ineffectual.
    • The NKC recommended the setting up of an overarching Independent Regulatory Authority in Higher Education (IRAHE).
    • A major concern of the Yash Pal Committee constituted in 2009 was compartmentalisation of academia.
    • To promote such a dialogue, the Yash Pal committee recommended the creation of an apex body called the National Commission for Higher Education and Research (NCHER).
    • TSR Subramanian committee in 2016 proposed an Act for setting up an Indian Regulatory Authority for Higher Education (IRAHE) to subsume all existing regulatory bodies in higher education.
    • The draft national policy presented by the Kasturirangan Committee in 2019 proposed a National Higher Education Regulatory Authority (NHERA) as a common regulatory regime for entire higher education sector.
    • The draft NEP 2020 proposed a Rashtriya Shiksha Aayog (RSA) to coordinate, direct and address inter-institutional overlaps and conflicts.

    The regulatory regime under NEP 2020

    • NEP 2020 has now a single regulator for all higher education barring medical and law education.
    • It envisages an overarching Higher Education Commission of India (HECI), with four independent verticals comprising the National Higher Education Regulatory Council (NHERC), the National Accreditation Council (NAC), the Higher Education Grants Council (HEGC) and the General Education Council (GEC).
    •  The University Grants Commission (UGC) is to become HEGC while the other regulatory bodies will become professional standard setters.

    Fragmented regulation of medical education to continue

    • NEP-2020 provides for separate regulation for medical education.
    • But it envisions healthcare education as an inter-disciplinary system.[Allopathic student to have a basic understanding of Ayurveda, Yoga etc and vice-versa]
    • Multiple regulators in health education include the National Commission for Homoeopathy (NCH) and the National Commission for Indian System of Medicine (NCISM) and continuation of the Dental Council of India (DCI), Pharmacy Council of India (PCI) and the Indian Nursing Council (INC),
    • Thus, making medical education inter-disciplinary would be difficult due to multiple regulators.

    Lessons from the governance of medical education

    • The above example demonstrate the difficulty in designing a single regulatory framework to take care of the domain-specific needs of even within healthcare education.
    • But if accepted as a principle, it has the potential to delay, if not derail, the idea of a single regulator.
    • And should that actually happen, the idea of reining in the regulators might mean abandoning the idea of regulation of regulators.

    Issues with the single regulator proposed in NEP 2020

    • The regulatory architecture proposed in the NEP is far too monolithic for a system of higher education serving a geographically, culturally and politically diverse country like ours.
    • Even in the matter of privatisation, there is enormous diversity of players and practices.
    • Historically too, private participation in the running of colleges has not followed a single pattern.
    • To imagine that a uniform structure called Board of Governors can serve all different kinds of institutions across the country is flawed.
    • Such a vision calls for better appreciation of what exists, no matter how worrisome a condition it is in.

    Consider the question “What are the challenges in the regulation of higher education in the country? What are the concerns with the idea of single regulator for the regualtion of higher education in country?”

    Conclusion

    Before proceeding with the single regulator, the government need to pay attention to the issue of diversity in various aspects in the country.

  • Give adequate time for investigation

    Andhra Pradesh’s Disha Bill of 2019 seeks to reduce the time period for investigation of some crimes to seven days. Such a move could have several consequences. The article deals with that issue.

    State governments reducing the period of investigation

    • The proposed Maharashtra Shakti Act of 2020 will have a provision to complete the investigation within 15 days.
    • Maharashtra has taken cur from the Andhra Pradesh’s Disha Bill of 2019.
    • Disha mandated completion of investigation within seven working days for offenses such as harassment of women, sexual assault on children, and rape, where “adequate conclusive evidence” is available.
    • The interpretation of “adequate conclusive evidence” by the police shall remain a problem.

    What are the CrPC provisions?

    • The Criminal Procedure Code (CrPC) provides that investigations relating to offenses punishable with imprisonment up to 10 years must be completed within 60 days.
    • For offenses with higher punishment (including rape) the time limit is of 90 days of detaining the accused, else he or she shall be released on bail.
    • To speed up the process, the CrPC was amended in 2018 and the period of investigation was reduced from 90 to 60 days for all cases of rape.

    Factors that decide the time required

    • Generally, the time of investigation depends on several factors like the severity of the crime, the number of accused persons and agencies involved.
    • This is besides the fact that in many cases of rape, the victim remains under trauma for some time and is not able to narrate the incident in detail.
    • The speed and quality of investigation also depend on whether a police station has separate units of investigation and law and order.[ a long-pending police reform]
    • It also depends on the number of available IOs and women police officers, and the size and growth of the FSL and its DNA unit.

    Consider the question “Examine the reasons for the high crime rate in India? Recently, some state governments have reduced the duration for the investigation of crime. How such move could impact the investigation?” 

    Conclusion

    Setting narrow timelines for investigation creates scope for procedural loopholes that may be exploited during the trial. Therefore, instead of fixing unrealistic timelines, the police should be given additional resources so that they can deliver efficiently.

  • Need for comprehensive agri policy

    The article examines the reasons for declining farm incomes and the contribution of farm subsidies.

    Contribution of agriculture

    • India’s agriculture, which also supports the rural workforce, was, forever, living beyond its means.
    • In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on it was close to 70%.
    • Today, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
    • The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.
    • Agriculture has been facing adverse terms of trade over extended periods since the 1980s, and even during the phases when the terms of trade have moved in its favour, for instance in the 1990s and again since 2012-13, there was no distinct upward trend.

    Reason for fall in farm incomes: falling investment

    • The decline in farm incomes was triggered by growing inefficiencies.
    • This decline, in turn, was caused by a lack of meaningful investment in agriculture.
    • The share of this sector in the total investment undertaken in the country consistently fell from about 18% in the 1950s to just above 11% in the 1980s.
    • In the most recent quinquennium for which data are available (2014-15 to 2018-19), the average share of agriculture was 7.6%.

    India’s dismal performance in term of yields of major crops

    • If one ranks countries in terms of their yields in wheat and rice — India’s two major crops — the country’s ranks were 45 and 59, respectively, in 2019.
    • This ranking would go down sharply if the areas recording high yields, such as Punjab and Haryana, are excluded.
    • In other words, for farmers in most regions of the country, it is an uphill battle for survival amid low yields.

    Need for coherent policy for agriculture

    • The lack of a coherent policy for agriculture must surely be regarded among the most remarkable failures of the governments in post-Independence India.
    • Compare this failure with the United States, with less than 2% of its workforce engaged in agriculture, has been enacting farm legislations every four years since the Agricultural Adjustment Act was enacted in 1933.
    • These policies comprehensively address the needs of the farm sector through proactive support from the respective governments.

    Issue of the farm subsidies in India

    • The subsidies are the price that the country pays for the failure of the policymakers to comprehensively address the problems of the farm sector.
    • Wanton distribution of subsidies without a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
    • And, yet, the fundamental ills of Indian agriculture are not adequately addressed.
    • Members of the World Trade Organization (WTO) are expected to notify their agricultural subsidies as a part of their commitment under the Agreement on Agriculture (AoA).
    • India’s latest notification, for 2018-19, shows that the subsidies provided were slightly more than $56 billion.
    • In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) is provided to “low income or resource-poor farmers”, a terminology that the AoA uses.
    • However, the designation of this category of farmers is left to individual members.
    • India has notified that 99.43% of its farmers are low income or resource-poor.
    • According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.
    • Thus, almost the entire farm sector comprises economically weak farmers.

    Comparing subsidies given by various countries

    • America provided $131 billion in 2017 and the EU, nearly €80 billion (or $93 billion) in 2017-18.
    • Instead of absolute numbers; the ratios of subsidies to agricultural value addition for the three countries give a much better picture.
    • Thus, for 2017, India’s farm subsidies were 12.4% of agricultural value addition, while for the U.S. and the EU, the figures were 90.8% and 45.3%, respectively.
    • This then is the reality of farm subsidies that India provides.

    Consider the question “Indian agriculture has been contributing beyond its means since Indian independence. However, agri incomes have shown a gradual decline. What are the reasons for such a decline? How far has farm subsidies succeeded in solving the low-income problem?” 

    Conclusion

    India needs a comprehensive Agri policy to deal with the distortion created by the subsidies.

  • The climate policy needs new ideas

    The article highlights the issues with the current climate policies which are centred on the inequality.

    Inequality and climate change

    • Inequity is built into the climate treaty, which considers total emissions, size, and population, making India the fourth largest emitter.
    • According to the United Nations, the richest 1% of the global population emits more than two times the emissions of the bottom 50%.
    • .China, with four times the population of the U.S., accounts for 12% of cumulative emissions.
    • India, with a population close to that of China’s, for just 3% of cumulative emissions that lead to global warming.
    • In an urbanized world, two-thirds of emissions arise from the demand of the middle class for infrastructure, mobility, buildings, and diet.
    • Well-being in the urbanized world is reflected in saturation levels of infrastructure.
    • Growth in the developed countries is consumption-driven not production driven.
    • The vaguely worded ‘carbon neutrality’, balancing emitting carbon with absorbing carbon from the atmosphere in forests is a triple whammy for latecomers like India.
    • Such countries already have less energy-intensive pathways that will not encroach on others’ ecological space, a young population, and are growing fast to reach comparable levels of well-being with those already urbanized and in the middle class.

    What changes are required in the policies

    • At present, the focus is on physical quantities which indicates effects on nature.
    • The solutions require analysis of drivers, trends, and patterns of resource use. 
    • This anomaly explains why the link between well-being, energy use, and emissions is not on the global agenda.
    • Modifying unsustainable patterns of natural resource use and ensuring comparable levels of well-being are societal transformations.
    • New thinking must enable politics to acknowledge transformational social goals and the material boundaries of economic activity.

    India’s unique national circumstances

    • India must highlight its unique national circumstances.
    • For example, the meat industry, especially beef, contributes to one-third of global emissions.
    • Indians eat just 4 kg of meat a year compared to those in the European Union who eat about 65 kg.
    • Also to be noted is the fact that the average American household wastes nearly one-third of its food.
    • Transport emissions account for a quarter of global emissions.
    • Transport emissions are the symbol of Western civilization and are not on the global agenda.
    • Rising Asia uses three-quarters of coal drives industry and supports the renewable energy push into cities.
    • India, with abundant reserves and per capita electricity use that is one-tenth that of the U.S., is under pressure to stop using coal.

    Way forward

    • India has the credibility and legitimacy to push an alternate 2050 goal for countries currently with per capita emissions below the global average.
    • These goals should include well-being within ecological limits, the frame of the Sustainable Development Goals, as well as multilateral technological knowledge cooperation around electric vehicles, energy efficiency, building insulation, and a less wasteful diet.

    Conclusion

    Emissions are the symptom, not the cause of the problem. India, in the UN Security Council, must push new ideas based on its civilizational and long-standing alternate values for the transition to sustainability.

  • Reforms with the future and farming needs in mind

    Some provisions of the new farm laws are opposed by the farmers. The article explains the utility of these provisions.

    Major objections to farm laws

    • The first objection is that the Agricultural Produce Market Committees (APMC) will be eventually closed,
    • The second objection is that Minimum Support Prices (MSP) will be stopped,
    • The third fear is that corporates will take over the agriculture trade, and farmers’ land will be taken over by powerful corporates.

    Why reforms were needed

    • The gap between the agri-income of a farmer and that of a non-agriculture worker increased from ₹25,398 in 1993–94 to ₹1.42 lakh in 2011-12.
    • Aggregate food demand has fallen short of domestic production necessitating the export of a large quantity to prevent domestic prices from falling very low.
    • India is sitting on an excess stock of 60 lakh tons of sugar and nearly 72 million tons of extra buffer stock of wheat and rice which is causing a huge drain on fiscal resources.
    • India’s agri-exports are facing difficulty, imports are turning attractive as domestic prices are turning much higher.
    • Rural youth are looking for jobs outside agriculture and there is a serious problem of unemployment in the countryside.
    • There are numerous instances of market failure to the detriment of producers and consumers.
    • This is turning farmers to look at the government for remunerative prices through MSP for most agricultural products.
    • The growth rate in agriculture is driven by heavy support through various kinds of subsidies and output price support.
    • These costs and losses and subsidies will take away most of the tax revenue of the central government.

    3 Provisions and their utility

    1) Relation between MSP and APMC

    • APMC has nothing to do with the payment of the MSP.
    • The necessary and sufficient conditions for the MSP are procurement by the government, with or without the APMC.
    • Experience shows that even after fruits and vegetables were de-notified from the APMC, they continued to arrive at APMC mandis in large quantities while farmers got additional options.
    • The protesting farmers have raised concerns to keep the level-playing field for the APMC and private players, and the government has shown agreement to address this fully.

    2) Criteria for traders

    • Protesting farmers are also opposing the provision of the simple requirement of a PAN card for a trader.
    • After having a PAN card, even a farmer can go for trading, his son can do agri-business and other rural youth can undertake purchases of farm commodities for direct sale to a consumer or other agribusiness firms.
    • If stringent criteria such as bank guarantee, etc. are included in the registration, then the spirit of the new law to facilitate farmers and rural youth to become agribusiness entrepreneurs will be lost.

    3) Mistaking contract farming with corporate farming

    • Critics and protesting farmers are mixing contract farming with corporate farming.
    • The new Act intends to insulate interested farmers (especially small farmers), against market and price risks.
    • The Act is voluntary and either party is free to leave it after the expiry of the agreement.
    • It prohibits the transfer, sale, lease, mortgage of the land or premises of the farmer.
    • The Act will promote diversification, quality production for a premium price, export, and direct sale of produce, with desired attributes to interested consumers.
    • It will also bring new capital and knowledge into agriculture and pave the way for farmers’ participation in the value chain.

    Conclusion

    The policy reforms undertaken by the central government through these Acts are in keeping with the changing times and requirements of farmers and farming. If they are implemented in the right spirit, they will take Indian agriculture to new heights and usher in the transformation of the rural economy.

  • The possibility of a two-front war

    The possibility of a two-front war has been debated for long in the Indian security establishment. However, the Galwan valley incident has added an urgency to that possibility. 

     

    Two front situation

    • In the Indian military’s thinking, while China was the more powerful, the chance of a conventional conflict breaking out was low.
    • The Chinese intrusions in Ladakh in May this year, the violence that resulted from clashes have now made the Chinese military threat more apparent and real.
    • This comes at a time when the situation along the Line of Control (LoC) with Pakistan has been steadily deteriorating.
    • Between 2017 and 2019, there has been a four-fold increase in ceasefire violations.
    • The larger challenge for India’s military would come if the hostilities break out along the northern border with China.
    • In such a situation, it is unlikely that Pakistan would initiate a large-scale conflict to capture significant chunks of territory as that would lead to a full-blown war between three nuclear-armed states.

    China-Pakistan relationship

    • China has always looked at Pakistan as a counter to India’s influence in South Asia.
    • There is a great deal of alignment in their strategic thinking.
    • Military cooperation is growing, with China accounting for 73% of the total arms imports of Pakistan between 2015-2019.
    • It would, therefore, be prudent for India to be ready for a two-front threat.

    The dilemma for India: In resources and strategy

    • It is neither practical nor feasible to build a level of capability that enables independent warfighting on both fronts.
    • A major decision will be the quantum of resources to be allocated for the primary front. This is the dilemma of resources.
    • If a majority of the assets of the Indian Army and the Indian Air Force are sent towards the northern border, it will require the military to rethink its strategy for the western border.
    • This is the second dilemma.
    • Even though Pakistan may only be pursuing a hybrid war, should the Indian military remain entirely defensive?
    • Adopting a more offensive strategy against Pakistan could draw limited resources into a wider conflict.

    Way forward

    • We need to develop both the doctrine and the capability to deal with this contingency.
    • Capability building also requires a serious debate, particularly in view of the country’s economic situation.
    • We need to focus on future technologies such as robotics, artificial intelligence, cyber, electronic warfare, etc.
    • The right balance will have to be struck based on a detailed assessment of China and Pakistan’s war-fighting strategies.
    • Diplomacy has a crucial role to play.
    • India would do well to improve relations with its neighbors so as not to be caught in an unfriendly neighborhood.
    • The engagement of the key powers in West Asia, including Iran, should be further strengthened.
    • Relationship with Moscow should not be sacrificed in favor of India-United States relations given that Russia could play a key role in defusing the severity of a regional gang up against India.
    • Political outreach to Kashmir aimed at pacifying the aggrieved citizens would help in easing the pressure from the western front.

    Consider the question “India faces the possibility of a two-front war. What strategy India should follow to deal with such a challenge?” 

    Conclusion

    A politically-guided doctrine, comprehensive military capability, and exploring other options will help to deal with the China-Pakistan threat.

  • Dealing with the challenges India faces

    The article deals with the challeges India has to deal with in 2021 on the various front like foreign policy and economy.

    Major challenge of 2020

    • The COVID-19 pandemic, which embraced every segment of Indian society was the most insidious threat.
    • Since April, India has confronted an unprecedented situation on the border with China in eastern Ladakh.
    • Ever since, the border has remained live; as of now there is no end in sight.
    • Chinese behaviour at the border has led to a grave hiatus in India-China relations.
    • Internal problems such as Naxalite violence and Jammu and Kashmir endured during much of 2020.
    • The economy is in recession. India has slipped further down the scale in the Human Development Index.
    • Slippages have occurred in the Global Economic Freedom Index.

    How India should deal with the challenges ahead

    1) China challenge and foreign policy

    • In foreign policy India must not remain content or satisfied with the current stand-off with China in the Ladakh sector.
    • The conflict with China is enabling many of its neighbours to play China against India.
    • So, India should think of what better options are available to it to resolve that conflict
    • To tackle China, India must come up with a whole new paradigm of ideas on which further actions can be formulated.

    2) State of the economy

    • India must seek to enhance its competitive advantage vis-a-vis other nations.
    • India should focus on export-oriented economic strategy instead of looking inward to enlarge its economy.
    • India should enhance its export capacity.
    • India’s strength lies in its diversity, and its ability to utilise all available opportunities.
    • The other pressing challenge in 2021 would be job creation for the youth, who are India’s most abiding asset.
    • The government must take urgent steps to set right the disruptions in the labour market caused by the pandemic.
    • Creating new jobs in new industries should be a critical requirement.
    • Stimulating demand would ensure growth in job opportunities, and this should go hand in hand with this task.
    • The importance of such measures must not be underestimated.

    3) Restoring confidence in constitutional practices

    • The government to restore confidence in constitutional proprieties, practices and principles.
    • There is a crisis of confidence which is affecting the body politic.
    • The starting point would be effecting an improvement in Centre-State relations, particularly between Centre and States.
    • As digital technology advances, concerns that an unduly centralised Central government could use this to further reduce the independent authority of States will again need to be dispelled.
    • Effective cooperation between the Centre and the States must be restored as early as possible to instil confidence about India’s democratic future.

    Consider the question “What are the challenges ahead for Indian economy in the wake of economic disruption caused by the pandemic? Suggest the way to deal with these challenges.”

    Conclusion

    As 2020 comes to a close, it might be worthwhile to take a hard look at these issues to ensure that 2021 does not become another wasted year.

  • Dangers lurking beneath economic recovery

    As Indian economy recovers from the economic disruption caused by the pandemic, there are dangers of rising inequality and cosequently the rising inflation. The article deals with these issues.

    3 features of Indian recovery

    • 1) The number of new cases has fallen while the fatality rate continues to drop.
    • 2) India has rolled out one of the smallest fiscal support packages globally, with central government spending flat so far this year.
    • 3) Inflation is now a big problem, with consumer prices above the 6 per cent tolerance level for the past eight months.

    Consequences of low fiscal spending

    • It may seem that India is back on the path to recovery.
    • But  the low level of fiscal spending could leave behind other problems, such as rising inequality.
    • Although, in India there was a focus on vulnerable section, there were some misses, such as the urban poor being left out, and the overall outlay was small.
    • For instance, demand for the rural employment guarantee programme continues to outstrip supply.
    • There is the rise in inequality between large and small firms, which is likely to be felt by individual employees.
    • Large firms were helped by cost-cutting, low interest rates, access to buoyant capital markets and increased spending in the formal economy probably helped.
    • The smaller listed firms did not do as well.
    • Small firms are more labour intensive than large firms.
    • If small firms do poorly, it impacts a large number of people.
    • All this could impact demand over time.
    • Rising inequality could stoke inflation (in services particular).
    • Consumption patterns show that the rich in India tend to consume more services than the poor.
    • And rising inequality could, therefore, stoke inflation.

    Possibility of services inflation

    • 1) As a vaccine comes into play, there could be a release of pent-up demand for high-touch services.
    • 2) As large firms and their employees do relatively well, they are likely to demand more services, stoking prices.
    • 3) Many service providers did not do a regular annual price reset in 2020, so they may raise prices to cover the two years once demand picks up.
    • If inflation does become persistent and leads to tighter monetary policy, that could weigh on growth over time.

    Way forward

    • To control inflation in 2021, the RBI may have to take steps such as:-
    • 1) Gradually drain the excess liquidity in the banking sector,
    • 2) Provide a floor for short-term rates, which have fallen below the reverse repo rate.
    • 3) Narrow the policy rate corridor by raising the reverse repo rate.
    • A quicker exit from loose monetary policy could become another area where India differs from the world.

    Consider the question “What are the consequences of economic recovery in the wake of pandemic? Suggest the ways to deal with these consquences.”

    Conclusion

    Putting all of this together, it seems India will come full circle in 2021. For a while it was worried more about weak growth than high inflation. But as growth recovers, inflationary concerns could reappear.

  • Deconstructing the opposition between merit and reservation

    The Supreme Court in recent judgement in Saurav Yadav Vs. State of Uttar Pradesh made it clear that reservation and merit are not mutually exclusive. The article deals with this issue.

    Vertical Vs. Horizontal reservation

    • Articles 15(4) and 16(4) enable vertical reservation based on slotting the population in terms of SC, ST, OBC, and General Category.
    • But there is also a class of reservations that cuts across all these categories and are referred to as horizontal reservation.
    • Horizontal reservation includes a reservation for women differently-abled persons, freedom fighters, army veterans, etc.

    Specifying the relationship between horizontal and vertical reservation

    • In cases like Anil Kumar Gupta v/s State of Uttar Pradesh, the Court had made it clear that horizontal reservation ought to be generally understood in compartmentalized terms: recognition of inequalities within each vertical category.
    •  In a particular case, candidates were excluded from competing from the General Category positions even though they have scored more, simply because they were OBC.
    • However, some state governments are trying to use the open category seats as a quota for general category candidates.
    • The High Courts had been giving contrary directions: Uttar Pradesh and Madhya Pradesh excluded reserved category women for consideration in the general category.
    • Rajasthan and Gujarat, amongst others, included them.
    • The Supreme Court, in a three-judge bench, ruled against the UP government and clarified the relationship between horizontal and vertical reservations.

    Analyzing the judgment

    • The judgments reiterate the principle that groups eligible for horizontal reservation cannot be excluded from the open category seats because they are from other vertically reserved category communities, like SC or OBC.
    • Women from all categories are eligible to be considered for the open category.
    • It also made it clear that the open category seats are not meant to be a quota for the non-reserved categories.

    Merit Vs. Reservation

    • The Court has often contrasted merit with reservation.
    • But this has always been a mistaken view of the relationship between merit and reservation.
    • In principle, reservation is an instrument for identifying merit in individuals from historically marginalized communities.
    • The Court is saying that by excluding the adjustment of OBC women who had scored higher against general category seats, the UP government was ironically using the General Category to exclude meritorious candidates.
    • When the Court is using the term merit, it is simply pointing out that certain selection criteria are being used.
    • Such selection criteria are also within particular reserved categories: which is also a function of selection criteria, in this case, marks.
    • From this point of view, even those who advocate reservation do not fully give up on the meritocratic criteria of selection — they just apply it differentially.
    • What the Court was concerned with is fairness in the application of the selection criteria within the overall framework of reservation.

    Conclusion

    What the court is trying to say something more interesting: Members of the reserved category must be fully considered as falling under the rubric of being potentially meritorious.