Note4Students
From UPSC perspective, the following things are important :
Prelims level: CAATSA
Mains level: Paper 2- Challenges facing India in 2022
Context
Risks in 2022 could be both domestic and geopolitical, with many precepts that the world has been accustomed to being at risk. Democracy itself could face serious headwinds this year.
Challenges to democracy
- The world has recently seen the rise of authoritarian rulers in many countries.
- What is worrisome is that democratic tenets which have been under attack in recent years appear set to face more onslaughts this year.
- The United States, which was widely viewed as a major bulwark for democracy, appears to have developed certain pathological infirmities.
Geopolitical challenges and risks
[1] Disruption by China
- The role of China is possibly the most disrupting one, given the challenge it poses to the existing international order.
- Militarily, China is openly challenging U.S. supremacy in many areas, including ‘state-of-the-art weaponry’ such as hyper-sonic technology.
- China is now threatening Taiwan, which could well become one of the flashpoints of conflict in 2022.
- The dip in China’s economic profile in the past year and more could also lead to new tensions in the Asia-Pacific region in 2022.
[2] Russia-Ukraine conflict
- The other major risk of a war in 2022, stems from the ongoing conflict between Russia and Ukraine — the latter being backed by the U.S. and North Atlantic Treaty Organization (NATO) forces.
- During the past three decades, NATO has expanded its reach almost a 1,000 miles to the east in violation of an earlier tacit understanding.
- Russia appears determined that Ukraine should be the ‘last frontier’ and, if need be, ensure this through military force.
- The situation has grave possibilities and could result in a series of cyclical outcomes with considerable damage potential.
[3] Instability in the vast region
- Unrest in Kazakhstan: The current unrest in Kazakhstan, which till recently was one of the more stable Central Asian nations, is perhaps symptomatic of what is in store.
- Recent events in Kazakhstan demonstrates a sharper cleavage between the U.S.-led West and its principal opponents, Russia and China.
- This is not a good sign for the world already wracked by a series of coups or internecine strife as in Ethiopia, Libya and certain regions of West Asia and North Africa.
[4] Return of Taliban and security implications for India
- Shift in balance of power: Of particular significance to India is that the Taliban’s return to power in Afghanistan has led to a material shift in the balance of power in India’s periphery.
- Developments in Afghanistan have fuelled the ambitions of quite a few ‘anti-state militant groups’ across the region.
- Even in Pakistan, the Tehrik-e-Taliban Pakistan (TTP) has become energised and is enlarging its sphere of action to other parts of Asia, notably Kazakhstan.
- This will have an unsettling effect across large parts of Asia.
- New evidence suggests that on India’s eastern flank, viz. Indonesia, a resurgence of radical Islamist activities is taking place.
- The Jemaah Islamiyah has reportedly become more active in Indonesia.
[5] India’s border issue with China
- The most serious issue that India confronts today is how to deal with a China that has become more confrontational.
- India’s membership of the Quad still rankles as far as China’s psyche is concerned, and during 2022, may well result in China embarking on new adventurist actions at many more points on the Sino-Indian border compelling India to react.
- Additionally, India will need to determine how best to respond to China’s provocations.
- Strengthen military posture: India would need to strengthen its military posture, both as a means to deter China and also to convince India’s neighbours that it can stand up to China.
Challenges ahead for India
- Challenge in Central Asia: Diplomatically, in 2022, India may find itself vulnerable in dealing with the turmoils which have occurred in two areas of strategic interest to it, viz. Central Asia and West Asia.
- Challenge in West Asia: In West Asia, the challenge for India is how to manage its membership of the Second Quad (India, Israel, the United Arab Emirates and the U.S.) with the conflicting interests of different players in the region.
- Limits to balancing: There is a limit to the kind of balancing act that India can perform, whether it be with regard to buying S-400 missile systems from Russia, risking potential sanctions from Washington under Countering America’s Adversaries Through Sanctions Act (CAATSA) or manoeuvering between the Arab States, Israel, Iran and the U.S. in West Asia.
Conclusion
Facing a host of unprecedented challenges, India’s leaders and diplomats must not only take stock of the dangers that exist but also be ready on how to manage the risks that are well evident.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Japan relations
Context
The year 2022 marks the 70th anniversary of the establishment of diplomatic relations between Japan and India.
Historical background of India-Japan relationship
- We have a long history of people-to-people exchanges that can be traced back to the sixth century.
- Buddhism was brought to Japan and, in 752.
- During Meiji Restoration in the late 19th Century — Japan needed natural resources to modernise its industry.
- Many Japanese travelled to India to purchase cotton, iron ore, etc.
- Formal relations between Japan and India began in 1952.
- After the Second World War, instead of signing the multilateral San Francisco Peace Treaty, India opted for concluding a bilateral peace treaty with Japan, considering that honour and equality should be ensured for Japan to rejoin the international community.
- But even before the establishment of diplomatic relations, the goodwill between the people of the two countries was deeply rooted through business, academic and cultural exchanges.
- After 70 years of multi-layered exchanges, the relationship between our two countries grew into a “Special Strategic and Global Partnership”.
Future possibilities
[1] As democratic countries, contribute to global peace and prosperity
- As democratic countries in Asia, India and Japan can cooperate to contribute to global peace and prosperity.
- We share political, economic and strategic interests based on the firm foundations of common values and traditions.
- We are continuing our efforts to build a rules-based free and open international order.
[2] Cooperation in security
- There are a plethora of fields that we can cooperate in security issues including cyber security, outer space and economic security.
[3] Augmenting economic relations
- For long, Japan has been the largest ODA (Official Development Assistance) donor to India.
- One of the most recent and ongoing examples of our collaboration is the Mumbai-Ahmedabad High-Speed Rail project.
- Japan is also one of the largest investors in India.
- Both countries have also promoted economic cooperation in other countries to enhance social infrastructure and connectivity.
- Our economic partnership can further strengthen the economy of the Indo-Pacific, as well as the world economy.
[4] Cultural exchange
- Cultural exchanges including literature, movies, music, sports and academics are essential for our relations, enabling a better understanding.
Consider the question “The year 2022 marks the 70th anniversary of the establishment of diplomatic relations between Japan and India. The future offers enormous possibilities for the partnership. In context of this, examine the future possibilities the two countries can explore.”
Conclusion
India-Japan ties will continue to flourish. Our long history substantiates that.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Meiji Restoration in Japan
- In Japanese history, the political revolution in 1868 that brought about the final demise of the Tokugawa shogunate (military government)—thus ending the Edo (Tokugawa) period (1603–1867)—and, at least nominally, returned control of the country to direct imperial rule under Mutsuhito (the emperor Meiji).
- In a wider context, however, the Meiji Restoration of 1868 came to be identified with the subsequent era of major political, economic, and social change—the Meiji period (1868–1912)—that brought about the modernization and Westernization of the country.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Geo-tagging
Mains level: Paper 3- Agri-reforms in Punjab
Context
It is no secret that Punjab, once the frontrunner of Indian agriculture, is struggling to retain its dynamism.
Need to diversify
- While Punjab ranked at the top of major Indian states in terms of per capita income during 1967-68 to 2002-03, it has slipped below the 13th position.
- Punjab’s agricultural growth rate, at 5.7 per cent, was more than double the country’s average of 2.3 per cent during 1971-72 to 1985-86.
- This has reversed between 2005 and 2019 with Punjab at 1.9 per cent and India at 3.7 per cent.
- Agriculture least diversified state: With almost 85 per cent of the gross cropped area under wheat and rice, agriculture is least diversified in the state.
- Mandi transactions cost about 8.5 per cent of the MSP, the highest in the country, making Punjab wheat and rice less competitive.
What explains low diversification in agriculture?
- Policies: Guaranteed MSP for wheat and paddy, backed by assured procurement, free power and highly subsidised fertilisers, has disincentivised diversification.
- Political economy: The political economy around wheat and rice is so intense that any effort to address its distortionary impact is met with fierce opposition by vested interest groups.
How to recalibrate Punjab agriculture towards higher, sustainable growth?
- Augment livestock and milk processing: While fruits and vegetables account for 7.4 per cent of the value of the output of agriculture and allied sectors, livestock accounts for 31.5 per cent and fisheries less than 1 per cent.
- The state has the highest per capita availability of milk but it can process less than 20 per cent of it.
- Promoting mega parks for value addition in fruits and vegetables, milk, and other livestock products through medium and small enterprises will strengthen its competitiveness.
- Strengthen market for seed potato: It is also a significant player in seed potato and with the right package of practices, traceability systems, and infrastructure, the market for Punjab seed potato can be strengthened.
- Scaling up alternative marketing channel: Alternative marketing channels for fruits and vegetables such as direct marketing, contract farming, and exports have been in place but these models need to be scaled up with the right ecosystem.
- Shift to demand-driven agriculture: Punjab needs to switch from supply-driven agriculture to demand-driven agriculture.
- The demand for fisheries, poultry, dairy, and fruits and vegetables is increasing way faster than the demand for wheat and rice.
- Rationalise mandi charges: Rationalising mandi charges to not more than 3 per cent will attract private sector investments in building efficient value chains.
- Rationalise subsidies: Time-bound incentives in the form of freight subsidies for exporters of high-value agri-produce, tax exemptions for the processing of perishable commodities for value chain players would be more rational than the overloaded subsidies of urea and free power.
- Use technology and start-up revolution: Punjab should leverage the start-up revolution that is unfolding in India, and use technology to ensure optimal utilisation of resources, expand markets, and augment farmers’ income.
- Geo-tagging of farms can address concerns related to long-term leasing of land that is critical for large-scale investments and enable vibrant agricultural land markets.
- Innovations in supply chain management, be it automated grain silos or state-of-art herd management will not only optimise the use of resources but also bring in traceability of farms and animals, early monitoring and prevention of disease outbreaks, and contain value chain losses.
How to manage financial resources?
- Rationalise urea subsidy: It should rationalise its fertiliser subsidy regime by moving towards cash transfers on a per hectare basis and free up fertiliser prices.
- Include urea in nutrient-based subsidy scheme: If that’s not possible, then urea should be included in the nutrient-based subsidy scheme.
- Bring soluble fertiliser under subsidy: Bring soluble fertilisers under subsidy, which will enhance fertiliser use efficiency through fertigation.
- This will also help reap environmental gains.
- Rationalise food subsidy: Food subsidy can also be rationalised through direct cash transfers replacing PDS, as Punjab is a grain surplus state.
Conclusion
Both environmental and financial sustainability concerns related to business-as-usual farming in Punjab call for a rebooting strategy.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Taxing cryptocurrencies
Context
Notwithstanding the eventual introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill in Parliament, cryptocurrencies continue to proliferate.
Provisions in Income Tax Act 1961 to tax cryptocurrencies
- Cryptocurrencies not mentioned in Income Tax Act, 1961: Although the Income Tax Act, 1961 (“IT Act”) does not specifically mention cryptocurrencies, it does cast a wide enough net to bring crypto transactions under its ambit.
- Capital asset: Trading in cryptocurrency may be classified as transfer of a ‘capital asset’, taxable under the head ‘capital gains.
- Business income: If such cryptocurrencies are held as stock-in trade and the taxpayer is trading in them frequently, the same will attract tax under the head ‘business income’.
- Even if one argues that crypto transactions do not fall under the above heads, Section 56 of the IT Act shall come into play, making them taxable under the head ‘Other sources of income’.
Challenges in taxing cryptocurrencies
- The above provisions in themselves are not sufficient in order to put in place a simple yet effective taxation regime for cryptocurrencies.
[1] Varied interpretations:
- First, the absence of explicit tax provisions has led to uncertainty and varied interpretations being adopted in relation to mode of computation, applicable tax head and tax rates, loss and carry forward, etc.
- For instance, the head of income under which trading of self generated cryptocurrency (currencies which are created by mining, acquired by air drop, etc.) is to be taxed is unclear.
- Since there is no consistency in the rates provided by the crypto-exchanges, it is difficult to arrive at a fair market value.
- Similarly, when a person receives cryptocurrency as payment for rendering goods or services, how should one arrive at the value of the said currency and how should such a transaction be taxed?
[2] Identifying tax jurisdiction
- It is often tricky to identify the tax jurisdiction for crypto transactions as taxpayers may have engaged in multiple transfers across various countries and the cryptocurrencies may have been stored in online wallets, on servers outside India.
[3] The anonymity of taxpayer
- The identities of taxpayers who transact with cryptocurrencies remain anonymous.
- Exploiting this, tax evaders have been using crypto transactions to park their black money abroad and fund criminal activities, terrorism, etc.
[4] Lack of third party information on crypto transaction
- The lack of third party information on crypto transactions makes it difficult to scrutinise and identify instances of tax evasion.
- One of the most efficient enforcement tools in the hands of Income Tax Department is CASS or ‘computer aided scrutiny selection’ of assessments, where returns of taxpayers are selected inter alia based on information gathered from third party intermediaries such as banks.
- However, crypto-market intermediaries like the exchanges, wallet providers, network operators, miners, administrators are unregulated and collecting information from them is very difficult.
[5] Physical goods/services may change hand in return for cryptocurrencies
- Even if the crypto-market intermediaries are regulated and follow Know Your Customer (KYC) norms, there remains a scenario, where physical cash or other goods/services may change hands in return for cryptocurrencies.
- Such transactions are hard to trace and only voluntary disclosures from the parties involved or a search/survey operation may reveal the tax evaders.
Steps need to be taken
- Statutory provision: The income-tax laws pertaining to the crypto transactions need to be made clear by incorporating detailed statutory provisions.
- Awareness generation: This should be followed by extensive awareness generation among the taxpayers regarding the same.
- Separate mandatory disclosure: The practice of having separate mandatory disclosure requirements in tax returns (as is the case in the United States) should be placed on the taxpayers as well as all the intermediaries involved, so that crypto transactions do not go unreported.
- Strengthen international legal framework: Additionally, the existing international legal framework for exchange of information should be strengthened to enable collecting and sharing of information on crypto-transactions.
- This will go a long way in linking the digital profiles of cryptocurrency holders with their real identities.
- Training tax officers: the Government must impart training to its officers in blockchain technology.
- The United Nations Office on Drugs and Crime’s ‘Cybercrime and Anti-Money Laundering’ Section (UNODC CMLS) has developed a unique cryptocurrency training module, which can aid in equipping tax officers with requisite understanding of the underlying technologies.
Consider the question “What are the provision in Income Tax Act 1961 to tax the cryptocurrencies? What are the challenges in taxing cryptocurrencies? “
Conclusion
It is certain that cryptocurrencies are here to stay. A streamlined tax regime will be essential in the formulation of a clear, constructive and adaptive regulatory environment for cryptocurrencies.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Women in Indian army
Context
Last year, the Supreme Court threw open the hallowed portals of the National Defence Academy for women. Something to truly celebrate on January 15, Army Day, this year.
Background
- The first batch of women officers was inducted into the Indian Army in non-medical roles via the Short Service Commission in 1992.
- Since 2008, women were inducted as permanent commissioned officers in the legal and education corps and as permanent commissioned officers in eight more non-combative corps in 2020.
The low number of women in Army
- As recent as 2020, women officers in the Indian army (excluding the medical corps) numbered just about three per cent.
- Compare this to 16 per cent in the US, 15 per cent in France and 10 per cent in both Russia and the UK.
Significance of allowing women to NDA
- When in February 2020, the Supreme Court decreed that women officers should get command positions on par with male officers, it also effectively dismissed the military’s earlier objection that it would lead to “operational, practical and cultural problems”.
- The SC went on to say that denying women commands based on the above argument was discriminatory and reinforced stereotypes.
- Last year, the Supreme Court threw open the National Defence Academy for women to compete for the seats and subsequent permanent commission in the Indian army in any corps they desire, including the combat ones.
- Addressing the shortage of officers: This may effectively address the long-standing shortage of officers in the Indian army in general. In response to a question in Rajya Sabha a month ago, the Minister of State for Defence said the Army has a shortage of 7,476 officers.
- This torch may also help confront the chauvinism, often misspelt as chivalry, that indisputably exists in the Army.
Conclusion
The move promises to change the composition of this arm of the defence force not just quantitatively, but also qualitatively — both dire requirements of the force at present.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Back2Basics: Permanent Commission (PC) Vs. Short Service Commission (SSC)
- SSC means an officer’s career will be of a limited period in the Indian Armed Forces whereas a PC means they shall continue to serve in the Indian Armed Forces, till they retire.
- The officers inducted through the SSC usually serve for a period of 14 years.
- At the end of 10 years, the officers have three options.
- A PC entitles an officer to serve in the Navy till he/she retires unlike SSC, which is currently for 10 years and can be extended by four more years, or a total of 14 years.
- They can either select for a PC or opt-out or have the option of a 4-years extension.
- They can resign at any time during this period of 4 years extension.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSP
Mains level: Paper 3- Making farming viable through legal MSP
Context
There has been debate on the issue of MSP with some arguing against it while some favouring it.
The issues with MSP
- The broad strands of argument against MSP are:
- MSP hinders the price discovery: Providing MSP does not allow the market to discover the prices; if market cleared prices are less than MSP, then the only buyer would be the government; this would render the government bankrupt.
- FPO as a mechanism to deal with markets: If markets have any distortions, the way to negotiate it is through Farmer Producer Organisations (FPOs) — as demonstrated by Amul.
- Provide income support through DBT: A better way to address the possible income gap is to give an income support-based direct benefit transfer (DBT).
Why MSP is necessary?
1] Barriers in agri-markets
- Through tariffs and other measures, we have built a national barrier on markets, where gates are opened on the basis of strategic intent.
- If we were to open our borders for free movement of grains from elsewhere, we may even argue for unlocking agricultural land for more lucrative purposes without worrying about food self-sufficiency, buffer stocking and domestic food safety.
- We may have to accept a national food safety for at least the essential foodgrains and pulses.
2] Role of MSP as price signalling and why it needs to be given as legal guarantee
- Disproportionate risk: If we were to look at farming, we realise that this exposes itself to disproportionate risks.
- First, there is no stop-loss mechanism after sowing the seed, except for destroying the crop for the season.
- This enterprise not only has the usual business risks but also has the enhanced risk of the force majeure elements that destroy the enterprise — a sudden hail storm, drought, unseasonal showers, a pest attack, a locust attack — there are too many things that the farmer cannot control.
- Therefore, an MSP provides a powerful signal to the farmer to exercise the choice of sowing a particular crop because the farmer can back-calculate the expected margin.
- If MSP is a signal that helps the farmer to choose a crop, then it must remain a choice at the harvest time as well.
- The significance of MSP is only when the markets do not clear the price.
- In such a situation, the farmer gets a return less than the MSP and by this argument we are escorting the farm fraternity towards bankruptcy.
- A legal guarantee is, therefore, needed.
- The argument that the state will have to procure all the floating stock in the market and may become bankrupt is fallacious.
- The intervention of the state in the markets usually covers information asymmetry, arbitrage and cools the markets when they get overheated.
3] Why not opt for income support instead of MSP?
- Income support does not address the issue of viability of the farming operations.
- There is no doubt that we need to make farming viable.
- It is important to address the prices of each crop as a strategic signalling mechanism: For crops that would be encouraged and those that would be discouraged.
4] Issues with drawing parallels with AMUL
- While the Amul model recognised the inherent power of markets, it took about five decades to make the system competitive — the investments were made in breed improvement, free veterinary services, better cattle feed, capital subsidy for processing plants, and return-free capital as investments.
- The nature of subsidies was smart and innovative.
- Dairying was the last bit to be liberalised, and it enjoyed protection even when we opened up in 1991.
Way forward
- Modernise the markets: We need to modernise the markets and storage and processing facilities.
- There is no point in conflating modernisation with liberalisation.
- Investment: If we need to take Indian agriculture on the path of Amul, we need to start making those investments now.
Consider the question “What are the objectives of providing MSP? How legal basis to MSP could help in making agriculture viable in India?”
Conclusion
Let us use the MSP framework smartly on diversified crops, on a decentralised basis while we develop the markets. A legal guarantee will only assure the farmers that they will not be bankrupted.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: AUKUS
Mains level: Paper 2- Indo-Pacific challenge
Context
The geopolitics of the Indo-Pacific, which is changing fast. As it moves into 2022, the region will carry the imprint of the past five years, and will have to chart a course through inter-state tensions and crises, using both diplomacy and military preparedness.
What will shape the geopolitics and geoeconomics of the Indo-Pacific?
- Key players in the region: The region is central to world economy and peace, and nine countries are key players: the US, China, Japan, India, Germany, the UK, Russia, Australia and France.
- The geopolitics and geo-economics of the Indo-Pacific will be largely shaped by the interplay of relations among these nations.
- US-China relations: Of paramount importance is the US-China equation.
- Expect this relationship to be marked by continually adversarial, competitive and cooperative traits.
- Beijing’s south/east China policy, aggressive postures towards Taiwan, human rights violations in Xinjiang, the subjugation of Hong Kong’s citizenry and assertive economic outreach in the Indo-Pacific — these will weigh heavily on US-China relations.
A significant role of groupings and individual nations
- In this standoff, the role of new groupings and individual nations is significant.
- Role of Quad: Foremost are the Quad, a strategic partnership between the US, India, Japan and Australia and the militaristic AUKUS (Australia, UK, US).
- India-Australia ties: Meanwhile, India and Australia are on track to deepen ties, not only bilaterally but also with the other two Quad powers.
- The next Quad summit, probably hosted by Japan, will cement the grouping.
- EU’s role: The EU’s Indo-Pacific strategy, announced last September, aims at increasing its economic and security profile in, and linkages with, the region.
- UK’s role: Only by being more strategic and less mercantilist, more candid and assertive with China, and more cooperative with partners such as India, can the EU — and its former member the UK — hope to become vital players in the Indo-Pacific.
- ASEAN, located in the middle of the Indo-Pacific waters, faces the heat of China’s aggression and the sharpening great power rivalry.
- It must enhance its realism and shed its tendency of wishing away problems.
Suggestions for India
- 1]Strengthen the Quad – especially by ensuring that the grouping fulfils its commitment to deliver at least one billion vaccine doses to Indo-Pacific nations by December 2022.
- India must protect its established relationship with Russia, and show some resilience in dialogue with Beijing.
- 2] Enhance relations with ASEAN nations: It must enhance cooperation with key Southeast Asian partners —Indonesia, Vietnam, Philippines and Thailand — while humouring ASEAN as a grouping.
- 3] Give attention to African and Indian Ocean island states: The eastern and southern planks of Africa and the Indian Ocean island states need continued high policy attention and financial resources.
- A clear economic and trade agenda to follow the flag in this vital region, is certain to yield long-term dividends.
Consider the question “Indo-Pacific will present India strategic and economic opportunities that India must not miss. However, the region will have to chart a course through inter-state tensions and crises. Comment.”
Conclusion
India has done well by fulfilling its humanitarian duties during the pandemic. Learning how to convert them smartly into economic and strategic opportunities in its periphery is the focused task for the nation in 2022.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Countries involve in South China sea dispute
Mains level: Paper 2- South China sea issue
Context
South-East Asian countries are increasingly wary of their giant neighbour.
Background of dispute
- Disputes in the South China Sea go back decades.
- But it was only ten years ago that China, which makes maritime claims for nearly the whole sea, greatly upped the ante.
- Countries involved: They involve Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam, all with contesting claims.
- China provoked a stand-off that left it in control of an uninhabited atoll, Scarborough Shoal, which under un maritime law clearly belongs to the Philippines.
- Then China launched a massive terraforming exercise, turning reefs and rocks into artificial islands hosting airstrips and bases.
China’s strong-arm tactics
- China’s long-term aim is to project Chinese power deep into the South China Sea and beyond, and to hold the Americans away during any conflict.
- The immediate aim, though, is to dominate politically and economically as much as militarily.
- China has challenged oil-and-gas activity by both Indonesia and Malaysia, and sent drilling rigs to both countries’ eezs and continental shelves.
- It has bullied foreign energy companies into dropping joint development with Vietnam and others.
Implications
- China has paid a diplomatic price.
- Impact on relations with ASEAN: Had Mr Xi engaged in none of the terraforming and bullying, China would be better admired among members of the ten-country Association of South-East Asian Nations (ASEAN).
- Naval presence of the US: The United States and its Western allies have upped their naval presence in the sea, welcomed by most ASEAN members.
Negotiation on Code of conduct on South China Sea
- For years China dragged its feet on agreeing with ASEAN a code of conduct on the South China Sea, a principle agreed on 20 years ago in order to promote co-operation and reduce tensions.
- These days, China likes to play willing.
- China is demanding, in effect, the right of veto over ASEAN members’ naval exercises with foreign powers.
- It also wants to keep out foreigners from joint oil-and-gas development.
- Such demands are unacceptable to members.
Conclusion
Despite China’s efforts to establish its wild claims of sovereignty, China has been facing sustained resistance from the ASEAN countries.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Need for democratic socialism based on cooperative economic enterprises
Context
Inequalities of wealth have increased around the world and India is becoming one of the world’s most unequal countries.
Role of globalisation and privatisation in increasing economic distress
- Economic despair is feeding the rise of authoritarianism, nationalism, and identity politics.
- Role of Globalisation: Opening national borders to free trade became an ideology in economics in the last 30 years.
- Taxes of incomes and wealth at the top were also reduced.
- The ideological justification was that the animal spirits of ‘wealth creators’ must not be dampened.
- With higher taxes until the 1970s, the U.S. and many countries in Europe had built up their public health and education infrastructure and strengthened social security systems.
- The rich are now being taxed much less than they were.
- The pie has grown larger but the richest few have been eating, and hoarding, most of it themselves.
- Role of privatisation: ‘Privatisation’ of everything became another ideological imperative in economics by the turn of the century.
- Selling off public enterprises raises resources for funds-starved governments.
- Another justification is efficiency in delivery of services, setting aside ethical questions of equity.
- When ‘public’ is converted to ‘private’, rich people can buy what they need.
- The gaps between the haves and the have-nots become larger.
How liberal economic policies are creating illiberal societies
- Liberal economists, promoting free markets, free trade, and privatisation, are worried by nationalism and authoritarian governments.
- They rail against “populist” policies of governments that subsidise the poor and adopt industrial strategies for self-reliance and jobs for their citizens.
- Liberals must re-examine their ideas of economics, to understand their own culpability in creating authoritarian and identitarian politics.
The failure of capitalism and communism
- While communism had lifted living standards, and the health and education of masses of poorer people faster than capitalism could, communism’s solution to the “property” question — that there should be no private property — was a failure.
- It deprived people of personal liberties.
- Capitalism’s solution to the property problem — replacing all publicly owned enterprises with privately owned ones (and reducing taxes on wealth and high incomes) has not worked either.
- It has denied many of their basic human needs of health, education and social security, and equal opportunities for their children.
- The private property solution has also harmed the natural environment.
Way forward
- Climate change and political rumblings around the world are both warnings that capitalism needs reform.
- Economic policies must be based on new ideas.
- Thought leaders and policymakers in India must lead the world out of the rut of ideas in which it seems to be trapped.
- Principles of human rights must not be overpowered by property rights.
- A new form of “Gandhian” democratic socialism, powered by cooperative economic enterprises, is required in the 21st century, to create wealth at the bottom, not only at the top, and save humanity and the planet.
Conclusion
A new form of ‘Gandhian’ democratic socialism powered by cooperative economic enterprises is required.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Dealing with hate speech
Context
On January 12, 2022 , the Supreme Court of India agreed to hear petitions asking for legal action to be taken against the organisers of, and speakers at, the “Hardwar Dharma Sansad”.
What constitutes hate speech
- Hate speech is speech that targets people based on their identity, and calls for violence or discrimination against people because of their identity.
- There is an absence of any legal or social consensus around what constitutes “hate speech.”
- As societies around the world have long understood, the harm in hate speech is not restricted to direct and proximate calls to violence.
- Inciting discrimination is part of hate speech: Hate speech works in more insidious ways, creating a climate that strengthens existing prejudices and entrenches already-existing discrimination.
- This is why – with the exception of the United States of America – most societies define hate speech in terms of both inciting violence, but also, inciting discrimination.
Challenges in dealing with hate speech
- Legal challenge: Our laws – as they stand – are unequipped to deal with the challenges of hate speech.
- The laws commonly invoked in such cases are section 295A of the Indian Penal Code (blasphemy) and section 153A of the Indian Penal Code (creating enmity between classes of people).
- Hate speech will not always be self-evident: Hate speech, by its very nature, will not always trumpet itself to be hate speech.
- Rather, it will often assume plausible deniability – as has been seen in the Hardwar case, where statements, worded with the right degree of ambiguity, are now being defended as calls to self-defence rather than calls to violence.
- Any comprehensive understanding of hate speech is a matter of judgment, and must take into account its ambiguous and slippery nature.
- Lack of social consensus against hate speech: No matter how precise and how definite we try to make our concept of hate speech, it will inevitably reflect individual judgment.
- If, therefore, social and legal norms against hate speech are to be implemented without descending into pure subjectivity, what is needed – first – is a social consensus about what kind of speech is beyond the pale.
- In Europe, for example, holocaust denial is an offence – and is enforced with a degree of success – precisely because there is a pre-existing social consensus about the moral abhorrence of the holocaust.
Conclusion
Achieving this social consensus is an immense task, and will require both consistent legal implementation over time, but also daily conversations that we, as a society need to have among ourselves.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 246
Mains level: Paper 2- Need for review of the Seventh Schedule
Context
Without delegation of funds, functions and functionaries, local governments are unable to respond to pressure from citizens who demand greater efficiency.
Background of the Seventh Schedule
- Article 246 of the Constitution mentions three lists in the Seventh Schedule — union, state and concurrent lists.
- The present Seventh Schedule and union (at that time Federal) list, state (at that time Provincial) list and concurrent lists are inherited from that 1935 piece of legislation.
- It states that “Notwithstanding anything in the two next succeeding subsections, the Federal Legislature has, and a Provincial Legislature has not, power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to this Act.”
Delivery of public goods
- Ignoring that narrow and technical definition of public good, loosely, we understand “public good” as something that must be delivered by the government.
- It cannot, or should not, be delivered by the private sector.
- Notwithstanding the use of private security guards, most people will agree “law and order” is a public good.
- Most public goods people will think of are efficiently delivered at the local government level, not Union or state level.
- There is a Seventh Schedule issue that is thus linked to the insertion of a local body list.
- Countervailing pressure by citizens increasingly demands efficient delivery of such public goods.
- But without delegation of funds, functions and functionaries, presently left to the whims of state governments, local governments are unable to respond.
Need for the review of the Seventh Schedule Lists
- No local body list: Most public goods people will think of are efficiently delivered at the local government level, not Union or state level.
- There is a Seventh Schedule issue that is thus linked to the insertion of a local body list.
- But without delegation of funds, functions and functionaries, presently left to the whims of state governments, local governments are unable to respond.
- The Rajamannar Committee — formally known as Centre-State Relations Inquiry Committee suggested constitution of a High Power Commission to examine the entries of Lists I and III in the Seventh Schedule to the Constitution and suggest redistribution of the entries,”.
- Changes in the past led to greater centralisation: Items have moved from the state list to the concurrent list and from the concurrent list to the union list.
- Such limited movements have reflected greater centralisation, such as in 1976.
- N K Singh, Chairman of 15th Finance Commission has also often made this point, in addition to scrutiny of Article 282.
Conclusion
For the sake of better governance, it’s not an issue that should be ducked and the basic structure doctrine doesn’t stand in the way.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 324
Mains level: Paper 2- Need to change the selection process of Election Commissioners
Context
The attendance of the Chief Election Commissioner (CEC) and his Election Commissioner (EC) colleagues at an “informal” meeting with the Principal Secretary to the Prime Minister has brought renewed focus on the independence and impartiality of the Election Commission of India (ECI).
Need for changes in the appointment process
- The changes in the appointment process for ECs can strengthen ECI’s independence, neutrality and transparency.
- The appointment of ECs falls within the purview of Article 324(2) of the Constitution, which establishes the institution.
- Article 324(2) contains a ‘subject to’ clause which provides that both the number and tenure of the ECs shall be “subject to provisions of any law made in that behalf by Parliament, be made by the President.”
- Apart from enacting a law in 1989 enlarging the number of ECs from one to three, Parliament has so far not enacted any changes to the appointment process.
- In 1975 itself, the Justice Tarkunde Committee recommended that ECs be appointed on the advice of a Committee comprising the Prime Minister, Lok Sabha Opposition Leader and the Chief Justice.
- This was reiterated by the Dinesh Goswami Committee in 1990 and the Law Commission in 2015.
- The 4th Report (2007) of the Second Administrative Reforms Commission additionally recommended that the Law Minister and the Deputy Chairman of the Rajya Sabha be included in such a Collegium.
- Violation of Article 14 and 324: Three Writ Petitions, with one pending since 2015, are urging the Supreme Court to declare that the current practice of appointment of ECs by the Centre violates Article 14, Article 324(2), and Democracy as a basic feature of the Constitution.
- Precedent does exist in the case of Rojer Mathew v South Indian Bank Ltd, to argue against the Executive being the sole appointer for a quasi-judicial body.
- The Supreme Court had recognised that “Election Commission is not only responsible for conducting free and fair elections but it also renders a quasi-judicial function between the various political parties including the ruling government and other parties.”
- In such circumstances, the executive cannot be a sole participant in the appointment of members of Election Commission as it gives unfettered discretion to the ruling party.
Way forward
- Establishing a multi-institutional, bipartisan committee for fair and transparent selection of ECs can enhance the perceived and actual independence of ECI.
- Such a procedure is already followed with regard to other Constitutional and Statutory Authorities such as the Chief Information Commissioner, Lokpal, Vigilance Commissioner, and the Director of the Central Bureau of Intelligence.
Consider the question “What is the procedure for the appointment of Election Commissioners? What are the issues with this procedure? Suggest the way forward.”
Conclusion
ECI’s constitutional responsibilities require a fair and transparent appointment process that is beyond reproach, which will reaffirm our faith in this vital pillar of our polity.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 1- Demographic dividend
Context
Countries like Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped to achieve incredible economic growth by adopting forward-looking policies and programmes.
The window of demographic opportunity
- With falling fertility (currently 2.0), rising median age (from 24 years in 2011, 29 years now and expected to be 36 years by 2036), a falling dependency ratio (expected to decrease from 65% to 54% in the coming decade taking 15-59 years as the working age population), India is in the middle of a demographic transition.
- This provides a window of opportunity towards faster economic growth. India has already begun to get the dividend.
- As fertility declines, the share of the young population falls and that of the older, dependent population rises.
- If the fertility decline is rapid, the increase in the population of working ages is substantial yielding the ‘demographic dividend’.
- The smaller share of children in the population enables higher investment per child.
- Therefore, the future entrants in the labour force can have better productivity and thus boost income.
- With the passage of time, the share of the older population rises and that of the working age population begins to fall and hence the dividend is available for a period of time, ‘the window of demographic opportunity’.
Need for forward-looking policies
- Without proper policies, the increase in the working-age population may lead to rising unemployment, fueling economic and social risks.
- This calls for forward-looking policies incorporating population dynamics, education and skills, healthcare, gender sensitivity, and providing rights and choices to the younger generation.
Lessons for India
- Countries like Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped.
- There are important lessons from these countries for India.
- 1) NTA data: The first is to undertake an updated National Transfer Accounts (NTA) assessment.
- Using NTA methodologies, we find that India’s per capita consumption pattern is way lower than that of other Asian countries.
- A child in India consumes around 60% of the consumption by an adult aged between 20 and 64, while a child in China consumes about 85% of a prime-age adult’s consumption.
- The NTA data for India needs to be updated to capture the progress made on such investments since 2011-12.
- 2) Invest more in children and adolescents: India ranks poorly in Asia in terms of private and public human capital spending.
- It needs to invest more in children and adolescents, particularly in nutrition and learning during early childhood.
- 3) Make health investments: Health spending has not kept pace with India’s economic growth.
- The public spending on health has remained flat at around 1% of GDP.
- Evidence suggests that better health facilitates improved economic production.
- Hence, it is important to draft policies to promote health during the demographic dividend.
- 4) Make reproductive healthcare services accessible on a rights-based approach: We need to provide universal access to high-quality primary education and basic healthcare.
- The unmet need for family planning in India at 9.4% as per the latest National Family Health Survey-5 (2019-21) is high as compared to 3.3% in China and 6.6% in South Korea, which needs to be bridged.
- 5) Bridge gender differentials in education: The gender inequality of education is a concern.
- In India, boys are more likely to be enrolled in secondary and tertiary school than girls. This needs to be reversed.
- 6) Increase female workforce participation: As of 2019, 20.3% of women were working or looking for work, down from 34.1% in 2003-04.
- New skills and opportunities for women and girls befitting their participation in a $3 trillion economy is urgently needed.
- It is predicted that if all women engaged in domestic duties in India who are willing to work had a job, female labour force participation would increase by about 20%.
- 7) Address the diversity between StatesWhile India is a young country, the status and pace of population ageing vary among States.
- Southern States, which are advanced in demographic transition, already have a higher percentage of older people.
- These differences in age structure reflect differences in economic development and health – and remind us of States’ very different starting points at the outset of the 2030 Sustainable Development Goals Agenda.
- But this also offers boundless opportunities for States to work together, especially on demographic transition, with the north-central region as the reservoir of India’s workforce.
- 8) Governance reform: A new federal approach to governance reforms for demographic dividend will need to be put in place for policy coordination between States on various emerging population issues such as migration, ageing, skiling, female workforce participation and urbanisation.
Conclusion
In India, the benefit to the GDP from demographic transition has been lower than its peers in Asia and is already tapering. Hence, there is an urgency to take appropriate policy measures.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Tax buoyancy
Mains level: Paper 3- GST and issues
Context
In 2020-21, the compensation payment episode plunged the Union-State relationship to a new low, creating humongous mistrust.
Background of the compensation to the States
- To allay the fears of States of possible revenue loss by implementing GST in the short term, the Union government promised to pay compensation for any loss of revenue in the evolutionary phase of five years.
- This was estimated by taking the revenue from the merged taxes in 2015-16 as the base and applying the growth rate of 14% every year.
- To finance the compensation requirements, a GST compensation cess was levied on certain items such as tobacco products, automobiles.
- Period of five years: The agreement to pay compensation for the loss of revenue was for a period of five years which will come to an end by June 2022.
- Mistrust between Centre and the State: In 2020-21, due to the most severe lockdown following the novel coronavirus pandemic, the loss of revenue to States was estimated at ₹3 lakh-crore of which ₹65,000 crore was expected to accrue from the compensation cess.
- Of the remaining ₹2.35 lakh-crore, the Union government decided to pay ₹1.1 lakh-crore by borrowing from the Reserve Bank of India.
- The entire compensation payment episode plunged the Union-State relationship to a new low, creating humongous mistrust.
GST reform is still in transition
- Misuse of input tax credit: The technology platform could not be firmed up for a long time due to which the initially planned returns could not be filed.
- This led to large-scale misuse of input tax credit using fake invoices.
- Revenue uncertainty faced by the States: This is the only major source of revenue for the States.
- Considering their increased spending commitments to protect the lives and livelihoods of people, they would like to mitigate revenue uncertainty to the extent they can.
- They have no means to cushion this uncertainty for the Finance Commission which is supposed to take into account the States’ capacities and needs in its recommendations has already submitted its recommendations.
- Changes needed: More importantly, the structure of GST needs significant changes and the cooperation of States is necessary to carry out the required reforms.
Changes needed in GST structure
- Reducing exemption items: Almost 50% of the consumption items included in the consumer price index are in the exemption list; broadening the base of the tax requires significant pruning of these items.
- Bringing petroleum products, real estate etc under GST: Sooner or later, it is necessary to bring petroleum products, real estate, alcohol for human consumption and electricity into the GST fold.
- Single rate: The present structure is far too complicated with four main rates (5%, 12%, 18% and 28%).
- This is in addition to special rates on precious and semi-precious stones and metals and cess on ‘demerit’ and luxury items at rates varying from 15% to 96% of the tax rate applicable which have complicated the tax enormously.
- Multiple rates complicate the tax system, cause administrative and compliance problems, create inverted duty structure and lead to classification disputes.
Way forward
- Extending the compensation period: Reforming the structure to unify the rates is imperative and this cannot be done without the cooperation of States.
- Thus, extending the compensation payment for the next five years is necessary not only because the transition to GST is still underway but also to provide comfort to States to partake in the reform.
- Reforming the structure is important not only to enhance the buoyancy of the tax in the medium term but also to reduce administrative and compliance costs to improve ease of doing business and minimise distortions.
- New rate of compensation: It has been pointed out by many including the Fifteenth Finance Commission that the compensation scheme of applying 14% growth on the base year revenue provided for the first five years was far too generous.
- The issue can be revisited and the rate of growth of reference revenue for calculating compensation can be linked to the growth of GSDP in States.
Conclusion
The transition to GST is still in progress and an extension will provide comfort to States to help roll out crucial changes.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Free speech vs hate speech
Context
The growing incidence of hate speeches, especially those targeting minorities, in combination with the judicial ambiguity has provided an opportunity to chart legislative reforms.
Current legal provisions to deal with hate speech
- Not defined in legal framework: Hate speech is neither defined in the Indian legal framework nor can it be easily reduced to a standard definition due to the myriad forms it can take.
- The Supreme Court, in Pravasi Bhalai Sangathan v. Union of India (2014), described hate speech as “an effort to marginalise individuals based on their membership in a group” and one that “seeks to delegitimise group members in the eyes of the majority, reducing their social standing and acceptance within society.”
- The Indian Penal Code illegalises speeches that are intended to promote enmity or prejudice the maintenance of harmony between different classes.
- Specifically, sections of the IPC, such as 153A, which penalises promotion of enmity between different groups;
- 153B, which punishes imputations, assertions prejudicial to national integration;
- 505, which punishes rumours and news intended to promote communal enmity, and
- 295A, which criminalises insults to the religious beliefs of a class by words with deliberate or malicious intention.
- Summing up various legal principles, in Amish Devgan v. Union of India (2020), the Supreme Court held that “hate speech has no redeeming or legitimate purpose other than hatred towards a particular group”.
- Lack of established legal standard: Divergent decisions from constitutional courts expose the lack of established legal standards in defining hate speech, especially those propagated via the digital medium.
Suggestions
- The Law Commission of India, in its 267th report, recommended the insertion of two new provisions to criminalise and punish the propagation of hate speech.
- The 189th Report of the Parliamentary Standing Committee on Home Affairs, in 2015, recommended the incorporation of separate and specific provisions in the Information Technology Act to deal with online hate speech.
- Specialised legislation for social media: Much of the existing penal provisions deal with hate speech belong to the pre-Internet era.
- The need of the hour is specialised legislation that will govern hate speech propagated via the Internet and, especially, social media.
- Recognise hate speech as reasonable restriction to free speech: Taking cue from best international standards, it is important that specific and durable legislative provisions that combat hate speech, especially that which is propagated online and through social media.
- Ultimately, this would be possible only when hate speech is recognised as a reasonable restriction to free speech.
Consider the question “What is hate speech? What are the challenges in dealing with hate speech? Suggest a way forward.”
Conclusion
It is important that specific and durable legislative provisions be enacted to combat hate speech.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Issues with India's GDP data
Context
There are three major reasons why the GDP data, and hence any narrative of economic recovery based on it, are questionable.
Background
- The NSO released the current GDP series in 2015, using 2011-12 as its base year.
- Some have argued that the problem in the new series is the real growth rate. This is debatable.
- Scholars have pointed to measurement problems, both in the nominal and real GDP growth rates.
Three issues with the GDP data, and narrative of economic recovery based on it
[1] Double deflation problem
- The new series entailed a shift from a volume-based measurement system to one based on nominal values, thereby making the deflator problem more critical.
- Simply put, the NSO calculates real GDP by gathering nominal GDP data in rupees and then deflating this data using various price indices.
- The nominal data needs to be deflated twice: Once for outputs and once for inputs.
- But the NSO — almost uniquely amongst G20 countries — deflates the nominal data only once.
- It does not deflate the value of inputs.
- To see why this is a problem, consider what happens when the price of imported oil goes down.
- In that case, input costs will fall and the profits recorded by Indian firms will rise.
- This increase in profits is merely the result of a fall in input prices, so it needs to be deflated away.
- But the NSO doesn’t deflate away the increase in profits.
- Since the cost of inputs is measured by the WPI (wholesale price index), a crude measure of the overestimation caused by the absence of “double deflation” is given by the gap between the WPI and the CPI (consumer price index).
- In the 2014-2017 period, oil prices plunged, causing the WPI to fall sharply relative to the CPI.
- This meant that real growth was probably overstated.
- In the last few months, the exact opposite has been happening. WPI inflation is soaring.
- The rapid increase in the WPI relative to the CPI is imparting an upward bias to the deflator.
[2] Sectoral weight not updated
- When it calculates GDP, it takes a sample of activity in each sector, then aggregates the figures by using sectoral weights.
- To make sure that the weights are reasonably accurate, the NSO normally updates them once a decade.
- It has now been more than 10 years since the weights were changed, and there are no signs of a base year revision.
- As a result, the sectoral weights are still based on the structure of the economy in 2010-11, when in particular the information technology sector was much smaller.
[3] Measurement of unorganised sector
- Measurement of the unorganised sector has always been difficult in India.
- Once in a while, the NSO undertakes a survey to measure the size of the sector.
- In the meantime, it simply assumes that the sector has been growing at the same rate as the organised sector.
- However, starting in 2016 the unorganised sector has been disproportionately impacted by a series of shocks.
- In 2018, the NBFC sector reported serious problems, which in turn impacted unorganised sector firms since they were heavily dependent on NBFCs for funds.
- From 2020 onwards, the pandemic has impacted the unorganised sector more than the organised sector enterprises.
- Despite these shocks, the NSO does not seem to have made any adjustments to its methodology for estimating the growth of the unorganised sector.
Consider the question “Elaborate the issues with India’s GDP data. Suggest the way forward.”
Conclusion
There are serious problems with India’s GDP data. Any analysis of recovery or growth forecast based on this data must be taken with a handful of salt.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Model BIT
Mains level: Paper 3- Reviev of BITs
Context
The report of the Standing Committee on External Affairs on ‘India and bilateral investment treaties (BITs)’ was presented to Parliament last month.
Factor’s that necessitated the review of India’s BITs
- Investor’s started suing India frequently: Since 2011, when India lost its first investment treaty claim in White Industries v. India, foreign investors have sued India around 20 times for alleged BIT breaches.
- This made India the 10th most frequent respondent-state globally in terms of investor-state dispute settlement (ISDS) claims from 1987 to 2019 (UNCTAD).
- Adoption of new Model BIT: India adopted a new Model BIT in 2016, which marked a significant departure from its previous treaty practice.
- Negotiating new BITs: India is in the process of negotiating new investment deals (separately or as part of free trade agreements) with important countries such as Australia and the U.K.
Recommendations of the Committee
- 1] Speed of the existing negotiations: India has signed very few investment treaties after the adoption of the Model BIT.
- It recommends that India expedite the existing negotiations and conclude the agreements at the earliest because a delay might adversely impact foreign investment.
- 2] Sign more BIT’s in core sector: The committee recommends that India should sign more BITs in core or priority sectors to attract FDI.
- Generally, BITs are not signed for specific sectors.
- It will require an overhauling of India’s extant treaty practice that focuses on safeguarding certain kinds of regulatory measures from ISDS claims rather than limiting BITs to specific sectors.
- 3] Fine-tune Model BIT: Model BIT gives precedence to the state’s regulatory interests over the rights of foreign investors.
- The Model BIT should be recalibrated keeping two factors in mind:
- a) tightening the language of the existing provisions to circumscribe the discretion of ISDS arbitral tribunals.
- b) striking a balance between the goals of investment protection and the state’s right to adopt bonafide regulatory measures for public welfare.
- 4] Improve the capacity of government officials: The committee recommends bolstering the capacity of government officials in the area of investment treaty arbitration.
- While the government has taken some steps in this direction through a few training workshops, more needs to be done.
- What is needed is an institutionalised mechanism for capacity-building through the involvement of public and private universities.
- The government should also consider establishing chairs in universities to foster research and teaching activities in international investment law.
Need to improve poor governance
- A very large proportion of ISDS claims against India is due to poor governance.
- This includes changing laws retroactively which led to Vodafone and Cairn suing India.
- Annulling agreement in the wake of imagined scam which resulted in taking away S-band satellite spectrum from Devas.
- The judiciary’s fragility in getting its act together (sitting on the White Industries case for enforcement of its commercial award for years).
Suggestions
- The Committee could have emphasised on greater regulatory coherence, policy stability, and robust governance structures to avoid ISDS claims.
- The government should promptly assemble an expert team to review the Model BIT.
Consider the question “India is one of the most frequent respondent-state globally in terms of investor-state dispute settlement (ISDS) claims. In context of this, examine the reasons for such frequent disputes and suggest the way forward.”
Conclusion
The committee’s report on India’s BITs have novel suggestions, but it is lacking in several aspects.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Back2Basics: ISDS mechanism
- Investor-state dispute settlement (ISDS) is a mechanism in a free trade agreement (FTA) or investment treaty that provides foreign investors, with the right to access an international tribunal to resolve investment disputes.
- ISDS promotes investor confidence and can protect against sovereign or political risk.
- If a country does not uphold its investment obligations, an investor can have their claim determined by an independent arbitral tribunal, usually comprising three arbitrators.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Centrality of Central Asian region for India
Context
When Prime Minister Narendra Modi hosts the five Central Asia leaders at the Republic Day Parade on January 26, it will send a strong signal — of the new prominence of the Central Asian region in India’s security calculations.
Why India needs effective continental policy
- Factors intensifying geopolitical competition: China’s assertive rise, withdrawal of forces of the United States/North Atlantic Treaty Organization (NATO) from Afghanistan, the rise of Islamic fundamentalist forces, the changing dynamics of the historic stabilising role of Russia (most recently in Kazakhstan) and related multilateral mechanisms — the Shanghai Cooperation Organization (SCO), the Collective Security Treaty Organisation, and the Eurasian Economic Union — have all set the stage for a sharpening of the geopolitical competition on the Eurasian landmass.
- Progress in ties: India’s continental strategy, in which the Central Asian region is an indispensable link, has progressed intermittently over the past two decades — promoting connectivity, incipient defence and security cooperation, enhancing India’s soft power and boosting trade and investment.
- It is laudable, but as is now apparent, it is insufficient to address the broader geopolitical challenges engulfing the region.
- To meet this challenge, evolving an effective continental strategy for India will be a complex and long-term exercise.
Leveraging maritime power
- India’s maritime vision and ambitions have grown dramatically during the past decade, symbolised by its National Maritime Strategy, the Security and Growth for All in the Region (SAGAR) and major initiatives relating to the Indo-Pacific and the Quad, in which maritime security figures prominently.
- It was also a response to the dramatic rise of China as a military power.
- Importance: Maritime security is important to keeping sea lanes open for trade, commerce and freedom of navigation, resisting Chinese territorial aggrandisement in the South China Sea and elsewhere, and helping littoral states resist Chinese bullying tactics in interstate relations.
- However, maritime security and associated dimensions of naval power are not sufficient instruments of statecraft as India seeks diplomatic and security constructs to strengthen deterrence against Chinese unilateral actions and the emergence of a unipolar Asia.
- Bulwarks against Chinese maritime expansionist gains are relatively easier to build and its gains easier to reverse than the long-term strategic gains that China hopes to secure on continental Eurasia.
- Centrality of Central Asia: Like Association of Southeast Asian Nations (ASEAN) centrality is key to the Indo-Pacific, centrality of the Central Asian states should be key for Eurasia.
Challenges for India
1] Connectivity challenge
- Connectivity means nothing when access is denied through persistent neighbouring state hostility contrary to the canons of international law.
- India has been subject for over five decades to a land embargo by Pakistan that has few parallels in relations between two states that are technically not at war.
- Lack of alternative route: Difficulties have arisen in operationalising an alternative route — the International North-South Transport Corridor on account of the U.S.’s hostile attitude towards Iran.
- With the recent Afghan developments, India’s physical connectivity challenges with Eurasia have only become harder.
- The marginalisation of India on the Eurasian continent in terms of connectivity must be reversed.
2] India must be aware of the limitations of the US
- The ongoing U.S.-Russia confrontation relating to Ukraine, Russian opposition to future NATO expansion and the broader questions of European security including on the issue of new deployment of intermediate-range missiles, following the demise of the Intermediate-Range Nuclear Forces (INF) treaty will have profound consequences for Eurasian security.
- The U.S. would be severely stretched if it wanted to simultaneously increase its force levels in Europe and the Indo-Pacific.
- A major conflict — if it erupts in Central Europe, pitting Russia, Ukraine and some European states — will stall any hopes of a substantial U.S. military pivot to the Indo-Pacific.
- India should be cognisant of the limitations of geography, obvious gaps between strategic ambition and capacity but also the inherently different standpoints of how major maritime powers view critical questions of continental security.
- India is unique as no other peer country has the same severity of challenges on both the continental and maritime dimensions.
Way forward for India
- India would need to acquire strategic vision and deploy the necessary resources to pursue our continental interests without ignoring our interests in the maritime domain.
- This will require a more assertive push for our continental rights — namely that of transit and access, working with our partners in Central Asia, with Iran and Russia, and a more proactive engagement with economic and security agendas ranging from the SCO, Eurasian Economic Union (EAEU) and the Collective Security Treaty Organization (CSTO).
- Striking the right balance between continental and maritime security would be the best guarantor of our long-term security interests.
Conclusion
India will need to define its own parameters of continental and maritime security consistent with its own interests. In doing so, at a time of major geopolitical change, maintaining our capacity for independent thought and action will help our diplomacy and statecraft navigate the difficult landscape and the choppy waters that lie ahead.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- China challenge
Context
Nearly 20 months after the border crisis began in Ladakh, China has pressed on with aggressive diplomatic and military gestures against India.
Recent anti- India moves by China
- Beijing recently renamed 15 places in Arunachal Pradesh, following the six it had done in 2017.
- China justifies the renaming as being done on the basis of its historical, cultural and administrative jurisdiction over the area — these old names existed since ancient times which had been changed by India with its “illegal occupation”.
- On January 1, 2022, Beijing’s new land border law came into force, which provides the People’s Liberation Army (PLA) with full responsibility to take steps against “invasion, encroachment, infiltration, provocation” and safeguard Chinese territory.
India’s response
- Delhi has run out of proactive options against Beijing that will force the Chinese leadership to change course on its India policy.
- The two countries have an increasingly lopsided trade relationship driven by Indian dependency on Chinese manufacturing, a situation further worsened by the Government’s mishandling of the novel coronavirus pandemic.
- To restore the status quo ante on the LAC as of April 2020, India undertook internal balancing of its military from the Pakistan border to the China border and external rebalancing through a closer partnership with the United States in the Indo-Pacific.
- Because of the China factor, the U.S. is currently looking away even as India mistreats its minorities and its democracy stands diminished.
- India’s difficult diplomatic and military engagement with China is going to leave it more dependent on U.S. support, rendering India more vulnerable to American pressure on ‘shared values’.
- With a rising China as its neighbour and a more self-centred U.S. – which is uncomfortable with India’s reliable partner, Russia — as its friend, Delhi continues to face difficult choices.
Conclusion
Put under the harsh glare, India has been found wanting in its ability to deal with future challenges. The immediate challenge, however, remains China. It cannot be wished away and must be tackled.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Section 498A
Mains level: Paper 2-Mediation Bill 2021
Context
The Mediation Bill, 2021 was introduced in Parliament in December 2021. It seeks to ‘promote mediation (including online), and provide for enforcement of settlement agreements resulting from mediation’.
Need to popularise mediation
- The Chief Justice of India (CJI), N.V. Ramana, had said that mediation should be made mandatory as a first step in dispute resolution and that a law should be framed in this regard.
- He emphasised the point that a movement needs to be launched to popularise mediation as it was a cheaper and faster dispute resolution mechanism.
- He said that courts should be the last resort for dispute resolution; therefore, one should explore the options of alternate dispute resolution.
- The Tamil Nadu Mediation and Conciliation Centre, an initiative of the Madras High Court and India’s first court-annexed facility with a mediation centre in every district, has significantly reduced the pendency of referred cases.
Which laws in India allow mediation?
- Mediation finds legitimacy in some specific laws such as:
- The Code of Civil Procedure, 1908, the Arbitration and Conciliation Act, 1996,
- The Companies Act, 2013,
- The Commercial Courts Act, 2015,
- The Consumer Protection Act, 2019,
- However, there is no standalone legislation as yet.
How the provisions of Mediation Bill 2021 will help in improving the law and order situation
- The bill seeks to promote mediation (including online), and provide for enforcement of settlement agreements resulting from mediation’.
- In case of civil or commercial disputes, a person must try to settle the dispute by mediation before approaching a court or tribunal.
- Improving the law and order situation: There are certain provisions in the Bill which may help in improving the law and order situation in a locality and/or encourage compounding of criminal offences.
- First, Section 7 of the Bill says that courts will be competent to refer any dispute to mediation relating to compoundable offences or matrimonial offences connected with or arising out of civil proceedings between the parties.
- Second, Section 44 of the Bill provides for ‘any dispute likely to affect peace, harmony and tranquillity amongst the residents or families of any area or locality, to be settled through community mediation.
- Third, the provisions of the Act shall not have the overriding effect, inter alia, on the Maintenance and Welfare of Parents and Senior Citizen Act, 2007 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
- Promote friendliness: Section 320 in the Code Of Criminal Procedure (CrPC) provides for the compounding of certain criminal offences which shall have the effect of acquittal of the accused.
- Here, the policy of the law is to promote friendliness between the parties so that peace between them is restored.
- Relieving the pressure on the police: Many criminal offences are a result of the fact that civil or commercial disputes could not be resolved amicably and in time.
- The police at times take minor cases lightly or reduce the seriousness of crime by converting a cognisable offence into a non-cognisable one.
- Therefore, the proposed law of mediation, that has the mechanism of not only preventing the breakdown of law and order through community intervention but also the competence to smoothen the route to compounding of certain criminal offences, may ultimately relieve some of the pressure on the police also.
Some laws are left out of the scope of Mediation Bill 2021
- Law to prevent sexual harassment of women at workplace: The law to prevent the sexual harassment of women at the workplace has probably been kept out of its scope so that an internal or local complaint committee is able to take up conciliation and close the case locally without involving a third party and detailed procedure.
- Law on welfare of parents and senior citizens: The law on the maintenance and the welfare of parents and senior citizens has also been kept out of its scope as offences under it are cognisable offences.
Way forward
- The Supreme Court’s view: The Supreme Court of India has held that if there is a composition of an offence during investigation, the parties can either approach the court or the police.
- Increasing the compoundable offences: The number of offences that can be compounded may also be increased — particularly property offences.
- Keeping in view the recommendations of the Law Commission in its 243rd report, Section 498A of the Indian Penal Code, relating to cruelty by the husband or his relatives, can also be made compoundable.
- It may have far-reaching consequences in resolving matrimonial disputes.
Consider the question “What are the provisions of the Mediation Bill 2021 that could help relieve some of the pressure on law enforcement agencies?”
Conclusion
Though the proposed law primarily intends to resolve civil and commercial disputes through mediation, it has ample scope to relieve some of the pressure on law enforcement agencies.
UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)
Back2Basics: What is a Compoundable and Non Compoundable offence in India
- Compoundable offences are those offences where, the complainant (one who has filed the case, i.e. the victim), enter into a compromise, and agrees to have the charges dropped against the accused.
- However, such a compromise should be a “Bonafide,” and not for any consideration to which the complainant is not entitled to.
- Compoundable offences are less serious criminal offences and are of two different types mentioned in tables in Section 320 of the Criminal Procedure Code, as follows:
- Court permission is not required: These are the offences, compounding of which do not require prior permission of the court.
- Court permission is required: These are the offences, compounding of which require prior permission of the court.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
