Foreign Policy Watch: India-Middle East

The Abraham Accords as India’s West Asia bridge

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Implications of Abrahams Accord for India

Context

The recent visit by the Indian Air Force chief, to Israel offers a window to study how India is taking advantage of the Abraham Accords deal signed between Israel and a consortium of Arab States led by the United Arab Emirates (UAE) in 2020.

Increasing defence cooperation between India and West Asia region

  • India’s trajectory towards an increased strategic footprint in West Asia has been in development for some time now.
  • Starting from the relatively low-key staging visit to Saudi Arabia conducted by the IAF in 2015.
  • India hosted visiting Iranian naval warships in 2018.
  • India takes an active part in the defence of the critical waterways in and around the Persian Gulf, the Arabian Sea and the extended Indian Ocean Region (IOR).
  • An Indian contingent of the Indian Air Force (IAF) will visit Israel in October to take part in multilateral military exercises.
  • India also conducted the ‘Zayed Talwar’ naval exercises with the UAE off the coast of Abu Dhabi, further deepening the fast-developing strategic cooperation between the two countries.
  • In December 2020, Indian Army chief visited the UAE and Saudi Arabia, becoming the first chief of the Indian Army to do so.
  • In 2017, India signed a deal with Oman, the home to Duqm Port  for access to the facility, including dry dock use by the Indian Navy.

How Abraham Accords accelerated India’s engagement with West Asia region?

  • No need for balancing act: The signing of the Accords has removed a significant strategic obstacle for India — delicate balancing act India has had to play out between the Arab Gulf and Israel over the decades.
  • India had welcomed the Accords, highlighting its support for mechanisms that offer peace and stability in the region.
  • From the UAE’s perspective, Accords were to make sure the emirate along with its international centres of trade such as Dubai and Abu Dhabi do not become targets between Jerusalem and Tehran.
  • However, not all Arab States have been on board with the geopolitical shifts the Accords have pushed through.
  • Saudi Arabia has maintained a distance from this arrangement.

India’s West Asia construct and relations with Iran

  • Iran, as part of India’s ‘West Asia’ construct, will also play a significant part in India’s outreach in the months to come as the crisis in Afghanistan deepens.
  • Connectivity projects such as Chabahar Port and Chabahar-Zahedan rail project (project discussions are still on) amongst others remain critical.
  • Recently,  strategic cooperation revitalised despite multiple obstacles in the bilateral relations, led by U.S. sanctions against Tehran and the general tensions between Israel, the Gulf and Iran via proxy battles in theatres such as Yemen, Syria and beyond.

Conclusion

India’s strategic play in West Asia will be reflective of its economic growth, and by association, an increasingly important place in the global order.

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Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

What India’s informal sector needs right now

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MGNREGA

Mains level: Paper 3- Issues of informal sector

Context

Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts.

Significance of informal sector

  • India’s large informal sector, which employs around 80 per cent of the labour force and produces about 50 per cent of GDP.
  • Of the 384 million employed in the informal sector, half work in agriculture, living mostly in rural India, and the other half are in non-agricultural sectors.
  • Of those, about half live in rural India and the remaining in urban areas.
  • Ignoring problems in the informal sector can be costly as it can lead to job and wage losses, higher inflation and even risk the livelihood of migrant workers.

Impact of pandemic on informal sector workers

  • Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts.
  • Such disruptions can be inflationary too.
  • India was one of the few countries with high inflation throughout pandemic-stricken 2020.
  • The 40 per cent in the informal non-agricultural sector is the most affected by the pandemic.
  • These workers are most vulnerable as they have borne the brunt of the economic disruption that the pandemic has unleashed.

Impact on the informal sector

  • Nominal GDP growth has been a good indicator of the formal sector corporate sales.
  • But during the pandemic and also during events like demonetisation, formal corporate sales have exceeded nominal GDP growth.
  • This means that some demand, which was previously supplied by the informal sector, began to be supplied by the formal sector.
  • Several surveys over this time also show a rise in urban unemployment and self-employment, with the latter category seeing the highest earnings loss.

Way forward

  • Formalisation on the back of policy changes: While traditionally associated with efficiency gains, if it comes at the cost of putting small informal firms out of business.
  • Formalisation that comes only on the back of external pressure or leads to deep distress in the informal sector, may not be sustainable.
  • By contrast, formalisation that happens on the back of policy changes that help small and informal firms grow over time into medium or larger formal sector firms is more sustainable.
  • Social welfare scheme: We need protection for informal sector workers via social welfare schemes so that the disruption they are facing does not lead to a permanent fall in demand.
  • There is a case for remaining generous with programmes such as the rural MGNREGA scheme for longer.
  • India doesn’t have an MGNREGA equivalent urban social welfare scheme.
  • Reforms: Steps to promote reforms that are needed to help small businesses grow are critical.
  • For example, lowering the regulatory burden associated with growing firms.

Conclusion

Bringing the informal sector to the forefront of policy decisions can lead to a significant payoff for the entire economy for years to come.

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Insolvency and Bankruptcy Code

Getting the perfect haircut from the IBC

Note4Students

From UPSC perspective, the following things are important :

Prelims level: IBC 2016

Mains level: Paper 3- Right timing in the use of IBC matters

Understanding the role of IBC 2016

  • For reasons sometimes a company may experience stress, that is, is unable to repay the debt in time — implying that it has assets less than claims against it.
  • So, when a company has inadequate assets, the claim of an individual creditor may be consistent with its assets while claims of all creditors put together may not.
  • In such a situation, creditors may rush to recover their claims before others do, triggering a run on the company’s assets.
  • The IBC provides for reorganisation that prevents a value-reducing run on the company.
  • It aims to rescue the company if its business is viable or close it if its business is unviable, through a market process.
  • Restructuring: The claims of creditors are restructured, which may be paid to them immediately or over time.
  •  In case of closure, the assets of the company are sold, and proceeds are distributed to creditors immediately as per the priority rule.
  • Reorganisation by financial creditor: The IBC entrusts the responsibility of reorganisation to financial creditors as they have the capability and the willingness to restructure their claims.

Why so much variation in haircut?

  • Where the company does not have adequate assets, realisation for financial creditors, through a rescue, may fall short of their claims known as haircut.
  • The IBC process yields a zero haircut (100% recovery of claimed amount) in one case and 100 per cent haircut (i.e. 0% recovery) in another.
  • Factors: It depends on several factors, including the nature of business, business cycles, market sentiments, and marketing effort.
  • It critically depends on at what stage of stress, the company enters the IBC process.
  • If the company has been sick for years, and its assets have depleted significantly, the IBC process may yield a huge haircut or even liquidation.
  • A haircut is typically the total claims minus the amount of realisation/amount of the claims.
  • But this formulation may not tell the complete story.
  • The realisation often does not include the amount that would be realised from equity holding post-resolution, and through the reversal of avoidance transactions and the insolvency resolution of guarantors — personal and corporate.
  • It also does not include realisations made in other accounts.
  • The amount of claim often includes NPA, which may be completely written off, and the interest on such NPA.
  • These understate the numerator and overstate the denominator, projecting a higher haircut.

Significance of IBC

  • A haircut should be seen in relation to the assets available and not in relation to the claims of creditors.
  • The market offers a value in relation to what a company brings on the table, not what it owes to creditors.
  • Value maximisation: So, the IBC maximises the value of existing assets, not of assets that probably existed earlier.
  • Market determined value: The IBC enables and facilitates market forces to resolve stress as a going concern.
  • Resolution applicants, who have many options for investment, including in stressed companies, compete to offer the best value.
  • If the best value offered by the market is not acceptable to creditors, the company is liquidated.
  • Maximum realisation: In addition to rescuing the company, the IBC realises, of the available options for creditors, the highest in percentage terms.

Conclusion

It is a tool in the hands of stakeholders to be used at the right time, in the right case, in the right manner.

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Back2Basics: Avoidable Transactions in IBC 2016

  • The UNCITRAL Legislative Guide on Law of Insolvency defines avoidance proceedings as “provisions of the insolvency law that permit transactions for the transfer of assets or the undertaking of obligations prior to insolvency proceedings to be cancelled or otherwise rendered ineffective and any assets transferred, or their value, to be recovered in the collective interest of creditors.”
  • It is very important for the Resolution Professional (RP) or the liquidator to identify such transaction and file applications to avoid it so that creditors can collect their claims.
  • The Insolvency and Bankruptcy Code, 2016 (IBC) contains four types of avoidable transactions- preferential, undervalued, defrauding creditors and extortionate transactions.
  • Usually, the avoidable transactions should be made within the prescribed relevant time or look back period.
  • Look back period is the relevant time up to which an RP or a liquidator can go back to scrutinize an expected avoidable transaction.

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Parliament – Sessions, Procedures, Motions, Committees etc

Role of Speaker

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Power of the Speaker

Mains level: Paper 2- Need to make Speakers independent and impartial

Context

The decline in the functioning of India’s Parliament — and state assemblies as well — is caused by one primary reason: The lack of independence and impartiality of the Speaker.

Important role of the Speaker

  • Our Constitution, after extensive debate, adopted the Westminster model of governance.
  • In the Lok Sabha, as in the United Kingdom, the Speaker is the supreme authority; he has vast powers and it is his primary duty to ensure the orderly conduct of the business of the House.
  • Constitutional law points out the two essential qualities of a Speaker: Independence and impartiality.
  • As the principal spokesperson of the Lok Sabha, the Speaker represents its collective voice.
  • Indeed, the supremacy of Parliament is emphasised by Article 75(3) of the Constitution: “The Council of Ministers shall be collectively responsible to the House of the People”.
  •  Pandit Nehru referred to the Speaker as “the symbol of the nation’s freedom and liberty” and emphasised that Speakers should be men of “outstanding ability and impartiality”.

How role of Speaker matters in functioning Legislature

  • Power to allow debate or discussion: It is the Speaker’s duty to decide what issues will be taken up for discussion.
  • He has the sole discretion to permit an adjournment motion to be tabled or to admit a calling attention notice, if the issue is of urgent public importance.
  • The present practice of the Speaker continuing to be an active member of the ruling party has the inevitable result of his refusing to allow any debate or discussion that may be essential in national interest but may embarrass the ruling party.
  • This inevitably leads to constant disruption of Parliament by the Opposition.
  • The stalling of parliamentary proceedings has led to the passing of important bills in several sessions without any discussion.
  • Violation of separation of power between legislature and executive: The most dangerous consequence is the vastly increased powers that the executive — the bureaucracy — begins to command by default.
  • In 1951, a nine-judge bench of the Supreme Court (In Re Delhi Laws Act Case) held that essential legislative functions cannot be delegated to the bureaucracy; law-making must remain the domain of the legislature.
  • This constitutional mandate is now increasingly and consistently being violated by issuing rules and notifications that have far-reaching consequences.
  • The new rules on information technology and electronic commerce are clear instances of changes that should have come about by a parliamentary law.
  • And worse still is the power given to the executive to issue retrospective notifications — a step unknown to any civilised democracy.
  • Partisan conduct in anti-defection law issues: Several judgments on the anti-defection law have been rendered by the Supreme Court.
  • A common factor that shows up in these rulings is the blatant, partisan conduct of speakers in state assemblies.

Way forward

  • Speaker should resign from Party: It should be made mandatory that the Speaker ought to resign from his party and his sole allegiance must be to the Constitution and to maintaining the dignity of the House.
  • The separation of powers is part of the basic structure of our Constitution.
  • It is imperative that the Speaker of every legislature resigns from his party to honour his constitutional obligation of independence and impartiality. 
  • This must be accepted as the primary responsibility of every ruling party, both at the Centre and in each state, and made into a constitutional convention.

Conlcusion

The option is a binary: Either allow Parliament and state legislatures to descend into terminal decline or make the Speaker truly independent and let every legislature perform its constitutional function.

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Foreign Policy Watch: India-Afghanistan

Understanding the strategic flux and humanitarian crisis in Afghanistan

Note4Students

From UPSC perspective, the following things are important :

Prelims level: UN Security Council

Mains level: Paper 2- Afghanistan issue

Context

The Afghan government and its defence forces have completely collapsed. The world over, television screens are full of images of the extraordinary takeover of Afghanistan by the Taliban.

Background of the US intervention in Afghanistan

  • The original trigger for the US military intervention in Afghanistan was the 9/11 attacks.
  • The objective then was to eliminate the al Qaeda sanctuaries hosted by the Taliban.
  • That goal was quickly attained, as was another one — the elimination of Osama Bin Laden in Abbottabad, Pakistan, in 2011.
  • The US was thereafter stuck into a vortex in which its mission oscillated between counter-terrorism and counter-insurgency. 
  • The military presence in Afghanistan has been questioned by the US political firmament for a decade.

Factors driving the US exit

  • China factor: The US now regards China as its principal strategic competitor.
  • China’s muscle-flexing in the East and South China Seas calls for a renewed effort by the US to protect its stakes.
  • The rise of China is the main geo-strategic threat for the US.
  • In 2001, the US had taken its eye off the ball in diverting its attention to the global war on terror.
  • Beginning with Afghanistan, it meandered through Iraq, Libya and Syria, with mixed results.
  • Taiwan: China’s recent ratcheting up of pressure on Taiwan has also sounded the alarm.

Implications of Taliban’s return for region

  • The new regime in Kabul is likely to open the door to economic investments from China.
  • At the geopolitical level, the BRI may well receive a boost, given China’s interests in connectivity that could straddle the region, from Pakistan to Iran.
  • Pakistan has shown alacrity in welcoming the change of guard in Kabul.
  • The change in Afghanistan has security implications for India and the region at large.
  • A spill-over of any chaos and instability in Afghanistan beyond its borders could give terrorism a shot in the arm.
  • It could also singe Pakistan if it does not review its malevolent practices, which favour terror as an instrument of state policy.

Way forward for India

  • India should prioritise the welfare of the Afghan people, whenever the opportunity presents itself.
  • Currently, about 2,500 Afghan students are enrolled in educational and vocational institutions across India.
  • They will no doubt wish to extend their scholarships.
  • As a close neighbour, India has keen stakes in ensuring a stable, secure and developed Afghanistan.
  • As the rotational President of the UN Security Council for August, India has an opportunity to engage important stakeholders on the way forward.
  • Beyond that too, India’s presence in the UN Security Council till the end of 2022 will provide a platform to explore options with greater flexibility.

Conclusion

The global community needs to underscore the continued participation of women in governance in Afghanistan and keep an eye on violations of human rights and international humanitarian law.

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Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

Sub-Mission on Fodder and Feed

Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Livestock Mission

Mains level: Paper 3- Addressing the lack of quality and affordable fodder and feed through Sub-Mission on Fodder and Feed

Context

The government recently announced a Sub-Mission on Fodder and Feed.

Why availability of good and affordable quality feed and fodder matters

  • A study by the Indian Grassland and Fodder Research Institute has observed that for every 100 kg of feed required, India is short of 23.4 kg of dry fodder, 11.24 kg of green fodder, and 28.9 kg of concentrate feed.
  • Low milk productivity: The lack of good quality feed and fodder impacts the productivity levels of cattle.
  • This is one of the chief reasons why Indian livestock’s milk productivity is 20%-60% lower than the global average.
  • High input cost: If we break down the input costs, we find that feed constitutes 60%-70% of milk production costs.
  • When the National Livestock Mission was launched in 2014, it focused on supporting farmers in producing fodder from non-forest wasteland/grassland, and cultivation of coarse grains.
  • However, this model could not sustain fodder availability due to a lack of backward and forward linkages in the value chain.

Why Sub-Mission on Fodder and Feed is significant

  • As about 200 million Indians are involved in dairy and livestock farming, the scheme is important from the perspective of poverty alleviation.
  • The Sub-Mission on Fodder and Feed intends to create a network of entrepreneurs who will make silage (the hub) and sell them directly to the farmers (the spoke).
  • Bringing down the input cost: The large-scale production of silage will bring down the input cost for farmers since silage is much cheaper than concentrate feed.
  • Objective: The revised scheme has been designed with the objectives of increasing productivity, reducing input costs, and doing away with middlemen (who usually take a huge cut).
  • Since India has a livestock population of 535.78 million, effective implementation of this scheme will play a major role in increasing the return on investment for our farmers.

About the Sub-Mission on Fodder and Feed

  • The scheme will provide 50% capital subsidy up to ₹50 lakh towards project cost to the beneficiary for infrastructure development and for procuring machinery for value addition in feed such as hay/silage/total mixed ration.
  • Private entrepreneurs, self-help groups, farmer producer organizations, dairy cooperative societies, and Section 8 companies (NGOs) can avail themselves of the benefits under this scheme.
  • The scheme can be used for covering the cost of infrastructure/machinery such as bailing units, harvester, chaff cutter, sheds, etc.

Challenges and solution

  • Seasonal availability: A major challenge in the feed sector emanates from the fact that good-quality green fodder is only available for about three months during the year.
  • Fermenting green fodder: Ideal solution would be to ferment green fodder and convert it into silage.
  • Hence, under the fodder entrepreneurship program, farmers will receive subsidies and incentives to create a consistent supply chain of feed throughout the year.

Conclusion

The mission will help marginal farmers reduce their input costs and help them in increasing the return on capital employed.

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Climate Change Impact on India and World – International Reports, Key Observations, etc.

The message from the IPCC report

Note4Students

From UPSC perspective, the following things are important :

Prelims level: IPCC

Mains level: Paper 3- What IPCC report seeks to convery

Context

The Intergovernmental Panel on Climate Change (IPCC) recently released the Working Group I contribution to the Sixth Assessment Report (AR6). It is the first of four that the Panel will issue over the next one and a half years.

What does the report say?

  • Global surface temperature is now higher by 1.07oC since the pre-industrial era.
  • The impact of climate change on the atmosphere, oceans and land is unmistakably of human origin and this impact is picking up pace.
  • Carbon dioxide is the dominant source of warming.
  • Aerosols contribute to reducing the impact of warming by other greenhouse gases, by almost a third.
  • Methane reduction, while needed overall, is particularly significant only as part of the endgame as the drastic reduction of aerosols actually leads to an increase in warming.
  • The report expectedly projects an increase in climate extremes due to global warming, with heatwaves, extreme rainfall events and occurrence of extreme sea levels all expected to intensify and be more frequent.
  • A major finding of the report is that air pollution reduction and steep climate change mitigation are not complementary goals but require independent efforts over the short and medium-term
  • With the inclusion of the Indian Institute of Tropical Meteorology’s Earth System Model among the climate models used in AR6, India too has joined the climate modelling fraternity.

About the net-zero emission targets

  •  The report’s clear message is that reaching net zero was not the determining factor for the world to limit itself to a 1.5oC , or 2oC, or indeed any specific temperature increase.
  • The report is clear that it is the cumulative emissions in reaching net zero that determine the temperature rise.
  • India’s Ministry for Environment, Forest and Climate Change was quick to note this point about net zero in a statement, adding that “historical cumulative emissions are the cause of the climate crisis that the world faces today
  • The limitations of the remaining carbon budget for 1.5oC are so stringent — a mere 500 billion tonnes of carbon dioxide for an even chance of keeping to the limit — that they cannot be met by promises of net-zero 30 years from now.
  • Equally, the disconcerting finding is that the world is set to cross the 1.5oC limit within 10-15 years.

Implications for India

  •  India has contributed less than 5% of global cumulative emissions to date, with per capita annual emissions a third of the global average.
  • India is also the only nation among the G20 with commitments under the Paris Agreement that are even 2oC warming-compatible.
  • India needs its development space urgently to cope with the future, one where global temperature increase may be closer to 2oC.
  • Even if India completely stops its emission which is 3 billion tonnes in carbon dioxide equivalent terms, for the next 30 years, with others’ emissions remaining the same, will buy the world less than two years of additional time for meeting the Paris Agreement temperature goals.

Way forward

  • Equity: Focusing on definite cumulative emission targets keeping equity and historical responsibility in view,
  • Immediate reduction by developed countries: Immediate emission reductions by the developed countries with phase-out dates for all fossil fuels.
  • Investment: Massive investment in new technologies and their deployment,
  • Climate finance: a serious push to the mobilisation of adequate climate finance is the need of the hour.

Conclusion

This is the message that the IPCC report has sent to this year’s climate summit and the world. The message is a dire warning, all the stakeholders should heed the warning.

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Foreign Policy Watch: India-Afghanistan

For India, there will be no dearth of balancing opportunities in Afghanistan

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Implications of situation in Afghanistan for India

Context

The rapid fall of Afghanistan after the withdrawal of the US sent shockwaves across the region.

Cause of concern for India

  • The Taliban’s entry into Kabul, marks the beginning of a new phase in the relationship between Afghanistan and India.
  • Recent developments in South Asia certainly point to a recurring dynamic between Afghanistan and India.
  • The restoration of Taliban rule in Afghanistan with Pakistan’s support undoubtedly presents some very serious potential challenges for Indian security.
  • However, a measure of strategic patience could help India cope with the adverse developments in Afghanistan and find ways to secure its interests in the near future.
  • For India, a bigger question mark will be about the Taliban’s renewed support for international terrorism and Pakistan’s re-direction of jihadi groups that have allegedly fought with the Taliban towards India.

Afghanistan from 1979 to 2001 and how it changed the subcontinent

  • At the end of 1979, the Soviet Union launched a massive military invasion to protect a communist regime in Kabul.
  • The US and Pakistan responded by unleashing a religious jihad that compelled Russia to withdraw by 1989.
  • Pakistan’s critical role in the Afghan war against Russia allowed Pakistan to secure the political cover for the country’s acquisition of nuclear weapons.
  • The Pakistan army turned the jihadi armies to gain control of Afghanistan and launched a proxy war against India, especially in the Punjab and Kashmir regions.
  • The turbulence of the 1990s saw deepening conflict between India and Pakistan.
  • Al Qaeda, hosted by the Taliban, launched terror attacks against the US on September 11, 2001.
  • Swift US retribution brought an end to Taliban rule and compelled Pakistan to reconsider its policies.
  • After 2001, there has also been a significant expansion of the India-US strategic partnership.
  • By the end of the decade, though, the Pakistan Army had swung back to its default positions — renewed support for the Taliban in Afghanistan.
  • Pakistan also teased an increasingly war-weary Washington into a negotiation with the Taliban for a peace settlement.

Way forward for India

  • Patience: Like all radical groups, the Taliban will have trouble balancing its religious ideology with the imperatives of state interests.
  • India would want to carefully watch how this tension plays out.
  • Watch the relation between Pakistan and Taliban: Equally important is the nature of the relationship between the Taliban and Pakistan.
  • The Taliban is bound to seek a measure of autonomy from Pakistan, India will have to wait.
  • Prepare for cross-border terror: India must fully prepare for a renewal of cross-border terror, but there is a lot less global acceptance of terrorism today than in the permissive 1990s.
  • No major power would like to see Afghanistan re-emerge as a global sanctuary of terror.
  • The world has also imposed significant new constraints on Pakistan’s support for terror through mechanisms like the Financial Action Task Force.
  • Unlike in the 1990s, when Delhi simply absorbed the terror attacks, it now shows the political will to retaliate forcefully.
  • Regional geopolitical alignment: It is also important to note that the US and the West will continue to have a say in shaping the international attitudes towards the new regime.
  • The Taliban and Pakistan appear to be acutely conscious of this reality.

Conclusion

For a patient, open-minded and active India, there will be no dearth of balancing opportunities in Afghanistan.

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Electoral Reforms In India

Criminalisation of politics

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Powers of ECI

Mains level: Paper 2- Electoral reforms in India

Context

According to the Association for Democratic Reforms (ADR), 233 MPs in the current Lok Sabha are facing criminal charges, up from 187 in 2014, 162 in 2009, and 128 in 2004. Recently, the Supreme Court has imposed fines on political parties for failing to comply with its orders regarding complete disclosure of their candidates’ criminal history.

Order adds strength to Election Commission

  • Through the order in a recent case, the SC has put a new onus on the Election Commission to do something concrete, for example, create a phone app to display the detailed criminal history of any contesting candidate.
  • This should be accompanied with a separate cell in the ECI to monitor the compliance of all the political parties regarding this; any breach should be brought to the attention of the SC without delay.

Why legislature and political parties are reluctant?

  • Two excuses: The legislature has been very slow in addressing this issue, and political parties remain extremely reluctant to change their ways, citing two major excuses.
  • Winnability of candidate: “Winnability” of candidates is the first reason.
  • The logic of a candidate with criminal charges doing good for the people of a constituency is dubious at best.
  • The winnability clause is an attempt by the party to absolve itself of all blame and put the onus of sending a criminally charged candidate to Parliament solely on the voter.
  • Innocent until proven guilty maxim: The other reason offered by political parties is summarised by the maxim of Indian law, which is that any accused is innocent until proven guilty.
  • It is argued that most criminally accused candidates are the victims of “vendetta politics”.

Issues with allowing criminals to contest election

  • The logic of a candidate with criminal charges doing good for the people of a constituency is dubious at best.
  • Violation of right to equality under Article 14: There were 4.78 lakh prisoners (as of December 2019) of whom 3.30 lakh were under trial, i.e. not yet proven guilty.
  • Yet, their fundamental rights — their right to liberty, freedom of movement, freedom of occupation and right to dignity — are curbed completely.
  • An “innocent” undertrial cannot vote, but a man chargesheeted for murder can even contest election from jail.
  • These blatant double standards are a clear violation of Article 14, which guarantees to all citizens equality before the law.

Suggestions

  • ECI suggestion on vendetta politics: The ECI has suggested some safeguards against vendetta politics.
  • First, only offences that carry an imprisonment of at least 5 years are to be considered.
  • The case against the candidate should have been filed at least six months before the scheduled elections for it to be considered.
  • And finally, a competent court must have framed the charges.
  • Fast-track court: An alternative solution would be to try cases against political candidates in fast-track courts.
  • The Supreme Court had sent a directive in 2014, directing that cases against political candidates must be completed within a year, failing which the matter should be reported to the Chief Justices of the respective High Court.
  • This is a matter entirely in the judicial domain.
  • Barring political parties: The Supreme Court has, in the recent order stopped short of drastic steps by rejected the suggestion to direct the Election Commission to bar political parties that fail to comply with criminalisation protocols by using its authority derived from Clause 16A of the Election Symbols Order.
  • This step, the SC reasons, would be going too far and infiltrating the domain of the legislature.

Conclusion

The legislature and the judiciary need to do more to curb the menace of criminalisation of politics.


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Start-up Ecosystem In India

Startup ecosystem can help India become powerhouse of global economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Unicorn club

Mains level: Paper 3- How startup ecosystem can help transform India

Context

With 62 per cent of the population in the working-age group and 54 per cent below the age of 25, we have the advantage of leveraging the skill and ability of our youth to drive the nation forward through productive output and innovation.

Significance of startup ecosystem in the country

  • In 2021 alone, Indian startups have so far raised upward of $20 billion in funding.
  • Today, India is home to more than 40,000 startups and is building a robust tech and internet infrastructure.
  • The last decade-and-a-half has witnessed a significant change in the landscape — from the founding of new startups, to global investor interest, to the advances made in infrastructure and policies.
  • Global investors too are realising the potential upside in India’s huge, under-penetrated market as the country steadily makes a place for itself as a leading R&D hub for many Silicon Valley companies.
  • Amid the Covid-19 pandemic, Indian startups have rapidly innovated to provide indigenous, tech-enabled solutions to combat challenges from testing kits and ventilators to remote monitoring, and preventive technologies, as well as innovations in supply chain management, logistics, and education.

Factors driving startup economy in India

  • The steady rise of Indian IT companies in the 2000s, a large talent pool of a skilled workforce, increased expendable income, and rising capital inflows have collectively contributed in large part.
  • Young generation: Moreover, the ability of the young generation to take risks, move fast, and disrupt things without fear, has become our biggest asset today.
  • Increasing internet use: In the next five years and likely to have an estimated 850 million internet users by 2030, the country stands at the cusp of unprecedented economic growth.

How it helps economy

  • The proliferation of this startup economy has brought with it new business opportunities, innovation, tech-centric approaches and job creation across sectors.
  • A mature startup ecosystem, with seasoned entrepreneurs and technology-led solutions, paves the way for innovation and expanding its global footprint.
  • While value creation lies at the centre of entrepreneurship, Indian startups are also taking big strides in building synergies and partnerships with global entities, further demonstrating the evolution of the startup ecosystem and its appetite for innovation, collaboration and disruption.
  •  In fact, one of the paradigm shifts brought about through technology during the pandemic has been systemic shift to online education and remote learning at scale.
  • Solutions built by Indian startups saw widespread adoption not just domestically but also on a global scale, firmly establishing the country as a cornerstone of tech and innovation in the world.

Suggestions

  • Educations and reskilling: In order to transition beyond the current capabilities and achieve the demographic dividend, education, and reskilling, and upskilling of our workforce is crucial.
  • Policy environment: Apart from the domestic policy environment, the global environment and technological advances are also changing, and it is imperative that India is prepared for this revolution.
  • Foster entrepreneurship: Apart from policy-level decisions that promote entrepreneurship, the onus is also on India’s corporate sector to foster entrepreneurialism, and create synergies to build impactful technology solutions, sustainable and resource-efficient growth.
  • Inclusion and sustainability: As country stands at the cusp of unprecedented economic growth, speed, inclusion, and sustainability are key elements in this mission.
  • Tap the potential of rural and semi-urban India: The collective future efforts of the public and private sectors to improve physical and digital connectivity will also help unlock the untapped potential of rural and semi-urban India to truly lead Industry 4.0 and beyond.
  • Focus on goals of national importance: In view of achieving this transformation at scale, the Indian startup ecosystem must focus on developing solutions that allow businesses in key sectors to meet goals of national importance.

Conclusion

Coupled with the nation’s focus on strengthening digital infrastructure in healthcare and education, and boosting employment in manufacturing, there is little doubt that India@100 will be a powerhouse of the global economy.

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Parliament – Sessions, Procedures, Motions, Committees etc

Issue of the oath of an elected representative

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Third schedule of Constitution

Mains level: Paper 2- Oath of an elected representative

Context

Some Cabinet Ministers in Karnataka who took oath recently stood out from the rest.  All these oaths run against the spirit of the Constitution.

Background of agnostic Constitution

  • The public officials who took office under the Government of India Act, 1935 had to take oath which had no mention of God.
  • During the Constituent Assembly debate, B.R. Ambedkar proposed the Preamble, “We, the people of India…”.
  •  H.V. Kamath moved an amendment to the Preamble, “In the name of God, we, the people of India…”.
  • To this proposal, another member, A. Thanu Pillai said that if this amendment is accepted it would affect the fundamental right of freedom of faith.
  • He said that a man has a right to believe in God or not, according to the Constitution.
  • H.N. Kunzru opposed Kamath’s amendment stating that in a matter that vitally concerns every man individually, the collective view should not be forced on anybody.
  • The amendment was defeated, thereby excluding ‘God’ from the Preamble.
  • Thus, our founding fathers gave us an agnostic Constitution.

What are provisions in Consitution

  • The public officials who took office under the Government of India Act, 1935 had to take oath which had no mention of God.
  • However, the framers of the Indian Constitution rejected this conception of secularism.
  • Constitution gives office-holders an option to swear in God’s name if they so wished.
  • The Supreme Court of India observed in 2012 that the oath by an elected representative should be taken “in the name of God” if the person is a believer or should be “solemnly affirmed” if the person is a non-believer.
  • The Supreme Court said that the oath of an elected representative should be in strict compliance with the wordings of the Constitution. 

Way forward

  • As the Republic belongs to all the citizenry, irrespective of whether he is a theist, atheist or agnostic, and irrespective of his caste or religion, a person occupying a constitutional post should take oath in the format of ‘“solemnly affirm”.
  • The Constitution should be amended accordingly.

Conclusion

If a person takes the oath in the name of a God affiliated to a particular religion or caste, the citizenry cannot expect the absence of affection or ill-will from him. The allegiance of a person holding a constitutional post should only be to the Constitution.

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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Learning from China

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Lessons from China's economic progress

Context

As we look back on our own journey after independence and feel proud of our achievements, wisdom lies in also looking around to evaluate how other nations have performed, especially those which started with a similar base or even worse conditions than us.

How India’s neighbouring countries have performed?

  • Independent India has done better than Pakistan if measured on a per capita income basis:
  • Comparison with Pakistan: India’s per capita income stood at $1,960 (in current PPP terms, it was $6,460) in 2020, as per the IMF estimates, while Pakistan’s per capita income was just $1,260 (in PPP terms $5,150).
  • Comparison with Bangladesh: Bangladesh, whose journey as an independent nation began in 1971, had a per capita income of $2,000 (though $5,310 in PPP terms), marginally higher than India, and certainly much higher than Pakistan in 2020.
  • Comparison with China: The real comparison of India should be with China, given the size of the population of the two countries and the fact that both countries started their journey in the late 1940s.
  • By 2020, China’s overall GDP was $14.7 trillion ($24.1 trillion in current PPP terms), competing with the USA at $20.9 trillion.
  • India, however, lags way behind with its overall GDP at $2.7 trillion ($8.9 trillion in PPP terms).
  • The quality of life, however, depends on per capita income in PPP terms, with the USA at $63,420, China at $17,190 and India at $6,460.

What made the difference between India and China?

  • India adopted a socialist strategy while China took to communism to provide people food, good health, education, and prosperity.
  • China, having performed dismally on the economic front from 1949 to 1977, started changing track to more market-oriented policies, beginning with agriculture.
  • Agriculture reforms: Economic reforms that included the Household Responsibility System and liberation of agri-markets led to an annual average agri-GDP growth of 7.1 percent during 1978-1984.
  • Reform in the non-Agri sector: Success in agriculture reforms gave political legitimacy to carry out reforms in the non-agriculture sector.
  • Manufacturing revolution: The success of reforms in agriculture created a huge demand for manufactured products, triggering a manufacturing revolution in China’s town and village enterprises.
  • Population control measures: China adopted the one-child norm from 1979-2015.
  • As a result, its per capita income grew much faster.
  • India’s attempts to control its population succeeded only partially and very slowly.
  • India’s sluggish performance when compared to China raises doubts about its flawed democratic structure that makes economic reforms and implementation of policy changes more challenging, unlike China.

Way forward for India

  • Liberating agri-markets is part of the reform package that China followed. That’s the first lesson.
  • Increase purchasing power of rural areas: Even for manufacturing to grow on a sustainable basis, we have to increase the purchasing power of people in rural areas.
  • This has to be done by raising their productivity and not by distributing freebies.
  • Investment in various areas: Increasing productivity requires investments in education, skills, health and physical infrastructure, besides much higher R&D in agriculture, both by the government as well as by the private sector.
  • Create institutional setup: This requires a different institutional setup than the one we currently have.

Conclusion

India’s sluggish performance when compared to China raises doubts about its flawed democratic structure that makes economic reforms and implementation of policy changes more challenging, unlike China. But India has lessons to learn from China.

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Parliament – Sessions, Procedures, Motions, Committees etc

Analysing decline of the role of Parliament in present context

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Constituent assembly

Mains level: Paper 2- Decline in the functioning of legislature

Context

This 75th year of India’s Independence feels like what its first year of freedom may have been like. The pandemic era defined by large-scale loss, lack of adequate state infrastructure and deep economic uncertainty — on the face of it — is reminiscent of the Partition years.

Declining role of Parliament

1) Low functioning

  • In 2020, Parliament sat in session for 33 days.
  • According to PRS Legislative Research (PRS), in the 2021 Monsoon Session, the Lok Sabha was scheduled to work for six hours per day for 19 days.
  • Instead, it sat for 21 hours in total or 21 per cent of what was conceived.
  • Brazil’s Parliament used an application called Infoleg during the pandemic and functioned at higher rates than in pre-pandemic times.
  • The United States Congress met physically for 113 days in 2020. In the year before, they met for 130 days.
  • In the past 10 years, the Rajya Sabha has functioned for less than 25 per cent of its scheduled time.

2) Neglect of the role of Parliamentary Committees

  • According to PRS, none of the 15 bills introduced in this Monsoon Session 2021 has been referred to a Parliamentary Committee.
  • In this current Lok Sabha commencing 2019, only 12 per cent of the bills introduced have been referred to committee.
  • By contrast, the 16th Lok Sabha (2014-2019) had 27 per cent and the 15th Lok Sabha (2009-2014) had 71 per cent of bills referred to standing committees.
  • More significantly, fewer and fewer drafts of key legislation are being debated across the political aisle before becoming law.

3) No discussion of supplementary budget

  • In this Lok Sabha, nine minutes were spent discussing and passing the supplementary budget that included a Rs 15,750 crore Covid-19 Emergency Response and Health System Preparedness Package.
  • This is the functioning of the legislature — increasingly convened less and debates are few.

Contrast with functioning of Parliament when country faced partition

  •  The drafting of India’s Constitution started in December 1946, when the Constituent Assembly first met, seven months before Independence in August 1947.
  • What makes these years of our constitutional founding so dramatic, was that the backdrop to our founding was as torturous as this pandemic era.
  • As Delhi was slowly filling up with refugees, India’s dual function legislature functioned as Parliament by morning and Constituent Assembly in the afternoon.
  • The first Constituent Assembly was meant to comprise 296 members, but its initial session had only 210 members in attendance.
  •  The assembly faced a boycott by the rest of the members.
  • The Constituent Assembly caucus of the founding Congress Party included many members from outside the party.
  • These members from across the political-ideological spectrum were able to arrive at decisions using a mixture of techniques of problem-solving, persuasion, bargaining and politicking.

Conclusion

The functioning of the Partition era Constituent Assembly is held up as a model of nation-building. Our political class today needs to learn from the makers of our Constitution and stop the declining role of our Parliament today.

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Direct Benefits Transfers

How e-RUPI can transform government’s welfare schemes

Note4Students

From UPSC perspective, the following things are important :

Prelims level: e-RUPI

Mains level: Paper 3- e-RUPI and its advantages

Context

Recently e-RUPI was launched by the Prime Minister.

About e-RUPI

  • It is a digital prepaid, purpose, and person-specific payment utility. 
  • Built on the UPI platform, e-RUPI is easy to scale by the issuer.
  • At the point of presence, the verification code received by the beneficiary is shared with the service provider to authenticate and authorize the transaction: Contactless, real-time payment, and online settlement of funds into the service provider’s bank account.
  • Fourteen leading banks have already integrated it with their systems.
  • e-RUPI is almost custom-designed for school voucher programs.
  • The efficacy of these programs is well established in many countries. 

Advantages

The adoption of e-RUPI in various government programs will enhance business efficiency, simplicity, transparency, and accountability in these programs.

1) e-RUPI can make cash transfer purpose and person-specific

  • Policymakers have debated whether direct cash transfers deliver benefits more efficiently than in-kind transfers like the Public Distribution System (PDS) and fertilizers.
  • e-RUPI could break the policy logjam with the following advantages:
  • 1) It will make cash transfers purpose- and person-specific.
  • 2) Freeing them from dependence on bank accounts.
  • 3) Providing visibility from the time of issue until redemption.

2) e-RUPI can make PDS more efficient

  • The inefficiency of PDS is rooted in high overhead costs, leakages, exclusion, and inefficiencies.
  • A food-specific e-RUPI voucher will allow beneficiaries to buy rations from an outlet of their choice.
  • It will also help promote the One Nation, One Ration Card.
  • The move will also help in removing price distortion and the redemption of the voucher at market price by merchants within and outside the PDS network.

3) Streamline fertilizer subsidy

  • e-RUPI will enable farmers to buy fertilizer at nominal prices with direct credit of the subsidy amount into the account of the authorised dealers.
  • As far back as 2011, a task force on direct transfer of subsidies on kerosene, LPG and fertilisers headed by Nandan Nilekani had suggested a roadmap for direct cash transfer of fertiliser subsidies in a phased manner.
  • The e-RUPI will allay apprehensions about creating an IT infrastructure, managing nearly 3,00,000 fertilizer sale points, the collapse of dealer network due to liquidity squeeze in the event of subsidy payments getting delayed, and a complex system of timely credit of subsidy into an estimated 129 million Aadhaar-linked bank accounts of farm households.

4) Basic income support

  • The Covid-19 pandemic has revived interest in Universal Basic Income (UBI).
  • The lockdowns to contain the pandemic exposed the poor to acute distress, due to loss of means of livelihood.
  • e-RUPI can mitigate their stress by rapidly distributing food and cash vouchers at scale.

5) Ayushman Bharat

  • In the Ayushman Bharat healthcare initiative beneficiaries can be given e-RUPI vouchers of designated value tenable at empanelled healthcare facilities, providing them portability and facility choice.
  • The service provider will benefit from the immediate payment.

Way forward

  • Ownership agency: The Aadhaar experience suggests ownership must vest with a specific agency.
  • Make distribution and acceptance compatible: Making the distribution and acceptance of e-RUPI incentive-compatible is recommended, as demonstrated by the popularisation of prepaid telephony by the telecom industry.
  • Light regulation and competition promotion: Light regulation and the opening of e-RUPI to the competition will spur innovation and adoption.
  • All banks, small and big, NBFCs, non-bank PPI issuers, and telcos may be allowed to issue it later.

Conclusion

e-RUPI opens up a world of opportunities to the government, people, and businesses to provide, avail, and pay for services seamlessly.

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Foreign Policy Watch: India-China

Understanding the anxieties behind Chinese aggression towards India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Quad

Mains level: Paper 2- India-China relations

Context

Chinese President Xi Jinping made a surprise visit to Tibet on July 21, signalling the seriousness with which China continues to take its Himalayan border dispute with India.

Understanding China’s strategic challenges and intensions

  • Demonstration of political confidence through aggression: More than a year after the clash at Galwan Valley, efforts to resolve the border crisis continue to move slowly.
  • The Chinese side has previously failed to complete troop withdrawals and revert to the status quo that the Indian side believed China agreed to.
  • China’s behaviour has been calculated to demonstrate political confidence.
  • Worsening strategic environment for China: Seen from Beijing, the strategic environment for China is beginning to worsen in South and Central Asia.
  • As the US withdraws and the Taliban advances in Afghanistan, China fears the prospect of instability and an emerging haven for terrorism directed against its policies in Xinjiang.
  • Even as China seeks to scale back the debt-laden BRI, such instability may also result in Beijing increasing its already overstretched external commitments — particularly in the security domain.
  • Re-emergence of Quad: China is deeply worried by the re-emergence and strengthening of multilateral opposition to China, and the Quadrilateral Security Dialogue (or “Quad”) between the US, Japan, Australia and India.
  • For China, this represents a persistent threat not only economically and in foreign policy, but also militarily along its maritime periphery in the South and East China Seas, as well as the Taiwan Strait.
  • As US multilateral cooperation with its partners has increased, Beijing has come to increasingly see itself as beset by threats on all sides.

China’s 2 possible responses to strategic challenges and its implications for India

  • 1) Wolf warrier diplomacy: So far, the response from China’s new class of “wolf warrior” diplomats to this emerging strategic challenge has been to only grow more assertive in rhetoric and behaviour.
  • China’s domestic politics: Response of wolf warrior diplomats may seem perplexing, given that it has served only to alienate other countries and isolate China further.
  •  China’s domestic politics in the lead up to the 20th Congress will mean that its leaders, diplomats and generals will be displaying maximum nationalistic fervour.
  • Implications for India: This may well mean China taking political and policy decisions, which in a normal season they would not because doing so could compromise Beijing’s longstanding diplomatic and strategic goals, including in dealings with India.
  • 2) Moderate approach to improve strategic position: But if instead of aggressive posture, China decided that it was better domestic politics to improve China’s strategic position in Asia amid its competition with Washington, Beijing’s diplomats may yet adopt a more moderate approach, including with India.
  • Implications for India: If stability can be restored to the China-India strategic relationship, this could provide a window for Asia’s two mega-economies to reopen their markets to each other.

Conclusion

Indeed, the choice China makes between these two alternatives will have implications for India and the rest of the world in their dealing with China.


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UDAY Scheme for Discoms

Why central government schemes for discoms have not worked

Note4Students

From UPSC perspective, the following things are important :

Prelims level: UDAY

Mains level: Paper 3- Schemes for discoms and issues with them

Context

A recent report of Niti Aayog has assessed the losses of discoms to be about Rs 90,000 crore in 2020-21.

Central government schemes for discoms

  • In 2001, the Accelerated Power Development Scheme was initiated.
  • This was followed by various other schemes with some differences between them.
  •  The government had launched the UDAY scheme in 2015.
  • UDAY did not involve any monetary assistance to the states, but only promised to help the states in reducing the cost of power through coal linkage rationalization, etc.
  • Recently, the government launched a new scheme with a total outlay of around Rs 3.03 lakh crore.
  • It seeks to improve the distribution infrastructure of the distribution companies (discoms) with the primary intention of improving their financial health.
  • The objective of the scheme is to bring down commercial losses in the range of 12-15 percent and also reduce the difference between the average cost of supply (ACS) and average revenue realized (ARR) to zero by 2024-25.
  • The problem with all these schemes (including UDAY) is that they have not been delivered and the financial position of the discoms has only worsened.

Why did schemes fail to improve the financial health of discoms?

  • Reduction of loss is a managerial issue: Reduction of commercial losses is not really about improving infrastructure, it is more of a managerial issue.
  • The average loss (inclusive of technical and commercial) is about 22 percent today.
  • But several discoms have losses in excess of 40 percent.
  • It is possible to bring down losses from 40 percent to about 15 percent without any significant investments in infrastructure.
  • Investments, however, would be required to bring down losses further to a single-digit level.
  • The governance issues of the scheme is a complex issue.
  • The two most popular parameters which are monitored are the loss levels and the difference between the ACS and ARR.
  • There are inherent problems with these parameters since they keep fluctuating and it is very difficult to fathom their trend on a quarter-wise basis, rendering the release of funds to be tricky and cumbersome.
  • In the scheme now announced by the government, about 26 parameters will be taken into consideration and assigned a score.
  • For some of the parameters, it may be difficult to assign a score across discoms which may lead to some amount of subjectivity.

Way forward: Alternate approach

  • Provide transitional financial support: An alternate approach that could be considered by the Centre (in lieu of such assistance schemes) is providing only transitional financial support to all discoms, which are privatized under the private-public partnership mode. 
  •  A transitional support of Rs 3,450 crore spread over five years proved to be exceedingly beneficial in the case of discoms in Delhi.
  • Promote privatization: Since in an earlier policy statement the government had mentioned that privatization of discoms is to be promoted, it would make sense to consider this transitional support as a catalyst.

Conclusion

Adopting this approach will ensure that the central government moves away from the micro-management of discoms, which inevitably happens if the release of funds is linked to reform-linked parameters on a quarter-wise basis.

 

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Judicial Reforms

Issues related to Judicial appointment in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article 124(2) and Article 217

Mains level: Issues with collegium system

Context

Recommendations of some judges for appointment by the collegium raises the issue of changes in the collegium system.

Background of the collegium system

  • During the 1970s, the political leaning of a candidate had become a major consideration in the matter of appointment of judges.
  • Therefore, it was felt that the role of the state in the appointment of judges in terms of Article 124 (2) and 217 needed to be reconsidered.
  • But then, in 1982 in S P Gupta’s case, the Supreme Court bench of five judges gave its approval to the primacy of the state in the matter of appointment of judges.
  • However, that judgment was overturned subsequently by a bench of nine judges.
  • Primacy of CJI:  It held that the provisions for consultation with the Chief Justice of India, and the Chief Justices of the high courts in Articles 124 (2) and 217 of the Constitution were introduced because of the realisation that the Chief Justice is best equipped to know and assess the worth of a candidate, and his/her suitability for appointment as a superior judge.
  • Initiation of proposal by CJI: It also held that the initiation of the proposal for appointment of a judge to the SC must be made by the CJI after wider consultation with senior judges, and likewise in the case of high courts.
  • Confirmation of CJI: It was also held that no appointment of any judge to the SC or any high court can be made unless it conforms with the opinion of the CJI.
  • Thus, what is known as the “collegium system” was born.
  • Striking down of NJAC: In 2014, the government tried to make changes to the collegium system by introducing Article 124 (A) by a constitutional amendment, and by enacting National Judicial Appointments Commission Act, 2014.
  • The SC has struck down both the amendment and the Act.

Has the collegium system succeeded?

  • Nepotism: There have been cases where the nearest relative of Supreme Court judges has been appointed as a high court judge, ignoring merit.
  • Ignoring the merit: Judges far lower in the combined All India Seniority of High Court judges were appointed to SC, and the reason assigned was that those selected were found more meritorious.

Conclusion

The collegium system is still the best, but it needs to weed out what is wrong in its actual working. It is hoped that the system will make course corrections in deserving cases.

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WTO and India

Unpacking the resiliency of global trade

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Global trade in the post-COVID-19 world

Context

Past experiences suggest there is hope for global trade recovery in the post-COVID-19 world.

Impact of pandemic on the global and Indian economy

  • In the last year, the devastating impact of COVID-19 pandemic has shrunk the world economy by 4.4% and global trade by 5.3%.
  • Job losses in the world have been estimated to be to the tune of 75 million.
  • India’s GDP contracted by 7.3% according to the National Statistical Office.
  • About 10 million jobs were lost in India according to the Centre for Monitoring Indian Economy Pvt. Ltd.
  • Around the world, countries have responded to pandemic-induced shortages with protectionist reactions and nationalist aspirations.
  • Such a response has the potential to disrupt complex cross-border supply chains.

How economic shocks in the past laid foundation for institutional changes

  • The Second World War was responsible for the creation of the Bretton Woods Institutions such as World Bank and International Monetary Fund (IMF) and International Trade Organisation (ITO) were created to help rebuild the shattered post-war economy.
  •  The General Agreement on Tariffs and Trade (GATT) was negotiated in 1947 as a means to reducing barriers to international trade.
  • The oil shocks of the 1970s led to the establishment of the International Energy Agency (IEA) in 1974 and went on to create awareness on the need for global energy security.
  • The financial crisis of 2008 led to the G20 Leaders Summit, an elevation from the G20 Finance Ministers forum in 1999.
  • Increase in global trade: As a result of these developments global trade increased from a mere $60.80 billion in 1950 to $2,049 billion in 1980; $6,452 billion in 2000; $19,014 billion in 2019.

Changes in the global trade in post-Covid world

  • Financial buffers due to stimulus package: Stimulus packages and forced savings in several countries in the last year have created financial buffers.
  • Resilient supply chain: Global supply chains are expected to be resilient to help revive manufacturing with lower production costs, induce investments and promote technology transfers.
  • Anti-dumping measures at WTO: In a post COVID-19 world, members of the World Trade Organization are expected to make rules to discipline errant nations that are known to dumping goods and erecting trade barriers through multilateral rules.
  • Deeper economic integration through trade arrangements: Mutually beneficial trade arrangements that seek deeper economic integration will be entered into at the bilateral and regional levels.
  • Dominance of technology: Countries that harness technology are expected to dominate international trade in future with a transformational impact on the global economy.
  •  Businesses will aim to harness data for innovation to remain ahead of the curve in a post-COVID-19 world.

Way forward for India

  • The projections of the International Monetary Fund for India’s economic growth ahead are positive and in line with the general trends world-wide.
  • Focus on value-added manufacturing: Building an ecosystem that incentivises value-added manufacturing and technology-induced finished products should form a part of our long-term strategy.
  • Production Linked Incentive Scheme (PLI) schemes, if carefully nurtured, could lead the industry on that path.
  • Support MSMEs: Supporting MSMEs with cheaper input costs, including raw material and intermediate goods would help sustain them with job creation at the local level.
  •  Developing a synergistic relationship between the big industry and MSMEs is at the core of a successful Atmanirbhar Bharat.
  • Skill upgradation: Skills upgradation to global standards should form a part of India’s strategy in a post-COVID-19 world.

Conclusion

The patterns in the past leave much hope for optimism for global trade in the post-COVID-19 crisis in the collective belief that international trade is vital for development and prosperity.

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Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

The shaky foundation of the labour law reforms

Note4Students

From UPSC perspective, the following things are important :

Prelims level: One Nation One Ration Card

Mains level: Paper 2- Labour law reforms in issues in implementation

Context

The central government has deferred the possible date of implementation of labour codes to October 1, 2021, prolonging the wait before employers and workers could enjoy the benefits extended by the labour codes.

Labour law reforms: Key provisions

  • The government enacted the Code on Wages in August 2019 and the other three Codes, viz., the Industrial Relations Code, the Occupational Safety, Health and Working Conditions Code and Code on Social Security (CSS) in September 2020.
  • Universal minimum wage: The codes would extend universal minimum wages and social security, enable enhanced industrial safety and the provision of social security to gig workers, among other things.
  • Recognition of trade unions: The Industrial Relations Code provides for recognition of trade union(s) by employers, a labour right that eluded workers for seven decades.
  • Flexibility to employers: Employers celebrated the extension of tremendous flexibility to them, even those unasked, such as relief from framing standing orders for most firms.
  • The central government has deferred the possible date of implementation to October 1, 2021.

Issues in implementation

  • State’s have not issued draft rules: Major States such as Tamil Nadu, Kerala, West Bengal, Maharashtra, Haryana and Delhi have not issued the draft rules under any codes.
  • Even though the Code on Wages was enacted in August 2019, it was only in March 2021 that the central government notified the constitution of an advisory committee.
  • Safety concerns persist:  Industrial safety continues to be a grave concern even after the enactment of the Occupational Safety, Health and Working Conditions Code.
  • Lack of clarity on the determination of minimum wage: On June 3, 2021, the government announced an expert committee with a tenure of three years to advise on minimum wages.
  • Then, on July 12, 2021, the government announced that the wage index’s base year would be shifted from 1965 to 2019 to use the revised wage index to determine minimum wages.
  • The Government seems to be facing difficulty regarding the implementation of minimum wages.

Conclusion

Despite the gazetting of four Codes, age-old laws are in force. That reflects poorly on the governance abilities of the governments.

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Oil and Gas Sector – HELP, Open Acreage Policy, etc.

No fossil fuels as usual

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Oil recovery rate

Mains level: Paper 3- Balancing the energy needs dependent on fossil fuel and environmental concerns

Context

The spread and speed of the destruction caused by climate change in recent weeks present our new Minister of Petroleum and Natural Gas with a policy dilemma. The article offers five policy suggestions to deal with the dilemma.

Energy dilemma facing India

  • The events of the past month all over the world have caught even the most alarmist of climate scientists by surprise.
  • These events brought into sharp relief the reality that there was no option of denying the consequential implications of the use of fossil fuels.
  • However, the dilemma India faces lies in the fact that the Indian economy is heavily dependent on fossil fuels and there is no end in sight to this dependence.
  • Further, India imports approximately 85 percent of its crude oil requirements and is exposed to the volatility of the international oil market.

Five policy changes needed

1) Reduce emphasis on domestic exploration

  • Not easy to locate and difficult to develop: A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, these reserves are not easy to locate and, even when located, difficult to develop and produce on a commercial basis.
  • The government has often compounded this economic challenge by placing administrative limits on marketing by companies and their pricing freedom.
  • High risk and structural softness in the market: The fundamental point is that EP in India is a high-risk activity, and this risk is even greater today because of the longer-term structural softness of the petroleum market.
  • The resources earmarked for exploration can be deployed more productively elsewhere.

2) Increase productivity of producing fields

  • The ONGC needs to allocate increasing resources to improving the productivity of its producing fields.
  • Low oil recovery rate: The average oil recovery rate in India was around 28 percent that is, for every 100 molecules discovered, only 28 were monetized.
  • This number did not compare well with the global average of around 45 percent for fields of comparable geology.
  • Use technology: The application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production.

3) Increase strategic reserves

  • We hold currently strategic reserves equivalent to 12 days of imports.
  • The government has approved plans to increase this buffer to 25 days.
  • By comparison, China, the EU, South Korea, and Japan hold between 70-100 days of reserves.
  • A significant portion of our oil imports came from the Middle East, predominantly Saudi Arabia, Iraq, and Iran.
  • This region faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured.
  • We would, therefore, be well-advised to build contingency safeguards.

4) Restructure and reorganize public sector petroleum companies

  • Consolidate upstream assets: In the first instance, the upstream assets should be consolidated under ONGC (the upstream assets of BPCL, IOC, HPCL, and GAIL should pass onto ONGC) and GAIL should be unbundled into a public utility gas pipeline company
  • Diversify: Thereafter, these companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise.
  • The restructuring will help cut back the “avoidable” costs of intra public sector competition.
  • It will also reduce the inefficiencies of “sub-scale” operations.
  • It will provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy.

5) Avoid siloed thinking

  • The petroleum minister should not see his responsibility through the siloed prism of oil and natural gas.
  • He should broaden the aperture and become the progenitor of the energy transition.

Conclusion

The dilemma referred to in the opening sentence will be easier to resolve our priorities are set within the framework of clean energy.

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