Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise ‘Sahyog-Kaijin’
Mains level: NA
Exercise ‘Sahyog-Kaijin’
- Indian and Japanese coast guards participated in a joint exercise ‘Sahyog-Kaijin’ on January 16.
- The aim behind ‘Sahyog-Kaijin’ is to strengthen the bond between the two countries.
- One ship of the Japanese Coast Guard and four ships and an aircraft of the Indian Coast Guard participated in the joint exercise.
- The drill is a five-day event.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- GST-below expected collection, and problems associated with it.
Context
In theory, the shift to GST made eminent sense, yet in practice, some of these expectations have been belied.
Why have GST collections not measured up to expectations?
- This could be due to a combination of three factors:
- First: The tax rates under GST are lower than in the earlier regime-GST was not revenue neutral, to begin with.
- Second: There has been massive tax evasion due to under-reporting, input credit scams and fake invoices
- Third: A slowing economy has impacted firm revenues, and thus tax collections.
GST should have been revenue-neutral but it is not
- Fitment exercises not carried out: The fitment exercise should have been undertaken in a manner so as to ensure that collections pre and post GST are the same.
- But, this fundamental principle was not adhered to, and other considerations dominated.
- Revenue neutrality Vs. Multiple objectives: The GST council began its deliberations not with the single objective of revenue neutrality, but with multiple objectives in mind.
- Closeness to existing tax: Council wanted to ensure that rates were close to the existing tax incidence (accounting for cascading); to ensure minimal impact on inflation.
- Not regressive: The council also wanted the proposed rate structure was not regressive in nature.
- The council wanted that items of mass consumption were not taxed at a higher rate.
- Achieving all these objectives simultaneously proved a difficult task.
The issue of tax evasion
- It is difficult to arrive at firm estimates of the scale of the problem but there are some indications of its size.
- In West Bengal, it was estimated that the value of goods (July 2017 to March 2018) entering a state appeared to be under-reported by around Rs 50,000 crore.
- Rs 60,000 crore in Madhya Pradesh, and Rs 1,50,000 crore in Maharashtra.
- Numerous cases of tax fraud and fake invoice scams have also been detected since then
Problems involve and possible solutions
- Invoice matching: It is argued that invoice matching will help if implemented it from the beginning.
- It could have helped plug the loopholes.
- Issue of under-reporting: It is debatable whether invoice matching can end under-reporting (collusion) and fake invoices.
- Limit of state capacity in handling cases: The Central and state administrations can intervene in only about 3 lakh cases in a year.
- Their capacity to track lakhs of transactions on a daily basis is questionable.
- Slowing economy: Already existing structural issues have been compounded by the slowing economy.
Way forward
- There are certain options available to the government.
- First: Either recalibrate the expectation or carry on the efforts to plug the loopholes and the shortcoming in the system.
- Second: Lower the cut-off for composition scheme. A higher level simply encourages business “splitting”.
- Third: Reduce exemptions.
- Fourth: The council must deliberate on the rate structure, bringing it in line with pre-GST levels.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Rising inflation-slowing growth rates and its consequences for Indian economy.
Context
High inflation has reduced the fiscal space available for a rate cut.
RBI target of 6% breached.
- CPI at 7.35 %: Retail inflation, as measured by the consumer price index (CPI), has surged to 7.35 per cent in December 2019.
- Latest inflation data seems to corroborate fears articulated by the Monetary Policy Committee (MPC) in its December meeting.
- In the meeting, MPC refrained from cutting the benchmark repo rate.
Consequences for the economy
- Reduced scope for fiscal slippage: High inflation reduced the space for further easing of policy rates.
- Even after clarity over the extent of the Centre’s fiscal slippage emerged.
- Rise in yield for 10-year securities: The 10-year G-sec yields have reacted sharply to these developments, rising to 6.67 on Tuesday.
- Offsetting operation twist: Rise in yield resulted in offsetting the impact of the RBI’s recent open market operations.
- Inflation targeting under stress: The combination of weak economic activity and higher than expected supply-side inflationary pressures has put the inflation-targeting regime under test.
Reasons for the inflation rise and chances of easing
- Food prices rise: Much of the rise in the headline inflation number can be traced to higher food prices.
- Food inflation has risen to a near six-year high of 14.12 per cent in December 2019, up from 10.01 per cent in the previous month.
- Vegetable prices have surged to 60.5 per cent in December, contributing nearly 3.7 percentage points to the headline numbers.
- Chances of ease in coming months: While vegetable crop cycles tend to be short, and supply-side pressures may ease in the coming months.
- The stickiness in prices of protein items is likely to provide a floor for food inflation.
Bleak outlook for inflation easing
- No short-term return to normal level: Food inflation is unlikely to revert to previous levels in the short term.
- Household inflation expectations, a key metric in the MPC’s assessment, are more responsive to food inflation, this will further exert upward pressure on MPC.
- A factor of hostilities in the Middle East: The uncertainty over oil prices on account of hostilities in the Middle East, adds to the bleak outlook for inflation.
Conclusion
With limited fiscal space for a meaningful stimulus, the government intends to support the economy during this rough patch, and return growth to a higher trajectory.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2-National Education Policy and ASER 2019 report , emphasis on the preschool education and issues associated with it.
Context
The draft NEP (National Education Policy) document points out that close to five crore children currently in elementary school do not have foundational literacy and numeracy skills.
Severe learning crisis: The document cites several possible reasons for this crisis.
- First reason: Many children enter school before age six.
- Lack of options: This is partly due to the lack of affordable and accessible options for pre-schooling.
- Therefore, too many children go to Std. I with limited exposure to early childhood education.
- Consequences for the poor: Children from poor families have a double disadvantage -lack of healthcare and nutrition and the absence of a supportive learning environment on the other.
- Second reason: Lack of developmentally appropriate activities by age and phase.
- The misplaced focus of ICDS: School readiness or early childhood development and education activities have not had a high priority in the ICDS system.
- Acting as an extension of pre-school education: Private preschools that have increased access to preschool but are often designed to be a downward extension of schooling.
- Thus, they bring in school-like features into the pre-school classroom, rather than developmentally appropriate activities by age and phase.
Three clear trends in ASER-2019 data
- First trend: Scope for expansion of Anganwadi network.
- Expansion network: There is considerable scope for expanding Anganwadi outreach for three and four-year-old children.
- All-India data from 2018 shows that slightly less than 30 per cent children at age three and 15.6 per cent of children at age four are not enrolled anywhere.
- Second trend: Under 6 students in class I.
- ASER 2018 data show that 27.6 per cent of all children in Std I are under six.
- It is commonly assumed that children enter Standard I at age six and that they proceed year by year from Std I to Std VIII.
- The Right to Education Act also refers to free and compulsory education for the age group six to 14.
- However, the practice on the ground is quite different.
- Third trend: There are important age implications for children’s learning.
- Association with learning output: ASER-2019 indicate the higher learning output associated with age in the same class.
- In Std. I, the ability to do cognitive activities among seven-eight-year olds can be 20 percentage points higher than their friends who are five years old but in the same class.
- In terms of reading levels in Std. I, 37.1 per cent children who are under six can recognise letters whereas 76 per cent of those who are seven or eight can do the same.
- Age distribution in Std. I vary considerably between government and private schools.
- Private schools in many states have a relatively older age distribution.
Way forward
- Understanding the children: Understanding the challenges that children face when they are young is critical if we want to solve these problems early in children’s life.
- Providing for developmentally appropriate skill: Instead of focusing on the pre-school years as the downward extension of school years there is a need for providing developmentally appropriate skill in these years.
- Pedagogy: On the pedagogy side reworking of curriculum and activity is urgently needed for entire age band of four to eight.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Art. 131, 32, 226
Mains level: Original Jurisdiction of the Supreme Court and High Courts
- The Kerala government moved the Supreme Court against the Citizenship (Amendment) Act becoming the first state to challenge the law.
- It filed a petition under Article 131 of the Constitution and asked for the law to be declared unconstitutional and in violation of Articles 14 (equality before law), 21 (protection of life and personal liberty) and 25 (freedom of conscience and free profession, practice, and propagation of religion).
What is Article 131 of the Constitution?
- The Article vests the Supreme Court with original jurisdiction over disputes occurring between states or between states and the Centre.
- The original jurisdiction of a court means the power to hear a case for the first time, as opposed to appellate jurisdiction, in which the court reviews the decision of a lower court.
- Unlike the original jurisdiction under Article 32 (which gives the top court the power to issue writs, etc.), the jurisdiction in Article 131 is exclusive, meaning it is only the Supreme Court which has this authority.
- Under Article 226, the High Courts too have the power to issue writs, directions etc.
Original jurisdiction
- Article 131 reads, “Original jurisdiction of the Supreme Court. — Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute —
(a) between the Government of India and one or more States; or
(b) between the Government of India and any State or States on one side and one or more other States on the other; or
(c) between two or more States,
if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends:
- The said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad, or other similar instrument which, having been entered into or executed before the commencement of this Constitution.
- However they continue in operation after such commencement, or which provides, that the said jurisdiction shall not extend to such a dispute.
What kinds of disputes are covered under Article 131?
- In ‘State of Rajasthan vs Union of India’, 1977, the Supreme Court ruled that the existence or extent of a legal right is a precursor before a suit under Article 131 is entertained. But mere wrangles between governments have no place in the scheme of that Article.
- Similarly, in the 1978 case, ‘State of Karnataka vs Union of India’, which involved the Centre’s authority to order an inquiry into a state Chief Minister’s conduct, jurisdiction under Article 131 was held valid.
- In the present case filed by Kerala, central legislation (CAA) is being challenged. In 2011, a two-judge Supreme Court Bench in ‘Madhya Pradesh v Union of India’ had held such a suit was not maintainable.
- Later in 2013, another two-judge Bench in ‘State of Jharkhand v State of Bihar and Another’ disagreed with the previous verdict and referred the matter to a larger Bench. Kerala’s plaint relies on the 2013 verdict.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Rare Diseases
Mains level: Highlights of the saif policy for ‘Rare Diseases’
The Union Ministry of Health and Family Welfare has published a national policy for the treatment of 450 ‘rare diseases’.
About the Policy
- The Centre first prepared such a policy in 2017 and appointed a committee in 2018 to review it.
- It was created on the direction of the Delhi High Court to the Ministry of Health and Family Welfare.
- This was in response to writ petitions for free treatment of such diseases, due to their “prohibitively” high cost of treatment.
- Hence, a policy was deemed necessary to devise a “multipronged” and “multisectoral” approach to build India’s capacity for tackling such ailments.
Why need such a policy?
- As per the policy, out of all rare diseases in the world, less than five per cent have therapies available to treat them.
- In India, roughly 450 rare diseases have been recorded from tertiary hospitals, of which the most common are Haemophilia, Thalassemia, Sickle-cell anemia, auto-immune diseases, Gaucher’s disease, and cystic fibrosis.
Features of the policy
- While the policy has not yet put down a detailed roadmap of how rare diseases will be treated.
- It has mentioned some measures, which include creating a patient registry for rare diseases, arriving at a definition for rare diseases that is suited to India, taking legal and other measures to control the prices of their drugs etc.
- It intends to kickstart a registry of rare diseases, which will be maintained by the Indian Council of Medical Research (ICMR).
- Under the policy, there are three categories of rare diseases — requiring one-time curative treatment, diseases that require long-term treatment but where the cost is low, and those needing long-term treatments with high cost.
- Some of the diseases in the first category include osteopetrosis and immune deficiency disorders, among others.
- As per the policy, the assistance of Rs 15 lakh will be provided to patients suffering from rare diseases that require a one-time curative treatment under the Rashtriya Arogya Nidhi scheme.
- The treatment will be limited to the beneficiaries of Pradhan Mantri Jan Arogya Yojana.
What are rare diseases?
- Broadly, a ‘rare disease’ is defined as a health condition of low prevalence that affects a small number of people when compared with other prevalent diseases in the general population. Many cases of rare diseases may be serious, chronic and life-threatening.
- While a majority of rare diseases are believed to be genetic, many — such as some rare cancers and some autoimmune diseases — are not inherited, as per the NIH.
- According to the policy, rare diseases include genetic diseases, rare cancers, infectious tropical diseases, and degenerative diseases.
Definition
- India does not have a definition of rare diseases because there is a lack of epidemiological data on its incidence and prevalence.
- While there is no universally accepted definition of rare diseases, countries typically arrive at their own descriptions, taking into consideration disease prevalence, its severity and the existence of alternative therapeutic options.
- In the US, for instance, a rare disease is defined as a condition that affects fewer than 200,000 people.
- The same definition is used by the National Organisation for Rare Disorders (NORD) in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: ASER
Mains level: Highlights of ASER 2019
The Annual Status of Education Report (ASER) 2019 (rural) was recently released by NGO Pratham.
Highlights of the report
- Only 16% of children in Class 1 in 26 surveyed rural districts can read text at the prescribed level, while almost 40% cannot even recognise letters.
- Only 41% of these children could recognise two digit numbers.
Private schools ahead
- Of six-year olds in Class 1, 41.5% of those in private schools could read words in comparison to only 19% from government schools.
- Similarly, 28% of those in government schools could do simple addition as against 47% in private schools.
- This gap is further exacerbated by a gender divide: only 39% of girls aged 6-8 are enrolled in private schools in comparison to almost 48% of boys.
- The report also found that a classroom could include students from a range of age-groups, skewing towards younger children in government schools.
Determinants of learning outcomes
- The ASER report shows that a large number of factors determine the quality of education received at this stage, including the child’s home background, especially the mother’s education level; the type of school, whether anganwadis, government schools or private pre-schools; and the child’s age in Class 1.
- More than a quarter of Class 1 students in government schools are only 4 or 5 years old, younger than the recommended age.
- The ASER data shows that these younger children struggle more than others in all skills.
- Permitting underage children into primary grades puts them at a learning disadvantage which is difficult to overcome,” said the report.
Role of Mothers
- Among the key findings of ASER 2019 is that the mother’s education often determines the kind of pre-schooling or schooling that the child gets.
- The report says that among children in the early years (ages 0-8), those with mothers who had completed eight or fewer years of schooling are more likely to be attending anganwadis or government pre-primary classes.
- With 75% women in the productive age group not in the workforce, they can be better engaged in their children’s development, learning and school readiness.
Key suggestions made by the report
- ASER found that the solution is not to spend longer hours teaching children the 3Rs.
- Counter-intuitively, the report argues that a focus on cognitive skills rather than subject learning in the early years can make a big difference to basic literacy and numeracy abilities.
- The survey shows that among Class 1 children who could correctly do none or only one of the tasks requiring cognitive skills, about 14% could read words, while 19% could do single digit addition.
- However, of those children who could correctly do all three cognitive tasks, 52% could read words, and 63% could solve the addition problem.
Focus on productive learning
- ASER data shows that children’s performance on tasks requiring cognitive skills is strongly related to their ability to do early language and numeracy tasks,” says the report.
- This suggests that focussing on play-based activities that build memory; reasoning and problem-solving abilities are more productive than an early focus on content knowledge.
- Global research shows that 90% of brain growth occurs by age 5, meaning that the quality of early childhood education has a crucial impact on the development and long-term schooling of a child.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Classical languages of India
Mains level: Protection of classical languages
Recently in a Marathi literary festival, a resolution was passed demanding its declaration as a ‘Classical’ language.
‘Classical’ languages in India
Currently, six languages enjoy the ‘Classical’ status: Tamil (declared in 2004), Sanskrit (2005), Kannada (2008), Telugu (2008), Malayalam (2013), and Odia (2014).
How are they classified?
According to information provided by the Ministry of Culture in the Rajya Sabha in February 2014, the guidelines for declaring a language as ‘Classical’ are:
- High antiquity of its early texts/recorded history over a period of 1500-2000 years;
- A body of ancient literature/texts, which is considered a valuable heritage by generations of speakers;
- The literary tradition be original and not borrowed from another speech community;
- The classical language and literature being distinct from modern, there may also be a discontinuity between the classical language and its later forms or its offshoots.”
How are the Classical languages promoted?
The HRD Ministry noted the benefits it provides once a language is notified as a Classical language:
- Two major annual international awards for scholars of eminence in classical Indian languages
- A Centre of Excellence for studies in Classical Languages is set up
- The University Grants Commission is requested to create, to start with at least in the Central Universities, a certain number of Professional Chairs for the Classical Languages so declared.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Endangered languages
Mains level: Not Much
Recently, The NY Times reported that the “near-extinct” Nepalese language Seke has just 700 speakers around the world. As per the Endangered Languages Project (ELP), there are roughly 201 endangered languages in India and about 70 in Nepal.
The last year, 2019, was the International Year of Indigenous Languages, mandated by the UN.
Nepal’s Seke language
- According to the Endangered Language Alliance (ELA), Seke is one of the over 100 indigenous languages of Nepal.
- The dialects from these villages differ substantially and are believed to have varying degrees of mutual intelligibility.
- In recent years, Seke has been retreating in the face of Nepali, which is Nepal’s official language and is considered to be crucial for getting educational and employment opportunities outside villages.
Degrees of endangerment
UNESCO has six degrees of endangerment. These are:
- Safe, which are the languages spoken by all generations and their intergenerational transmission is uninterrupted;
- Vulnerable languages, which are spoken by most children but may be restricted to certain domains;
- Definitely endangered languages, which are no longer being learnt by children as their mother tongue.
- Severely endangered are languages spoken by grandparents and older generations, and while the parent generation may understand it, they may not speak it with the children or among themselves.
- Critically endangered languages are those of which the youngest speakers are the grandparents or older family members who may speak the language partially or infrequently and lastly,
- Extinct languages, of which no speakers are left.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: BIS Hallmark
Mains level: Ensuring gold purity and standardisation
Gold hallmarking is being made mandatory to ensure consumers are not cheated, are better informed about purity and corruption is removed.
Gold Hallmarking
- Bureau of Indian Standards (Hallmarking) Regulations, 2018 were notified w.e.f. 14.06.2018. BIS is running a hallmarking scheme for gold jewelry since April 2000.
- The BIS Act 2016 has enabling provisions under Section 14 & Section 16 for mandatory hallmarking of Gold jewellery & artefacts by the Central Government.
- This made it compulsory for all the jewelers selling Gold jewellery and artefacts to register with BIS & sell only hallmarked Gold jewellery & artefacts.
- The caratage is marked on jewelry in addition to fineness for convenience of consumers, e.g. for 22 carat jewelry, 22K will be marked in addition to 916, for 18 carat jewelry, 18K will be marked in addition to 750 and for 14 carat jewelry, 14K will be marked in addition to 585.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CRZ norms, Blue flag certification
Mains level: Blue Flag Certification
The MoEFCC has relaxed Coastal Regulation Zone (CRZ) rules that restrict construction near beaches to help States construct infrastructure and enable them to receive ‘Blue Flag’ certification.
Why such move?
- The Blue Flag certification, however, requires beaches to create certain infrastructure — portable toilet blocks, grey water treatment plants, a solar power plant, seating facilities, CCTV surveillance and the like.
- However, India’s CRZ laws don’t allow the construction of such infrastructure on beaches and islands.
- The new order allows for some constructions subject to maintaining a minimum distance of 10 meters from HTL (High Tide Line).
Blue Flag certification
- The ‘Blue Flag’ beach is an ‘eco-tourism model’ and marks out beaches as providing tourists and beachgoers clean and hygienic bathing water, facilities/amenities, a safe and healthy environment, and sustainable development of the area.
- The certification is accorded by the Denmark-based Foundation for Environment Education.
- It started in France in 1985 and has been implemented in Europe since 1987, and in areas outside Europe since 2001, when South Africa joined.
- It has 33 stringent criteria under four major heads for the beaches, that is, (i) Environmental Education and Information (ii) Bathing Water Quality (iii) Environment Management and Conservation and (iv) Safety and Services.
Blue Flag beaches
- Japan and South Korea are the only countries in south and southeastern Asia to have Blue Flag beaches.
- Spain tops the list with 566 such beaches; Greece and France follow with 515 and 395 Blue Flag beaches, respectively.
In India
- Last year, the Ministry selected 13 beaches in India to vie for the certificate.
- The earmarked beaches are — Ghoghala beach (Diu), Shivrajpur beach (Gujarat), Bhogave beach (Maharashtra), Padubidri and Kasarkod beaches (Karnataka), Kappad beach (Kerala), Kovalam beach (Tamil Nadu), Eden beach (Puducherry), Rushikonda beach (Andhra Pradesh), Miramar beach (Goa), Golden beach (Odisha), Radhanagar beach (Andaman & Nicobar Islands) and Bangaram beach (Lakshadweep).
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Taal Volcano
Mains level: Volcanism and its impact
In the Philippines, a volcano called Taal on the island of Luzon; 50 km from Manila has recently erupted.
Taal Volcano
- Taal is classified as a “complex” volcano. Taal has 47 craters and four maars (a broad shallow crater).
- It is situated at the boundaries of two tectonic plates — the Philippines Sea Plate and the Eurasian plate — it is particularly susceptible to earthquakes and volcanism.
- A complex volcano, also called a compound volcano, is defined as one that consists of a complex of two or more vents, or a volcano that has an associated volcanic dome, either in its crater or on its flanks.
- Examples include Vesuvius, besides Taal.
- The Taal volcano does not rise from the ground as a distinct, singular dome but consists of multiple stratovolcanoes (volcanoes susceptible to explosive eruptions), conical hills and craters of all shapes and sizes.
Threats posed
- Taal’s closeness to Manila puts lives at stake. Manila is a few tens of kilometres away with a population of over 10 million.
- The volcano is currently at alert level 4, which means that a “hazardous eruption” could be imminent within a few hours to a few days.
- Hazardous eruptions are characterised by intense unrest, continuing seismic swarms and low-frequency earthquakes.
Earlier records of eruption
- Taal has erupted more than 30 times in the last few centuries. Its last eruption was on October 3, 1977.
- An eruption in 1965 was considered particularly catastrophic, marked by the falling of rock fragments and ashfall.
- Before that, there was a “very violent” eruption in 1911 from the main crater. The 1911 eruption lasted for three days, while one in 1754 lasted for seven months.
- Because it is a complex volcano with various features, the kinds of eruption too have been varied. An eruption can send lava flowing through the ground, or cause a threat through ash in the air.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Economic reform-sudden or persistent and incremental, sustainable.
Context
Rather than big bang measures or a stealthy agenda, India can count on small but significant improvements.
Reforms only in crisis or by stealth
- The accepted conventional wisdom is that economic reforms in India happen only in a crisis or by stealth.
- Reforms in the crisis
- Reforms of 1991 : The big example of the former are the 1991 reforms.
- In 1991 the country faced a huge foreign exchange crisis, resulting partly from the fiscal profligacy of the previous decade.
- 1999 telecom sector reforms: Another example is from 1999 when the telecom sector was in near bankruptcy, and that crisis led to the shift away from fixed fee for spectrum to revenue sharing.
- The situation of no other choice: In both cases, there was considerable opposition to those reforms, but they were pushed through because the crisis left no other choice.
- Reform by stealth: Other than a crisis, more often than not, it has been economic reform by stealth.
- In the form of executive orders: These reforms are often in the form of an executive decision rather than legislation. Following are the examples of it-
- Expansion of the list under licence: The expansion of the list of items under the Open General Licence for imports, which is a reform of protectionism, or the reduction in the set of industries reserved for small-scale businesses.
- Electoral bond introduction: A more recent example of stealth reform was the insertion of an electoral bond scheme in the Finance Bill of 2018.
- Advantages of going stealth: Reform by stealth offers the advantage of going in either direction.
- In 2013, faced with a potential currency crisis, the Reserve Bank of India (RBI) quietly retracted the limits on the liberalized remittance scheme (LRS).
- Problem with stealth reforms: Stealth reforms are introduced stealthily but when they do not yield the desired result they are rolled back unpredictably, increasing uncertainty in policies of the government.
Persistent, encompassing, creative incrementalism in reforms
- The Economic Survey of 2015 pretty much ruled out Big Bang reforms in India, calling instead for “persistent, encompassing, creative incrementalism” on them.
- This is the right mantra.
- What incrementalism means: It implies continuity, not slowness, a sustainable speed that gives reforms predictability and stability. Following are its examples of it-
- Reform in food subsidy: Example of incrementalism could be reforms that are being carried out in food subsidies.
- First: Reduce the leakages of the subsidy to non-farmers.
- Thus, when procurement is done, payments go directly to their Aadhaar-linked accounts.
- This will lead to non-farmers getting eliminated,
- Second-Pay subsidy only to the poor: It will lead to subsidy savings, allowing us to limit the subsidy only to poor farmers.
- Sovereign gold bond scheme: The use of paper gold greatly reduces imports of the physical metal and outgoes of foreign exchange.
- The sale of these bonds is being expanded, and they would eventually be everywhere, even at post offices.
- Aggregate licence by RBI: The next example is from a new category called account aggregators licensed by RBI.
- It allows users’ control over the digital data trail that their transactions generate, and they can monetize it or use it to enhance their creditworthiness.
- This is an incremental reform with huge ramifications.
Conclusion
- The reforms cited above are incremental, not a big bang, persistent but not slow, open and not by stealth, and finally, imaginative too, since they respond to real needs.
- Effective reforms are those that are done brick by brick, the boring measures that chip away at everything that constrains high, inclusive and sustainable growth.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- India's foreign relation with 'Middle Power' countries-Prospects and opportunities.
Context:
As the world is moving from an era of predictability to an era of unpredictability led by the US and China, a new Middle Power coalition is the need of an hour.
The “Rising India” narrative and challenges
- The narrative was scripted over the two post-Cold War decades, 1991 to 2011.
- Narrative of plural secular democracy: It was based on the improving performance of the economy and India’s political ability to deal with many longstanding diplomatic challenges within a paradigm of realism.
- Three successive prime ministers – scripted the narrative of India rising as a plural, secular democracy, as opposed to China’s rise within an authoritarian system.
- Opening of new vistas: India’s improving economic performance had opened up new vistas for cooperation with major powers and neighbours.
- New challenges to the narrative: Now the economy’s subdued performance and domestic political issues have created new challenges for Indian foreign policy.
- The new approach to relations with India adopted by both President Donald Trump and President Xi Jinping has created a more challenging external environment.
Relations with the US
- New demands from the US: Each time New Delhi has tried to meet a US demand, Washington DC has come up with new demands.
- US-China dispute resolution and effects for India: Any resolution of US differences with China, can only reduce whatever little bargaining clout India has.
- Complaint at WTO: The US has, in fact, actively lodged complaints against India at the World Trade Organisation.
- Geopolitical effects for India: On the geopolitical side, US intervention in West Asia has always imposed an additional economic burden on India.
Relations with China
- Consistent policy: There has been continuity and consistency in India-China policy over the past two decades, with some ups and downs.
- Effects of power difference with China: As the bilateral power differential widens, China has little incentive or compulsion to be accommodative of Indian concerns, much less the interests.
- China never fails to remind India of the growing power differential between the two.
- Building strength to deal with China: In dealing with China, India will have to, paraphrasing Deng Xiaoping, “build its strength and bide its time.
Russia’s focus
- It will remain focused on Eurasian geopolitics.
- It will also be concerned with the geo-economics of energy.
- Implications for India: Both these factors define Russia’s relations with China, and increasingly, with Pakistan, posing a challenge for India.
Way forward in the relations with Pakistan
- The government’s Pakistan policy has run its course.
- It yielded some short-term results thanks to Pakistan’s efforts not to get “black-listed” by the Financial Action Task Force (FATF).
- But the rest of the world is doing business with Pakistan, lending billions in aid.
- The global community may increasingly accept future pleas from Pakistan that terror attacks in India are home-grown.
- related to the situation in Kashmir or concerns about the welfare of Muslims, unless incontrovertible evidence to the contrary is offered.
- The need for a new Pakistan policy: Backchannel talks should be resumed and visas should be given liberally to Pakistani intellectuals, media and entertainers to improve cross-border perceptions as a first step towards improving relations.
The Middle Powers and opportunities for India
- What are the middle powers? It is a mix of developed and developing economies, some friends of the US and other friends of China.
- It is an amorphous group but can emerge into a grouping of the like-minded in a world of uncertainty capable of taming both the US and China.
- A new Middle Powers coalition may be the need of the year.
- Which countries can be part of it? Germany, France, Japan, Australia, Brazil, Indonesia, Vietnam and perhaps South Korea. One could include Russia, Nigeria and South Africa also in this group.
- Stakes involved but no influence: Like India, these countries have a stake in what the US and China do, but little influence over either.
- What India can do? These countries which constitute the part of the Middle Powers should engage the attention of India’s external affairs minister.
Disruptive policies not an option
- Adoption of disruptive approach: There is a view among some policy analysts that India too can adopt a “disruptive” approach as a clever tactic in foreign affairs.
- Disruption is not an end in itself. It has to be a means to an end.
- Powerful nations can afford disruption as tactics.
- Unchanged strategic elements: The strategic elements defining Indian foreign policy in the post-Cold War era have not changed.
- Not an option: India cannot risk such tactics without measuring the risk they pose to strategy.
Conclusion
With the changing geopolitical atmosphere particularly with respect to the US and Chiana, India needs to adopt a suitable approach to its foreign policy especially involving the Middle Powers.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Events in the Middle East, especially involving Iran and its implications for India.
Context
In the aftermath of recent events, Iran needs a new compact to deal with the domestic crisis and also a framework to deal with the US.
The threat of “regime change” in Iran
- The US policy-The temptation for a policy of “regime change” in Iran has never disappeared from the US policy towards Iran.
- The policy is based on the hope that mounting external pressure and deepening internal dissent will combine to produce a “regime collapse” in Tehran.
- US President has often insisted that he is not seeking to overthrow the clerical regime in Tehran led by Ayatollah Ali Khamenei.
- The Us demands were an end to the nuclear and missile programmes, stop supporting terror in the region and end the interference in the internal affairs of its Arab neighbours.
- Iran’s success in fending off these threats: Iran has been successful so far in fending off these external and internal challenges.
- Iran has put down repeated mass uprisings and neutered attempts from within the elite to reform the system.
De-escalation of the tension after the war-like situation
- Fear of escalation: The widespread assessment after the killing of Soleimani was that Iran would inevitably escalate the confrontation.
- Tehran set up a token retaliation for domestic political consumption and quickly called for de-escalation.
- The message of peace from the US: Trump also told the Iranian leaders that America “is ready to embrace peace with all who seek it”.
The shooting of a passenger jet and the aftermath
- The shooting of the jet:
- The Ukrainian passenger jet was shot-down near Tehran killing all 176 passengers and crew on-board.
- It included 82 Iranian nationals and many Canadian citizens of Iranian origin
- After initial denial, Tehran was forced to accept responsibility for shooting down the plane.
- The aftermath of the shooting of the plane
- Protests: Soon after the confession, protests broke out against the government.
- Demand for accountability: Iranians are angry at the attempt of the government to cover up initially and are demanding full accountability.
The general discontent of the people against the government
- The latest round of protests must be seen as a continuation of those that have raged since the end of 2017.
- Reasons for the discontent: Economic grievances, frustration with widespread corruption, demands for liberalising the restrictions on women and political opposition to the regime are the reasons.
- Discontent against external adventures: There was also strong criticism of the government’s costly external adventures in the Middle East amidst the deteriorating economic conditions.
- There is little love for the Revolutionary Guards, the principal face of state oppression.
- External pressure: As the regime cracks down on the protests against the airliner shooting, the external pressures against Iran are only likely to mount.
Available option and their dangers
- As sanctions squeeze the Iranian economy, the costs of regional overreach become apparent, and internal protests become persistent, Khamenei has few good options.
- The option of the new political compact: Offering a new political compact to the people of Iran or a new framework to deal with the Arab neighbours and the US would seem reasonable goals.
- But they involve considerable risk for the regime.
- The option of pragmatism: All revolutionary regimes come to a point when they need to replace ideological fervour with pragmatism.
- But the change from ideological fervour to pragmatism is also the time of the greatest vulnerability for the regime.
Conclusion
India as a friend of Iran will surely begin to debate if privately, the implications of the deepening regime crisis in Iran.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Police Commissionerate System
Mains level: Read the attached story
The UP Cabinet has approved the Commissionerate system of policing for state capital Lucknow, and Noida.
The Police Commissionerate System
- The system gives more responsibilities, including magisterial powers, to IPS officers of Inspector General of Police (IG) rank posted as commissioners.
- Under the 7th Schedule of the Constitution, ‘Police’ is under the State list, meaning individual states typically legislate and exercise control over this subject.
- In the arrangement in force at the district level, a ‘dual system’ of control exists, in which the Superintendent of Police (SP) has to work with the District Magistrate (DM) for supervising police administration.
- At the metropolitan level, many states have replaced the dual system with the commissionerate system, as it is supposed to allow for faster decision-making to solve complex urban-centric issues.
Additional powers to Police
- In this system, the Commissioner of Police (CP) is the head of a unified police command structure, is responsible for the force in the city, and is accountable to the state government.
- The office also has magisterial powers, including those related to regulation, control, and licensing.
- The CP is drawn from the Deputy Inspector General rank or above, and is assisted by Special/Joint/Additional/Deputy Commissioners.
Where is the system in force?
- Previously, only four cities had the system: Kolkata, Mumbai, Hyderabad and Chennai.
- However, with rapid urbanisation, states felt an increasing need to replicate the system in more places.
- The sixth National Police Commission report, which was released in 1983, recommended the introduction of a police Commissionerate system in cities with a population of 5 lakh and above, as well as in places having special conditions.
- Over the years, it has been extended to numerous cities, including Delhi, Pune, Bangalore and Ahmedabad. By January 2016, 53 cities had this system, a PRS study said.
- Depending on its success, the policing system may gradually be implemented in other districts as well.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Raisina Dialogue
Mains level: Raisina Dialogue and its impact on India's global profile
India`s annual global conference on geopolitics and geo-economics, Raisina Dialogue 2020 has began with the participation of over 100 countries.
Raisina Dialogue
- The Raisina Dialogue is a multilateral conference committed to addressing the most challenging issues facing the global community.
- It is jointly organised by the Ministry of External Affairs and the Observer Research Foundation.
- Every year, global leaders in policy, business, media and civil society are hosted in New Delhi to discuss cooperation on a wide range of pertinent international policy matters.
- The Dialogue is structured as a multi-stakeholder, cross-sectoral discussion, involving heads of state, cabinet ministers and local government officials, as well as major private sector executives, members of the media and academics.
This years’ agenda
- The fifth edition of the Dialogue 2020 has been India`s contribution to global efforts to discover solutions, identify opportunities and provide stability to a century that has witnessed an eventful two decades.
- This year`s Dialogue titled `Navigating the Alpha Century` is structured as a multi-stakeholder, cross-sectoral discussion, involving heads of states, cabinet ministers and local government officials as well as major private sector executives, members of the media and academics.
Significance of the dialogue
- The Raisina Dialogue has acquired an enviable global profile uniting the best strategic thinkers of the world.
- The synergies and collaborations in the Raisina Dialogue represent India`s deliberative ethos, as well as its international credibility and convening power.
- The Dialogue has grown along with India`s diplomatic profile and will set the tone for its intensive diplomatic engagement this year.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various keywords mentioned
Mains level: Urbanization in India
The Economist has put Malappuram at the top of the “Top ten fastest-growing cities” in the world.
Anomalies in the data
- The total fertility rate (TFR, the number of children a woman is likely to have in the childbearing age of 15-49) in Kerala is 1.8 as per NITI Aayog data from 2016 — below the replacement rate of 2.1.
- Another Kerala city, Thrissur, is No. 13, and the capital Thiruvananthapuram is No. 33 on the UN list.
- Tiruppur in Tamil Nadu — which has an even lower TFR of 1.6 — is No. 30.
- Surat in Gujarat (TFR of 2.2) is No. 27. There is no representation on the list from high population growth states like Bihar and UP.
What does “fastest growing” refer to? How is a “city” defined?
- The list based on data from the UN Population Division refers to “urban agglomerations” (UA), which are extended areas built around an existing town along with its outgrowths — typically villages or other residential areas or universities, ports, etc., on the outskirts of the town.
- The Census defines a UA as “a continuous urban spread consisting of a town and its adjoining urban outgrowths or two or more physically contiguous towns together”.
- The NCT of Delhi is a UA that includes the Municipal Corporation of Delhi (MCD) and New Delhi Municipal Council (NDMC) areas, as well as 107 “Census towns” — erstwhile surrounding villages where more than 75% of the population is now engaged in non-agricultural pursuits.
A pace of urbanization
- The Economist has listed the rate at which the populations of the UAs are expected to increase between 2015 and 2020.
- Since data on India and many other countries were not available for 2015 (the last Census in India was in 2011), the UN report used projections of UAs’ populations — estimates based on past population growth data.
- The rate of growth between 2015 and 2020 thus calculated provides a measure of the pace of urbanisation.
How does urban population grow?
- Urban populations can grow when the birth rate exceeds the death rate when workers migrate to the city in search of jobs; when more areas get included within the boundaries of the city; or when existing rural areas are reclassified as urban.
- The low fertility rate in Kerala means the increase in the population of Malappuram and other cities is not because women are having more children; rather it is because more villages are being transformed into towns, and city borders are expanding.
- According to the Census definition, an urban area is either a census town (CT) or a statutory town (ST). An ST is any place with a municipal corporation, municipal council, or cantonment board.
- A CT can be a village with “urban characteristics” — a population more than 5,000, population density more than 400 people per sq km, and with more than 75% of the population not engaged in agriculture for their livelihood.
- When a village becomes a CT, its population is included in the urban population of the district.
Could migration have caused the increase?
- Migration can either increase or decrease the population of a town.
- Kerala sees both emigration — migration from the state to other places — and immigration — the migration of workers to the state.
- Also the remittances that emigrants send allow the residents of villages to move away from agriculture, which changes the status of a village to census town.
Why these cities are growing so fast?
- These cities are seeing rapid urbanisation, and the main reason is the inclusion of new areas in the UA’s limits.
- In 2001, there were two municipal corporations within the UA of Malappuram. In 2011, the number of municipal corporations had doubled to four, and an additional 37 CTs were included within Malappuram.
- The population of the UA (excluding the residents of the outgrowths) increased almost 10 times in the same period — from 1,70,409 to 16,99,060 — obviously because of the inclusion of existing urban areas in the town.
- Similarly, Kollam UA grew from one municipal corporation in 2001 to 23 CTs, one municipal corporation, and one municipal council in 2011.
- Its population increased by 130%, even though the population of the original ST of Kollam actually decreased by 4%.
Why is this not seen elsewhere in India?
- In Kerala, urbanisation is driven by a move away from agriculture, which leads to a change in a village’s Census classification status.
- This is evident from the large number of CTs that were included in the UAs of the state since the last Census. On the other hand, except Delhi, the more populous cities in the North had fewer CTs in 2011.
- While the pace of urbanisation has been slower in the North, some unnaturally high increases in the population can be expected after the 2021 Census — because in some cases, villages on the peripheries were brought within the administrative boundaries of the cities.
Is it good for the economy?
- Urbanisation leads to the growth of cities, which are sites of infrastructure like universities, hospitals, and public transport facilities.
- There are more opportunities for the youth, which is why they attract young people and entrepreneurs.
- In India, people moving to cities leave behind (to some extent) caste and class divisions that dominate life in the villages, and can hope to climb up the social ladder.
- However, unplanned urbanisation can be “exclusionary”, making it difficult for migrants to live there given the high cost.
- Unregulated housing, lack of reliable public transport, and longer commutes within these towns puts a strain on the meagre resources of migrants.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NEON
Mains level: Applications of AI
NEONs are being called the world’s first artificial humans. They look and behave like real humans, and could develop memories and emotions — though from behind a 4K display.
NEON
- Star Labs is headed by India-born scientist Pranav Mistry who underlines that what was showcased at CES was the product of just four months’ work.
- The company says NEONs are computationally created virtual humans — the word derives from NEO (new) + humaN.
- For now, the virtual humans can show emotions when manually controlled by their creators.
- But the idea is for NEONs to become intelligent enough to be fully autonomous, showing emotions, learning skills, creating memories, and being intelligent on their own.
- Star Labs thinks they can be “friends, collaborators, and companions”, but all that is a few years away.
How does it work?
There are two core technologies behind his virtual humans.
- First, there is the proprietary CORE R3 technology that drives the “reality, real time and responsiveness” behind NEONs.
- It is the front-end reality engine that is able to give you that real expression.
- The company claims CORE R3 “leapfrogs in the domains of Behavioral Neural Networks, Evolutionary Generative Intelligence and Computational Reality”, and is “extensively trained” on how humans look, behave and interact.
- But in the end, it is like a rendition engine, converting the mathematical models to look like actual humans.
- The next stage will be SPECTRA, which will complement CORE R3 with the “spectrum of intelligence, learning, emotions and memory”.
- But SPECTRA is still in development, and is not expected before NEONWORLD 2020 later this year.
How could NEONs be used?
- NEONs are the interface for technologies and services.
- They could answer queries at a bank, welcome you at a restaurant, or read out the breaking news on television at an unearthly hour.
- This form of virtual assistance would be more effective, for example, while teaching languages, as NEONs will be capable of understanding and sympathizing.
How are they different from Virtual Assistants?
- Virtual Assistants now learn from all the data they are plugged into. NEONs will be limited to what they know and learn.
- Their leaning could potentially be limited to the person they are catering to, and maybe her friends — but not the entire Internet.
- They will not be an interface for you to request a song, rather they will be a friend to speak to and share experiences with.
- Currently, its developer doesn’t want NEONs to have collective memory, or to share data among themselves.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Types of NBFC.
Mains level: Paper 3- NBFC crisis.
Context
While India was trying to deal with the problems arising out of the large NPA accumulated by the commercial banks, the Indian financial sector was dealt with another blow in the form of the NBFC crisis.
Effects of IL&FS and DHFL collapse:
- Balance sheets affected: The collapse of these two big entities affected the balance sheets of banks and mutual fund companies.
- Credit crunch: It also resulted in a credit crunch that dampened demand and pushed a slowing economy towards recession.
- Tarnished image of NBFCs: Being leaders in the industry, their failure has tarnished the image of the NBFC sector as a whole.
Types of NBFCs and their numbers
- Total number: As of September 2019 there were a total 9,642 NBFCs in India.
- Deposit-taking NBFC (NBFCs-D): Only 82 of India’s NBFCs were deposit-taking institutions (NBFCs-D) permitted to mobilise and hold deposits.
- Non-deposit taking NBFCs (NBFCs-ND): The rest of the NBFCs which are not deposit-taking, are categorised as non-deposit taking NBFCs.
- They did not have access to the savings of ordinary households.
- For this reason, the majority of these institutions were not considered to be entities that needed strict regulation
- Systematically important (NBFCs-ND-SI): Of a large number of non-deposit taking NBFCs (NBFCs-ND), only 274 were identified as being systematically important (NBFCs-ND-SI), by virtue of having an asset size of ₹500 crores or more.
Significance of NBFCs as expressed by assets holdings
- A significant player in the financial markets: As at the end of March 2019, these two sets-NBFCs-D and NBFC-ND-SI- held assets that amounted to almost a fifth of that held by the scheduled commercial banks.
- This made them significant players in the web of credit, as well as large enough as a group to affect the health of the financial sector.
- Non-deposit taking NBFCs must rely on resources garnered from the “market,” including the banking system, besides the market for bonds, debentures, and short-term paper.
- Extension of financial entities: Individual investors would only be marginally involved in direct investment in these instruments.
- So, the NBFCs are essentially extensions of the activity of other financial entities such as banks, insurance companies, and mutual funds.
Concentrated lending by NBFCs
- Industry getting lion’s share: Industry accounted for the biggest chunk of lending, amounting to 57% of gross advances in September 2019.
- Much of this lending to industry went to the infrastructural sector.
- At second place-retail sector: A second major target for lending by the NBFCs was the retail sector, with retail loans accounting for 20% of gross advances.
- Within the retail sector, vehicle/auto loans accounted for as much as 44% of loans.
What went wrong?
- Diversification by commercial banks: Following a surge in capital flows into India which began in 2004, banks were flush with liquidity.
- Under pressure to lend and invest to cover the costs of capital and intermediation and earn a profit, banks were looking for new areas into which they could move
- Increase in retail lending by banks: The pressure resulted in a significant increase in retail lending, with lending for housing, automobiles and consumer durables.
- There was also a substantial increase in lending to the infrastructural sector and commercial real estate.
- Why NBFCs flourished even in the face of competition by banks? What the growth of the NBFCs indicates is that banks were unable to exhaust the liquidity at their disposal.
- Banks were also unable to satisfy the potential for lending to these sectors, providing a space for NBFCs to flourish.
- The willingness of NBFCs suited the banks: The willingness of the NBFCs to enter these areas suited the banks in two ways.
- First, it permitted the banks to use their liquidity even when they themselves were stretched and could not discover, scrutinise and monitor new borrowers.
- Banks could lend to the NBFCs, which could then take on the tasks associated with expanding the universe of borrowers to match the increased access to liquid funds.
- The second was that it helped the banks to move risks out of their own books.
- Short term lending to NBFCs, and long-term lending by NBFCs: Banks accepts short term deposits, so there is limit in their ability to lend that short term deposits as a long term debt.
- On the other hand, these were the sectors to which additional credit could be easily pushed.
- Lending to NBFCs that in turn lent to these sectors, appeared to be a solution to the problem.
- Bank lending to the NBFCs was short term, and the latter used these short-term funds to provide long-maturity loans
- NBFCs expected that they would be able to roll over much of these loans so that they were not capital short.
- Role of rating agencies: What they needed for the purpose were ratings that ranked their instruments as safe.
- The ratings companies were more than willing to provide such ranks.
- The two risks involved in this model: The NBFC-credit build-up was an edifice that was burdened with two kinds of risks.
- First risk: A possible default on the part of borrowers.
- The probability of which only increases as the universe of borrowers is expanded rapidly to exhaust the liquidity at hand.
- The second risk: The second was the possibility that developments in the banking sector and other segments of the financial sector would reduce the appetite of these investors for the debentures, bonds and commercial paper issued by the NBFCs
- Since the NBFCs banked on being able to roll-over short-term debt to sustain long-term lending.
- A slowdown in or halt to the flow of funds would lead to a liquidity crunch that can damage the balance sheet of these institutions.
- Which of the two risks is involved in the present crisis? The crisis that affected the NBFCs was a result of both kinds of setbacks.
- First setback: Loans to areas like infrastructure, commercial real estate and housing went bad.
- Second setback: With the non-performing assets problem in the commercial banking sector curtailing their access to bank lending.
- Why the problem turned systemic? Given the importance of ratings and “image” in ensuring access to capital, some firms with the requisite image were able to mobilise large sums of capital and expand their business.
- When entities like that go bust, the response of lenders and investors to the event tends to be drastic, with systemic effects on the sector as a whole.
Conclusion
The episode was a shadow banking crisis that has had far-reaching consequences for the economy as a whole. Therefore, its high time that measures are taken to avoid the occurrence of such a crisis in the future.
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