Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Understanding the paradox in between booming financial sector and declining economy
Divergence in the financial sector and the overall economy
- India’s major secondary stock market, the Sensex has been found tracking an upward path, from 40,817 on January 8, 2020, to 48,569 a year later, on January 8, 2021.
- The trend indicates that GDP in India has been subdued while the financial sector has continued moving up.
- This paradox has been found to be replicated in other developing as well as advanced economies.
- These include the major emerging economies such as Brazil and Argentina along with advanced economies such as the United States and the United Kingdom.
- It remains an open question whether this paradox can sustain itself.
- If this cannot sustain, it poses risk for those having large exposures in the financial market and also for the economy as a whole.
Let’s understand the financial flows beyond the real economy
- Finance as above, having no counterpart in the productive sector, was identified, first by Karl Marx, as fictitious capital.
- Earnings from fictitious capital include interests, dividends, and capital gains as well as profits on derivatives.
- All the above come in the category of unearned or rentier capital.
- Financial assets, sold with capital gains at higher prices, are met with a rising rather than with the usual declines in demand.
- Evidently, possibilities of accumulating assets turn even brighter with the high-value assets (used as collaterals), fetching credit for further business.
- As for the stock prices, which reflect the stream of dividends over time discounted by interest rates, lower rates can help pitch stock prices higher.
- Cuts in interest rates are often preferred as tools under mainstream prescriptions limiting expansionary policies, which evidently helps stock prices.
- A journey as above for the financial circuit continues, is subject to market confidence.
Role of state
- To look at how finance has attained its present status we need to look at the evolving alliances between finance and the ruling state.
- The path started with the financial deregulation in the late-1990s when banks were allowed to profit by dealing with securities and with the emergence of hedging devices such as futures and options in the market.
- It also reflects the rise of non-bank financial institutions as well as shadow banks operating beyond regulations even at cost for the regular banks which had large exposures to the non-banks.
- The state’s close proximity to big finance is also evident in the revamping of downhill finance, even with bailouts in the name of restoring financial stability.
- It speaks even more of the pro-finance stance of the government in the neglect of upswings in the financial sector despite the continuing downslides in the real economy.
Consider the question “What explains the apparent paradox in the India economy with evident divergence in its booming financial sector and subdued economy. What are the risks involved in such situations? Suggest the measures to deal with such situations.
Conclusion
Catastrophes, that comes with the sudden collapse of confidence in the financial sector, highlight the need for alternative policies on the part of the state as well as a bit of caution on part of individual investors — in a bid to usher in a sustainable and equitable path of growth for the economy as a whole.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Data Protection Bill provisions
Mains level: Paper 3- Issues of informed consent to the online privacy policies
The article discusses challenges posed by online privacy policies and suggests some ideas to make them more user friendly.
Issues with online privacy policies
- Such policies are not designed for easy reading.
- These policies are full of legal jargon and most are difficult to read.
- Most policies are exclusively in English, which is clearly inadequate in a country where no more than 12 per cent are comfortable with the language.
- A human-centric study across India found that even people who couldn’t read or write, when made aware of what they were consenting to, cared deeply about it.
- Online consent is, therefore, a false choice for most Indians.
Importance of consent in data ecosystem
- Consent is also the fulcrum of India’s fast-growing data ecosystem.
- The Data Protection Bill under consideration by Parliament lists consent as a legal ground for data processing.
- Last year, NITI Aayog sought public comments on the Data Empowerment and Protection Architecture (DEPA), a system that will connect an individual’s financial, health, telecom and other data so that it can be moved from one provider to another.
- DEPA intends to use consent to ensure that users remain in control of their data.
New ideas needed to give users greater control
1) Business as steward of consumer trust
- Businesses need to become more responsible stewards of consumer trust.
- Experiments suggest that making consumers read privacy policies by getting them to stay on the “privacy policy” page for a few minutes, led to increased trust in businesses and greater data sharing.
- Businesses can adopt such ideas to make users trust them more.
2) Regulatory bodies need to guide consumers
- Consumers do not have the time or knowledge to go through privacy policies.
- The food regulator’s food safety certifications and the Bureau of Energy Efficiency (BEE)’s rating guides have become part of our everyday lives.
- Similarly, a “privacy rating” for apps can help individuals make more informed choices about their data.
- Such “rule of thumbs” can help them cut through the jargon, trust businesses more and share more data.
3) Running awareness campaign
- Governments and industry associations can play an enabling role by running innovative awareness campaigns that leverage local contexts, and relatable narrative styles.
- The campaign should include awareness about messages logging off from public computers, and not sharing phone numbers easily.
4) Some other ideas
- The “burden of proof” on privacy should rest with providers rather than consumers.
- Businesses should act as fiduciaries of user data and act in the best interest of the user than simply maximising profits.
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Regulators can create a new class of intermediaries that warn consumers about dangerous practices, represent them, and seek recourse on their behalf.
Consider the question “What are the issues with the consent to the online privacy policies? Suggest the measures to give users greater control over their digital destinies.
Conclusion
By educating and empowering every Indian, we will enable her to participate fully in India’s digital economy, and thereby create a meaningful digital life for every Indian. Only then will the true potential of Digital India be realised.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: FCI and MSP
Mains level: Paper 3- Making India's agri-food policies optimal
Basic parameters to design optimal agri-food policy
- UN population projections (2019) indicate that India is likely to be the most populous country by 2027.
- By 2030, the country is likely to have almost 600 million people living in urban areas, who would need safe food.
- Indian agriculture has an average holding size of 1.08 hectares (2015-16 data) while engaging 42 percent of the country’s workforce.
- Cultivable land and water for agriculture are limited and already under severe pressure.
What should be the basic features of agri-policy
- 1) It should be able to produce enough food, feed, and fibre for its large population.
- 2) It should do so in a manner that protects the environment — soil, water, air, and biodiversity and achieves higher production with global competitiveness.
- 3) It should enable seamless movement of food, keeping marketing costs low, save on food losses in supply chains and provide safe and fresh food to consumers.
- 4) Consumers should get safe and nutritious food at affordable prices.
Need to change from sub-optimal to optimal policies
- Free electricity and highly subsidized fertilizers, especially urea, are damaging groundwater levels, especially in the Green Revolution states.
- Sugar and wheat are being produced at prices higher than global prices, and these crops can’t be exported unless they are heavily subsidized.
- Excessive stocks of wheat and rice with the Food Corporation of India (FCI) are putting pressure on the agency’s finances.
- Rice remains globally competitive, but it should be remembered that in exporting rice we are also exporting massive amounts of precious water — almost 25-30 billion cubic meters, annually.
- This is the water that is pumped for rice cultivation, enabled by the subsidized power supply.
- In the marketing segment also, for most of our agri-commodities, our costs remain high compared to several other developing countries due to poor logistics, low investments in supply lines, and high margins of intermediaries.
- All these are signs of sub-optimal agri-food policies.
Policy changes required: On the production level
- Green Revolution states of Punjab, Haryana, and western Uttar Pradesh require crop diversification.
- This can be done by switching from the highly subsidized input price policy (power, water, fertilizers) and MSP/FRP policy for paddy, wheat, and sugarcane, to more income support policies linked to saving water, soil, and air quality.
- The Agri-marketing segment is also in the need of reforms especially with respect to bringing about efficiency in agri-marketing and lowering transaction costs.
- It is believed that developing countries should invest at least one percent of their agri-GDP in agri-R&D and extension.
- India invests about half.
- It needs to double with commensurate accountability of R&D organizations, especially the ICAR and state agriculture universities to deliver.
Policy changes required: On the consumption level
- The biggest challenge for the next 10 years is that of malnutrition, especially amongst children.
- The public distribution of food, through PDS, that relies on rice and wheat, and that too at more than 90 percent subsidy over costs of procurement, stocking, and distribution, is not helping much.
- It is increasing the finances of FCI, whose borrowings have touched Rs 3 lakh crore.
- To address that, beneficiaries of subsidized rice and wheat need to be given a choice to opt for cash equivalent to MSP plus 25 percent.
- The FCI adds about 40 percent cost over the MSP while procuring, storing, and distributing food.
- This cash option will save some money and also lead to supplies of more diversified and nutritious food to the beneficiaries.
Consider the question “What are the issues with India’s agri-food policies? Suggest the changes in agri-food policies so as to make them optimal.
Conclusion
What we need is to set agri-food policies on a demand-driven approach, protecting sustainability and efficiency in production and marketing, and giving consumers more choices for nutritious food at affordable prices.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Judicial Review
Mains level: Separation of Power doctrine
The Supreme Court’s recent order staying the implementation of three farm laws has been criticised and is seen as violative of the doctrine of Separation of Powers.
Q. Discuss the role of judicial activism in parliamentary democracy in India.
What is the issue?
- In particular, many have questioned the suspension of action under the laws as such interim orders are extremely rare.
- The court did not accept the Attorney General’s argument that laws made by the legislature should not be ordinarily stayed, as there is a presumption of constitutionality in favour of the laws.
SC’s justification
- This court cannot be said to be completely powerless to grant stay of any executive action under a statutory enactment, the Bench observed in its order.
- This means that it was apparently making a distinction between staying a law and staying its implementation or any action under it.
- Some may argue, however, that the effect remains the same, as the order operates as a stay on the government invoking its provisions.
Previous such orders
- The court also cited an order passed by another Bench of the Supreme Court in September 2020 on the Maratha reservation issue.
- It directed that admissions to educational institutions for 2020-21 and appointments to posts under the government shall be made without reference to the reservation provided under the relevant legislation.
Farms laws case is different
- In the Maratha reservation case, the Bench said interim orders could be passed if an enactment is ex facie unconstitutional or contrary to the law laid down by the Supreme Court.
- It noted that the quota violated the 50% ceiling mentioned in the Indra Sawhney case (1992) and that the Maharashtra government had not shown any extraordinary situation to justify exceeding the limit.
- Here, the Court observed that a stay on the farm laws’ implementation may assuage the hurt feelings of farmers and encourage them to come to the negotiating table.
What are the court’s powers in regard to staying enacted law?
- Under the broad framework of judicial review, the Supreme Court and High Courts have the power to declare any law unconstitutional.
- This is on grounds if a law is contrary to any provision of the Constitution or it violates any of the fundamental rights.
- Another ground is invalidity if the law is repugnant to a central law on the same subject or has been enacted without legislative jurisdiction.
Criticisms of the move
- The main criticism is that suspending a law made by the legislature goes against the concept of separation of powers.
- Courts are expected to defer to the legislature’s wisdom at the threshold of a legal challenge to the validity of a law.
- The validity of law ought to be considered normally only at the time of final adjudication, and not at the initial stage.
- The second principle is that there is a presumption that every law enacted by any legislature is constitutional and valid.
- The onus is on those challenging it to prove that it is not. Therefore, courts are circumspect when hearing petitions seeking suspension of law pending a detailed adjudication.
Various precedents cited by the Court
- Case law suggests that in some cases, High Courts indeed stayed the operation of some laws. However, the Supreme Court took a dim view.
- In 1984, the top court set aside an interim stay granted against the operation of a municipal tax (Siliguri Municipality & Others vs Amalendu Das & Others).
- In 2013, it removed the stay on some provisions of and regulations under the Cigarettes and Other Tobacco Products Act, 2003 (Health for Millions Trust vs Union of India).
- It then held that the rules were ex facie unconstitutional and the factors, like, the balance of convenience, irreparable injury and public interest are in favour of passing an interim order.
Back2Basics: Judicial Activism
- The term “Judicial Activism” refers to the court’s decision, based on the wisdom that does not go rigidly within the text of the statute passed by the legislature.
- It goes in favour of the use of judicial power broadly to provide remedies to the wide range of social wrongs for ensuring proper justice.
- The judiciary performs an active role to uphold constitutional values and ethics under the constitutional pattern.
- For addressing civic dilemmas, the judiciary applies its intellect and creativity to fill the gap between the positive and normative aspects of legislations.
- For this reason, judicial activism has emerged.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: G7. G8, G20
Mains level: G7 and its significance for India
The United Kingdom has invited PM Modi to attend the G7 summit that is scheduled to be held in June.
Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7. 
G7 Countries
- The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
- It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
- Initially, it was formed as an effort by the US and its allies to discuss economic issues.
- The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
- It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
- Canada joined the group in 1976, and the European Union began attending in 1977.
Evolution of the G-7
- When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
- And it was a cozy club for tackling issues such as the response to oil shocks.
- Now it accounts for about 40% of global GDP.
- Since the global financial crisis of 2007-09, it has sometimes been overshadowed by the broader g20.
- The G-7 became the G-8 in 1997 when Russia was invited to join.
- In 2014, Russia was debarred after it took over Crimea.
Significance of G7 for India
- India will get more voice, more influence, and more power by entering the G7.
- After the UN Security Council (UNSC), this is the most influential grouping.
- If the group is expanded it will collectively address the humongous issues created by the Wuhan virus,
- Diplomatically, a seat at the high table could help India further its security and foreign policy interests, especially at the nuclear club and UN Security Council reform as well as protecting its interests in the Indian Ocean.
Back2Basics: The G-20
- The G-20 is a larger group of countries, which also includes G7 members.
- The G-20 was formed in 1999, in response to a felt need to bring more countries on board to address global economic concerns.
- Apart from the G-7 countries, the G-20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.
- Together, the G-20 countries make up around 80% of the world’s economy.
- As opposed to the G-7, which discusses a broad range of issues, deliberations at the G-20 are confined to those concerning the global economy and financial markets.
- India is slated to host a G-20 summit in 2022.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Adaptation Cost
Mains level: Progress of global climate action
The United Nations Adaptation Gap Report, 2020 was recently released by the UNEP.
Must read edition: Five years of Paris Agreement
UN Adaptation Gap Report
- UN Environment Programme (UNEP) has managed the production of UN Environment’s Adaptation Gap Report series since its first edition in 2014.
- The aim of the reports is to inform national and international efforts to advance climate change adaptation.
Behind the concept: Adaptation Cost
- Adaptation Cost includes costs of planning, preparing for, facilitating and implementing the climate change adaptation measures.
- It thus derives benefits as the avoided damage costs or the accrued benefits following the adoption and implementation of adaptation measures.
Highlights of the 2020 report
- The annual cost of adaptation to the effects of climate change for developing countries is estimated to at least quadruple by 2050, according to the United Nations Adaptation Gap Report, 2020.
- The current cost for developing countries is in the range of $70 billion (Rs 5.1 lakh crore) and may rise to $140-300 billion in 2030 and $280-500 billion in 2050.
Funding gaps
- The ever-increasing adaptation cost has also outpaced the growth in adaptation finance that refers to the flow of funds to developing countries to help them tide over the damages caused by climate change.
- This, in turn, has kept the adaptation finance gap from closing with the current efforts, although the fund flow has increased, the report said.
- Adaptation costs, in actual terms, are higher in developed countries but the burden of adaptation is greater for developing countries in relation to their gross domestic product.
- These countries, especially in Africa and Asia, which are least equipped to tackle climate change will also, be the most impacted by it, the report noted.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 5G technology
Mains level: 5G technology and its rollout
The Department of Telecommunications (DoT) has sought inputs from telcos and other industry experts on the sale and use of radiofrequency spectrum over the next 10 years, including the 5G bands.
Try this PYQ:
Q. In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?
- Ad Hoc Committees set up by the Parliament
- Parliamentary Department Related Standing Committees
- Finance Commission
- Financial Sector Legislative Reforms Commission
- NITI Aayog
Select the correct answer using the code given below:
(a) 1 and 2
(b) 1, 3 and 4
(c) 3, 4 and 5
(d) 2 and 5
What is 5G technology?
- 5G or fifth generation is the latest upgrade in the long-term evolution (LTE) mobile broadband networks.
- It mainly works in 3 bands, namely low, mid and high-frequency spectrum — all of which have their own uses as well as limitations.
Three bands of 5G
- The low band spectrum has shown great promise in terms of coverage and speed of internet and data exchange, the maximum speed is limited to 100 Mbps (Megabits per second).
- This means that while telcos can use and install it for commercial cellphones users who may not have specific demands for very high-speed internet, the low band spectrum may not be optimal for specialised needs of the industry.
- The mid-band spectrum, on the other hand, offers higher speeds compared to the low band but has limitations in terms of coverage area and penetration of signals.
- Telcos and companies, which have taken the lead on 5G, have indicated that this band may be used by industries and specialised factory units for building captive networks that can be moulded into the needs of that particular industry.
- The high-band spectrum offers the highest speed of all the three bands, but has extremely limited coverage and signal penetration strength.
- Internet speeds in the high-band spectrum of 5G have been tested to be as high as 20 Gbps (gigabits per second), while, in most cases, the maximum internet data speed in 4G has been recorded at 1 Gbps.
Where does India stand in the 5G technology race?
- On par with the global players, India had, in 2018, planned to start 5G services as soon as possible, with an aim to capitalize on the better network speeds and strength that the technology promised.
- Indian private telecom players have been urging the DoT to lay out a clear road map of spectrum allocation and 5G frequency bands so that they would be able to plan the rollout of their services accordingly.
- One big hurdle, however, is the lack of flow of cash and adequate capital with some companies due to their AGR dues.
Global progress on 5G
- More than governments, global telecom companies have started building 5G networks and rolling it out to their customers on a trial basis.
- In countries like the US, some companies have taken the lead when it comes to rolling out commercial 5G for their users.
- A South Korean company, which had started researching on 5G technology way back in 2011, has, on the other hand, take the lead when it comes to building the hardware for 5G networks for several companies.
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