| Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Small and Medium Companies

Mains level: MSME sector updates

The Ministry of Corporate Affairs has expanded the turnover and borrowing thresholds for Small and Medium-sized Companies (SMC), allowing a larger number of firms to benefit from reporting exemptions under accounting norms.

What is the change?

The MCA has increased the turnover threshold for SMCs to Rs 250 crore from Rs 50 crore, and the borrowing threshold to Rs 50 crore from Rs 10 crore.
SMCs are permitted to avail a number of exemptions under the Company (Accounting Standards) Rule 2021 to reduce the complexity of regulatory filings for smaller firms.
Banks, financial institutions, insurance companies, and listed companies cannot be classified as SMCs.
Further, any company which is either the holding company or subsidiary of a company that is not an SMC cannot be classified as an SMC.

What are the exemptions available to SMCs that are not available to other firms?

SMC are completely exempted from having to file cash flow statements and provide a segmental break up of their financial performance in mandatory filings.
SMCs can also avail partial reporting exemptions in areas including reporting on employee benefits obligations such as pensions.
SMCs are exempted from having to provide a detailed analysis of benefit obligations to employees, but are still required to provide actuarial assumptions used in valuing the company’s obligations to employees.
SMCs are also exempted from having to report diluted earnings per share in their filings.
Diluted earnings per share reflect the per-share earnings of a company assuming that all options to convert other securities into shares are exercised.

Answer this PYQ in the comment box:

Q. What is/ are the recent policy initiative(s) of the Government of India to promote the growth of the manufacturing sector?

Setting up of National Investment and Manufacturing Zones.

Providing the benefit of single window clearance.

Establishing the Technology Acquisition and Development Fund.

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

How does this impact these firms?

Experts have noted that the move would promote ease of doing business for the firms that would now be included under the definition of SMC.
The Accounting Standards for SMC, which were notified in December 2006 and amended from time to time, are much simpler as compared to Indian Accounting Standards (Ind AS).
These accounting standards involve less complexity in their application, including the number of required disclosures being less onerous.
Ind AS standards are applied to larger firms and are largely similar to International Financial Reporting Standards (IFRS) used in most developed jurisdictions.

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Historical and Archaeological Findings in News

Skull found in China represents a new human species

Prelims Only | Trivia | Mains Paper 3: Awareness in various sc and tech fields

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Stone age man and his evolution

Mains level: Not Much

Scientists have announced that a skull discovered in northeast China represents a newly discovered human species they have named Homo longi, or “Dragon Man”.

Answer this PYQ in the comment box:

Q.The word ‘Denisovan’ is sometimes mentioned in media in reference to (CSP 2019):

(a) fossils of a kind of dinosaurs

(b) an early human species

(c) a cave system found in North-East India.

(d) a geological period in the history of Indian subcontinent

Who is the “Dragon Man”, the latest Chinese discovery?

The cranium found in China has been dubbed the “Dragaon Man” or Homo longi, a name that has been derived from the Long Jiang or Dragon River in the Heilongjiang province of China where the city of Harbin is located.
The skull was reportedly discovered back in 1933, when a bridge was built over the Songhua River.
For thousands of years, the skull remained buried in sediments.
Because of the distinctive shape of the skull, which was found almost complete, some members of the team have suggested that it be declared a part of a new species of the genus Homo.
Significantly, the size of the skull, which has a considerable brain capacity, is comparable to that of modern humans and Neanderthals.

Why is this discovery being considered significant?

For one, it brings new knowledge about the evolution of Homo sapiens.
It might help to bridge the gaps between our ancient ancestors called Homo erectus and us.
This knowledge is important because there is very little consensus in the scientific community about how different human species are related, and which species are our immediate ancestors.
Smithsonian for instance notes that some palaeontologists believe Homo heidelbergensis to be our immediate ancestors.
This species was discovered in 1908, and lived about 700,000 to 200,000 years ago in Europe and possibly China and some parts of Africa.

Back2Basics: Species of Humans

Modern humans are the only human species that exist in the world today.
While the exact number of human species is a matter of debate, most scientists believe that there are at least 21 of them.

As per the Smithsonian National Museum of Natural History, there are over 21 human species. Major among these are:

(1) Sahelanthropus tchadensis

Sahelanthropus tchadensis is believed to be the oldest member of the human family tree.
It lived about 7-6 million years ago somewhere around present-day Chad in Africa.
It had both ape-like and human-like features and was bipedalled, an ability that may have increased its chances of survival.

(2) Homo erectus

Homo erectus lived about 1.89 million-110,000 years ago, in Northern, Eastern, and Southern Africa and Western and East Asia.
‘Turkana Boy’ is the most complete fossil belonging to this species and is dated to be around 1.6 million years old.

(3) Modern man

Homo neanderthalensis lived about 400,000-40,000 years ago and co-existed with Homo sapiens for a few thousand years.
They lived in Europe and in southwestern and central Asia.
Homo sapiens evolved about 300,000 years ago, and are found worldwide.

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New Species of Plants and Animals Discovered

Species in news: Euphlyctis Kerala

Species | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Euphlyctis Kerala

Mains level: NA

A new species of skittering frog has been identified from the surroundings of the Thattekkad bird sanctuary.

Euphlyctis Kerala

The new species is named Euphlyctis Kerala in honor of the remarkable biodiversity of the State, which is also known for many endemic species of frogs.
The new species is known to be found in the freshwater bodies of the foothills of the Western Ghats, south of the Palakkad Gap.
Although multiple skittering frogs have been described from India for almost two centuries (since 1799), the taxonomic mess within this group created a lot of confusion due to “morphological character crypticity”.
Members of the genus Euphlyctis (skittering frogs) have their distribution range from Arabian Peninsula, Pakistan, India, Nepal, Sri Lanka, Myanmar, and Thailand.
As of now, Kerala is known to have 180 species of frogs and there could be many more new species awaiting formal descriptions.

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Where is the Indian rupee headed?

op-ed snap | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Factors affecting currency's value

Mains level: Paper 3- Factors affecting rupee's value

The article explains the factors affecting the Indian rupee’s value against the dollar in implications of change in value for the Indian economy.

Factor’s affecting rupee’s value

First, India’s foreign exchange reserves need to be considered, which have been increasing quite rapidly.
Second, there are daily fluctuations caused by foreign portfolio investment (FPI) flows.
Third, there is the external factor of the dollar, when the US currency strengthens against the euro, the rupee tends to decline and vice-versa.
Fourth, there is the concept of the real effective exchange rate (REER), a construct of economists in which relative inflation comes into play.
If inflation in India is higher than in countries associated with its export basket of currencies, then the rupee is overvalued and will correct through depreciation.
Fifth, at what stage will the RBI intervene by buying or selling dollars to stabilize the Indian currency also matters.

Let’s look at some of these factors in detail.

Impact of the U.S. economy and Fed

The dollar is driven by the US economy as well as its Federal Reserve’s policies.
The Fed’s recent indication that it would raise its policy rate of funds in the years ahead was enough to strengthen the dollar and weaken the rupee. As an increase in US rates could see global investor money flocking back to the US, the dollar gained in relative value.
The dollar should logically be strengthening, given improving US growth, now reinforced by the Fed.

Inflation factor

The inflation factor, however, has been curious.
Indian inflation will be high in India and hence also the rupee’s REER.
To the extent the market understands this concept and uses it for valuation, it should be pushing the rupee downwards.
But the pressure will be less this time as global inflation is also being raised by rising commodity prices.
Indian inflation may not be so much higher as to warrant a deep depreciation.

Increase in Forex reserves

An increase in forex reserves is an indication that India is getting in more dollars than we are spending.
This also means that our combined current and capital accounts are in surplus zone.
However, India’s current account will go into a deficit this year, as imports will be greater than exports, but will not be very high. Maybe 0.5-1% of GDP.
The capital account can get tricky.
Inward foreign direct investment was high in 2020-21.
At $60 billion in equity and $80 billion overall, it was one of the world’s highest.
Therefore, capital flows should remain strong.
External commercial borrowings could slow down amid weak investment within India.
So the fundamentals suggest that the rupee should be stable, with a tilt towards depreciation.

The RBI intervention

The RBI’s surplus liquidity and accommodative stance have not worked in favour of the rupee.
In response to its April policy, when RBI affirmed its dovish stance, the rupee began falling on expectations that if RBI kept rates low at a time of high inflation and excessive market borrowing by the government, investors will potentially move out.
This pushed the rupee towards the 75 level against the dollar, but reverted with time as RBI kept infusing liquidity and managed the yield curve.
In April, RBI bought $4.2 billion worth of the US currency.
Exports have grown smartly in the first two months of 2021-22, and at this stage, the central bank would not want to that trend by stalling the rupee’s depreciation.

Conclusion

Taking all these factors into account, one can foresee the rupee moving in the range of ₹74-75 to the dollar, unless there’s a shock of some sort, though none looks likely at present.

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Microfinance Story of India

Microfinance institutions

op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues,Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MFIs

Mains level: Paper 3- Freeing up microfinance institutions

The microfinance institutions (MFI) faced several restrictions by RBI which were not applicable to banks, NBFC and small finance banks. This denied the MFIs level playing field. A recent Consultative document by the RBI frees MFIs from such restrictions. The article explains this in detail.

Background of regulation of MFI’s by RBI

RBI first allowed informal self-help groups to open savings accounts in banks and bank lending to these groups in 1991-92.
In 2000, RBI permitted all types of institutions to offer microcredit and bank loans extended to these institutions for on-lending were treated as part of the priority sector lending.
Beyond these, RBI was unwilling to bring in any regulations on the plea that as long as these are not deposit-taking institutions there is no need to regulate them.
That was the stand of various RBI-appointed committees too, including the Vyas Committee of 2004.
Based on the Malegam Committee recommendations, RBI came out with detailed guidelines for microfinance institutions (not the microfinance sector) in 2011.
These guidelines introduced a new category of NBFCs, viz NBFC-MFIs (microfinance institutions).
It also set norms for income criteria for clients of MFIs, repayment period, borrower loan limits, interest rate norms and caps, limits on a number of lenders to a borrower and a host of other norms and criteria.

How these norms created the issue of a level playing field?

After 2015-16, the entry of small finance banks, eight of which were MFIs, into the microfinance space started to create issues.
MFIs discovered to their dismay that while they had to adhere to a set of regulations, it was a free-for-all for non-MFIs (banks, SFBs and NBFCs).
The main issue was that non-MFIs need not adhere to the norm of number of lenders (two in the case of NBFC-MFIs) and per-borrower loan limits.
It prompted non-MFIs to target borrowers identified and nurtured by MFIs with higher loan amounts, leading to high levels of borrower indebtedness.
In addition, the interest rate cap (2.75 times the base rate declared quarterly by RBI) was squeezing the margins of small and medium MFIs, as none of them get loans from the biggest banks.

Way forward

The recent Consultative Document by RBI frees MFIs from the restriction imposed by the 2011 regulations and gives them a level-playing field.
Another important feature for MFIs is that by doing away with the 50% income generation loans criteria and the repayment period norms.
RBI is facilitating credit flow into lifecycle needs like housing, water sanitation, education, health, renewable energy, etc, which are now as important as income generation.
On the interest rate front, initially, some upward correction could be there by medium and small MFIs based on their borrowing rates.
The document enhances the role for the regulator as the adoption of Board-approved policies to determine the norms of household indebtedness and to fix a transparent rate of interest by each institution and their implementation need a rigorous supervisory oversight

Conclusion

Providing a level playing field to the MFI is critical to their development, the document by RBI rightly does that. It will help in providing credit to those who remain outside the formal banking network.

Source:

https://www.financialexpress.com/opinion/unfettering-microfinance-recent-rbi-consultative-document-frees-mfis-from-shackles-imposed-by-2011-regulations/2277925/

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Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Covid-19 Delta-plus Variant

| Science Tech | Mains Paper 3: Awareness in various sc and tech fields

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Delta plus variant

Mains level: COVID

The Maharashtra government has tightened the Covid-19 unlocking process in the wake of a rise in cases of the Delta Plus variant.

What is Delta Plus?

A variant that has emerged as a new threat, especially in India, Delta Plus (B.1.617.2.1/(AY.1) is a new mutant strain of the Delta variant of SARS-CoV-2.
It is technically the next generation of SARS-COV-2.
The Delta variant that was first detected in India eventually became a huge problem for the whole world.
However, the Delta Plus variant, at present, is limited to smaller areas in the country. This mutant of Delta was first detected in Europe in March 2021, but it came to light on June 13.
Although it is still under investigation, experts believe that the Delta Plus variant has increased transmissibility.

What is known so far?

The new Delta plus variant has been formed due to a mutation in the Delta or B.1.617.2 variant.
Delta Plus (AY.1) is resistant to monoclonal antibodies cocktail.
Since it’s a new variant, its severity is still unknown.
63 genomes of Delta (B.1.617.2) with the new K417N mutation have been identified by the GISAID (global science initiative) so far.
The mutation is in the spike protein of SARS-COV-2, which helps the virus enter and infect the human cells.
People reported symptoms like headaches, sore throats, runny noses, and fever.

Are COVID-19 vaccines effective against the Delta Plus variant?

Medical experts say it is too early to predict the effectiveness of the existing vaccines on the new variant.
A detailed study would be required to establish any effect of the mutant on the immune system.
However, Union Health Ministry says that both Indian vaccines — Covishield and Covaxin are effective against the Delta variant.
There is fear that this new variant Delta Plus may spark the third wave of COVID-19, but there is a very low incidence of such cases, so there is no certainty.

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Insolvency and Bankruptcy Code

Who is a Registered Valuer?

| Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: IBC, Registered Valuers

Mains level: Financial frauds these days

A valuation report by a registered valuer is at the heart of the recent controversy surrounding a Rs 4,000 crore share allotment decision by PNB Housing Finance.

Who is a Registered Valuer?

A registered valuer is an individual or entity which is registered with the Insolvency and Bankruptcy Board of India (IBIBI) as a valuer in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017.
Under Section 458 of the Companies Act, IBBI has been specified as the authority by the central government.
The concept of registered valuer was introduced in the Companies Act in 2017 in order to regulate the valuation of assets and liabilities linked to a company and to standardize the valuation procedure in line with global valuation standards.
Before the concept of registered valuer became part of the Companies Act, valuation was done in an arbitrary manner, often leading to question marks over the authenticity of the valuation.

What does the valuation report comprise?

As per the Companies (Registered Valuers and Valuation) Rules, 2017, the valuer should, in his/its report, state 11 key aspects including disclosure of the valuer’s conflict of interest, if any.
Among others, it must include the purpose of valuation; sources of information; procedures adopted in carrying out the valuation; valuation methodology; and major factors that influenced the valuation.

Who can become a registered valuer?

An individual needs to clear the Valuation Examination conducted by IBBI.
The rules state that an individual who has completed 50 years of age and has been substantially involved in at least ten valuation assignments of assets amounting to Rs 5 crore rupees or more, during the five years preceding the commencement of these rules, shall not be required to pass the Valuation Examination.
The individual should, however, have a postgraduate degree in the specified discipline (relevant for valuation of the class of asset for which the registration is sought) and should have at least three years of experience in the discipline thereafter.
As of March 31, 2021 there were 3,967 registered valuers in the country. Only 40 of them are registered entities; the rest are individuals.

For what assets can a registered valuer undertake valuation?

A registered valuer can get themselves registered for valuation of assets such as land and building; plant and machinery; and securities and financial assets.
They can get registered for valuation of all three classes, and can undertake valuation of only the assets for which they have got the registration.

Answer this PYQ in the comment box:

Q.Which of the following statements best describes the- term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news? (CSP 2017)

(a) It is a procedure for considering the ecological costs of developmental schemes formulated by the Government.

(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.

(c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.

(d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.

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Wildlife Conservation Efforts

What is Ambergris?

| Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Ambergris

Mains level: Not Much

In the past few weeks, there have been two cases where the Mumbai Police has arrested five persons trying to sell Ambergris or whale vomit.

What is Ambergris?

Ambergris, French for grey amber, is generally referred to as whale vomit.
It is a solid waxy substance that floats around the surface of the water body and at times settles on the coast.
A sperm whale eats several thousand squid beaks a day.
Occasionally, a beak makes it way to the whale’s stomach and into its looping convoluted intestines where it becomes ambergris through a complex process, and may ultimately be excreted by the whale.

Is it Ambergris valuable?

This excretion is so valuable it is referred to as floating gold.
As per the latest estimates given by Mumbai Police, 1 kg of ambergris is worth Rs 1 crore in the international market.
The reason for its high cost is its use in the perfume market, especially to create fragrances like musk.
It is believed to be in high demand in countries like Dubai that have a large perfume market. Ancient Egyptians used it as incense.
It is also believed to be used in some traditional medicines.

Why are the laws on Ambergris?

Due to its high value, Ambergris has been a target for smugglers especially in coastal areas.
There have been several cases where the coastline of Gujarat has been used for such smuggling.
Since the sperm whale is a protected species, hunting of the whale is not allowed.
However, smugglers are known to have illegally targeted the fish in order to obtain the valuable Ambergris from its stomach.
However, Ambergris is produced only by an estimated one per cent of sperm whales.

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Foreign Policy Watch: India-Russia

Places in news: Black Sea

Places in news | International Relations | Mains Paper 2:

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Black Sea mapping

Mains level: Not Much

Russia accused Britain of spreading lies over a warship confrontation in the Black Sea.

What is the issue?

Russia annexed Ukraine’s Crimean Peninsula in 2014, a move that was not recognized by most countries in the world.
Russia has frequently responded at NATO warships visits near Crimea, casting them as destabilizing.
NATO members Turkey, Greece, Romania and Bulgaria are in the Black Sea, but warships from the US, UK and other NATO allies also have made increasingly frequent visits in a show of support to Ukraine.

About Black Sea

The Black Sea is a marginal sea of the Atlantic Ocean lying between Europe and Asia; east of the Balkans (Southeast Europe), south of the East European Plain in Eastern Europe, west of the Caucasus, and north of Anatolia in Western Asia.
It is supplied by major rivers, principally the Danube, Dnieper, and Don.
The watersheds of many countries drain into the sea beyond the six that share its coast.
The Black Sea is bordered by Bulgaria, Georgia, Romania, Russia, Turkey, and Ukraine.

Must answer this PYQ in the comment box:

Q.Consider the following pairs:

Sea

Bordering country

1. Adriatic Sea Albania

2. Black Sea Croatia

3. Caspian Sea Kazakhstan

4. Mediterranean Sea Morocco

5. Red Sea Syria

Which of the pair given above are correctly matched? (CSP 2020)

(a) 1, 2 and 4 only

(b) 1, 3 and 4 only

(c) 2 and 5 only

(d) 1, 2, 3, 4 and 5

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Urban Transformation – Smart Cities, AMRUT, etc.

[pib] 6 years of Urban Transformation

PIB | Trivia | Mains Paper 1: Urbanization, Their Problems & Remedies

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Various schemes mentioned

Mains level: Urban transformation

The Ministry of Housing and Urban Affairs (MoHUA) has commemorated 6 years of the three transformative Urban Missions vis. Smart Cities Mission (SCM), Atal Mission for Urban Rejuvenation and Urban Transformation (AMRUT) and Pradhan Mantri Awas Yojana-Urban (PMAY-U). All these missions were inaugurated in 2015.

[A] Pradhan Mantri Awas Yojana – Urban (PMAY)

PMAY is an initiative in which affordable housing will be provided to the urban poor with a target of building 2 crore (20 million) affordable houses by 31 March 2022.
It has two components: for the urban poor and also for the rural poor.
This scheme is converged with other schemes to ensure houses have a toilet, Saubhagya Yojana electricity connection, Ujjwala Yojana LPG connection, access to drinking water, and Jan Dhan banking facilities, etc.

[B] Atal Mission for Rejuvenation & Urban Transformation (AMRUT)

AMRUT was launched with the focus to establish an infrastructure that could ensure adequate robust sewage networks and water supply for urban transformation by implementing urban revival projects.
The components of the AMRUT consist of capacity building, reform implementation, water supply, sewerage and septage management, stormwater drainage, urban transport, and the development of green spaces and parks.
During the process of planning, the Urban Local Bodies (ULBs) will strive to include some smart features in the physical infrastructure components.
Rajasthan was the first state in the country to submit State Annual Action Plan under Atal Mission for Rejuvenation and Urban Transformation (AMRUT).

[C] Smart Cities Mission

National Smart Cities Mission is an urban renewal and retrofitting program by the Government of India with the mission to develop smart cities across the country, making them citizen-friendly and sustainable.
The Union Ministry of Urban Development is responsible for implementing the mission in collaboration with the state governments of the respective cities.
All the participating cities from West Bengal have withdrawn from the Smart Cities Mission.
Mumbai and Navi Mumbai from Maharashtra have also been withdrawn from the Smart Cities Mission.

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NPA Crisis

Bad bank

op-ed snap | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Bad bank

Mains level: Paper 3- Lessons from China as India operationalise its new bad bank

The article suggests drawing the lessons from China’s experience with the bad bank as India India gets ready to operationalise a new bad bank.

Bad bank in China and issues

In the aftermath of the Asian financial crisis, China set up dedicated bad banks for each of its big four state-owned commercial banks.
These bad banks were meant to acquire non-performing loans (NPLs) from those banks and resolve them within 10 years.
In 2009, their tenure was extended indefinitely.
Chinese banks can currently transfer NPLs only to the national or local bad banks.
One of China’s biggest bad banks is the China Huarong Asset Management Co. Ltd. (Huarong).
The Chinese government is its principal shareholder.
Recently this bad bank stoked financial stability concerns when it skirted a potential bond default.
An incentive to conceal: Recent research at the National University of Singapore and others highlights that Chinese bad banks effectively help conceal Non-Performing Loans.
The banks finance over 90 per cent of NPL transactions through direct loans to bad banks or indirect financing vehicles.
The bad banks resell over 70 per cent of the NPLs at inflated prices to third parties, who happen to be borrowers of the same banks.
The researchers conclude that in the presence of binding financial regulations and opaque market structures bad bank model could create incentives to hide bad loans instead of resolving them.
Broadening of tenure: In case of Huarong, the main source of the problem appears to be the gradual broadening of the original mandate and tenure of Chinese bad banks.

Four lessons for India

India is about to operationalise a new bad bank, the National Asset Reconstruction Company Ltd. (NARCL).
The Chinese experience holds four important lessons for India.

1) Finite tenure of bad bank

A centralised bad bank like NARCL should ideally have a finite tenure.
Such an institution is typically a swift response to an abrupt economic shock (like Covid) when orderly disposal of bad loans via securitisation or direct sales may not be possible.
The banks could transfer their crisis-induced NPLs to the bad bank and focus on expanding lending activity.
The bad bank in turn can restructure and protect asset value.
Over time, it could gradually dispose of the assets to private players.

2) Narrow mandate

A bad bank must have a specific, narrow mandate with clearly defined goals.
Transferring NPLs to a bad bank is not a solution in itself.
There must be a clear resolution strategy.
Otherwise, allowing a bad bank to exist in perpetuity risks a potential mission creep, which might in the long run threaten financial stability itself.

3) Diversify the sources of funds for ARC

Indian banks remain exposed to these bad loans even after they are transferred to asset reconstruction companies (ARCs).
The RBI Bulletin (2021) notes that sources of funds of ARCs have largely been bank-centric.
The same banks also continue to hold close to 70 per cent of the total security receipts (SRs).
To address this problem, RBI has tightened bank provisioning while liberalising foreign portfolio investment norms.

4) Resolution of bad loans should be through market mechanism

In a steady state, the resolution of bad loans should happen through a market mechanism and not through a multitude of bad banks.
In India, the Narasimham Committee (1998) had envisaged a single ARC as a bad bank.
Yet, the SARFAESI Act, 2002 ended up creating multiple, privately owned ARCs.
As a result, regulations have treated ARCs like bad banks, although functionally they are closer to stressed asset funds registered as Alternative Investment Fund Category II (AIFs).
With the setting up of NARCL as a centralised bad bank, the regulatory arbitrage between ARCs and AIFs must end.
While AIFs should be allowed to purchase bad loans directly from banks and enjoy enforcement rights under the SARFAESI Act.
ARCs should be allowed to purchase stressed assets from mutual funds, insurance companies, bond investors and ECB lenders.
ARC trusts should be allowed to infuse fresh equity in distressed companies, within IBC or outside of it.
Lastly, the continued interest of the manager/sponsor of ARCs should be at par with AIFs, that is, at least 2.5 per cent in each scheme or Rs 5 crore, whichever is lower.

Conclusion

The Chinese experience should nudge Indian policymakers to limit the mandate and tenure of NARCL, while facilitating market-based mechanisms for bad loan resolution in a steady state.

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Promoting Science and Technology – Missions,Policies & Schemes

60 Years of Antarctic Treaty

| International Relations | Mains Paper 2: International Institutions

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Antarctic Treaty

Mains level: Significance of Antarctic Treaty in geopolitics

The 1959 Antarctic Treaty (wef 1961) recently celebrated its 60th anniversary.

Antarctic Treaty

The Antarctic Treaty and related agreements are collectively known as the Antarctic Treaty System (ATS).
It regulates international relations with respect to Antarctica, Earth’s only continent without a native human population.
For the purposes of the treaty system, Antarctica is defined as all of the land and ice shelves south of 60°S latitude.
The treaty entered into force in 1961 and currently has 54 parties.
The treaty sets aside Antarctica as a scientific preserve, establishes freedom of scientific investigation, and bans military activity on the continent.
The treaty was the first arms control agreement established during the Cold War.
India is a signatory of this treaty since 1983.

Why is it significant?

Negotiated during the middle of the Cold War by 12 countries with Antarctic interests, it remains the only example of a single treaty that governs a whole continent.
It is also the foundation of a rules-based international order for a continent without a permanent population.

Key provisions

The treaty is remarkably short and contains only 14 articles.
Principal provisions include promoting the freedom of scientific research, the use of the continent only for peaceful purposes, and the prohibition of military activities, nuclear tests and the disposal of radioactive waste.

What the treaty says about territorial claims

The most important provision of the treaty is Article IV, which effectively seeks to neutralise territorial sovereignty in Antarctica.
For the Antarctic territorial claimants, this meant a limit was placed on making any new claim or enlargement of an existing claim.
Likewise, no formal recognition was given to any of the seven territorial claims on the continent, by Argentina, Australia, Chile, France, New Zealand, Norway and the United Kingdom.
Russia, the United States and China — signatories with significant Antarctic interests who have not formally made territorial claims — are also bound by the limitations of Article IV.
And one sector of Antarctica is not subject to the claim of any country, which effectively makes it the last unclaimed land on earth.
The treaty also put a freeze on any disputes between claimants over their territories on the continent.

How the treaty has expanded

Though the compact has held for 60 years, there have been tensions from time to time.
Argentina and the UK, for instance, have overlapping claims to territory on the continent.
When combined with their ongoing dispute over the nearby Falkland (Malvinas) Islands, their Antarctic relationship remains frosty.
Membership of the treaty has grown in the intervening years, with 54 signatories today.

Where to from here?

While the Antarctic Treaty has been able to successfully respond to a range of challenges, circumstances are radically different in the 2020s compared to the 1950s.
Antarctica is much more accessible, partly due to technology but also climate change.
More countries now have substantive interests in the continent than the original 12.
Some global resources are becoming scarce, especially oil.

Answer this PYQ:

Q.The term ‘IndARC’, sometimes seen in the news, is the name of:

(a) An indigenously developed radar system inducted into Indian Defence

(b) India’s satellite to provide services to the countries of Indian Ocean Rim

(c) A scientific establishment set up by India in Antarctic region

(d) India’s underwater observatory to scientifically study the Arctic region

Back2Basics: Indian Antarctic Program

The Indian Antarctic Program is a multi-disciplinary, multi-institutional program under the control of the National Centre for Polar and Ocean Research, Ministry of Earth Sciences.
It was initiated in 1981 with the first Indian expedition to Antarctica.
The program gained global acceptance with India’s signing of the Antarctic Treaty and subsequent construction of the Dakshin Gangotri Antarctic research base in 1983 superseded by the Maitri base from 1989.
The newest base commissioned in 2012 is Bharati, constructed out of 134 shipping containers.

Various missions

In 1981 the Indian flag unfurled for the first time in Antarctica, marking the start of Southern Ocean expeditions under the environmental protocol of the Antarctic Treaty (1959).

(1) Dakshin Gangotri

The first permanent settlement was built in 1983 and named Dakshin Gangotri. In 1989 it was excavated and is being used again as supply base and transit camp. It was decommissioned in the year 1990 after half of it got buried under the ice.

(2) Maitri

The second permanent settlement, Maitri, was put up in 1989 on the Schirmacher Oasis and has been conducting experiments in geology, geography and medicine. India built this station close to a freshwater lake around Maitri known as Lake Priyadarshini.

(3) Bharati

Located beside Larsmann Hill at 69°S, 76°E, Bharati is established in 2015. This newest research station for oceanographic research will collect evidence of continental breakup to reveal the 120-million-year-old ancient history of the Indian subcontinent.

(4) India Post Office in Antarctica

It was established in the year 1984 during the third Indian expedition to Antarctica. It was located at Dakshin Gangotri. This post office was indeed situated in a stunning location and it was more than just a post office. An interesting fact about this place is that as many as 10,000 letters were posted and canceled in this post office in total in the first year of its establishment.

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Indian Army Updates

Proposal for Integrated Theatre Commands

| Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Integrated Theatre Commands

Mains level: Joint operability of the armed forces

The Chief of Defence Staff has held a meeting with the Vice Chiefs of the Army, the Navy and the Air Force, and others in the backdrop of concerns about the proposed model of the integrated theatre commands.

What are integrated theatre commands?

In the simplest words, it is a unified command under which all the resources of the Army, the Navy and the Air Force are pooled, depending on the threat perception.
The commands could be geographical — like looking at a border with a particular country — or thematic, like a command for all maritime threats.
Several nations in the world have theatre commands, including the United States and China.

Is theatre commands a new idea?

The idea of creating an integrated tri-Services command in India is not new — it had been recommended at various levels after the Kargil conflict.
When Gen Rawat was appointed Chief of Defence Staff in January 2020 with a mandate to raise such commands within his three-year tenure, the idea was finally brought to the design table.
After his appointment, Gen Rawat had commissioned studies within each of the armed forces to come up with ideas of what these commands could look like.
These were headed by the Vice Chiefs of the forces.
Last year, Gen Rawat had suggested that the first of these commands, the Air Defence Command, could come up by the end of 2020.
However, the process has been delayed due to multiple factors, including the Covid-19 pandemic.
Officials are now suggesting that some of the new commands could be rolled out by the end of this year.

What is the proposal under discussion?

A model with four to five integrated tri-Services theatre commands is under discussion, with each command headed by a three-star officer.
This officer, the theatre commander, will report to the Chiefs of Staff Committee (COSC), which, as the name suggests, includes the three Service Chiefs, and is headed by the CDS as its permanent chairman.
This brings in a major change — the Service chiefs currently have all the operational control over their forces; operational powers will now move to the COSC.
Each of these commands will have the needed assets from all the three forces. Operational control over all of those assets, regardless of the force, will lie with the commander of that theatre.

The proposed commands are:

A Maritime Theatre Command, which will take care of all the maritime security needs of the country on both the eastern and the western seaboards, and will include air strike assets and amphibian forces of the Army.
An Air Defence Command, which will be mandated with air defence across the country and beyond. The fighter jets will have reconnaissance and surveillance assets as well.
Two or three land-based commands are proposed. If there are two commands, there will be one each for India’s borders with China and Pakistan.
But there is also a proposal to have another command looking at India’s borders with Pakistan and China in Jammu and Kashmir, and Ladakh.
There will be a Logistics Command, which will have the logistics of all the Services under one person; and there will be a Training and Doctrine Command, so that all Services work under a common doctrine and have some basic common training.

What will be the role of the Services, if not operational?

As of now, the Services have to speak to each other in times of need and urgency to request their assets to conduct a particular operation.
The proposal is to have a theatre commander who will have operational control of the assets under his command, thus enhancing jointness among the forces, and also reducing duplication of resources.
However, this would leave the Service chiefs with no direct control over their assets operationally.
This does not mean their roles will be made redundant. Now the Services will have the core tasks to Raise, Train and Sustain their respective forces.
Also, as each chief will be a member of the COSC and an expert of his/her domain, his or her inputs will be necessary for all operational decisions.

Readiness of the services

Sources within the Services and the Defence Ministry have mentioned that while the Army and the Navy are on board with the proposal, the Air Force has certain reservations.
One, the Air Force does not want the Air Force chief to lose operational control of Air assets, according to the sources.
Two, the Air Force is concerned that all of its assets might be divided within these integrated theatres.
Sources in the Air Force said that all such concerns need to be addressed before such a significant transformation of the defence set-up takes place.

How many commands are there now; are any of them tri-Service commands?

As of now, the three forces have 17 commands between them.

The Army has seven commands: Northern, Eastern, Southern, Western, Central, Southwestern and Army Training Command (ARTRAC).
The Air Force has seven as well: Western, Eastern, Southern, Southwestern, Central, Training, and Maintenance commands.
The Navy has three: Western, Eastern and Southern, of which Southern is largely about training.
Even if these commands operate in the same region, they are not co-located, and their areas of operational responsibility are not necessarily the same.
There are two existing tri-Service commands as well — the Andaman and Nicobar Command (ANC), which is headed by rotation by officers from the three Services.

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

GIMAC: India’s first maritime arbitration centre

| Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

Note4Students

From UPSC perspective, the following things are important :

Prelims level: GIMAC

Mains level: International arbitration and India

The Gujarat Maritime University signed a Memorandum of Understanding (MoU) with the International Financial Services Centres Authority in GIFT City to promote the Gujarat International Maritime Arbitration Centre (GIMAC).

What is GIMAC?

The GIMAC will be part of a maritime cluster that the Gujarat Maritime Board (GMB) is setting up in GIFT City at Gandhinagar.
The Maritime Board has rented about 10,000 square feet at GIFT House which is part of the Special Economic Zone (SEZ) area with clearance from the development commissioner.
This will be the first centre of its kind in the country that will manage arbitration and mediation proceedings with disputes related to the maritime and shipping sector.
The centre is expected to be ready by the end of August.

Why is such a centre needed?

It is required because, for instance, the ship owners belong to a different country and the person leasing the ship is from another country.
Any dispute arising between them can be resolved within this centre.
There are over 35 arbitration centres in India. However, none of them exclusively deals with the maritime sector.
The arbitration involving Indian players is now heard at the Singapore Arbitration Centre.
The idea is to create a world-class arbitration centre focused on maritime and shipping disputes that can help resolve commercial and financial conflicts between entities having operations in India.
Globally, London is the preferred centre for arbitration for the maritime and shipping sector.

What is the current status of the project?

The process of recruiting staff for the arbitration centre is currently underway.
A 10-member advisory board for GIMAC, consisting of international experts and professionals, has been created, which will help in the framing of rules for the arbitration centre and in empanelling arbitrators.

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Goods and Services Tax (GST)

National Anti-Profiteering Authority (NAA)

DOMR | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Anti-Profiteering Authority (NAA)

Mains level: Not Much

The National Anti-Profiteering Authority (NAA) has directed GST officials across the country to ensure that the tax rate cuts notified on some COVID-19-related essentials are passed on to consumers.

What is National Anti-Profiteering Authority (NAA)?

The NAA has been constituted under Section 171 of the Central GST Act, 2017 to ensure that the reduction in the rate of tax or the benefit of the input tax credit is passed on to the recipient by way of commensurate reduction in prices.
The decision about the formation of the NAA came in the background of a rate reduction of a large number of items by the GST Council in its 22^ndmeeting at Guwahati.
At the meeting, the Council reduced rates of more than 200 items including goods and services.
This has made a tremendous price reduction effect and the consumers will be benefited only if the traders are making the quick reduction of the prices of respective items.
There was a concern that traders are reluctant to make price cuts so that they can make a profit.

Answer this PYQ in the comment box:

Q. Consider the following items:

Cereal grains hulled

Chicken eggs cooked

Fish processed and canned

Newspapers containing advertising material

Which of the above items is/are exempt under GST (Goods and Services Tax)?

(a) 1 only

(b) 2 and 3 only

(c) 1, 2 and 4 only

(d) 1, 2, 3 and 4

What is profiteering?

Profiteering means unfair profit realized by traders by manipulating prices, tax rate adjustment etc.
In the context of the newly launched GST, profiteering means that traders are not reducing the prices of the commodities when the GST Council reduces the tax rates of commodities and services.
Conventionally, several traders will have a strong tendency to quickly increase the price of a commodity whose tax rate has been increased.
But on the opposite side, they may delay the price reduction of a commodity whose tax rate has been cut by the government.
A delayed or postponed price reduction helps business firms to make a higher profits. The losers here are the consumers.

Functioning of NAA

The Authority’s main function is to ensure that traders are not realizing unfair profit by charging high prices from the consumers in the name of GST.
Traders may charge high prices from the consumers by naming the GST factor.
Similarly, they may not make quick and corresponding price reductions when the GST Council makes a tax cut. All these constitute profiteering.
The responsibility of the NAA is to examine and check such profiteering activities and recommend punitive actions including the cancellation of licenses.

Steps were taken by the NAA to ensure that customers get the full benefit of tax cuts:

Holding regular meetings with the Zonal Screening Committees and the Chief Commissioners of Central Tax to stress upon consumer awareness programs;
Launching a helpline to resolve the queries of citizens regarding registration of complaints against profiteering.
Receiving complaints through email and the NAA portal.
Working with consumer welfare organizations in order to facilitate outreach activities.

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

Places in news: Yellowstone National Park

Places in news | Enviro & Biodiversity | Mains Paper 1: Climatic Change

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Yellowstone National Park

Mains level: NA

A new assessment of climate change in the Yellowstone National Park shows that it has lost a quarter of its annual snowfall.

Yellowstone National Park

Yellowstone NP is an American national park located in the western United States, largely in the northwest corner of Wyoming and extending into Montana and Idaho.
Yellowstone was the first national park in the US and is also widely held to be the first national park in the world.
The park is known for its wildlife and its many geothermal features, especially Old Faithful geyser, one of its most popular.
While it represents many types of biomes, the subalpine forest is the most abundant. It is part of the South Central Rockies forests ecoregion.
The area also represents the one point where the three major river basins of the western U.S. converge.
The rivers of the Snake-Columbia basin, Green-Colorado basin, and Missouri River Basin all begin as snow on the Continental Divide as it weaves across Yellowstone’s peaks and plateaus.

Impact of climate change

Since 1950, average temperatures in the Greater Yellowstone Area have risen 1.3°C and potentially, more importantly, the region has lost a quarter of its annual snowfall.
The loss of snow there has repercussions for a vast range of ecosystems and wildlife, as well as cities and farms downstream that rely on rivers that start in these mountains.
It is home to the southernmost range of grizzly bear populations in North America and some of the longest intact wildlife migrations, including the seasonal traverses of elk, pronghorn, mule deer and bison.

Answer this PYQ in the comment box:

Q.Consider the following pairs:

River Flows into

1. Mekong – Andaman Sea

Thames – Irish Sea

Volga – Caspian Sea

Zambezi – Indian Ocean

Which of the statements given above is/are correct? (CSP 2020)

(a) 1 and 2 only

(b) 3 only

(c) 3 and 4 only

(d) 1,2 and 4 only

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Higher Education – RUSA, NIRF, HEFA, etc.

Blended mode of teaching

op-ed snap | Governance | Mains Paper 2: Health & Education

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Blended learning

Mains level: Paper 2- Blended learning and related issues

Blended mode of teaching and its advantages

A recent circular by the University Grants Commission (UGC) proposes that all higher educational institutions (HEI) teach 40% of any course online and the rest 60% offline termed as blended learning (BL).
The UGC argues that this “blended mode of teaching” and learning paves the way for:
1) Increased student engagement in learning.
2) Enhanced student-teacher interactions.
3) Improved student learning outcomes.
4) More flexible teaching and learning environments, among other things.
5) Other key benefits such as the increased opportunity for institutional collaborations at a distance and enhanced self-learning accruing from blended learning (BL).
6) BL benefits the teachers as well. It shifts the role of the teacher from being a “knowledge provider to a coach and mentor”.
7) The note adds that BL introduces flexibility in assessment and evaluation patterns as well.

Challenges

All India Survey on Higher Education (2019-20) report shows that 60.56% of the 42,343 colleges in India are located in rural areas and 78.6% are privately managed.
Only big corporates are better placed to invest in technology and provide such learning.
Second, according to datareportal statistics, Internet penetration in India is only 45% as of January 2021.
This policy will only exacerbate the existing geographical and digital divide.
Third, BL leaves little room for all-round formation of the student that includes the development of their intelligent quotient, emotional quotient, social quotient, physical quotient and spiritual quotient.
The listening part and subsequent interactions with the teacher may get minimised.
Also, the concept note assumes that all students have similar learning styles and have a certain amount of digital literacy to cope with the suggested learning strategies of BL.
This is far from true. Education in India is driven by a teacher-centred approach.

Suggestions

The government should ensure equity in access to technology and bandwidth for all HEIs across the country free of cost.
Massive digital training programmes must be arranged for teachers.
Even the teacher-student ratio needs to be readjusted to implement BL effectively.
This may require the appointment of a greater number of teachers.
The design of the curriculum should be decentralised and based on a bottom-up approach.
More power in such education-related policymaking should be vested with the State governments.
Switching over from a teacher-centric mode of learning at schools to the BL mode at the tertiary level will be difficult for learners.
Hence, the government must think of overhauling the curriculum at the school level as well.
Finally, periodical discussions, feedback mechanisms and support services at all levels would revitalise the implementation of the learning programme of the National Education Policy 2020, BL.
It will also lead to the actualisation of the three cardinal principles of education policy: access, equity and quality.

Conclusion

Government must take steps to address the concerns with blended learning before implementing it.

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

It’s time for RBI to turn its attention to inflation

op-ed snap | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: GDP Deflator

Mains level: Paper 3- Impact of inflation on various stakeholders

Recently, CPI inflation crossed the RBI’s upper limit of 6%. The article explains the implications of this for various stakeholders.

How inflation benefits government as a borrower

Rising inflation hurts lenders and benefits borrowers.
To that extent, the government, one of the biggest borrowers, stands to benefit as high inflation will lower the national debt load in relation to the size of the economy.
The Union budget 2021-22 assumed a 14.4 per cent growth in nominal GDP, however, actual growth is set to exceed this.
The GDP deflator, which measures the difference between nominal and real GDP, is a weighted average of WPI and CPI, with a higher weightage to WPI.
And given that nominal GDP is used as a base for computing the fiscal ratios, all of these will get deflated.
The value of past debt and debt servicing costs thus gets pared in real terms as inflation rises.
Viewed from a debt dynamics perspective, as the gap between growth and interest rates rises, the debt/GDP ratio falls.

Impact on other stakeholder

That inflation reduces purchasing power and hits private consumption is well known.
Overall food CPI inflation (5 per cent) was lower than non-food inflation (7.1 per cent) in May.
Lower food inflation, coupled with higher non-food inflation means reduced purchasing power for farmers.
Inflation trends, specifically input prices (reflected better by WPI), matter for corporate performance as well.
While producers seem to be bearing a part of the burden of rising input costs for now, these could get passed on in greater measure to consumers once demand recovers.
Rising inflation reduces returns on fixed income instruments, including bank deposits, which account for over 50 per cent of households’ financial savings.
This has already induced a shift to riskier asset classes such as equities, which has ramifications for overall financial stability.

Way forward

The RBI will have to closely monitor inflation trends and calibrate its policy response.
It has not intervened on high inflation since the onset of the pandemic and, rightly so, in order to support growth.
But the current spell of inflation is over a high base and a continuation of recent trends will persuade it to turn the focus back on inflation.
Given the need for monetary policy to stay accommodative, it might be time to consider other supply-side interventions such as cuts in excise rates on petroleum products to soften the inflation blow.

Consider the question “As a one of the largest borrowers, how rising inflation benefits the government? How high inflation affects the other sections of the economy?”

Conclusion

Given the impact rising inflation has for the braoader sections of the economy, it is time for RBI to turn its attention to inflation.

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Parliament – Sessions, Procedures, Motions, Committees etc

The ‘Union government’ has a unifying effect

| Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article 1, 2 and 3

Mains level: Read the attached story

The Tamil Nadu government has decided to shun the usage of the term ‘Central government’ in its official communications and replace it with ‘Union government’. This is a major step towards regaining the consciousness of our Constitution.

India the union

Seventy-one years since we adopted the Constitution, it is time we regained the original intent of our founding fathers beautifully etched in the parchment as Article 1: “India, that is Bharat, shall be a Union of States”.
The Constituent Assembly did not use the term ‘Centre’ or ‘Central government’ in all of its 395 Articles in 22 Parts and eight Schedules in the original Constitution.
What we have are the ‘Union’ and the ‘States’ with the executive powers of the Union wielded by the President acting on the aid and advice of the Council of Ministers headed by the Prime Minister.

Where is Central Govt defined?

Even though we have no reference to the ‘Central government’ in the Constitution, the General Clauses Act, 1897 gives a definition for it.
The ‘Central government’ for all practical purposes is the President after the commencement of the Constitution.
Therefore, the real question is whether such definition for ‘Central government’ is constitutional as the Constitution itself does not approve of centralising power.

Intent of Constituent Assembly

On December 13, 1946, Pt Nehru introduced the aims and objects of the Assembly by resolving that India shall be a Union of territories willing to join the “Independent Sovereign Republic”.
The emphasis was on the consolidation and confluence of various provinces and territories to form a strong united country.
Many members of the Constituent Assembly were of the opinion that the principles of the British Cabinet Mission Plan (1946) be adopted, which contemplated a Central government with very limited powers whereas the provinces had substantial autonomy.
The Partition and the violence of 1947 in Kashmir forced the Constituent Assembly to revise its approach and it resolved in favour of a strong Centre.
The possibility of the secession of States from the Union weighed on the minds of the drafters of the Constitution and ensured that the Indian Union is “indestructible”.

Preventing the secession

In the Constituent Assembly, B.R Ambedkar, the Chairman of the Drafting Committee, observed that the word ‘Union’ was advisedly used in order to negative the right of secession of States.
Ambedkar justified the usage of ‘Union of States’ saying that the Drafting Committee wanted to make it clear that though India was to be a federation, it was not the result of an agreement.
Therefore, no State has the right to secede from it. “The federation is a Union because it is indestructible,” Ambedkar said.

Then criticism of the ‘Union’

The usage of ‘Union of States’ by Ambedkar was not approved by all and faced criticisms from Maulana Hasrat Mohani.
He argued that Ambedkar was changing the very nature of the Constitution.
Mohani made a fiery speech in the Assembly on September 18, 1949 where he contended that the usage of the words ‘Union of States’ would obscure the word ‘Republic’.
Mohani went to the extent of saying that Ambedkar wanted the ‘Union’ to be “something like the Union proposed by Prince Bismarck in Germany, and after him adopted by Kaiser William and after him by Adolf Hitler”.

Dr. Ambedkar’s clarification

Ambedkar clarified that the Union is not a league of States, united in a loose relationship; nor are the States the agencies of the Union, deriving powers from it.
Both the Union and the States are created by the Constitution, both derive their respective authority from the Constitution.
The one is not subordinate to the other in its own field… the authority of one is coordinate with that of the other.

Features of Indian Union

The sharing of powers between the Union and the States is not restricted to the executive organ of the government.
The judiciary is designed in the Constitution to ensure that the Supreme Court, the tallest court in the country, has no superintendence over the High Courts.
Though the Supreme Court has appellate jurisdiction — not only over High Courts but also over other courts and tribunals — they are not declared to be subordinate to it.
In fact, the High Courts have wider powers to issue prerogative writs despite having the power of superintendence over the district and subordinate courts.
Parliament and Assemblies identify their boundaries and are circumspect to not cross their boundaries when it comes to the subject matter on which laws are made.
However, the Union Parliament will prevail if there is a conflict.

Answer this PYQ:

Q.Consider the following statements:

The Executive Power of the Union of India is vested in the Prime Minister.

The Prime Minister is the ex-offi cio Chairman of the Civil Services Board.

Which of the given statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

A wordplay indeed

The members of the Constituent Assembly were very cautious of not using the word ‘Centre’ or ‘Central government’ in the Constitution as they intended to keep away the tendency of centralizing of powers in one unit.
The ‘Union government’ or the ‘Government of India’ has a unifying effect as the message sought to be given is that the government is of all.
Even though the federal nature of the Constitution is its basic feature and cannot be altered, what remains to be seen is whether the actors wielding power intend to protect the federal feature of our Constitution.
As Nani Palkhivala famously said, “The only satisfactory and lasting solution of the vexed problem is to be found not in the statute book but in the conscience of men in power”.

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Digital India Initiatives

What is AgriStack?

| Economics | Mains Paper 3: E-Technology In The Aid Of Farmers

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Agristack

Mains level: Digitalization of Agriculture

The Department of Agriculture, Cooperation and Farmers Welfare has entered into an MoU with Microsoft Corporation to start a pilot project in 100 villages to create a ‘Unified Farmer Service Interface’ through its cloud computing services.

AgriStack

The AgriStack is a collection of technologies and digital databases proposed by the Central Government focusing on India’s farmers and the agricultural sector.
The central government has claimed that these new databases are being built to primarily tackle issues such as poor access to credit and wastage in the agricultural supply chain.
Under AgriStack’, the government aims to provide ‘required data sets’ of farmers’ personal information to Microsoft to develop a farmer interface for ‘smart and well-organized agriculture’.
The digital repository will aid precise targeting of subsidies, services and policies, the officials added.
Under the programme, each farmer of the country will get what is being called an FID, or a farmers’ ID, linked to land records to uniquely identify them. India has 140 million operational farm-land holdings.
Alongside, the government is also developing a unified farmer service platform that will help digitise agricultural services delivery by the public and private sectors.

Issues with the move

Agriculture has become the latest sector getting a boost of ‘techno solutionism’ by the government.
But it has, since then, also become the latest sector to enter the whole debate about data privacy and surveillance.
Since the signing of the MoUs, several concerns related to sharing farmers’ data with private companies the major one being Microsoft whose owner Bill Gates is said to be the largest private farmland owner in the US.
In all the MoUs, there are provisions under which the agriculture ministry will enter into a data sharing agreement with the private companies of the likes of Amazon, Microsoft and Patanjali.
The development has raised serious concerns about information asymmetry, data privacy and consent, profiling of farmers, mismanaged land records and corporatization of agriculture.
The formation of ‘Agristack’ also implies commercialization of agriculture extension activities as they will shift into a digital and private sphere.

Why such concerns?

The project was being implemented in the absence of a data protection legislation.
It might end up being an exercise where private data processing entities may know more about a farmer’s land than the farmer himself.
Without safeguards, private entities would be able to exploit farmers’ data to whatever extent they wish to.
This information asymmetry, tilted towards the technology companies, might further exploit farmers, especially small and marginal ones.

What are some major threats?

One of the biggest worries is the threat of financial exploitation.
We have already seen how microfinance firms have wreaked financial havoc in rural hinterlands.
Now, once Fintech companies are able to collect granular data about the farmers’ operations, they may offer them usurious rates of interest precisely when they would be in the direst need for credit.
With this, the risk of commodifying agriculture and farmer data ran high.

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*Sea*	*Bordering country*
*1. Adriatic Sea*	*Albania*
*2. Black Sea*	*Croatia*
*3. Caspian Sea*	*Kazakhstan*
*4. Mediterranean Sea*	*Morocco*
*5. Red Sea*	*Syria*