Note4Students
From UPSC perspective, the following things are important :
Prelims level: SERC
Mains level: Paper 3- The Electricity (Rights of Consumers) Rules, 2020
The article examines the various provisions of the Electricity (Rights of Consumers) Rules, 2020 and analyses whether or not these Rules will empower the consumers.
Empowering electricity consumers
- The Electricity (Rights of Consumers) Rules, 2020 was promulgated in December to deal with the problems faced by the consumers.
- The enactment of consumer-centric rules does spark public debate that brings the rights of consumers to the fore.
- the Rules lay an emphasis on national minimum standards for the performance parameters of DISCOMs. without urban-rural distinction.
- They also reiterate the need for automatically compensating consumers.
Let’s analyse the changes introduced by the new Rule and issues with them
Supply quality issue
- Many States have not been able to provide quality supply, especially to rural and small electricity consumers.
- Provisions similar to made in the new Rule already exist in the Standards of Performance (SoP) regulations of various State Electricity Regulatory Commissions (SERCs).
- It is not because of a lack of rules or regulations that quality supply is not provided; rather, it is on account of a lack of accountability systems to enforce them.
- Unfortunately, neither these rules nor past efforts address these accountability concerns.
- Guarantee of round the clock supply is a provision that the Rules emphasise, which might be missing in State regulations.
- It is difficult to enforce since the availability of power supply is inadequately monitored even at 11 kV feeders, let alone at the consumer location.
- This highlights not only the need for implementation of existing provisions in letter and spirit but also amending them with strong accountability provisions.
Weakening of existing provision
- The Rules, in few cases, dilute progressive mechanisms that exist in State regulations.
- For example, the Rules say that faulty meters should be tested within 30 days of receipt of a complaint.
- Compared to this, regulations t in Andhra Pradesh, Bihar, and Madhya Pradesh, respectively, say that such testing needs to be conducted within seven days.
- A similar observation can be drawn from the suggested composition of the Consumer Grievance Redressal Forum.
- The Rules say that the forum — constituted to remedy complaints against DISCOMs should be headed by a senior officer of the company.
- This is a regressive provision that would reduce the number of cases that are decided in favour of consumers.
Lack of clarity on net-metering
- The Rules guarantee net metering for a solar rooftop unit less than 10 kW.
- However, there is no clarity if those above 10 kW can also avail net metering.
- This could lead to a change in regulations in many States based on their own interpretations.
- The possible litigation that follows would be detrimental to investments in rooftop solar units, and would discourage medium and large consumers to opt for an environment-friendly, cost-effective option.
Way forward
- SERCs should assess the SoP reports of DISCOMs and revise their regulations more frequently.
- SERCs should organise public processes to help consumers raise their concerns.
- DISCOMs could be directed to ensure automatic metering at least at the 11 kV feeder level, making this data available online.
- The Forum of Regulators — a central collective of SERCs — could come up with updated model SoP regulations.
- Central agencies have taken proactive efforts to ensure regular tariff revision.
- They could also support independent surveys and nudge State agencies to enforce existing SoP regulations.
- The central government could disburse funds for financial assistance programmes based on audited SoP reports.
Consider the question”What are the problems faced by the electricity consumers in India? Will the Electricity (Rights of Consumers) Rules, 2020 help consumers to deal with the existing issues?”
Conclusion
The governments, DISCOMs and regulators need to work jointly and demonstrate the commitment and the will power to implement existing regulations. It is not yet late to recognise this and initiate concerted efforts to truly empower consumers.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Equalisation levy
Mains level: Paper 3- Digital Service Tax as an interim solution to the challenge of taxing digital companies doing business internationally
Business models of digital companies challenge the conventional basis of taxation in which the fixed place of business formed the basis. Digital Service Tax could provide a basis to deal with the challenge. The article deals with this issue.
Equalisation levy and issues with it
- Equalisation levy seeks to tax payments made for online advertising services to a non-resident business by residents in India.
- India is amongst the first to have implemented such levy.
- It is predominantly applicable to US companies since the market for digital services is dominated by US-based firms.
- Any company that has a permanent residence in India is excluded since it is already subject to tax in India.
- In March 2020, India expanded the scope of the existing equalisation levy to a range of digital services that includes e-commerce platforms.
- Such levy can result in over-taxation since the company will not be able to claim any credit for tax paid on Indian sales.
- Such an approach is often viewed as contrary to the ethos of international agreements.
Issue of taxation of digital companies
- The agenda to reform international tax law so that digital companies are taxed where economic activities are carried out was formally framed within the OECD’s base erosion and profit shifting programme.
- Worried they might cede their right to tax incomes, many countries have either proposed or implemented a digital services tax (DST).
- However, the proliferation of digital service taxes (DSTs) is a symptom of the changing international economic order.
- Countries such as India which provide large markets for digital corporations seek a greater right to tax incomes.
- The core problem that the international tax reform seeks to address is that digital corporations, unlike their brick-and-mortar counterparts, can operate in a market without a physical presence.
- The current basis for taxing in a particular jurisdiction is a notion of fixed place of business.
Way forward
- To overcome the challenge, countries suggested that a new basis to tax, say, the number of users in a country.
- The EU and India were among the advocates of this approach.
- In 2018, India introduced the test for significant economic presence in the Income Tax Act.
- However, the proposal of a revised nexus was not supported widely.
- Moreover, to give effect to a new system would require bilateral renegotiation of tax treaties that supersede domestic tax laws.
- Meanwhile, the OECD continued to work to find commonalities among a range of solutions.
- In its current form, the solution is too complex to administer and proposes to allocate residual profit — a term that has no economic definition.
- It would also require political consensus on multiple issues, including sensitive matters such as setting up of an alternative dispute resolution process comparable to arbitration.
- This can increase the compliance burden.
- The US has expressed its preference to apply this measure on a safe harbour basis, which can limit the companies to which it may be applicable.
Consider the question “Digital corporations can operate in a market without a physical presence. The current basis for taxing in a particular jurisdiction is a notion of fixed place of business. In light of this, examine the challenges in taxing the digital companies and how India is dealing with such a challenge?”
Conclusion
As countries calibrate their response to competing demands for sovereignty to tax, DST is an interim alternative outside tax treaties. It possesses the advantage of taxing incomes that currently escape tax and creates space to negotiate a final, overarching solution to this conundrum.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Money Bill , Art 110
Mains level: Aadhaar-Money Bill Issue
The Supreme Court, in a majority view (4:1), dismissed a series of petitions seeking a review of its 2018 judgment upholding the Lok Sabha Speaker’s certification of Aadhaar law as a Money Bill and its subsequent passage in Parliament.
Try this PYQ:
Consider the following statements:
- Aadhaar card can be used as a proof of citizenship or domicile.
- Once issued, Aadhaar number cannot be deactivated or omitted by the Issuing Authority.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Backgrounder
- The review petitions had highlighted how the Aadhaar Act was passed as a Money Bill by superseding the Rajya Sabha. It was called a “fraud on the Constitution”.
- The review petition had argued that the Aadhaar Act clearly did not fall within the ambit of Article 110 (1) of the Constitution, which restricted Money Bills to certain specific fields only.
What is a Review Petition?
- Article 137 of the Constitution provides that subject to provisions of any law and rule made under Article 145 the Supreme Court of India has the power to review any judgment pronounced (or order made) by it.
- Thus the binding decision of the Supreme Court/High Court can be reviewed in the Review Petition.
Aadhaar Case: Two questions for review
- Two questions had come up for review regarding the five-judge Aadhaar Bench’s judgment in 2018.
- One, whether the Speaker’s decision to declare a proposed law as Money Bill was “final” and cannot be challenged in court.
- The second, whether the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 was correctly certified as a ‘Money Bill’ under Article 110(1) of the Constitution.
What is the majority Judgment?
- On the first question, the majority judgment in 2018 said the Speaker’s decision could be challenged in court only under “certain circumstances”.
- On the second, it concluded that the Aadhaar Act was rightly called a Money Bill.
Back2Basics: Money Bill
- A Bill is said to be a Money Bill if it only contains provisions related to taxation, borrowing of money by the government, expenditure from or receipt to the Consolidated Fund of India.
- Bills that only contain provisions that are incidental to these matters would also be regarded as Money Bills.
- A Money Bill may only be introduced in Lok Sabha, on the recommendation of the President as per Article 110 of the Constitution.
- Then, it is transmitted to the Rajya Sabha for its recommendations. Following this, it may be sent to the Rajya Sabha for its recommendations, which Lok Sabha may reject if it chooses to.
- If such recommendations are not given within 14 days, it will be deemed to be passed by Parliament.
How is a Money Bill different from a financial bill?
- While all Money Bills are Financial Bills, all Financial Bills are not Money Bills.
- For example, the Finance Bill which only contains provisions related to tax proposals would be a Money Bill.
- However, a Bill that contains some provisions related to taxation or expenditure, but also covers other matters would be considered as a Financial Bill.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IBC
Mains level: Read the attached story
The Supreme Court has held that the bidders for a corporate debtor under the Insolvency and Bankruptcy Code (IBC) would be immune from any investigations being conducted either by any investigating agencies.
Q.Examine the impact of various amendments to the Insolvency and Bankruptcy Code (IBC) and suggest further improvements in the IBC.
Backgrounder: IBC
- IBC was enacted on May 28, 2016, to effectively deal with insolvency and bankruptcy of corporate persons, partnership firms and individuals, in a time-bound manner.
- It has brought about a paradigm shift in laws aimed to maximize the value of assets, providing a robust insolvency resolution framework and differentiating between impropriety and business debacle.
- The predominant object of the Code is the resolution of the Corporate Debtor.
- It has been amended four times to resolve problems hindering the objectives of the Code.
What is Section 32A?
- In cases involving property of a corporate debtor, Section 32A covers any action involving attachment, seizure, retention, or confiscation of the property of the corporate debtor as a result of such Proceedings.
- It provides immunity to the corporate debtor and its property when there is the approval of the resolution plan resulting in the change of management of control of the corporate debtor.
- This is subject to the successful resolution applicant being not involved in the commission of the offense.
What were the challenges?
- Since the IBC came into being in 2016, the implementation of the resolution plan of several big cases has been delayed because of various challenges mounted by its own agencies and regulators.
- For example, a debt-laden company, admitted into insolvency in 2017, owes more than Rs 47,000 crore to banks and other financial institutions.
- After a prolonged bidding battle, another won the rights to take over it with a bid of Rs 19,700 crore.
- However, before it could move to take over, the ED/SEBI swooped in, and attached assets worth Rs 4,000 crore citing alleged fraud in a bank loan under the Prevention of Money Laundering Act (PMLA).
Observations made by the SC
- In its judgment, the apex court upheld the validity of Section 32.
- It said it was important for the IBC to attract bidders who would offer reasonable and fair value for the corporate debtor to ensure the timely completion of the corporate insolvency resolution process (CIRP).
- Such bidders, however, must also be granted protection from any misdeeds of the past since they had nothing to do with it.
- Such protection, the court said, must also extend to the assets of a corporate debtor which will help banks clean up their books of bad loans.
- The apex court has, however, also said that such immunity would be applicable only if there are an approved resolution plan and a change in the management control of the corporate debtor.
Significance of SC’s intervention
- With the Supreme Court upholding the validity of Section 32 A will give confidence to other bidders to proceed with confidence while bidding on such disputed companies and their assets.
Must read
[Burning Issue] Insolvency and Bankruptcy Code
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Indus Water Treaty, Ratle Hydel Project
Mains level: Indus Water Treaty and its significance
The Centre has decided to go ahead with the long-pending 850-megawatt Ratle hydroelectric power project on the river Chenab in J&K Kishtwar district, despite objections raised by the Pakistan government over the same.
Tap to read more about Indus River System
Ratle Hydel Plant
- It is a run-of-the-river hydroelectric power station currently under construction on the Chenab River, downstream of the village near Drabshalla in Kishtwar district of the Indian UT of Jammu and Kashmir.
- The project includes a 133 m (436 ft) tall gravity dam and two power stations adjacent to one another.
- The installed capacity of both power stations will be 850 MW.
- In June 2013, then PM Manmohan Singh laid the foundation stone for the dam.
- Pakistan has frequently alleged that it violates the Indus Water Treaty.
What is the Indus Water Treaty?
- The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
- According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi, and the Sutlej was given to India.
- The control over the water flowing in three “western” rivers of India — the Indus, the Chenab, and the Jhelum was given to Pakistan
- The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial, and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects
- India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SOFR and various inter-bank rates
Mains level: Not Much
State Bank of India (SBI) has executed two inter-bank short term money market deals with pricing linked to SOFR (Secured Overnight Financing Rate).
Try this PYQ:
Q.The money multiplier in an economy increases with which one of the following?
(a) Increase in the cash reserve ratio
(b) Increase in the banking habit of the population
(c) Increase in the statutory liquidity ratio
(d) Increase in the population of the country
What is SOFR?
- Secured Overnight Financing Rate (SOFR) is a secured interbank overnight interest rate.
- It is a replacement for USD LIBOR (London Inter-bank Offered Rate) that may be phased out end-2021.
- The overnight rate is generally the interest rate that large banks use to borrow and lend from one another in the overnight market.
Why SOFR?
- Global regulators decided to move away from the Libor, a vital part of the financial system after it was revealed in 2012 that banks around the world manipulated it.
- It also didn’t help that volume underlying the benchmark dried up.
- U.K regulators set the deadline at 2021 for financial firms and investors to transition away from the Libor.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Tripuri Handloom
Mains level: Not Much
Tripura CM has of late made a statement to sport the Risa, a customary hand-woven cloth used by Tripura’s indigenous tribal communities.
Try this PYQ:
Q.Consider the following pairs:
| Sr. |
Tradition |
|
State |
| 1. |
Chapchar Kut festival |
: |
Mizoram |
| 2. |
Khongjom Parba ballad |
: |
Manipur |
| 3. |
Thang-Ta dance |
: |
Sikkim |
Which of the pairs given above is/are correct? (CSP 2018)
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3
What is Risa?
- Risa is one of the three parts of customary Tripuri female attire, the other two being the Rignai and Rikutu.
- The Risa, which is essentially a customary hand-woven cloth, is used as headgear, stole, female upper cloth or presented to honour a distinguished recipient.
- The Rignai is primarily used to cover the lower part of the body and literally translates into ‘to wear’. The Rituku covers the upper half of the body, wrapping it all around.
- However, it is also used as a ‘chunri’ or a ‘pallu’ of the Indian saree. It is also used to cover the head of newly married Tripuri women.
Its cultural significance
- Apart from its beautiful designs, the Risa plays a host of crucial social utilities.
- Adolescent Tripuri girls are first given Risa to wear when she reaches 12-14 years in an event called Risa Sormani.
- The event involves prayers to a Lampra god, where her elder women pray for her wellbeing throughout her life.
- However, it is also used in religious festivals like the Garia Puja, a customary festival of the tribal communities, or as a head turban by male folks during weddings and festivals, as a cummerbund over dhoti or headscarf.
- The cloth is even used as a makeshift baby carrier on the mother’s back.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AI and deepfakes
Mains level: Paper 3- Deepfakes and threats associated with it
Deepfakes creates media in which it challenges our ability to detect real from fake, it blurs the line between two. This article explains the threat associated with it.
What are deepfakes and threat associated with it
- Deepfakes are synthetic media (including images, audio and video) that are either manipulated or wholly generated by Artificial Intelligence.
- AI is used for fabricating audios, videos and texts to show real people saying and doing things they never did, or creating new images and videos.
- These are done so convincingly that it is hard to detect what is fake and what is real.
- They are used to tarnish reputations, create mistrust, question facts, and spread propaganda.
Legal provision in India
- Deepfakes even have the power to threaten the electoral outcome.
- So far, India has not enacted any specific legislation to deal with deepfakes.
- However, there are some provisions in the Indian Penal Code that criminalise certain forms of online/social media content manipulation.
- The Information Technology Act, 2000 covers certain cybercrimes.
- But this law and the Information Technology Intermediary Guidelines (Amendment) Rules, 2018 are inadequate to deal with content manipulation on digital platforms.
- The guidelines stipulate that due diligence must be observed by the intermediate companies for removal of illegal content.
- In 2018, the government proposed rules to curtail the misuse of social networks.
- Social media companies voluntarily agreed to take action to prevent violations during the 2019 general election.
- The Election Commission issued instructions on social media use during election campaigns.
How to deal with the problem of deepfakes
- Only AI-generated tools can be effective in detection.
- Blockchains are robust against many security threats and can be used to digitally sign and affirm the validity of a video or document.
- Educating media users about the capabilities of AI algorithms could help.
- Six themes identified in the workshop convened by the University of Washington and Microsoft are to dela with the deepfakes
- 1) Deepfakes must be contextualised within the broader framework of malicious manipulated media, computational propaganda and disinformation campaigns.
- 2) Deepfakes cause multidimensional issues which require a collaborative, multi-stakeholder response that require experts in every sector to find solutions.
- 3) Detecting deepfakes is hard.
- 4) Journalists need tools to scrutinise images, video and audio recordings for which they need training and resources;
- 5) Policymakers must understand how deepfakes can threaten polity, society, economy, culture, individuals and communities.
- 6) Any true evidence can be dismissed as fake is a major concern that needs to be addressed.
Consider the question “What are the deepfakes and threats associated with it? How these threats can be tackled?”
Conclusion
In today’s world, disinformation comes in varied forms, so no single technology can resolve the problem. As deepfakes evolve, AI-backed technological tools to detect and prevent them must also evolve.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 254 of Indian Constitution
Mains level: Paper 2- RERA and its benefits to the consumers
The article highlights the various provision of RERA and its overall impact on the sector.
How it changed the real estate sector
- Real Estate (Regulation and Development) Act (RERA) was enacted in 2016 and it had been in the works for more than a decade.
- RERA has infused governance in a hitherto unregulated sector.
- Along with demonetization and GST, it has, to a large extent, cleansed the real estate sector of black money.
- It has transformational provisions, conscientiously addressing issues that have been a constant bane for the sector.
Important provisions of RERA
- The Act stipulates that no project can be sold without project plans being approved by the competent authority and the project is registered with the regulatory authority.
- This provision ended the practice of selling on the basis of deceitful advertisements.
- Promoters are required to maintain “project-based separate bank accounts” to prevent fund diversion.
- The mandatory disclosure of unit sizes based on “carpet area” strikes at the root of unfair trade practices.
- The provision for payment of “equal rate of interest” by the promoter or the buyer in case of default reinforces equity.
- These and many other provisions have empowered consumers, rectifying the power asymmetry prevalent in the sector.
How RERA is an effort in cooperative federalism
- Though the Act has been piloted by the Central government, the rules are to be notified by state governments.
- The regulatory authorities and the appellate tribunals are also to be appointed by them.
- The regulatory authorities are required to manage the day-to-day operations, resolve disputes, and run an active and informative website for project information.
- Since RERA came into full force, 34 states and Union territories have notified the rules, 30 states and Union territories have set up real estate regulatory authorities and 26 have set up appellate tribunals.
- The operationalization of a web-portal for project information, which is at the heart of ensuring full project transparency, has been operationalized by 26 regulatory authorities.
- Around 60,000 projects and 45,723 real estate agents have been registered with regulatory authorities.
- Twenty-two independent judicial officers have been appointed to redress consumer disputes, and 59,649 complaints have been disposed-off.
Consider the question “What were the various problems faced by the consumers in real estate sector? How various provisions in RERA helped in the protection of consumers’ interests?”
Conclusion
RERA is to the real estate sector what SEBI is to the securities market. It helped consumers from the various malpractices in the real estate sector.
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India-Nepal Joint Commission meeting took place at a time when Nepal in going through a political turmoil. The article examines the issues discussed in the meeting and how its implications for the bilateral relations between the two countries.
India-Nepal joint commission meeting amid political chaos in Nepal
- Recently, the Minister for Foreign Affairs of Nepal visited New Delhi for the sixth meeting of the India-Nepal Joint Commission.
- Nepal’s Prime Minister dissolved the House of Representatives in late December 2020, the move was termed ‘unconstitutional’ by the experts and the country’s Supreme Court is hearing writ petitions against the move.
- As a unique characteristic, Nepal’s internal political fundamentals continue to shape its foreign policy choices.
- In such a scenario, any inbound or outbound delegation is seen from a different prism.
Issues discussed in the meeting
1) Progress on the development partnership front
- On the development partnership front, the expansion of the Motihari-Amlekhganj petroleum products pipelines to Chitwan and the establishment of a new pipeline on the eastern side connecting Siliguri to Jhapa in Nepal formed a part of the discussions.
- The operating procedures for commencement of train services of the first passenger railway line between India and Nepal from Jaynagar to Kurtha via Janakpurhave have been discussed.
- Other cross-border rail connectivity projects, including a possible Raxaul-Kathmandu broad gauge railway line, were also discussed.
- The joint hydropower projects, including the proposed Pancheshwar Multipurpose Project, should get positive momentum following this round of meetings.
2) Facilitating the cross-border movement of people
- The recently inaugurated Integrated Check Posts (ICPs) at Birgunj and Biratnagar have helped in the seamless movement of people and trade between the two countries.
- The construction of a third integrated check post at Nepalgunj has already commenced, while the new integrated check post at Bhairahwa would begin shortly.
- Since Nepal relies on India’s seaports in a big way for trading, and goods are transported by road, the integrated check posts are expected to ease trade and transit.
3) Border issue
- Nepali side’s demand to include the boundary in the Joint Commission Meeting.
- However, India made it clear to find a fresh mechanism to resolve any such crucial long-pending issue.
4) New direction to bilateral ties
- India’s support for two more cultural heritage projects in Nepal, namely, the Pashupatinath Riverfront Development and the Bhandarkhal Garden Restoration in Patan Durbar is significant.
- Nepal expressed support for India’s permanent membership of an expanded UN Security Council (UNSC) to reflect the changed balance of power.
- The next meeting of the Joint Commission in Nepal should be crucial in giving a new direction to the bilateral ties, keeping a balance between change and continuity.
India’s deepening engagement with all sections
- There is growing disenchantment among the Nepali masses over the increased centralization of power, failure of the Provincial System in addressing the developmental issues, misuse of Presidential authority, and unprecedented corruption.
- While the unusual developments are taking place in Nepal, there are many who still think that India is comfortable with some changes as its Nepal policy is heading very clearly towards a deeper engagement with all sections.
Consider the question “How India-Nepal ties are affected by the internal political fundamentals in Nepal? What approach should be adopted by India in dealing with Nepal?”
Conclusion
Nepal cannot afford to enter into another round of political instability, and those who have commanding authority to spearhead India-Nepal bilateral relations must give a humane consideration to it. At the crossroads, Nepal needs action and to come to terms with realities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Question Hour
Mains level: Parliamentary control
Question Hour, which had been suspended by the government during the monsoon session, will resume when Parliament meets for the budget session.
Q.Discuss the various instruments of Parliamentary Control in India.
Must read edition: [Burning Issue] Quashing of the Question Hour
What is Question Hour?
- Question Hour is the liveliest hour in Parliament. It is during this one hour that MPs ask questions of ministers and hold them accountable for the functioning of their ministries.
- Prior to Independence, the first question asked of government was in 1893. It was on the burden cast on village shopkeepers who had to provide supplies to touring government officers.
- The questions that MPs ask are designed to elicit information and trigger suitable action by ministries.
- Over the last 70 years, MPs have successfully used this parliamentary device to shine a light on government functioning.
- Their questions have exposed financial irregularities and brought data and information regarding government functioning to the public domain.
- With the broadcasting since 1991, Question Hour has become one of the most visible aspects of parliamentary functioning.
Its evolution
- The right to question the executive has been exercised by members of the House from the colonial period.
- The first Legislative Council in British India under the Charter Act, 1853, showed some degree of independence by giving members the power to ask questions to the executive.
- Later, the Indian Council Act of 1861 allowed members to elicit information by means of questions.
- However, it was the Indian Council Act, 1892, which formulated the rules for asking questions including short notice questions.
- The next stage of the development of procedures related to questions came up with the framing of rules under the Indian Council Act, 1909, which incorporated provisions for asking supplementary questions by members.
- The Montague-Chelmsford reforms brought forth a significant change in 1919 by incorporating a rule that the first hour of every meeting was earmarked for questions. Parliament has continued this tradition.
- In 1921, there was another change. The question, on which a member desired to have an oral answer, was distinguished by him with an asterisk, a star. This marked the beginning of starred questions.
Its significance
- Question Hour is not only an opportunity for the members to raise questions, but it is a parliamentary device primarily meant for exercising legislative control over executive actions.
- The government’s actions erode the constitutional mandate of parliamentary oversight over executive actions as envisaged under Article 75 (3) of the Indian Constitution.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 21
Mains level: Right to Privacy
The Government of India has asked WhatsApp to withdraw the proposed changes in its privacy policy.
Q.What are the factors responsible for the spread of misinformation on social media? Suggest the measures to tackle it.
Core of the news
- WhatsApp has been embroiled in a controversy over its updated privacy policy.
- The posts are pointers on the new policy.
What was the news Privacy Policy?
- When one goes to the status tab on the app, one can see the WhatsApp icon and its four posts, along with the statuses of one’s contacts.
- While one reads ‘We are committed to your privacy’, another reads, ‘WhatsApp can’t read or listen to your personal conversations as they’re end-to-end encrypted’.
- Another post reads ‘WhatsApp can’t see your shared location’ and yet another reads ‘WhatsApp doesn’t share your contacts with Facebook’.
- The messaging app reviewed its privacy policy and asked users to accept the terms and conditions by February 8. Following this, the app faced severe backlash from its users and privacy advocates.
Issues pointed by Govt.
- said that the proposed changes raised “grave concerns” over the implications of the choice and the autonomy of Indian citizens.
- It pointed out that the Indian users, who have not been given the option to opt-out of data-sharing with Facebook companies, were being subjected to differential treatment.
- The issue is the impact it has on informational privacy, data security and user choice.
Data at stake
- The government asked WhatsApp to reconsider its approach to respect the informational privacy, freedom of choice and data security of Indian citizens.
- It said that India’s distinct identity and its people must be properly respected and any unilateral changes to WhatsApp Terms of Service and Privacy would not be fair and acceptable.
A discriminatory move
- India formed the largest segment of WhatsApp’s user base globally and any change in policies would have a disproportionate impact on its citizens.
- The privacy policy offered by WhatsApp to its European users specifically prohibits the use of any information shared with a Facebook company for those companies’ own purposes.
- This Clause is not present in the privacy policy offered to Indian users.
- This differential and discriminatory treatment of Indian and European users is attracting serious criticism and betrays a lack of respect for the rights and interest of Indian citizens.
What lies ahead?
- India has a huge user base of WhatsApp and Facebook in India.
- The consolidation of sensitive information exposes a very large segment of Indian citizens to greater information security risks.
- By not providing Indian users with the ability to opt-out of this data sharing with other Facebook companies, WhatsApp is treating users with an ‘all-or-nothing’ approach.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Parliamentary behavior and decency
Food served in Parliament canteen is set to cost more as it will no longer be subsidised, Lok Sabha Speaker has informed.
I say there is no darkness, but ignorance.
-William Shakespeare
Why in news?
- The low rate of food in the Parliament canteen has often attracted controversy, with critics objecting to lawmakers enjoying a cheap meal at the taxpayers’ expense.
- Others have pointed out that the subsidy doesn’t benefit just MPs, as a host of other Parliament staff and security personnel also take their meals at the canteen.
- However, in 2019, all MPs had unanimously decided to do away with the subsidy.
- The annual revenue from Parliament catering was to the tune of Rs 15 to Rs 18 crore. It could annually save more than Rs 8 crore with the subsidy coming to an end.
Parliament Canteen Subsidy
- A major furore over the subsidy had erupted in 2015 when a reply to an RTI query which revealed that the canteen got a subsidy of Rs 14 crore every year.
- The item list received under the RTI Act revealed that items like ‘fish fried with chips’ were available at Rs 25, mutton cutlet at Rs 18, boiled vegetables at Rs 5, mutton curry with bone at Rs 20 and masala dosa at Rs 6.
- These were the rates subsidised by 63 per cent, 65 per cent, 83 per cent, 67 per cent and 75 per cent respectively.
- The caterers were being paid by the Ministry of Finance through Parliament.
Was the entire amount being spent on MPs’ food?
- Apart from food, the subsidy is used for other expenses, like salaries of canteen staff. Also, many other people apart from the MPs use the canteen.
- In fact, when the RTI query had been filed in 2015, the sales in the canteen for when Parliament was in session and when it wasn’t were almost the same.
- Of the total subsidy of Rs 14 crore revealed by the RTI query, about Rs 11-12 crore would go towards the salary of the staff manning the canteen.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SC Bose and his legacy
Mains level: Freedom struggle
The Union Culture Ministry has announced that January 23, birth anniversary of Subhash Chandra Bose, would be celebrated as “Parakram Diwas” — the day of courage — every year.
Try this PYQ
Q.Highlight the difference in the approach of Subhash Chandra Bose and Mahatma Gandhi in the struggle for freedom. (150 W)
Subhash Chandra Bose (1897-1945)
- Bose was an Indian revolutionary prominent in the independence movement against British rule of India.
- He also led an Indian national force from abroad against the Western powers during World War II.
- He was a contemporary of Mohandas K. Gandhi, at times an ally and at other times an adversary.
- He was highly influenced by a socialist ideology that acquired popularity as consequences of the Russian Revolution.
Forget not that the grossest crime is to compromise with injustice and wrong. Remember the eternal law: You must give if you want to get.
– Netaji
Association with INC
- In 1927, after being released from prison, Bose became general secretary of the Congress and worked with Jawaharlal Nehru for independence.
- In late December 1928, Bose organised the Annual Meeting of the Indian National Congress (INC) in Calcutta.
- Subsequently, Bose wanted to get elected as Congress President in a subsequent session of 1939 convened at Tripuri.
- However, his candidature was challenged by Mahatma Gandhi who wanted to prevent socialist orientation to the Indian National Movement.
- Gandhi proposed Pattabhi Sitaramaya for this candidature.
- In this election, Bose emerged victorious by a huge margin which was not acceptable to Mahatma Gandhi.
- Congress leader supported Mahatma Gandhi and forced Subhash Chandra Bose to step down from Presidentship.
- Under such collective pressure, Bose not only resigned from the Congress members. Thereafter he established a separate political party known as “Forward Bloc”.
Escape to Germany
- On the outbreak of WW-II, Bose advocated a campaign of mass civil disobedience to protest against Linlithgow’s decision to declare war on India’s behalf without consulting the Congress leadership.
- Having failed to persuade Gandhi of the necessity of this, he was house arrested from where he escaped to Germany.
- He then went to several countries of Europe and finally landed in a region of Singapore in “South East Asia”.
Azad Hind Fauj
- The SE Asia region was under the control of Japan where a large number of “Indian Prisoners of War” was confined.
- When Subhash Chandra Bose reached Singapore in1943 this army was led by a prominent revolutionary Ras Behari Bose whose cadre was known as “Indian National Army”.
- Subhash Chandra Bose reorganized and expanded this force in order to liberate India. This force was renamed as “Azad Hind Fauj” by him.
The Azad Hind Government
- The Provisional Government of Free India, or, more simply, Free India (Azad Hind), was an Indian provisional government established in occupied Singapore in 1943.
- C. Bose was the leader of Azad Hind Government (AHG) and also the Head of State of this Provisional Indian Government-in-exile.
- It was a part of the freedom movement, originating in the 1940s outside India with a purpose of allying with Axis powers to free India from British rule.
Its collapse and INA Trials
- INA under the leadership of Bose got defeated severely at Rangoon due to lack of support of Japanese.
- Bose was suggested to leave Burma to continue his struggle for Indian independence and returned to Singapore before the fall of Rangoon.
- The AHG govt in the islands collapsed when the island garrisons of Japanese and Indian troops were defeated by British troops and the islands themselves retaken.
- The Provisional Government of Free India ceased to exist with the deaths of the Axis, the INA, and Bose in 1945.
- It was followed by the Famous Trials at Red Fort.
Also read:
In news: 1946 Royal Indian Navy Mutiny
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: World History: American decolonization
The White House has released the 1776 Commission report, just days before president-elect Joe Biden would take his oath in office.
Read about anti-apartheid movement from your World History sources.
What is the news?
- Earlier, Trump has signed an executive order to set up a “national commission to promote patriotic education” in the country.
- The initiative dubbed the ‘1776 Commission’, is an apparent counter to The 1619 Project, a Pulitzer Prize-winning collection of essays on African American history of the past four centuries.
- It explores the Black community’s contribution to nation-building since the era of slavery to modern times.
- The name marks the independence of 13 US colonies from the British Empire in 1776.
What is Trump’s 1776 Commission?
- With this move, Trump sought to activate his right-wing supporters by doubling down on what he described as “cancel culture”, “critical race theory” and “revisionist history”.
- Looking at the racial attacks, trump had said that Americans are inundated with critical race theory.
- This was a Marxist doctrine holding that America is a wicked and racist nation, that even young children are complicit in oppression.
- Trump wanted to reform this idea and wanted to portray himself as a defender of traditional American heritage against “radical” liberals.”
What was the 1619 Project?
- The Project is a special initiative of The New York Times Magazine, launched in 2019 to mark the completion of 400 years since the first enslaved Africans arrived in colonial Virginia’s Jamestown in August 1619.
- The project aimed to reframe US history by considering what it would mean to regard 1619 as America’s birth year.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise Desert Knight-21
Mains level: India-France defence cooperation
Indian Air Force and French Air and Space Force will conduct a bilateral Air exercise, Ex Desert Knight-21 at Air Force Station Jodhpur.
All-time generic question seeking ‘match the pairs’ can be asked from the news as such. Click here for more exercises.
Ex. Desert Knight-21
- The French side will participate with Rafale, Airbus A-330 Multi-Role Tanker Transport (MRTT), A-400M Tactical Transport aircraft and approximately 175 personnel.
- The IAF aircraft participating in the exercise will include Mirage 2000, Su-30 MKI, Rafale, IL-78 Flight Refuelling Aircraft, AWACS and AEW&C aircraft.
- The exercise marks an important milestone in the series of engagements between the two Air forces.
- As part of Indo-French defence cooperation, Indian Air Force and French Air and Space Force have held six editions of Air Exercises named ‘Garuda’, the latest being in 2019.
- Presently, the French detachment for Ex Desert Knight-21 is deployed in Asia as part of their ‘Skyros Deployment’ and will ferry in forces to Air Force Station Jodhpur.
Why it is special?
- The exercise is unique as it includes fielding of Rafale aircraft by both sides and is indicative of the growing interaction between the two premiers Air Forces.
- It will put into practice operational experience gained across terrains and spectrums and endeavour to exchange ideas and best practices to enhance interoperability.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bad Bank
Mains level: Paper 3- Creation of Bad Bank is right idea at wrong time
The article argues that instead of creating the Bad Bank, several steps taken by the government and the bank regulator could deal with the problem of NPAs and also improve the performance of the banks.
Challenge of NPA: Is Bad Bank and answer to it?
- Recently, RBI governor said that the RBI was open to considering setting up of a “bad bank”.
- India’s economic growth, unless pandemic risks resurface, should be good enough to largely take care of its non-performing assets (NPAs) in the coming years.
- It was the high economic and credit growth of the 2003-08 period that whittled down the NPA ratio.
- The provision coverage ratio at banks had gone up from 42% in 2016 to 72.4% in September 2020, and that net NPAs were down to 2.8% in March 2020.
- The bad loan legacy is almost done with.
- Consequently, the bad bank is a right idea at the wrong time.
Steps the government and RBI should take
1) Resume the operation of IBC
- The government should reinstate the operation of the Insolvency and Bankruptcy Code (IBC).
- The code had improved the recovery rate from NPAs in the banking system.
- There is a need to create disincentives for deliberate delaying tactics, so that the original timeline of 270 days is honoured more in its observance than in breach.
2) Recapitalisation of banks
- The government should provide more than adequate capital to the strong banks it owns, and adequate capital to the not-so-strong ones, with well-defined performance criteria for them to receive more.
- If they don’t deliver, then the government should consolidate them or begin diluting its stake below 51% in such banks.
3) Level playing field improvement in compliance culture
- The government should level the regulatory playing field between private-sector and government-owned banks.
- The risk management and compliance culture in public-sector banks must improve.
- However, public sector banks should not be subject to excessive oversight by government investigative and audit agencies.
4) Plug the sources of NPAs through policy changes
- More than these, there are two other important things that constitute the fountainheads of NPAs.
- The government should evolve a framework for passing on explicit development goals of the state for banks to achieve through the credit mechanism.
- The government should provide for them in the budget and compensate banks rather than direct credit by diktat.
- The cost of directed lending is not just the creation of NPAs, but morale and market-value erosion as well.
- In any case, recapitalization needs mean that the fiscal costs are not avoided. It is self-defeating.
- Then, governments (Union and states) should plug the other underlying sources of NPAs.
- Among things, they should ensure economic pricing of utilities, honour power purchase contracts and raw material purchase agreements, pay arrears to private counterparties, and stop being reflexive litigants.
Consider the question ” What is the Bad Bank? Do you agree with the view that India needs Bad Bank?”
Conclusion
The above measures would greatly help the country achieve high growth and sustain it. Setting up a bad bank may be unnecessary.
Back2Basics: Provisioning Coverage Ratio (PCR)
- Banks usually set aside a portion of their profits as a provision against bad loans.
- Provisioning Coverage Ratio (PCR) is essentially the ratio of provisioning to gross non-performing assets (NPA) and indicates the extent of funds a bank has kept aside to cover loan losses.
- A high PCR ratio (ideally above 70%) means most asset quality issues have been taken care of and the bank is not vulnerable.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Reforms for economic growth
The article suggests the reforms that should be included in the next budget to boost the Indian economy.
Need for further reforms
- Government has leveraged the Covid-19 slowdown as an opportunity for introducing transformative reforms.
- The recently introduced reforms include liberalising agricultural markets, diluting the onslaught of labour laws, credit guarantees for SME loans, and a liberal PLI to stimulate manufacturing.
- These reforms have created a cautious optimism among investors worldwide awaiting the forthcoming Budget.
- India’s reforms require further acceleration, and a consensus that good economics makes good politics.
Reforms required to attract investment
- Cost of acquiring land has increased substantially, which needs to be reduced.
- The government must categorise 44 central laws into compensation, social security, industrial relations, and health and safety—and draft a unified model labour law to replace archaic laws for adoption by states.
- India’s trade-to-GDP ratio must improve.
- Having turned away from the RCEP, India needs to conclude trade agreements with the UK and other major economies. Announcing such intent would be welcome.
- Effective corporate tax rate for domestic companies is 25.17%, while that for foreign firms is 43.68%, India should maintain tax parity across domestic and foreign companies.
- With such parity, India will enhance investment attractiveness.
- In view of the recent international arbitration rulings, India should discontinue retrospective taxation.
- Defence FDI could be raised from 74% to 100% under automatic route.
- The rationale to maintain FDI in the insurance sector at 49% now holds limited logic, India could increase it to a majority stake or even 100%.
- Bottled-in-origin and bulk spirits attract a high basic customs duty (150%), deterring companies eyeing the Indian market, and depriving India of the corresponding FDI.
- Phased reduction of duty on these products to 75% and finally to 30% is advisable.
Areas that need increased spending
- Spending on public healthcare needs to rise from 1.3% to 3% of GDP with Covid-19 exposing glaring inadequacies.
- Revising the National List of Essential Medicines to exempt inexpensively-priced medicines from price controls would help investments in innovation and API manufacturing.
- If the New Education Policy is to be implemented properly, public spend on education and skill development must rise from 3% to 4.5% of GDP.
- The government must raise defence allocations to over 2.5% of GDP given India’s new threat perceptions and increase capital component of total fiscal allocations for defence could be increased from 34% to 40%.
Other measures to boost the economy
- Developing data adequacy agreements with the UK and other key countries would facilitate cross-border movement of personal data based on a mutual adequacy basis.
- The online gaming industry should be supported by a model law, tax regime and self-regulation so that the government accrues tax revenues estimated at Rs 15,000 crore.
- Most countries tax domestic corporate dividends at lower rates and, therefore, FPIs’ dividend income should be taxed at 10%.
- Foreign banks must be brought at par with Indian banks with 8.5% deduction for NPA provisioning.
- Excluding financial services from the e-commerce equalisation levy would be appropriate.
- PSU disinvestments have slowed, and the Budget needs to announce measures for their acceleration as a privatisation push would be transformative for India in the long run.
Consider the question”What are the hurdles in making India the more attractive to the investors? Discuss the measures to make India more attractive for investors.”
Conclusion
As developed countries contemplate relocating their manufacturing supply chains to destinations besides China, a progressive Budget would send positive signals to overseas investors and would propel India’s rightful ambition to be the world’s next manufacturing workshop, in consonance with the Atmanirbhar Bharat vision.
Source:
https://www.financialexpress.com/opinion/union-budget-fy22-good-economics-must-make-good-politics/2173553/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Mineral Policy
Mains level: Paper 3- Issues with our mining policies and changes needed to make them sustainable
The rate at which we are extracting mineral and spending the proceeds from it without consideration for the future generation needs a rethink. The article deals with this issue.
The principle of Intergenerational Equity
- We cannot compromise the ability of future generations to meet their needs, and this is reflected in the aim for the sustainable economy.
- The principle of Intergenerational Equity would make it imperative for us to ensure future generations inherit at least as much as we did.
- If we are successful in abiding by intergenerational equity, our children will be at least as well off as we are.
Issues with our mineral policy
- India’s National Mineral Policy 2019 states: “natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance.”
- The extraction of oil, gas, and minerals is effectively the sale of this inheritance.
- Unfortunately, governments everywhere treat the mineral sale proceeds as revenue or income which is basically a sale of inherited wealth.
- This results in governments selling minerals at prices significantly lower than what they are worth, driven by lobbying, political donations, and corruption.
Error in accounting
- Proceeds received by the government are treated as “revenue” and spent.
- This is just not sustainable.
- There is growing empirical evidence of large losses in mining from around the world.
- There is also growing evidence from the International Monetary Fund that many governments of resource-rich nations face declining public sector net worth, i.e., their governments are becoming poorer.
- Due to the high profits involved, the extractors are keen to extract as quickly as possible and move on.
- More mining would make a bad situation significantly worse.
- The Government Accounting Standards Advisory Board needs to correct this error in the standards for public sector accounting and reporting for mineral wealth.
Way forward
- If we extract and sell our mineral wealth, the explicit objective must be to achieve zero loss in value; the state as trustee must capture the full economic rent.
- Any loss is a loss to all of us and our future generations, and makes some rich; that is patently unfair.
- India’s National Mineral Policy 2019 says: “State Governments will endeavor to ensure that the full value of the extracted minerals is received by the State.”
- Like Norway, the entire mineral sale proceeds must be saved in a Future Generations Fund.
- The Future Generations Fund could be passively invested through the National Pension Scheme framework.
- The real income of a fund of this nature may be distributed only as a citizens’ dividend, equally to all as owners.
- For the Indian economy, this is sustainable — capital has been maintained; the savings rate would rise, making available more long-term domestic capital; it diversifies risk while likely improving returns.
Consider the question “What are the issues with our mining policies? Suggest the changes to make it more sustainable.”
Conclusion
Through these changes, let us be the generation that changes the course of history for the better, not the one that consumed the planet.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NPA, Bad Bank
Mains level: Asset reconstructions post NPA buzz
The idea of setting up a bad bank to resolve the growing problem of non-performing assets (NPAs), or loans on which borrowers have defaulted, is back on the table.
Q.What is Bad Bank? Discuss how it is different from an Asset Reconstruction Company (ARC)?
Why in news?
- Commercial banks are set to witness a spike in NPAs, or bad loans, in the wake of the contraction in the economy as a result of the pandemic.
- Hence the RBI recently agreed to look at the proposal for the creation of a bad bank.
- This is in the response to a six-month moratorium it has announced to tackle the economic slowdown.
What is a Bad Bank?
- A bad bank conveys the impression that it will function as a bank but has bad assets to start with.
- Technically, it is an asset reconstruction company (ARC) or an asset management company that takes over the bad loans of commercial banks, manages them and finally recovers the money over a period of time.
- Such bank is not involved in lending and taking deposits, but helps commercial banks clean up their balance sheets and resolve bad loans.
- The takeover of bad loans is normally below the book value of the loan and the bad bank tries to recover as much as possible subsequently.
Global examples of Bad Bank
- US-based BNY Mellon Bank created the first bad bank in 1988, after which the concept has been implemented in other countries including Sweden, Finland, France and Germany.
- However, resolution agencies or ARCs set up as banks, which originate or guarantee to lend, have ended up turning into reckless lenders in some countries.
Do we need a bad bank?
- The idea gained currency during Rajan’s tenure as RBI Governor.
- The RBI had then initiated an asset quality review (AQR) of banks and found that several banks had suppressed or hidden bad loans to show a healthy balance sheet.
- However, the idea remained on paper amid lack of consensus on the efficacy of such an institution.
- ARCs have not made any impact in resolving bad loans due to many procedural issues.
What is the stand of the RBI and government?
- While the RBI did not show much enthusiasm about a bad bank all these years, there are signs that it can look at the idea now.
- Experts, however, argue that it would be better to limit the objective of these asset management companies to the orderly resolution of stressed assets, followed by a graceful exit.
Key suggestions
Former RBI Dy. Governor Acharya suggested two models to solve the problem of stressed assets.
- The first is a private asset management company (PAMC), which is said to be suitable for stressed sectors where the assets are likely to have an economic value in the short run, with moderate levels of debt forgiveness.
- The second model is the National Asset Management Company (NAMC), which would be necessary for sectors where the problem is not just one of excess capacity but possibly also of economically unviable assets in the short to medium terms.
Good about the bad banks
- The problem of NPAs continues in the banking sector, especially among the weaker banks.
- The bad bank concept is in some ways similar to an ARC but is funded by the government initially, with banks and other investors co-investing in due course.
- The presence of the government is seen as a means to speed up the clean-up process.
- Many other countries had set up institutional mechanisms such as the Troubled Asset Relief Programme (TARP) in the US to deal with a problem of stress in the financial system.
Pandemic and the NPAs
- Bad loans in the system are expected to balloon in the wake of contraction in the economy and the problems being faced by many sectors.
- The RBI noted in its recent Financial Stability Report that the gross NPAs of the banking sector is expected to shoot up to 13.5% of advances by September 2021, from 7.5% in September 2020.
- The report warned that if the macroeconomic environment worsens into a severe stress scenario, the ratio may escalate to 14.8%.
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