Note4Students
From UPSC perspective, the following things are important :
Prelims level: States with multiple administrative capitals
Mains level: Need for more capital cities
The Andhra Pradesh Assembly unanimously passed a Bill to repeal two laws that were cleared last year to set up three different state capitals.
Three Capitals Act
- The law was titled Andhra Pradesh Decentralisation and Inclusive Development of All Regions Act, 2020.
- The incumbent govt had decided to reverse the previous government’s decision to have an ambitious world-class capital city at Amaravati, which is located between Vijayawada and Guntur.
- Thus, it was decided that Amaravati was to be the Legislative capital, Visakhapatnam the Executive capital, and Kurnool the Judicial capital.
Why was it repealed?
- Over a hundred petitions challenging the government’s move have been filed before the Andhra Pradesh High Court.
- Farmers of Amaravati, who let the government acquire their lands, wanted them to stick to the previous plan and build a world-class capital city in the same location.
Will Andhra Pradesh have only one capital now?
- It is not clear if the government will stick to Amaravati as the sole capital.
- Throughout his address, the CM stressed the need for decentralization for the equitable development of all regions.
What are the other examples of multiple capital cities?
- Among Indian states, Maharashtra has two capitals– Mumbai and Nagpur (which hold the winter session of the state assembly).
- Himachal Pradesh has capitals at Shimla and Dharamshala (winter).
- The former state of Jammu & Kashmir had Srinagar and Jammu (winter) as capitals.
Must read
Three capitals for Andhra Pradesh — its logic and the questions it raises
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From UPSC perspective, the following things are important :
Prelims level: Matosinhos Manifesto
Mains level: Not Much
The European Space Agency (ESA) has approved a Matosinhos Manifesto to accelerate the use of space in Europe.
Matosinhos Manifesto
- At the Intermediate Ministerial Meeting that was held in Matosinhos, Portugal.
- The Council of Ministers unanimously adopted this resolution that lays down a vision for the continent in terms of maintaining and expanding its activities in space.
- The large-scale nature and fast pace of the climate crisis and other challenges means that no European nation will be able to effectively address them alone.
The manifesto defines three “accelerators” to further advance Europe’s space ambitions:
- The first of these accelerators is for the ESA to start working towards the “Space for a Green Future”
- The second accelerator is called “Rapid and Resilient Crisis Response” to support governments to act decisively on crises facing Europe, from flooding and storms to wildfires
- The third accelerator mentioned in the resolution is “Protection of Space Assets”, whose objective is to safeguard ESA astronauts and assets from interference by space debris and space weather
A brief history of the ESA
- The ESA is an intergovernmental organization that was formed in 1975 with the aim of developing Europe’s space capabilities.
- The organization has 22 member states — Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland and the UK.
- Slovenia, Latvia and Lithuania are Associate Members.
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From UPSC perspective, the following things are important :
Prelims level: Global State of Democracy Report, 2021
Mains level: Decline of Democracy
The number of countries moving towards authoritarianism in 2020 was higher than that of countries going in the other direction, towards democracy, a/c to the Global State of Democracy (GSD) Report, 2021.
Note: The Global Democracy Index is released by the Economic Intelligence Unit (EIU). One may get confused over this two.
About GSD Report
- The GSD report is released by the International Institute for Democracy and Electoral Assistance (International-IDEA).
- The International-IDEA, is an inter-governmental organization supporting democracy, is chaired by Australia and includes India as a member-state.
- The report aims to influence the global debate and analyses current trends and challenges to democracy, exacerbated by the Covid-19 pandemic.
- It offers specific policy recommendations to spark new and innovative thinking for policymakers, governments and civil society organizations supporting democracy.
GSD framework
Highlights of the report
- The US and three members of the European Union (EU) [Hungary, Poland and Slovenia] have also seen concerning democratic declines.
- The pandemic has prolonged this existing negative trend into a five-year stretch, the longest such period since the start of the third wave of democratization in the 1970s.
- Democratically elected Governments, including established democracies, are increasingly adopting authoritarian tactics.
- This democratic backsliding has often enjoyed significant popular support.
India’s performance
- The report highlighted the case of Brazil and India as “some of the most worrying examples of backsliding.
- India is the backsliding democracy with the most democratic violations during the pandemic.
- Violations include- Harassment, arrests and prosecution of human rights defenders, activists, journalists, students, academics and others critical of the government or its policies; internet obstructions etc.
Resilient democracies
- The report pointed out that many democracies had proved to be resilient to the pandemic.
- Despite pandemic restrictions on campaigning and media, the electoral component of democracy has shown remarkable resilience.
- Countries around the world learned to hold elections in exceedingly difficult conditions and they rapidly activated special voting arrangements to allow citizens to continue exercising their democratic rights.
Democracy is good. I say this because other systems are worse.
– Jawaharlal Nehru
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From UPSC perspective, the following things are important :
Prelims level: Rani Gaidinliu
Mains level: Not Much
Union Home Minister has laid the foundation for ‘Rani Gaidinliu Tribal Freedom Fighters Museum’ in Imphal, Manipur.
Rani Gaidinliu
- Gaidinliu (26 January 1915 – 17 February 1993) was a Naga spiritual and political leader who led a revolt against British rule in India.
- At the age of 13, she joined the Heraka religious movement of her cousin Haipou Jadonang.
- The movement later turned into a political movement seeking to drive out the British from Manipur and the surrounding Naga areas.
- Within the Heraka faith, she came to be considered an incarnation of the Goddess Cherachamdinliu.
Meeting with Pt. Nehru
- Gaidinliu was arrested in 1932 at the age of 16, and was sentenced to life imprisonment by the British rulers.
- Jawaharlal Nehru met her at Shillong Jail in 1937 and promised to pursue her release.
- Nehru gave her the title of “Rani” (“Queen”), and she gained local popularity as Rani Gaidinliu.
Her legacy
- She was released in 1947 after India’s independence and continued to work for the upliftment of her people.
- An advocate of the ancestral Naga religious practices, she staunchly resisted the conversion of Nagas to Christianity.
- She was honored as a freedom fighter and was awarded a Padma Bhushan by the Government of India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NARCL
Mains level: Paper 3- NARCL-challenges and opportunities
Context
The newly-created National Asset Reconstruction Company (NARCL) in the public sector offers hopes for the faster clean up of lenders’ balance sheets.
Features of National Asset Reconstruction Company (NARCL)
- The newly-minted ARC, NARCL is not a bank, but a specialised financial institution to help resolve the distressed assets of banks.
- Faster aggregation: Its greatest virtue lies in the faster aggregation of distressed assets that lie scattered across several lenders.
- Soverign assurance: Its securitised receipts (SRs) carry sovereign assurance.
- This is of particular comfort to PSU banks as price discovery would not be subject to later investigations.
- Focus on large accounts: It would initially focus on large accounts with debts over Rs 500 crore.
- IDRCL: All eyes will be focused on IDRCL (Indian Debt Resolution Company), the operating arm, which would be in the private sector.
Past policy measures to resolve the bad debts
- Institutional measures include BIFR (Board for Industrial and Financial Reconstruction, 1987), Lokadalat, DRT (Debt Recovery Tribunal, 1993), CDR (Corporate Debt Restructure, 2001), SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement, 2002), ARC (Asset Recovery Company, 2002).
- The RBI has also launched a slew of measures during 2013-14 to resolve, reconstruct and restructure stressed assets.
Why the measures to resolve the bad debt failed?
- Of the 28 ARCs (private sector) in operation, many are bit players.
- Dominance of few ARC: The top five ARCs account for over 70 per cent of the asset under management (AUM) and nearly 65 per cent of the capital.
- Restructuring as an exception: Financial and business restructuring appears to be more an exception than the norm.
- Nearly one-third of debts are rescheduled.
- This is not much value addition to what lenders would have otherwise done at no additional cost.
- Success and shortcomings of IBC: The IBC, introduced in 2016, was landmark legislation and marked a welcome departure from the earlier measures, with a legally time-bound resolution.
- The focus is on resolution rather than recovery.
- It nearly put an end to evergreening.
- Even though there are delays under this newfound promise, they are counted in terms of days and not years and decades.
- The NCLT (National Company Law Tribunal) is the backbone of the IBC, but lamentably is starved of infrastructure and over 50 per cent (34 out of 63) of NCLT benches were bereft of regular judges.
- Even the parliamentary committee has expressed indignation on a large number of positions left vacant.
- This lack of adequate infrastructure, coupled with the poor quality of its decisions, has proved to be the IBC’s Achilles’ heel.
- We need judicial reforms for early and final resolutions.
- Issue of delayed recognition and resolution: Forty-seven per cent of the cases referred to the IBC, representing over 1,349 cases, have been ordered for liquidation.
- Against the aggregate claims of the creditors of about Rs 6.9 lakh crore, the liquidation value was estimated at a paltry Rs 0.49 lakh crore.
Suggestions to make IBC more effective
- Delayed recognition and resolution: Lenders and regulators need to address the issue of delayed recognition and resolution.
- Business stress and/or financial stress needs to be recognised even prior to regulatory norms on NPA classification.
- Dealing with anchoring bias: The tendency to make decisions on the basis of first available information is called “anchoring bias”.
- The first available information in bidding for distressed assets is the cost of acquisition to ARCs.
- Potential bidders would quote prices nearer to this anchor.
- Nobel Laureate Daniel Kahneman has suggests a three-step process to mitigate anchor bias: One, acknowledge the bias; two, seek more and new sources of information, and three, drop your anchor on the basis of new information.
Way forward for NARC
- Forbid wilful defaulters from taking back distressed asset: The IBC has made considerable progress in bringing about behavioural change in errant and wilful defaulters by forbidding them to take back distressed assets.
- Otherwise, the credit culture suffers.
- The NARC should uphold this principle, not dilute it
- Introduce Sunset clause: It should have a sunset clause of three to five years.
- This will avoid the perpetuation of moral hazard and also encourage expeditious resolution.
- Deal with anchor bias: Anchor bias needs to be mitigated by better extrinsic value discovery.
- Avoid selling to other ARCs: It should avoid selling to other ARCs.
Conclusion
The RBI has recently released (November 2) a report on the working of ARCs and makes 42 recommendations to improve the performance of ARCs. This article incidentally makes an effort to identify some constraints and offer solutions to improve the performance of ARCs.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: HGV missile
Mains level: Paper 2- HGV test by China and its implications
Context
On October 27 Chairman of the Joint Chiefs of Staff of the US, reacted to China testing its nuclear-capable hypersonic weapons system by drawing an analogy with a Sputnik moment.
How US’s Ballistic Missile Defence led to the recent Sputnik moment
- Since the US withdrawal from the Anti-Ballistic Missile (ABM) treaty in 2002, both Russia and China have been wary of Washington’s Ballistic Missile Defence (BMD) programme.
- It undermines strategic stability: Missile defence is inherently destabilising — it undermines “strategic stability”.
- A robust BMD would compromise the second strike capability of the adversary by neutralising the surviving incoming missiles in case of a near-decapitating first strike
- Both Russia and China thus view the US BMD as undermining their deterrence and have sought ways to restore their retaliatory strike capability by investing in new technologies such as Hypersonic Glide Vehicles (HGVs).
- HGVs can escape the missile defence systems.
- HGVs fly at lower altitudes than ballistic missiles, which means they could potentially escape early warning systems, aided by the earth’s curvature.
Implications of Chinese test
- It can set off competition: The Chinese tests have the potential to set off an aggressive competition among the nuclear powers to modernise their nuclear arsenals and add new, potentially destabilising capabilities to their arsenal.
- Global and regional arms race: In the present era of minimal arms control measures, the Chinese hypersonic missile system test will trigger an intense arms race both at the global and regional levels.
- With the Chinese test, the US may be forced to expand its hypersonic programme and further modernise its missile defence systems.
What should be the course of action for India
- China’s nuclear-tipped hypersonic weapon systems, though not particularly India-focused, could nudge New Delhi to adopt two courses of action.
- Missile program: First, accelerate its hypersonic missiles programme.
- Develop missile defence system: Second, consider erecting an equally robust missile defence.
- Chinese advancement in stealth technologies will drive New Delhi to seek similar capabilities but also develop effective countermeasures.
- This can then set off a regional arms race, a sign that is not particularly encouraging for regional peace.
Consider the question “Examine the implications of recent hypersonic missile test by China for the region and global arms race control efforts? What should be the course of action for India? “
Conclusion
China’s hypersonic missile test may not have come with a Sputnik-like surprise, but it has the potential to set off a post-Sputnik-like arms race that does not augur well for the strategic stability both at the global and regional level.
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Back2Basics: Hypersonic Glide Vehicles (HGVs)
- A hypersonic missile is a vehicle that achieves a speed five times faster than the speed of sound, crossing Mach 5.
- These missiles travel at a speed of around 6,115 km per hour, with a combination of technology and manoeuvrability of ballistic missiles and cruise missiles.
Fractional Orbital Bombardment System (FOBS)
- A Fractional Orbital Bombardment System is a warhead delivery system that uses a low earth orbit towards its target destination.
- Just before reaching the target, it deorbits through a retrograde engine burn.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 222
Mains level: Issues with Judicial Transfer
The transfer of Chief Justice Sanjib Banerjee from the Madras High Court to the Meghalaya High Court has given rise to a controversy over the question of whether judicial transfers are made only for administrative reasons or have any element of ‘punishment’ behind them.
Transfer of judges and the Constitution
- Article 222 of the Constitution provides for the transfer of High Court judges, including the Chief Justice.
- It says the President, after consultation with the Chief Justice of India, may transfer a judge from one High Court to any other High Court.
- It also provides for a compensatory allowance to the transferred judge.
- This means that the executive could transfer a judge, but only after consulting the Chief Justice of India.
- From time to time, there have been proposals that one-third of the composition of every High Court should have judges from other States.
What is the Supreme Court’s view on the issue?
Union of India vs. Sankalchand Himatlal Sheth (1977)
- The Supreme Court rejected the idea that High Court judges can be transferred only with their consent.
- It reasoned that the transfer of power can be exercised only in public interest.
- It held that the President is under an obligation to consult the CJI, which meant that all relevant facts must be placed before the CJI.
- It ruled CJI had the right and duty to elicit and ascertain further facts from the judge concerned or others.
S.P. Gupta vs. President of India, 1981 (First Judges Case)
- It considered the validity of the transfer Judges as well as a circular from the Law Ministry.
- The Ministry had put that additional judge in all High Courts may be asked for their consent to be appointed as permanent judges in any other High Court, and to name three preferences.
- The Minister’s reasoning was that such transfers would promote national integration and help avoid parochial tendencies bred by caste, kinship and other local links and affiliations.
- The majority ruled that consultation with the CJI did not mean ‘concurrence’ with respect to appointments.
SCARA Vs Union of India, 1993 (Second Judges Case)
- In effect, it emphasized the primacy of the executive in the matter of appointments and transfers.
- However, this position was overruled in the ‘Second Judges Case’ (1993).
- The opinion of the CJI, formed after taking into account the views of senior-most judges, was to have primacy.
- Since then, appointments are being made by the Collegium.
Current procedure for transfers
- As one of the points made by the ‘Second Judges Case’ was that the opinion of the CJI ought to mean the views of a plurality of judges, the concept of a ‘Collegium of Judges’ came into being.
- In the collegium era, the proposal for transferring a High Court judge, including a Chief Justice, should be initiated by the Chief Justice of India, “whose opinion in this regard is determinative”.
- The consent of the judge is not required.
- All transfers are to be made in public interest, i.e. for promoting better administration of justice throughout the country.
- For transferring a judge other than the Chief Justice, the CJI should take the views of the CJ of the court concerned, as well as the CJ of the court to which the transfer is taking place.
- The CJI should also take into account the views of one or more Supreme Court judges who are in a position to offer their views.
- In the case of transfer of a Chief Justice, only the views of one or more knowledgeable Supreme Court judges need to be taken into account.
Provision for Written Recommendation
- The views should all be expressed in writing, and they should be considered by the CJI and four senior-most judges of the Supreme Court, which means, the full Collegium of five.
- The recommendation is sent to the Union Law Minister who should submit the relevant papers to the Prime Minister.
- The PM then advises the President on approving the transfer.
What makes transfers controversial?
- Punitive intent: Transfer orders become controversial when the Bar or sections of the public feel that there is a punitive element behind the decision to move a judge from one High Court to another.
- No disclosure of reasons: As a matter of practice, the Supreme Court and the government do not disclose the reason for a transfer.
- Adverse opinions behind: For, if the reason is because of some adverse opinion on a judge’s functioning, disclosure would impinge on the judge’s performance and independence in the court to which he is transferred.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Repealing of a law
Mains level: Farmers protests and related issues
PM after repealing the farm laws has said that the process of repealing the laws — which are currently stayed by the Supreme Court — will take place in the upcoming Winter Session of Parliament.
Repealing a Law
- Repealing a law is one of the ways to nullify a law.
- A law is reversed when Parliament thinks there is no longer a need for the law to exist.
- Legislation can also have a “sunset” clause, a particular date after which they cease to exist.
- For example, the anti-terror legislation Terrorist and Disruptive Activities (Prevention) Act 1987, commonly known as TADA, had a sunset clause, and was allowed to lapse in 1995.
- For laws that do not have a sunset clause, Parliament has to pass another legislation to repeal the law.
(Sunset Clause: A law shall cease to have effect after a specific date, unless further legislative action is taken to extend the law.)
How can the government repeal a law?
- Article 245 of the Constitution gives Parliament the power to make laws for the whole or any part of India, and state legislatures the power to make laws for the state.
- Parliament draws its power to repeal a law from the same provision.
- A law can be repealed either in its entirety, in part, or even just to the extent that it is in contravention of other laws.
What is the process for repealing a law?
- Laws can be repealed in two ways — either through an ordinance, or through legislation.
- In case an ordinance is used, it would need to be replaced by a law passed by Parliament within six months.
- If the ordinance lapses because it is not approved by Parliament, the repealed law can be revived.
- The government can also bring legislation to repeal the farm laws.
- It will have to be passed by both Houses of Parliament, and receive the President’s assent before it comes into effect.
Legislations required
- All three farm laws can be repealed through a single legislation.
- Usually, Bills titled Repealing and Amendment are introduced for this purpose.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: HomoSEP
Mains level: Manual scavenging in India
IIT Madras has developed a robot that can, if deployed extensively, put an end to this practice of sending people into septic tanks.
HomoSEP
- HomoSEP stands for “homogenizer of septic tanks”.
- It has a shaft attached to blades that can open like an inverted umbrella when introduced into a septic tank.
- This is helpful as the openings of the septic tanks are small and the tank interiors are bigger.
- The sludge inside a septic tank contains faecal matter that has thickened like hard clay and settled at the bottom.
- This needs to be shredded and homogenized so that it can be sucked out and the septic tank cleaned. The whirring blades of the robot achieve precisely this.
Manual scavenging deaths in India
- A statement by the Social Justice and Empowerment Ministry conveyed that in the five years till December 31, 2020, there have been 340 deaths due to manual scavenging.
- Uttar Pradesh (52), Tamil Nadu (43) and Delhi (36) leads in the list. Maharashtra had 34 and Gujarat and Haryana had 31 each.
- This is despite bans and prohibitory orders.
Various policy initiatives
- Prohibition of Employment as Manual Scavengers and their Rehabilitation (Amendment) Bill, 2020: It proposes to completely mechanise sewer cleaning, introduce ways for ‘on-site’ protection and provide compensation to manual scavengers in case of sewer deaths.
- Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013: Superseding the 1993 Act, the 2013 Act goes beyond prohibitions on dry latrines, and outlaws all manual excrement cleaning of insanitary latrines, open drains, or pits.
- Rashtriya Garima Abhiyan: It started national wide march “Maila Mukti Yatra” for total eradication of manual scavenging from 30th November 2012 from Bhopal.
- Prevention of Atrocities Act: In 1989, the Prevention of Atrocities Act became an integrated guard for sanitation workers since majority of the manual scavengers belonged to the Scheduled Caste.
- Judicial intervention: In 2014, a Supreme Court order made it mandatory for the government to identify all those who died in sewage work since 1993 and provide Rs. 10 lakh each as compensation to their families.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Healthcare scenario in urban areas
The report on ‘Health Care Equity in Urban India’ exploring health vulnerabilities and inequalities in cities in India was recently released.
About the report
- The report is released recently by Azim Premji University in collaboration with 17 regional NGOs across India.
- It notes that a third of India’s people now live in urban areas, with this segment seeing rapid growth from about 18% (1960) to 28.53% (2001) to 34% (in 2019).
- The study draws insights from data collected through detailed interactions with civil society organizations in major cities and towns.
- This also included an analysis of the National Family and Health Surveys (NHFS), the Census of India, and inputs from State-level health officials on the provision of health care.
- It also looks at the availability, accessibility, and cost of healthcare facilities, and possibilities in future-proofing services in the next decade.
Key highlights of the report
- Urban poverty on rise: Close to 30% of people living in urban areas are poor.
- Declining life expectancy: Life expectancy among the poorest is lower by 9.1 years and 6.2 years among men and women, respectively, compared to the richest in urban areas.
- Chaotic health governance: The report, besides finding disproportionate disease burden on the poor, also pointed to a chaotic urban health governance.
- Multiplicity and non-coordination: The multiplicity of healthcare providers both within and outside the government without coordination challenges to urban health governance.
- Lack of political attention: Urban healthcare has received relatively less research and policy attention.
Major recommendations
The report calls for:
- Strengthening community participation and governance
- Building a comprehensive and dynamic database on the health and nutrition status, including co-morbidities of the diverse, vulnerable populations
- Strengthening healthcare provisioning through the National Urban Health Mission, especially for primary healthcare services
- Putting in place policy measures to reduce the financial burden of the poor
- A better mechanism for coordinated public healthcare services and better governed private healthcare institutions
Conclusion
- As urbanization is happening rapidly, the number of the urban poor is only expected to increase.
- A well-functioning, better coordinated, and governed health care system is crucial at this point.
- The pandemic has brought to attention the need for a robust and resourced healthcare system.
- Addressing this will benefit the most vulnerable and offer critical services to city dwellers across income groups.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Semiconductor, Rare earth elements
Mains level: Semiconductor industry
Chips or processors power every possible product on the market from high-end cars to washing machines. There is a worldwide shortage of semiconductor chips.
What are Semiconductors?
- A semiconductor sits between a conductor and an insulator and is commonly used in the development of electronic chips, computing components, and devices.
- It’s generally created using silicon, germanium, or other pure elements.
- Semiconductors are created by adding impurities to the element.
Giants of global chip industry
- Semiconductor manufacturing is now dominated by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan and Samsung Electronics in South Korea.
- American chipmaker Intel now plans to spend $20 billion to build two new chip factories in Chandler, Arizona.
- These new fabs will also manufacture chips designed by Amazon, Qualcomm, and other customers.
Why is there a semiconductor shortage?
- During the pandemic, manufacturing came to a standstill impacting the supply chains of products that need one or more of these.
- As the automotive sector almost shut down last year, chip makers shifted capacity to cater to increased demand for electronics items such as cell phones and laptops.
- Since orders for advanced chips are placed well in advance, manufacturers have not yet been able to come back to pre-pandemic production schedules to cater to all sectors.
- The automotive chips are of medium-level complexity, compared to the really small and extremely complicated ones on smartphones and personal computers.
- Building something this small, featuring billions of transistors is an expensive process.
Has India missed the bus in setting up chip factories?
- There is a lot of risks involved in setting up a chip plant.
- Past initiatives to set up chip manufacturing units in the country never took off due to lack of long-term vision, lack of government incentives, and poor planning.
- Now the government is keen to promote manufacturing and has even proposed tax incentives under Production Linked Incentive Scheme.
- Things are progressing slowly, but the recent announcement of Tata Group entering semiconductor manufacturing is being seen positively.
How is the chip crisis playing out in geopolitics?
- The global chip crisis and geopolitical tensions with China have shifted focus back on semiconductors.
- The US, which was once a leader in chip manufacturing, wants the crown back.
- The protectionist US is looking to bring manufacturing back to America and reduce its dependency on a handful of chipmakers mostly concentrated in Taiwan and South Korea.
- China’s renewed aggression on Taiwan is also being seen in light of the chip crisis.
Impact
- The crisis is expected to cost the global automotive industry $210 billion in revenue in 2021.
- The global semiconductor shortage has affected many industries for more than a year and because of that, they are either forced to pay more for products or being asked to wait a little more.
- The consumption of integrated circuits in products is ever increasing and a large manufacturing sector for these kinds of integrated circuits are a part of the supply chain.
- The shortage has affected smartphones, personal computers, game consoles, automobiles, and medical devices.
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From UPSC perspective, the following things are important :
Prelims level: Majuli Island
Mains level: Not Much
Soil erosion, coupled with changing climatic conditions, has been writing a cruel destiny for the inhabitants of Majuli in Assam, the largest river island in the world.
About Majuli Island
- Majuli is a riverine island in the Brahmaputra River, Assam and in 2016 it became the first island to be made a district in India.
- Majuli has shrunk as the river surrounding it has grown.
- It had an area of 880 square kilometers (340 sq mi) at the beginning of the 20th century but having lost significantly to erosion it covers 553 square kilometers as at 2014.
- It is the abode of the Assamese neo-Vaishnavite culture.
Its formation
- The island is formed by the Brahmaputra River in the south and the Kherkutia Xuti, an anabranch of the Brahmaputra, joined by the Subansiri River in the north.
- It was formed due to course changes by the river Brahmaputra and its tributaries, mainly the Lohit.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Issues with India's taxation policies
Context
To develop their renewable energy capacities poor countries may well have to help themselves to make the transition that society urgently needs. One source of funding could well be the well-off citizens of India, who are getting richer and richer.
Growing inequality in India
- A 2018 Oxfam report revealed that 10 per cent of the richest Indians garnered 77.4 per cent of the nation’s wealth.
- In fact, according to the report, 58 per cent of India’s wealth was in the hands of one per cent of the country’s population.
- The combined income of this handful of people in 2017 was almost as much as India’s budget that year.
- In 2017, the fortune of India’s 100 richest tycoons leaped by 26 per cent.
- According to Crédit Suisse, the number of dollar millionaires in India has jumped from 34,000 in 2000 to 7,59,000 in 2019 — in other words, the country has one of “the world’s fastest-growing population of millionaires”.
- The average wealth of these millionaires has increased by 74 per cent over this period.
Issues with taxation policies
- The taxation policy of the government, instead of making the exchequer benefit from this trend, has actively strengthened the trend of growing millionaires.
- Replacing wealth tax by increasing income tax: The government replaced the wealth tax by an income tax increase of two per cent for households that earned more than 10 million rupees annually.
- Corporate tax was reduced: The corporate tax was lowered, for existing companies from 30 per cent to 22 per cent, and for manufacturing firms incorporated after October 1, 2019 that started operations before March 31, 2023, from 25 to 15 per cent — the biggest reduction in 28 years.
- Increase in income tax exemptions: In the 2019-20 budget, the income tax exemption limit jumped from Rs 2,00,000 to 2,50,000 and the tax rate for incomes up to Rs 5 lakh was reduced from 10 to 5 per cent.
Impact of pro-rich taxation policy
- Deprives the state of resources: This taxation policy deprived the state of important resources.
- Increase in indirect taxes: To (partly) compensate for the decline of direct taxes, the government has increased indirect taxes, unfairly so, because they affect all Indians irrespective of their income.
- The share of indirect taxes in the state’s fiscal resources has increased to reach 50 per cent of total taxes in 2018.
- Taxes on petroleum products are a case in point.
High taxes on petroleum products
- About two-thirds of the cost of a litre of petrol now goes towards taxes.
- The tax collected on petrol and diesel has increased by 459 per cent in the past seven years — from Rs 52,537 crore in 2013 to Rs 2.13 lakh crore in 2019-2020.
- Given that petrol is a less elastic good, people are bound to consume it even at higher prices.
- This also explains why the government sees fuel sale in India as a safe “revenue collection” medium.
- In 2018-19, excise duty on petroleum products alone accounted for roughly 24 per cent of the indirect tax revenue.
Consider the question “India’s taxation policies are criticised for being pro-rich. In the context of this, discuss the issues with the taxation system and suggest the measure to deal with these issues.”
Conclusion
The government’s taxation policy will probably continue to prevail depriving the exchequer of some of the resources it needs for dealing with issues as important as climate change.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Economic and political implications of repeal of farm laws
Context
In a surprise move, Prime Minister Narendra Modi announced that the government will repeal the farm laws in the Winter Session of Parliament.
Economic impact
- Agri-growth rate to remain constant: The agri-GDP growth has been 3.5 per cent per annum in the last seven years.
- One expects this trend to continue — there might be minor changes in the agri-GDP depending on rainfall patterns.
- Cropping pattern to remain skewed: Cropping patterns will remain skewed in favour of rice and wheat, with the granaries of the Food Corporation of India bulging with stocks of grain.
- Increase in food subsidy: The food subsidy will keep bloating and there will be large leakages.
- Environmental impact: The groundwater table in the north-western states will keep receding and methane and nitrous oxide will keep polluting the environment.
Suggestion on increasing farmers income
- Average agri-household income: The latest Situation Assessment Survey of the NSO reveals that the income of an average agri-household in India was only Rs 10,218 per month in 2018-19.
- This is not a very happy situation and all out measures need to be taken to increase rural incomes in a sustained manner.
- How to increase farmers income: Given that the average holding size stands at just 0.9 ha (2018-19), and has been shrinking over the years.
- Efficient functioning value chain: Unless one goes for high-value agriculture — and, that’s where one needs efficient functioning value chains from farm to fork by the infusion of private investments in logistics, storage, processing, e-commerce, and digital technologies — the incomes of farmers cannot be increased significantly.
- Reforms: This sector needs reforms, both in the marketing of outputs as well as inputs, including land lease markets and direct benefit transfer of all input subsidies — fertilisers, power, credit and farm machinery.
Implications
- Demand for legal status to MSP could strengthen: Farmer leaders are already asking for the legal guarantee of MSPs for 23 agri-commodities.
- Their demand could increase to include a larger basket of commodities.
- Demand for privatisation: There could be demands to block the privatisation reforms of public sector enterprises — Air India, for instance — or to scuttle any other reform for that matter.
- The net result is likely to be slowing down the economic reforms that are desperately needed to propel growth.
Consider the question “The latest Situation Assessment Survey of the NSO reveal the low average agri-household income in India. All out measures need to be taken to increase rural incomes in a sustained manner. In the context of this, suggest the measures to increase the farmers’ income and challenges in it.
Conclusion
The most important lesson from the repeal of the farm laws is that the process of economic reforms has to be more consultative, more transparent and better communicated to the potential beneficiaries. It is this inclusiveness that lies at the heart of democratic functioning of India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Farm laws, Essential commodities
Mains level: Farmers protests and related issues
The Prime Minister has announced the withdrawal of the contentious farm laws.
Daniel Q. Gillion, author of The Political Power of Protest, and a sociologist at the University of Pennsylvania, says to be successful, a protest must be impossible to ignore.
What were the farm laws that have been repealed?
- Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: It was aimed at allowing trade in agricultural produce outside the existing APMC mandis
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020: It seeks to provide a framework for contract farming;
- Essential Commodities (Amendment) Act, 2020: It was aimed at removing commodities such as cereals, pulses, oilseeds, edible oils, onion and potato from the list of essential commodities.
Why were these reforms sought?
- APMC reforms: There has been a long-pending demand for reforms in agricultural marketing, a subject that comes under the purview of state governments.
- Long pending stagnation: It was in this backdrop that the present government went for reforms in the sector by passing these laws.
In what circumstances were the laws passed?
- Ordinance route: The government initially cleared them as ordinances in June 2020, there were token protests with the country’s attention gripped by the first wave of Covid-19.
- Without consultation and haste: In Parliament, there was no thorough scrutiny of the Bills by a parliamentary panel. The government dismissed these demands and pushed the legislation through.
- Opposition disregard: The Opposition benches were suspended for a week for their “disorderly conduct” while protesting against the rushed passage of the laws.
Beginning of the protests
The protests gained momentum when the Centre pushed the Bills in Parliament in the Monsoon Session.
- Fear over private mandis: Farmers feared that the existing APMC mandis where they sell their products would be shut down once private players started trading in agri-produce outside the mandi premises.
- Non-guarantee over MSP: Once the APMC mandi system became redundant, procurement based on minimum support prices (MSP) too would come to an end.
After sporadic protests against the farm laws, including a nationwide road blockade, the farmers’ unions in Punjab and Haryana gave a call for a ‘Delhi Chalo’ movement.
How protests could sustain for so long?
- Unity: The leaders of farmers’ unions were very strategic in their approach to the protest and decided to work together very early in the agitation.
- Finances: The protest sites at the Delhi border needed a steady injection of resources to keep going. Aware of this need, the unions had begun making monthly collections.
- People: The unions behind the farm stir are well-organized machinery with committees at the level of villages, blocks, and districts.
- Communication: Social media has been central to the scale of this agitation.
- Engagement: The unions kept the stakeholders engaged by ensuring that there was never a dull moment in this agitation.
In practical terms, what was the status of the three laws until the repeal?
- The farm laws were in force for only 221 days — June 5, 2020, when the ordinances were promulgated to January 12, 2021, when the Supreme Court stayed their implementation.
- The Supreme Court stayed the implementation of the three laws on January 12 this year.
- Since the stay, the laws have been suspended.
- The government has used old provisions of the Essential Commodities Act, 1955 to impose stock limits, having amended the Act through one of the three farm laws.
Reasons for the repeal
There are contrasting suggestions about the timing of the decision to announce the repeal.
- Forthcoming elections: There are crucial Assembly elections early next year in five states, including Uttar Pradesh and Punjab.
- Public appeasement: The PM sought to announce this on Guru Nanak Jayanti probably in a move to appease a community, to which a significant segment of protesting farmers from Punjab belongs.
- Rising anxiety among Public: There was a risk that anxiety among the protesters could lead to tensions as there had been many deaths since the protests began.
- Fury over year-long protests: The protest had created a ruckus on the streets of capital due to continuous blockades even after the intervention of Supreme Court.
- Rising political differences: Given that it took the government a year to realise the socio-political costs, the repeal also signals a weakened political feedback mechanism within the party.
Significance of the repeal
- Restores faith in the govt: In the immediate term, the repeal exposes the government to charges of being on the wrong path and against popular sentiments, notwithstanding its claims to the contrary.
- Dedication over farmers’ cause: The govt moves were increasingly perceived as being not in tune with the needs of rural farming communities.
- Political stewardship: The PM was clearly balancing his political posture that has thrived on the image of strong and decisive leadership.
Implications of the repeal
- CAA standpoint: Although the anti-CAA protests were called off, almost two years on, the Home Ministry has not yet framed the rules for implementation of the CAA.
- Statehood for J&K: There is no such unanimity over Article 370. Most of these parties have largely been united for the restoration of statehood to J&K, and early elections.
An analysis of the enactment-repeal conundrum
(1) Reforms are must
- There may be some deficiencies in the exact design and mechanism of the reforms proposed in the three farm laws.
- However, most advocates of agricultural reform would agree that they were in the right direction.
(2) Reforms don’t occur overnight
- These laws could be a great example for passionate reforms. However, Legislative tapasya (penance) is all about listening to outer world (i.e the farmers), not inner self.
- It requires listening to those for whose benefit laws and policies are crafted. It can’t be a meditation in isolation and implementation as a divine ordeal.
(3) Answerability and consultation matters
- That the government chose to push these reforms through its own set of consultations left many stakeholders feeling left out, and created a backlash.
- The repeal underlines that any future attempts to reform the rural agricultural economy would require a much wider consultation.
(4) Success lies in the acceptance of reforms
- The better design of reforms ensures wider acceptance.
- The repeal would leave the government hesitant about pursuing these reforms in stealth mode again.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PESA, FIfth Schedule
Mains level: Tribal autonomy and self-government issues
The Ministry of Tribal Affairs has celebrated the 25th year of the inauguration of the Panchayats (Extension to Scheduled Areas) Act 1996 (PESA)’ as a part of Azadi Ka Amrit Mahotsav.
What is PESA?
- The PESA is a law enacted by the govt. for ensuring self-governance through traditional Gram Sabhas for people living in the Scheduled Areas of India.
- Scheduled Areas are areas identified by the Fifth Schedule of the Constitution of India.
What are Scheduled Areas?
- “Scheduled Areas” mean the Scheduled Areas as referred to in Clause (1) of Article 244 of the Constitution.
- They are found in ten states of India which have predominant population of tribal communities.
- At present, Scheduled Areas have been declared in the States of AP (including Telangana), Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, MP, Maharashtra, Odisha and Rajasthan.
Powers granted to Gram Sabha/Panchayats
- Land acquisition: To be consulted on matters of land acquisition and resettlement.
- Mining licencing: Grant prospecting license for mining lease for minor minerals and concessions for such activities.
- Water Bodies: Planning and management of minor water bodies.
- Regulation of Liquor: The power to enforce prohibition or to regulate or restrict the sale and consumption of any intoxicant.
- Minor Forest Produces: The ownership of MFPs
- Land reforms: The power to prevent alienation of land and to restore any unlawfully alienated land of a scheduled tribe.
- Village Markets: The power to manage village markets.
- Money Lending: The power to exercise control over money lending to scheduled tribes.
Role of Governor in Implementation of PESA
(1) Report as sought by the President:
- As per para 3 of the Fifth Schedule, the Governor therein is required to make a report to the President regarding the administration of the Scheduled Areas.
- The Attorney General had advised the Home Ministry that the role of the governor in sending this report is discretionary.
(2) Applicability of certain laws:
- An even more significant role of the Governor in scheduled areas arises out of the powers inherent in sub-para (1) of Para 5 of the Fifth Schedule.
- Governor may direct that any particular Act of Parliament or of the Legislature of the State shall not apply to a Scheduled Area or any part thereof in the State or shall apply to a Scheduled Area.
(3) Modification of laws:
- The regulation-making powers of the Area is bound neither by the advice of the Tribes Advisory Council or the assent of the President.
- The provision lays down the responsibility on the Governor to ensure that laws that are contrary to the interests of Scheduled Areas may be suitably modified.
Why was PESA enacted?
- Filling the constitutional vacuum: These Areas were not covered by the 73rd Constitutional Amendment or Panchayati Raj Act of the Indian Constitution as provided in Part IX of the Constitution.
- Self-governance: PESA sought to enable the Panchayats at appropriate levels and Gram Sabhas to implement a system of self-governance.
- Customary regulation: It includes a number of issues such as customary resources, minor forest produce, minor minerals, minor water bodies, selection of beneficiaries, sanction of projects, and control over local institutions.
Significance of PESA
- Tribal autonomy: PESA was seen as a panacea for many of these vulnerabilities where the tribal communities in such Scheduled Areas were to decide by themselves the pace and priorities of their development.
- Tribal way of development: PESA was viewed as a positive development for tribal communities in Scheduled Areas that had earlier suffered tremendously from engagement with modern development processes.
- Sustainable access to forests: The loss of access to forest, land, and other community resources had increased their vulnerability.
- Easing of tribal distress: Rampant land acquisition and displacement due to development projects had led to large-scale distress in tribal communities living in Scheduled Areas.
Issues with PESA
- Dilution of the role of Tribal Advisory Councils: PESA mandates Tribal Advisory Councils to oversee tribal affairs and also gives extrajudicial, extra-constitutional powers to the Governors.
- Politicization: The councils, with the CM as their chairperson, have evolved into a non-assertive institution amid the machinations of upper-class politics.
- Non-involvement: The Governors, in order to have friendly relations with the Chief Ministers, have desisted from getting involved in tribal matters.
- Lack of coordination at Centre: Two different ministries, the Ministry of Panchayati Raj and the Ministry of Tribal Affairs, have an overlapping influence and they function almost without any coordination.
- Lack of operationalization: In most of the state the enabling rules are not in place more than eight years after the adoption of the Act suggests the reluctance to operationalize the PESA mandate.
- Ignoring the spirit of PESA: The state legislations have omitted some of the fundamental principles without which the spirit of PESA can never be realised.
- Ambiguous definitions: No legal definition of the terms like minor water bodies, minor minerals etc. exist in the statute books.
Related question in CS Mains:
Q. What are the two major legal initiatives by the State since Independence addressing discrimination against Scheduled Tribes (STs)? (2017, 150W)
—
Also try answering this PYQ:
In the areas covered under the Panchayat (Extension to the Scheduled Areas) Act, 1996, what is the role/power of Gram Sabha?
- Gram Sabha has the power to prevent alienation of land in the Scheduled Areas.
- Gram Sabha has the ownership of minor forest produce.
- Recommendation of Gram Sabha is required for granting prospecting license or mining lease for any mineral in the Scheduled Areas.
Which of the statements given above is/are correct?
(a) Only 1
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Post your answers here:
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Articles mentioned in the newscard
Mains level: Uniform Civil Code
Stating that the Uniform Civil Code “is a necessity and mandatorily required today,” the Allahabad High Court has called upon the Central Government to forthwith initiate the process for its implementation.
What is a Uniform Civil Code?
- A Uniform Civil Code is one that would provide for one law for the entire country, applicable to all religious communities in their personal matters such as marriage, divorce, inheritance, adoption etc.
- Article 44, one of the directive principles of the Constitution lays down that the state shall endeavour to secure a Uniform Civil Code for the citizens throughout the territory of India.
- These, as defined in Article 37, are not justiciable (not enforceable by any court) but the principles laid down therein are fundamental in governance.
Why need UCC?
- UCC would provide equal status to all citizens
- It would promote gender parity in Indian society.
- UCC would accommodate the aspirations of the young population who imbibe liberal ideology.
- Its implementation would thus support the national integration.
Issues with UCC
- There are practical difficulties due to religious and cultural diversity in India.
- The UCC is often perceived by the minorities as an encroachment on religious freedom.
- It is often regarded as interference of the state in personal matters of the minorities.
- Experts often argue that the time is not ripe for Indian society to embrace such UCC.
Greater role for State
- Fundamental rights are enforceable in a court of law.
- While Article 44 uses the words “state shall endeavour”, other Articles in the ‘Directive Principles’ chapter use words such as “in particular strive”; “shall in particular direct its policy”; “shall be obligation of the state” etc.
- Article 43 mentions “state shall endeavour by suitable legislation” while the phrase “by suitable legislation” is absent in Article 44.
- All this implies that the duty of the state is greater in other directive principles than in Article 44.
What are more important — fundamental rights or directive principles?
- There is no doubt that fundamental rights are more important.
- The Supreme Court held in Minerva Mills (1980): Indian Constitution is founded on the bed-rock of the balance between Parts III (Fundamental Rights) and IV (Directive Principles).
- To give absolute primacy to one over the other is to disturb the harmony of the Constitution.
- Article 31C inserted by the 42nd Amendment in 1976, however, lays down that if a law is made to implement any directive principle, it cannot be challenged on the ground of being violative of the FRs under Articles 14 and 19.
Does India not already have a uniform code in civil matters?
- Indian laws do follow a uniform code in most civil matters – Indian Contract Act, Civil Procedure Code, Sale of Goods Act, Transfer of Property Act, Partnership Act, Evidence Act etc.
- States, however, have made hundreds of amendments and therefore in certain matters, there is diversity even under these secular civil laws.
- Recently, several states refused to be governed by the uniform Motor Vehicles Act, 2019.
What about personal laws?
- If the framers of the Constitution had intended to have a Uniform Civil Code, they would have given exclusive jurisdiction to Parliament in respect of personal laws, by including this subject in the Union List.
- But “personal laws” are mentioned in the Concurrent List.
- Last year, the Law Commission concluded that a Uniform Civil Code is neither feasible nor desirable.
Is there one common personal law for any religious community governing all its members?
- All Hindus of the country are not governed by one law, nor are all Muslims or all Christians.
- Not only British legal traditions, even those of the Portuguese and the French remain operative in some parts.
- In Jammu and Kashmir until August 5, 2019, local Hindu law statutes differed from central enactments.
- The Shariat Act of 1937 was extended to J&K a few years ago but has now been repealed.
Various customary laws
- Muslims of Kashmir were governed by a customary law, which in many ways was at variance with Muslim Personal Law in the rest of the country and was, in fact, closer to Hindu law.
- Even on registration of marriage among Muslims, laws differ from place to place. It was compulsory in J&K (1981 Act), and is optional in Bengal, Bihar (both under 1876 Act), Assam (1935 Act) and Odisha (1949 Act).
- In the Northeast, there are more than 200 tribes with their own varied customary laws.
- The Constitution itself protects local customs in Nagaland. Similar protections are enjoyed by Meghalaya and Mizoram.
- Even reformed Hindu law, in spite of codification, protects customary practices.
How does the idea of a Uniform Civil Code relate to the fundamental right to religion?
- Article 25 lays down an individual’s fundamental right to religion;
- Article 26(b) upholds the right of each religious denomination or any section thereof to “manage its own affairs in matters of religion”;
- Article 29 defines the right to conserve distinctive culture.
- An individual’s freedom of religion under Article 25 is subject to “public order, health, morality” and other provisions relating to FRs, but a group’s freedom under Article 26 has not been subjected to other fundamental rights
- In the Constituent Assembly, there was division on the issue of putting UCC in the fundamental rights chapter. The matter was settled by a vote.
- By a 5:4 majority, the fundamental rights sub-committee headed by Sardar Patel held that the provision was outside the scope of FRs and therefore the UCC was made less important than freedom of religion.
Minority opinion in the Constituent Assembly
- Some members sought to immunize Muslim Personal Law from state regulation.
- Mohammed Ismail, who thrice tried unsuccessfully to get Muslim Personal Law exempted from Article 44, said a secular state should not interfere with the personal law of people.
- B Pocker Saheb said he had received representations against a common civil code from various organisations, including Hindu organisations.
- Hussain Imam questioned whether there could ever be uniformity of personal laws in a diverse country like India.
- B R Ambedkar said “no government can use its provisions in a way that would force the Muslims to revolt”.
- Alladi Krishnaswami, who was in favour of a UCC, conceded that it would be unwise to enact UCC ignoring strong opposition from any community.
- Gender justice was never discussed in these debates.
How did the debate on a common code for Hindus play out?
- In June 1948, Rajendra Prasad, President of the Constituent Assembly, warned Nehru that to introduce “basic changes” in personal law was to impose “progressive ideas” of a “microscopic minority” on the Hindu community as a whole.
- Others opposed to reforms in Hindu law included Sardar Patel, Pattabhi Sitaramayya, M A Ayyangar, M M Malaviya and Kailash Nath Katju.
- When the debate on the Hindu Code Bill took place in December 1949, 23 of 28 speakers opposed it.
- On September 15, 1951, President Prasad threatened to use his powers of returning the Bill to Parliament or vetoing it. Ambedkar eventually had to resign.
- Nehru agreed to the trifurcation of the Code into separate Acts and diluted several provisions.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- COP26 achievements and failures
Context
Glasgow’s success was that it finished building the scaffolding for climate action initiated through the Paris Agreement. But true success depends on whether countries are receptive to these nudges.
What were the Glasgow climate meeting’s (COP26) successes and failures?
- Strengthened Paris Agreement mechanism: Glasgow strengthened the Paris Agreement mechanism of eliciting pledges from countries and ratcheting them up over time.
- It requested countries to update and strengthen 2030 emission targets in their NDCs by the end of 2022, earlier than previously expected.
- Success at Glasgow was explicitly defined around ‘keeping 1.5 degrees alive’ through such pledges.
- There are two problems with this interpretation.
- First, the Paris, and Glasgow, approach focusing on target-setting gives insufficient importance to the challenge of implementing those targets.
- A focus on shorter term targets and their implementation — which India to its credit has been highlighting — will be important.
- Second, by calling on countries to strengthen targets to align with the Paris Agreement objectives without explicitly considering that countries have different roles and responsibilities in doing so risks side-stepping, again, the long-standing issue of climate equity.
Phase-down clause for thermal power and implications for India
- Phasing down coal power: A specific high profile clause calls for the ‘phase down of unabated coal power and phase out of inefficient fossil fuel subsidies’.
- It was the Indian Minister who read out an amendment modifying ‘phase-out’ to ‘phase-down’ for coal.
- India’s concerns: India’s real concerns included not precluding subsidies for social purposes, such as for cooking gas; querying whether from an equity point of view, all countries should be asked to limit coal use at the same time; and noting the lack of mention of oil and gas.
- A positive for all from environmental point of view: From an environmental point of view, more explicit discussion of coal, but ideally all fossil fuels, is a positive, including for India.
- Concerns on developmental view: From a developmental view, however, India is concerned that explicit mention of coal constrains us in our choice of fuel.
- Way out for India: A possible way out is for India to explicitly seek global support for an accelerated transition away from coal, an approach taken by South Africa.
Challenges and achievements at COP26
[A] Measures for adaptations
- Adaptation has long been neglected in global negotiations, reflecting a global power imbalance that places less weight on the concerns of vulnerable nations.
- In this context, it was a partial win that Glasgow set up an explicit two year work programme for a ‘global goal’ on adaptation.
- No development on agenda of loss and damage: The important complementary agenda of ‘loss and damage’ – compensating for unavoidable impacts that go beyond adaptation — received at most lip service.
- Even though there was discussion of a specific mechanism, backed by funding, to the dismay of small, vulnerable nations, only a ‘dialogue’ was established.
[B] Climate finance commitment issue not addressed
- Commitment on climate finance not met: Climate finance promised to be the central issue of COP26, with considerable frustration from developing countries that the decade-long commitment of $100 billion had not been met.
- Glasgow did no more than establish a work programme on post-2025 financing and continue tracking progress on the $100 billion.
- The exception was a call to double adaptation finance by 2025.
- Mobilising private finance: Former Bank of England Governor Mark Carney indicated that companies committed to net zero initiatives could marshal a scarcely believable $130 trillion, suggesting growing efforts to mobilise private finance.
- Developing countries have long insisted that publicly funded climate finance is a right devolving from the ‘polluter pays’ principle rather than aid.
[C] Paris rulebook
- Completion of two elements of Paris Rulebook: There were two particularly important elements of what is called the ‘Paris Rulebook’ that were completed in Glasgow.
- Transparency framework: First, the transparency framework was completed, which includes reporting rules and formats for emissions, progress on pledges and finance contributions.
- Rules for carbon market: The second key was completion of agreed rules for carbon markets, the complexities of which had stymied agreement for four years.
- Rules were put in place to limit the scope for ‘double-counting’ of credits by more than one country.
Way forward for India
- The real determinant of success or failure rests on national politics and popular support for climate change within countries — how countries use the scaffolding.
- For India, these politics are complex because they revolve around simultaneously balancing concerns over whether our policy space will be limited by inequities embedded in the global mitigation efforts, and our own interests as a vulnerable country in enhancing and accelerating climate action.
- A balanced view requires consideration of both objectives.
Consider the question “Why climate finance continues to be a contentious issue in the negotiations over climate change? Suggest the way to balance the concerns over development with the efforts at climate action.”
Conclusion
The meeting hit many, but not all, of its procedural benchmarks by building scaffolding for the future. But the real determinant of success or failure rests on national politics and popular support for climate change within countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- UHC and challenges
Context
NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.
About missing middle and provision in the NITI Aayog report
- The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), aims to extend hospitalisation cover of up to ₹5 lakh per family per annum to a poor and vulnerable population of nearly 50 crore people.
- Left out segment: Covering the left out segment of the population, commonly termed the ‘missing middle’ sandwiched between the poor and the affluent, has been discussed by the Government recently.
- Towards this, NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.
- Primary role for private commercial health insurer: The report proposes voluntary, contributory health insurance dispensed mainly by private commercial health insurers as the prime instrument for extending health insurance to the ‘missing middle’.
Issues with the provision in the NITI Aayog report
- Narrow coverage: Government subsidies, if any at all, will be reserved for the very poor within the ‘missing middle’ and only at a later stage of development of voluntary contributory insurance.
- This is a major swerve from the vision espoused by the high-level expert group on UHC a decade ago, which was sceptical about such a health insurance model.
- No country has ever achieved UHC by relying predominantly on private sources of financing health care.
- Contributory insurance not best way: Evidence shows that in developing countries such as India, with a gargantuan informal sector, contributory health insurance is not the best way forward and can be replete with problems.
- Issues with low premium model: For hospitalisation insurance, the report proposes a model similar to the Arogya Sanjeevani scheme, albeit with lower projected premiums of around ₹4,000-₹6,000 per family per annum.
- This model is a little different from commercial private insurance, except for somewhat lower premiums.
- Low premiums are achieved by reducing administrative costs of insurers through an array of measures, including private use of government infrastructure.
- This model is vulnerable to nearly every vice that characterises conventional private insurance.
- Insufficient measures to deal with adverse selection: The report suggests enrolment in groups as a means to counter adverse selection.
- The prevailing per capita expenditure on hospital care is used to reflect affordability of hospital insurance, and thereby, a possible willingness to pay for insurance.
- Both these notions are likely to be far-fetched in practice, and the model is likely to be characterised by widespread adverse selection notwithstanding.
- OPD insurance on a subscription basis: The report proposes an OPD insurance with an insured sum of ₹5,000 per family per annum, and again uses average per capita OPD spending to justify the ability to pay.
- However, the OPD insurance is envisaged on a subscription basis, which means that insured families would need to pay nearly the entire insured sum in advance to obtain the benefits.
- Clearly, this route is unlikely to result in any significant reduction of out-of-pocket expenditure on OPD care.
- Role of government:The NITI report defies the universally accepted logic that UHC invariably entails a strong and overarching role for the Government in health care, particularly in developing countries.
Consider the question “What are the challenges in achieving universal health coverage? What are the issues with private sources financing health care to achieve UHC?”
Conclusion
The National Health Policy 2017 envisaged increasing public health spending to 2.5% of GDP by 2025. Let us not contradict ourselves so early and at this crucial juncture of an unprecedented pandemic.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Cryptocurrencies and Legal Tender Currency
Mains level: Need for Cryptocurrencies regulation
With cryptocurrencies such as Bitcoin gaining popularity among citizens, the Centre has been compelled to take a stance on the legal status of cryptocurrencies.
Background
- The Union Government is said to be considering a proposal to tax cryptocurrency transactions in the country.
- The move would bring cryptocurrency trading, which has till date happened outside the ambit of the law, into the formal economy.
Defying RBI ban
- RBI has been vehemently opposed to the idea of legalizing cryptocurrencies.
- It had banned financial institutions such as banks from facilitating transactions involving cryptocurrencies back in 2018.
- The RBI’s order was overturned by the Supreme Court in 2020, and this led to a tremendous surge in cryptocurrency transactions through exchanges.
Why did RBI propose a ban?
- Financial stability: The RBI has characterized private cryptocurrencies as a threat to financial stability.
- Threat to the sovereignty of Rupee: It perceives cryptocurrencies rise as a threat to the sovereignty of the rupee.
- Beyond regulatory scope: The widespread acceptance of cryptocurrencies could interfere with the ability of the RBI to conduct monetary policy effectively.
- Digital currency in the pipeline: It should be noted that RBI and other central banks are also looking to come up with digital versions of their own currencies.
- Competition of currencies: The rupee or central bank digital currencies may not be able to outcompete cryptocurrencies just because they are digital.
Legislative opinion on Cryptocurrencies
- Not in favour of ban: This week, a Parliamentary Standing Committee recommended that cryptocurrencies be regulated rather than banned.
- Making a legal framework: The Government is also expected to table a bill that clarifies its position on cryptocurrencies in Parliament next year.
- Taxing cryptocurrencies: There is a proposal to classify cryptocurrency exchanges as e-commerce platforms and tax them under the GST framework comes.
Why has the Government chosen to regulate rather than ban cryptocurrencies?
- Popularity amongst Public: The growing popularity of cryptocurrencies among citizens may have played a role in the Government opting for regulation over an outright ban.
- Lack of evident threat: There is no clear evidence of the misuse of cryptocurrencies and their risks.
- Boosting with policy: The Union govt may also not want to kill the nascent cryptocurrency industry which many believe can be a hub for financial innovation.
- Revenue generation: Fiscal revenues can be adversely impacted by the increased tax evasion opportunities that crypto-currencies can facilitate.
- Capitalizing the market: The govt wants to capitalise on the recent surge in the usage of cryptocurrencies to tax them and shore up its revenues.
- Financial innovation: Blockchain technology has multiple uses beyond just facilitating cryptocurrency transactions.
Issues with the ban
- Brain-Drain: Ban of cryptocurrencies is most likely to result in an exodus of both talent and business from India, similar to what happened after the RBI’s 2018 ban.
- Capital inflows will be restricted: If cryptos begin to get mined onshore, they will induce capital inflows.
- Killing financial innovation: A ban will deprive India, its entrepreneurs and citizens of a transformative technology that is being rapidly adopted across the world.
Other generic concerns:
- Safety (cyber-attacks and fraud)
- Financial integrity (money laundering and evasion of capital controls)
- Energy usage (outsized energy needs to mine cryptos)
Way forward
- Thus it can be inferred that cryptocurrency is better classified as an asset rather than as a currency, in order to gain acceptance and avoid a ban.
Conclusion
- There is no doubt that the acceptance of cryptocurrencies by the Government is likely to be limited.
- While cryptocurrencies may be accepted as speculative assets, it is highly unlikely that they will be accepted as full-fledged currencies competing against the rupee.
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