Bills/Act/Laws DOMR Ethics Explained Historical Sites India Mapping IOCR op-ed snap PIB Prelims Only SC Judgements Schemes Species States World Mapping

Bad bank

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Bad bank

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

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

Bad bank in China and issues

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

Four lessons for India

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

1) Finite tenure of bad bank

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

2) Narrow mandate

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

3) Diversify the sources of funds for ARC

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

4) Resolution of bad loans should be through market mechanism

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

Conclusion

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Promoting Science and Technology – Missions,Policies & Schemes

60 Years of Antarctic Treaty

| International Relations | Mains Paper 2: International Institutions

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Antarctic Treaty

Mains level: Significance of Antarctic Treaty in geopolitics

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

Antarctic Treaty

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

Why is it significant?

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

Key provisions

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

What the treaty says about territorial claims

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

How the treaty has expanded

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

Where to from here?

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

Answer this PYQ:

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

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

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

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

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

Back2Basics: Indian Antarctic Program

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

Various missions

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

(1) Dakshin Gangotri

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

(2) Maitri

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

(3) Bharati

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

(4) India Post Office in Antarctica

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Indian Army Updates

Proposal for Integrated Theatre Commands

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Integrated Theatre Commands

Mains level: Joint operability of the armed forces

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

What are integrated theatre commands?

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

Is theatre commands a new idea?

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

What is the proposal under discussion?

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

The proposed commands are:

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

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

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

Readiness of the services

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

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

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

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

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

GIMAC: India’s first maritime arbitration centre

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: GIMAC

Mains level: International arbitration and India

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

What is GIMAC?

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

Why is such a centre needed?

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

What is the current status of the project?

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Goods and Services Tax (GST)

National Anti-Profiteering Authority (NAA)

DOMR | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Anti-Profiteering Authority (NAA)

Mains level: Not Much

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

What is National Anti-Profiteering Authority (NAA)?

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

Answer this PYQ in the comment box:

Q. Consider the following items:

Cereal grains hulled

Chicken eggs cooked

Fish processed and canned

Newspapers containing advertising material

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

(a) 1 only

(b) 2 and 3 only

(c) 1, 2 and 4 only

(d) 1, 2, 3 and 4

What is profiteering?

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

Functioning of NAA

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

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

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

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

Places in news: Yellowstone National Park

India Mapping | Enviro & Biodiversity | Mains Paper 1: Important Geophysical Phenomena

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Yellowstone National Park

Mains level: NA

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

Yellowstone National Park

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

Impact of climate change

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

Answer this PYQ in the comment box:

Q.Consider the following pairs:

River Flows into

1. Mekong – Andaman Sea

Thames – Irish Sea

Volga – Caspian Sea

Zambezi – Indian Ocean

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

(a) 1 and 2 only

(b) 3 only

(c) 3 and 4 only

(d) 1,2 and 4 only

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Higher Education – RUSA, NIRF, HEFA, etc.

Blended mode of teaching

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Blended learning

Mains level: Paper 2- Blended learning and related issues

Blended mode of teaching and its advantages

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

Challenges

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

Suggestions

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

Conclusion

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

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

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

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: GDP Deflator

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

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

How inflation benefits government as a borrower

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

Impact on other stakeholder

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

Way forward

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

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

Conclusion

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Parliament – Sessions, Procedures, Motions, Committees etc

The ‘Union government’ has a unifying effect

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Article 1, 2 and 3

Mains level: Read the attached story

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

India the union

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

Where is Central Govt defined?

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

Intent of Constituent Assembly

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

Preventing the secession

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

Then criticism of the ‘Union’

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

Dr. Ambedkar’s clarification

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

Features of Indian Union

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

Answer this PYQ:

Q.Consider the following statements:

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

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

Which of the given statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

A wordplay indeed

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Digital India Initiatives

What is AgriStack?

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Agristack

Mains level: Digitalization of Agriculture

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

AgriStack

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

Issues with the move

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

Why such concerns?

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

What are some major threats?

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

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

What is a Full Ship Shock Trial (FSST)?

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Full Ship Shock Trial (FSST)

Mains level: Not Much

The US Navy Friday carried out a ‘full ship shock trial’ on its newest and most advanced nuclear-powered aircraft carrier to ensure its hardness was capable of withstanding battle conditions.

What is a Full Ship Shock Trial (FSST)?

During World War II, American warships suffered severe damage from enemy mines and torpedoes that had actually missed their target, but exploded underwater in close proximity.
The US Navy has since worked to improve the shockproofing of their ship systems to minimize damage from such “near miss” explosions.
In FSSTs, an underwater explosive charge is set off near an operational ship, and system and component failures are documented.
The FSST probes whether the components survive shock in their environment on the ship; it probes the possibilities of system failures, and large components that could not be otherwise tested.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Bhutan’s Tax Inspectors Without Borders (TIWB) Programme

PIB | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: TIWB Programme

Mains level: Not Much

Tax Inspectors Without Borders (TIWB) programme has been recently launched.

TIWB Program

TIWB is a joint initiative of the United Nations Development Programme (UNDP) and the Organization for Economic Cooperation and Development (OECD).
India was chosen as the Partner Jurisdiction and has provided the Tax Expert for this programme.
It aims to aid Bhutan in strengthening its tax administration by transferring technical know-how and skills to its tax auditors, and through sharing of best audit practices.
The focus of the programme will be in the area of International Taxation and Transfer Pricing.
This programme is another milestone in the continued cooperation between India and Bhutan and India’s continued and active support for South-South cooperation.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Services Sector

[pib] Guidelines for Other Service Providers (OSP)

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Other Service Providers (OSPs), Sectors of economy

Mains level: Not Much

The Union Minister for Electronics & Information Technology has further liberalized the guidelines for Other Service Providers (OSPs).

Do you remember quaternary and quinary sectors of Economy from NCERTs?

What are OSPs?

These entities are business process outsourcing (BPO) organizations giving Voice based services, in India and abroad.
The term Business Process Outsourcing or BPO as it is popularly known, refers to outsourcing in all fields.
A BPO service provider usually administers and manages a particular business process for another company.
BPOs either use new technology or apply an existing technology in a new way to improve a particular business process.
India is currently the number one destination for business process outsourcing, as most companies in the US and UK outsource IT-related business processes to Indian service providers.

Main features of the liberalized guidelines

Distinction between Domestic and International OSPs has been removed. A BPO centre with common Telecom resources will now be able to serve customers located worldwide including in India.
EPABX (Electronic Private Automatic Branch Exchange) of the OSP can be located anywhere in the world. OSPs apart from utilising EPABX services of the Telecom Service Providers can also locate their EPABX at third Party Data Centres in India.
With the removal of the distinction between Domestic and International OSP centres, the interconnectivity between all types of OSP centres is now permitted.
Remote Agents of OSP can now connect directly with the Centralised EPABX/ EPABX of the OSP/ EPABX of the customer using any technology including Broadband over wireline/ wireless.
No restriction for data interconnectivity between any OSP centres of same company or group company or any unrelated company.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Population decline: Bane and Boon for the economy

| Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Replacement rate

Mains level: Paper 3- Why declining population is not always a problem

Deflation. A recent (2014) study found substantial deflationary pressures from Japan’s ageing populationThe article argues that a decline in population is not always as worrisome as it is made to be.

Declining fertility rate

China’s fertility rate of 1.3 children per woman in 2020 is well below replacement level, but so, too, are fertility rates in every rich country.
In all developed economies, fertility rates fell below replacement in the 1970s or 1980s and have stayed there.
In India, more prosperous states have fertility rates below replacement level, with only the poorer states of Bihar and Uttar Pradesh still well above.
And while the national rate in 2018 was still 2.2, the Indian National Family Health Survey finds that Indian women would like to have, on average, 1.8 children.
In all prosperous countries where women are well educated and free to choose whether and when to have children, fertility rates fall significantly below replacement levels.
If those conditions spread across the world, the global population will eventually decline.

Is the declining population good or bad for the economy

A pervasive conventional bias assumes that population decline must be a bad thing.
But while absolute economic growth is bound to fall as populations stabilise and then decline, it is the income per capita that matters for prosperity and economic opportunity.
It is true that when populations no longer grow, there are fewer workers per retiree, and healthcare costs rise as a percent of GDP.
But that is offset by the reduced need for infrastructure and housing investment to support a growing population.
A stable and eventually falling global population would make it easier to cut greenhouse-gas emissions to avoid climate change, and alleviate the pressure that growing populations inevitably place on biodiversity and fragile ecosystems.
And contracting workforces create stronger incentives for businesses to automate while driving up real wages, which, unlike absolute economic growth, are what really matter to ordinary citizen.
In a world where technology enables us to automate ever more jobs, the far bigger problem is too many potential workers, not too few.
Even when the Indian economy grows rapidly, its highly productive “organised sector” of about 80 million workers, fails to create additional jobs.
Growth in the potential workforce simply swells the huge “informal sector” army of unemployed and underemployed people.

So, when declining populations turns to be a problem?

Fertility rates far below replacement level create significant challenges, and China may well be heading in that direction.
At those rates, population decline will be precipitate rather than gradual.
If Korea’s (fertility rate 1.09) birth rate does not rise, its population could fall from 51 million today to 27 million by 2100, and the ratio of retirees to workers will reach levels that no amount of automation can offset.

Conclusion

The average fertility rates well below replacement level in all developed countries, and, over time, gradually falling populations. The sooner that is true worldwide, the better for everyone.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Poverty Eradication – Definition, Debates, etc.

Why counting of poor matters?

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Poverty line

Mains level: Paper 3- Counting the number of the poor

Counting the number of the poor

If the state of the Indian economy is to be repaired, we need to meticulously count the number of the poor and to prioritise them.
The World Bank $2-a-day poverty line might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.
A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower-middle-income country bracket.
Since 2013 three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted.
The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73.
Second is the fall of India in the Global Hunger Index to ‘serious hunger’ category.
Third, health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health.
A fourth statistic, Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect.

Increase in number of poor in India

In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016.
Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide.
In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’.
In 2020, India contributed 57.3% of the growth of the global poor.
This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s.
Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.

Debate on the poverty line

In 2011, the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population.
The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee.
In 2014, C. Rangarajan Committee estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.
The National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised.
The Commission’s conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.

Why counting the poor matters?

1) Helps in forming public opinion

Knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers.
The world outside India has moved onto propose high fiscal support, as economic rationale and not charity.
In India too, a dramatic reorientation would get support only once numbers are honestly laid out.

2) It helps in evaluating success of policies

Recording the data helps to evaluate all policies on the basis of whether they meet the needs of the majority.
Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority?
This would be possible to transparently evaluate only when the numbers of the poor are known and established.

3) Helps in addressing the concerns of real majority

If government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority.
Such data would also help in creating a climate that demands accountability from public representatives.

4) To gauge the rising inequality

India has clocked a massive rise in the market capitalisation and the fortunes of the richest Indian corporates, even as millions of Indians have experienced a massive tumble into poverty.
To say that the stock market and the Indian economy are ‘not related’ is ingenuous.
Indians must have the right to question whether there is a connection and if the massive rise in riches is not coincidental, but at the back of the misery of millions of the poor.
If billionaire lists are evaluated in detail and reported upon, the country cannot shy away from counting its poor.

Conclusion

The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Foreign Policy Watch: India-China

Why does China consistently beat India on soft power?

op-ed snap | International Relations | Mains Paper 2: India & Its Neighborhood - Relations

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Soft-power comparison with China

The article compares India with China in terms of soft-power both countries exert based on the measures produced by Lowy Institute in Australia.

What is soft power?

Joseph Nye, who gave us the notion of soft power, suggests that it consists of foreign policy, cultural and political influence.
Foreign policy influence comes from the legitimacy and morality of one’s dealings with other countries.
Cultural influence is based on others’ respect for one’s culture.
Political influence is how much others are inspired by one’s political values.
Soft power is difficult to measure.

The Lowy Institute in Australia has produced various measures which correspond roughly to foreign policy influence, cultural influence and political influence.

1) India’s foreign policy influence

In diplomatic influence, overall, India ranks sixth and China ranks first among 25 Asian powers.
On networks, India nearly matches China in the number of regional embassies it has but is considerably behind in the number of embassies worldwide (176 to 126).
Multilaterally, India matches China in terms of regional memberships, but, crucially, its contributions to the UN capital budget are completely dwarfed by Chinese contributions (11.7 per cent to 0.8 per cent of the total).
In surveys of foreign policy leadership, ambition, and effectiveness, China ranks first or fourth on four measures while India ranks between fourth and sixth in Asia.

2) Cultural influence

Lowy’s overall measure of cultural influence ranks India in fourth place and China in second place in Asia.
Cultural influence is then divided into three elements, of which “cultural projection” and “information flows” are the most important.
In cultural projection, India scores better on Google searches abroad of its newspapers and its television/radio broadcasts.
India also exports more of its “cultural services” defined as “services aimed at satisfying cultural interests or needs”.
China does better on several other indicators.
For instance, India has only nine brands in the list of the top 500 global brands whereas China lists 73.
On the number of UNESCO World Heritage sites, India has 37 while China has 53.
Respect for the Indian passport also lags.
Chinese citizens can travel visa-free to 74 countries while Indians can only do so to 60.
In terms of information flows, in 2016–17, India hosted a mere 24,000 Asian students in tertiary education institutions whereas China hosted 2,25,000.
On total tourist arrivals from all over the world, India received 17 million, while China received 63 million.

3) Political influence

In 2017 the two were not ranked that far apart in political influence.
The governance effectiveness index shows India scoring in the top 43 per cent countries worldwide and ranked 12th and China scoring in the top 32 per cent and ranked 10th.
On “political stability and absence of violence/terrorism”, India ranked 21st, and China ranked 15th.

Consider the question “What do you understand by the term soft-power? How would you assess India’s soft-power potential in terms of various parameters?”

Conclusion

Soft-power theorists suggest that the ability to persuade rests on the power of attraction. We in India may think we are more attractive than China. The numbers show otherwise.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

Compensation for Covid deaths

| Enviro & Biodiversity | Mains Paper 3: Disaster Management

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Disaster Management Act

Mains level: Compensation for disaster victims and its limitations

The Supreme Court has reserved its verdict seeking compensation of Rs 4 lakh to the kin of those who have died of Covid-19 or related complications. The Centre has stated that state governments cannot afford to pay this, and had argued in favor of a broader approach including health interventions.

Provisions for Compensation

Last year, the Centre declared Covid-19 as a notified disaster under the Disaster Management Act.
Section 12(iii) of the Act says the National Authority shall recommend guidelines for the minimum standards of relief to be provided to persons affected by disaster.
It includes “ex gratia assistance on account of loss of life as also assistance on account of damage to houses and for restoration of means of livelihood”.
The Centre revises this amount from time to time.

What is the latest amount?

On April 8, 2015, the Disaster Management Division of the Home Ministry wrote to all state governments and attached a revised list of “norms of assistance”.
Under “ex gratia payment to families of deceased persons”, it specified: Rs 4 lakh per deceased person including those involved in relief operations or associated in preparedness activities.
This is subjected to certification regarding cause of death from appropriate authority.

So, what about compensation for Covid?

Last year the Home Ministry wrote to state governments that the central government has decided to treat it (Covid-19) as a notified disaster for the purpose of providing assistance under SDRF.
It attached a partially modified list of items and norms of assistance.
It did not specify payment of ex gratia to families of deceased.
Some states have decided to pay, but not for all deaths.

How has the government responded to the petition?

The Centre has submitted that ex gratia of Rs 4 lakh is beyond the affordability of state governments.
It argued that if Rs 4 lakh is paid to the kin of each, it “may possibly” consume the entire amount of the State Disaster Relief Fund (SDRF).
This would leave states with insufficient funds for organizing a response to the pandemic, or to take care of other disasters.
The centre argued that the term ex gratia itself means the amount is not based on legal entitlement.

Way ahead

A broader approach, which involves health interventions, social protection, and economic recovery for the affected communities would be a more prudent, responsible, and sustainable approach.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Judicial Reforms

What is Recusal of Judges?

| Polity | Mains Paper 2: Executive & Judiciary

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Recusal of Judges

Mains level: Judical transparency issues

In the last week, two Supreme Court judges have recused themselves from hearing cases relating to West Bengal.

Can you list down some basic principles of judicial conduct?

Independence, Impartiality, Integrity, Propriety, Competence and diligence and Equality are some of them as listed under the Bangalore Principles of Judicial Conduct.

What is the Recusal of Judges?

Recusal is the removal of oneself as a judge or policymaker in a particular matter, especially because of a conflict of interest.
Recusal usually takes place when a judge has a conflict of interest or has a prior association with the parties in the case.
For example, if the case pertains to a company in which the judge holds stakes, the apprehension would seem reasonable.
Similarly, if the judge has, in the past, appeared for one of the parties involved in a case, the call for recusal may seem right.
A recusal inevitably leads to delay. The case goes back to the Chief Justice, who has to constitute a fresh Bench.

Rules on Recusals

There are no written rules on the recusal of judges from hearing cases listed before them in constitutional courts. It is left to the discretion of a judge.
The reasons for recusal are not disclosed in an order of the court. Some judges orally convey to the lawyers involved in the case their reasons for recusal, many do not. Some explain the reasons in their order.
The decision rests on the conscience of the judge. At times, parties involved raise apprehensions about a possible conflict of interest.

Issues with recusal

Recusal is also regarded as the abdication of duty. Maintaining institutional civilities are distinct from the fiercely independent role of the judge as an adjudicator.
In his separate opinion in the NJAC judgment in 2015, Justice Kurian Joseph highlighted the need for judges to give reasons for recusal as a measure to build transparency.
It is the constitutional duty, as reflected in one’s oath, to be transparent and accountable, and hence, a judge is required to indicate reasons for his recusal from a particular case.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Blockchain Technology: Prospects and Challenges

Why is China targeting Cryptocurrencies?

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Cryptocurrencies

Mains level: Issues with Cryptocurrencies

China’s crackdown against cryptocurrencies, which are those that aren’t sanctioned by a centralized authority and are secured by cryptography, is said to have a lot to do with the crashing of the value of cryptocurrencies.

Background

The price of the world’s most prominent cryptocurrency Bitcoin has more than halved in the last two months after hitting a peak in mid-April.
The second-most valuable cryptocurrency, Ether, has seen a similar fall from its peak last month.

What is Cryptocurrency?

A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers.
This decentralized structure allows them to exist outside the control of governments and central authorities.
The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
Blockchains, which are organizational methods for ensuring the integrity of transactional data, are an essential component of many cryptocurrencies.
Many experts believe that blockchain and related technology will disrupt many industries, including finance and law.
Cryptocurrencies face criticism for a number of reasons, including their use for illegal activities, exchange rate volatility, and vulnerabilities of the infrastructure underlying them. However, they also have been praised for their portability, divisibility, inflation resistance, and transparency.

What has China done?

In recent weeks, China has reportedly cracked down on crypto mining operations.
The country has over the years accounted for a large percentage of the total crypto mining activity that takes place.
In purpose, Bitcoin miners play a similar role to gold miners — they bring new Bitcoins into circulation.
They get these as a reward for validating transactions, which require the successful computation of a mathematical puzzle.
And these computations have become ever-increasingly complex, and therefore energy-intensive in recent years. Huge mining operations are now inevitable if one is to mine Bitcoins.

Why is Crypto mining booming in China?

Access to cheap electricity has made mining lucrative in China.
According to the Cambridge Bitcoin Electricity Consumption Index, China accounted for nearly two-thirds of the total computational power last year.

For an ‘unregulated’ market

Actually, there is little change in the policy as far as China is concerned. It first imposed restrictions on cryptocurrencies way back in 2013.
It then barred financial institutions from handling Bitcoin.
Four years later, it barred what are called initial coin offerings, under which firms raise money by selling their own new cryptocurrencies.
This is largely an unregulated market.

What does China want?

An inter-ministerial committee report in India two years ago noted that in 2017, the government of China also banned trading between RMB (China’s currency renminbi) and cryptocurrencies.
Before the ban, RMB made up 90% of Bitcoin trades worldwide.
The fact that cryptocurrencies bypass official institutions has been a reason for unease in many governments.
Not just that. The anonymity that it offers aids in the flourishing of dark trades online.
While many countries have opted to regulate the world of cryptocurrencies, China has taken the strictest of measures over the years.
According to observers, the latest set of measures are to strengthen its monetary hold and also project its new official digital currency.

For a digital Yuan

China launched tests for a digital yuan in March.
Its aim is to allow Beijing to conduct transactions in its own currency around the world, reducing dependency on the dollar which remains dominant internationally.

Also read:

Legalizing Bitcoin in El Salvador and takeaways for India

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Civil Aviation Sector – CA Policy 2016, UDAN, Open Skies, etc.

What is Chicago Convention of 1944?

IOCR | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Chicago Convention of 1944

Mains level: NA

A private commercial flight was forced to make an emergency landing in Minsk by a MiG-29 fighter jet of Belarus. The incident received considerable global attention.

How justified was Belarus in taking such a decision?

The answer lies at the junction of Belarus’s domestic laws as a sovereign country and international laws governing the action that states can legitimately take to deal with threats to security, real or perceived.
The issue of the use of military aircraft to neutralize potential threats posed by civilian aircraft acquired a different kind of urgency in the aftermath of terrorist attacks in the US on September 11, 2001.
Generally speaking, international law grants sovereignty to nations over their airspace as it does in territorial waters.

The Chicago Convention of 1944

The Convention on International Civil Aviation, better known as the Chicago Convention of 1944, to which Belarus is a signatory state, prohibits any unlawful intervention against a civilian aircraft.
At the same time, it has various provisions under Article 9 which permit a sovereign state the right to impose restrictions.
This includes enforced landings at a designated airport in its territory, in “exceptional circumstances or during a period of emergency, or in the interest of public safety”.
Once a flight has landed, Article 16 provides the host country the right to board/search the aircraft.
This is probably the clause that provided cover for the local authorities to board Mr. Morales’s aircraft in Austria in 2013.
But the Chicago Convention applies only to civilian aircraft of the contracting parties.

Other such laws

International law might also have to be examined in light of the International Air Services Transit Agreement (IASTA), also concluded in Chicago in 1944.
According to this agreement, contracting states grant to one another the freedom of air transit in respect of scheduled international air services, that is, the privilege to fly across territories without landing.
Belarus is not a signatory of IASTA.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now