Author: Explains

 

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Note4students

It is a very crucial technology. It is likely to have unprecedented impact on mankind. UPSC in last few years have asked a number of Questions on Land-mark developments and Since it is a revolutionary development, it is important for mains 2017.

What is CRISPR?

1. It is a revolutionary gene editing technique that scientists have borrowed from nature.
2. CRISPRs (clustered regularly interspaced short palindromic repeats) are sections of DNA, while CAS-9 (CRISPR-associated protein 9) is an enzyme.
3. Bacteria use them to disable attacks from viruses.

Working of the CRISPR

1. Crispr scans the genome looking for the right location and then uses the Cas9 protein as molecular scissors to snip through the DNA.
2. Cas9 endonuclease – guide RNAs direct it to a particular sequence to be edited.
3. When Cas9 cuts the target sequence, the cell repairs the damage by replacing the original sequence with an altered version.
4. Unlike other gene-editing methods, it is cheap, quick, easy, safer and more accurate to use because it relies on RNA–DNA base pairing, rather than the engineering of proteins that bind particular DNA sequences.

What is Genome Editing?

1. It is a type of genetic engineering in which DNA is inserted, deleted or replaced in the genome of an organism using engineered nucleases, or “molecular scissors”.
2. These nucleases or enzymes create site-specific double-strand breaks (DSBs) at desired locations.
3. The induced double-strand breaks are repaired through end joining or recombination, resulting in targeted mutation.

CRISPR/Cas9 Applications

Arguably, the most important advantages of CRISPR/Cas9 over other genome editing technologies is its simplicity and efficiency.

Basic Science

To date, the CRISPR/Cas9 gene editing tool appears to work in nearly every organism, from micro-organisms to monkeys, and in every cell type: kidney, heart and those, like T-cells, that researchers had previously found difficult to modify.

Agriculture

Some of the earliest papers using CRISPR/Cas9 for gene editing focused on crops important for agriculture such as rice and wheat. It was realized early on that this system could be utilized to specifically alter the DNA of these crop species to improve traits like disease and drought tolerance.

Disease Modeling

Disease modeling using animals has been a hurdle for study of many types of human diseases due to the difficulty in generating genetically modified animals that accurately recapitulate human pathology. The process was inefficient and inaccurate or simply impossible to do. CRISPR-Cas9 has allowed for generation of transgenic animals like rats, monkeys and other animals which are more suitable for human disease modeling than mice and thus permit better drug-development tests.

Gene Therapy

In 2014, CRISPR-Cas9 was used in mice to correct a mutation associated with a human metabolic disease called tyrosinaemia (Yin et al., 2014). It was the first use of CRISPR/Cas9 to fix a disease-causing mutation in an adult animal and an important step towards using the technology for gene therapy in humans.

Concerns related to CRISPR Tech.

1. CRISPR is basically knock out strategy to silence the gene by inhibiting the RNA polymerase activity inside the nucleus. It’s still in the nascent stage, so it would be hard to comment about the major disadvantages
2. But it’s very labour intensive and high cost oriented technique than RNA interference which provides a complete gene knock down within the cytosol with higher efficiency.

The Way Forward

1. CRISPR/Cas9 gene editing technology is being touted as one of the biggest biotechnology breakthroughs of the century
2. This new technology is a powerful tool for manipulating the genomes of not only mice but also somatic and embryonic stem cells from other species, including humans.
3. It is likely that the refinements of these systems will continue and that they will be adapted in new ways to create ever more sophisticated animal models for and genetic therapies for treating human diseases.

Question

Q.) “CRISPR technology is much faster, yield better results, and is relatively easy to do.” Examine.

Source

http://cellculturedish.com/2016/05/crispr-cas9-system-applications/

https://www.taconic.com/taconic-insights/gems-design/crispr-genome-engineering-advantages-limitations.html

https://www.jax.org/news-and-insights/jax-blog/2014/march/pros-and-cons-of-znfs-talens-and-crispr-cas

Wikipedia
Quora

Note4students

This technology is in its early stages of development. It has become more important due to its relevance in agriculture sector. As, India has many issues(For example, late monsoon) related to agriculture sector. This technology can become solution to these problems in future.

What is Cloud Seeding?

1. Cloud seeding is a form of weather modification, a way of changing the amount or type of precipitation that falls from clouds, by dispersing substances into the air that serve as cloud condensation or ice nuclei, which alter the microphysical processes within the cloud.
2. The usual intent is to increase precipitation (rain or snow), but hail and fog suppression are also widely practiced in airports.
3. The history of cloud seeding has experienced uncertain results because it can never be known whether a cloud that rains after seeding might have rained anyway. This is because seeding is performed on clouds that look like they have some potential for producing rain.

Cloud Seeding Methods

There are three cloud seeding methods: static, dynamic and hygroscopic.

1. Static cloud seeding involves spreading a chemical like silver iodide into clouds. The silver iodide provides a crystal around which moisture can condense. The moisture is already present in the clouds, but silver iodide essentially makes rain clouds more effective at dispensing their water.
2. Dynamic cloud seeding aims to boost vertical air currents, which encourages more water to pass through the clouds, translating into more rain [source: Cotton]. Up to 100 times more ice crystals are used in dynamic cloud seeding than in the static method. The process is considered more complex than static clouding seeding because it depends on a sequence of events working properly. Dr. William R. Cotton, a professor of atmospheric science at Colorado State University, and other researchers break down dynamic cloud seeding into 11 separate stages. An unexpected outcome in one stage could ruin the entire process, making the technique less dependable than static cloud seeding.
3. Hygroscopic cloud seeding disperses salts through flares or explosives in the lower portions of clouds. The salts grow in size as water joins with them. In his report on cloud seeding, Cotton says that hygroscopic cloud seeding holds much promise, but requires further research.

Pros of Cloud Seeding:

(1) It creates rain, providing relief to drought-stricken areas

Of course, this is the best advantage of cloud seeding as it is its main purpose after all. Offering the ability to reduce the impact of droughts by and bring stimulating rain is very powerful. It can lead to more crop yields, and the best part is, this could occur in areas that might not have supported crops in the past. This means that this technology has the potential to get rid of future water scarcity and famine for some regions.

(2) It makes a place more hospitable

Due to extreme heat, some parts of the world have become dry, even making them unsuitable to live in or visit. But thanks to cloud seeding, we can increase the probability of rainfall and make these typically dry areas much more hospitable. As a result, these places will be become habitable and will be able to receive more tourists, helping the overall economy. The potential effects of this technique are definitely far reaching.

(3) It would allow for economic growth

If farmers were able to grow and sell more crops, then a region’s overall economy would improve greatly. Aside from agriculture, we have previously mentioned that tourism would also be boosted, where previously inhospitable places would be transformed into desirable holiday spots. The boost in economy would then circulate among the local residents and improve their living conditions.

(4) It can reduce crop damage

The technology of cloud seeding has been effectively utilized in suppressing undesirable forms of precipitation, such as hail, which can cause damage to crops and cities. As you can see, it can alter or modify storm clouds that would produce hail and other frozen forms of precipitation otherwise.

(5) It has the potential to help regulate the weather

Even the best regions to grow crops are facing severe weather, which means that they are still suffering some damage to their produce. Luckily, this technology is stated to have the capability to regulate atmospheric conditions through water vapor, so this problem would also be solved.

Cons of Cloud Seeding:

(1) It uses chemicals that might be harmful.

As cloud seeding basically involves the use of chemicals and putting them in the air, it does have the potential to harm plants, animals and people, or the environment as a whole. The way the chemicals are being used in this technology and would affect the organisms that will be hit by the artificial rainfall is considered its most direct concern. As of yet, scientists and researchers have been able to state the complete effect of this technique. Though silver iodine is not currently known to be hazardous to human health, this might change in the future as more and more research is being conducted and completed.

(2) It can lead to abnormal or unpredictable weather patterns and flooding.

Though cloud seeding is believed to regulate the weather, some people fear that it might ultimately change climatic patterns on the planet. Places that are normally receiving moisture might start experiencing drought due to the artificial process of adding chemicals to the atmosphere to stimulate rain. Remember that once the compounds used by this technology are released into the atmosphere, we will have no control over what type of weather would form afterwards. There are several possible consequences, such as excessive rain that can cause flooding, which means that regions experiencing chronic water shortage would suffer more, as they probably do not have any system designed to deal with floods and other disasters.

(3) It is yet to be fully proven as cost-efficient and effective.

Assessments done on the effectiveness of cloud seeding is not foolproof so far. Since it is used mostly on clouds that already show signs of potential rainfall, it is not known if the technique is actually the reason for producing rain.

(4) It can cause cloud pollution.

As the artificial rain falls, seeding agents like silver iodide, dry ice or salt will also fall. While research on the effects of silver iodide is still ongoing, there have been found high levels of the residual silver discovered in places near cloud-seeding projects, which are considered toxic. As for dry ice, it can also be a source of greenhouse gas that contributes to global warming, as it is basically carbon dioxide.

(5) It is a costly process.

The cost of cloud seeding is indeed astronomical, considering the procedures involved in it, such as delivering chemicals to the sky and releasing them into the air by flare shots or airplanes. Of course, the costs of chemicals add up to the overall amount. The expense we pay for cloud seeding can be justified if the amount of rainfall during the first attempt would thoroughly water crops and saturate the ground, otherwise the process would have to be repeated even up to several times.

The Way Forward

As the procedure is still in its early development stages, a lot of changes to improve it can be expected. Trying to address the problem of drought is an ongoing battle, so as the debates around the world about its use. Determining if cloud seeding is good or bad is definitely not easy, but by taking into account the pros and cons listed above, you will be able to have a better understanding about its functionality and efficiency.

Q.) “Is Cloud Seeding a solution for rising irrigation problems in Indian Agriculture Sector.” Critically examine.

References:

http://www.physics.org/article-questions.asp?id=98

http://science.howstuffworks.com/nature/climate-weather/meteorologists/cloud-seeding1.htm

https://flowpsychology.com/10-pros-and-cons-of-cloud-seeding/

Note4Students

Swachh bharat mission is the one of the pet project of the Prime minister. It is important to trace the development made by the project.

Introduction

1. Swachh Bharat is a campaign by the Government of India to keep the streets, roads and infrastructure of the country’s 4,041 statutory cities and towns and its rural areas clean.
2. The mission is bifurcated into sub-missions as Swachh Bharat Abhiyan (Gramin), under Ministry of Drinking Water and Sanitation, and Swachh Bharat Abhiyan (Urban), under Ministry of Housing and Urban Affairs. It includes ambassadors and activities such as a run, national real-time monitoring and updates from NGOs.

 

Objectives Of Swachh Bharat Mission

1. Elimination of open defecation
2. Eradication of manual scavenging
3. Modern and Scientific Municipal Solid Waste Management
4. To effect behavioural change regarding healthy sanitation practices
5. Generate awareness about sanitation and its linkage with public health
6. Capacity Augmentation for Urban Local Bodies (ULB)
7. To create an enabling environment for private sector participation in Capex (capital expenditure) and Opex (operation and maintenance)

Fact and figures

1. AS OF 2011, ACCORDING TO INDIA’S LATEST CENSUS,1 percent of the country’s 246.7 million households had no latrine on their premises. Of these, a small share used public latrines, and the vast majority—half of all the households in the country—practised open defecation.
2. The United Nations, in a report on water access and sanitation in India released in 2015, said that 564 million of the country’s people still defecated in the open. They accounted for nearly half of the country’s population, and for over half of the 1.1 billion people across the world who practised open defecation. The UN estimated that 65,000 tonnes of uncovered, untreated faeces—equal to the weight of around 180 Airbus A380s—were being introduced into the environment in India every single day.
3. India’s crisis of sanitation has huge costs.
4. The UN estimates that around 117,000 of the deaths of Indian children under the age of five in 2015 were caused by diarrhoea, the incidence of which correlates closely with the quality of sanitation in an area. This means that 10 percent of all deaths under the age of five in the country are due to the disease—among the highest proportions of anywhere in the world.
5. Diarrhoea and other diseases tied to poor sanitation can have debilitating long-term effects, such as malnutrition and stunting. They also have costs in terms of decreased productivity, expenditure on treatment and premature deaths.
6. A 2015 report on the global costs of poor sanitation, co-authored by the charity WaterAid, valued the loss to India’s economy at $106 billion per year, or over 5 percent of its gross domestic product.
7. Sikkim has become the first state to be declared Open Defecation Free (ODF) this year followed by Himachal Pradesh and Kerala.
8. 6 of the top 10 clean cities of 2017 viz.,  Indore, Bhopal, Visakhapatnam, Surat, Tirupati and Vadodara have improved their sanitation rankings in 2017 over the 2016 and 2014 rankings.
9. Bottom 10 clean cities/towns  of India in 2017 are: Gonda (UP)-434, Bhusawal (Maharashtra)-433, Bagaha (Bihar)-432, Hardoi (Uttarakhand)-431, Katihar (Bihar)-430, Bahraich (UP)-429, Muktsar (Punjab)-428, Abohar (Punjab)-427, Shahjahanpur (UP)- 426 and Khurja (UP)-425.
10. Four of the bottom 10 clean cities are from UP, two each from Bihar and Punjab and one each from Uttarakhand and Maharashtra.

Analysis

Important points from cag report

1. The CAG said its audit has brought out planning level weaknesses which were critical for the success of programme.
2. More than 30 per cent of individual household latrines were defunct/non-functional for reasons like poor quality of construction, incomplete structure, non- maintenance,” it pointed out.
3. Nearly Rs 10,000 crore was spent on the rural sanitation programme by the Central government in the five years covered by audit and large scale diversions, wastages and irregularities were noted.
4. “The conceptual frame-work kept changing from supply driven to demand driven and finally to ‘saturation and convergence’ approach, yet the lessons learnt and experimentations through this long journey do not seem to have made much impact on the sanitation status in the country”.
5. CAG said unless implementation is based on realistic planning and is backed by large scale information, education and communication campaigns to bring about behavioural changes in the target population and overall governance at the grass root level improves, mere deployment of resources may not have any significant impact.

Performance analysis

1. The first step in eliminating open defecation is to make sure that people have latrines to use in the first place—
2. On this the mission is making significant headway.
3. To end manual scavenging, these latrines must be of the kinds that eliminate the handling of fresh excreta, and must be used as per design
4. .Maintaining sanitary facilities also require systems to handle the sewage they capture.
5. Manual scavenging exists in the yawning gap between the amount of excreta produced by India’s enormous population and the country’s existing capacity for processing it sanitarily.
6. If that gap is not closed, especially as the government strives to get more than half a billion people who did not previously use latrines to start using them, it will perpetuate the same old practices.

There is also another factor in getting all of India’s households and communities to use latrines, and to take collective responsibility for their upkeep.

1. Many of the current practices responsible for the abysmal state of sanitation in the country are rooted in traditional notions of purity and hygiene—often the same ones that normalise the allocation of sanitation work to the oppressed castes
2. . Transforming sanitation in India will require a large-scale change in these beliefs, yet here again the Swachh Bharatag Mission is faltering.

Funding

1. It has set up Swachh Bharat Kosh, a special fund to seek charitable contributions to the cause. Finance minister Arun Jaitley has already proposed a Swachh cess in the budget, a 2% surcharge on select services to finance and promote initiatives under the flagship programme.
2. But even the government realizes that there is a need to do much more.
3. Recently the Urban Development ministry wrote to all states requesting them to levy a user charge to support solid waste management services.
4. It has admitted that inadequate budget of municipalities can derail the Swachh Bharat initiatives in urban areas. Recently, a committee of the National Institution for Transforming India (NITI) Aayog has also recommended levying a cess on telecom services, fossil fuels like coal and petrol to garner resources for the campaign. 

Social mentality

1. The problem is that rural sanitation policy does not address the real reasons why people do not like to use toilets.
2. Many people in rural India, where 90% of the country’s open defecation occurs, believe that the kinds of toilets the government promotes are impure. There is also substantial concern over what will happen when the pits of these toilets fill up, since emptying a pit is associated with manual scavenging.
3. Unfortunately, the government’s awareness campaigns are not addressing these concerns.
4. in urban areas – where 13% of the households defecate in the open – and where the remaining 1.04 crore toilets are to be built, the progress is nothing to crow about.

 

Conclusion

1. One year down the line, government statistics reveal that it has a long way to go before the goal of eliminating open defecation can be achieved. Inadequate funds, lack of capacity of municipalities and district panchayats to undertake the gargantuan task, an ineffective awareness campaign that has failed to bring about behavioural changes among the people to use latrines, are among some of the reasons that urban experts are citing as factors that could end up derailing the ambitious mission.
2. Government has set an overall target of building roughly 11.1 crore toilets by 2019 as a part of the Swachh Bharat Abhiyan campaign.
3. 3 crore toilets have been constructed so far. So that means about 27% of the target has been achieved. The country still has a long way to go, and the progress made so far needs to be sustained and strengthened further in the new year.

Question

Q.) What are the achievements of Swachh bharat abhiyan. Analyse in the light of CAG remarks on Swachh bharat abhiyan

Note4students

Skill India is one of the ambitious programmes of the prime minister. Many programmes failed achieve its targets due to various reasons. It is essential to understand the shortcomings of the programmes to suggest new paradigm.so performance appraisal needs to be carried out to write answers for elimination of unemployment, elimination of extremism by empowering youth etc.

Introduction

Skill India a flagship programme of government of India has completed one year of its launching. It includes various initiatives of the government like National Skill Development Mission, National Policy for Skill Development and Entrepreneurship, 2015, Pradhan Mantri Kaushal Vikas Yojana and the Skill Loan scheme. It has aim to train impart skill to over 400 million people by 2022. The programme made some head ways in last one year, but it need to be improved to achieve desired goals. Recently government revised this mission.

Fact and Figures

Analysis

1. According to the Sharada Prasad Committee set up by the skill development ministry to review the performance of various sector skill councils.
2. Since it was a scheme where trainees were rewarded between Rs 5,000 and Rs 12,000, the government through the National Skill Development Council (NSDC) overshot its target by training 1.8 million people, and certified another 1.2 million,
3. The second phase or PMKVY 2.0 was launched the following year, with a budget of Rs 12,000 crore to skill 10 million youth by 2020.
4. Of those 10 million, 6 million were to be provided fresh training and 4 million were to be certified for the RPL programme.
5. Sharada Prasad committee observed that, no evaluation was conducted of PMKVY 2015 (the first version of the scheme) to find out the outcomes of the scheme and whether it was serving the twin purpose of providing employment to youth and meeting the skill needs of the industry before launching such an ambitious scheme
6. The committee noted that in its consultations with various stakeholders, all of them said in one voice that the targets allocated to them were very high and without regard to any sectoral requirement. Everybody was chasing numbers without providing employment to the youth or meeting sectoral industry needs.”
7. The report has pointed at apparent overlaps across formations such as the National Skill Development Corporation (NSDC), National Skill Development Authority (NSDA), National Skill Qualification committee (NSQC), National Council on Vocational Training (NCVT) and Directorate General of Training (DGT), and suggested that the ministry address such duplication.
8. Data shows that the NSDC, through its partners, only managed to skill around 600,000 youth till September 1, 2017, and could place only 72,858 trained youth, exhibiting a placement rate of around 12 per cent. Under PMKYV 1, the placement rate stood at 18 per cent.
9. Critics say the focus of PMKVY has been largely on the short-term skill courses, resulting in low placements.
10. The Comptroller and Auditor General (CAG) made a recommendation to the Union government to re-look at the design and operations of the NSDC and National Skill Development Fund to ensure achievement of skill development goals.
11. The CAG report was based on various irregularities and performance aspects of the NSDC.  “NSDC provided financial assistance to partners for meeting their agreed training targets.
12. It was observed that in the years 2010-11 to 2013-14, the percentage of partners, who had not achieved training targets were 57, 77, 83 and 68, respectively. Majority of them also could not achieve the placement targets for the trained persons,” the report had noted.
13. The Sharada Prasad Committee also held the NSDC responsible for poor implementation of the Standard Training Assessment and Reward (STAR) programme between August 2013 and September 2014.
14. Only 8.5 per cent of the persons trained were able to get employment. That is what has been claimed by NSDC. But the real ground reality will emerge only after a detailed survey of trainees trained and placed

Conclusion

1. Skill India is ambitious programme of Government of India. At present India faces a severe shortage of trained workers. Only 2.3% of India’s work force has formal skill training compared to 68% in the UK, 75% in Germany, 52% in USA, 80% in Japan and 96% in South Korea. Hence there is is an urgent need to impart skills in more efficient way. Similarly success of many initiatives like Make-in-India depends on availability of the requisite skilled manpower. Hence Skill India needs concerted attention to achieve desired goals.
2. We need to have a holistic approach to vocational education and skill development by having a defined approach for both short-term and long-term training courses to meet the objectives of the Skill India programme
3. Skill development cannot happen without developing a credible, sound, aspirational, national system, which is quality assured and internationally compatible.

Questions:

Q.) Why did skill India mission failed to achieve its targets

Q.)“We need to have a holistic approach to vocational education and skill development by having a defined approach for both short-term and long-term training courses to meet the objectives of the Skill India programme” evaluate the statement

Note4Students

Economic Survey 2017 mentioned a new institution PARA (bad bank) which could be utilized to solve the Twin Balance concept. Since it was a controversial institution it has raised debate among experts. A number of op-eds both in favour and against have been written against this proposed Institution. Therefore, we find this topic as a probable topic for mains 2017

Context

The latest Economic Survey has mooted a new idea, PARA, as a solution to the NPA problem.

What is PARA?

1. The Public Sector Asset Rehabilitation Agency or PARA will be an independent entity that will identify the largest and most vexatious NPA accounts held by banks, and then buy these out from them.

Need for PARA?

1. To resolve bad debts on sound economic principles
2. Stressed debt is concentrated in larger companies. Bigger cases are difficult to resolve and needs an independent agency.
3. Banks have difficulty in solving these cases due to lack of coordination, capital etc. Even private ARCs have failed. International practice has shown PARA like organization to be viable to solve TBS problem. E.g. Post East Asian crisis
4. Many of the companies are unviable at current level of debt requiring debt write-downs in many cases.
5. Immediate step is needed because delays are increasing the problem

Ill effects of NPA on the Economy

1. Lenders suffer lowering of profit margins.
2. Stress in banking sector causes less money available to fund other projects, therefore, negative impact on the larger national economy.
3. Higher interest rates by the banks to maintain the profit margin.
4. Redirecting funds from the good projects to the bad ones.
5. As investments got stuck, it may result in it may result in unemployment.
6. In the case of public sector banks, the bad health of banks means a bad return for a shareholder which means that government of India gets less money as a dividend. Therefore it may impact easy deployment of money for social and infrastructure development and results in social and political cost.
7. Investors do not get rightful returns.
8. Balance sheet syndrome of Indian characteristics that is both the banks and the corporate sector have stressed balance sheet and causes halting of the investment-led development process.
9. NPAs related cases add more pressure to already pending cases with the judiciary.

How will PARA work?

It would purchase loans from banks and adopt value maximizing strategy to solve them. E.g. Converting loan (debt) to equity etc. Then the government can recapitalize PSBs.  In this process, losses would have to be paid to the creditors.

The bulk of this burden will fall on government as PSBs are major creditors.

The government can finance this capital by –

Issuing Government Securities.

Capital markets – Private sector can take equity floated by PARA. Government can sell its holdings in PSBs too.

RBI is one of the most highly capitalized banks in the world. Therefore, its excess capital like securities can be transferred to PARA.

International Experience

Issues/Challenges With Bad banks:

Worsen Macroeconomic stability

creation of a bad bank puts a strain on government finances in the short term. Even if the government funds only 20% of stressed assets in the banking system, it would exceed the net market borrowing target in 2017-18 by more than 30%. Achieving committed targets for fiscal deficit and government-debt-to-GDP also becomes difficult for the finance minister.

2. Who will have the majority stake in the bad bank? Will it be the government or private investors?

3. A big chunk of NPAs at PSBs pertains to projects that are viable.

4. Why would taxpayers’ money be used to buy bad loans of private sector? It would be socialisation of the losses of the private sector” who can pay but are not willing to pay.

Way Forward

Set up a bad bank to deal with NPAs at some of the weaker PSBs, instead of one that picks up NPAs from all PSBs.

It would prove less controversial if the government had a majority stake in it.

This must be complemented with other steps.

1. The government must infuse more capital into the better-performing PSBs.
2. It must also create, through an act of Parliament, an apex Loan Resolution Authority for tackling bad loans at PSBs. The authority would vet restructuring of the bigger loans at PSBs.

Conclusion:

Resolution of bad loans and restoring the health of PSBs is among the biggest challenges the economy faces today. It’s a challenge that requires a response on multiple fronts. A bad bank cannot be the sole response.

Question:

Q.1) To solve the Twin Balance problem, Economic Survey has suggested setting up of a Centralised Public Sector Asset Rehabilitation Agency. Critical discuss whether setting up of an agency like PARA will be feasible?

 

Note4Students

Economic Survey for the year 2016-17 has an entire chapter dedicated to the discussion on Universal Basic Income (UBI). This shows the Importance of this topic. UPSC loves to ask Questions on issues which are debatable and controversial and this Topic certainly meets both of these criteria.

Context

The Economic survey has endorsed universal basic income (UBI) in an annual report. UBI is a “powerful idea” and would be more effective at combating poverty than existing state benefits, according to the country’s 2016-2017 Economic Survey.

What is a Universal Basic Income?

A UBI would mean every single individual, regardless of their identity or economic status, is guaranteed a monthly income, transferred directly into their bank account by the government every month. It has three key components: universality, unconditionality and agency – the last condition as a way to give people a choice in how to spend the transferred money.

Argument Against Universal Basic income

1. Unaffordable-Assuming roughly 700 million people between ages of 18 and 60 will have to be provided Universal basic income of Rs 5000 in India that will be 3.5 trillion rupees, or about 3 per cent of the current GDP. That seems huge and unaffordable for a poor country like India.
2. Disincentive to work– It provides a disincentive to work, which in the grand scheme of things means we produce less as a society. critics state that this system would lead to a reduction in labour, as more people would be motivated to be ‘free loaders’
3. Over-Migration-If a country like India which do not have strong border controls, implements a guaranteed income, it will become a magnet for immigration. Inflow of migrants from countries like Nepal and Bangladesh would increase in India.
4. Impractical: Funding it would require raising tax rates to levels that are not politically feasible. For instance, according to a UK study by Joseph Rowntree Foundation, direct tax rates might have to be 50 per cent.
5. Misuse:The final argument against basic income is that the poor will use the money to fund personally or socially detrimental activities, such as gambling and alcohol consumption.

Arguments in favour of Universal basic income

1.  No direct disincentives: Being unconditional, it does not create any direct disincentives for those who want to work more and live better.
2.  By just letting people have the money and decide what they want to do with it, it gets away from the “nanny state” that so many Market economists despise.
3. Many economists believe that a basic income is a means to provide equal opportunity and counter exploitation.
4. In country like India there is the question of whether the current, multifariously fractured system of welfare, where multiple authorities give out different subsidies (money, food, housing, travel, education, healthcare), guided by their own priorities and targets (the young or the old, the mother or the child, the poor or the indigent), makes any sense. Why not have one universal basic subsidy that covers everything (perhaps except health and education) and let people decide how they will spend it, rather than trying to target subsidies based on our imperfect knowledge of what people need and deserve.
5. The number of extant government “welfare schemes” exceeds 350, though most of those programmes are not much more than a name, an office and a few underemployed bureaucrats. Moreover, many of our bigger schemes, like MGNREGS or PDS, are far from being well targeted or well run. Why not replace these 350 odd schemes by a single Universal Basic Income of, say, Rs 250 a week, which entitles every adult resident to a minimum weekly income as long as they verify their identity using Aadhaar (or in some other way) every week. The verification process will serve the dual purpose of making sure there is no fraud and discouraging the rich, who will find it unpleasant and a waste of time, from claiming a subsidy they don’t need.
6. At the very least, this will reduce poverty and free up the bureaucracy to do other things. But potentially, the benefits could be much larger. For example, the poor, liberated from having to worry about where their next meal or school fee will come from, might plan their lives better and invest more effectively in their children and their businesses
7. Assuming roughly 700 million people between ages of 18 and 60 are provided basic income of Rs 5000, that will be 3.5 trillion rupees, or about 3 per cent of the current GDP. That seems huge and unaffordable. But, the challenge may be surmountable. For instance, all the subsidies meant for the poor are more than 4 per cent of GDP (Centre plus states).Thus compared to subsidies it is a cheaper option.
8. Experiences with direct cash transfers in a range of countries, including Ecuador, India, Mexico, and Uganda, have not provided much evidence of any misuse of cash transfers; in general, the cash is spent on worthwhile goods and services.

What is needed?

1. UBI alone is not sufficient for the overall upliftment of poor. Two distinct sets of reforms are needed:
2. Broad-based economic reforms that would strengthen entrepreneurship, remove barriers to job creation, and increase the returns to human capital investments by the poor.
3. Specific reforms to allow the poor to gain better education and health

What does Economic Survey says on UBI?

1. ES advocated for the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty.
2. It suggests that a more efficient way to help the poor will be to provide them resources directly, through a UBI.
3. It will be an efficient substitute for a plethora of existing welfare schemes and subsidies.

Why ES say so?

1. Promoting social justice, reducing poverty, unconditional cash transfer that lets the beneficiary decide how she uses the money, employment generation by promoting labour flexibility.
2. It will bring in administrative efficiency as a direct cash transfer through JAM (Jan Dhan-Aadhar-Mobile) platform.
3. It will be more efficient as compared to the “existing welfare schemes which are riddled with misallocation, leakages and exclusion of the poor.
4. It can help to achieve considerable gains in terms of bureaucratic costs and time by replacing many of these with a UBI

Conclusion

Proposals for a universal basic income, fancied by utopian socialists and libertarians, may be premature in the advanced countries. But such schemes should not be dismissed in the developing world, where conditions are such that they could offer an affordable alternative to administratively unwieldy and ineffective welfare programs. Basic incomes are no panacea; but for overworked developing-country citizens living in extreme poverty, they would certainly be a relief.

Questions:

Q.1) Examine the arguments in favour and against introduction of universal basic income?

Q.2) Critically comment on recommendations made by the Economic Survey in introducing a universal basic income in India.

Note4Students/Syllabus Mapping: GS3

The GST is undoubtedly one of the single biggest historic tax reform ever since independence so much so that it aims to alter the dynamics of the current indirect taxation system and render it a single, unified, modern, transparent and uniform structure nationwide. This article will look into the nuances of this tax reform from various perspectives. Though a few questions have been asked earlier but its final rollout on July 1 2017 with its multiplier implications and impediments in implementation makes it a hot topic for analysis in this year CSE Mains.

 

What is GST—One nation one tax!

1. GST is a simpler, modern and more transparent taxation system that will do away with 500 different taxes levied across the country’s 29 States and seven Union Territories.
2. GST is essentially a consumption tax and is levied at the final consumption point.
3. It would comprise of two components, a central GST and a state GST.
4. It is levied on the value addition and thus avoids the cascading effect or tax on tax which increases the tax burden on the end consumer
5. It is collected on goods and services at each point of sale in the supply line
6. The GST that a merchant pays to procure goods or services can be claimed as input tax credit later against the tax applicable on supply of goods and services

Key Provisions of GST:

1. The GST with principle of One Nation and One Tax, and a unified market could make the movement of goods freer across the country.
2. GST was implemented through Constitution (One Hundred and First Amendment) Act, 2016, following the passage of Constitution 122nd Amendment Bill.
3. GST will be taxed at 0.25%, 5%, 12%, 18% and 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. The implementation has been complex, as it has a five layered taxation slab for various commodities.
4. Transactions made within a single state will be levied with central GST (CGST) by the central government and State GST (SGST) by the state government.
5. For interstate transactions imported goods or services, an integrated GST (IGST) is levied by the central government.
6. GST is a consumption based tax, so taxes are paid to the state where the goods or services are consumed and not in the state in which they are produced.
7. As a parallel development, a Goods and Services Tax Network (GSTN), a nonprofit organization has been formed to create a platform for all the stakeholders, government, tax payers to collaborate on a single portal.
8. GST tax of 28% on luxury goods is the highest in the world. Even UK and USA don’t have GST higher than 17%.
9. Most economists forecast inflation to come down as GST rates for most goods have been fixed at a lower rate.
10. GST laws focus on anti-profiteering measures-the benefits of the reduction in the tax rate and input credit shall be passed on by a commensurate reduction in prices.

One Nation- One Tax but Multiplier Benefits:

1. End of Cascading of Taxes: It seeks to eliminate inefficiencies in the tax system which results in ‘tax on tax’.
2. A Destination-based Tax on consumption, as per which the state’s share of taxes on inter-state commerce goes to the one that is home to the final consumer, rather than to the exporting state.
3. The central and state governments will witness tax buoyancy and the tax collection costs will reduce significantly.
4. Exports will become competitive.
5. Make in India programme will get a major fillip due to increased ease of doing business and protection from cheap imports.
6. All these benefits will add to the GDP growth of India in the medium and long run.
7. The Prime minister added that its introduction was not just a tax or economic reform, but a social reform that would nudge people on the path to honesty and benefit the poor the most.
8. The practice of giving out kachcha (informal) bills would become history as the GST presented an opportunity to stop black money and corruption, and give people a chance to do honest business
9. It would end the spectre of tax terrorism and Inspector Raj, as the technological backing for the GST would do away with grey areas and reduce the discretion enjoyed by the bureaucracy over tax matters
10. GST will also lead to economic integration of the country
11. The GST could make the movement of goods freer across the country.
12. GST seeks to align the Indian taxation system with the global standards and norms particularly with USA and Europe.

What is in the kitty of GST? Which Indirect taxes get subsumed and which are not?

SIMPLE WORKING OF GST:

GST – How does it impact various sectors?

 

For Business and Industry	For Central and State governments	For the consumer	Disadvantages of GST
Easy compliance	Simple and easy to administer- easier tax governance	Single and transparent tax proportionate to the value of goods and services	Services are expected to become costlier as the expected GST rate would be higher than the existing service tax rate of 15%.
Uniformity of tax rates and structures	Better controls on leakage and reduced corruption	Relief in overall tax burden	Supply of certain category of goods may come down depending on the effective rate of indirect taxes.
Removal of cascading	Higher revenue efficiency		Problems of anti-profiteering clause
Improved competitiveness	Will boost GDP on the longer run		Regressivity inherent in GST would result in hurting poor the more
Gain to manufacturers and exporters	Balances fiscal federal relations – cooperative federalism
Ease of doing business enhanced	Facilitate Make in India

Apprehensions/ challenges in Implementation:

IT Preparedness and Infrastructure

1. It cannot be assured whether all the States and Union Territories in India are currently equipped with infrastructure and requisite manpower.
2. Except few states like Karnataka, Maharashtra and Gujarat, who have pioneered the E-Governance model, we have not heard about this trend in other States and Union Territories.

Officers Training

1. The unlearning of the old law and learning GST provisions is imperative. GST law heavily banks on Information Technology and hence proper training has to be given to the departmental officers for effective usage and implementation.

New Registrants

1. Transition of existing registered assesses and registration of new assesses and resolving of migration issues is a big challenge.

Pending Cases/ Past Disputes

1. There are many disputes pending in the context of present indirect tax laws (both Centre and State), which are at various stages, viz, adjudication or appellate level. Government should find ways and means to resolve these disputes.
2. A possibility of introducing a dispute settlement scheme on the lines of Kar Vivad Samadhan Scheme needs to be explored which would enable the litigants to resolve pending matters.

Tax Administration

1. With GST, both the centre and state level officers are expected to work under one roof and in tandem by giving up their differences.
2. Cadre differences may arise, as presently in Central Excise and Service Tax, the departments are headed by officers of IRS, whereas in the state commercial departments, the commissioner is from IAS and his subordinates would be from State Administration Service.

Anti- Profiteering Clause

1. The idea of rolling out GST along with an anti-profiteering clause is to prevent the possibility of businesses and traders retaining the benefits of tax reduction to themselves rather than passing them on to the consumers.
2. The steps are being taken to make sure that businesses and traders pass on the benefits to the consumer-such as setting up an anti-profiteering authority and creating awareness among traders and consumers.
3. A National Anti-profiteering Authority (NAA) is to be set up to ensure that the benefits due to reduction in costs are passed on to the consumers.

The anomaly of India’s tax revenue

1. Indirect taxes, now made up chiefly of the nationwide goods and services tax (GST), are inherently regressive. They hurt the poor more than the rich. GST is a consumption tax. For the poor, almost their entire income (or more) is spent on consumption, and is hence subject to the tax.
2. The rich have a big share of their income go into savings, which is not taxed (or even subsidized). With the widening of GST and higher tax slabs, the unfairness of the indirect system becomes more acute. The global average rate for consumption taxes is 16%. Most Asian countries have rates of 10-15%. But India’s modal rate is 18%. This hurts the poor much more.

Operational Difficulties

1. The requirement that taxpayers must register in each jurisdiction in which they operate. If a unit operates in several states, it must register in each state in which it operates, and be taxed in each jurisdiction, and also maintain records that allow the tax paid in each jurisdiction to be audited.

Far from Ideal GST 

1. It is very far from being universal and according to some it excludes 50% of the gross domestic product. Major items such as petroleum, natural gas, alcohol, electricity, and real estate/construction are left out.
2. The second flaw is too many rates: 3% (on gold), 5%, 12%, 18% and 28 %, plus an extra GST cess on some luxury or socially undesirable items. Multiple rates are an invitation to misclassification and disputes/harassment arising from suspicion of misclassification. This reduces the efficiency gains which were expected to generate higher growth.

Way forward:

1. The initial collection figures for GST in India already show higher than expected revenue. The GST Council should set up an expert group that could assess the performance of the system based on results of the first year and work on a revised GST rate structure towards desirability of migrating to fewer rates. A Progressive and universal coverage should be the step ahead. A systematic effort should be launched to correct deficiencies over time through the mechanism of the GST Council. The long answer then is to focus on correcting the unfairness and skew in goods and services tax (GST), with greater redistribution.

Conclusion:

1. Introduction of GST is a very good start. Reforms, however, do not end here. Certain features can be further streamlined. Rolling out GST on 1 July was the result of more than a decade of discussions, tussles among states, and between states and the Union government, instances of give and take, lobbying and compromise.
2. The GST that is being rolled out is far from ideal. The guiding principle was that it is better to have a good GST instead of waiting endlessly for the best one. Despite its imperfections, Policymakers must continue to bet on GST to achieve various economic goals in one stroke. Continued follow up of structural reforms as big as this one definitely needs diligence and reinvention for rich dividends ahead.

Note4Students

There is intense debate on labour market reforms in India today. It is argued that but for restrictive labour laws that create inflexibility in the labour market, the Indian economy would have experienced a higher growth of employment. The government has come up with some Labour reforms like: Deen Dayal Upadhyay Shramev Jayate Karyakram, new social security schemes, convergence of social security schemes with labour welfare etc.

Context/Introduction

• The body of legislation that shapes the industrial and labour environment in India is huge. Here is a minuscule sampler:
• Minimum Wages Act, 1948; Trade Unions Act, 1926; Contract Labour Act, 1970; Weekly Holidays Act, 1942; Beedi and Cigar Workers Act, 1966.
• These and much more form a crisscrossing network of chaotic, strangulating, overlapping and often-contradictory laws that are crying out for overhaul.
• Despite low wages, India is not a global manufacturing hub, even while being one of the fastest growing service sectors in the world. India’s service sector has grown at an annual rate of 9% since 2001, and contributed 64% of the GDP in 2015-16.The industrial sector, meanwhile, only recorded a negligible increase and contributes nearly half at 20% of GDP.

Despite the availability of human resources, India has not been able to leverage its demographics for industrial development.

Issues in Indian labour laws

Archaic laws

1. In the pre-independence period, British colonialists in India suppressed labour rights, trade unions and the freedom of association among workers. As a result, labour activism became a part of the Indian freedom struggle.
2. In 1950, the newly framed Constitution of India looked to undo these wrongs by including fundamental labour rights, along with complex labour laws. These laws made hiring additional workers increasingly difficult.
3. Despite several decades of economic progress, these laws have not been amended or reformed in order to foster a friendlier climate for business.

Labour productivity

1. India has low labour productivity in comparison with other developing nations.
2. As a result, in the early days of offshoring, Western firms showed greater interest in setting up manufacturing facilities in Thailand, Mexico, China, Vietnam and Philippines rather than in India.
3. All of these countries had as bad a record of bureaucratic corruption as India did at the time, but labour productivity was found to be higher in those countries.

Politics

1. In Kerala alone, for example, there were nearly 363 hartals between 2005 and 2012, causing loss of so many working days
2. In addition, in the 1970s and 1980s, Indian politics was dominated by socialists who created the impression that profit making by private enterprises is undesirable.
3. Policymakers also further strengthened India’s complicated labour laws

Complexity

1. Labour is a subject in concurrent list of the Constitution of India. Thus both centre and states can enact laws on labour matters
2. There are about 45 central government laws and more than 100 state statutes, sometimes overlapping or contradicting

Rigidity

1. India has one of the most rigid labour regulatory frameworks in the world
2. Example- Industrial Disputes Act of 1947 stipulates that a firm with 100 employees or more cannot close down without government permission
3. Such laws curtail the growth of a firm by forcing it to hire fewer workers and remain small

Cost of compliance

1. There are also high costs involved in complying with several labour laws
2. Example- under the Factories Act, firms with 10 or more workers and firms which use electric power are required to keep records and file regular reports on matters such as overtime work, wages, attendance, sick leave and worker fines.

Need For Reforms

1. As early as in 2002, the Second National Commission on Labour suggested the formulation of labour codes similar to those in Russia, Germany, Poland, Hungary and Canada
2. The commission recommended that labour legislation be divided into five broad areas: industrial relations, wages, social security, safety and welfare, and working conditions.
3. NITI Aayog has pressed for ‘substantive’ reforms in labour laws to take the country out of the current low-productivity and low-wage jobs situation.
4. It is predicted that the size of India’s workforce will swell to 249 million by 2050, while China’s is set to decline to 166 million during the same period.

Recent Reforms

1. Recently Govt. unveiled a new roadmap, including measures to end ‘Inspector Raj’ with a system that is expected to sharply curb the element of discretion with labour inspectors and a single window compliance process for companies on labour-related issues.
2. As a step in this direction, all 1,800 labour inspectors will be disallowed from swooping down on companies and instead, a computerised system will randomly send them on inspections, based on data trends and objective criteria.
3. Following inspections, they will have to upload their reports within 72 hours and cannot modify them thereafter.
4. Govt. also unveiled nearly half-a-dozen schemes, including a Shram Suvidha Portal where employers can submit a single compliance report for 16 labour laws, a new web-based labour inspection system, unique account numbers for members of the EPFO, a revamped Rashtriya Swasthya Bima Yojana as well as a new skill development and apprenticeship scheme.
5. Sharply streamlined the cumbersome compliance process, manufacturers can now register online at the Shram Suvidha portal and file a self-certified single compliance report for 16 Central labour laws.
6. In return, labour inspections by four central agencies — EPFO, Employees’ State Insurance Corporation, Central Labour Commissioner and Director General of Mines’ Safety — will be based on a computerised list of units that are picked up from this database.
7. A panel, headed by Finance Minister Arun Jaitley, is mulling converting 44 labour laws into four simplified codes. They relate to industrial relations, wages, social security and safety.

Criticism for the Reforms

1. Any dilution of the existing laws will compromise employees’ welfare and they think the government is insisting on changing labour laws without realizing that it is not a short cut for job creation
2. The government said that 30 million organized sector workers are getting less than 15000 a month. So, by changing the laws you will put these poor workers in
   further trouble.
3. The trade unions have opposed the provision of deducting 8 days salary for one day of strike.

Way ahead:

1. Legislative reforms such as those taken up recently by central government and states such as Rajasthan, Gujarat, MP are very much needed
2. Empowering women to enter the workplace and providing them additional support
3. Physically challenged- Increasing current 3% reservation in governmental and government-funded jobs. Also ensuring that workplaces are disabled-friendly
4. Example- Karnataka granted exemptions to IT industries from the Industrial Employment (Standing Orders) Act of 1946. It undermines the employer’s autonomy in determining the terms of employment, working hours, leave grant and similar matters
5. Providing social security to workers in the informal sector would also pave the way for a more satisfied and productive workforce
6. Training and skilling- India has a demographic advantage but in order to utilize this dividend, India needs to invest heavily in training its talent
7. India’s supply of labour presently outnumbers industry’s demand for them. As a result, the government and manufacturing firms need to invest in training and skilling

Conclusion:

1. The guiding principle for India’s labour policy reformers should not merely be ring fencing jobs but safeguarding workers through social assistance, re-employment support (such as that which is provided in several Western nations) and skill building, and supporting employers in employee training and development.

Model Question

Q.) Recent Labour Reforms balance the concerns of the industries and the workers. Critically evaluate.

Q.) “Success of make in India program depends on the success of Skill India programme and radical labour reforms.” Discuss with logical arguments.(2015 GS Paper III)

References

http://labour.nic.in/

http://indianexpress.com/article/india/india-others/live-prime-minister-narendra-modi-announces-labour-reforms/

http://www.livemint.com/Politics/OeEG5RZFnP7xEX61lV9rYM/Niti-Aayog-presses-for-substantive-reforms-of-labour-laws.html

http://www.thehindu.com/business/budget/india-has-second-fastest-growing-services-sector/article6193500.ece

 

Note4Student

India offers today the world’s largest market for PPPs. As the PPP market in infrastructure matures in India, new challenges and opportunities have emerged and will continue to emerge. To address this Kelkar committee submitted its report “Report on Revitalising and Revising PPP models in Infrastructure” and Infrastructure vital part of GS 3 . Makes this topic important from exam point of view.

Definition

Standards & Poor definition of PPP is any medium to long term relationship between public and private sectors, involving sharing of risks and rewards for multi sectorial skills, expertise and finance to deliver desired policy outcomes.

Introduction

According to the World Bank, India is one of the leading countries in terms of readiness for PPPs.

Rapid Urbanisation, increase in per capita income and high industrial growth led demand for basic infrastructure such as water supply and sanitation, seamless transportation and energy. To fulfil these demands India has systematically rolled out a PPP program with increasing budgetary allocation in 12th FYP for the delivery of high-priority public utilities and infrastructure.

Context

According to the data from the Ministry of Statistics and Programme Implementation’s (MOSPI) Online Computerised Monitoring System for projects and infrastructure monitoring, of 351 ongoing projects costing above Rs 1,000 crore in the infrastructure sector, 127 projects were delayed and 115 were in cost overruns, and 51 were showing both time and cost overruns as of February 2017.

Why PPP and its challenges

1. Investment in infrastructure in India has posed a challenge in the last few years.
2. Reports of delayed or stalled infrastructure projects.
3. Rate of growth of Gross Fixed Capital Formation (GFCF) have been disappointing.
4. Inadequate acceleration in private sector projects due to unfavourable market conditions.
5. lack of appetite for fresh investment by promoters and
6. Delays in obtaining environmental clearances.
7. Slowdown in delivery of projects has been attributed to over regulation, problems in land acquisition and scarcity of funds.
8. “Obsolescing Bargain”-the loss of bargaining power over time by private player in PPPs due to plicy changes.

Different PPP Models

In India, road projects are awarded via one of the three models: Build-Operate Transfer (BOT)-Annuity, BOT-Toll, and EPC (engineering, procurement and construction) contract.  An advanced version  of  (MCA) Model Concession Agreement HAM model is a mix of BOT (Built Operate Transfer) and EPC (Engineering, Procurement and Construction) model.

Engineering Procurement  Model:

1. Under this system the entire project is funded by the government.
2. The EPC entails the contractor build the project by designing, installing and procuring necessary labour and land to construct the infrastructure, either directly or by subcontracting.
3. Under EPC model the contractor is legally responsible to complete the project under some fixed predetermined timeline and may also involve scope for penalty in case of time overrun.
4. In EPC as all the clearances, land acquisition and regulatory norms have to be completed by the government itself and the private players do not have to get itself involved in these time taking procedures.

Hybrid Annuity Model:

1. In India, the new HAM is a mix of BOT Annuity and EPC models.
2. As per the design, the government will contribute to 40% of the project cost in the first five years through annual payments (annuity). whereas the remaining 60% is raised by developer from equity or loan as variable depending upon the value of assets created.
3. Under HAM, Revenue collection would be the responsibility of the National Highways Authority of India (NHAI).The developer doesn’t have right to collect revenue.

Advantages:

The brief picture of Risk Allocation can be tabulated as in Table:

Type of Risks/Models	Financing Risk	Revenue collection Risk	O&M Risk
BOT Model	By Private	By Private	By Private
Annuity Model	By Private	By Govt	By Private
VGF	By Govt and Private	By Private	By Private
EPC Model	By Govt	By Govt	By Govt
HAM	By Govt and Private	By Govt	By Private

1. Financial burden of private players and even government will reduce.
2. Will reduce dependency on Banks for loans private player can raise money form equity. Thus NPAs of banks for long gestation project will also decrease. Helps cut the overall debt and improves project returns.
3. Developers will take ‘traffic risk’ help in expediting project completion. From government side it does take the traffic risk, it also earns better social returns by way of access and convenience to daily commuters.
4. Will speed up stalled projects.

Kelkar Committee recommendations

1. Contracts need to focus more on service delivery instead of fiscal benefits.
2. Better identification and allocation of risks between stakeholders
3. Renegotiation clause of Concession Agreement
4. Infrastructure PPP Project Review Committee (“IPRC”) may be constituted to evaluate and send its recommendations on any problems of PPP project.
5. Infrastructure PPP Adjudication Tribunal (“IPAT”) chaired by a Judicial Member (former Judge SC/Chief Justice HC) with a Technical and/or a Financial member, where benches will be constituted by the Chairperson as per needs of the matter in question.
6. Institutionalization of mechanism like the National Facilitation Committee (NFC)to ensure time bound resolution of issues e.g. Clearances.
7. Unsolicited Proposals(“Swiss Challenge”)to be discouraged to avoid information asymmetries and lack of transparency.
8. PPP structures not to be adopted for very small projects.
9. Amend the Prevention of Corruption Act, 1988 to distinguish between genuine errors in decision-making and acts of corruption.
10. vBuild up capacity in all stakeholders, including regulators, authority, consultants, financing agencies, developers.
11. Set up an institute of excellence in PPP to inter alia guide the sector, provide policy input, timely advice and undertake sustainable capacity building.

Conclusion

1. India’s infrastructure deficit-whether congested roads and ports, inadequate hospitals or wastewater treatment facilities, and slow trains-is a key factor constraining rapid, competitive economic growth and job creation and thereby imposing huge costs on society. Low productivity, poor competitiveness, high costs, and the slow pace of urbanization are some of the consequences of this deficit.
2. India will be the world’s most populated country before 2030, outgrowing China. Without sustained rapid economic growth and the resulting productive jobs, India will be unable to convert its demographic transition into a demographic dividend.
3. To address the above concerns it is imperative to create quality infrastructure by different means. One of the most effective mean is PPP.

Questions:

Q.) Examine the features of HAM model? How it is different from EPC? Explain how it will revitalise infrastructure deficit to achieve broad developmental objectives?

Q.) Recently kelkar committee submitted report on Revitalising and reviving languishing infrastructure projects. Discuss major recommendations of kelkar committee.

References:

Kelkar ‘ Report on Revitalising and Revising PPP models in Infrastructure’.

PIB

Ministry of Statistics and program Implementation

Ministry of Roadway Transport and Highways.

News on Air and Rajya sabha Debate.

 

Note4Students

Banking Sector in India is crippled with multidimensional problems like mounting NPAs, Twin Balance sheet Syndrome (TBS), Merging banks causing structural problems, loss of employment, difficulty in recognizing defaulters, falling short of adhering BIS norms. Financial Sector is very much important for UPSC and the current government gives so much importance to the Banking Sector.

Background/ Introduction

1. Reforms in banking sector started even before independence with passing of The Reserve Bank of India Act, 1934 (RBI Act).
2. Later Nationalization of banks, consolidation, diversification, liberalization of the banking industry in 1980s and 1990s were part of the ongoing reforms.
3. From the 1991 economic crisis India has grown significantly in terms of economic development. So has its banking sector Government of India (GOI) set up various committees with the task of analyzing India’s banking sector and recommending legislation and regulations to make it more effective, competitive and efficient. Two such expert Committees were set up under the chairmanship of M. Narasimham. They submitted their recommendations in the 1990s in reports widely known as the Narasimham Committee-I (1991) and the Narasimham Committee-II (1998) Report.
4. Narasimham committee Recommendations revolved around:
5. Autonomy in Banking.
6. Reform the role of RBI.
7. Tighten Provisioning norms- Capital adequacy ratio, Asset classification (NPAs).
8. Entry for foreign banks.
9. SARFASI Act 2002.

Certain Facts:

1. AS per KPMG-CII report, India’s banking sector expanding rapidly and has the potential to become fifth largest banking industry in the world by 2020 and third largest by 2025.
2. The share of gross NPAs in India could inch up to 10.2% by March 2018, from 9.6% in March 2017, according to the FSR-Financial Stability report.

Current Problem in Banking Sector

1. With changing global economic situations, demand for speedy, secure and efficient service delivery from customers, Information and Communication revolution, big bang long gestation infrastructure projects, the problems of Banking system undergone drastic changes:

(a)Twin balance sheet:

1. The public sector banks are burdened with the high non-performing assets (NPAs) while some of the corporate houses are also under stress due to sluggish global demand. This has been called the “TBS problem” or “Twin Balance Sheet Syndrome“.
2. This leads to incomplete transmission of the monitory policy, unwillingness of banks to lend credit on account of rising NPAs affecting Credit growth in turn economic activity.

(b)Non-performing Assets:

1. When the borrower stops paying interest or principal on a loan for 90days or more considered as NPA.
2. According to RBI’s recent data, the gross non-performing assets (NPAs) of public sector banks are just under Rs 4 lakh crore which is alarming. Reasons for NPAs:
3. Bad lending practices
4. Delay in environmental clearances leading to
5. Wilful defaulters due to crony capitalism.
6. Global, regional and national Financial crises.
7. Poor performance across different sectors like Infra, Steel, Discom etc.
8. Not adhering provisioning norms- BASEL I, II, III.
9. Failure of SARFASI, ARC.

(c)Requirements of Reserve ratio:

1. RBI policy mandates reserve ratios CRR 4%, SLR 20%. And compulsory Primary Sector lending for social sector projects affects the credit expansion of banks.

(d)Increasing Competition and funding sources

1. Strengthening of Bond Market, External Borrowing sources,
2. Indian PSBs not competitive.

Crisis in Management

Measures taken by RBI and Government:

1. Debt Recovery Tribunals (DRTs)

1. To decrease the time required for settling cases.

Amendments to the SARFAESI Act: The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 includes

1. The SARFAESI Act allows secured creditors to take possession over collateral, against which a loan had been provided, upon a default in repayment.
2. This process is undertaken with the assistance of the District Magistrate, and does not require the intervention of courts or tribunals.
3. The Bill provides that this process will have to be completed within 30 days by the District Magistrate
4. Bill empowers the District Magistrate to assist banks in taking over the management of a company, in case the company is unable to repay loans.
5. Act creates a central registry to maintain records of transactions related to secured assets.

2. 4R SOLUTION

1. Economic Survey 2016-17 gives 4R solution to solve TBS problem – Recognize, Recapitalize (Eg Indradhanush), Resolution and Reform. Economic Survey 2016-17  Volume II stress more upon last R i.e. Reform.

3.INDRADHANUSH

1. Indradhanush framework for transforming the PSBs represents the most comprehensive reform effort undertaken since banking nationalization in the year 1970 to revamp the Public Sector Banks (PSBs) and improve their overall performance by ABCDEFG.

1. A-Appointments: Based upon global best practices and as per the guidelines in the companies act, separate post of Chairman and Managing Director and the CEO will get the designation of MD & CEO and there would be another person who would be appointed as non-Executive Chairman of PSBs.
2. B-Bank Board Bureau: The BBB will be a body of eminent professionals and officials, which will replace the Appointments Board for appointment of Whole-time Directors as well as non-Executive Chairman of PSBs
3. C-Capitalization: As per finance ministry, the capital requirement of extra capital for the next four years up to FY 2019 is likely to be about Rs.1,80,000 crore out of which 70000 crores will be provided by the GOI and the rest PSBs will have to raise from the market.
4. D-DEstressing: PSBs and strengthening risk control measures and NPAs disclosure.
5. E-Employment: GOI has said there will be no interference from Government and Banks are encouraged to take independent decisions keeping in mind the commercial the organizational interests.
6. F-Framework of Accountability: New KPI(key performance indicators) which would be linked with performance and also the consideration of ESOPs for top management PSBs.
7. G-Governance Reforms: For Example, Gyan Sangam, a conclave of PSBs and financial institutions. Bank board Bureau for transparent and meritorious appointments in PSBs.

 

4. BANKRUPTCY & INSOLVENCY CODE 2015

1. The Code creates time-bound processes for insolvency resolution of companies and individuals.  These processes will be completed within 180 days.  If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.
2. The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies.  The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
3. The Code creates an Insolvency and Bankruptcy Fund.

Other Major reforms

Payment and Postal Banks on recommendation of Nachiket Mor Committee to acheive Financial Inclusion and reduce banks burden.

Economic Survey 2016-17 suggests setting up of a centralised Public Sector Asset Rehabilition Agency (PARA)

the Agency will look after the largest, most difficult Cases, and make Politically Tough Decisions to reduce Debt

‘Scheme for Sustainable Structuring of Stressed Assets (S4A) by RBI for resolution of large stressed assets.

Startegic Debt Restructuring involves transferring equity of the company to lenders also enable a change in management control.

1. The Banking Regulation (Amendment) Bill, 2017
2. It seeks to amend the Banking Regulation Act, 1949 to insert provisions for handling cases related to stressed assets.
3. The central government may authorise the Reserve Bank of India (RBI) to issue directions to banks for initiating proceedings in case of a default in loan repayment. These proceedings would be under the Insolvency and Bankruptcy Code, 2016.
4. also be applicable to the State Bank of India, its subsidiaries, and Regional Rural Banks.

Merging of SBI subsidiaries as well as other PSBs to

1. improve efficiency in service delivery
2. to become single biggest lender of bigger infrastructure projects and
3. to achieve top ranking in global ranking.

Marginal Cost of Fund Based Lending Rate (MCLR)

The MCLR rate is the minimum rate below which the banks are not allowed to lend, except in some case allowed by the RBI. It is an internal reference rate for the bank. The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in the year 2016. The MCLR system has replaced the base rate system that was introduced in the year 2010.

Why MCLR was Introduced?

To effectively implement monetary policy, since MCLR is more sensitive to policy rates like Repo rate and Reverse Repo Rate.

Prior to the implementation of MCLR, different banks are using different methods for calculating base rates. Thus, MCLR aims at:

1. To improve the transmission of policy rates into the lending rates of banks.
2. To bring transparency in the methodology followed by banks for determining interest rates on advances.
3. To ensure availability of bank credit at interest rates which are fair to borrowers as well as banks.
4. To enable banks to become more competitive and enhance their long run value and contribution to economic growth.

Calculation of MCLR

MCLR lending rate is dependent on all the sources of bank borrowing. A bank borrows from multiple sources like, fixed deposits, demand deposits, saving accounts, current accounts. Apart from these, banks also invest in equity, whose return are also considered while calculating MCLR.

The formula prescribed by the Reserve Bank of India for calculation of MCLR is given below:

Marginal cost of funds = Marginal borrowing cost x 92% + return on the net worth x 8%

Thus, marginal cost of borrowings has a weightage of 92% while return on net worth has 8% weightage in the marginal cost of funds.

Here, the weight given to return on net worth is set equivalent to the 8% of risk weighted assets prescribed as Tier I capital for the bank.

The marginal cost of borrowing refers to the average rates at which deposits of a similar maturity were raised in the specified period.

Banks must also maintain a cash reserve ratio of 4%. On this deposit, no interest is earned by the bank. Under MCLR, banks can avail some allowance called Negative Carry on CRR. Negative carry on account of’ Cash reserve ratio (CRR)- Negative carry on the mandatory CRR arises because the return on CRR balances is nil. Negative carry on mandatory Statutory Liquidity Ratio (SLR) balances may arise if the actual return thereon is less than the cost of funds.

Also, the operating costs must be considered and taken care of. There are several expenses of a bank that includes raising funds, opening branches, paying salary to its employees etc. These are not charged to the customers. Operating Cost associated with providing the loan product, including cost of raising funds, but excluding those costs which are separately recovered by way of service charges.

Finally comes the discount or tenor premium. The reset period for the interest rate is called the tenor. It is directly proportional to the reset period i.e. the tenor is higher if the reset period is higher. Tenor Premium- The change in tenor premium cannot be borrower specific or loan class specific. In other words, the tenor premium will be uniform for all types of loans for a given residual tenor.

Thus, MCLR depends on

1. Tenor premium,
2. Operating costs of the bank,
3. Negative carry on Cash Reserve Ratio, and
4. Marginal cost of funds.

Conclusion

1. Banks are the backbone of every economy. The banks are the lifelines of the economy and play a catalytic role in activating and sustaining economic growth, especially, in developing countries and India is no exception.
2. The Indian banking sector is at a critical juncture in its evolution. It is now clear that the slump in credit growth and increase in stressed assets has affected the profitability of all banks, and threatens the very survival of some of them. To maintain impetus of economic growth with achievement of SDGs we need strong banking system.
3. Certain building blocks for the reorientation of the banking structure with a view to addressing various issues such as enhancing competition, financing higher growth, providing specialized services and furthering financial inclusion have been initiated but need to focus on implementation.
4. Vision 2020 of banking system should incorporate Transformed Banking models with emerging technologies like IT revolution,Robotics, Artificial Intelligence and FINTECH solutions to make banking affordable and accessible.
5. In order to achieve more faster and inclusive growth and to make major govt initiatives (–Make in india, Financial Inclusion etc ) overhaul reforms in banking sector is imperative.

Questions

1. Banking Sector in India is crippled with multidimensional problems like mounting Twin Balance sheet Syndrome (TBS), Merging banks causing structural problems, loss of employment, difficulty in recognizing defaulters etc. What are the government initiatives to tackle such problems?
2. Banking Reforms is not a new word to the financial sector. Explain the Banking Sector reforms taken place till now and those which are yet to be rolled out in the immediate future, in detail.

References:

1. Newspapers: The Hindu, Indian express, live mint.

2. Economic Survey 2016-17 and 2017-18.

3. RBI Site

4. PRS legislative

5. Rajyasabha and news on Air.

6. Min of Finance.

 

Economic Survey Volume II highlights importance of Industry and Infrastructure for India to maintain stable and sustainable economic growth. India’s ranking in World Bank’s Logistics Performance jumped to 36^th position in 2016 from 58^th rank in 2014. UPSC last year asked regarding Roadways so this year expected question from Ports and economic growth.

Introduction

1. World Bank rightly pointed out ‘infrastructure development’ includes–Ports, Roadways, Railways, Telecommunication, critical to delivering growth, reducing poverty, building human capability and to address broader developmental goals.
2. Economic Survey Vol II highlights among the same per capita emerging countries India’s performance is significantly better.
3. India has a coastline spanning 7516.6 kilometres, forming one of the biggest peninsulas in the world. According to the Ministry of Shipping, around 95 per cent of India’s trading by volume and 70 per cent by value is done through maritime transport.
4. There are 12 Major Ports & 187 Minor/Intermediate ports.
5. Government is taking various measures to enhance capacity of existing ports and creating new major ports, Ease of doing business- Sagarmala, Bharatmala, Inland water transport(Jal Vikas Marg), East Coast Economic corridor etc.

Sagarmala

1. Sagarmala project is a port-led development programme of Ministry of Shipping.
2. A Shipping ministry study has claimed that the project could lead to an annual saving of Rs 40,000 crore by optimizing logistics.

Need for such a project:

1. India is lacking the high quantity of international trade via coastal line due to the lack of infrastructure facilities and advanced coastal technologies.
2. The cost of shipping/evacuating goods through Indian maritime transport is quite high compared to that of China, South Korea, Japan and other developed countries. This makes Indian goods uncompetitive in the international market.
3. China, South Korea and Japan have effectively used their coastline for ‘port-led development’. India has to replicate their model to stay competitive.
4. So, a plan has to be devised to reduce logistics cost and strengthen India’s EXIM industry. Sagarmala Project is one such plan.

Objectives of Sagarmala:

PORT MODERNIZATION-

1. Augmenting operational efficiency of ports (more terminals for loading and unloading cargo).
2. 40+ capacity enhancement projects at major ports
3. 6–8 new ports.

PORT CONNECTIVITY-

1. Optimizing logistics (rails, roads and inland waterways).
2. Port and industrial connectivity.

PORT LED INDUSTRIALISATION-

1. 14 Coastal Economic Zones, Industrial Clusters Identify capacity additions Modernize India’s Ports to achieve Ease of Doing business.

COASTAL COMMUNITY DEVELOPMENT

1. Skill development.
2. Uplifting fishermen and other local communities.
3. Island development.

Vision of Sagarmala:

 

Analysis

Impact of sagarmala by 2025

Other advantages of SAGARMALA:

1. It is a counter to China’s String of Pearls.
2. It is a security infrastructure envisaged by India in the Indian Ocean region.
3. It is a defense capability enhancement project of Indian Navy.

Current challenges to Shipping Industry of India: Economic survey volume 2

1. Globally, maritime freight rates in most shipping segments endured volatility and overall downward movements.
2. There has been a sharp decline in the share of Indian ships in the carriage of India’s overseas trade from about 40 per cent in the late 1980s to 7 per cent in 2015-16.
3. Existing fleets are ageing.

Recommendations to further enhancement of this project:

1. Setting up storage capacities at origin-destination ports to shorten turnaround time.
2. Developing adequate ship-repair facilities in the maritime states.
3. Indian ports will have to upgrade their technology levels to be comparable to international standards.
4. Creating dedicated coastal berth ports for coastal shipping.
5. Establishing new transhipment port (transfer cargo from one ship to another).
6. During the last few years the non-major ports are gaining more share of cargo handling compared to major ports so the focus should be connecting non major ports to hinterland.(Economic survey volume2 )
7. Fuel tax free for indian tax vessels.
8. Government already proposed Jal Marg Vikas Project’ (on NW-I:River Ganga), a large integrated IWT project to end to end connectivity.

Conclusion

Indian ports now need to plan with a 15-20 year perspective. We are far behind other Asian countries, be it China or a tiny state like Singapore. Emerging innovative port models like Landlord Port development, Coastal Economic Zones are steps in right direction. So it is imperative to have well developed ports to boost our exports, play a vital role in maritime security and to realise broader developmental goals.

Questions:

Q.) Enumerate challenges and prospectus of Sagarmala project in India.

Q.) What do you mean by Port led development? What are the key objectives and vision of  Sagarmala Project? Its impact on trade,employement?

 

Note4Students

Like abolition of FIPB and merger of Railway budget with General budget. This is a Revolutionary step taken by Government which will have wide reaching Consequences. Since UPSC has been asking lot of questions on reform measures taken by the Modi Government A question can be expected on this topic also.

Context

Last year The Cabinet has decided in principle to advance the presentation of the Union Budget by a month, from February to January. The objective is to have the Budget constitutionally approved by Parliament and assented to by the President, and all allocations at different tiers disseminated to budget-holders, before the financial year begins on April 1.

Presenting the budget earlier comes with both advantages and disadvantages.

Advantages:

In the existing system, the Lok Sabha passes a vote on account for the April-June quarter, under which departments are provided a sixth of their total allocation for the year. This is done by March. The Finance Bill is not passed before late April or early May. If the Budget is read in January and passed by February-March, it would enable the government to do away with a vote on account for the first three months of a financial year.

Retired and serving officials say the biggest plus would be that the Finance Bill, incorporating the Budget proposals, could be passed by February or March. So, government departments, agencies and state-owned companies would know their allocations right from April 1, when the financial year begins.

It would also help the private sector to anticipate government procurement trends and evolve their business plans. And, civil society could deliberate on and give feedback in time for the parliamentary discussions.

 

Disadvantages:

1. One big disadvantage of advancing the Budget preparations is lack of comprehensive revenue and expenditure data. Currently, work on the Budget begins in earnest by December. By the time it is finalised in mid-February, data on revenue collections and expenditure trends is available for the first nine months of the financial year, i.e April-December. Based on which, projections for the full year can be made.
2. To read the Budget in January, the centre will have to start preparing it by early October. To go by less than six months of data and making projections for the full year and the next year, based on such an incomplete picture, will be an impossible task.
3. Advancing the Budget dates would be fraught with practical difficulties. Effective Budget planning also depends on the monsoon forecasts for the coming year, making the advancing the whole exercise even more difficult.
4. Besides, whether the chambers of Parliament and its standing committees will get adequate time to deliberate on the budget is a moot point. The standing committees of Parliament, whose charter is to examine the justification of the ministry-wise allocations and funding needs of concomitant programmes included in the Budget, undertake their scrutiny during a two to three-week gap within the budget session period, when the houses are adjourned. This scrutiny is an essential element in the parliamentary budget approval system.

Way ahead:

Advancing the presentation of the Budget, so as to allow Parliament to vote on tax and spending proposals before the beginning of the new financial year on April 1, is a good idea. It would do away with the need for a vote on account and allow new direct tax measures to have a full year’s play. Members of Parliament now will have to work hard over two months to vet Budget proposals, for this to work.

 

Conclusion:

These reforms make sense, but Budget reform has to go further, to incorporate a multi-year time horizon and shift to outcome-linked expenditure management, as had been recommended by a committee headed by C Rangarajan in 2011.

Note4Students

India has been fighting with proxy state terrorists since independence. Nuclear weapon owned neighbours posing formidable threats to the national security. Moreover as a regional power India has gained commendable respect among the world countries.  So it is important to discuss about to design a national security policy.

Introduction

1. Unlike other democracies, India does not have a formally declared national security strategy.
2. The threats and challenges to a country’s national interests in the prevailing geo-strategic and regional security environment guide its national security objectives and these, in turn, help to formulate a comprehensive national security strategy

Analysis

What would be the basis of national security strategy

1. The primacy of national interests in the formulation of national security strategy is unquestionable.The meaning of national interest is survival
2. The protection of physical, political and cultural identity against encroachments by other nation-States.’
3. National interests may be defined as ‘the claims, objectives, goals, demands and interests which a nation always tries to preserve, protect, defend and secure in relations with other nations.
4. These are classified as vital or survival interests and other interests.
5. Vital national interests must by definition be defended by applying military force if it becomes necessary.

 

India’s vital national interests would include the following:

1. The security of Indian territory on land and sea and that of Indian airspace
2. the protection of Indian citizens
3. the security of India’s energy sources, refining facilities and merchant vessels engaged in transporting oil and gas and trade
4. A peaceful and stable internal and external security environment for unhindered socio-economic development;
5. The protection of critical infrastructure against physical disruption and cyber-attack.

 

Other major national interests comprise the following:

1. An egalitarian world order that is rules-based and promotes free trade and security of the global commons through international cooperation;
2. The promotion of democracy and respect for universal values at home and around the world.

Why do we need a National Security Strategy?

1. Maintaining the territorial integrity of India‘s borders on land, sea and air, as defined by law and enshrined in the Constitution, including the defence of India’s island territories.
2. Defending India’s coastline against aggression and infiltration; and, ensuring the security of Indian personnel and assets such as ships and oil rigs operating in the Exclusive Economic Zone.
3. Resolving the territorial and boundary disputes with China and Pakistan on favourable terms through negotiations in an early time frame. (In this context, as the territory occupied by the Chinese on the Aksai Chin Plateau in Ladakh and by the Pakistanis in Pakistan occupied Kashmir is required to be regained in accordance with two separate parliamentary resolutions, building a national consensus to resolve both territorial disputes through a negotiated settlement should be an important political objective.)
4. Protecting the lives and property of India’s citizens, including during insurgencies and against acts of terrorism.
5. Maintaining effective nuclear deterrence against the use or the threat of use of nuclear weapons against India.
6. Protecting critical infrastructure and military command and control systems against cyber-attack from State and non-State actors and developing offensive cyber operations capabilities to deter such attacks.
7. Ensuring the security of India’s energy sources, refining facilities and modes of transportation, especially the security of oil and gas fields, ships transporting oil and gas and, where necessary, oil and gas pipelines within India and abroad.
8. Undermining the China-Pakistan nexus and reducing the salience of the Pakistan army in the country’s polity.
9. Ensuring through diplomatic means and in conjunction with strategic partners that India will not be required to fight a simultaneous two-front war with China and Pakistan.
10. Providing a stable and peaceful external security environment in India’s area of strategic interest to facilitate unimpeded socio-economic development and the free flow of trade. (This may involve military intervention, singly or in conjunction with strategic partners, when India’s vital national interests are threatened.)
11. Creating and sustaining an effective capability for out-of-area contingency operations through military intervention, when necessary, to ensure peace and stability in the Indo-Pacific and the security of the global commons (freedom of navigation in the sea lanes of communication, air space, cyber space and outer space).
12. Being prepared to provide security and other assistance to the Indian Diaspora, especially in West Asia and on the Arabian Peninsula.
13. Acting vigorously against narcotics traffickers and small arms smugglers and disrupting their linkages with terrorist organisations.
14. Bringing to speedy justice both overseas and local perpetrators of terrorist strikes in India and against Indian assets anywhere.
15. Preventing the destabilisation of friendly countries in India’s area of strategic interest extending from the South China Sea in the east to the Horn of Africa in the west, and providing military and other assistance when requested by them. (In this context, stability in Afghanistan, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka, is a major national interest.)
16. Developing balanced relationships with strategic partners, including through defence cooperation, to deter conflict and manage crises, and engaging with organisations such as the ASEAN Regional Forum and the Shanghai Cooperation Organisation to launch cooperative security initiatives, while preserving India’s strategic autonomy.
17. Promoting cooperation and understanding with neighbouring countries and implementing mutually agreed confidence-building measures to prevent crises through miscalculation.
18. Pursuing security and strategic dialogues to address key challenges before the international community.
19. Following a consistent and principled policy on nuclear disarmament and international security issues based on universality, non-discrimination and equal security for all.
20. Working dynamically to achieve the goal of self-reliance (70 per cent indigenous content) in defence procurement by 2025. (The indigenous manufacture of microchips, the basic building block of ICT products, must be a national priority.)
21. Investing appropriately in the development of high-end defence technologies in conjunction with strategic partners to gain an edge in combat capabilities over military adversaries.
22. Developing a pro-active strategic culture by exposing all students in schools and colleges to understanding basic threats and challenges to national security and the measures necessary to overcome these. (All government training institutions must also educate their trainees about national security issues by devoting a portion of the syllabus to the subject.)

Way Forward

1. The government should appoint a study group to deliberate over the important issues of national interests and national security objectives and recommend a national security strategy for consideration by the Cabinet Committee on Security. The exercise should be steered by the National Security Advisor.
2. Strengthening the national security architecture will be possible if the triad of defence and strategic studies, defence studies and analyses, and national security policy-making become interdependent organically, intellectually, professionally and systemically.

Question:

Why needs a national security strategy. What will be the objectives of security policy?

Note4Students

Prevalence of peace is the one the pre requisite for the development. Left wing extremism had engulfed many developmental efforts with its sheer coercive action. A civil administration–police coordinated action is required to bring the peace in the red corridor. Home ministry’s new policy of SAMADHAN tries to achieve a multi-dimensional development agenda through affirmative action.

Introduction:

1. India is the largest democracy in the world. However, Left Wing Extremism desires to weaken and make the roots of democracy hollow.
2. A Naxal or Naxalite is a member of the Communist Party of India (Maoist). The term Naxal derives from the name of the village Naxalbari in West Bengal, where the movement had its origin. Naxalites are considered far-left radical communists, supportive of Maoist political sentiment and ideology.

Problems Faced By government:

1. 12000 citizens of our country have lost their lives in violent activities of the Left Wing Extremists
2. Out of these 12000 people, 2700 are jawans of the Security Forces and the remaining 9300 are innocent and simple common people who are not guilty.
3. The anti-development Left Wing Extremism not only target the Security Forces but also public property like roads, culverts, railway tracks, electricity and telephone towers, hospitals, schools, anganwadi and panchayat bhawans etc, that are created by the Government for benefit of the common man.
4. It is evident from the destruction caused by the Left Wing Extremists that they do not want people to get facilities and access to the development, in the remote and inaccessible areas, because these facilities provide the path of economic and social progress, to the local people
5. It also joins them to the mainstream of the nation. The cancer of LWE flourishes in poverty or backwardness.
6. Therefore, the LWE strategy is to ensure that the people of this area stay without electricity, without road, without education, so that the vested interest of the Left Wing Extremists continues unabated.

 

Recents Developements:

1. The whole country is agitated with the martyrdom of 25 CRPF personnel in the incident of April 24, 2017 in Burkapal, Sukma district of Chhattisgarh. In such situations, the challenge before us is to maintain focus and move towards our goal with speed, in a planned manner.
2. The Government was concerned but not perturbed by the attack on the CRPF Camp by the Left Wing Extremists and
3. A new formula of SAMADHAN has been evolved to tackle the Naxalites problem.

The solution to the LWE problem is not possible with any silver bullet. There is no short-cut for it. For this short term, medium term and long term policies need to be formulated at different levels. There is need to find a solution for this problem and the strategy is available and encompassed in the word ‘SAMADHAN’ which means-

S– Smart Leadership

A– Aggressive Strategy

M- Motivation and Training

A– Actionable Intelligence

D– Dashboard Based KPIs (Key Performance Indicators) and KRAs (Key Result Areas)

H– Harnessing Technology

A– Action plan for each Theatre

N– No access to Financing

SAMADHAN:-

S – Smart Leadership-

The key properties of ‘Smart Leadership’ are:

• Vision,
• Mission,
• Passion and
• Self belief

1. A leadership full of self confidence should have a solid vision on how he would envisage the challenges of the future and prepare his team and energise his team to a mission mode, in order to achieve his objectives. To make his team secure, disciplined and victorious, should be of paramount importance for him.
2. The success stories of many police officers in India are inscribed in the minds of the common people, as to how they kept their teams alive with energy. On the Left Wing Extremism front, we also need such leadership, who despite adversity, keep their jawans full of enthusiasm and teach them only to win.
3. Be it Central Forces or the district police, they will have to work under a coordinated strategy and plan. The most important thing is that the officers will have to lead from the front. Success in this regard cannot be achieved only by sitting in Delhi, Ranchi or Raipur..
4. Unified Co-Ordination and Command is needed in the LWE Front. Along with Strategic Command, Unified Command is also required at the Operational and Tactical Level. Intelligence sharing is important too.

 

A-Aggressive Strategy-

1. Need to consider whether to react only after the occurrence of such events? Should our role not be Proactive?
2. Learning from the old incidents, we need to bring aggression into our policy. Aggression in thinking, Aggression in strategy, Aggression in deployment of forces, Aggression in operations, Aggression in development and Aggression in road construction.
3. Have to be cautious that extremely defensive deployment may result in reduction of operational offensive.
4. Have to consider that although the figures of the surrenders of the Left Wing Extremisms are increasing, but whether benefit of intelligence from these surrendered LWE cadres is being derived.
5. Must ensure that the States take the ownership of LWE operations and CAPFs cooperate with them fully. At the same time, the forces on the Ground level should not lack leadership. “Unity of Purpose” and “Unity of Action” are essential for the success of operations.

 

M – Motivation and Training –

1. The Government has superior resources, training, technology, than the Left Wing Extremists. But there is a need for better coordinated efforts to counter the strategy of the LWE.
2. Success on this front cannot be achieved only by being emotional in this regard. The right vision, right strategy, efficient use of resources, knowledge of enemy strengths and weaknesses, training of their security forces, their facilities and arrangements of tools are necessary for success.
3. In the camps where the security forces are residing, proper facilities of power, water, connectivity should be provided so that the Security Forces may remain stress free. They should also be able to contact their family as per requirement.
4. In addition to information about the place of posting, security forces should also have knowledge of language, dialects, traditions and culture so that they can adapt to the local conditions and earn the trust of the local people.
5. Security forces must adhere to Standard Operating Procedures so that they are conscious about their own security.

 

A-Actionable Intelligence

1. To develop actionable intelligence it is important that all intelligence agencies and security forces establish a good network with local people.
2. Surrendered LWE cadre should be used for intelligence collection to the maximum possible.
3. Need to depute Shadow Intelligence Officers to trace the prominent targets associated with Left Wing Extremism.
4. There is a need to establish specific procedures between State Police and Central Forces for the exchange and use of intelligence.

 

D-Dashboard based KPIs (Key Performance Indicators) and KRAs (Key Result Areas):-

• Key Performance Indicators (KPIs) and Key Result Areas (KRAs) should be determined both for the State Police and the CAPFs. This would not only help to assess the preparedness but also their performance, regular progress of its unit and individual abilities of each police officer.

 

H – Harnessing Technology –

1. Technology is a Force Multiplier.
2. Many technologies including Space, IT and Communication have brought revolutionary changes in the world. Many new techniques are also being used in dealing with law and order and the crime. On the LWE  front, there is a need to use more of such latest technologies.
3. Use of some Cutting edge Technologies
4. The use of the UAV is sub-optimal, that needs to be augmented both by numbers and by use in the right place.
5. The Mini UAVs are extremely useful. Therefore, they should be procured and available in more quantities. We must try that with every battalion there must be atleast one UAV / Mini UAV.
6. Use high resolution PTZ Cameras, GPS Tracking, Handheld Thermal Imaging, Radar, Satellite Image etc.
7. Trackers in Weapons
8. Biometrics in smart gun triggers.
9. Trackers should also be embedded in Shoes, BP jackets etc.
10. In addition, unique identification numbers should also be used in Gelatine and other explosive materials.
11. States that do not have expertise in such state of the art technology, the Central Government can assist in this regard

 

A-Action plan for each theatre:- 

1. The situation of Left Wing Extremism in different States is not the same.
2. In different States, to fight Left extremism, there is a need to fight on multiple fronts and to create a specific action plan for each of such fronts, in order to achieve success on a systematic basis.
3. There is a need to create separate short-term, medium-term, long-term strategies, whose goals and deadlines are clearly defined.
4. The Implementation should be done on a Mission Mode defining the Key Performance Indicators (KPIs) for continuous monitoring and Key Result Areas (KRAs), that should also be aligned with these strategies.

 

N-No access to financing:-

1. Economic resources play an important role in any war or any such exercise, because when money is available, only then will it be possible to buy, eat, drink and possess ammunition and weapons. Therefore, choking the financial resources of the LWE is the most basic mantra in this fight.

Conclusion:-

1. We have come a long way in defeating the fight with Left Wing Extremists. In the remote areas, our young men are constantly working for the development and protection of the area endangering their lives.
2. That day is not far when this mindless violence will be completely finished and once again the atmosphere of peace and prosperity will prevail and people will rapidly join the main stream along with enjoying the fruits of development.

 

Note4Students

Cyber security one of the most important topics surfaced in this year. Various incidents of cyber-attack necessitated the engineering of stronger cyber defence mechanisms. In this context, this following article will provide an insight about cyber security.

Introduction

1. India witnessed more than 27,000 cyber security threat incidents in the first half of 2017.
2. Authorities including the telecom regulator TRAI are also noticing the threat posed by mobile applications that collect sensitive user data

Recent incidents

1. Two Indian conglomerates were forced to pay $5 million each in order to prevent hackers from disclosing information that could have implicated them in a wrongdoing.
2. State run Union Bank of India was breached by cyber hackers. The hackers had managed to get past the bank’s security systems but the money trail was traced and the movement of funds was blocked.
3. The vulnerability of the banks came into light recently when data of about 3.2 million debit cards was lost in what is claimed to the India’s biggest breaches. SBI, HDFC Bank, ICICI, YES Bank and Axis were worst hit by the breach of the debit cards.
4. WannaCry, a crypto-ransomware that is also called WannaCrypt, affected at least 200,000 computers in 150 countries, including India, described as the largest ever of its kind. The WanaCrypt encrypts data on a computer within seconds and displays a message asking the user to pay a ransom of $ 300 in Bitcoins to restore access to the device and the data inside.

Analysis

What is Cyber Space?

1. Cyberspace comprises IT networks, computer resources, and all the fixed and mobile devices connected to the global Internet
2. A nation’s cyberspace is part of the global cyberspace; it cannot be isolated to define its boundaries since cyberspace is borderless. This is what makes cyberspace unique.
3. Unlike the physical world that is limited by geographical boundaries in space—cyberspace can and is continuing to expand. Increased Internet penetration is leading to growth of cyberspace, since its size is proportional to the activities that are carried through it.

The term “cyber security” refers to three things:

1. A set of activities and other measures, technical and non-technical, intended to protect computers, computer networks, related hardware and devices software, and the information they contain and communicate, including software and data, as well as other elements of cyberspace, from all threats, including threats to the national security;
2. The degree of protection resulting from the application of these activities and measures;
3. The associated field of professional endeavour, including research and analysis, aimed at implementing and those activities and improving their quality.

India’s Vulnerability on cyber space

1. India remains vulnerable to digital intrusions such as cyber-espionage, cybercrime, digital disruption and Distributed Denial of Service (DoS)
2. The crimes related to cyber world can be multi-layered, multi-location, multilingual, multicultural and multi-legal, that’s why it is difficult to investigate and reach to the criminal.
3. The cases related to cyber-crime have increased by 70% in the year 2014 as compared to the year 2013.
4. There is growing threat from online radicalization.
5. The number of cybercrime cases registered in India has risen by 350 per cent in the three-year period from 2011 to 2014, according to a joint study by PwC and Assocham.
6. With the growing adoption of the Internet and smart-phones, India has emerged “as one of the favourite countries among cyber criminals.”
7. Major security threat: Critical infrastructure: Attackers can gain control of vital systems such as nuclear plants, railways, transportation or hospitals that can subsequently lead to dire consequences.
8. Despite having a National Cyber Security Policy (2013), risks to our critical infrastructure remain.
9. In spite of instituting a National Cyber Security Coordinator (2014), the rivalries between the National Technical Research Organisation (the nodal agency for cybersecurity) and the Ministry of Communications and Information Technology impede cooperation.
10. Lack of coordination among different government agencies.
11. China’s emphasis on ‘cloud computing techniques’, and the involvement of its Ministry of State Security in this endeavour, suggests that it is preparing for all-out offensive cyber operations. India would be a prime target.

What India Wants

1. Bleeding edge technology: Bleeding edge refers to technology that has been released but is still not ready for the general public due to the fact that it has not been reliably tested. The term bleeding edge was formed as an allusion to the similar terms “leading edge” and “cutting edge”.
2. Big data analytics: it is the process of collecting, organizing and analysing large sets of data (big data) to discover useful information.
3. Air gapping: Air gapping is a security measure that involves isolating a computer or network and preventing it from establishing an external connection. An air gapped computer is physically segregated and incapable of connecting wirelessly or physically with other computers or network devices.  Emphasis on cloud computing techniques.
4. Offensive cyber operations and strengthened cyber security.

International Convention on Cyber-crime:

1. Convention on Cybercrime, also known as the Budapest Convention.
2. The Budapest Convention is the first international treaty that addresses Internet and computer crime by harmonizing national laws, improving legal authorities for investigative techniques, and increasing cooperation among nations.
3. The Budapest convention is the only multilateral convention on cyber security – considered critical to economic and national security of a country
4. .Developing countries including India have not signed it stating that the developed countries lead by the US drafted it without consulting them.

Way Forward

The success in the futuristic space endeavour will depend upon setting up a well-tuned, cyber secure and tamper proof cyber security system, which can provide surge capabilities to bolster India’s Space programme during critical period or in hostilities.

Questions:

Q.) Cyber security, in the near future, will be the main component of the state’s overall national security and economic security strategies. Are citizens, organizations and public institutions ready to face challenges of cyber security? Critically analyse

Q.) Discuss the necessity of and measures being taken to introduce strong cyber security framework for banking sector in India.

Note4Students

Escalated tension in the various parts world necessitated an evacuation plan. Considering the size of Indian diaspora, tentative plans would not be successful in every instance. So this topic is important for mains examination.

Introduction

• India has extensive experience conducting evacuation operations, but given the rising economic contributions and political influence of Indian citizens abroad and the increasing complexity of these operations, the incentives to ensure the success of future ones are now even greater.
• As India’s diaspora continues to grow, so will the challenges New Delhi faces challenges in protecting this diverse and geographically dispersed population. To overcome these issues, the Indian government will have to institutionalize best practices, bolster its diplomatic and military capabilities, and improve coordination.

Fig: Indian diaspora

Analysis

Why do we need an evacuation policy?

1. India has conducted more than thirty evacuation operations across Africa, Asia, and Europe, including its largest-ever civilian airlift of 110,000 people from the Persian Gulf in 1990.
2. With one of the world’s youngest populations, India’s population is expected to peak at 1.7 billion in 2060, and many are likely to seek a new passport and consular support while traveling, working, or studying abroad.29 Keeping track of and monitoring this growing mobile population will pose a significant challenge to the Indian government.
3. According to the Ministry of External Affairs (MEA), an estimated 11 million Indian citizens now permanently reside abroad, and almost 16 million people of Indian origin hold other citizenships.1 The annual average rate of growth of India’s diaspora population was 4.5 percent between 2000 and 2015.2 Personal remittances are now twenty-nine times what they were in 1990, playing a vital role in the country’s economic growth and development policies.
4. Given the trend of increased migration and travel from India, it will become increasingly important for the country’s government to institutionalize its best practices and learn from the experiences of other countries.
5. According to the United Nations (UN), the total number of international migrants increased between 1990 and 2015 from 154 million to 244 million—now constituting 3.3 percent of the world’s population.
6. Evacuating citizens from abroad is an extremely complex mission in which distance, logistics, security, and coordination pose numerous obstacles. Such operations can assume various forms, and the instruments employed depend on myriad factors, such as geographic location, the nature of the crisis environment, or the size of the population to be extricated.
7. Several states have therefore developed extensive expertise and capabilities to evacuate their citizens and, most importantly, they have established standard operating procedures for such contingencies. For example, Brazil’s National Defence Policy now enshrines the protection of its 3 million citizens living abroad as a main objective.
8. However, given the lack of any formal doctrine or emergency plan, the success of India’s missions has mostly been due to the individual sacrifices of officials from its diplomatic corps, flagship carrier, and armed forces.
9. As more than 11 million Indians now reside abroad, and more than 20 million travel overseas each year, the government will no longer be able to rely on heroic, ad hoc efforts and quick-fix solutions.
10. Lingering and emerging challenges, including a lack of standard operating procedures and inadequate coordination, will only intensify as evacuation operations become larger in scope and public scrutiny increases

Steps To Be Taken By The Government

1. The Indian government should employ significant diplomatic and military resources to assess its evacuation operations and institutionalize best practices;
2. Develop standard operating procedures, including emergency doctrines;
3. Train and prepare its diplomatic cadre to operate in hostile environments, and increase coordination with other governments;
4. Assign a greater role to the armed forces, strengthening their capacity to plan and deploy in tandem with civilian authorities;
5. Establish a permanent coordinating mechanism that facilitates communication and joint operations across national, regional, and international levels and bureaucratic and military levels;
6. Designate a civilian air reserve fleet for evacuation operations to reduce the burden on Air India, whose staff also requires specific training;
7. Explore new communication technologies to develop consular platforms to identify, monitor, and contact citizens’ abroad, offering them real-time updates on evacuation procedures.
8. Expand efforts to manage public pressure through diplomacy and a communication strategy that appropriately prioritizes Indian citizens over people of Indian origin.

Conclusion

1. To secure their diaspora as a prized asset, home states are also more inclined to protect migrants in extraordinary times of crisis.
2. As a vulnerable and dislocated population, migrants are particularly exposed to various risks abroad, including natural disasters, political unrest, and violent conflict in their host country or region.
3. They are often specifically targeted by populist and extremist movements or forced to depart after sudden changes in immigration laws. In such circumstances, governments must act swiftly and decisively to protect the lives and assets of their citizens, which may require evacuating them safely back home.

Questions

Q1. A proper evacuation plan for overseas workers would serve our national interests. Analyse

Note4Students

The Union Cabinet has approved the new wage code bill. The Code on Wages, 2017 was introduced in Lok Sabha by the Minister of Labour and it is recently cleared by Cabinet. The Code would ensure universal minimum wage for all industries and workers. It will also cover those workers who are getting monthly pay of higher than Rs 18,000. Labour reforms is one of the long pending decision and the minimum wage is the basic solution for poverty alleviation, if not Universal Basic Income.

Introduction

The Wage code Bill seeks to consolidate laws relating to wages by replacing: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1949, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976 and will ensure uniformity of minimum wage across geographical regions and all sectors. If passed it is expected to benefit over 4 crore employees across the country. At present, every state decides the minimum wage for different industries and labour classifications .The bill seeks to empower the Centre to set a minimum wage across all sectors in the country and the states will have to maintain that.

Indian labour market has a sharp divide between organised and unorganised sector.The small proportion of organised labour enjoys an advantage with stringent laws and rules and regulations enabling them to fight for their rights. The major chunk however consists of unorganised labour with almost no job or social security. With India poised to have the largest workforce in the world by 2025 it is imperative that labour issues are given the attention and the importance that they deserve.

According to ILO, Social and economic outlook trends 2016 ‘Poor quality  job remains a pressing issue worldwide’ and 12 per cent of workforce in developed countries and 42 per cent in developing countries are in informal employment.

Key features of the Legislation

• 1. The bill defines Wages as it includes salary, allowance, or any other component expressed in monetary terms.  This will not include bonus payable to employees or any travelling allowance, among other.

Minimum Wage

• 1. National minimum wage:  The central government may notify a national minimum wage for the country.  It may fix different national minimum wage for different states or geographical areas.
  2. Fixing the minimum wage: The Code requires employers to pay at least the minimum wages to employees as specified by central or state government as National minimum wage. The Code specifies that the central or state governments will review or revise the minimum wage every five years.
  3. Working hours: The central or state governments will fix the number of hours that will constitute a working day. Further a day of rest for employees every week.  The amount of overtime will be at least twice the normal wage of the employee.

Payment of Wages

• 1. Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, or (iv) through digital or electronic mode.  The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.
  2. Deductions:  Under the Code, an employee’s wages may be deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv) recovery of advances given to the employee, among others.  These deductions should not exceed 50% of the employee’s total wage.

Payment of Bonus

• 1. Determination of bonus:  The employer will pay each employee an annual bonus of at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher. In addition, the employer will distribute a part of the gross profits amongst the employees in proportion to the wages earned by employees.
  2. Maximum bonus:  An employee can receive a maximum bonus of 20% of his wages.

Advisory Board:

1. The central and state governments will constitute their respective advisory boards.  These boards will have representation from: (i) employees, (ii) employers, and (iii) independent persons. 
2. Further, one-third of the total members will be women. 
3. The boards will advise the respective governments on aspects including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

Offences:

 The Code specifies penalties for offences committed by an employer, such as

(i) paying less than the due wages, or

(ii) for contravening any provision of the Code.  Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.

Merits of the Legislation

1. Will ensure decent  Minimum wage for all which will result into increase in disposable incomes in turn help in eradicating Poverty, hunger to achieve SDGs.
2. Uniformity in coverage. At present, the minimum wages fixed by the Centre and states are applicable to workers getting up to Rs 18,000 pay monthly and does not cover workers getting a monthly wage of more than Rs 18,000. If the bill is approved in the Parliament, workers getting a monthly pay of higher than Rs 18,000 would also be legally entitled to a minimum wage.
3. Multiplicity of definitions will be removed through this change.
4. The wage conditions of unskilled workers will improve.
5. This bill is expected to treat contract labour on par with regular employee to have dignified life.
6. It Will ensure humane working conditions through minimum working hours,overtime etc. and  prevent exploitation of labour.
7. Formalisation of economy.
8. Also help in reduce regionalism by reducing wage disparity across different regions.

Demerits of the Legislation

1. The Economic survey highlights 78% of indian firms employ under 50 worker and just 10% employ more than 500 comparable of china are 15 and 20% respectively. Further strengthening  of labour laws will worsen the situation.
2. According to Noble prize winner economist George Stigler, the minimum wages doesn’t satisfies original intentions i.e. elimination of poverty and it tends to reduce employment and  family income.
3. Labour comes under concurrent list and different states having different criteria in deciding minimum wages so there is possibility some states may raise concern.
4. Will facilitate ease of doing business but affect competitiveness of trade and industry, especially states capacity to attract FDI.
5. Economic theory and its evidences suggest that any price control leads to creation and expansion of black market. Similarly in this case companies will prefer contractual workers or keep majority of workforce in informal sector.
6.  Negative impact on hiring in tier II and tier III markets.
7. Implementation would be difficult and it may lead to inspector raj.

Way Forward/Conclusion

• 1. Bringing four legislations into one is a major step towards labour reforms.
  2. Looking at the larger picture, the new wage code is one part of the reforms needed to modernize the archaic labour laws in India, and hence a step in the right direction. But to make the new code into reality Government will have to,
• Generate political consensus; 
• Work on creating an infrastructure to ensure implementation; and 
•  Talk to state governments about the nuances of the new wage structure. It is a long process. Until then, the four crore employees will have to keep their fingers crosses.

 

Model Questions

Q.) What is the significance of the proposed Wage code in India? Explain the challenges that competitiveness in trade and industry will face?

Q.)List out recent labour reforms? How they will have impact on meeting Global standards and achieving economic growth?

Sources:

PRS India Website

Big Picture Discussion

The Hindu News, The Mint , Financial Express

Ministry of Labour

Yojana on Labour reforms

Note4Student:

After string of victories of BJP in all major elections The Standing Committee on Personnel, Public Grievances, Law and Justice, headed  by senior congress leader Anand Sharma called for debate on reforms in adoption of First past the post system and also suggested a dual system where separate votes for a candidate and a party could be considered. India being one of the world’s largest democracy any change or debate on election methods process is very important from our exam point of view.

Introduction

India adopted Parliamentary form of government with representative democracy in which legislatures are elected by First Past The Post system (FPTP) type of election.

Under this FPTP system in India:

Entire country divided in to constituencies now 543.

Each constituency elects one candidate

Candidate who gets highest number of votes declared elected than others. Even if votes share less than 50%.(Bharatiya Janata Party’s (BJP’s) massive election victory is the claim that they got 31.84% of vote share and  won 282 seats that, therefore, 69% of those who voted did not vote in favour of the winning party)

This system is also known as Single Member Plurality or Plurality Voting system in which winner takes it all. And all other votes are disregarded.

Analysis

Positives of having FPTP

1. Firstly it is praised for simplicity and easy to understand. No specialised knowledge of elections and politics required. During parliamentary debates members of constituency assembly representing Scheduled Caste and General Hindus rejected the system of proportional representation bcz of its complexity and difficult to understand  for illiterate population.
2. It retains link between the constituency, Member of Parliament (MP) and voter.
3. Fosters representation and ‘Geographical Accountability’.
4. It allows voters to choose between persons rather than just between parties or balances both party and candidate. So voter asses performance of individual candidate and party.
5. Gives chance to popular candidate to get elected even without party backing.
6. Cost effective.
7. Ensures stable government in such a diverse country.

Negatives aspects of FPTP

1. It may exclude minority parties from representation in Parliament or Councils if they don’t have concentration areas where their candidates can win. Lesser women MPs, MLAs as they don’t have area of concentration.
2. It will encourage development of ethnic parties i.e. political parties base their plans, policies in favour of particular clan, religion, region, etc.
3. Since there is delimitation of boundaries, cases of gerrymandering can occur.
4. FPTP system results in Two Party system. E.g. BJP and Congress.
5. It leaves a large number of wasted votes which do not go towards the election of any candidate.

Alternative to FPTP

Proportional Representation

Seats are allotted to the political parties according to their vote share. Here voter vote for party not for candidates.

Advantages of PR system

1. Faithfully translate votes cast into seats won.
2. Encourage or require the formation of political parties.
3. Give rise to very few wasted votes, depending on the threshold.
4. Facilitate minority parties’ access to representation depending on the or the district magnitude.
5. Encourage parties to campaign beyond the districts.
6. Restrict the growth of ‘regional fiefdoms’.
7. Make power-sharing between parties and interest groups more visible.

Disadvantages OF PR System

1. Gives rise to coalition governments and a fragmented party system i.e. Less stable government.
2. The inability of the voter to enforce accountability by throwing a party out of power or a particular candidate out of office.
3. Difficulties either for voters to understand or for the electoral administration to implement depending on voter’s education and training of poll workers.

Way forward

1. On the lines of European countries Dual system of election model need to be studied in which voters cast vote both  to Political party and candidate.
2. recommendations of the Law Commission’s 170th and 255th report should be implemented:
3. A hybrid of both first-past-the-post and proportional representation should be tried.
4. Both the reports have suggested that 25% or 136 more seats should be added to the present Lok Sabha and be filled by Proportional Representation.
5. Need to study PR system on pilot basis.

Conclusion

The election process and system should safeguard the following principles: more representation, transparency, verifiability, fairness, eligibility to vote, free, secret and universal suffrage, and accessibility.

No electoral system is perfect. Each one favours one or more of the objectives of elections – but not all of them. Broadly speaking, PR systems favour accuracy of representation; While FPTP favours stability. Majority systems tend to stress strong and stable government. Different electoral systems produce different results. There is no one objectively “best” system. Need to debate, discuss, to evolve more suitable election system.

Q1. What is First past the post system? How it is different form Proportional representation? Is it time for India to shift from FPTP system to PR system? Critically analyse.

Q2. Electoral system failed to achieve India as a more representative democracy? Critically analyse this statement and give your views with recent examples.