Comprehensive News Analysis - 04 April 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. U.S. Act to ‘institutionalise’ defence, trade ties with India

2. ‘Human rights concerns should not impair India-EU relations’

C. GS3 Related:

1. Ballast water bringing invasive species to coasts

2. Rail, road connectivity to top Board of Trade agenda

D.GS4 Related
E.Important Editorials : A Quick Glance
The Hindu:

1. The need to pre-empt nuclear terrorism

2. Out of depth

Others:
Indian Express:

1. When less is not more

2. Business Line: Banking on digital transformation

The Economic Times:

1. Linking Nuclear Security and Terror

2. Business Standard: A relook at DGFT’s prudence & relevance

F.Concepts-in-News: Related Concepts to Revise/Learn:
G.Fun with Practice Questions 🙂
H.Archives

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Useful News Articles

A. GS1 Related

– Nothing here for today folks! –

 

B. GS2 Related

1. U.S. Act to ‘institutionalise’ defence, trade ties with India

Topic: International Relations

Category: Effect of policies and politics of developed and developing countries on India’s interests

Location: The Hindu, Page 12

TH04_US_Col_eps_fT_2800380e

Keypoints:

  • The US-India Defence Technology and Partnership Act, would “institutionalise” the Defence Technology and Trade Initiative (DTTI) framework between the two countries and the Indian-specific cell in the Pentagon.
  • The U.S.-India Business Council played a major role in pushing the resolution forward.

India Rapid Reaction Cell (IRRC)

  • The IRRC is the only country-specific cell in the Pentagon and functions under the office of the Under Secretary of Defence Acquisition, Technology and Logistics. It was set up in January 2015 with a six-member team, which is indicative of the importance attached to deepening strategic cooperation with India.
  • The IRRC was the initiative of U.S. Defence Secretary Ash Carter, also the key architect of the DTTI, launched in 2012 to deepen high-technology cooperation and move towards co-development and co-production of high technology platforms.

Progress of the projects under the DTTI

  • A project agreement had been signed in August last year for two of the four pathfinder projects — mobile electric hybrid power sources and uniform integrated protection ensemble (nuclear, biological and chemical protection suits for soldiers).

 

2. ‘Human rights concerns should not impair India-EU relations’

Topic: International Relations

Category: Effect of policies and politics of developed and developing countries on India’s interests

Location: The Hindu, Page 14

Geoffrey_Van_Orden_2799918f

Keypoints:

  • Geoffrey Van Orden, a Member of the European Parliament (MEP) from the British Conservative Party, said that he would like to see a more practical and realistic relationship between India and the EU.
  • The Summit of March 30 was an opportunity to continue expanding ties beyond trade and this was reflected in some of the items on the agenda — a water and clean energy partnership and a commitment to cooperate on counter-terrorism issues.

 

Recent Issues

  • Despite the scope for cooperation, bilateral engagement at the higher levels had become a casualty of irritants between the two governments, such as the banning of some 700 generic drugs from India in 2015 and the issues concerning the Italian marines.
  • The MV Seaman Guard Ohio case, where six Britons and 14 Estonians were among those arrested in 2013 for unauthorised entry into the territorial waters of India with arms and ammunition on board, has also become a pressure point between the two governments.
  • With regard to the view that the EU talks were partly stalled due to human rights concerns, Mr. Van Orden’s view was that while some MEPs had expressed such concerns, these should not hamper bilateral engagement.

 

India- Britain relationship

  • On the India-Britain relationship, there is greater scope for engagement, including in security and defence, because of a shared history and the large Indian diaspora in Britain.
  • Britain will deploy a carrier strike force, ‘East of Suez’ in 2020, and this will be a significant opportunity for defence cooperation.

 

C. GS3 Related

1. Ballast water bringing invasive species to coasts

Topic: Environment and Ecology

Category: Bio-diversity

Location: The Hindu, Page 8

Keypoints:

  • The expansion of seaports and minor ports could pave the way for the arrival of invasive species in coastal areas.
  • A recent survey by the Department of Aquatic Biology and Fisheries, University of Kerala, had recorded the presence of as many as 10 invasive species in the biodiversity-rich intertidal habitats of the Kerala coast.
  • The distribution of invasive species reported from the Kerala coast is likely to have been assisted by shipping.
  • The colossal loads of ballast water carried by ships could transport fish, viruses, bacteria, algae, zooplankton and benthonic invertebrates to harbours at a faster pace.
  • Ballast water is one of the biggest transporters of non-native marine species. Studies done by experts have indicated that over 10,000 marine species are being transported across the world in ballast water carried by ocean-going vessels for stability and safety.
  • Ballast water is discharged when the ship enters a new port, releasing alien organisms into the local waters.
  • Ballast water is also considered a vehicle for toxic algae causing red tides and harmful algal blooms.

 

2. Rail, road connectivity to top Board of Trade agenda

Topic: Indian Economy

Category: Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Location: The Hindu, Page 15

TH04_BU_PORT_2799925f

Keypoints:

  • The issue of better rail and road connectivity from export clusters to ports and airports at the state-level is expected to top the agenda during the April 6 meeting of the Board of Trade (BoT), headed by Commerce and Industry Minister Nirmala Sitharaman
  • The board is meeting to evolve steps to boost India’s exports.
  • The board will also discuss the recent cutback in government aid for export marketing under the Market Access Initiative Scheme and problems faced by exporters in getting refund of duty and taxes from the government.
  • Earlier the commerce department was looking at bridging the gaps in export-related infrastructure through the Assistance to States for Infrastructure Development of Exports (ASIDE) Scheme.
  • Now the allocation for the ASIDE Scheme is practically nil and subsequent to higher allocation to the States in the Central taxes (in accordance with the Finance Commission’s suggestion), it has been left to the States to fund such infrastructure projects.
  • Many States face shortage of funds or have different priorities and they neglect export-related infrastructure.
  • This has in turn added to the logistics cost for exporters.

 

How the Board of Trade (BoT) can help

  • The BoT, which was reconstituted on March 23, comprises of representatives from the concerned ministries and from leading companies belonging mainly to export-oriented sectors, besides export promotion councils, industry chambers and trade experts.
  • The infrastructure-related issues will be taken up especially since the BoT comprises secretaries of the ministries of shipping, aviation and surface transport as well as the heads of National Highways Authority of India, Railway Board and the Container Corporation of India.
  • During the meeting of the (Centre-State) Council for Trade Development and Promotion in January 2016, it was pointed out that ‘poor (export-related) infrastructure’ was the top-most factor hampering exports, and that the role of the states was crucial in addressing this.
  • Also slated for discussion is a proposal to grant interest subsidy on pre and post-shipment rupee export credit to merchant exporters (who procure goods from manufacturers for exports) from sectors such as handicrafts, carpets and agriculture.

 

D. GS4 Related
E. Important Editorials: A Quick Glance

The Hindu

1. The need to pre-empt nuclear terrorism

Topic: International Relations, Internal Security

Category: Agreements involving India and/or affecting India’s

interests, Role of external state and non-state actors in creating challenges to internal security

Key points:

  • The Nuclear Security Summit (NSS), is a platform to discuss strategies to block terror groups such as the Islamic State from obtaining radioactive material.
  • This summit was led by the Barack Obama administration.
  • A notable absentee from the high table was Vladimir Putin, the President of Russia, which houses the largest number of nuclear weapons — some 7,300 warheads, compared to the U.S.’s 6,970 and India’s 120.
  • Russia’s absence, apparently owed much to Mr. Putin’s diplomatic stand-off with Mr. Obama over the crisis in Syria and Iraq.
  • Putin’s absence to an extent doomed the fourth and final NSS to piecemeal rather than dramatic goals.
  • Nonetheless, the Summit saw 50-odd participant-nations celebrate the creation of a strong legacy in detecting, intercepting and securing vulnerable and illicitly trafficked nuclear materials, including pre-emptively safeguarding stockpiles of highly enriched uranium (HEU).

 

Where India stands?

  • India’s achievements in the realm of improving nuclear security have been considerableduring this time.
  • They include, a) establishing a rigorous legislative framework for developing nuclear resources and a Global Centre for Nuclear Energy Partnership, b) the contribution of $2 million towards the Nuclear Security Fund, and c) participation in UN and IAEA joint mechanisms to strengthen nuclear security.
  • However, along with Russia, China and Pakistan, India has been frustrating the West as a hold-out that refuses to sign a 2014 Nuclear Security Implementation initiative.
  • The pact was joined by more than two-thirds of the participating states and is arguably the most significant instrument to build a robust nuclear security system based on national commitments to the application of international principles and guidelines, including peer reviews.

 

Conclusion

  • Worldwide, the alarms for nuclear terrorism are likely to be blinking red: a case in point is the discovery by the Belgian police that IS conducted surveillance of the home of an officer at a Belgian nuclear site that held large stocks of HEU.
  • India cannot be complacent over securing vulnerable nuclear material, and the first step has to be a willingness to speak openly about the risks of terrorism and sabotage posed by its clandestine nuclear weapons development sites, and not just on its safeguarded civilian nuclear energy programme.

 

2. Out of depth

Topic: Indian Economy

Category: Infrastructure: Energy

Key points:

  • Oil and gas exploration, especially in deepwater, is a risky business that requires highly sophisticated technology which, in turn, requires huge funding.
  • The Gujarat State Petroleum Corporation (GSPC), state-owned company, has spent over Rs.17,000 crore of public money over the last five years in the Krishna-Godavari Basin with nothing to show for it in terms of either oil or gas output.
  • A report of the Comptroller and Auditor-General of India (CAG) points out that the project was badly planned, thereby leading to both cost and time overruns.

GSPC’s miscalculation

  • Even the biggest and best oil companies make miscalculations while exploring frontier basins; such failures go with the territory — they occur despite the deployment of the latest technologies, often because oil and gas reservoirs are formed in complex depositional environments.
  • The GSPC’s big mistake was not overestimation, but the somewhat unrealistic assumption that it could develop the highly complex deepwater field on its own.
  • At a time when even ONGC with decades of experience was circumspect about how to go about developing its block in the KG Basin, GSPC with no comparable track record plunged headlong. The kind explanation for this approach is that it was a bad miscalculation.
  • Given the difficult nature of the high-temperature and high-pressure KG Basin field, GSPC should have roped in a technology partner, as Reliance did with BP. The company could have even considered collaborating with other PSUs such as ONGC or Oil India.
  • GSPC is probably also guilty of not correcting the course after seeing that Reliance ran into technical problems in the same deepwater field despite accessing cutting-edge technology and global expertise. The urge to strike out independently despite a clear lack of technical expertise in a business fraught with risks has proved costly indeed for the company — and for the taxpayer.

Others:

Indian Express:

1. When less is not more

Topic: Indian Polity, Governance

Category: Representation of People’s Act, Government policies and interventions

Keypoints:

  • Prime Minister Narendra Modi suggested that elections to the Lok Sabha, Vidhan Sabha and local bodies should be held simultaneously
  • This has brought to centre-stage an issue that has been raised intermittently, for years.
  • The idea is good in principle but seems fraught with constitutional issues and administrative problems.

Reasons prompting this proposal

  • Frequent elections bring to a standstill normal functioning of the government and life of the citizens and bring a heavy recurring cost.
  • Typically, elections to the Lok Sabha are spread over two and a half months.
  • As soon as the Election Commission announces the poll dates, the model code of conduct (MCC) comes into operation. This means that the government cannot announce any new schemes, make any new appointments, transfers or postings without EC approval. Ministers get busy in the election campaign, the district administration machinery gets totally focused on elections.
  • The cost, is a major issue
  • The costs of election have gone up enormously. It has two components — the cost of management to the EC/ government.
  • And the cost to candidates and political parties. Though there are no exact estimates, one guesstimate puts it at Rs 4,500 crore.
  • Money power of political parties and contestants
  • Though the law prescribes a ceiling on the expenditure of candidates, the fact is that it is violated with impunity.
  • There is no cap on the expenditure of political parties, which exploit this loophole to the hilt.
  • Aggravation of vices
  • Another consequence of frequent elections is the aggravation of vices like communalism, casteism, corruption (vote-buying and fund-raising) and crony capitalism.
  • If the country is perpetually in election mode, there is no respite from these evils.

 

Potential Benefits of frequent elections

  • One, politicians, who tend to forget voters after the elections for five years have to return to them. This enhances accountability, keeps them on their toes.
  • Two, elections give a boost to the economy at the grassroots level, creating work opportunities for lakhs of people.
  • Three, there are some environmental benefits also that flow out of the rigorous enforcement of public discipline like non-defacement of private and public property, noise and air pollution, ban on plastics, etc.
  • Four, local and national issues do not get mixed up to distort priorities. In voters’ minds, local issues overtake wider state and national issues.

 

Conclusion

  • It’s possible to reduce the duration of the election process by half — by conducting the elections in one day. That requires making available to the EC five times the Central armed police force that is currently provided.
  • Instead of 700-800 companies, the EC will then need 3,500 companies. Raising a few battalions of various paramilitary forces will also give relief to the extremely stretched and stressed forces, provide employment and contribute to better enforcement in troubled areas.
  • The other possible and desirable action is to cut the role of money power in elections. It requires two things: Putting a cap on political party expenditure and state-funding of political parties (not elections), with a simultaneous ban on all private, especially corporate, funds.

 

The Hindu Business Line:

1. Banking on digital transformation

Topic: Indian Economy

Category: Technology missions, Effects of liberalization on the economy, changes in industrial policy

Keypoints:

  • Banks are typically seen as resistant to any change — be it technology or otherwise. Part of the reason is cultural — banks are supposed to be risk averse and conservative. The other is driven by the fact that banks have a strong line of defence from incumbents — they have a strong distribution channel, a large set of captive customers (and their money) and a complex regulatory framework among other things.
  • In the context of banking, the evolution of smartphones, social media, the rising value of customer experience, service expectations and lower switching costs for customers are changing the way banks function.
  • The disruption comes not just from smartphones (and easier customised access) but also from the accessibility/availability of data that wasn’t possible earlier.
  • The RBI recently allowed 11 entities to open payment banks in India. Public cloud has also helped banks cut down infrastructure cost substantially.
  • Banks that embrace this new digital world will have a better chance to survive and emerge stronger and more profitable.

How should banks embrace change?

  • Simplify customer experience via digital channels
  • Banks have to redesign their processes keeping the customer at the centre. Indian millenials are digital natives growing up with Uber and Amazon as benchmarks.
  • The role of brick-and-mortar bank branches will undergo a drastic transformation to provide new and more relevant experiences.
  • Unlike today, where branches handle a majority of financial transactions, these centres will work like showrooms to display signature products and services.
  • Use data to differentiate
  • At present, banks have just scratched the surface with traditional business intelligence (BI) tools.
  • They now need to move towards using data engineering and data sciences.
  • Avoid trying to do all the innovation in-house
  • Given the risk averse culture of banks, it is inherently a difficult task for them. Partnering with strategic fin-tech firms to try new innovations is a better bet.
  • Increase focus on millennials, small businesses and unbanked
  • These segments are cost conscious, they have been under the radar of banks, and constitute large groups.
  • The Centre’s programmes such as Aadhaar and Jan DhanYojana are becoming the foundation on which banks can build long-term sustainable businesses.

Conclusion

  • The time is ripe for new age banks. Hence, finding the right transformation partners for this journey is essential.
  • There is a silver lining for Indian banks as opposed to banks from the developed world.
  • The extent of legacy infrastructure that our banks have is limited and hence they are better suited to leapfrogging into the new world.

 

The Economic Times:

1. Linking Nuclear Security and Terror

Topic: International Relations

Category: Effect of policies and politics of developed and developing countries on India’s interests

Keypoints:

  • Prime Minister Narendra Modi’s recent foreign tour had two objectives:
    a) garner support for India’s membership of the Nuclear Suppliers Group (NSG), and
    b) to highlight that nuclear security cannot be achieved without a concerted global approach to tackle terrorism.
  • This entails acting on countries like Pakistan, where state actors collude with terrorists.
  • Much of the prime minister’s engagement focused on India’s membership to global nuclear export regimes.
  • The most important demonstration of India’s leadership lies in the linking of the issue of terrorism and nuclear safety.
  • In calling for the adoption of a global rather than national response to terror, New Delhi has brought to the fore aweakness in the current efforts to tackle terrorism.
  • In reiterating the problem of state actors working with terrorists and nuclear traffickers, the prime minister turned the spotlight on a real but rarely recognised problem: Pakistan, with its fast-growing nuclear arsenal and nexus between the state apparatus and terrorists.
  • The true measure of success of this intervention will be evident at the NSG plenary in June — if India secures membership of this group. Failing which, this visit will be just one more stop in New Delhi’s continued diplomatic effort.

 

Business Standard:

1. A relook at DGFT’s prudence & relevance
Topic: Indian Economy

Category: Changes in industrial policy

Keypoints:

  • The commerce ministry intends to hire a consultancy firm to conduct an in-depth study of the scope and nature of the functions and operational tasks undertaken by the Directorate General of Foreign Trade (DGFT).
  • The idea is a relook at the prudence and relevance of its activities, and ascertain the degree of optimality with which they achieve the intended policy objectives and regulatory concerns.
  • If pursued diligently, this should eventually lead to restructuring the DGFT in a meaningful way, with less government and more governance.
  • The ministry has called for proposals from consultants for conducting an extensive study of the relevant practices in major trading nations/hubs of the world.
  • The best part of the Request for Proposal (RFP) is the Terms of Reference that require the consultants to examine the adequacy of the Foreign Trade Policy (FTP) in its current form.
  • The RFP says the consulting entity should have proven expertise in research-based analytical studies in the area of economic and commercial policy, and have the necessary reach and access to the relevant resources that are required for such a global study.
  • To be eligible, it should have had a minimum turnover of Rs 50 crore in each of the past three years, experience of at least 10 years in consultancy assignments in India, prior experience of policy advisory, institutional strengthening and capacity building, related to government institutions, experience in serving the government in at least five similar projects in the past three years, have a minimum of five offices outside India in different countries and have minimum employee strength (consulting staff only, and excluding audit/tax or other non-consulting divisions) of 100.
  • It has long been felt that the DGFT has a definite role in regulating imports and exports, and in formulating export promotion schemes.
  • While also advocating administration of the schemes through customs and excise, rather than regional offices of DGFT.
F. Concepts-in-News: Related Concepts to Revise/Learn:
  1. Model code of conduct (MCC)
  2. Directorate General of Foreign Trade (DGFT)
  3. Nuclear Suppliers Group (NSG)
  4. Assistance to States for Infrastructure Development of Exports (ASIDE) Scheme
  5. Gujarat State Petroleum Corporation (GSPC)
  6. Defence Technology and Trade Initiative (DTTI)
G. Fun with Practice Questions 🙂

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