Comprehensive News Analysis - 11 July 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. ‘Peaceful pockets’ in J&K rise up in protest

C.GS3 Related:

1. Govt. to announce recapitalisation of public sector banks

2. Probe into IS ties extends to Sri Lanka

3. India to seek help for services pact at UN

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

The Hindu

1. All you need to know about the GM food controversy

2. Besides GST Bill, many other important draft laws are pending

3. Ending impunity under AFSPA

4. It’s time for an urban upgrade

5. Storm in the South China Sea

The Indian Express

1. There is an issue of the tyranny of the 10 per cent in our policy focus: YagaVenugopal Reddy(former RBI governor)-Excerpts from Interview

2. Being unneighbourly

Others

1. PIB

a) National Coordinated Action takes off for clean-up of 10 iconic places as Models of Swachhta under SBM

b) Rural women solar engineers (Solar Mamas) present a skill demonstration to PM in Dar-es-Salaam

c) Shri Gadkari’s Visit to give New Momentum to India’s Ties with the US in Infrastructure Sector

d) Captain Radhika Menon, First Woman Captain of Indian Merchant Navy to receive IMO Award for Exceptional Bravery at Sea

2. The Financial Express:

a) How Indian Railways are critical for GDP, carbon footprint

b) National E-Governance Plan: Justice delayed, is justice denied

c) Tax certainty: Where does Narendra Modi govt stand?

3. The Business Line:

a) Boosting labour reforms

b) Trouble’s brewing for us in the Maldives

c) To Read:Genesis of NPAs

4. The Economic Times:

a) Wind up SUUTI: Firmly, transparently

5. Quick Bits and News from States

a) Kudankulam plant reaches milestone

b) SC seeks review of law on advocates

c) Speculation ahead of South China Sea award

d) Forceful presentation by Wigneswaran’s representative on federalism

e) India backs African countries’ demand for curbs on cotton subsidies at WTO

f) US proposes tough fuel norms at G20

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

 

B. GS2 Related

 

1. ‘Peaceful pockets’ in J&K rise up in protestTopic: Federal Relations

Category: Polity

Key points:

  • The Jammu and Kashmir government says it is grappling with a new pattern of violence in the State in the aftermath of the killing of the HizbulMujahideen commander Burhan Wani
  • “The security challenge has come from fringe areas and peripheries this time. We will be assessing its causes,” said Additional Director General of Police, CID.Another worrying pattern is the attacks on minority colonies in Pulwama, where, the police said, two abandoned houses of Pandits were set afire by mobs
  • “Security agencies admitted that Wani and his team had not crossed the Line of Control to get arms training. Whatever is happening in the State is spontaneous. The government of India should declare every Kashmiri a terrorist or must understand that the problem is beyond the scope of law and order and needs a solution”Independent MLA Engineer Rashid said

 

C. GS3 Related

 

  1. Govt. to announce recapitalisation of public sector banks

Topic: Banking

Category: Economy

Key points:

 

  • As early as Monday, the Centre is likely to announce the first tranche of the Rs 25,000 crore capital infusion for public sector banks (PSBs), planned for this financial year (2016-17). The first tranches could add up to about Rs.10,000 crore, said a source at the Finance Ministry
  • The recapitalisation is aimed at shoring up the PSBs lending capacities that are restricted by poor asset quality and weak capitalisation
  • Gross bad loans, as a proportion of the total advances by these banks, rose to 7.6 per cent, a 12-year high in March 2016, according to the Reserve Bank of India’s latest financial stability report released on June 28
  • The government has said its ultimate aim is to lower the number of large PSBs to 8-10 from the current 27 and that it is not averse to reducing its stake in each to up to 52 per cent

 

2. Probe into IS ties extends to Sri LankaTopic: Terrorism

Category: Security

Keypoints:

  • Most mainstream Muslim organisations in Kerala have denounced the Islamic State (IS) even as the investigation into the suspected defection of at least 12 Keralites to the proscribed organisation unfolded across the State and beyond the country’s borders
  • Officials privy to the Central and State inquiries said the focus has also shifted to Sri Lanka, which “reports indicated” was the “common transit camp” for several of the “missing families” suspected to have joined the IS
  • They said the Sri Lankan government was conducting its own investigation after reports emerged that at least two of its citizens had joined the IS last year

 

3. India to seek help for services pact at UNTopic: Services

Category: Economy

Keypoints:

  • India will press for endorsement by more nations for its proposal on a global pact to expedite the services trade flow, during the forthcoming Nairobi meet of the United Nations (UN) body for development issues including on trade-UNCTAD(The July 17-22 Nairobi (Kenya) meet will be the UN Conference on Trade and Development’s (UNCTAD) 14th quadrennial ‘Ministerial Conference’. The ‘Ministerial Conference’ is the Geneva-headquartered UNCTAD’s highest decision-making body, and is held every four years ever since UNCTAD was set up in 1964)
  • The proposed pact, among other things, is aimed at making it easier for services professionals and skilled workers to move across borders for ‘short-term’ projects
  • It will officially be known as the ‘Trade Facilitation Agreement (TFA) for Services’ at the World Trade Organisation (WTO)-level. Its objectives include streamlining procedures for global services trade, besides ensuring recognition at the WTO-level for services as a tradable item by establishing a framework — for clarity on definitions and for settlement of disputes

 

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

 

The Hindu

 

  1. All you need to know about the GM food controversy

Topic: GM Crops

Category: S&T

Keypoints:

  • Last week, over a hundred Nobel laureates shot off a letter to NGO Greenpeace calling its campaign against genetically modified (GM) crops “misleading” and “unscientific.” The letter has re-ignited the debate over how safe it is to consume GM food
  • Environmentalist Vandana Shiva, founder of Navdanya, an organisation promoting organic farming, is clear that GM crops contaminate the environment and the letter by the Nobel winners is merely an opinion, and not an authoritative study to go by
  • What is the science behind GM crops?
  • Ever since the discovery of the DNA double-helix model by Watson and Crick, scientists realised it was possible to manipulate the DNA features of an organism to create new traits in them by borrowing genes from other organisms and mixing it with theirs. In the case of GM food, scientists insert into a plant’s genome one or several gene from another species of plant or even from a bacterium, virus or animal. This is to inject desired traits such as pest-resistance or Vitamin A (as in the case of golden rice)

 

  • Is GM food unsafe?
  • Most studies on the safety of GM food are heavily debated; with the result that it is hard to conclude they are unsafe. The International Agency for Research on Cancer (IARC) classified glyphosate, a herbicide that goes with Monsanto’s Roundup Ready product, as “probably carcinogenic” in 2015. However, this has been challenged by food scientists. This ensures that only the weed dies and not the crop itself, as the GM food is modified to resist glyphosate. In a review paper of GMO safety assessment studies, environmental scientist Marek Cuhra has shown that glyphosate-tolerant GM food plants accumulate glyphosate residues at unexpected high levels
  • Till date the most controversial study around safety of GM food has been on GM corn by French molecular biologist Gilles-ÉricSéralini. In a 2012 journal paper, he had shown that rats fed GM corn and the herbicide Roundup developed tumours. But his journal paper was withdrawn after its data was shown to be flawed
  • A study released by the Japanese Department of Environmental Health and Toxicology, based on a 52-week feeding of GM soybeans to rats, found “no apparent adverse effect in rats” in 2007
  • In 2012, scientists from the University of Nottingham’s School of Biosciences released a review of 12 long-term studies and 12 multi-generational studies of GM foods, concluding there is no evidence of health hazards from GM food. The European Commission too funded 130 research projects on the safety of GM crops and could not find anything that could prove the risks from GM crops
  • Is there more to the GM controversy?
  • It isn’t just about safety. There are arguments against GM food that are economic and social in nature. Advocates of organic farming like Vandana Shiva have voiced serious concern about multinational agribusiness companies such as Monsanto and Bayer taking over farming from the hands of small farmers, which includes several poor women in developing countries like India. This would mean loss of autonomy over the manner in which agriculture itself is practiced, with increased dependence on GM seed companies and herbicides manufactured by them, putting financial strain on farmer households
  • There are also concerns regarding loss of food biodiversity if corporate food varieties begin to flood the markets. In a note published on the Navdanya site, Ms. Shiva wrote that Golden Rice is less efficient in providing Vitamin A than the biodiversity alternatives that those grown by indigenous farmers. She also wrote that GMO ‘iron-rich’ bananas have less iron than turmeric and amchur (mango powder). “Apart from being nutritionally empty, GMOs are part of an industrial system of agriculture that are destroying biodiversity, and we are losing access to the food systems that have sustained us throughout time,” she wrote
  • However, scientists in the U.S. and elsewhere are firm that GM food can resolve the hunger challenge in the developing world, as the Nobel Laureates’ letter states. They also speak of the benefits of insect-resistant food crops that can increase farm productivity for farmers
  • The GM scene in India
  • While a Directorate General of Foreign Trade notification in 2013 addressed the issue of labelling by requiring those importing GM food to explicitly mention it in their labels, in the case of home-manufactured products like edible oil, there are chances of GM cottonseed oil being mixed with other edible oil without any labelling, she said
  • Though no State government in India has permitted commercial cultivation of GM food till now, field trials for 21 GM food crops, including GM vegetables and cereals, have been approved by the government

 

2. Besides GST Bill, many other important draft laws are pendingTopic: Legislation

Category: Polity

Key points:

  • The monsoon session of Parliament is set to begin on July 18 and end on August 12. Though the government is keen on ensuring the passage of the GST Bill and the much-needed constitutional amendment to be passed in the Upper House, a host of other important bills are pending in Parliament
  • Firstly, the government must ensure the passage of three Bills in the Rajya Sabha in order to replace three ordinances. These include The Indian Medical Council (Amendment) Ordinance, 2016 and The Dentists (Amendment) Ordinance, 2016. These ordinances were needed to establish a National Eligibility Entrance Test (NEET) for undergraduate and postgraduate medical courses as per a Supreme Court order, as well as for giving exemption to the States that opt out of the uniform exam for 2016-17
  • The third ordinance pertains to ‘Enemy Properties’, a term used to refer to property owned by Pakistan nationals in India. The Enemy Property (Amendment and Validation) Bill, 2016 vests the rights of enemy property on the custodian and declares transfer of such property by Pakistan nationals as void. If the Bill turns into an Act, then civil courts cannot hear disputes pertaining to enemy property. It is because of this clause that the Bill could not be passed and the government took ordinance route three times

 

  • Pending Bills in the Lok Sabha
  • A total of 11 Bills are pending in the Lok Sabha, including four for which Standing Committees have sent their reports. Since the ruling party enjoys majority in the Lower House, the passage of the Bills should not be a problem
  • The Factories (Amendment) Bill, 2014 seeks to amend the 1948 Factories Act to keep pace with International LabourOrganisation (ILO) conventions. The Bill includes provision for workers’ safety, amendments to overtime hours, higher minimum wages, health and welfare of workers, especially women and disabled, and penalties for various offences
  • The Electricity (Amendment) Bill, 2014, is needed for the government’s much publicised UDAY scheme. If made an Act, supply licences will be granted by a State Electricity Regulatory Commission and customers can choose their electricity provider
  • The Lok Pal and Lokayuktas and Other Related Laws (Amendment) Bill,2014
  • In 2014, the government decided to amend the Act to make Lokpal the single point to investigate corruption related cases. The amendment will pave way for the leader of the largest opposition party to be a member of the panel that selects the chairperson and members of the body. It also makes mandatory for government employees to declare their wealth
  • The Merchant Shipping (Amendment) Bill,2015 was tabled to amend the 1958 Act to ensure compliance with the Nairobi International Convention and the International Convention on Civil Liability for Bunker Oil Pollution Damage
  • The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015 would increase the allowance for investment in MSME manufacturing and services sector. The Consumer Protection Bill, 2015 proposes to create a Central Consumer Protection Authority with powers to take suo moto actions against unfair trade practices, defective products, and overcharging, among others. The Bill will also create Consumer Disputes Redressal Commissions and Consumer Mediation Cell at districts, States, and national levels

Comparison of investment limits for enterprises in manufacture/production (in Rs.)

Type of Enterprise MSME Act, 2006 MSME Bill, 2015
Micro 25 lakh 50 lakh
Small 25 lakh to 5 crore 50 lakh to 10 crore
Medium 5 crore to 10 crore 10 crore to 30 crore

Comparison of investment limits for enterprises providing services (in Rs.)

Type of Enterprise MSME Act, 2006 MSME Bill, 2015
Micro 10 lakh 20 lakh
Small 10 lakh to 2 crore 20 lakh to 5 crore
Medium 2 crore to 5 crore 5 crore to 15 crore

Source: PRSIndia.org

  • The Benami Transactions (Prohibition) Amendment Bill, 2015 seeks to amend the definition of benami and benami transaction to include transactions made in fictitious name and grants exemptions if the benamidar is spouse or children or a member of Hindu Undivided Family
  • A Parliamentary Standing Committee has agreed to include the amendments made by Rajya Sabha in the Indian Trust (Amendment) Bill, 2015. This Bill will be tabled again in Lok Sabha.
  • In addition to these the Companies (Amendment) Bill, 2016, referred to Standing Committee, the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill,2016 that was referred to Joint Committee and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill,2015, better known as the land Bill may also be taken up
  • Prominent Bills pending in the Rajya Sabha
  • There are 25 Bills pending in the Rajya Sabha. The main reason for the backlog is that the ruling party has only 46 members in the House. Even if all the six nominated members and alliance MPs pledge their support to the ruling party, it still falls short of majority
  • Three Bills already passed by the Lok Sabha need clearance from the Upper House. They are the Whistle Blowers Protection (Amendment) Bill,2015; the Compensatory Afforestation Fund Bill,2016, the Regional Centre for Biotechnology Bill, 2016
  • The Prevention of Corruption (Amendment) Bill, 2013 was referred to the Select Committee

 

  • In addition to these, 34 Bills on which reports were presented by Standing Committees are likely to be taken up in this session. The prominent ones are Child Labour (Prohibition and Regulation) Amendment Bill,2012, Right of Persons with Disabilities Bill,2014; and the Pesticides Management Bill, 2008

 

3. Ending impunity under AFSPATopic: Federal Relations

Category: Polity

Key points:

  • “Accountability is a facet of the rule of law.” This established legal principle has acquired fresh significance after the Supreme Court ruled that the armed forces cannot escape investigation for excesses in the course of the discharge of their duty even in “disturbed areas”
  • In such notified areas, security personnel enjoy statutory protection for their use of “special powers”. While hearing petitions demanding an inquiry into 1,528 deaths in counter-insurgency operations and related incidents in Manipur, the court has said the provisions of the Armed Forces (Special Powers) Act and the purported immunity it offers to the use of force “even to the extent of causing death” are not invincible. Such legal protection, especially in a State that has been under AFSPA for nearly 60 years, has to yield to larger principles of human rights, and no allegation of the use of excessive or retaliatory force can be ignored without a thorough inquiry
  • This is a requirement both of democracy and for the preservation of the rule of law. The court has sought tabulated details on 62 specific cases in which there is some evidence that the deaths involved were not genuine operational casualties but extrajudicial killings or fake encounters. Even though the 85-page ruling draws its broad principles from an earlier Constitution Bench verdict in Naga People’s Movement of Human Rights (1997), it has special meaning in the present context, with a growing body of opinion that AFSPA should be repealed or amended
  • The court is not unaware of the circumstances prevailing in Manipur and its neighbouring States. What has caused consternation is the near-total absence of any inquiry. In most cases, not even a first information report has been registered, and in some, the cases are against the victims. The court has acknowledged that additional powers have been given to the armed forces to deal with terrorism effectively. However, it also made clear that this cannot be an excuse for extrajudicial killings — whenever such allegations surface, they have to be investigated, regardless of whether the person concerned is a dreaded criminal, terrorist or insurgent
  • The court has reminded the authorities of the circumstances in which the use of force, even to the point of causing death, is immune from prosecution and the Army’s own list of dos and don’ts while operating in a disturbed area. It has rejected the notion that every person bearing arms in a disturbed area is ipso facto an “enemy”. The occasion calls for an investigation into allegations of enforced disappearances and extrajudicial killings, especially those already documented or partially probed. It must give momentum to the demand for the repeal of AFSPA as a necessary step to end impunity

 

4. It’s time for an urban upgradeTopic: Executive

Category: Polity

Key points:

  • The Indian police have been the target of criticism from several quarters, some justified and others not. The police in our country have changed only marginally since Independence, so much so the average member of the public views it as an unhelpful and insensitive body that has to be scrupulously avoided if possible. Several police reform bodies have examined this intractable situation with only marginal success. What has been critical is the undoubted absence of political will to make the system professional and to insulate it from the caprice of the street-level politician
  • With the growing size of our cities and towns, India no longer lives in the villages. All the action and focus are in the cities, and the police are evaluated mainly on what they do there or fail to do. The recent Swathi murder case in Chennai is an instance in point. The initial public outrage was one that blamed the police for not giving enough security to working women. This lasted only for a few days, until the nearly blind case was successfully cracked. Criticism slowly yielded to admiration for the police
  • Another key area is traffic enforcement amidst gross indiscipline on the part of the road user. Increased technology and flawless identification of offenders and harsh penalties on violators of traffic rules alone can save the situation. This is a challenge to which the urban police have responded with only marginal success. The citizen expects drastic results, forgetting the fact that it is he who will make the difference through dissemination of the message that submitting oneself to traffic rules alone will reduce chaos on the streets
  • From a purely preventive role contemplated for the constable on the beat, we have come a long way to assign to him a set of functions that seem enormous, complex and too forensic to discharge to the satisfaction of society. The net result is an all-round harsh assessment of the police
  • A rational and full-fledged debate, some kind of national consultation, over limits to policing in an urban setting is long overdue. Any system that does not constantly review the manner in which it does business is doomed to perdition. Innovation is the key to upgrading quality. In the case of policing, this could be in the areas of patrolling the streets, receipt and registration of public grievances and identification of law-breakers. Technology can help, but it is the sensitivity and dedication of policemen at the cutting edge that would eventually make the difference between an admired and an alienated police force
  • Going by the rising graph of bodily crime and traffic accidents, our cities and towns appear to be fast going beyond redemption
  • Policing would collapse not long from now because of two factors
  • The first is the growing geographic sprawl of our cities. This expansion has not been accompanied by a commensurate increase in police strength. The second is the disappointing lack of consensus on what the police can do, and what it cannot or should not attempt to do
  • We believe that there are implications here for a concept such as the Smart City that Central government in New Delhi has conceived. Any Smart City would thrive and flourish only if it is turned into a “safe city” first
  • Ultimately, all discussion of urban policing would lead us to the important issue: how much money can a government invest in policing? India has approximately a little more than two million policemen (both armed and unarmed).There are about 12,000 police stations. In the absence of scientifically determined yardsticks, the question whether this is adequate for a country as large as India is debatable
  • The growing tentacles of terrorism have resulted in certain disarray in police thinking, something for which the police were untrained or insufficiently trained. An almost whole-time attention on countering monstrous outfits such as al-Qaida, Islamic State, Taliban, Lashkar-e-Taiba and a host of others, including our very own Indian Mujahideen, has robbed the common man of police services to which he is entitled as a tax-paying citizen
  • Any evaluation of the police will be grievously wrong if it did not factor in this development. Also, an attempt to divest the police station of its responsibility in this area by raising an exclusive counter-terror outfit is ill-advised, because thwarting the terrorist depends on intelligence collection at the grass-root, and this can be done only with the help of a police station on the ground. The latest arrest in far away West Bengal of a suspected IS organiser and propagandist, who had made Tirupur in Tamil Nadu his home, would indicate how growing towns in the country could provide shelter to anti-social elements and need more intensive policing than before
  • This is the complexity of urban policing today. Mechanical law enforcement, not backed by an alert intelligence apparatus, can result in disasters of the kind that happened recently in Dhaka, Amsterdam, Brussels and Paris
  • In the ultimate analysis, it is the consumer of the police service, the average citizen, who has the critical role of giving a continual feedback to the police on how well the latter are performing. Without this, no community will get the police it demands, and possibly deserves

 

5. Storm in the South China SeaTopic: South China Sea Disputes

Category: International Affairs

Key points:

  • The International Court of Arbitration is set to give its ruling on the South China Sea disputes on July 12 amid strong opposition from China. The Chinese Foreign Ministry spokesman has said: “I again stress that the arbitration court has no jurisdiction in the case and on the relevant matter, and should not hold hearings or make a ruling”
  • The case filed by the Philippines at the International Tribunal for the Law of the Sea at The Hague in 2013 seeks to counter the Chinese claims in the South China Sea. Beijing insists that Manila’s case is an issue of territorial sovereignty over which the tribunal has no jurisdiction.
  • China claims almost all of the South China Sea along the nine-dash line on the map. The Philippines argues that the claim made by China is against international law
  • The current round of tension between the two countries began in 2008-2009 after a tense but bloodless stand-off over the Scarborough Shoal, which led to China gaining de facto control of it in 2012
  • In recent years, attention has shifted to China’s construction and installation of military-capable infrastructure in the Spratly Islands. The pace and scale of China’s island-building works have dwarfed the presence of other countries that engage in similar activities, and is beginning to take on a more overtly strategic character, which includes the construction of runways and port facilities
  • There are no easy answers to the South China Sea disputes. At the same time, it is well understood by the parties concerned as well as the international community that the disputes need to be resolved
  • Because of the capital spent on island-building works by individual countries on the one hand and the sea’s rich natural resources and annual revenues generated from the sea routes on the other, none of the disputing parties is likely to sacrifice or surrender its claims easily
  • The underlining problem is the claim of overlapping areas by different countries, that involve Brunei, China, Vietnam, the Philippines, Taiwan and Malaysia
  • One of the fundamental principles of the Association of Southeast Asian Nations (ASEAN) has been to resolve disputes by peaceful means and to reach agreement by a consensus. But over the years, the position of ASEAN on the South China Sea disputes has been weak. At times, the organisation has been unable to formulate a consensus policy. This is partly due to the fact that not all 10 ASEAN members are claimants to the South China Sea. Another reason is that members of ASEAN have overlapping claims among themselves. Moreover, bilateral relations between China and some smaller ASEAN members, such as Laos and Cambodia, are also a factor. Because of its economic and military power, China has been able to win over some ASEAN members
  • China is well aware that a united voice of all ASEAN members would have greater force. ASEAN’s inability to build a united front on the South China Sea disputes is a major challenge for the regional bloc. There is no single country in ASEAN party to the South China Sea disputes that is capable of challenging China individually. This is an important reason why ASEAN has welcomed the role of the United States as a power balancer on the issue
  • While China insists on talks among the parties concerned, the claimants in ASEAN want to pursue it through multilateralism or the Court of Arbitration. The existence of two diametrically opposing approaches is a major challenge for bringing a mutually acceptable solution to the South China Sea disputes
  • Since China has openly refused to acknowledge or accept the ruling of the arbitration court, despite support from several countries, as well as its lack of enforcement power, this channel is likely to be inconclusive
  • However, the reactions of the international community in the aftermath of the court’s ruling are bound to put pressure on the disputing parties. The ruling may also provide a justification for coalition action
  • To resolve the disputes peacefully, the claimants should be willing to abandon their confrontational attitude and agree to find some common grounds even if this requires sacrificing certain portions of their claims
  • For example, one possible peaceful solution would be for all claimants to limit their claim to the areas of 200 nautical miles of the Exclusive Economic Zone in accordance with the United Nations Convention on the Law of the Sea (UNCLOS). By agreeing to such proposal, the parties to the dispute can also reach an agreement to leave international waters for free navigation
  • Another way out is for the parties concerned to establish a common ownership of the disputed areas whereby all the revenues from the South China Sea are equitably shared among the littoral countries
  • Yet other possibility is for the disputing countries to specifically lay out their claims and allow a neutral party to adjudicate on the basis of the UNCLOS or any other relevant international laws
  • But for now, all eyes are on the July 12 ruling

 

The Indian Express

 

  1. There is an issue of the tyranny of the 10 per cent in our policy focus: Yaga Venugopal Reddy (former RBI governor)-Excerpts from Interview

Topic: Reforms

Category: Economy

Key points:

  • What are the lessons from that economic crisis of 1990-91?
  • The first lesson is that we should avoid the mistakes we committed during the ’70s and ’80s. While discussing reforms, we should realise that part of the reform was about correcting our mistakes and part of it was to improve our systems and policies. The second lesson from crisis management is that the central bank has to play a critical role in a crisis, especially when there is political uncertainty
  • What was the biggest challenge you faced then or later in your various roles?
  • The biggest challenge for me professionally was to manage a situation of plenty as governor of the Reserve Bank, especially during the 2006-08 period. We in India have never had to deal with a problem of plenty in the past. Global liquidity was high during this period. The belief, including among the political leadership, was in favour of global finance. The belief was also in favour of finance leading to development and being of great benefit to all. The risks of global finance were being underestimated then. Therefore, we had to convince everyone about the challenges involved in development of the financial sector and integration with the global economy. RBI as a professional body commanded respect globally and was able to gain the trust of the government. The combination of intellectual opinion, especially from the IMF, interests of global financial conglomerates and the inclination of the political leadership in favour of the prevailing beliefs had to be countered with all professional resources in RBI and the personal trust reposed in me. However, the government and the RBI still worked together to bring about significant legislative changes and a structural transformation while undertaking counter cyclical operations. The outcomes in terms of GDP growth, inflation and the soundness of the financial sector and the strength of the external sector reflect the co-ordinated policies during this period. They show that the challenge has been met successfully by all of us
  • What is still to be opened up after 25 years?
  • There is an impression that economic reform means opening up. In fact, in my view, there is an issue of the tyranny of the 10% in our policy focus. What I mean is that 10% of our investment is funded by foreign savings and the attention paid to that in our policy debate is 90%. When the discussion is on the work force, it is focused on the organised work force, which is less than 10%. Similarly, the large private corporate sector dominates policy discussions disproportionate to its criticality to our economy. Opening up is one element of the financial sector reform. Financial sector reform is one element of economic reform, the real issue for us is one of efficient financial intermediation in our economy. We have to improve financial intermediation in banking, which dominates the financial sector. As long as there is no genuine reform in public sector banking, financial intermediation will continue to be inefficient
  • Now, when it comes to capital markets, they are essentially being driven by foreign investors reflecting more of inherent volatile global conditions than relatively more stable domestic growth. My position on Participatory Notes being an unhealthy element in the Indian financial sector is well known. In India, households still depend on banks. The capital markets are yet to command the trust and confidence of households. In my view, the mutual fund business is being driven by bank money and institutional sources. Mutual funds should ideally not have the participation of anything other than household money. And they should not be a pass-through vehicle for corporates and institutions who have the capacity to take independent financial decisions unlike households
  • In brief, the real immediate priority for reform of our financial sector is to improve the efficiency of the domestic banking system and to enhance the integrity and relevance of the capital markets to Indian households
  • What should be on the agenda for the next 25 years?
  • One of the first things we should do is to fix the judicial process. The bad loans mess is in some ways a reflection of the fact that banks could not enforce their rights in a timely manner. The judicial process involves huge delays affecting the enforcement of rights of lenders in India. Unless we fix the legal framework and the judicial process, we can never become a middle income country. The second thing is to focus on law and order and enforcement of criminal justice. Filing an FIR is a major challenge for a common person. The delays in dispensation of justice in criminal matters make the process a captive of the rich and the powerful. Economic reforms cannot afford to underestimate the criticality of reforms in institutions performing basic functions of the government such as the judiciary and the law and order machinery
  • Having been RBI governor and having seen conflicts between the institution and the government, how can the relationship between the two evolve? Do you think there is a need for a longer, fixed tenure for an RBI governor, considering that you had a straight five-year term?
  • We should distinguish between the length of the tenure and the security of tenure of an RBI governor. The relevant provision of the RBI Act says that the governor can be removed, just as the deputy governors and members of the central board can be removed. My understanding is that there is no prescribed procedure for removal of the RBI governor. In most other countries, there is a prescribed process for the removal of the governor and that assures security of tenure

 

2.  Being unneighbourlyTopic: Pakistan and Afghanistan

Category: India’s Neighbourhood

Key points:

  • Last month, the Pakistan-Afghanistan relations took a violent turn when both the countries deployed tanks and armoured personnel along their border at Torkham (Khyber pass), one of the busiest Durand Line crossings. The escalation resulted as Islamabad attempted to build a new fence and a gate for checking passports and inspecting cargo vehicles. Last month’s tensions, which culminated in the firing of mortars and several casualties, hark back to the structural bones of contention: Afghanistan has never recognised the Durand Line and is not prepared to accept it as the proper border. But this has never generated so much acrimony in the past
  • Hostilities between the two countries have precipitated due to several factors over the last 12 months. Till then, the relations between Islamabad and Kabul were improving, largely because of the attitude of the new Afghan president, Ashraf Ghani. In contrast to his predecessor Hamid Karzai, who was seen to be close to India, Ghani had made overtures to Pakistan after assuming office. Ghani had ordered action against some Tehrik-e-Taliban Pakistan (TTP) militants suspected to have orchestrated the Peshawar tragedy of December 2014. He had also sent Afghan National Army cadets to study in Pakistan and turned down the Indian offer to supply Kabul with weapons — something made possible by the India-Afghanistan Strategic Partnership. Ghani had hoped that Islamabad would reciprocate by fighting against the irreconcilable Taliban, which had found refuge in Pakistan, and by bringing the others to the negotiating table. Pakistan government somewhat delivered by bringing the TTP to the Murree meeting in July 2015 for peace talks in a new format called the Quadrilateral Coordination Group. The QCG, comprising Afghanistan, Pakistan, China and the US, recognised Pakistan’s key role
  • However, this initiative was short-lived. In late July, peace talks broke down after the Afghan government revealed that Mullah Omar had died two years ago in Karachi. After this episode, the new Taliban chief, Mullah Mansour could not be persuaded to come to the negotiation table. The Pakistanis consider that by making the death of Mullah Omar public, some Afghan elements, including Karzai and members of the security apparatus that had remained anti-Pashtun because of its Tajik majority, sabotaged the peace process
  • The Afghan authorities had a different explanation. For them, the peace talks in the QCG did not go anywhere because Islamabad tried to use them for re-establishing some of its lost influence over Afghanistan. By making the demise of Mullah Omar public, the Afghans tried to weaken the Taliban and deprive Pakistan of one of the bargaining chips it had over the Taliban
  • The second factor of hostility has much to do with India and Iran. Besides the recognition of the Durand Line, the other priority of Pakistan is to contain the Indian presence on its western border. In December 2015, Narendra Modi not only visited Kabul to inaugurate the parliament built by India but also handed over three Mi-25 attack helicopters to Ghani. And in May, Modi, Iranian President Hassan Rouhani and Ghani met in Tehran to sign a three-way transit agreement on Iran’s Chabahar port. This agreement may affect the bargaining power of Islamabad vis-à-vis Kabul by further shifting some of its trade through Iran instead of Pakistan
  • Thirdly, trans-border terrorism has become a major source of tension between Afghanistan and Pakistan. Traditionally, Kabul has accused Islamabad (and Rawalpindi) of welcoming Taliban. Groups paying allegiance to Mullah Omar (including the Haqqani network) and close to Pakistan’s Inter-Services Intelligence (ISI) since the anti-Soviet jihad days, used the safe havens in Pakistan to attack the Afghan National Army and the NATO forces. This has continued even after the demise of Mullah Omar and the withdrawal of most of the foreign troops
  • In April, Kabul cancelled its participation in the QCG meeting — to which Islamabad had invited the Qatar-based Taliban — and protested against a massive terrorist attack in Kabul, attributed to the Haqqani network
  • But trans-border terrorism has become a two-way traffic after operations in the North Waziristan region pushed TTP operatives to the Afghan side. Fazlullah, the TTP chief, had found refuge in Afghanistan after a Swat operation in 2009. Kabul had also welcomed Hafiz Saeed Khan
  • Drug trafficking was the other reason why Pakistan wanted to manage its border more effectively, in Torkham and elsewhere
  • While Islamabad and Kabul have many reasons to fight each other, there is one reason for collaboration: The Islamic State, which is making inroads on both sides of the border, but particularly in Afghan districts bordering Pakistan like Nangarhar. The IS has attracted some Taliban and some TTP commanders not only because of the crisis in the leadership of these groups but also because some Taliban leaders were seen to be too close to Pakistan. Few Afghans like their big neighbour because of its international agenda. The IS has affinities with the TTP and its vision is in stark contrast to the limited, territorial objectives of the Taliban
  • Interestingly, two of the IS Afghan leaders — Mullah Abdul Rauf Khadim and Abdul Rahim Muslim Dost — have transformed into trans-national terrorists after their years in Guantanamo (where they learnt Arabic among other things). While both countries have a common enemy in the IS, it may not be a big enough threat as of now to persuade Kabul and Islamabad to resume talks
  • Such negotiations will happen anyway because Afghanistan cannot ignore Pakistan — they share a 2,250 km long border. But mutual suspicion may further undermine the peace process already complicated by external actors. While the US cannot be part of the solution anymore — there are only 10,000 American soldiers left in Afghanistan — they have become a part of the problem according to Islamabad. Pakistan saw a contradiction in the drone attack that killed Mansour and told Washington DC that if the US wanted an interlocutor for peace talks, it should be spared

 

Others:

 

  1. PIB

 

a) National Coordinated Action takes off for clean-up of 10 iconic places as Models of Swachhta under SBM  “Need to go back to our roots and learn ‘Swachhta’ from Rural India”: Narendra Singh Tomar in first address as Minister DWS

The Ministry of Drinking Water and Sanitation, on July 8 and 9, 2016, organized a 2-day workshop in New Delhi for special clean-up of 100 iconic places across the country, starting with 10 in the first phase. Representatives from the following 10 places participated in the workshop, along with representatives from concerned state governments and municipal bodies.

  1. Vaishno Devi: Jammu & Kashmir
  2. Taj Mahal: Uttar Pradesh
  3. Tirupati Temple: Andhra Pradesh
  4. Golden Temple: Punjab
  5. Ajmer Sharif: Rajasthan
  6. Meenakshi Temple: Tamil Nadu
  7. Kamakhya Temple: Assam
  8. JagannathPuri: Odisha
  9. ManikarnikaGhat: Uttar Pradesh
  10. ChhatrapatiShivaji Terminus: Maharashtra

 

b) Rural women solar engineers (Solar Mamas) present a skill demonstration to PM in Dar-es-SalaamA group of about 30 “solar mamas” from Tanzania and a few other African countries demonstrated their skills in fabrication, repair and maintenance of solar lanterns and household lighting systems to the Prime Minister today. They also presented their honey-extraction and stitching practices and sung a song “we shall overcome”.

Barefoot College, Tilonia (Rajasthan) has been promoting and training rural women solar engineers (solar mamas) from Africa in fabrication, installation, use, repair and maintenance of solar lanterns and household solar lighting under Government of India supported programmes. They have set up a Barefoot women vocational training college in Zanzibar Islands of Tanzania and other countries in Africa for imparting solar electrification skills (training) and distributing solar kits to trainees. These colleges also support various entrepreneurial skills such as bee-keeping, tailoring, etc. The solar mamas have fabricated and installed solar kits, and now maintain these solar electrification systems in their communities.

 

c) Shri Gadkari’s Visit to give New Momentum to India’s Ties with the US in Infrastructure Sector Indo-US cooperation in the vital infrastructure sector will get a new impetus when the Road Transport, Highways & Shipping Minister holds official talks with his counter-part US Secretary of Transportation in Washington tomorrow, on a wide range of projects of mutual interest.

He will be particularly looking for widening and deepening the scope of Indo-US cooperation in innovative technologies for improving highway development, road engineering, road safety and development of green fuels in automobile sector and electric vehicles. He has envisaged 50-60 Billion USD foreign investment for infrastructure and another 100 Billion USD towards industrial development for port-led economic growth in the maritime sector and inland waterways, water transport, coastal and cruise shipping and solar and wind energy generation to further boost the country’s growth momentum.

 

d) Captain Radhika Menon, First Woman Captain of Indian Merchant Navy to receive IMO Award for Exceptional Bravery at Sea Captain Radhika Menon, Master of the oil products tanker SampurnaSwarajya, is to receive the 2016 International Maritime Organization Award for Exceptional Bravery at Sea for her role in the dramatic rescue of seven fishermen from a sinking fishing boat in tumultuous seas in the Bay of Bengal in June last year. The International Maritime Organization – is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships. Captain Menon was nominated by the Government of India, for the rescue of all seven fishermen from the fishing boat Durgamma.

 

2. The Financial Express:

 

a) How Indian Railways are critical for GDP, carbon footprintTopic: Railways

Category: Governance

Key points:

  • The railways are critical for both India’s GDP as well as its carbon future. Just how critical, was reinforced by former RBI deputy governor Rakesh Mohan—Mohan chaired a committee on India’s transport needs till 2032
  • Just a few numbers on India’s transport needs highlight how critical it is to get the railways piece right. If India was to grow at 7% a year, freight transport demand will quadruple by the mid-2030s—if the rate goes up to 8-9%, demand could rise by a factor of six. For passenger traffic, we’re talking of a 15-fold rise
  • Mohan’s committee’s simulations showed energy demand rising by a factor of four over the next 20 years, steel by eight times. Though a lot of traffic has shifted to road over the past few decades, neither the current network nor what is planned can deal with such volumes. Till 15 years ago, both road and railway networks, Mohan points out, were growing at relatively similar rates, but former prime minister Atal Bihari Vajpayee’s Golden Quadrilateral and then the rural roads programme put the roads network on a dramatically different trajectory
  • While the railways have made a recovery with the two dedicated freight corridors, what is needed is to complete the other corridors that were mentioned in the last budget speech—while a bullet train may be desirable, its costs have to be seen in comparison with what such corridors can achieve
  • Not being able to do this implies a serious infrastructure constraint to further GDP growth since, to take the most obvious example, if coal does not move, there can be no electricity supply to power India’s industrial/services growth. In absolute terms, transport investment needs to rise seven-fold from the 11th Plan to the 15th Plan (2027-32), or from 2.6% of GDP right now to 3.7% in another few years and then be sustained at that level
  • Apart from the fact that a one percentage point step up is a big one, much of the investment will have to come from the public sector—in the original simulations, the private share was expected to rise to around 25-30% over a decade but the sad state of private infrastructure firm balance sheets shows this was way too optimistic
  • More than the money which is a big challenge, it is clear the present Railway Board-led governance structure cannot pull off this transformation
  • Apart from the criticality of building the railway network for GDP growth, India’s Paris goals depend upon increasing the railways’ share in local transport from 36% right now to 45% by 2030—the six freight corridors will lower India’s cumulative railway emissions from 1.26 billion tonnes between 2016-2046 to 0.29 billion tonnes, and to 0.09 billion in a low-carbon scenario. India can’t afford to slip up on widening its tracks

 

b) National E-Governance Plan: Justice delayed, is justice deniedTopic: ICT Intervention

Category: Governance

Key points:

  • With over 2.2 crore cases in the courts—at least a tenth of which are over a decade-old—e-Courts, a Mission Mode Project under the National e-Governance Plan, was meant to help fix most of this. Though the project mostly envisages computerisation and ICT-enabling of the lower courts, the idea was also to upgrade the system in the higher courts to track delays and decrease pendency and provide uniform justice across the entire judicial system. Electronic filing of cases and caveat-checking would make these processes faster and easier while digitisation would help aggregate cases pertaining to a similar legal question in a particular court and even across courts—and if there was a Supreme Court ruling on a similar case, judges, as a matter of course, could keep this in mind
  • If the system worked well, judges would be able to hear undertrials through video-conferencing, even as court libraries got digitised. But as a study by Vidhi Centre for Legal Policy shows, the project has been hobbled by huge delays
  • While the first phase of the project, which included providing hardware and software to judicial officers and staff, LAN connectivity and training, was to be completed by 2007—the project was announced in 2005—it is getting completed only now. By 2010, when the second tranche of funds for the first phase was approved, it was found that critical components, such as digitisation of record of existing cases, WAN connectivity and uninterrupted power supply had not been included in deliverables of the first phase—this was then included
  • Moreover, as the project got delayed, implementation was thrown into disarray with new courts coming up in some complexes which had already been computerised—this means there are complexes where some courts function in the manual mode while the rest are ICT-enabled. Needless to say, the budgets went out of whack, from Rs 442 crore estimated in 2005 to Rs 935 crore approved in 2010, but that is hardly the issue since the project taking off is far more important from the point of view of delivering faster justice
  • Meanwhile, the second phase which was to originally begin in 2007—before it was pushed to 2014—took off only last year. With the action plan setting no clear deadline for completion, how long that will take is anyone’s guess. That the list of deliverables has been substantially expanded right at the start to avoid the vision deficit that plagued the first phase is the only consolation—the fact remains that the legacy delays, the unavailability of software that can be seamlessly adapted to court functions, the resistance from the beneficiaries of the previous system will prove tough challenges

 

c)  Tax certainty: Where does Narendra Modi govt stand?Topic: Taxation

Category: Governance

Key points:

  • In 2016, India celebrates 25 years of its first major economic reforms, those that came in 1991. While we look back at the contours of the evolution of India’s tax regime, it is pertinent to mention that tax policies have not only been a measure for collecting revenues but have simultaneously been a stimulus for increasing investments into capital markets, attracting investments through fiscal incentives and also a measure to improve technological and scientific capabilities of the country
  • After the 1991 liberalisation, India had to ensure a competitive environment in order to attract MNCs. The country saw the first set of direct tax reforms in 1991, when the Tax Reforms Committee (TRC) was setup. As the very first step, progressive taxation for non-corporate taxpayers was adopted. Domestic corporates were taxed at 40%; the rate was subsequently brought down to 35% and later to 30%. In Budget 2015, the finance minister proposed that the rate be reduced to 25% in four years
  • India has seen several proposals that have turned around the entire construct of direct tax policy. Somethat have proved to be game-changers include the introduction of Tax Deduction at Source (TDS) provisions—which helped widening the tax base and ensured a regular stream of income for the government—presumptive taxation, shifting of dividend tax levy from investors to the companies, introduction of transfer-pricing norms and integration of fair market value concept to counter generation of unaccounted money
  • Another worthwhile mention would be the reintroduction of the minimum alternate tax (MAT) in 1996-97. MAT provisions have been successful in curbing the so-called ‘zero-tax’ companies; however, it simultaneously gave rise to one of the most vexing tax controversies, i.e., its applicability on foreign companies. Undoubtedly, this hit India’s image as a tax-friendly nation. However, in September 2015, the MAT controversy was laid to rest when the government accepted the recommendations of Justice AP Shah Committee and scrapped its applicability on FIIs
  • With MNCs’ participation in the Indian economy increasing, cross-border transactions increased rapidly. To counter and prevent erosion of the tax base, India introduced the international transfer-pricing (TP) norms in FY02—these were supposed to ensure cross-border transactions between associated enterprises were undertaken only at arm’s-length pricing. Government reports show that the cumulative value of TP adjustments was Rs 2,700 billion till FY15. Recognising the increase in TP adjustments and consequent litigation, the government, in 2012, introduced the provision of Advance Pricing Agreement (APA), thereby giving taxpayers an opportunity to mitigate tax controversies. Initially, this was only limited to unilateral relief. Starting 2015, the wall around unilateral APAs was finally broken and conversations began for executing bilateral APAs, with roll-backs
  • As we recapitulate the Indian direct tax reforms, the Finance Act of 2012 deserves a mention because it introduced several retrospective amendments on indirect transfer taxation and software taxation
  • These were made to counter the Supreme Court (SC) judgment on the tax demand raised by the government on the Hutch-Vodafone transactions and high court rulings upholding the view that the payment for shrink-wrapped software (widely used platforms) does not constitute royalty under the Indian tax laws. The government, however, had other concerns. The tax department estimated it would lose about Rs40,000 crore in revenue from Vodafone-type deals following the SC decision. The government, looking for revenues to meet mounting expenses, introduced tax on indirect transactions. This action was roundly criticised by industry captains around the globe
  • While the present govt. has given repeated assurances of a stable and predictable tax reforms, there is still some time before India fully recovers from the legacy uncertainties
  • Tax litigation, on the one hand, is yet to see any major reform—this is primarily dependent on structural and functional efficiencies of the executive. Data revealed by the Tax Administrative Reforms Committee (TARC) report shows staggering statistics with respect to outstanding disputes, with approximately 2.6 lakh cases pending at several levels in FY13. To be sure, the government has adapted several alternate dispute resolution mechanisms such as the Dispute Resolution Panel (DRP) and Settlement Commissions for speedy resolution of disputes—however, they have not turned out to be effective so far
  • On the other hand, the generation and circulation of unaccounted money has remained a concern, even prior to liberalisation. There have been several initiatives and policies to counter the parallel economy, but very few have been effective. Though it is too early to tell, the black money law introduced in 2015 hopefully should bring some discipline
  • Is the Indian tax law (as it exists today) well-equipped to deal with the complexities of the modern-day business environment? Certain efforts were made on this account, notably the 2013 introduction of the Direct Taxes Code which was, however, withdrawn subsequently by the government. The country is also looking at the OECD’s framework (BEPS) to prevent tax-base erosion. With the introduction of the General Anti-Avoidance Rules (GAAR)—scheduled for implementation in FY18—alongwith the recent amendments in the 33-year-old tax treaty between India and Mauritius, India has sent a strong message of its commitment towards a source-based taxation policy
  • Undoubtedly, going forward, as Indian transforms into a developed economy, tax policy are likely to be significantly influenced by the international community in comparison to what existed prior to liberalisation. Indian tax evolution, in the coming years, should usher in a progressive regime, and for this, tax administration reforms are essential

 

3.The Business Line:

 

a) Boosting labour reformsTopic: Labour Issues

Category: Governance

Key points:

  • The model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill seeks to promote employment in retail and IT by allowing 24×7 operations — including night shifts for women, provided the necessary workplace requirements are met. It tries to ease doing business by addressing some broad problems: rigidity in the opening and closing of establishments, difficulties in registration and renewal, problems in maintenance of statutory records, and arbitrariness in inspections
  • The proposed law also covers banks, stocks, brokerages, journalistic or printing work, theatre, cinema, warehouses, bars, restaurants, among others. The draft, which significantly leaves out shops employing less than 10 workers, visualises cities that work round the clock all through the year, supported by essential services such as transportation, crèches and other public amenities
  • Working 24×7 will enable IT, financial and information services to cater to customers across time zones. It is also an option that India, with its abundance of skilled workers, can exercise without much ado. These workers could serve as customers for 24×7 retail outlets, restaurants and cinemas, lifting not just the economic output but the vibrancy of urban life
  • While the law rightly questions “protective discrimination” faced by women by debarring them from doing nightshifts, it is the labour department’s job to ensure that the establishment concerned provides the requisite transportation, rest room and crèche facilities, as well as the mechanisms to prevent sexual harassment. This should be accorded the highest priority
  • While nothing has been spelt out with respect to minimum wages, which are likely to be met or exceeded to draw workers, the draft law lays out a nine-hour working day and a 48-hour week, while exempting IT and biotechnology from the norm
  • The challenge in implementing this act as well as other labour-related laws, is to ensure that entitlements of workers are met while keeping the rules simple and labour law inspections to a minimum
  • Yet, there are concerns. The law is focused on raising output by using more labour, rather than developing skills, productivity and innovation, which are important in IT and finance in particular. This will help India retain its competitiveness only in the short run
  • Inconsistencies between the draft law and labour laws pertaining to manufacturing could give rise to confusion, particularly in an integrated workplace performing various roles under a single roof, and employing workers under different terms and conditions. By leaving out small establishments, it has heightened the possibility of sweat shop conditions being perpetuated there through use of ‘family labour’, now permissible under the amended child labour laws
  • The energy requirements of urban India working at night could suddenly spike
  • That said, the draft law signals a reformist approach to regulation in a labour-surplus economy, which States should take up in their own interest. That said, the Centre need to work with stakeholders on widening the social safety net through pension and insurance schemes, so that such reforms do not run into socio-political resistance

 

b) Trouble’s brewing for us in the MaldivesTopic: Maldives

Category: India’s Neighbourhood

Key points

  • As the strategically important Indian Ocean archipelago of the Maldives continues its descent into political anarchy with democratic institutions facing an unabated onslaught under the authoritarian regime of President Abdulla Yameen, India can no longer afford to be a mere spectator
  • India has, for some time, chosen to maintain a studied silence on what’s happening in this troubled tourists’ paradise. But with both China and Pakistan stepping up their strategic inroads into the Maldives, coupled with Saudi Arabia pumping in money for religious radicalisation, India seems to be fast ceding its traditional space for effective diplomatic influence in the archipelago
  • The Yameen government stands accused of stifling democracy, riding roughshod over the country’s 2008 constitution, reducing its majlis (parliament) where his party has a majority to a mere rubber stamp, and weakening the judiciary. Unfair persecution and imprisonment of political rivals, rampant corruption and severe curbs on press freedom are other charges
  • Growing Islamic radicalisation in the tiny island-nation of about four lakh people once known for its tolerant practices has many foreign governments, including India, deeply concerned. While the Maldivian government says only 49 of its citizens have joined ISIS, unofficial figures pitch the number at about 250-300
  • In the coming months, New Delhi will need to step up pressure on the government in Male if it is to safeguard its own strategic and security interests in the archipelago that straddles important sea lanes in the Indian Ocean Region. Quiet persuasion is what India has been engaging in so far, but it may need to rally international opinion against the repressive regime, possibly through the Commonwealth Ministerial Action Group (CMAG)
  • In February this year, New Delhi along with Islamabad had chosen to back the Maldives in CMAG after which a grateful Yameen had thanked India for “protecting” his country during his visit to New Delhi in April this year. He even called upon India to continue supporting his country against any “unfair, punitive action” by CMAG. The CMAG sought “clear, measurable progress” in the Maldives in six priority areas
  • Among them were an “inclusive, purposeful, time-bound and forward-looking political dialogue” as also the release of political leaders detained or are in custody, and the return of those from outside the country. It also wanted steps taken to prevent the ongoing use of anti-terrorism or other legislation to stifle national political debate
  • However, little has changed since February. India, therefore, should seriously reconsider its support for Male in CMAG when it meets in September to “assess progress, take stock, and take decisions accordingly”
  • India’s cautious dealings with the Yameen regime followed a period of strained bilateral ties after Mohamed Nasheed — he was the first democratically elected president of the archipelago in 2008 — was ousted in 2012. Unwilling to be seen as aligning with any political faction, India has engaged in outreach to the entire political spectrum in the archipelago. New Delhi is also unlikely to accede to the request of the Maldives United Opposition (MUO) — a broad coalition of political parties seeking restoration of democracy — to directly intervene or impose sanctions to arm-twist the Yameen regime
  • The MUO that has Nasheed as an advisor, was launched in early-June at London with a 25-member shadow cabinet. Some of its members were in New Delhi recently to seek India’s support to “bring back democracy to the Maldives” and ensure the elections which are still two years away are “free and fair” by having a “transitional arrangement” in place after Yameen’s removal
  • However, as India walks the middle path, what remains worrying is the Yameen’s regime’s “deep involvement” with China. The contract for the $500-million Male international airport modernisation project bagged by GMR was unilaterally terminated once Nasheed was ousted. India’s loss was China’s gain with the latter bagging the contract for the airport and the China-Maldives Friendship Bridge project that will link Male to the airport
  • Concurrently, Saudi Arabia’s Binladin Group too has been awarded a contract worth $800 million to build a new passenger terminal at the airport. The continuing money flow from Saudi Arabia for the construction of mosques and madarsas which now dot the archipelago is also worrying as they emerge as hubs for religious radicalisation and indoctrination. The Saudis along with Pakistan and Egypt are seen as fuelling extremist religious views through the scholarships they are offering to Maldivian youth who are returning radicalised after having travelled to these countries
  • Amid all this, the window for Indian diplomatic intervention seems to be closing. In seeking to balance its geo-strategic interests along with the need to remain engaged with the Yameen government, India cannot afford to trust Yameen’s enunciation of an ‘India First’ approach. Especially when at stake is India’s influence in the Indian Ocean region

 

c) To Read:Genesis of NPAs

 

4. The Economic Times:

 

a) Wind up SUUTI: Firmly, transparentlyTopic: Disinvestment

Category: Economy

Key points:

  • The government’s plan to invite merchant bankers to help it sell shares of 51 Indian companies that it holds through the Specified Undertaking of UTI is a sensible way to raise revenues, and long overdue
  • SUUTI was created in 2003 specifically to bail out investors in UTI’s flagship US 64 scheme. The Sensex has been up by about 20% since March this year and there is little sense in the government holding on to these shares forever in the hope that markets would do better. The winding up of SUUTI should be done in a transparent way
  • It holds large stakes in professionally managed companies such as L&T (8.15%), ITC (11.14%) and Axis Bank (11.53%) valued at about Rs 60,000 crore. That’s not small change for the government, which wants to raise Rs 56,500 crore from divestment this fiscal. FDI in tobacco manufacturing is banned. So, fears about corporate control if the shares of ITC were to be acquired by British American Tobacco are misplaced. SUUTI also has small stakes in 40 other listed companies, besides stakes in eight unlisted companies. The request for proposal suggests flexibility in the method to sell the shares as no one size fits all
  • The traded price is a good indicator in listed companies where SUUTI holds only small chunks of equity. It sets the floor. However, sale of large chunks of equity would entail a premium. Ideally, the government could ask potential investors to submit bids above a floor price and allocate to each bidder as many shares as he has bid for, starting with the highest price bid and going down the hierarchy of prices till all available shares are exhausted. Sure, this would result in multiple prices for the same stock, but that would only reflect the differing valuation assigned by different investors to the same company. There is no reason to deny them pricing freedom

 

5. Quick Bits and News from States

 

a) Kudankulam plant reaches milestoneThe second reactor of Kudankulam Nuclear Power Project (KKNPP) attained criticality at 8.56 p.m. on Sunday.The nuclear fission started in the second reactor at the scheduled time.

On commencing the First Approach to Criticality (FAC) at 7.52 p.m. on Friday by withdrawing the control rods from the reactor, boron dilution started four hours later to allow neutron concentration to go up, which eventually led to the criticality of the reactor.

Once the reactor starts generating 400 MWe of power, possibly within 45 days from the date of criticality, it is likely to be connected to the grid. Generation of power will be raised to 500 MWe, 750 MWe, 900 MWe and 1,000 MWe in stages. At every stage, various tests will be conducted and the technical parameters verified as mandated by the Atomic Energy Regulatory Board (AERB)

 

b) SC seeks review of law on advocatesAlarmed by the increasing instances of unruliness in the legal profession, the Supreme Court has asked the Law Commission of India to review “all relevant aspects” relating to the law governing advocates, including issues like professional misconduct.The direction assumes importance in the context of the recent instances of alleged violence by lawyers in Delhi and Chennai and strikes by lawyers in different parts of the country, including Telangana.

 

c)  Speculation ahead of South China Sea awardDiplomatic speculation is heightening, barely hours before the Permanent Court of Arbitration at The Hague issues a crucial order on the South China Sea dispute between Philippines and China. The order, expected to be announced on Tuesday, is likely to be a catalyst for diplomatic manoeuvres in South and Southeast Asia, experts said.Diplomats believe that China will refer to past precedents to neglect the verdict if it turns out to be adverse. Many also say it will spur ASEAN members to build a special “code of conduct”.

 

d) Forceful presentation by Wigneswaran’s representative on federalismIn an attempt by the Northern Province to present a picture of unity on constitutional reforms in Sri Lanka, Chief Minister C.V. Wigneswaran has fielded Leader of Opposition in the Northern Provincial Council (NPC) S. Thavarajah to place his case on the importance of adopting federal system before the Steering Committee of the Constitutional Assembly.Mr. Thavarajah explained to members of the Standing Committee the background in which the federal option was arrived at. While sticking on to the merger of the North and the East, he said concerns of Muslims in the East would be adequately addressed under a merged province.Impressing upon the Steering Committee the need for full implementation of the 13 Amendment, the Eastern Province Chief Minister said this was the position of other Chief Ministers as well.

 

e) India backs African countries’ demand for curbs on cotton subsidies at WTOIndia is backing major cotton growing African countries in their demand for immediate elimination of cotton export subsidies and a timeline for reduction of domestic support by heavily subsidising members such as the US.At a meeting in Geneva earlier this month, New Delhi, which supports its cotton farmers through a minimum support price (MSP), had underscored the importance of focussing on how much support individual farmers get.

 

f) US proposes tough fuel norms at G20The US is pushing for a strong action plan on emissions by heavy duty vehicles at the G20 in a move that may improve fuel mileages and standards in the world’s largest economies. “Experience demonstrates that the combination of stringent fuel quality and tailpipe emission standards is a highly cost-effective strategy,” the US said in its proposal.

The third point of focus is on fuel efficiency. “These standards drive efficiency improvements in engine design, as well as other improvements to the overall design of the vehicle, like using lower-weight materials and increasing vehicle aerodynamics in order to reduce fuel consumption,” the proposal added.

 

F. Concepts-in-News: Related Concepts to Revise/Learn:
  • UNCTAD
  • TFA
  • GM Food
  • AFSPA
  • ICA,Hague
  • SCS Disputes
  • Durand Line
  • Quadrilateral Coordination Group
  • IMO
  • National e-governance Plan
  • BEPS
  • APA
  • CMAG

 

G. Fun with Practice Questions 🙂
Question 1: Which of the following statements is/are correct?
  1. Durand Line is the line demarcating the boundaries of Pakistan and Afghanistan
  2. Macmahon Line is the line demarcating the frontiers of India and China
  3. Medicine Line is the border between Canada and the United States

a) 1 and 2 only

b) 2 and 3 only

c) 1,2 and 3

d) All the Above

 

Question 2: Which of the following statements is/are correct about United Nations Conference on Trade and Development?
  1. The ‘Ministerial Conference’ is the UNCTAD’s highest decision-making body and is held every four years
  2. One of the principal achievements of UNCTAD has been to implement the Generalised System of Preferences (GSP) under which manufacturers’ exports and some agricultural goods from the developing countries enter duty-free or at reduced rates in the developed countries

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 3: Which of the following is/are correctly matched?
  1. Barefoot College –Bunker Roy
  2. Vandana Shiva – Navdanya
  3. Ela Bhatt-SEWA

a) 1 only

b) 3 only

c) 1 and 2 only

d) All the Above

 

Question 4: Which of the following statements is/are correct?
  1. The Harare Commonwealth Declaration was a declaration of the Commonwealth of Nations, setting out the Commonwealth’s core principles and values, detailing the Commonwealth’s membership criteria, and redefining and reinforcing its purpose
  2. The Commonwealth Ministerial Action Group is a group of representatives of members of theCommonwealth of Nations that is responsible for upholding the Harare Declaration

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 5: Which of the following countries is/are involved in the ongoing South China Sea Disputes?
  1. Taiwan
  2. Singapore
  3. Malaysia
  4. Indonesia

a) 1 only

b) 1 and 2 only

c) 3 and 4 only

d) All the Above

 

Check Your Answers

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