Comprehensive News Analysis - 15 August 2016

A. GS1 Related

Nothing here today folks!

B. GS2 Related

1. Centre owes Rs. 80,000 crore to States, says CAG report

Topic: Federal Relations

Category: Polity

Key points:

• The Centre owes the States over Rs. 80,000 crore from its net proceeds of the period between 1996 and 2015, according to a Comptroller and Auditor General (CAG) report tabled in Parliament on Friday
• “During the certification of ‘net proceeds’ by the CAG, based on the recommendations of the successive Finance Commissions, it was noticed that during the period from 1996-97 to 2014-15 an aggregated amount of Rs. 81,647.70 crore was short devolved to the States,” says the CAG report, on ‘Compliance of Fiscal Responsibility and Budget Management Act, 2003.’
• The report says that according to Article 279 of the Constitution, the CAG is “required to ascertain and certify the ‘net proceeds’ (any tax or duty the proceeds thereof reduced by the cost of collection), whose certification shall be final.”

Topic: Judiciary

Category: Polity

Key points:

• The government returned a draft of the Memorandum of Procedure (MoP) to the Collegium for its consideration on August 3 as part of the consultative process underway to finaliseways to make the collegium system of judicial appointments accountable and transparent
• On December 16, 2015, a Constitution Bench of the Supreme Court, led by Justice J.S. Khehar, had tasked the government to draft the MoP, while suggesting that a separate secretariat should be formed to vet the names which come up for elevation as judges.Chief Justice Thakur has expressed reservations about this proposal
• Government sources said the Centre is following the directions of the Supreme Court and clarified that the receipt and consideration of complaints against the judiciary would remain in-house within the judiciary
• In June, the Supreme Court Collegium had reiterated its rejection of several crucial clauses in the government’s earlier draft MoP
• The collegium had taken offence to the government’s proposal to that merit be the overriding concern and not seniority, as is the norm, of judges during appointments and elevation. The collegium has said both merit and seniority should be balanced.
• Besides, the government also wants the authority to reject a judicial candidate for national security reasons despite the collegium’s recommendations. Finally, the government wants the Attorney-General of India and Advocates General of States to have a role in the appointment of Supreme Court and High Court judges, respectively
• Presently, the government is bound to comply if the Supreme Court Collegium chooses to override its disapproval of a person recommended for judicial appointment. If the government returns the candidate’s file to the collegium, and the latter reiterates its recommendation, the government has no choice but to comply

C. GS3 Related

1. Railway Budget to be merged with General Budget from 2017

Topic: Budget

Category: Economy

Key points:

• The 92-year-old practice of presenting a separate Railway Budget is set to come to an end from the next fiscal, with the Finance Ministry accepting the Railway Ministry’s proposal to merge it with the General Budget
• According to railways, the Finance Ministry has now constituted a five-member committee comprising senior officials of the Ministry and the national transporter to work out the modalities for the merger. The committee has been asked to submit its report by August 31
• If the merger happens, Indian Railway will get rid of the annual dividend it has to pay for gross budgetary support from the government every year
• With the merger, the issue of raising passenger fares, an unpopular decision, will be the Finance Minister’s call

D. GS4 Related

E. Important Editorials: A Quick Glance

1. Read: From the annals of history: The Hindu as published on Aug. 15, 1947

Note: Contains many insightful articles. A good read

a) The article by C.V Raman talks about Indians having to reject the notion of superiority attributed to western scientific institutions and forge their own way in the quest for scientific knowledge

b) The article by Aurobindo Ghosh talks about Indian spirituality being the factor that can unify the whole world

c) V.K Krishna Menon’ s article ( Secretary of India League in London- mobilising public opinion in favour of India in London)

“Let us remind ourselves that while we complain other people fail to understand us and misinterpret events in India, our lack of knowledge and our inadequate appreciation of world affairs and the outlook and aims of other people is equally to be deplored”

d) Tribute to Netaji

Not the least important and noteworthy among them is the Indian Independence Movement launched in East Asia by Netaji Subhas Chandra Bose, together with the formation of the Provisional Government of Azad Hind, the Indian National Army which was the Government’s sword- arm and the various auxiliary units for the efficient conduct of the campaign. A short resume of Netaji’s historic contribution to the freedom of India is the least tribute his adherents and country- men can pay in memory thereof, on the dawn of freedom.

Netaji Subhas Chandra Bose was without doubt a far-sighted, realistic type of leader. He knew that World War No. II was bound to materialise sooner or later as a natural corollary to the Versailles Treaty. He knew that our motherland could not be liberated unless a military campaign was launched from outside India. He knew also that facilities could be obtained for such a campaign only from Britain’s enemies and not from Britain’s allies during the course of World War II. With these basic ideas, he made good his escape from India and proceeded first to Germany and thence to Japan.

e) Article on the sacrifices of the Nehrus

f) Article by K.M Munshi talks about the Constituent Assembly a little

f) Article on Mahatma Gandhi. Is Gandhian non-violence too impractical a course to follow in the contemporary world? If so, are we on a path of moral digression?

g) The Article by T.T Krishnamachari talks about uniform taxation(Last para)

h) Jinnah’s speech on the eve of Pakistan’s independence. He talks about tolerance among faith and goodwill among nations

i) One article talks about the closing down of India office in Pakistan

j) Nehru’s speech

Topic: Social and political dempcracy

Category: Polity

Key points:

• Indian nationalism did not seek to promote Indian interests at the expense of others,it did not seek to dominate smaller powers, instead supported and encouraged them to be independent. This was because Indian nationalism, as articulated in our freedom struggle, was a progressive, revolutionary, humane, compassionate, pro-people, anti-colonial nationalism. It was not the aggressive jingoistic nationalism of the fascist Mussolini or Nazi Hitler which was used in Europe in the 1930s and 1940s to crush democracy, and commit genocide on bona fide citizens by declaring them anti-national. Neither was it the homogenising nationalism based on language (and often religion), as in 19th century Europe, examples being French-speaking Catholic France and German-speaking Protestant Germany. The nationalist vision that inspired millions of Indians was of an independent, multi-lingual, multi-religious, secular, democratic, civil libertarian and egalitarian republic
• The hyper-nationalism witnessed in India in recent times is not the nationalism of our freedom struggle
• Witness the reckless use of Section 124-A to charge students with sedition, with vigilantes attacking even journalists inside law courts, with books being withdrawn and pulped, with Ministers attempting to terrorise dissenting intellectuals by labelling them as ‘intellectual terrorists’, with gaurakshaks physically attacking those who they think are flouting their diktats, especially if they belong to the Dalit or minority communities. These attacks on freedom of expression, of movement, on freedom to eat and earn your livelihood, bring home to us the urgent necessity of resisting these attacks, and that can only be done by defending civil liberties, by defending this legacy as an integral part of our nationalism, and by declaring these attacks as anti-national. To do so, we need to arm ourselves with greater knowledge about how the battle for civil liberties was linked to our national struggle
• Examples from history
• Almost half a century before anti-imperialist nationalist ideas begun to emerge, Raja Rammohan Roy, often called the Father of Modern India, as early as 1824 protested against a regulation restricting the freedom of the press. In a memorandum to the Supreme Court, he argued for “the unrestricted liberty of publication” to ensure that every individual could bring his views to the notice of the rulers
• Vernacular Press Act,1878 was vehemently opposed
• A few years later, in 1883, SurendranathBanerjea, one of the founders of the movement for independence, was sent to jail for two months for contempt of court for an editorial he wrote in his newspaper, the Bengalee, criticising a judgment of the Calcutta High Court in sharp terms. This was seen by political India as an attack on civil liberties. In Calcutta, there was a complete hartal in the Indian part of the city
• Similarly, and on a far bigger scale, country-wide protests followed when LokmanyaTilak was sentenced to 18 months’ rigorous imprisonment in 1897 for publishing his own speech in the Kesari, his Marathi newspaper. Again, in 1908, Tilak was convicted of sedition under the notorious Section 124-A of the Indian Penal Code and sentenced to transportation for six years and exiled to Mandalay in Burma for his articles on ‘The Arrival of the Bomb’. The reaction was predictably stronger, given the timing of the attack, at the last phase of the Swadeshi Movement
• In 1922, Mahatma Gandhi was also tried under the same Section 124-A for sedition for articles he wrote in Young India, and the judge told him he was giving him the same punishment that was given to LokmanyaTilak: six years of imprisonment, but not in exile
• The struggle for civil liberties thus entailed much suffering and sacrifice, many suffered long jail terms, others lost their life’s savings, their families paid the cost; the legacy is thereby a precious and hallowed one. A legacy which we cannot allow to be whittled away, as on its defence rests our ability to defend the humane, pluralistic and egalitarian legacy of Indian nationalism
• Gandhiji said: “Liberty of speech means that it is unassailed even when the speech hurts. Liberty of the press can be said to be truly respected only when the press can comment in the severest terms upon and even misrepresent matters… Freedom of association is truly respected when assemblies of people can discuss even revolutionary projects.” And: “Civil liberty, consistent with the observance of non-violence is the first step towards Swaraj. It is the breath of political and social life, it is the foundation of freedom. There is no room here for dilution or compromise. It is the water of life.”

1. From plate to plough: Seeds of change

Topic: Agriculture

Category: Economy

Key points:

• A look at the historic evolution of the agri-food space to identify catalytic contributions by leaders of the day reveals interesting facts
• Let us start with the Nehruvian era. The first five year plan (FYP) focussed on irrigation (big dams). The second FYP (1956-61) was driven by Prime Minister Nehru’s economic philosophy of the mixed economy, with the state playing a dominant role, and focused on heavy industry. For food, however, he relied on PL480 aid (mainly wheat) from the US
• When India faced back-to-back droughts in the mid 1960s, Shastri realised the folly of this model. For a country that lived “from ship-to-mouth”, two consecutive droughts and a 72-hour suspension of food aid from the US (due to political differences over Vietnam) were enough to ring the alarm bells
• The crisis sowed the seeds of the first major transformational change in Indian agriculture. Nearly 18,000 tonnes of high yielding variety seeds of dwarf wheat were imported from Mexico, and Agricultural Prices Commission (APC), now known as CACP, and the Food Corporation of India (FCI) were created to incentivise farmers to adopt new technology. By 1971-72, India became nearly self-sufficient in basic staples. This transformational change was the Green Revolution
• Shastri also took another transformational decision that changed the course of India’s milk sector, which was to create the National Dairy Development Board (NDDB), with VergheseKurien as its chairman. The NDDB gave India the White Revolution, which turned the country into the largest producer of milk in the world
• Indira Gandhi went socialist and strangulated grain markets by taking over wholesale trade in wheat in 1973-74 and rice in the following season. She failed miserably and India was forced to import grain again
• The biggest decision thereafter in the agri-food space was taken by Vajpayee when he allowed GM technology in cotton in March 2002 and in the process launched the gene revolution. This made India the second largest producer and exporter of cotton, with net gains of about $55 billion during 2002-2015
• UPA I and UPA II saw the global commodity price boom. Manmohan Singh’s government offered significant increases in minimum support prices. This increased production, stocks and exports to unprecedented levels. India exported more than 60 million tonnes of cereals during 2012-14, and overall agriculture exports touched $42 billion in FY14
• More recently, Modi’s government is seen struggling to revive the agri sector in the wake of back-to-back droughts in 2014 and 2015. In his town hall meeting, Modi acknowledged that Indian agriculture held the key to India’s growth. A week before, in a meeting at NITI Aayog for 15 years’ vision and planning, he stated emphatically that focus on agricultural productivity alone will not suffice, and that we needed a holistic approach including food processing, access to markets etc. Further, he added that the time for incremental changes was over, and that we now needed transformational ideas and policies. He is spot on
• The Indian farmer and farming is limping due to heavy dependence on monsoons. Slogans like harkhetkopani and more crop per drop under the PM’s KrishiSinchayeeYojana (PMKSY) are nowhere near transformational as they have only paltry resources (Rs 5,767 crore) and fragmented governance across three ministries
• If PM Modi really wants to usher in transformational changes in India’s agri food space, our submission is he focus on just three things
• One, put food and fertiliser subsidies under Direct Benefit Transfer (DBT) to beneficiaries’ accounts. Tie it with deregulating fertiliser prices and imports, and shrink the public distribution system, which is marred by massive leakages (above 40 per cent) and high costs. This will save him save a minimum of Rs 50,000 crore annually, which he should put in water management (PMKSY)
• Two, ensure at least all NDA-ruled states carry out genuine agri market reforms, that is, break the monopoly of APMC markets by creating alternative private sector/farmers’ markets, allowing direct purchases from farmers, capping commissions plus taxes at 3 per cent (1 plus 2), abolish or drastically prune Essential Commodities Act (ECA), liberalise retail and e-commerce to create all India markets
• Three, usher in a brown revolution by incentivising precision agriculture. It will help save precious water, fertilisers, maintain soil fertility of Mother Earth, and make agriculture not only sustainable but also productive and profitable to farmers
• If PM Modi can do these, he will go down in history as having transformed the Indian agri-food space. Else, we are afraid, his slogans may boomerang

1. Read: Brief Highlights of Prime Minister’s Address on Independence Day

1. Trade talks that could milk India dry

Topic: Effect on trade

Category: International Groupings

Key points:

• During the recently concluded Ministerial level meet on Regional Comprehensive Economic Partnership (RCEP) at Laos, India officially communicated its position to consider a uniform yardstick for elimination in number of tariff lines. This is a significant shift from its earlier position of a three-tiered approach to tariff reduction. In return, India is pushing for liberalisation of trade in 120 services — an area in which it apparently enjoys comparative advantage over other members of RCEP
• The three tier approach to elimination in tariff lines proposed by India earlier divided the 15 members of RCEP into three groups. The first group consisted of the existing members of ASEAN — three of them considered as low income countries as per the World Bank classification, namely, Cambodia, PDR Lao and Myanmar
• The second group includes Japan and Korea — countries which have simultaneous free trade agreements (FTA) with ASEAN and India
• The third group includes Australia, New Zealand and China. These three countries have FTAs with ASEAN but are yet to ink such agreements with India

• India offered to eliminate 80 per cent of the tariff lines with the countries clubbed in group 1 on a reciprocal basis with 65 per cent of them being made effective once the RCEP would come into effect and the rest over an extended period of 10 years
• Proposed tariff line elimination for second and third group of countries were pegged lower at 65 per cent and 42.5 per cent, respectively, to be phased out over time. ( Tariff lines are products defined at a highly detailed level for the purpose of setting import duties)
• This change in strategy brings to the fore an important issue vis-à-vis the Indian dairy sector. As long as India had proposed to follow differential rates of elimination of tariff lines with minimal levels of elimination proposed for Australia, New Zealand and China, there was not much of a threat to our dairy sector
• New Zealand and Australia are the leading exporters of milk and dairy products in the world. Both of them enjoy a high degree of comparative advantage globally over their competitors
• New Zealand recorded a self-sufficiency index of more than 500 in 2013, indicating that out of every five units of milk and milk products produced there, only one unit was used up for domestic consumption. The rest of the produce is required to be exported, else they would lie as unused stocks in storage houses, creating an obvious drag on future prices and capacity utilisation in dairy sector, thereby affecting the economy
• Australia recorded a self-sufficiency index of 127, still indicating considerable excess production of dairy products over domestic consumption requirements. On the other hand, the Chinese estimate of the same index stood at 81 — indicative of a significant deficit in domestic production compared to internal consumption requirements
• The rest of the RCEP members are yet to be self-sufficient in milk and milk products. The new dispensation of equal treatment by India to all 15 members of RCEP in terms of elimination of tariff lines potentially opens up a much larger possibility — of Indian milk producers facing strong competitive pressure from the dairy sectors in New Zealand and Australia
• Are Indian dairy farmers ready to compete with their counterparts from New Zealand and Australia? Is it necessary for them to compete with them? Perhaps both the questions are to be answered in emphatic negatives
• In today’s competitive world, exports are conditioned by the capacity to produce beyond domestic production. The gap between cost of production and the price of the products, both in domestic and international markets which are often not free from manipulation or distortion of one kind or the other, too determines the capacity of a country to export

• Incidentally, India’s self-sufficiency index in dairy products was measured as 101 in 2013. Per capita annual milk consumption in India is not very healthy compared to global standards. It was recorded at 123 kg of milk equivalent in 2013, compared to 328 kg in Australia, 259 kg in the US, 214 kg in Argentina and 180 kg in Brazil. This is in spite of the fact that India is the largest producer of milk in the world
• India is not export competitive in any of the 21 dairy products traded globally. However, the Indian dairy sector is surely capable of taking care of present domestic requirements. With milk production increasing at a healthy rate, the country is well poised to maintain its self-sufficiency even though per capita consumption of milk in India is steadily increasing at more than 2 per cent per year
• Thanks to “Operation Flood”, we have been quite successful in safeguarding the interests of our vast millions of resource-poor milk producers as well as that of our domestic consumers. However, India is yet to acquire enough commercial intelligence to handle unforeseen fluctuations in global trade. It would have to undertake large scale domestic institutional reforms, including handling of import quality, to establish herself even as a small global player in the dairy sector in the years to come
• The threat to Indian dairy sector through RCEP, in view of the recent change in negotiation strategies, comes from New Zealand and Australia. The cost of production of milk in here is more or less similar to that in India; so milk products from these countries will be price competitive vis-à-vis domestic products, if existing tariffs are altogether or even partially eliminated
• Given the excess production capacity in these countries, they can engage in large scale export without impacting domestic price levels. It is imperative that the domestic dairy sector is protected through appropriate policy instruments, till the required domestic reforms are initiated
• A unique feature of Indian dairy sector is the high share of the consumer rupee flowing into the hands of the primary milk producers, thanks to the extensive network of dairy cooperatives
• It supports around 75 million households with small landholding, mostly owning two or three cattle or buffaloes. Opening the milk sector hastily to competition will be a recipe for disaster unless the small producers are provided with policy support – the most important being access to cheaper credit and integration with the extended value chain
• The next round of negotiations begin today in Ho Chi Minh City, Vietnam. The shift in India’s strategy in favour of opening up the goods sector uniformly to competition from all other signatories of RCEP should be reconsidered. A gain for one small organized group may be accompanied by a loss to a much larger but relatively unorganised group — the dairy sector

1. Class 12 certificates for vocational courses

Students undergoing vocational training will soon be able to get a Class 12 certificate that will be equivalent to an intermediate certificate from Central and State Boards.

The National Institute of Open Schooling (NIOS), an autonomous institution under the Ministry of Human Resource Development, is offering Class 12 and Class 10 certificates through open and distance learning system to students who pass three vocational papers — of same or similar vocations — and two academic papers, one of which should be a language paper. The other can be any of the subjects on offer.This will make many students eligible for jobs that have Class 12 as a necessary qualification.

The tea industry has reiterated its plea to maintain a special concessional rate under the proposed GST regime. “Tea, being a product of mass-consumption, should be kept under a special rate under the GST regime, and it should be at par with the current rate of 5.5 to 6 per cent,” the Indian Tea Association said. It also wants a waiver of the one per cent additional tax on inter-state supplies of goods proposed under GST saying that this would have a significant impact on products like tea which are produced only in select states.

Oil and Natural Gas Corporation (ONGC) unveiled a Rs.100 crore start-up fund to foster, nurture and incubate new ideas related to the oil and gas sector.As part of this initiative, ONGC will provide the entire support chain for start-ups including seed capital, hand-holding, mentoring, market linkage and follow-ups.

An IMF paper has raised question marks over the ability of the Reserve Bank of India (RBI) to target inflation through monetary measures, saying the size of the formal financial sector is small in India and may undermine the effectiveness of interest rate changes on aggregate demand.It said that careful studies of the effectiveness of monetary transmission in low-income countries have often found monetary policy effects that are counterintuitive, weak or unreliable.

F. Concepts-in-News: Related Concepts to Revise/Learn:

• RCEP
• Constituent Assembly
• Problems of Indian agriculture
• Freedom Movement
• Collegium System

G. Fun with Practice Questions 🙂

Question 1: Which of the following countries is/are members of RCEP?

Question 2: Which of the following statements is/are correct about the constituent assembly that drafted the Indian constitution?

Question 3: Which of the following statements is/are correct?

Question 4: Which of the following statements is/are correct?

Question 5: Which of the following was/were reforms undertaken by Lord Ripon?

H. Archives:

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