# Comprehensive News Analysis - 23 August 2016

The Hindu

##### H. Archives

.

+++++++++++++++++++++++++++++++++++++++++++++++

### Useful News Articles

##### A. GS1 Related

Nothing here today folks!

##### B. GS2 Related

1. Tamil Nadu is all set to‘trans’ form police force

Category: Polity and Governance

Topic:  Welfare schemes and policies for the vulnerable

Key Points:

• Tamil Nadu has cleared the decks for trans-genders to enter the police force. The government has said trans-genders could apply either as male, female or third gender.
• Those opting for “third gender” would be under the female category for educational qualifications, physical fitness and reservation.
• The move comes after the entry of Prithika Yashini, the first trans-woman Sub-Inspector, based on a court order last year. Though some of them tried to join the police on earlier occasions, they were turned away as there was no provision to accommodate the third gender.
• The reservation rules on appointment of trans-genders in other departments would apply.

##### C. GS3 Related

1. Ports to promote waterways as Centre plans policy rejig

Category: Economy

Topic:  Transportation

• The Centre is framing a policy to enable all major ports to set up subsidiary companies to develop inland waterways.
• The establishment of separate units will facilitate easy foreign funding for inland waterway projects by capitalizing on the financial credentials of the government owned ports.
• As the shipping ministry believes, loans are generally not forthcoming to inland waterway projects, they plan to use the financial credential of ports, which will set up subsidiary companies for developing inland waterway projects.
• The objective of the government is to reduce logistics costs to make exports competitive and all ports will be asked to improve inland waterways in their periphery to divert large part of the cargo on waterways which is cost effective.
• JNPT will develop waterways on seven to eight rivers in Maharashtra which flow from Madhya Pradesh.
• Goa Port will be the next to follow and will develop inland waterways on two rivers.
• The inland waterway projects are economically viable, but raising funds for them is not a successful practice in our country as they don’t have any financial credentials now.

##### E. Important Editorials: A Quick Glance

The Hindu

Category: Polity and governance

Topic:  Separation of powers, judiciary, executive

• The delay in filling up vacancies by the executive, in the high courts has been questioned by the chief justice of India.
• The executive and the judiciary are yet to agree on a fresh Memorandum of Procedure (MoP) for appointments to the superior courts.
• The memorandum of procedure is a proposed mechanism to appoint the chief justice of India, chief justice of high courts and judges of supreme court and high courts. It was proposed to be devised after the apex court struck down the NJAC as unconstitutional.
• The Union government, tasked with revising the MoP, is awaiting the approval of the Chief Justice and his senior colleagues for its draft proposals.
• Therefore, the confusion now is whether to appoint the judges in existing 475 vacancies in various high courts, through the old collegium system which would soon be abolished or wait for the new MoP to materialize.
• Even the Constitution Bench that invalidated the laws relating to the NJAC conceded that the collegium process requires improvement. One judge even called for glasnost and perestroika.
• The government argues that, its draft MoP adheres to the framework laid down by the Supreme Court. It seeks to “widen the zone of consideration” to reduce arbitrariness as well as nullify perceptions of favouritism in making judicial appointments and transfers.
• Greater transparency is sought to be introduced through a process of vetting by screening committees at the high court and Supreme Court levels.
• It envisages a permanent secretariat for the collegium to gather and scrutinise data relating to prospective appointees, and lays down a judicial mechanism for redress of complaints against judges.
• A panel of retired judges would be a part of the secretariat which would screen the potential judges
• Reports suggest that the judges are uneasy about the screening process and have grave reservations about the executive claiming a right to veto specific recommendations on the grounds of national security or public interest.
• However, there is a compelling need for the two branches of government to come to a consensus quickly.

2. Miles to go before we reap

Category: Economy, Governance, miscellaneous

Topic:  Employment generation, exports, Government policies in the field of sports

• When India won six medals at the 2012 London Olympics, it was considered a watershed moment. The significance of this accomplishment lay in the fact that until then the country had earned a sum total of just seven individual medals.
• The performance was expected to provide a springboard for future successes. Four years hence, on the back of heightened expectations, the results have been a mixed bag.
• It would not be fair to dismiss the results as disappointing, for there were a few near-misses — Dipa Karmakar and Abhinav Bindra both finishing fourth, Sania Mirza and Rohan Bopanna losing the bronze medal match etc.
• Yet, it was no doubt underwhelming from the largest contingent of Indian athletes at the Olympics ever.
• This leads to questions about the lack of a ‘sporting culture’. Does India have the infrastructure and coaching facilities to produce medal winners consistently?
• Athletes have voiced their concern about the lack of good facilities. However, developing a sporting culture means more than improving facilities.
• It demands that sporting, needs to be viewed as something more than a hobby or a recreation. There needs to be sustained programmes, policies and interventions by all the stakeholders to engender a paradigmatic attitudinal shift towards sporting as a respectable bread-winning profession.
• It is important to understand that modern-day sport is professional at its core and helps in creating jobs and businesses.
• It is also an important tool for human resource development. In fact, the success of P.V. Sindhu and Sakshi Malik is representative of what a good sporting culture can achieve.
• In addition to shooting, badminton and wrestling enjoy more patronage than other Olympic sporting events. But it is also enabled by parents and coaches willing to show faith and patience in their wards.
• It can be safely assumed that the careers of Malik and Sindhu wouldn’t have been considered as failures even in the event of their not winning a medal.

3. Should mayors be directly elected?

Category: Governance

Topic: Urban Local Governance

• One of the constant and most talked about impending reforms is with regard to local governance.
• It is largely believed that our cities have a weak and fragmented institutional architecture with overlapping jurisdiction of multiple agencies.
• Recently, talks of reforming the mayoral election system have been voiced, including the Prime minister himself calling for feasibility study of a direct mayoral election system.
• Mayoral reform has now made its way into Parliament with Shashi Tharoor introducing a private member’s bill to amend the Constitution for strengthening local governments. This step has helped spark a public discourse on this issue.
• The bill aims to establish strong leadership for cities by providing for a directly elected and empowered Mayor. It also envisages other key urban governance reforms such as mandating the constitution of area sabhas and ward committees and strengthening the devolution of functions to local governments.
• However, it is the attempt to mandate directly elected Mayors for all municipalities that raises some questions.

An empowered Mayor:

• The passage of the 74th Constitution Amendment in 1992 resulted in Urban Local Bodies (ULBs) — Nagar Panchayats, Municipal Councils and Municipal Corporations — becoming a constitutionally recognised “institution of selfgovernment”.
• However, it did not prescribe the manner of election, tenure or powers of the Mayors/Chairpersons of ULBs.
• This new bill mandates the direct election of the Mayor, fixes the Mayor’s term to be coterminous with that of the municipality, and makes the Mayor the executive head of the municipality.
• Vesting the executive powers of the municipality with the Mayor would be a very positive move.
• Most Indian cities still follow the Commissionerate system of municipal administration, a British legacy, in which the State government-appointed Commissioner is the executive head of the city while the Mayor has a largely ceremonial role.
• This is an anomaly. In a democracy, executive power should vest with a person or a body that is democratically accountable.

Direct versus indirect election of the Mayor:

• However, this does not necessitate the Mayor to be directly elected. After all, we do not directly elect the Prime Minster or the Chief Minister. Still they enjoy wide powers and are democratically accountable.
• Mayors do not enjoy similar powers not because they are not directly elected, but because State governments exercise enormous control over ULBs — politically, administratively and financially.
• For responsive urban governance, we need a powerful political executivein the city with more autonomy, whether directly or indirectly elected.
• An empowered executive at the city can also be achieved through an indirectly elected “Mayor-in-Council” system in which, much like the cabinet system in Parliament, the Mayor has to maintain the support of the majority of the council.
• Further, in States like Rajasthan and Himachal Pradesh which introduced directly elected mayors reversed the decision due to the difficulties posed by such a system.
• Experts are of the opinion that directly elected mayor might actually result in a gridlock in administration, especially when the Mayor and the majority of elected members of the city council are from different political parties.
• Notably, this proposed bill gives the Mayor veto powers over some of the council’s resolutions and also lets the Mayor nominate members of the Mayor-in-Council and vest it with powers.
• Essentially, it centralises power in the hands of the Mayor and his nominees and creates a political executive which neither enjoys the support of the elected council nor needs its acquiescence for taking decisions.

Way forward- Devolution is the key

• A more fundamental question to consider is this: even if a directly elected mayoral system is a relatively good reform, should it be made mandatory for all municipalities under the Constitution? India is one of the few countries where the powers of the local government are laid out in the federal Constitution.
• However, local government is still under List II of the Seventh Schedule of the Constitution. Hence only the State is empowered to make laws on this subject. In such a federal system, constitutional provisions should only lay down the broad institutional framework for local governments.
• But since States are often reluctant to devolve functions to local government, it makes sense to mandate such devolution in the Constitution.
• However, the Constitution may not be the ideal instrument for prescribing the manner in which the head of a local government is elected.
• More cities should perhaps institute a directly elected mayor. But making it the only way through which Mayors can be elected limits the options of cities and States. Perhaps Mr.
• An empowered political executive for the city can be achieved in multiple ways, including a directly elected mayor.
• When the U.K. sought to reform local governments, a directly elected mayor was only one of the three options given to the local governments.
• Creating an empowered and accountable political executive for cities is important, but a directly elected mayor should be a political option, not a constitutional decree.

1. Monsoon matters

Category: Economy

Topic:Agriculture

• Owing to good and well distributed monsoon, farm GDP is expected to rise by 6 per cent in 2016-17, unlike its average growth rate of 1.6 per cent.
• This is expected to lift overall growth by one percentage point to at least 8 per cent — given that agriculture accounts for 16-17 per cent of the GDP.
• This is expected to benefit the rural economy in general, and consumer goods in particular as there is an expected demand uptick.
• This is a much needed relief from the widening rural-urban divide, which would have otherwise been compounded by the seventh pay commission recommendations having overarching implications on urban spending.
• Assuming that the rabi season too goes off well, food grain output is expected to touch an all-time high of 270 million tonnes in 2016-17, against 252 in 2015-16.
• The generous hike in support prices (8-9 per cent across categories) of pulses has obviously worked; the issue now is to sustain this interest.
• Timely rain contributed to a 10-million hectare increase in paddy acreage; this could lift the fortunes of distress-prone, rainfed regions such as Telangana and Odisha.
• However, a good monsoon should not lead to complacency in policy matters.
• An RBI working paper observes that farm output is more responsive to changes in acreage than rainfall, which points to the significance of the right policy environment.
• The spatial and temporal distribution of rain, rather than the actual quantum, is more important in assessing the impact of monsoon on agriculture.
• Owing to climate change, the dry days in the monsoon months has increased, accompanied by bouts of extraordinarily heavy rain destroying standing crop and livestock. The impact of the floods in central and western India can turn out to be serious.
• Therefore, experts argue that Agriculture policy should be increasingly about managing water sensibly and being prepared for extreme weather events.
• TheEconomic Survey 2015-16 places water at crux of agriculture management. Crop insurance should be proactively promoted. The ICAR must work on preserving native, sturdy strains and evolving new ones resistant to droughts and floods.

2. Revisiting inflation targeting

Category: Economy

Topic: Monetary Policy

• Recently, there has been a paradigmatic shift in the RBI’s stance on monetary policy. Based on the Urjit Patel committee , RBI has accepted inflation-targetting as its primary function based on CPI inflation index.
• At the final stage the ministry signed an agreement with the RBI that the CPI number would be targeted at 4 per cent with a band of 2 per cent either way.
• A few economists believe that the perception regarding inflation can be a bone of contention. If inflationary expectations are grim, it does not look good, and if external factors are congenial, the number looks low.

Theoritical basis to target inflation:

• It is widely believed that minimum inflation is necessary to stimulate demand, but beyond a point, easy money creates excess demand forces which push up prices leading to ‘demand pull inflation’ which monetary policy can curb by increasing interest rates or reserves, or going in for open market operations to handle liquidity.
• However, the Keynesian school propagates that monetary policy can also influence growth. This is where the government comes in, when the argument is put forward that lower rates will push up growth.
• Given that the government is not willing to spend by the theoretical Keynesian prescription of fiscal stimulus, the onus is passed to the RBI to lower rates which will enable the private sector to invest more.
• There is, however, an argument that excess demand comes in only when full employment is reached and hence as long as there is spare capacity monetary expansion should not be inflationary. Hence both monetarism and Keynesianism can coexist.
• But what has been observed globally is that merely lowering rates or even enthusing liquidity by buyback of securities is not adequate to propel economies.
• When the problem is on the demand side, which is the case in India today, lowering rates has weak effects. People do not buy homes or companies invest when there is less money being earned by households or excess capacity residing in industry.
• The RBI can only lower rates, but economic agents have to start borrowing more and banks should be willing to lend more given their asset quality challenges.
• By treating interest rates as the overriding factor driving the economy and focusing excessively on lowering the same, we could just be losing the plot.

CPI vis-a-vis WPI:

• It is also a matter of debate whether CPI is the right index to target in the Indian context, as the components of this series are not linked with leverage.
• In the US, credit cards are used in every sphere of life starting from bus tickets to consumer goods. Hence, viewing the CPI and then targeting the same makes economic sense. But for India, where almost 90 per cent of the index is not based on borrowing, interest rate policy cannot influence this number.
• The CPI is basically a supply-side phenomenon where shocks in production can set us back considerably.
• Ideally, the WPI which comes closer to being a producers’ index should be targeted, and going by what has transpired in FY16, negative WPI inflation was not consistent with the conservative monetary policy action of the RBI.
• The main takeaway is that monetary policy is one aspect of the framework which can work only to a limited extent, for two reasons. First, we are targeting an inflation rate over which the policy has less control. Second, even if rates are lowered, the decision to spend is a demand-side issue and hence has met with little success.
• Two conundrums come up. First, if crude oil prices go up, given that the government has withdrawn the subsidy substantially, prices of fuel products are bound to increase; this will push up inflation. Can the RBI then be pressured to lower rates in a situation where the government has contributed to rising prices?
• The second issue is that as there is a lot of focus on growth when it comes to monetary policy, should we abandon the inflation targeting model and start talking of targeting growth?
• Hence, instead of looking at 6 per cent inflation, the vision can be , say, 8 per cent GDP growth, and as long as we are below this mark, interest rates have to come down. If inflation is on the supply side driven by potatoes and tomatoes, such rates should then be non-inflationary.

A realistic view

• At a more realistic level we can also consider fixing ideal rates of inflation and GDP growth, and gear policy to these numbers.
• This was the RBI’s way of expressing itself before it settled for inflation targeting; But quantifying inflation targetting does constrain policy action as while the band of 2 per cent for inflation allows for flexibility, excluding growth numbers in the approach generates controversy.
• Going ahead, it is the monetary policy committee that will work on the structure.
• It will be interesting to see how the last part of the agreement between the RBI and the finance ministry will be handled in case inflation goes beyond 6 per cent, especially if the tomato or onion crop turns negative. The committee will be answerable

##### F. Concepts-in-News: Related Concepts to Revise/Learn:
• Inflation
• National Waterways
• Agriculture
• 74th Constitutional Amendment act and urban local bodies

##### G. Fun with Practice Questions 🙂
Question 1: Consider the following statements?
1. The urban local bodies have been given constitutional status by 73rd constitutional amendment act.
2. The mayor is directly elected in the municipal corporations

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2

Question 2: Consider the following statements?
1. P.V sindhu, associated with archery, won a silver medal at the recently concluded Rio olympics
2. Arjuna award is the highest sporting honour in India

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2

Question 3: consider the following:
1. At present, the Supreme court judges are appointed by the Collegium consisting of Chief justice of India and two senior most judges of supreme court
2. The Supreme court of India enjoys writ jurisdiction for any matter under the law.

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2

Question 4: consider the following:
1. The base year for CPI index is 2012
2. Inflation, at present, is targeted on WPI index

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2

Question 5: Monsoons in India are stronger when:
a) Low pressure due to heating of Tibetan Plateau

b) High Pressure in the Tibetan Plateau

c) Southward shift of ITCZ in month of May

d) Strong low pressure in the Mascarene basin