Comprehensive News Analysis - 24 June 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. NSG delegation heads reconvene to discuss India’s entry

2. Colombia government, rebels agree full ceasefire

3. More clarity on defence acquisitions soon

C.GS3 Related:

1. Britain votes to leave EU in historic divorce

2. India refuses to offer China equal market access given to other members in RCEP

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

The Hindu

1. A stitch in time

2. Death of a singer

3. A strange obsession with the NSG

4 Must Read:Peace through economics: a short history of the EU

The Indian Express

1. Solution is the problem

2. To Read: Nuts and bolts: Throwing light on lightning

Others

1. PIB

a) Pilot Programme to run two wheelers on CNG launched by Shri Dharmendra Pradhan & Shri Prakash Javadekar

b) India and UK join hands to work as R&D partners in Solar Alliance and Nano Material Research

c) Prime Minister to launch Smart City projects

2. The Financial Express:

a) Telephony: Here’s what keeps service from being free

3. The Business Line:

a) Business-friendly policy at labour’s expense

5. Quick Bits

a) Six militants killed in Kashmir encounter

b) Torpid airports may convert into SEZs

c) ‘Mobile banking volumes up 7 fold in three years’

d) India is biggest threat to Pakistan: Bajwa

e) Any NSG exception to disturb regional stability: Pakistan

f) China de-links bilateral ties with India from the NSG debate

g) Government amends income tax rules to end uncertainty over GAAR

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. NSG delegation heads reconvene to discuss India’s entry

Topic: NSG

Category: International Groupings

Location: The Hindu

Key points:

  • Heads of delegations of Nuclear Suppliers Group (NSG) countries have reconvened in Seoul to carry forward their inconclusive consultations that went on late into Thursday night over India’s entry into the global body
  • Meanwhile, Prime Minister Modi urged China to make a fair and objective assessment of India’s application and judge it on its own merits. He said that China should contribute to the emerging consensus in Seoul
  • But differences persist. Brazil said during the special session that it wanted a “non-discriminatory, criteria-based process”, akin to China’s stated position on the subject. Turkey is believed to have specifically mentioned that any flexibility shown to India should also be shown to Pakistan. A third group of countries like Ireland, Austria and New Zealand continued to hold firm that any future member of the Nuclear Suppliers Group must adhere to the Non Proliferation treaty, that India has contended is non-necessary

 

Related news: In Tashkent, Modi engages China on NSG membership

 

  • The Indian PM arrived in Tashkent to a warm welcome as he kicked off a two-day visit to attend the annual summit of the Shanghai Cooperation Organisation (SCO) with the aim of expanding India’s engagement with the China-dominated grouping in areas of security, defence and energy
  • the SCO will start the process of India’s accession to the grouping as a full-fledged member, along with Pakistan

 

2. Colombia government, rebels agree full ceasefireTopic: Latin America

Category: International Affairs

Key points:

  • Colombia’s government and theRevolutionary Armed Forces of Colombia (FARC) guerrilla force(the country’s biggest rebel group) agreed on a definitive ceasefire, taking one of the last steps towards ending Latin America’s longest civil war
  • The announcement heralds an end to a half-century conflict that has killed hundreds of thousands of people in the jungles of the major cocaine-producing country
  • The deal resolves one of the final points in peace talks between the government and the  FARC

 

3. More clarity on defence acquisitions soonTopic: Defence

Category: Governance

Key points

  • The Air Force’s long-range air defence systems, the Army’s artillery modernisationprogramme and the Navy’s plans to procure new missile boats and special operations vehicles will get policy clarity when the Defence Acquisition Council, headed by the Defence Minister  meets later this week
  • The deal for five S-400 Triumf long-range surface-to-air missile systems from Russia, potentially worth about Rs. 40,000 crore, is up for clearance
  • Three major artillery programmes of the Army at an advanced stage of procurement will be taken up for specific approvals and clarity. These include M-777Ultra-Light Howitzer from BAE systems, upgrading of 130-mm guns to 155-mm ones and the indigenously upgraded Bofors gun, Dhanush. The Army has failed to induct any new piece of artillery(large-calibre guns) since the 1980s after the infamous Bofors scandal
  • For the Navy, six next-generation missile vessels meant to replace the current Prabal class of missile boats acquired in the late 1980s from the Soviet Union is a high priority
  • However, guidelines on selecting strategic partners intended to develop the domestic manufacturing under the new Defence Procurement Procedure, 2016, remains unfinished with the industry objecting to the government’s proposed guidelines on the issue

 

C. GS3 Related

 

  1. Britain votes to leave EU in historic divorce

Topic: Brexit

Category: Economy

Key points:

  • Britain has voted to leave the European Union, results from Thursday’s landmark referendum showed, an outcome that sets the country on an uncertain path and deals the largest setback to European efforts to forge greater unity since World War Two
  • World financial markets dived as nearly complete results showed a 51.8/48.2 per cent split for leaving. Sterling suffered its biggest one-day fall of more than 10 per cent against the dollar, hitting a 31-year low on market fears the decision will hit investment in the world’s fifth largest economy
  • The UK itself now faces a threat to its survival, as Scotland voted 62 per cent in favour of staying in the EU and is likely to press for a new referendum on whether to become independent after its 2014 vote to stay in the UK
  • Scottish First Minister Nicola Sturgeon said Thursday’s vote “makes clear that the people of Scotland see their future as part of the European Union.”
  • Northern Ireland’s largest Irish nationalist party, Sinn Fein, said the result intensified the case for a vote on whether to quit the UK
  • Quitting the EU could cost Britain access to the EU’s trade barrier-free single market and mean it must seek new trade accords with countries around the world. President Barack Obama says it would be at the “back of a queue” for a US pact
  • The EU for its part will emerge economically and politically weakened, facing the departure not only of its most free-market proponent but also a member country that wields a UN Security Council veto and runs a powerful army. In one go, the bloc will lose around a sixth of its total economic output
  • It also revealed deeper splits in British society, with the pro-Brexit side drawing support from millions of voters who felt left behind by globalisation and believed they saw no benefits from Britain’s ethnic diversity and free-market economy
  • Concerns over uncontrolled immigration, loss of sovereignty, remote rule from Brussels and a protest vote from working class northern voters appear to have trumped almost unanimous warnings of the economic perils of going it alone
  • “People are concerned about how they have been treated with austerity and how their wages have been frozen for about seven years,” said John McDonnell, finance spokesman for the opposition Labour Party, which had favoured a Remain vote
  • Surveys on public attitudes across the EU have for years shown growing disenchantment with European integration, a project that began in the 1950s as a common market for steel and coal but which over the years offered members the chance to join up to a single currency and do away with old national borders
  • The EU lost public support over its handling of the 2009 sovereign debt crisis that inflicted painful austerity on much of the south of the continent and left many citizens in northern countries resentful at having to fund bailouts
  • Right-wing British eurosceptics seized on the euro zone crisis to argue that Britain was “shackled to a corpse”
  • Aside from Denmark-ruled Greenland, which left the EEC in 1985 after a row over fishing rights, Britain is the first country to leave the EU, and even EU officials say it takes the continent into uncharted territory
  • A regular EU summit has been pushed back to next Tuesday and Wednesday, when Cameron may trigger Article 50 of the EU’s treaty, the legal basis for a country to leave, setting in motion two years of divorce negotiations
  • To retain access to the single market, vital for its giant financial services sector, London would have to adopt all EU regulation without having a say in its shaping, and pay a substantial contribution to Brussels coffers for market access, as Norway and Switzerland do
  • EU officials have said UK-based banks and financial companies would lose automatic “passport” access to sell services across Europe if Britain ceased to apply the EU principles of free movement of goods, capital, services and people
  • Aside from trade, huge questions now face the millions of British expatriates who live freely elsewhere in the bloc and enjoy equal access to health and other benefits, as well as some 2 million EU citizens who live and work in Britain
  • Core founding members of the EU such as France and Germany will be wary of making life too easy for Britain for fear of encouraging eurosceptics across the continent to call for referendums in their countries
  • Both countries, whose painful post-war reconciliation formed the basis for the future union of Europe, must now deal with buoyant anti-EU parties at home, with the Alternative fuer Deutschland in Germany and the Front National in France

 

2. India refuses to offer China equal market access given to other members in RCEPTopic: RCEP

Category: Economy

Key points:

  • India is feeling the heat in the on-going negotiations for the proposed Regional Comprehensive Economic Partnership — one of the largest potential free trade bloc in the world — with most of the 16 members now demanding that commitments be made as early as next month and equal market access be given to all participating countries
  • It is not just China, but also the ASEAN that is pushing for dismantling of the three-tier system followed in the initial round of offers for goods liberalisation
  • Under the three-tier system India offered the highest market access to the ASEAN (removing tariffs on 80 per cent of items). This is followed by its free trade agreement partners South Korea and Japan with proposed tariff elimination at 65 per cent. The lowest offers of dismantling of tariffs are for China, Australia and New Zealand, the three countries with which India does not have free trade pacts, at 42.5 per cent of traded goods
  • “The argument forwarded by the ASEAN is that low tariffs for all members would create a regional value chain under which China will not hesitate to buy from it to value add and sell to India as it would have unhindered access in the Indian market as well,” the official said
  • This may be good economics for the region, but doesn’t work for India
  • In the area of services, despite several papers floated by India, the response has been low. Now India has to decide how to position itself in goods, if there is no improvement in services

 

D. GS4 Related

 

E. Important Editorials: A Quick Glance

 

The Hindu

 

  1. A stitch in time

Topic: Textiles

Category: Economy

Key points

  • The Centre’s package of incentives to boost investments and job creation in the export-oriented textile and apparel sector is a stitch in time
  • That one of the economy’s largest employment generators outside agriculture has been steadily ceding ground to smaller but nimbler competitors such as Bangladesh and Vietnam has been a matter of concern for industry and policymakers alike
  • The measures, aimed at streamlining labour norms and offering tax breaks, will give a big fillip to domestic garment-makers as they compete with producers in South and Southeast Asia to gain a larger share of the U.S. and European Union markets
  • As the World Bank report, ‘Stitches to Riches?’, noted in April 2016, the potential decrease in Chinese apparel exports — as wage costs in that country rise and manufacturing investments move up the value chain into high-technology industries — presents a huge opportunity for South Asian countries. The government’s action will help tap this opportunity
  • Of the Rs.6,000crore earmarked for the package, Rs.5,500 crore is set apart for providing an additional 5 per cent duty drawback for garments. Apparel-makers can now avail refunds on state levies paid by them as part of this benefit, a long-pending demand
  • The other announcement with an upfront fiscal implication is the Rs.500 crore pencilled against additional incentives under the Amended Technology Upgradation Funds Scheme. Specifically, the subsidy provided to garment units has been increased to a healthy 25 per cent from 15 per cent. This should boost employment generation
  • Cognizant of the fact that leading international brands now insist on their outsourced value chains being compliant with global labour standards, the Centre has aligned overtime norms for workers with the ILO’s weekly limit of eight hours. To address the seasonal nature of the workflow, the Ministry has introduced the concept of fixed-term employment for the garment industry: a worker hired for a fixed term will be treated on a par with a permanent employee and will be eligible for all statutory dues
  • As a result of the sops, the apparel and textile industry is expected to add one crore jobs over the next three years. This ambitious goal will become achievable if the projected investments of Rs.74,000 crore flow in
  • Apparel exporters in Vietnam will gain substantial tariff advantages and market access as part of the Trans-Pacific Partnership deal to which it is a signatory. Bangladesh continues to enjoy a raft of preferential tariffs and access benefits given its status as one of the Least Developed Countries. Given this, the measures to bolster India’s textile industry have come just in time

 

2. Death of a singerTopic: Pakistan

Category: India’s Neighbourhood

Key points:

  • AmjadSabri, a celebrated qawwali singer, is the latest victim of the Taliban’s war on plurality in Pakistan. The Tehreek-e-Taliban Pakistan, which has claimed responsibility for Sabri’s murder in Karachi on Wednesday, has said the group considers his music blasphemous
  • The reason lies in the Taliban’s own ideological moorings. Qawwali is part of a Sufi tradition that binds not only Muslims across South Asia, but people of other faiths too. It is indeed the most vibrant iteration of the subcontinent’s syncretism
  • The TTP, steeped in an extremist, fundamentalist approach to religion and society, has long made known its displeasure against both music and the Sufis. Being part of the well-known Sabri family tradition, Amjad clearly was a target. His murder is also in line with the new tactical use of violence by the TTP. Of late, the group has turned its focus from large-scale attacks in public places to targeted killings. A day before Sabri was shot, an Ahmadi doctor was killed in Karachi.
  • Be it large-scale attacks or targeted killings, the goal remains the same. The TTP wants to inflame sectarian passions that it could exploit to find recruits among the radicalised sections.
  • Unlike major attacks in public places, targeted killings are unlikely to attract a massive security crackdown on militants. The TTP may have learnt this lesson after the 2014 Peshawar school massacre, which forced the Pakistani security establishment to turn against the militants. In the ensuing battle the TTP was badly weakened, though its capacity to strike is still formidable
  • It remains a threat to both the Pakistani state and society. The question is whether the authorities have an effective counter-strategy to stop them
  • Fighting radicalisation is key to this. But the increasing use of the controversial blasphemy law under the watch of the state betrays reticence, or fear, on the part of politicians and institutions in fighting radicalisation. Even Sabri had faced a blasphemy case two years ago over his songs
  • Second, Karachi is known for violent crimes. Though there was a government sweep in 2013, militant groups are clearly still active in the city
  • Third, the Pakistan army’s approach towards the Taliban is complicated. It is fighting the TTP on the Pakistani side, but maintains good ties with the Afghan Taliban on the other side of the border. This dual approach is self-defeating in any meaningful fight against extremism

 

3. A strange obsession with the NSGTopic: NSG

Category: International Groupings

Key Points

  • The government seems to be obsessive quest for membership of the Nuclear Suppliers Group (NSG). With the waiver of 2008, India no longer needs it for its civil nuclear facilities
  • The NSG has already made its rules, covering every aspect of nuclear trade, spelt out in its guidelines and trigger-lists. Complying with the fiat from the U.S. Congress in 2006, which demanded that India harmonise its export control legislation and regulations with those of the NSG, Missile Technology Control Regime, Wassenaar Arrangement and Australia Group and adhere to their guidelines if it wanted the nuclear deal, India has done so
  • The NSG’s original guidelines were issued in 1978 and revised in 1992. In 2010, two years after it granted us the waiver that freed us from its clutches, it decided that its rules should be updated; the revised guidelines, incorporating 54 amendments, were issued in June 2013
  • Under our agreement with the U.S., our export laws and regulations either have been, or will have to be, amended to incorporate these changes
  • One of these changes, though, made a crucial difference to our waiver, which “provided that transfers of sensitive exports remain subject to paragraphs 6 and 7 of Guidelines”. In 2011, before the other amendments were adopted,Paragraph 6 was revised to prohibit trade in enrichment and reprocessing with any country that has not signed the Non-Proliferation Treaty (NPT), which means that no NSG member can cooperate in these areas with India. Exactly as the NSG was set up to target India after its 1974 test, this amendment was introduced by NPT evangelists to target India after the 2008 waiver, which they could not thwart
  • As the record shows, once the NSG adopts changes, it retains them for over a decade, because its amendments are comprehensive and reaching agreement on alterations is hard. The last changes came after almost 20 years. Therefore, even if India does become a member now, it cannot beaver away at new rules. We might well want to revise paragraphs 6 and 7 again to suit our needs, but the rule of consensus, on which the NSG works, means anything we propose must be accepted by every other member
  • So if the government says it must get into the NSG because it wants to make or change the rules, it is being impractical
  • What the government is pursuing so avidly now is a second-class membership. All other members of the NSG would trade in all phases of the nuclear cycle, except for India, where there would be a presumption of denial on enrichment and reprocessing. India would be the sole exception in the club, denied a privilege to which all the others are entitled. It is far better to stay out of it, with the ambiguity of the unique status that the waiver granted to India
  • Other arguments have been put forward for our getting into the NSG: that the waiver could be revoked, that China could create problems for India, that if we are there we can ensure Pakistan is not, and we should be in a group that is so powerful
  • There are counter arguments aplenty. The waiver was not specific to the agreement with the U.S., it covered all the items in the NSG’s lists, and it has no sunset clause; India needs no further waiver to import from willing exporters anything it needs for “IAEA-safeguarded civil nuclear facilities”; from 2011, of course, this would exclude enrichment and reprocessing. It can only be revoked by consensus, and India truly would be friendless if it cannot find one influential member of the NSG to oppose a proposal that the waiver be cancelled. Neither China nor any other member can create problems for India within the terms of the waiver: whether any member sells to us or not will be dependent entirely on other factors, including its domestic laws and the strength of our bilateral relations
  • And if a consensus does build up around Pakistan, how would it help India to stand alone against it?
  • And then, how powerful is the NSG? China has thumbed its nose at it after our waiver, claiming that the new reactors it then gave Pakistan were all grand-fathered when it joined the group. That is a lie, but no one in the NSG has had the gumption to nail it. Even if they had tried, of course, China would have objected, so it escaped even the mildest censure. If a member enjoys such impunity, that might seem to be a good reason to get on the NSG, but this makes sense only if India is bent on following China into a life of nuclear crime, helping another state illegally, or doing what it has not done so far, proliferate
  • There are opinions that the quest for NSG membership actually reveals a new level of self-assurance, the overcoming of deference towards the great powers, the confidence to finesse conflicts of interest, the dexterity to maintain relations with parties mutually hostile, a willingness to take risks and to go it alone that is the great gift and quality of this government, a break from the timidity of the past

 

 

Indian Express

 

  1. Solution is the problem

Topic: Reservation

Category: Governance

Key Points:

  • Marathas, Patels, Jats, Kapus and others are asking for reservations today, preferably through their recognition as Other Backward Classes. This demand reflects the challenges they are facing on the job market. Not only is the Indian economy not creating as many jobs as before (the number has declined from 7 lakh to 1.55 lakh from 2011-12 to 2014-15 in the eight sectors reviewed by the Labour Bureau), but wages in the private sector are much lower than in the public sector
  • On average, in 2011-12 daily earnings were almost 2.5 times higher in the public sector at Rs 945 against Rs 388 in the private sector. The gap will increase after the recommendations of the 7th Pay Commission are implemented. Certainly, this assessment needs to be qualified because salaries of government jobs are mostly attractive at entry-level. But they are also perceived as less demanding, more stable and as providing many social benefits
  • However, one may wonder whether the inclusion of dominant castes in the OBC list is such a panacea. The first problem is that the public sector is shrinking: Government jobs which were 19.5 million in 1996-97 are about 17.6 million today. Certainly, the percentage of public jobs is higher in some states than in others — 16 per cent in Kerala to 1.2 per cent in Gujarat — but the national average is rather low at 4.5 per cent
  • It is also true that among government workers, groups A and B have continued to grow (24.1 and 27 per cent respectively between 2001-02 and 2011-12), but groups C and D have declined by 8.4 per cent over the same period, and these are the most numerous
  • According to the 7th pay commission, only slightly more than 1 lakh jobs were added every year in departments and ministries of the central government between 2006 and 2014. The stock of jobs of the state governments being 1.6 times that of the Centre in 2006, if they have recruited at the same rate, by and large, the public sector has been hiring 3 lakh people a year in 2006-14 — when about 8 lakh young Indians were entering the job market annually
  • Secondly, government jobs may not be the right solution for the dominant castes listed above because an increasingly large percentage of these jobs are occupied by contract workers who earn at least twice less than the directly employed ones
  • In 2014, a report prepared by the Indian Staffing Federation showed that at least 44 per cent of the government employees are now temporary — and their number is on the rise. Not only are their wages almost as low as those of the contract workers of the private sector, but they are deprived of social security benefits
  • If we return to the Patels, Marathas, Jats and Kapus, this state of things is particularly resented by such caste groups which used to enjoy a prestigious status in the village and whose expectations are still high. In fact, some studies show that their job problem has much to do with the hiatus between their expectations and their skills: They want good jobs but are not very qualified. In a way, their problem is one of employability — which explains that joblessness is particularly pervasive among those who have degrees, but no real skill
  • According to the Employment and Unemployment Survey 2013-2014 of the ministry of labour and employment, the unemployment rate was above 15 per cent among the graduates and 2.5 per cent among the “not literates” of India — partly because some families can’t afford not to work
  • If reservations are not a solution for the dominant castes, they still see them as a problem because of the advantages they give to OBCs who, according to some dominant caste leaders, do not deserve them. Many Patels, Marathas, Jats and Kapus would prefer reservations to be abolished — if they cannot benefit from them. Their argument needs also to be revisited
  • First, OBCs have not taken away as many jobs as is suggested by the quota of 27 per cent that is supposed to go to them at the Centre and in most states. In fact, a quarter of a century after the upholding of the Mandal Commission recommendations by the Supreme Court, this quota remains less than half filled at the Centre. According to the response to a Right to Information Act, less than 8 per cent of employees of government ministries, departments and statutory bodies were from the OBCs in 2008 and about 12 per cent in 2015 — that is, only 9,040 people out of 79,483 posts
  • Interestingly, 12 per cent of Central government jobs was exactly the proportion the OBCs already represented in the national bureaucracy in 1980 according to the Mandal Commission Report (Report of the Backward Classes (Mandal) Commission, 1980, Vol II, p. 92)
  • According to the reply of minister of state, V. Narayanasamy, in Parliament in 2011, when OBCs formed 12.9 per cent of the IAS officers.
  • Others have raised their voice in favour of more positive discrimination for the OBCs. In April 2016, a Union minister demanded reservation for OBCs in the judiciary and in February the NCBC had asked for legislation making it mandatory for private entities, including cooperatives, to reserve 27 per cent of all hiring to OBCs. These moves are understandable if one admits that positive discrimination was intended to help the OBCs catch up in socio-economic terms — as V.P. Singh explained in 1990 — simply because these groups continue to lag behind. For instance, according to the NSS, there are still only 4.7 per cent graduates among them, against 11.20 per cent in the “general” population
  • With dominant castes resenting reservations (or asking to benefit from them) and OBCs claiming that they have not achieved their mission yet (and are not prepared to share their quota), tensions are bound to increase
  • But no party may dare to open this pandora’s box without an alternative solution that could be agreeable to all the parties and this is not an easy task. After all, the judiciary has rejected the inclusion of the Jats in the OBC list by the government of Haryana and the Patel leaders have rejected the Economically Backward Classes formula of the Gujarat government

 

 

Others:

 

1.PIB

 

a) Pilot Programme to run two wheelers on CNG launched by Shri Dharmendra Pradhan & Shri Prakash JavadekarGas share in the country’s fuel basket is just 7% compared to world average of around 24%.The government has proposed to jump from Euro-IV type fuel to Euro-VI by 2020 to control pollution.Being implemented by Indraprastha Gas Limited (IGL) and one of its parent company, GAIL (India) Limited, the Pilot Programme involves 50 CNG retrofitted two wheelers

 

b) India and UK join hands to work as R&D partners in Solar Alliance and Nano Material Research The 5thIndoUK Science and Innovation Council Meeting (SIC) was held at London last week. India and UK have agreed to work together in two major initiatives in the fields of Solar Energy and Nano Material Research, inter alia.It was informed that as a part of the commitment to the Solar Alliance, the IndiaUK networked Centre on Solar Energy would be established. It would be linked to India’s renewable energy mission and UKs SupergensProgramme

 

c) Prime Minister to launch Smart City projectsLaunch marks heralding of integrated urban planning and development in the country

PM also to inaugurate citizen participation in designing of smart cities and Smart Net portal 

Prime Minister ShriNarendraModi will launch Smart City projects on June 25,2016 kick starting execution of Smart City Plans of 20 cities selected in the first round of ‘Smart City Challenge Competition’. This marks the beginning of holistic and integrated urban development in the country as envisaged under the new urban missions launched by the Government. Smart Net Portal also will be inaugurated by the Prime Minister which enables the cities under different urban missions to share ideas and source solutions for various issues during the implementation of various missions

Prime Minister will launch 14 projects under the Smart City Plan of Pune from the city’s 5,000 capacity Shiv Chatrapati Sports Complex

 

2. The Financial Express:

 

a) Telephony: Here’s what keeps service from being freeTopic: Telecom

Category: Governance

Key Points

  • On the face of things, Telecom Regulatory Authority of India’s (Trai’s) consultation paper on internet telephony is timely since, with more 4G spectrum available and telcos beginning to migrate to next-generation networks, there is going to be a lot more internet telephony—apart from RJio which has a network based on internet protocol (IP), a host of internet companies can also offer voice telephony based on IP. Given voice calls are essentially data services offered on a prioritised basis, finding ways to facilitate internet telephony will lower costs for consumers and can only be a good thing
  • In order to give a boost to internet telephony, however, it needs to be moved away from the current email-linked process it is, and migrated to a phone—in other words, an email address needs to be mapped to a phone number. It is for facilitating this process that Trai has issued its consultation paper
  • Of course, it is also true that while IP processes offer a cheaper call, it is not certain how fast existing telcos will be able to move to such networks since they also have legacy 2G and 3G systems—since the earlier systems work on what is called circuit switching, a full move towards IP systems depends on how fast legacy networks are replaced by new ones
  • Theoretically, internet service providers (ISPs) can provide internet telephony almost free—bundled in attractive data packages—and they can easily buy a Universal Service Licence that allows this for a mere Rs15 crore across the country. What keeps the service from being totally free, though, is the interconnect usage charge (IUC) that telcos pay one another for accessing each other’s networks—IUC charges are fixed by the regulator and are 14 paise per minute on local mobile-to-mobile calls and 53 paise for international calls—so any ISP providing internet calls will have to charge customers at least 14 paise per minute
  • Lowering IUC for internet calls is one possibility but, as Trairecognises, it creates arbitrage possibilities since it may not be possible to distinguish between internet and other calls, or between local and foreign calls. The only solution, then, is to lower IUC charges across the board
  • Before looking at lowering IUC, however, it is important to keep in mind why it was introduced. Since telcos invested tens of thousands of crore rupees to set up their networks, the IUC was a way to compensate them for this. If there was no IUC, any telco or ISP could offer voice/data services to its customer and then terminate the call on some other telco’s network—while that telco’s network would get used, it would not get paid for it, or not get paid enough
  • That reality of telcos needing to get compensated for their investments has not reduced; indeed, it has only gone up hugely due to higher and higher spectrum auction costs. Maintaining a level playing field is something Trai will always have to keep in mind—after all, if ISPs have not invested in rolling out extensive pan-Indian networks, why should they be allowed cheap access to them ?

 

3. The Business Line:

 

a) Business-friendly policy at labour’s expenseTopic: labour

Category: State of Indian Economy

Key points:

  • News that India jumped 13 points to rank second only to China in the Global Retail Development Index brought cheers to the business world and policymakers. India is slowly progressing in the World Bank’s ease of doing business ranking. The World Bank, recognising the importance of decentralisation and competitive federalism, in 2015 initiated the exercise of ranking the States in India
  • Not surprisingly, this has caught the attention of the chief ministers who are in a race to scale up their ranking. Not to be outdone, the think-tank of the Government last year set up an official initiative for ease of doing business in States on the labour front. This has led to competitive reforms of labour laws. There are other exercises too to measure business friendliness. These ranking exercises are watched keenly by policymakers and industry. There is no consideration for labour welfare or rights
  • The ease of doing business exercises implicitly or explicitly argue for deregulation and reward countries/States that streamline, relax or deregulate labour regulatory policies and governance. A flood of these exercises has pushed trade unions on the backfoot in the corridors of lobbying, policymaking, and in the labour market
  • The ratification of ILO conventions (international labour treaties) is a marker of labour rights, though the yawning gaps between ratification and field realities cannot be ignored
  • The International Trade Union Confederation (ITUC) has been collecting data on violations of trade union and collective bargaining rights for more than three decades. The exercise is contextualised in Decent Work and Core ILO Standards. These rights codified are fundamental to achieving core and other labour standards and violations amount to a fundamental weakening of the collective power of the working class and dilution of democratic rights
  • The Global Rights Index (GRI) seeks to capture the degree of respect accorded to labour rights by government and industry, and ranks 141 countries against 97 internationally recognised indicators. Suffice it to say that the GRI is subject to rigour and hence is as credible as others. The countries are rated from 1 to 5+ and labour rights violations are higher as we move up — 1 being the best rating and 5 the worst
  • The GRI should interest India because even as it’s working on the ease of doing business index, its labour rights violations record is worsening. India, along with Cambodia, Iran and Turkey, joined the ‘rogues gallery’ of ten worst countries for labour rights this year. It has been shown that countries with a good record of ease of doing business fare worse on the human rights front (for example, Saudi Arabia and Qatar)
  • The drive for flexibility and incessant lobbying by pro-market institutions are forcing hapless governments to adopt measures to provide flexibility to business, which invariably weakens labour rights. It is not surprising that the conventional democratic space for trade unions is narrowing and a sense of insecurity is enveloping the working class
  • According to the Global Slavery Index (by Walk Free Foundation), India accounts for almost 40 per cent of modern forms of forced labour, which simply means that persons are trapped in a job with no scope for free movement out of it
  • According to Child Rights and You, the law allowing children to work in family occupations after school hours increases their potential risk of being employed on a full-time basis with little or no education
  • India has ratified important and relevant conventions of the UN and ILO, and is committed to ensuring basic labour rights. The Constitution also provides for the same. Simply put, ease of doing business measures are possibly inversely related to decent work and labour rights

 

4. Quick Bits

 

a) Six militants killed in Kashmir encounterSix militants were killed in a gunfight with the Army in a forest range of Kupwara district, more than 110 km from Srinagar

 

b) Torpid airports may convert into SEZsThe Centre is mulling a plan to convert unused airports in India into special economic zones (SEZ) for aircraft leasing companies to park their aircraft and showcase them to potential customers.Like ship-breaking, he said, even dismantling an aircraft could be made possible at dormant airports

 

c) ‘Mobile banking volumes up 7 fold in three years’With more banks offering mobile banking services, transactions through mobile apps has increased seven-fold in three years, between 2013 and 2016, the Reserve Bank of India said

 

d)  India is biggest threat to Pakistan: BajwaIndia poses the “biggest threat” to Pakistan which has forced the country to make its defence mechanism ‘India-specific’, a top Pakistan army official has said. He also said that the country’s defence mechanism was ‘India-specific’

 

e) Any NSG exception to disturb regional stability: PakistanAny “exception” in granting membership to the NSG will “disturb” strategic stability in South Asia, Pakistan President MamnoonHussain on Thursday told his Chinese counterpart Xi Jinping.

Making a strong case for Pakistan’s bid to join the 48-member NSG, Mr. Hussain said that his country had made notable efforts over the years to strengthen its export controls, command and control and nuclear safety and security

 

f) China de-links bilateral ties with India from the NSG debateChina sought to insulate bilateral ties with India from the headwinds originating from the on-going debate on New Delhi’s entry into the 48-nation Nuclear Suppliers Group

 

g) Government amends income tax rules to end uncertainty over GAAR 

 

The government has amended income tax rules to end uncertainty overgeneral anti-avoidance rules( GAAR) that is set to kick in from April 1, 2017.The amended Income tax rules issued yesterday clearly provide that GAAR rules will not apply to FIIs in respect of their income from transfer of investment made before April 1, 2017, clearly laying down that it will be in force prospectively.

GAAR seek to deny tax benefit to any arrangement entered only for the purpose of avoiding tax.
Tax experts had been calling for a prospective implementation of the rules.

 

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. Fun with Practice Questions 🙂
Question 1: Which of the following statements is/are correct about Defence Procurement Policy(DPP),2016?
  1. The DPP 2016 has been framed based on the recommendations of the Dhirendra Singh Committee
  2. Buy (India-IDDM) seeks to boost indigenous production and procurements under it should 40% sourced locally in terms of the content

a. 1 only

b. 2 only

c. Both 1 and 2

d. Neither 1 nor 2

 

Question 2: Which of the following countries is /are partners to RCEP?
  1. New Zealand
  2. Australia
  3. Japan
  4. South Korea

a) 1,2 and 3

b) 1,2 and 4

c) 2,3 and 4

d) All the Above

 

Question 3: Which of the following statements is/are correct?
  1. The Maastricht Treatyestablished the European Union under its current name and introduced European citizenship
  2. The Schengen Agreement paved the way for the creation of open borders without passport controls between most member statesand some non-member states of the then European Economic Community

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 4: Which ofthe following statements is/are criteria for selection  in Stage 1 of Smart Cities Mission?
  1. Existing Service Levels
  2. Institutional Systems and Capacities
  3. Self-financing
  4. Innovation and Scalability

a) 1,2 and 3

b) 1,2 and 4

c) 2,3 and 4

d) All the Above

 

Question 5: Which of the following statements is/are correct about the General Anti-Avoidance Rules -GAAR?
  1. Under GAAR, the investor has to prove that the participatory note was not set to avoid taxes
  2. It allows officials to deny double taxation avoidance benefits, if deals made in tax havens like Mauritius were found to be avoiding taxes

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Check Your Answers

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