CNA 09 Feb 2023:- Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related B. GS 2 Related C. GS 3 Related ECONOMY 1. The status and proceeds of disinvestment D. GS 4 Related E. Editorials POLITY 1. The Problem of Opacity in Judicial Appointments ENVIRONMENT 1. Nordic–India Connection F. Prelims Facts 1. Gaganyaan G. Tidbits 1. RBI lifts loan costs to tame inflation 2. Constitution doesn’t allow aldermen right to vote, says SC 3. Fiji hopes to partner with India in meeting climate action goals 4. India said to seek LIC, EPFO investment for green energy H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
Nothing here for today!!!
B. GS 2 Related
Nothing here for today!!!
C. GS 3 Related
1. The status and proceeds of disinvestment
Syllabus: Indian Economy and issues relating to planning, mobilization of resources, growth and development
Prelims: About Disinvestment, Department of Investment and Public Asset Management (DIPAM) and initial public offering (IPO)
Mains: Disinvestment – different forms, significance, associated concerns and the recent trend
Context
With the Union Budget 2023-24 the government has set a disinvestment target of ₹51,000 crores.
Background
- The disinvestment target in the Union Budget 2023-24 has declined by close to 21% from the budget estimate for the FY 2022-23 and only about ₹1,000 crores more than the revised estimate.
- The disinvestment target in the Union Budget 2023-24 is also the lowest target in about seven years.
- Furthermore, the government has also not met the disinvestment target for 2022-23.
- To date, the government has realised ₹31,106 crores out of which ₹20,516 crores (33.33% of the budgeted estimate) have come from the initial public offering (IPO) of 3.5% of the government’s shares in the Life Insurance Corporation (LIC).
Read more about – Sansad TV Perspective: LIC IPO
Disinvestment
- Disinvestment or divestment refers to the selling of the assets or a subsidiary such as a Central or State public sector enterprise by the government.
- There are three key approaches to disinvestment which include:
- Minority disinvestment: The government despite restoring to disinvestment still retains majority shares in the company usually greater than 51%.
- With respect to minority disinvestment, the government still holds management control.
- Majority disinvestment: In the case of majority disinvestment, the government transfers the control to the acquiring entity and retains only some stake.
- Complete privatisation: With respect to complete privatisation, 100% of the control of a public entity is transferred to the acquiring entity.
- Minority disinvestment: The government despite restoring to disinvestment still retains majority shares in the company usually greater than 51%.
- The Department of Investment and Public Asset Management (DIPAM) is a separate department working under the Union Finance Ministry which looks after disinvestment-related procedures.
Learn more about – Disinvestment Policy in India and DIPAM
Significance of disinvestment
- Disinvestment can help reduce the fiscal burden on the government and can also compensate for the revenue shortfall in a particular year.
- The disinvestment proceeds are also used to finance the fiscal deficit.
- Disinvestment also encourages private ownership of assets and trading in the open market.
- Successful disinvestments also ensure that the government need not bear the costs of the loss-making entities anymore.
- The proceeds from disinvestments can also be used to invest back in the economy, fund social sector and developmental programmes, and pay the government debt.
Trends in disinvestment in India
- As soon as the NDA government assumed power in 2014, a push for disinvestment was expected as the government had announced, “no business to be in business”.
- Since 2014, the NDA government has met its disinvestment targets twice.
- It is to be noted that various governments over the past 30 years have been able to meet annual disinvestment targets only six times in India.
- In 2017-18, the government earned disinvestment receipts of over ₹1 lakh crores as compared to the set target of ₹72,500 crores
- Further in 2018-19, the government earned ₹94,700 crores as compared to the set target of ₹80,000 crores through disinvestment.
- However, PRS Legislative Research has highlighted the instances in recent years wherein the government disinvested over 51% of its shares in certain Central Public Sector Enterprises (CPSEs), along with a transfer of management control which was sold to another public sector enterprise.
- For instance, when the government exceeded its target in 2017-18, about ₹36,915 crores were earned by selling Hindustan Petroleum Corporation Limited (HPCL) to the state-owned Oil and Natural Gas Corporation (ONGC).
- Similarly, in 2018-19, the government raised ₹14,500 crores by selling REC Limited to Power Finance Corporation Limited which is another state-owned entity.
- In 2021-22, despite the disinvestment of Air India which was handed over to the Tata group, the Centre missed its target of ₹1.75 lakh crores by a significant margin, raising only about ₹13,534 crores through disinvestment proceeds.
- Additionally, even in FY 2022-23, about 33.33% of the budget estimate has been realised through the delayed LIC IPO, which should have taken place in the previous year if not for market volatility.
- The government has only realised ₹31,106 crores through disinvestment proceeds to date and with less than two months remaining in the current fiscal, the government is likely to miss its target.
- Recent trends in disinvestment:
- Disinvestment of the 52.8% stake in Bharat Petroleum (BPCL) was also deferred in mid-2022 as most of the bidders withdrew.
- The strategic sale of Central Electronics was also called off because of the lapses in the bidding process.
- The disinvestment of Pawan Hans has also been deferred.
- The selling of Neelachal Ispat Nigam Ltd. (NINL) to a steel entity of the Tata group did not translate into any sale proceeds to the government’s exchequer as it held no equity in the company.
Also read – Disinvestment in India
Path ahead
- As per the new disinvestment policy announced in 2021, the government intends to maintain a minimum presence in strategic sectors such as atomic energy, defence, etc., and exit the non-strategic sectors.
- Officials of DIPAM have also said that the government has decided to stick to the already-announced and planned privatisation of state-owned companies.
- However, the government is not expected to add any new companies to the list of Central Public Sector Enterprises (CPSEs) which would be divested in 2023-24.
- Further, the aspirational divestments of two public sector banks and one general insurance firm which were announced in the Budget 2021, might also not be a part of disinvestment plans.
Nut graf: There has been an increasing trend with respect to the dependence of the government on disinvestment proceeds to bridge the gap in the Budget. However, critics opine that disinvestments should be driven mainly by the long-term vision of the government and not by the need to raise immediate revenues to compensate for the deficit.
D. GS 4 Related
Nothing here for today!!!
E. Editorials
1. The Problem of Opacity in Judicial Appointments
Syllabus: Structure, Organization & Functioning of the Judiciary
Mains: Issues with the functioning of the collegium system
Context: The Madras High Court recently appointed lawyer Lekshmana Chandra Victoria Gowri as an additional judge.
Introduction:
- After the collegium recommended Victoria Gowri’s name for judgeship, a petition was filed in the Supreme Court challenging this appointment, on the basis that she had, allegedly, engaged in “hate speech” against Muslims and Christians.
- However, the Supreme Court of India rejected their plea to withdraw Victoria Gowri’s appointment and restrain her from taking the oath.
- Earlier, the Union Law Ministry had processed the recommendation concerning a set of candidates with extraordinary speed not displayed in other cases to avoid any possible interim order from the Court.
The problem of opacity:
- The controversy indicates certain continuing, structural problems with the process of judicial appointments such as opacity.
- Judicial appointments by the collegium in India can be contrasted with other democratic countries, such as the United States, South Africa, or Kenya.
- These countries follow transparent procedures where the names of the judicial candidates are publicly known before the formal commencement of the selection process.
- By contrast, in India, the candidate’s name is effectively made public after their selection by the collegium.
- The selection process is behind closed doors, where the parties involved are the collegium and the government (through the Intelligence Bureau).
- The fall-out of this opaque procedure is asymmetric.
- When the government approves a particular candidate, it can simply withhold relevant information from the collegium to influence the materials on the basis of which the collegium determines “suitability”. This effectively affects the decision-making ability of the collegium.
- Had there been effective consultation and relevant information placed before the collegium, Lawyer Lekshmana Chandra Victoria Gowri’s appointment may not have materialised.
- Government can also rush the process through (as happened in the present case). In other cases, the government can exercise a pocket veto by refusing to appoint judges as per the direction of the collegium).
- When the government approves a particular candidate, it can simply withhold relevant information from the collegium to influence the materials on the basis of which the collegium determines “suitability”. This effectively affects the decision-making ability of the collegium.
- Once a collegium recommendation has been made, the only way of contesting it is through a legal challenge.
- However, that challenge must be before the Supreme Court itself, leading to a set of awkward situations as the decision of the collegium of the three (or five) senior-most judges of the Supreme Court must be challenged before their own junior colleagues (and these colleagues will be assigned the case by the CJI, who is himself the head of the collegium).
- The collegium acts as an administrative body while recommending a name for judicial appointment and all administrative decisions are open to judicial review, in practice.
International Practices:
- Italy: Appointments to the Constitutional Court are made by the President, the legislature and the Supreme Court, with each entity allowed to nominate five judges.
- USA: Supreme Court justices are nominated (for life) by the President and then approved by the Senate via a majority vote.
- Germany: The German Constitutional Court is appointed by the Parliament (each House gets four appointments in each of the Court Senates) with a supermajority vote (2/3).
- Iraq: All judges are graduates of a Judicial Institute, with all applicants undergoing written and oral tests, along with an interview with a panel of judges.
- Japan: The Supreme Court Secretariat controls lower-level judicial appointments, along with their training and promotions.
- Judicial councils: Other countries have experimented with judicial councils (often comprising of existing judges, representatives of the Ministry of Justice, members of the bar association, laymen, etc.).
Way Forward:
- The present structure is problematic not only in principle but also because it asymmetrically benefits the political executive. Therefore it is crucial to locate the roots of the problem in the structure of our judicial appointments process and safeguard judicial independence from executive dominance.
- India can follow international best practices in this regard. For instance, in South Africa, proceedings of the judicial appointments commission have been subjected to judicial review, and the courts have directed the commission to make their deliberations public.
- This provides a system of checks and balances and brings transparency and publicity. Therefore a degree of separation between the judicial appointments commission and the court is necessary to allow for a check and corrective mechanism in case of mistakes and errors.
- A process that combines an objective evaluation of the candidates’ credentials with an independent mechanism that ensures public scrutiny of their suitability should be put in place to overcome any unhealthy compromises in the appointment process.
Read more on the recent conflict between the Executive and the Judiciary in CNA dated Dec 13, 2022.
Nut Graf: Recent appointment of a controversial lawyer as an additional judge by the Madras High Court epitomises the problematic opaque nature of the system of judicial appointment. This could potentially endanger the independence of the judiciary as it asymmetrically benefits the political executive.
Syllabus: International Environment Agencies, Legislations and Agreements
Mains: India’s ties with Nordic countries
Context: This article discusses the significance of Nordic countries for India’s green transition.
Introduction:
- Over the last decades, Nordic countries have been pioneering green technologies – hydrogen, offshore wind, batteries and carbon capture and storage — solutions that are essential for the world to succeed in the green transition.
- The Nordic region aims to become the most sustainable and integrated region in the world by 2030.
- At the Nordic-India Summit held in Copenhagen in May 2022, the five Nordic Prime Ministers and India’s Prime Minister Narendra Modi agreed to intensify cooperation on digitalisation, renewable energy, maritime industries, and the circular economy.
- Mr. Modi also expressed an interest in joint Nordic solutions that can support India’s green transition.
Connecting with India:
- Trade Ministers of Norway and Finland along with business delegations and companies are currently visiting India together (February 9-10) to showcase the added value to the partnership these countries can bring to India and learn from the impressive innovations and digital solutions being developed in India.
- There are about 240 Norwegian and Finnish companies in India.
- Both Norway and Finland have ongoing free trade agreements and investments negotiations (FTA) with India.
- In addition, trade in services is an area of significant potential, especially with tourism, education, IT, energy, maritime and financial services.
- Finland, as a member of the European Union (EU), is a part of the EU-India FTA negotiations, and Norway is negotiating through the European Free Trade Association.
India-Finland:
- There has been a significant rise in trade and investments between Finland and India in recent years.
- Finland also opened a new Consulate General in Mumbai, which will further increase the number of Nordic representations in India and contribute to strengthening India-Finnish ties.
- Finland’s experience in technology and innovation, sustainability, digitalization, carbon neutrality, and other sectors has attracted the attention of several Indian enterprises.
- Additionally, more and more Indian scholars, academics, and professionals are relocating to Finland.
- India is currently the largest growing market for Finnish businesses like Nokia and Fortum, who have made some of their biggest investments there.
India-Norway:
- Trade between Norway and India has doubled in the last three years.
- The Norwegian Sovereign Wealth Fund is likely to become one of India’s largest single foreign investors (around $17.6 billion).
- The Norwegian government has also recently established a new Climate Investment Fund for investments in renewables abroad, and India has been defined as a focus country.
- Almost ₹1,500 crores have been invested so far in India through the climate investment fund, and the number of investments is increasing rapidly.
Significance of Nordic countries to India:
- India and Nordic countries have embarked on a multidimensional strategic cooperation path in recent years based on mutual trust, enduring friendship, and a spirit of shared progress.
- The two sides are regarded as natural partners as they share strong democratic values and principles, pluralism, and institutional foundations.
- India and Nordic countries enjoy robust business partnerships with total bilateral trade and services of USD 13 billion.
- Nordic countries bring in the best of innovation, green technologies, clean energy, climate activism, and energy diversification.
- Apart from the United States, India is the only other country with which the Nordic countries have summit-level meetings.
- Heightened India–Nordic relations are also an enabling factor in promoting India’s Arctic Policy which reflects New Delhi’s strong determination for strategic presence in that region. Concurrently, it will also enable the consolidation of strategic ties with the European Union (EU).
- Despite ongoing investments and trade between India and Nordic countries, there is still significant untapped potential for trade and further collaboration.
- As India takes rapid strides into a green, digital, and innovative future, Nordic countries can share experiences in these fields and be a part of India’s transition.
- A shared interest in enhancing investment in “innovative and sustainable solutions” in conjunction with “identifying new opportunities in sectors such as food processing and agriculture, health projects and life sciences” has been prioritised.
- One of the unique features of the India–Nordic strategic partnership is the emphasis on maritime cooperation. Heightened investment in the blue economy aiming to enhance shared economic progress, employment generation, nutrition, and food security is seen as a positive step.
- Technologies and innovations that are successful and scaled up in India can easily be transferred to other parts of the world.
- Together, the Nordics and India can be the powerhouse of the green transition globally.
Nordic Countries:
- The Nordic countries are a geographical and cultural region in Northern Europe and the North Atlantic.
- It includes the sovereign states of Denmark, Finland, Iceland, Norway and Sweden, and the autonomous territories of the Faroe Islands (an archipelago of islands as an autonomous country within the kingdom of Denmark).
- These countries share similar flags, languages, and many cultural traits.
Image Source: World Atlas
Nut Graf: The heightened India–Nordic partnership has been increasingly recognised globally as a reckoning force towards strengthening the international rules-based system in the evolution of the 21st-century world order. Together, the Nordics and India can deliver key technologies and solutions to stop climate change and boost green growth.
F. Prelims Facts
1. Gaganyaan
Syllabus: Science and Technology – Awareness in the field of Space
Prelims: Gaganyaan Mission
Context
The Indian Space Research Organisation (ISRO) and the Indian Navy have jointly conducted a key trial for the Gaganyaan mission.
Details
- The trials were part of the preparation for crew module recovery operations for the Gaganyaan mission.
- The recent trial included a Crew Module Recovery Model (CMRM) that simulates the mass, centre of gravity, outer dimensions, and externals of the actual Crew Module at touchdown.
- Safe recovery of the crew is said to be the final step to be achieved for the success of human spaceflight missions.
Gaganyaan mission
- Gaganyaan is ISRO’s first human space flight mission.
- Gaganyaan project aims to demonstrate the human spaceflight capability of the country by launching a three-membered crew to an orbit of 400 km for a 3 days mission and bringing them back safely by landing them in Indian waters.
- LVM3 rocket has been identified as the launch vehicle for the Gaganyaan mission.
- The LVM3 rocket consists of a 3-stage engine i.e. solid stage, liquid stage and cryogenic stage.
- The systems in the LVM3 rocket are re-configured to meet human rating requirements and has been re-named Human Rated LVM3 (HLVM3).
- The total cost of the mission is expected to be close to ₹10000 crores.
- ISRO is developing the spacecraft for the mission while the Russian space agency ROSCOSMOS is helping in extending the required training to the astronauts.
- If the mission is successful, India would become the fourth country to have sent humans to space after the US, Russia and China.
Read more about – Gaganyaan Mission
G. Tidbits
1. RBI lifts loan costs to tame inflation
Image Source: The Hindu
- The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has increased the benchmark lending rate by 25 basis points (bps) to 6.5% as the RBI targets persistently high core inflation that is seen as a risk to the improving outlook for the economy.
- According to the RBI Governor, the MPC believes that calibrated monetary policy actions are required to keep inflation expectations anchored, address the persistence of core inflation and improve growth prospects.
- He further added that the Indian banking system, including the NBFC sector, has remained resilient and strong.
- The RBI Governor has acknowledged that the real policy rate has moved into positive territory and the banking system has come out from the chakravyuh of excess liquidity without causing any disruption.
2. Constitution doesn’t allow aldermen right to vote, says SC
- The Supreme Court while issuing notice to the Lieutenant-Governor and the pro tem presiding officer of the Municipal Corporation of Delhi (MCD) has held that the Constitution does not allow aldermen (nominated members of a municipality) the right to vote in meetings.
- The Chief Justice of India while hearing a petition filed by the ruling party in Delhi has said that the difference between the elected members and aldermen (nominated members) is very substantial.
- While hearing the arguments that the move by the pro tem presiding officer to allow the nominated members to vote is a violation of Article 243R(2)(iv) of the Constitution, Justice P.S. Narasimha noted that it is not just a statute, but the Constitution itself does not allow the aldermen to vote.
For detailed background information on this issue, refer to the following article:
UPSC Exam Comprehensive News Analysis dated 17 Jan 2023
3. Fiji hopes to partner with India in meeting climate action goals
- The Deputy Prime Minister of Fiji who is also the country’s Finance Minister has said that the Government of Fiji seeks closer relations with democracies such as India.
- He also expressed hope that Fiji and India would cooperate in meeting climate action goals and upholding common democratic values in the Indo-Pacific region.
- The Deputy Prime Minister of Fiji also met the Union Petroleum and Natural Gas Minister and discussed India’s possible support to Fiji in its energy transition by supporting the technology transfer and in developing climate-smart infrastructure.
4. India said to seek LIC, EPFO investment for green energy
- According to reports, the Union Government is looking to mandate the Life Insurance Corp. of India (LIC) and sovereign pension fund to invest 1% of their assets under management in bonds issued by state-run power lending firms to finance green projects.
- That is, the LIC and Employees’ Provident Fund Organisation (EPFO) would be required to invest in bonds issued by Power Finance Corp. (PFC), REC Ltd. and Indian Renewable Energy Development Agency (IREDA).
- LIC and EPFO have combined assets under management of ₹50 trillion and the commitment of billions of dollars in bonds by two of the biggest funds in the country would play a significant role in bridging the estimated $3 trillion investment gap in meeting the 2070 goal for net zero emissions.
- Further, the Union Power Ministry has also recommended the reduction of the fee for sovereign guarantees on foreign currency loans taken by state-run power financiers from overseas markets.
Know more about – India’s Net Zero Emission Commitment
H. UPSC Prelims Practice Questions
Q1. Consider the following statements regarding RBI’s monetary policy: (Level – Easy)
- As a general rule, when RBI is more concerned about containing inflation it raises interest rates (thus depressing economic activity), and when it wants to stimulate growth it brings down interest rates.
- Due to the hike in repo rate, EMIs on vehicles, home and personal loans will also rise.
- Decisions in the monetary policy committee are taken on the basis of consensus.
Choose the correct code:
- Only one statement is wrong
- Two statements are wrong
- All statements are wrong
- None of the statements is wrong
CHECK ANSWERS:-
Answer: a
Explanation:
- Statement 1 is correct, As a general rule, when RBI is more concerned about containing inflation it raises interest rates (thus depressing economic activity), and when it wants to stimulate growth it brings down interest rates.
- Statement 2 is correct, The increase in repo rate will make loans such as home, auto and personal loans and EMIs on vehicles costlier.
- Statement 3 is not correct, The decisions by the MPC are decided by a majority of votes by the members present and voting.
Q2. Consider the following statements with regard to the Government e-marketplace platform: (Level – Difficult)
- GeM is a one-stop national public procurement portal to facilitate online procurement of common-use goods & services required by various Central and State Government Departments/Organisations/Public Sector Undertakings (PSUs).
- It provides fixed prices to government organizations, helping them plan their budgets better.
- It works under the Ministry of Cooperatives.
Choose the correct code:
- Only one statement is wrong
- Two statements are wrong
- All statements are wrong
- None of the statements is wrong
CHECK ANSWERS:-
Answer: b
Explanation:
- Statement 1 is correct, The Government e-Marketplace (GeM) platform was launched on 9th August 2016 as an online, end-to-end solution for procurement of commonly used goods and services for all Central Government and State Government Ministries, Departments, Public Sector Units (PSUs) and affiliated bodies.
- Statement 2 is not correct, One of the key advantages offered by GeM is dynamic pricing i.e. price can be changed based on market conditions.
- Hence there is no fixed price for the whole year, and no fear of fluctuation of raw material prices, or exchange rate variations.
- Statement 3 is not correct, Government e-Marketplace is a 100% Government owned company set up under the aegis of the Department of Commerce, Ministry of Commerce.
Q3. ‘Alderman’ is a term that usually refers to : (Level – Easy)
- Nominated members of the municipal body
- Nominated members of the parliament
- The pro tem speaker of the Lok Sabha
- The pro tem speaker of the State Legislative Assemblies
CHECK ANSWERS:-
Answer: a
Explanation:
- “Alderman” refers to a nominated member of a city council or municipal body with exact responsibilities depending on the location of its usage.
- Members to be nominated as Aldermen must have “special knowledge or experience in municipal administration”.
Q4. Consider the following statements with regard to the Aligarh Muslim University: (Level – Easy)
- It grew out of the work of Muhammad Ali Jinnah and the Aligarh Movement.
- It was founded as the Madrasatul Uloom in 1875 in Aligarh and evolved into the Mohammedan Anglo-Oriental College.
- Post-independence, the college was transformed into the Aligarh Muslim University.
Choose the correct code:
- 1 & 2 only
- 3 only
- 2 only
- 1 & 3 only
CHECK ANSWERS:-
Answer: c
Explanation:
- Statement 1 is not correct, Aligarh Muslim University (AMU) grew out of the work of Sir Syed Ahmad khan.
- The movement associated with Syed Ahmad Khan and the university has been referred to as the Aligarh Movement.
- Statement 2 is correct, AMU was initially established as Madrasatul Uloom in 1875, and after two years it evolved as Muhammadan Anglo-Oriental College (MAO).
- Statement 3 is not correct, MAO became Aligarh Muslim University in 1920, following the Aligarh Muslim University Act.
Q5. Which one of the following protected areas is well-known for the conservation of a sub-species of the Indian swamp deer (Barasinga) that thrives well in hard ground and is exclusively graminivorous? PYQ (2020)
- Kanha National Park
- Manas National Park
- Mudumalai Wildlife Sanctuary
- Tal Chhapar Wildlife Sanctuary
CHECK ANSWERS:-
Answer: a
Explanation:
- The Kanha National Park in Madhya Pradesh is famous for the Indian swamp deer or Barasingha.
- The Kanha National Park is the site of Barasingha reintroduction which had significantly saved their numbers from terminal decline
- Kanha National Park was created on 1 June 1955 and was designated a tiger reserve in 1973.
- Along with the barasingha, the park is also home to the Bengal tiger, Indian leopard, sloth bear, and dhole.
I. UPSC Mains Practice Questions
- Far too often, the Government of India’s disinvestment targets have remained unfulfilled. Discuss the possible reasons and remedies for the same. (15 marks, 250 words) [GS-3, Economy]
- India’s partnership with Nordic nations can positively impact various sectors in India. Elaborate. (15 marks, 250 words) [GS-2, IR]
Read the previous CNA here.
CNA 09 Feb 2023:- Download PDF Here
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