# 07 Jul 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
GOVERNANCE
1. Academia irked by HECI move
POLITY
1. CJI alone is master of the roster, rules SC
C. GS3 Related
D. GS4 Related
E. Editorials
ECONOMY
1. A political ploy
INTERNATIONAL RELATIONS
F. Tidbits
1. ‘Alternative cereals can save water’
2. Plan for central pool of documentary proof
3. Defaults on CV loans may rise on oil: Fitch
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions


A. GS1 Related

Nothing here for today!!!

B. GS2 Related

1. Academia irked by HECI move

Context

• There is growing resentment within the academic community over the Centre’s decision to scrap the University Grants Commission and replace it with a Higher Education Commission of India (HECI), which is likely to be without the grant-giving powers that the UGC possesses.

Criticism

• A lack of debate before the decision to the government seeking to take upon itself the power to finance universities.
• The low presence of professional academics in the proposed bureaucrat-heavy body.
• The UGC is a body created by an Act of Parliament. The government should have first called for a debate among academics and also in Parliament on how it should be improved, or to know whether the stakeholders supported its winding up.
• While the UGC Act mandated the commission ‘to inquire into the financial needs of universities’ and ‘allocate and disburse, out of the fund of the commission’ to the universities (under Section 12 of the UGC Act, 1956), now the Ministry has taken over the direct control over the allocations to be made to the universities, which will clearly convert the universities into mere departments of the government.
• This will bring the universities under the strict and direct financial control of the MHRD.
• This shift in financial control to the Ministry will be used for regimentation of knowledge.

1. CJI alone is master of the roster, rules SC

• The term ‘Chief Justice of India’ denotes an individual judge and not a collective of the first three or five senior-most judges of the Supreme Court called the ‘Collegium,’ the Supreme Court declared.
• It is the exclusive authority of this individual judge to allocate cases to fellow judges in his role as the master of the roster, a Bench of Justices A.K. Sikri and Ashok Bhushan clarified in their separate but concurring opinions.
• The ruling is based on a petition by former Law Minister Shanti Bhushan to have the Collegium collectively allocate cases.

C. GS3 Related

Nothing here for today!!!

D. GS4 Related

Nothing here for today!!!

E. Editorials

1. A political ploy

Context

• The Centre has cleared a hike in the minimum support prices (MSPs) for the kharif summer crop, ranging from a modest 3.7% increase for urad to as much as a 52.5% for the cereal ragi over the previous season.

Calculations

• The cost considered by CACP is as per the A2+FL formula, which includes expenses on farm inputs — including seeds, fertilisers, fuel and irrigation — and imputed value of Family Labour.
• While making calculations, it relied on estimates of input costs actually paid by farmers and the imputed value of unpaid family labour engaged in the field.
• Yet, the final hikes announced for some crops are even higher – with the MSP for bajra pegged 97% over estimated costs.
• On an average, the MSP hike notified for 17 kharif crops is about 25% higher and constitutes the biggest hike since 2013-14.

Significance

• All in all, the announcement is an olive branch to farmers who over the past year spearheaded widespread protests over the rural distress.
• With less than a year to go for the general election, the NDA government has clearly opted to reverse the abundant, inflation-weary caution it had exercised while fixing MSPs.

Concerns

• Given that the MSP mechanism is primarily enforced through official procurement only for wheat and paddy, mere announcement of prices for other crops is unlikely to suffice in ensuring farmers get those returns.
• Anticipating this, the Budget had promised that Niti Aayog would work with the Centre and States to put a fool-proof mechanism in place so that farmers get adequate remuneration if market prices slip below the MSP.
• This could be through government purchases or a gap-funding mechanism whereby the difference between MSPs and market prices is transferred to farmers.
• Little is known on the status of this endeavour, or the Centre’s procurement strategy for this year.
• As things stand, the impact of these hikes on consumer price inflation is expected to vary between 0.5% and 1% by the end of 2018-19.
• On the other hand, the Centre’s fiscal arithmetic may not be too adversely affected if its outlay on procurement is around ₹15,000 crore, about 0.1% of GDP.
• But these costs could mount based on the procurement strategy and the new mechanism for MSP enforcement.

Way forward

• While rural incomes may rise from this farm-friendly gesture, concomitant reforms to free agricultural markets are vital to prevent a distortionary effect on farmers’ choices on account of MSPs.
• Easing onerous stockholding limits under the Essential Commodities Act and avoiding frequent curbs on farm exports are key.

Why in news?

• There is little sign that Donald Trump will be turned from his protectionist path by appeals on the virtues of trade.

Context

• Since the start of the year, U.S. President Donald Trump has lashed out at allies and adversaries alike on trade.
• Often, as with India, the U.S. has pushed for enhanced security cooperation at the same time it declared trade relations a national security threat.

• There are at least three possible explanations worth considering
1. As with complaints about Chinese practices.
2. As in the preoccupation with meaningless bilateral trade deficits.
3. It might just be a straightforward desire to block trade.

The highlights of the issues?

• The evidence seems to point to the last possibility simple protectionism.
• While the U.S. has significant concerns about Chinese economic practices, such as China’s aggressive approach to acquiring intellectual property from American businesses, the administration has been unable to focus its demands on these practices.
• China offered a deal to address its steel overcapacity, Mr. Trump reportedly rejected the deal in favour of pursuing tariffs.
• Nor has the White House been able to prioritise among its global trade concerns.
• The discord with trading partners such as the European Union and Canada has undercut the possibility of presenting a united front on China complaints.
• The Trump administration extended steel and aluminium tariffs to Canada, among other countries.
• Ostensibly, the rationale was a threat to U.S. national security.
• Yet, at the G7 meetings, Mr. Trump seemed to explain the aggressive U.S. stance by citing Canada’s protective dairy regime.
• There is ample evidence that Mr. Trump places a high priority on bilateral trade deficits, which he seems to equate with profit and loss statements.
• Hoping to assuage the President’s concerns, Chinese Vice-Premier Liu. He came to Washington to offer increased Chinese purchases of U.S. goods as a means of resolving the looming tariff threat. The Trump administration initially struck a deal, then reversed it roughly a week later.
• Countries with which the U.S. runs a trade surplus have also not been immune from trade attacks; Canada is a prime example.
• This then leaves the simpler explanation that Mr. Trump is fond of tariffs and believes that American industry will do better behind a wall of protection.

Where are international protections against capricious protectionism?

• The U.S. prides itself, however, on its political system of checks and balances. Even with a protectionist President, how can one individual recraft a country’s long-standing trade position so dramatically?
• The puzzle deepens when one looks at the U.S. Constitution, which assigns the power to apply tariffs to Congress.
• Domestically, Congress has tried to shift responsibility for trade on to the Executive Branch ever since it engaged in an ill-fated bout of protectionism in 1930.
• The underlying presumption was that individual members of Congress were more likely to succumb to protectionist pressures from their narrower constituencies, while the President was more likely to consider the broader national interest.
• Most domestic legislative safeguards, therefore, protected against a president being more liberal than Congress might desire; there are relatively few protections against a President who is more protectionist. Over the years, the legal authorisations for a President to apply protection accumulated, largely unused.
• Thus, the steel and aluminium tariffs were justified under an obscure provision of the Trade Expansion Act of 1962, a law granting national security powers from the midst of the Cold War.
• Turning to the global trading system, the burgeoning trade war demonstrates its limitations.
• The General Agreement on Tariffs and Trade and World Trade Organization were never designed to block a major world power from running amok.
• They relied, instead, on the principal players in global trade respecting the system. Trade disputes were anticipated, of course, but they were intended to be sincere cases of disagreement about rules and acceptable practices.
• The WTO Dispute Settlement Mechanism cannot act quickly enough to address the mounting spats about trade protectionism emanating from the U.S., a major reason why countries around the world have not waited for verdicts from their WTO complaints and have instead proceeded with retaliation.

What comes next for the global trading system?

• In the near term, we are likely to see escalation. S. tariffs on $34 billion of imports from China took effect. China has promised equivalent retaliation. Mr. Trump has promised to retaliate against that retaliation. • The Trump administration also announced its intention to use its national security justification for tariffs on the auto sector. • While such a move would be qualitatively similar to the action against steel and aluminium trade, it would be quantitatively much more significant, given the magnitude of the autos trade. • Europe has threatened retaliatory tariffs worth$300 billion should the auto tariffs proceed.

• There is little sign that Mr. Trump will be turned from his protectionist path by earnest explanations of the virtues of trade, though there have been valiant attempts both from the private sector and from members of Congress.
• If there is to be a change in the U.S. position, it is likely to come from an active reassertion of congressional authority over trade policy.
• It is only in the last month or two that the effects of both protection and retaliation have begun to be felt. While some businesses have been helped, many more have been hurt. For example, while there are roughly 140,000 Americans who work in steel production, there are about 2 million who work in industries that use steel as a major input.
• Those latter industries are beginning to cry for help, along with farmers who are seeing sales lost to retaliatory barriers. Stories such as the relocation of production of Harley-Davidson motorcycles have called into question the President’s claim that protection would revive American manufacturing.

F. Tidbits

1. ‘Alternative cereals can save water’

• If Indian farmers were to switch from growing rice and wheat to ‘alternative cereals,’ such as maize, sorghum, and millet, it could reduce the demand for irrigation water by 33%.
• This could also improve nutritional availability to consumers, according to an analysis by researchers.

Research work

• For their analysis, the scientists considered water as well as cereal-production data from 1996-2009.
• Because actual water consumption data was not available, they used a proxy — Crop Water Requirement (CWR), which is the product of the water required by a crop and the harvested area — to calculate water consumption in every district in this period.

Findings

• In this time, cereal production grew by 230%. Although the combined production of alternative cereals was larger than that of wheat in the 1960s, their relative contribution to the cereal supply has steadily dwindled.
• Yet, alternative cereals disproportionately account for the supply of protein, iron, and zinc among kharif crops.
• At the same time, total CWR demand for Indian cereal production increased from 482 to 632 km3 per year during the study period.
• The nub was that rice is the least water-efficient cereal when it came to producing nutrients and was the main driver in increasing irrigation stresses.

Recommendations

• Replacing rice with maize, finger millet, pearl millet, or sorghum could save irrigation and improving production of nutrients such as iron by 27% and zinc by 13%, according to the report
• Alternative cereal production can help distribute nutrient production across the country and reduce the impact of a single local climate shock to national grain production.

2. Plan for central pool of documentary proof

• A proposal for creating a centralised pool of documentary evidence for expeditious sharing of actionable information on economic offences between various Central investigating agencies is pending consideration with the government.
• As proposed, documentary proof gathered by the respective agencies would be stored at one place and its certified copies made available for the purposes of investigations and use as evidence in the court of law.
• Such an arrangement would require relevant amendments to the legislation governing each agency in terms of evidence collection.
• It would require use of data analytics for extracting relevant information.

Significance

• The recommendation has been made to overcome the existing procedural and legal hurdles in sharing of evidence between the probe agencies like the Central Bureau of Investigation, the Enforcement Directorate, the Income-Tax Department and the Special Fraud Investigation Office.
• At times, sharing evidences becomes a time-consuming exercise and delays investigations.
• This Central Pool will ensure transparency in the system.

3. Defaults on CV loans may rise on oil: Fitch

• Rising fuel prices could strain India’s commercial vehicle operators and lead to a rise in auto-loan delinquencies, according to Fitch Ratings, which said that the upbeat economic outlook suggested operators may find it easier to pass increased costs on to customers than during previous fuel-price spikes.
• Freight rates have so far not kept pace with fuel-price increases which is causing stress for commercial-vehicle operators, for whom fuel accounts for a significant proportion of overall costs.
• Commercial vehicle loans make up almost all of the pools in our Indian auto asset-backed-security (ABS) portfolios.

G. Practice Questions for UPSC Prelims Exam

Question 1. Consider the following statements with respect to Import Cover.
1. It is an important indicator of the stability of a currency.
2. It measures the number of months of imports that can be covered with foreign exchange reserves available with the central bank of the country.

Which of the above statement/s is/are incorrect?

Options:

1. i) only
2. ii) only
3. Both i) and ii)
4. None of the above

See

Question 2. Consider the following statements:
1. Fundamental rights under Article 14 and 19 can be diluted to give effect to certain Directive principles.
2. If President of India reserves a bill for his own consideration and then approves, then judicial review would not be possible.
3. Any law, relating to Schedule 9, can be curtailed on the grounds of violation of Fundamental rights and it cannot be challenged.

Choose the correct option.

1. Only i) and ii) are correct
2. Only iii) is correct
3. All the statements are correct
4. All the statements are incorrect

See

Question 3. Consider the following statements:
1. In Mandal case, court rejected reservation to the economically backward higher classes and creamy layer among OBC.
2. Ram Nandan committee was constituted by the government to identify creamy layer among OBCs in 1993.
3. National backward class commission was established as per the recommendations of the Sachar committee report.

Which of the above statement(s) is/are incorrect?

1. i) only
2. i) and ii) only
3. i) and iii) only
4. iii) only

See

Question 4. Which of the below statement/s is/are correct regarding the
Battle of Imphal and Kohima fought between British and the Japanese in 1944

1. It was voted as Britain’s greatest battle beating Waterloo.
2. The Japanese brought a large number of Indian troops captured after the fall of Malaya and Singapore.

Options:

1. i) only
2. ii) only
3. Both i) and ii)
4. Neither i) nor ii)

See

Also, check previous Daily News Analysis