05 Mar 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
INTERNATIONAL RELATIONS
1. Myanmar puts off border pact
C. GS3 Related
ECONOMY
1. Solar goal for 2022
D. GS4 Related
E. Editorials
ECONOMY
1. Trade wars
2. Land acquisition: The case of returning lands
F. Prelims Fact
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions 

A. GS1 Related

B. GS2 Related

• Myanmar has indefinitely deferred signing an agreement with India to streamline the free movement of people within 16 km along the border.
• India is keen to sign the agreement but Myanmar — citing “domestic compulsions” — has asked more time before the agreement is sealed.
• On January 3, the Union Cabinet had approved the agreement between India and Myanmar on land border crossing to enhance economic interaction between people of the two countries.

Border passes

• To give it shape, the Centre had asked four States — Arunachal Pradesh, Nagaland, Manipur and Mizoram — that share the unfenced border with Myanmar to distribute “border pass” to all the residents living within 16 km from the border.
• The Memorandum of Understanding (MoU) has been deferred twice in the past seven months.
• It was to be signed in September last year when Prime Minister Narendra Modi visited Naypyidaw for a bilateral visit. India tried to again push the agreement in January when Myanmar’s State Counsellor Aung San Suu Kyi was in New Delhi with nine ASEAN leaders as chief guest for the Republic Day parade.

India raised issue

• An official said as per the proposal, there would have been no restrictions on the movement of people across the borders.
• The domiciles were to be allotted border passes and those going across for agriculture, work or to meet relatives should carry the pass at all times.
• The official said both the countries intend to put a system in place after India raised the issue of movement of extremists and smugglers freely across the border.

India and Myanmar share a 1,643 km unfenced border along Arunachal Pradesh (520 km), Nagaland (215 km), Manipur (398 km) and Mizoram (510 km) and permit a ‘free movement’ regime upto 16 km beyond the border.

C. GS3 Related

• India had been on track to meet its target of 100 Gigawatt (GW) of solar energy capacity by 2022 but momentum has been severely eroded in the last few months, according to industry players.
• Issues such as uncertainty around import duties and future tax rates on existing power purchase agreements have dampened investor sentiment.
• The Director General (Safeguards) had earlier this year recommended imposing a 70% safeguard duty on imported solar cells, panels and modules for a minimum period of 200 days. No decision has been taken yet on this, but the proposal is causing a lot of uncertainty in the industry because of the higher costs this would result in.
• With the advent of anti-dumping and the prospect of safeguard duties, and so many changes, it becomes that much more uncertain.
• Last year, the global capacity addition in solar stood at 105 GW who added that India was in third place in terms of how much its market has grown over the year.
• It’s riddled with a lot of complications and a lot of noise from the industry as well, where everybody wants protectionism. China has done nothing like that. It has created a bottom up approach where 60-70% of the global manufacturing in solar is from China.
• The problem in India is that uncertainty surrounding tariffs coupled with a large target means that the road ahead to 2022 will be a tough one. Industry players across the board have said that they are waiting for more certainty before they bid for more projects or expand their existing projects.
• Another major issue that is causing industry players to slow their investments is the incidence of State governments trying to renegotiate past power purchase agreements due to lower tariffs being discovered subsequent to the signing of their PPAs.

Renegotiation by States

• The renegotiation of renewable power purchase agreement (PPA) tariffs by quoting high tariffs is not an apparent option available with State discoms.
• Although there is no anecdotal evidence of cancellation of renewable PPAs in contravention to possible exit clauses available in PPAs, there have been instances of lower-than-contracted payments or grid curtailments.
• There is no direct evidence of PPA cancellation due to higher tariffs. However, additional clarity will attract investments in the sector.
• The report added that anecdotal experience shows high power cost that States had signed off on as the sole reason for the proposed renegotiation or cancellation of PPAs.
• The other aspect that will likely hold up India’s achievement of the 100 GW target for solar is the rooftop solar component within this target. Out of the total, utility scale capacity is to make up 60% of the target and rooftop solar is to make up the remaining 40%.
• In other words, the utility scale segment has achieved 30% of the 2022 target with four years to go. The rooftop segment has achieved less than 4%.

D. GS4 Related

E. Editorials

 Why in news?

• American President Donald Trump last week announced that his administration would soon impose tariffs on the import of steel and aluminium into the U.S. for an indefinite period of time. The European Union, one of the largest trading partners of the U.S., has since vowed to return the favour through retaliatory measures targeting American exporters.
• World leaders did well to avoid protectionist trade policies in the aftermath of the Great Recession of 2008. After all, they had learned their lessons from the global trade war of the 1930s which deepened and prolonged the Great Depression, or so it was thought.
• The EU is expected to come out with a list of over 100 items imported from the U.S. that will be subject to scrutiny.
• For his part, Mr. Trump has justified the decision to impose protective tariffs by citing the U.S.’s huge trade deficit with the rest of the world. He explained his logic in a tweet exposed a shocking ignorance of basic economics. He likened his country’s trade deficit to a loss that would be set right by simply stopping trade with the rest of the world.
• International trade, like trade within the boundaries of any country, however, is not a zero-sum game. So the trade deficit does not represent a country’s loss either, but merely the flip side of a capital account surplus.
• This is not to deny that there are definitely some losers — for example, the U.S. manufacturing industry which lost out to competition from countries such as China due to increasing globalisation. But throwing free trade out of the window would only make Americans and everyone else poorer.
• Despite the global backlash, it is unlikely that Mr. Trump will walk back on his decision, especially given its populist resonance. Steelworkers in key States in the U.S. played a significant role in Mr. Trump’s election win in 2016.
• In fact, these are the only people who will benefit from the steel and aluminium tariffs while American consumers as a whole will pay higher prices for their goods.
• Mr. Trump’s desire to appeal to populist sentiment also explains why his protectionist turn comes in the midst of steadily improving economic growth.
• With Mr. Trump’s tariffs not going down well with the EU, it will be important to see how China and other major trading partners respond to his opening salvo.
• They can take a leaf out of the books of major global central banks which have shown enough maturity to avoid using currency wars as a means to settle disputes. Instead of retaliating with more tariffs, which could cause the current dispute to spiral into a full-fledged global trade war, the U.S.’s trading partners must try to achieve peace through negotiations.

Several previous governments had made attempts to amend the Land Acquisition Act, 1894, but none had met with much success and the Act continued as an instrument of state oppression and forced displacement.

Features of  Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013.

• The law provided for greatly enhanced compensation, consent of those whose land was sought to be acquired, and detailed rehabilitation and resettlement provisions (including employment, land for land, and other beneficial schemes). In other words, it changed the relationship between the state and the individual by empowering the latter against the former.

Returning land

• It also included a retrospective clause. Section 24 of the new Act provided that under certain circumstances, acquired land could be returned to affected families.

Now, the Supreme Court, in Indore Development Authority v. Shailendra (February 2018), has effectively implemented the provisions of the lapsed ordinance with regard to the retrospective clause. Given that it is at variance with other Benches on the issue, this has now led to the constitution of a five-judge Bench of the Supreme Court to decide whether the Section has to be interpreted expansively or in a narrow sense.

As the Supreme Court gets ready to decide on the fate of this Section in a law that has positively impacted the lives of several farmers/ land owners, it would be appropriate to revisit the legislative intention that existed at the time of its drafting.

• It was clear at the draft stage itself that a new law on land acquisition would necessarily have to address the cases of those who had suffered and continued to suffer due to the unacceptable provisions of the 1894 law. There were still conflicts surrounding acquisitions that had been initiated decades earlier and where the acquired land was lying unused, bringing no benefit to the state or the former owner.

1. A test had to be laid down to determine in which cases land could be returned to the original owners. After much deliberation, including with leaders of the then opposition, a formula was arrived at. There would be three categories.
2. The first category would comprise of those for whom the land acquisition award had been made less than five years prior to the coming into force of the new law (before January 1, 2014 and after January 1, 2009). In such cases, the new law would not apply; the proceedings would continue under the old law.
3. The second would be where the award had not been made (on the date of the new law coming into force) but the acquisition proceedings had been initiated. In such cases, the land owners would be entitled to enhanced compensation and all other rehabilitation and resettlement benefits as provided under the new law, but the acquisition process would continue under the 1894 Act.
4. The third category would comprise of the cases of those for whom the land acquisition award had been made five years (or more) prior to the new law coming into force and where either compensation had not been paid or there had been no physical possession of the land. It was reasoned that five years was enough time for the acquiring authority to resolve all disputes, failing which it made no sense to hold on to the land.

The Supreme Court decision in the Indore case does two things: one, it relaxes the existing definition of compensation paid from the active requirement of offering the compensation and depositing the same in court (laid down by a three-judge Bench of the Supreme Court in a historic 2014 decision). Now, an offer followed by deposit in the government’s own treasury is sufficient to qualify as compensation paid.

• Two, on the subject of physical possession, it lays down that the period where the government is prevented from taking possession of the land due to the operation of a stay order or injunction shall not be counted towards the stipulated five-year requirement.
• The 2013 Act had no such caveats or qualifications because (i) the compensation would have to be offered in a meaningful fashion rather than the passive act of mere deposit in the treasury where it anyway resides; and (ii) stay or no stay, five years was sufficient time for a government to resolve any pending litigation on the subject. Having studied the ground reality for over three years, we can safely say that these new requirements (laid down by the Bench in the Indore case) will likely render the Section inoperable.

Land owner versus the state

• This interpretation stands in contrast to a majority of the Supreme Court’s earlier judgments that upheld the Section and applied it expansively in favour of the land owner. In those judgments, the Section was  interpreted in favour of securing the land owners’ interests over those of the state.
• This was in sync with the foundational premise of the 2013 Act that it was never meant to help the state hold on to its land banks or to deny return of land on the basis of narrow technicalities.

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

Question 1. Which of the above states do not share border with Myanmar?

Question 2. Consider the following statements about Currency Wars:

Question 3. Consider the following statements:

Question 4. Consider the following statements about Prasar Bharthi:

H. UPSC Mains Practice Questions

Also, check previous Daily News Analysis