07 May 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
CULTURE
1. Aranmula’s snakeboats
B. GS2 Related
SOCIAL ISSUES
1. Inter-country parental child abduction
GOVERNMENT SCHEMES
1. Assessment of Gram Swaraj Abhiyan
POLITY
1. Adult couple can live together, says SC
INTERNATIONAL RELATIONS
1. Panel for revamp of Indo-Nepal treaty
C. GS3 Related
SECURITY
1. Maoists have developed new weapons: report
ECONOMY
1. Review insolvency code regulations, NCLT tells bankruptcy board
D. GS4 Related
E. Editorials
ECONOMY
1. Fluctuations in the Indian Rupee
2. GST’s new compliance system
F. Prelims Fact
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions 

A. GS1 Related

Why in news?

• The famous Aranmula snakeboat regatta in Kerala will not be a competitive race in the Pampa river waters at this year’s Onam festival, and will instead return to its roots as a spectacle of colour and song.
• Palliyoda Seva Sanghom (PSS), which conducts the show, has decided to do away with the race format during the Uthrattadhi Vallamkali in August.

Aranmula Vallamkali

• The Aranmula Vallamkali has strong moorings in the traditions of the centuries-old Sree Parthasarathy temple at Aranmula, regarded as one of the 101 Vaishnava Tirupatis.
• The Vallamkali marks the anniversary of the idol installation at the Aranmula temple, with the participation of about 50 units called Palliyoda Karayogams in and around Aranmula, which have their own snakeboats (Palliyodams). The oarsmen consider it a holy mission to take part, and the boats are treated as those of the deity.
• The race was not part of Aranmula Vallamkali earlier, and the high-crested boats that take part are distinct from those used in races elsewhere in Kerala.
• They are meant to be paddled, in tune with the rhythmic Vanchippattu, which are verses in praise of Lord Krishna. The dhoti-and-shawl dress code of the oarsmen is also a special feature.

Issues with Racing

• When racing entered the scene, it was seen as robbing the regatta of its charm. Some of the participants were recruited from Kuttanad, which has a major boat race, and the traditional paddling style was overtaken by sport. Besides putting off those looking for spectacle, it led to disputes among teams.
• The Mannam Trophy will thus go to the snakeboat that is adjudged the best in terms of paddling style, discipline, costume of the oarsmen, and Vanchippattu singing.

B. GS2 Related

Why in news?

A committee set up by the Centre to prepare a report on the issue of inter-country parental child abduction has questioned one of the basic principles of the Hague Convention by arguing that the return of the child to his or her habitual residence may not necessarily be in the best interest of the child.

• There is immense pressure on India from the U.S. to accede to the Hague Convention on the Civil Aspects of International Child Abduction, which is a multi-national treaty that seeks to protect children wrongfully removed by one of the parents from the custody of the other parent.

Justice Rajesh Bindal Committee

• The Justice Rajesh Bindal Committee was set up last year to suggest a model legislation to safeguard the interest of the child as well those of the parents when an NRI (Non Resident Indian) marriage goes sour and one of the parents flees from one country to another with the child.
• Once the Central government decides to set-up the Authority and frames a law on the issue, it is expected to take a decision on whether it should accede to the Hague Convention.
• In 2016, the government had decided not to be a signatory to the treaty on the ground that it can be detrimental to the interest of the women fleeing an abusive marriage.

What is wrong the Hague Convention?

• At the heart of this treaty is the criterion of habitual residence of the child, which is used to determine whether the child was wrongfully removed by a parent as well as to seek the return of the child.
• The Committee feels that the concept of habitual residence is not synchronous with the best interest of the child, says a report by the Justice Rajesh Bindal Committee.
• It adds that returning a child to the place of habitual residence may result in sending the child to an inharmonious set-up as well as overlook the fact that a mother is the primary caregiver of the child.

Major Recommendations

• The panel has also prepared a draft law to safeguard the interest of the children, as well as those of the parents, particularly mothers.The proposed legislation lays down nine exceptions under which a child will not be returned to the country of habitual residence.
• The important conditions under which a child’s return can be refused are — best interest of the child, domestic violence or mental or physical cruelty or harassment against the parent who fled with the child, the parent claiming the return of the child was not exercising the custody rights at the time of removal, and if there is a grave risk that the child would be exposed to physical or psychological harm.
• The panel has also emphasised the importance of the Indian family system in ensuring the best interest of the child, seemingly to question the logic behind returning the child to a place of habitual residence outside India.
• With the older generation of womenfolk being home-makers, the households have great caregivers in terms of grandparents, uncles, aunts, cousins, etc., on either sides. A child, even if he may have stayed in some other country, would never be completely uprooted from the country of his parents’ origin, who have families back home in India.

Inter-Country Parental Child Removal Disputes Resolution Authority

• The report also requires the setting up of an Inter-Country Parental Child Removal Disputes Resolution Authority, which will be the nodal body to decide on the custody of the child, mediate between the warring parties, as well as order the return of the child to the country of habitual residence.
• The Committee submitted its report to Women and Child Development Minister Maneka Gandhi. The Ministry will be circulating the report to the Ministries of External Affairs and Home Affairs for their inputs.

What is the status of penetration of GSA?

• At the end of a three-week drive to bring seven flagship schemes to 16,850 villages with a high number of poor, SC (Scheduled Caste) and ST (Scheduled Tribe) households, less than 30% of the target households received an electricity connection, while less than 40% got a gas connection, according to government data.
• However, financial schemes for rural beneficiaries to get Jan Dhan bank accounts and sign up for life and accident insurance achieved a high level of saturation. A scheme to fully immunise all pregnant women, and all children under two years, also reached almost all targeted beneficiaries.

Gram Swaraj Abhiyan

• The Gram Swaraj Abhiyan was launched by Prime Minister Narendra Modi on April 14, the birth anniversary of Dr. B.R. Ambedkar, to reach out to villages, most of which have a majority of Dalit and tribal homes.
• The objective of the outreach programme, which was launched a fortnight after nationwide protests against the dilution of the Scheduled Caste and Scheduled Tribes (Prevention of Atrocities) Act, was to promote social harmony, spread awareness about pro-poor initiatives of government, reach out to poor households to enrol them in various welfare programmes.

Other Schemes

• The Saubhagya scheme to give every household an electricity connection reached 4 lakh homes, as against a target of 14.5 lakh homes, thus reaching 27% of the intended beneficiaries. Under the Ujjwala scheme to give gas connections to all homes, 39% or 5.6 lakh households were reached out of a total target of 14.4 lakh.
• A senior official at the Rural Development Ministry said that KYC (Know Your Customer) processing was still ongoing for many applicants, especially for the Ujjwala scheme, where a total of 11 lakh applications were received. The official added that while the Gram Swaraj Abhiyan officially ended, the government planned to continue until full saturation was achieved.
• Financial schemes also saw high saturation, with a higher number of Jan Dhan bank accounts being opened. The Pradhan Mantri Jeevan Jyoti Bima Yojana, a life insurance scheme, enrolled 73% of targeted beneficiaries, while the Pradhan Mantri Suraksha Bima Yojana, a risk insurance scheme for accidental death or disability, enrolled almost 88% of target beneficiaries.

• An adult couple has a right to live together without marriage, the Supreme Court said, while asserting that a 20-year-old Kerala woman, whose marriage had been annulled, could choose whom she wanted to live with.
• The top court held that live-in relationships were now even recognised by the legislature and they had found a place under the provisions of the Protection of Women from Domestic Violence Act, 2005.
• The observations came while the top court was hearing a plea filed by Nandakumar against a Kerala HC order annulling his marriage with Thushara on the ground that he had not attained the legal age of marriage. The Prohibition of Child Marriage Act states that a woman can’t marry before the age of 18, and a man before 21.

• The final report of a bilateral committee — appointed to advise governments in Delhi and Kathmandu — is likely to suggest that the 1950 India-Nepal Peace and Friendship Treaty should be revised.

Newer aspects

• The India-Nepal friendship Treaty is now almost seven decades old and needs to reflect realities of our times.
• Eminent Persons Group (EPG) was appointed in 2016 to suggest measures for improving bilateral ties.The EPG was set up during the February 2016 visit of Prime Minister K. P. Sharma Oli, in the aftermath of the economic blockade of Nepal, to bring in measures to address concerns of both sides.
• It has met seven times in two years and will hold its last meeting next month in Delhi when the report is expected to be finalised. At the penultimate meeting in Kathmandu, the two sides had exchanged an early draft of the report.
• Given the difference of opinion on important issues like border trade, tariffs, and the friendship treaty, there were concerns on whether the two sides could reach a consensus. However, the member said both sides had addressed the key issues and it will be up to the governments on both sides to implement the report.

C. GS3 Related

Why in news?

• Naxals have developed some lethal and crude ammunition like Rambo arrows, topped with gunpowder, and improvised rocket bombs as part of their new armoury to be used on security forces, says a new report.
• The report prepared by a joint security command on IED threats in Left Wing Extremism-hit areas said the Maoists have devised a smart way of concealing crude bombs in animal excreta to deceive sniffer dogs from detecting and alerting the security forces.
• There were occasions in the first quarter of 2017, when sniffer dogs of security forces were killed or injured as pressure improvised explosive devices (IEDs) exploded while the canines were getting agitated because of the obnoxious smell (of the excreta) while trying to detect the hidden IEDs.

Rambo arrow

• One of the newest technique witnessed is the use of an innovative explosive material called ‘Rambo arrow’. The arrowhead carries low-grade gunpowder or firecracker powder which explodes after hitting the target.
• The rambo arrow doesn’t cause much damage but disorients the security personnel by generating intense heat and fog, thereby making it easy for the Maoists to inflict fatal battle injuries on the troops and helps them to loot their weapons.
• The Naxals have also developed improvised mortars and rockets. In the rockets, a conical nose filled with explosives is welded into the tail-section which is filled with low-explosive propellant fuel. Once the rocket strikes, an explosion takes place and creates a boom impact.

Why in news?

The National Company Law Tribunal (NCLT) has suggested to IBBI that there is a need to review the insolvency code regulations to ensure that they are not misused or misinterpreted.

• It also said that the resolution professional (RP) should be competent and independent so that there are no interruptions in the process which lead to delays in disposal of insolvency cases.
• Besides, it has said that the claims of operational creditors are neglected or ignored as the Committee of Creditors (CoC) (banks and financial institutions) have control over the entire process.Nobody is taking care of operational creditors’ claims, said the NCLT Kolkata Bench in its order passed last week on the Binani Cement matter.
• In the order, the tribunal has also raised concern about the functioning of RPs, saying it has been receiving several pleas from stakeholders on issues such as transparency, arbitrariness and delays in the process.
• The adjudicating authority (NCLT) is facing too much interruption from various stakeholders. All challenge the independence of the resolution professional and lack of transparency, competency and arbitrariness in the matter of resolution process.

D. GS4 Related

E. Editorials

 

• The Indian currency has been facing some selling pressure for the last 4-5 weeks, chiefly on the back of rising crude price. The rupee fell against the U.S. dollar by a little over 2.5% in April, and 4.3% since the beginning of the year, making it the worst-performing Asian currency.
• Compared to the position as of end-March 2017, the rupee is now about 3% weaker vis-a-vis the U.S. dollar. RBI is reportedly intervening in the market to cushion the rupee’s fall.
• After nearly four years of subdued and benign oil prices and the consequent improvement in the country’s terms of trade, India once again faces its age-old vulnerability to high cost of oil import.

U.S. dollar recovering

• And this has come at a time when the U.S. dollar seems to be on a cyclical recovery path against other major currencies on the relative strength of the U.S. economy. On all such occasions in the past, the rupee as well as the capital account of the country’s Balance of Payments came under pressure.
• But this repeat of history now has other elements that compound the overall external sector vulnerability: overvalued rupee, rising current account deficit, sudden ebb in capital inflows and certain developments in the domestic political economy policy front.
• Going by its 36-country trade-weighted real exchange rate index, the rupee is currently overvalued by more than 17% relative to 2005. The movement of this index over the last few years provides some interesting insights: the real effective exchange rate of the rupee has gone up by about 4.73% since 2015-16, but it remained flat in 2017-18, although the nominal effective exchange rate of the U.S. dollar fell by about 9% during that period.
• The table alongside illustrates this point. This highlights the structurally higher inflation in India not just in relation to the U.S., but vis-a-vis all its major trading partners and competitors as well.
• RBI expects CPI inflation to lie between 4.4%-5.1% during the current fiscal year, with higher inflation expected in the first half. For the purpose of this estimate, RBI has assumed an average oil price of $68 per barrel. If global prices turn out to be higher than this, then the inflation will be higher. With the benchmark Brent having already touched a high of $75 per barrel, the possibility of inflation crossing 5% in the coming months is high.
• The moot point here is that the inflation differential between India and most of the major trading partner countries is close to 3%, which explains the sustained real appreciation of the rupee.
• In the past, real exchange rate appreciation would lead to abrupt and large changes in the nominal exchange rate of the rupee against the U.S. dollar, often triggered by domestic macro/political and global economic developments, the latest example being the burst of sharp depreciation of the rupee in August-September, 2013 caused by the so-called ‘taper tantrum’ announcement by the Federal Reserve to curtail its quantitative easing programme.

Rising wages

• The significant real appreciation of the rupee calls for a deeper probe as regards its causes and consequences for trade competitiveness. First, labour productivity has increased at an average rate of 6.3% annually since 2005, which is way higher than the annual average of 3.3% recorded in the previous 12 years.
• We need further research to determine if the consequent wage rise led to higher inflation, real appreciation and increase in current account deficit within the theoretical framework of Balassa-Samuelson Effect.
• As regards the consequence of the real appreciation of the rupee, it needs to be ascertained if any increase in factor productivity in the tradeable sector has cushioned its adverse impact on the competitiveness of the country’s goods and services.
• This is crucial for the purpose of guiding exchange rate policies of RBI and the government. India’s current account deficit increased to 1.9% of GDP in April-December 2017 from 0.7% in the corresponding period of 2016-17 on the back of about 44% widening of the trade deficit during this period.
• While the country’s imports relative to its GDP is now much lower than the peak level reached in 2012-13, the performance of exports continues to be lacklustre. In the financial year 2013-14, exports were 17.2% of GDP and by the financial year 2016-17, the ratio fell to 12.4% of GDP.
• In the traditional areas of exports, such as garments and textiles, where India was second only to China, the country now occupies third position in textiles and fifth position in garments.
• The case of garments exports is interesting as in 2000 the share of clothing exports as a percentage of total global clothing exports of Bangladesh, Vietnam and India was 2.6%, 0.9% and 3% respectively. By 2016, while India’s share of global clothing exports has increased marginally to 4%, Bangladesh has improved its share to 6.4% and Vietnam’s share is a stellar 5.5%.
• This is a pointer to India’s inability to gain market share in a global business which is consolidating among the top ten countries. Despite the claims of ‘Make in India’, India does not yet figure among the top ten exporters of manufactured goods.
• China now exports manufactured goods worth $2 trillion (almost equal to India’s GDP) and its share of global exports of manufactured goods increased from 4.7% in 2000 to 17.9% in 2016.
• The silver lining in India’s current account in the past has been the export of services export. Indian IT services companies, which followed a low-cost global delivery model with success in the past, have not succeeded so far in graduating to the new world of artificial intelligence, machine learning and robotics.
• In the first half of the financial year 2017-18, growth in IT services exports compared to the corresponding period in 2016-17, was a meagre 2.3%. Growing trade protectionism in the West will certainly slow down the growth of exports of IT and IT-enabled services, unless Indian companies move up the value chain. Tourism and transfers from migrant workers in the Gulf have remained robust.
• India’s gold import, which was $56 billion in 2011-12, declined 52% to $27 billion in 2016-17. However, a rising trend of gold import is now being seen, with the import in 2017 at 855 tonnes — a 67% rise over the previous year,
• The other worrisome trend is the rapid growth in imports of electronic goods, which was $3.4 billion in 2011-12 and $42 billion in 2016-17 — a massive 12-fold increase in five years.
• There is a distinct possibility that imports of electronic imports, mostly from China, will surpass oil imports in the near future.The rising trend of import of gold and white goods could very well be a manifestation of the rupee’s overvaluation.
• The FDI and portfolio flows in the first nine months of 2017-18 remained robust. But, a decline in portfolios flows is taking place now, as evidenced by an outflow of $2 billion in April. Foreign exchange reserves at $424 billion, with another $22 billion in forward purchase, look formidable to be able to quell any market volatility.
• But, as before, the leeway to spend the reserves is not unlimited and decline in foreign currency assets is already happening. Further, applying IMF’s metric of reserves adequacy, the safe level of foreign exchange reserves for India turns out to be $496 billion.

Disagreements with IMF?

• Curiously, India’s annual Article IV consultation with the IMF staff, which usually takes place in February, has not yet happened this year. As per its office in India, the earliest it is going to happen is in July, 2018. One wonders if the delay is due to any disagreement between Indian authorities and IMF staff on macro issues.
• Typically, in the last ten years, sharp currency movements have happened in years of political transition. Macroeconomic populism has already led to fiscal slippage; and uncertainty around the extent of RBI’s commitment to an inflation-targeting regime amid rising inflationary pressures and external sector vulnerability will make 2018-19 a challenging year for Indian policymakers.
• Higher oil prices mean tough choices, especially on the fiscal front. In fact, there are no easy options left on any of the major macroeconomic policy front in the lead-up to the next general elections.

• With collections from the goods and services tax peaking at over Rs.1 lakh crore in April, industry hoped the GST Council would make life simpler for an increasingly compliant tax-payer base.
• Indeed, at its meeting last week the Council decided to introduce a new compliance system under which a single monthly GST return will have to be submitted by firms, barring a few exceptions.
• However, this will only be done in a phased manner — with the first of three transition stages to begin six months from now. Discussions over simplifying GST returns have been underway for months and considered by the Council, a committee of officers and a Group of Ministers. Nandan Nilekani, chairman of Infosys Technologies, the firm in charge of the GST Network’s IT system, has been consulted.
• Yet, the solution offered has gaps. For instance, in the second stage of the transition to simpler returns, buyers will get provisional input credit even if the seller doesn’t upload the invoices.
• While this could lead to disputes, in the third stage input credits will only be granted after sellers upload invoices. If a seller defaults on depositing GST dues collected from a buyer and remains evasive, the authorities can reverse the credit availed by the buyer for such outstanding taxes.
• In any case, the timelines for the transition are long and bring fresh uncertainty for businesses still recovering from the initial jitters and confusion around the tax regime. Firms will again have to cope with significant changes in accounting software in the middle of the financial year.
• The Council, credited with swift and significant course correction in GST processes in its initial months, could have done more. The most troubling is the Centre’s push for the imposition of a cess on sugar over and above the 5% GST levied on it.
• A cess at the rate of Rs.3 a kg is proposed to alleviate ‘deep distress’ among sugarcane farmers. Not surprisingly, this faces opposition from several States. It has been rightly argued that this will burden consumers while favouring larger sugarcane-growing States like U.P. and Maharashtra.
• In addition, a special sugar cess will signal a looming breakdown of the basic tenet of GST: the abolition of such cesses and surcharges, barring the compensation cess for funding States’ revenue losses for five years. Along with a proposal to reward digital GST payments, this has been referred to new ministerial groups, which are to revert in a fortnight.
• Lastly, the decision to make the GSTN a 100% government-owned firm, instead of the present structure with 51% private ownership, explains neither how this will address data security concerns nor the impact on the Network’s functional efficiency, which was the original stated intent for giving private players an upper hand in operations.

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

Question 1. Bringing Green Revolution to eastern India is a sub scheme of

Question 2. Consider the following statements related to UMANG:

Question 3. Consider the following statements regarding Rashtriya Arogya Nidhi (RAN):

Question 4. Consider the following statements about Zero Defect, Zero Effect Scheme:

Question 5. Recently PM gave the call for building a New India by 2022, which aims to quit evils
like corruption. What can be the possible measures for reducing corruption in the country?

H. UPSC Mains Practice Questions

Also, check previous Daily News Analysis