Dec. 28, 2018

Article
28 Dec 2018

E-COMMERCE RULES

Union Ministry of Commerce announced new e-commerce rules to provide clarity on FDI policy on e-commerce sector.

 

Key Highlights of the rules:

The following decisions will take effect from 01 February, 2019 –

  • 100% FDI under automatic route is permitted in marketplace model of e-commerce. FDI is not permitted in inventory-based model of e-commerce.

  • E-commerce companies running marketplace platforms — such as Amazon and Flipkart — cannot sell products through companies, and of companies, in which they hold equity stake.

  • Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.

  • An e-commerce marketplace will not force any seller to sell any product exclusively on its platform.

  • To curb the practice of deep discounts, the government said they cannot directly or indirectly influence the price of goods and services.

  • E-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to RBI, confirming compliance of the guidelines, by September 30 every year for the preceding financial year.

  • All vendors on the e-commerce platform should be provided services in a “fair and non-discriminatory manner”. Services include fulfilment, logistics, warehousing, advertisement, payments, and financing among others.

Definitions acc. to Circular:

  • E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

  • E-commerce entity- E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013.

  • Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.

  • Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

Impact on e-commerce majors:

  • Under the rules, the suppliers will not be permitted to sell their products on the platform run by such marketplace entity. This will impact backend operations, as Group entities would have to be removed from the e-commerce value chain.

  • Also, e-commerce players like Amazon and Flipkart, who have their private labels, will not be able to sell them on their platforms if they hold equity in the company manufacturing them.

  • Industry experts say the changes will have a significant impact on the business model of e-commerce majors such as Amazon and Flipkart, as most of them source goods from sellers who are related party entities.

  • However, the language of the clarification seems to grant leeway, to a certain extent, to entities which are step-down subsidiaries of the entity in which the e-commerce entity or its group companies hold equity.

Impact on consumers and small retailers:

  • Consumers may no longer enjoy the deep discounts offered by retailers that have a close association with marketplace entities.

  • The absence of large retailers will, however, bring relief to small retailers selling on these platforms.

  • Traders running traditional brick-and-mortar stores, who now find it difficult to compete with the large e-commerce retailers with deep pockets, could gain.

Way ahead:

  • Industry experts while welcoming the decision to tighten FDI norms called for forming a regulatory authority to check flouting of e-commerce rules.

  • they have also asked the government to come with an e-commerce policy soon

 

Economics

Dec. 26, 2018

Article
26 Dec 2018

BOGIBEEL BRIDGE

Prime Minister Narendra Modi inaugurated Bogibeel bridge over Brahmaputra at Bogibeel in Assam. He also flagged off the first passenger train Tinsukia-Naharlagun Intercity Express over the bridge.

Boghibeel Bridge:

  • It is built over Brahmaputra River at Bogibeel between Dibrugarh and Dhemaji districts of Assam

  • At 4.94 km, the Bogibeel Bridge is the country’s longest road-cum-rail bridge, and its fourth longest of any kind above water.

    • It was approved by the Cabinet Committee on Economic Affairs in 1997.

    • The foundation stone was laid that year by then Prime Minister H D Deve Gowda, and construction was inaugurated in 2002 by then PM Atal Bihari Vajpayee.

    • Work on the substructure began in 2008.
      Background: The proposal to make the bridge dates back to the Assam Accord of 1985.




    • The Bogibeel Bridge upstages the 4.62-km Vembanad rail Bridge between Edappally and Vallarpadam in Kochi, Kerala, as well as the 4.55-km Digha-Sonpur rail-cum-road Bridge across Ganga in Bihar.

    • In a comparison of all bridges across water, the Bogibeel comes in at fourth, after the neighbouring Dhola-Sadiya road bridge (9.15 km), the Patna-Hajipur road bridge (5.75 km), and the Bandra-Worli Sea Link (5.6 km).

    • In October, the Centre announced a plan for construction of a 19-km bridge over the Brahmaputra from Dhubri in Assam to Phulbari in Meghalaya. Once that happens, three of India’s five longest bridges would be running across the country’s widest river.
      Comparison to other bridges:              




Tinsukia-Naharlagun Intercity Express:

  • On the occasion, PM Modi also flagged off the first passenger train Tinsukia-Naharlagun Intercity Express over the bridge.

  • It will run five days a week and use the bridge to cut down the train-travel time between Tinsukia in Assam to Naharlagun town of Arunachal Pradesh by more than 10 hours.

Significance:

  • The bridge is of immense economic and strategic significance for the nation. The bridge will be the lifeline of North East region and will facilitate connectivity between North and South Banks of river Brahmaputra in the Eastern region of Assam and Arunachal Pradesh.

  • Distance reduction: Within the Northeast, the train journey between Assam and Arunachal Pradesh now reduces from 500 km to 100 km. For the rest of India too, Dibrugarh becomes accessible without travelling via Guwahati.

  • Economic: It also benefits tourists and those involved in trading goods.

  • Health of the residents: It also benefits those seeking medical treatment. Dibrugarh, considered a gateway to parts of Arunachal Pradesh, is home to Assam Medical College. For patients on the north bank, the only crossing into Dibrugarh so far was by ferry.

  • Strategic significance: This boosts the defence forces by facilitating quicker movement of troops and equipment to areas near the India-China border.



 

Economics

Dec. 20, 2018

Article
20 Dec 2018

RAT-HOLE MINING

The Supreme Court questioned the Centre and the State of Meghalaya that how come lives were lost in rat-hole mines.  This comes after 15 coal miners have been trapped in a flooded coal mine in Meghalaya.

 Meghalaya mining accident:

  • The Meghalaya mining accident happened on 13 December 2018, when miners were trapped in a mine in Lumthari village. Lumthari village is located in Saipung Tehsil of Jaintia Hills district in Meghalaya, India.

  • The tunnel of the mines was flooded with water from the nearby Lytein river, thus cutting off the access. The miners are trapped inside the coal mine at a depth of around 370 feet.

  • While five miners managed to escape, rescue efforts for the remaining 15 are going on.

  • Earlier in 2014, The National Green Tribunal (NGT) banned coal mining in Meghalaya, specifically banning mining through the 'rat-hole' technique.

Rat-Hole Mining:

  • Meaning: Rat-hole mining involves digging of very small tunnels, usually only 3-4 feet high, which workers (often children) enter and extract coal.

  • Types: Rat-hole mining is broadly of two types –
    • In side-cutting procedure, narrow tunnels are dug on the hill slopes and workers go inside until they find the coal seam. The coal seam in hills of Meghalaya is very thin, less than 2 m in most cases.

    • In box-cutting procedure, a rectangular opening is made, varying from 10 to 100 sq. m, and through that is dug a vertical pit, 100 to 400 feet deep. Once the coal seam is found, rat-hole-sized tunnels are dug horizontally through which workers can extract the coal.



Debate on Rat-Hole Mining:

  • Criticism:
    • The National Green Tribunal (NGT) banned it in 2014 on grounds of it being unscientific and unsafe for workers.

    • Ecology: Petitioners from Assam have complained to NGT that rat-hole mining in Meghalaya had caused the water in the Kopili river (it flows through Meghalaya and Assam) to turn acidic.

    • Risk to lives: The NGT also observed that there are number of cases where by virtue of rat-hole mining, during the rainy season, water flooded into the mining areas resulting in death of many individuals including employees/workers.



  • Why is it followed?
    • Although banned, it remains the prevalent procedure for coal mining in Meghalaya.

    • Meghalaya has promulgated a mining policy of 2012, which does not deal with rat-hole mining, but on the contrary, deprecates it. It states: “Small and traditional system of mining by local people in their own land shall not be unnecessarily disturbed.”

    • According to experts, no other method would be economically viable in Meghalaya, where the coal seam is extremely thin. Removal of rocks from the hilly terrain and putting up pillars inside the mine to prevent collapse would be costlier.

    • In Jharkhand, for example, the coal layer is extremely thick. So, open-cast mining can be done.



Mining Deaths: Data

  • According to data provided by the Labour and Employment Ministry in the winter session of Lok Sabha, 377 workers involved in mining of coal, minerals and oil were killed in accidents between 2015 and 2017.

  • Of the 377 deaths, 129 occurred in 2017 alone. As many as 145 died in 2016, while the figure was 103 in 2015.

  • Coal mine deaths:
    • Coal mines have accounted for the highest number of casualties due to accidents in mines. Of the 377, more than half, 210, were killed in coal mines.

    • Jharkhand, which recorded 69 deaths in the three years, has accounted for the highest death of coal mine workers in accidents inside mines.

    • Goda in Jharkhand witnessed one of the biggest open cast mine accidents in 2016 when 23 workers died in December that year.



  • Metal mines death:
    • During the period, 152 persons died in accidents in metal mines across the country.

    • Rajasthan, one of highest mineral producing States in the country, accounted for 48 deaths while Andhra Pradesh recorded 29 deaths.



  • Oil mines death:
    • During this period, 15 deaths were reported in oil mines, most of them occurring in Assam and Gujarat.



 

Environment & Ecology

Dec. 17, 2018

Article
17 Dec 2018

LIVING PLANET REPORT 2018

According to the Living Planet Report 2018 released by WWF, Earth is witnessing Great Acceleration, a unique event in Earth’s history characterized by exploding human population and economic growth.

 What is the Living Planet Report?

  • The Living Planet Report is WWF’s flagship publication released every two years.

  • It is a comprehensive study of trends in global biodiversity and the health of the planet.

  • The Living Planet Report 2018 is the 12th edition of the report.

What are the Key findings of the Living Planet Report 2018?

  1. The Great Acceleration:
    1. Since 1950s, we are witnessing Great Acceleration, a unique event in Earth’s history characterized by exploding human population and economic growth. This is leading to increased demand for energy, land and water and interference with Biodiversity.

    2. Due to this, scientists believe that, we are entering Anthropocene, a new geological epoch.



  2. Threats to biodiversity:
    1. The key drivers of biodiversity decline remain overexploitation and agriculture, which are in-turn driven by spiralling human consumption.

    2. Over the past 50 years our Ecological Footprint – one measure of our consumption of natural resources – has increased by about 190%.



  3. Threats and Pressures on Land:
    1. According to the latest Land Degradation and Restoration Assessment (LDRA) released by IPBES in March 2018, only a quarter of land on Earth is substantively free of the impacts of human activities.

    2. Wetlands are the most impacted category, having lost 87% of their extent in modern era.



  4. Soil biodiversity:
    1. The recently published Global Soil Biodiversity Atlas mapped for the first-time potential threats to soil biodiversity across the globe.

    2. The areas with the lowest level of risk are mainly concentrated in the northern part of the northern hemisphere. India, China, several countries in Africa and Europe, and most of North America are faces the highest level of risk to soil biodiversity.



  5. Pollinators:
    1. The majority of flowering plants are pollinated by insects and other animals. Our food production depends heavily upon these pollinators.

    2. But, changing land use due to agricultural intensification and urban expansion is leading to huge pollinator loss.



  6. The Living Planet Index (LPI):
    1. This year’s LPI shows an overall decline of 60% in the population sizes of vertebrates between 1970 and 2014. South and Central America suffered the most dramatic decline (an 89% loss compared to 1970).

    2. In the 20th century, freshwater fish have had the highest extinction rate worldwide among vertebrates.

    3. Almost 20% of the Amazon rainforest has disappeared in just 50 years.



  7. In the last 50 years, global average temperature has risen at 170 times the background rate.

What are the three new indicators included in the report?

  • As measuring biodiversity is complex, so this report also explores three other indicators to complement the Living Planet Index (LPI). These indicators are:
    • Species Habitat Index: tracks changes in species distribution;

    • IUCN Red List Index: tracks extinction risk; and

    • Biodiversity Intactness Index: tracks changes in community composition.



  • All these show the same picture—showing severe declines or changes.

Recommendation:

The report suggests three necessary steps to prevent Biodiversity loss:

  1. Clearly specify the goal for biodiversity recovery,

  2. Develop a set of measurable and relevant indicators of progress, and

  3. Agree a suite of actions that can collectively achieve the goal in the required timeframe.

 

Environment & Ecology

Dec. 14, 2018

Article
14 Dec 2018

STRATEGIC PETROLEUM RESERVES (SPR)

 India’s decision to expand the size of Strategic Petroleum Reserve (SPR) to 87 days’ worth of the country’s net crude oil imports by 2020 is being debated by critiques.

The Government of India is setting Strategic petroleum reserves, which are essentially huge stockpiles of crude oil that would serve as a cushion during any external supply disruptions. What are Strategic Petroleum Reserves?



  • These strategic storages would be in addition to the existing storages of crude oil and petroleum products with the oil companies.

  • Working:
    • In India, these are being constructed near the coastal regions in underground rock caverns (as they are considered the safest means of storing hydrocarbons).

    • Crude oil from these caverns can be supplied to the Refineries either through pipelines or through a combination of pipelines and ships.



Global Scenario:

  • The concept of SPRs were introduced by the International Energy Agency (IEA) in the aftermath of the 1973 oil shock when Arab countries drastically cut production of oil.

  • Subsequently, many major global oil consumers such as the US, China and Japan have built massive strategic reserves of oil over the years.

Indian scenario:

  • ISPRL has constructed three strategic petroleum reserves at Visakhapatnam on the East Coast, and at Mangaluru and Padur (near Udupi) on the West Coast. These facilities, with total capacity of 5.33 million tonnes, can meet 10 days of India’s crude oil requirements.

  • In July 2018, the government approved the construction of two more reserves at Chandikhol in Odisha and Padur in Karnataka, having an aggregate capacity of 6.5 million tonnes. The new facilities can provide additional supply for about 12 days.

  • This year only, the Government of India also announced that it would increase the size of the SPR to 87 days’ worth of the country’s net crude oil imports by 2020.

Criticism:

  1. Globally, there are no perceived shortages envisaged in oil supplies (as there is plenty of oil in the global market), at least in the foreseeable future.

  2. Also, any supply disruption due to any conflict, would not last longer.

  3. Constructing SPRs involves huge capital investment, estimated at Rs. 4098.35 crore for the three original SPR sites alone.

  4. Infact, S. has been debating about reducing its strategic stockpile to half, driven by the shale revolution and the country’s dramatic resurgence as a net oil exporter.

Reasons for enlarging the Indian SPR?

  1. Supply crisis: Notwithstanding the current adequate supply condition, there is little certainty in oil markets. There is a perception that a period of plenty could be followed by a supply crisis. Also, the longevity of shale production is also not certain over the long term.

  2. Price volatility: The issue is not just about availability of oil, but about ‘affordable oil’. g. the world recently witnessed oil price spike due to geo-political standoff (e.g. Iranian sanctions). An expanded SPR would provide some relief from price hikes.

  3. Production manipulation: Price volatility has become a regular feature due to production manipulation by oil producers to protect their market share. E.g. in December 2016 OPEC and non-OPEC producers agreed to curtail production so as to shore up prices.

  4. India’s Oil Dependence: Years of stagnating domestic production and the rising demand for crude (82% of which is imported) is continuously increasing India’s crude oil import bill.

  5. Energy diplomacy: An enlarged SPR can be a key component of India’s energy diplomacy.
    • Countries which cannot afford to maintain SPRs could purchase crude from India in the event of a disruption, which, in turn, could strengthen bilateral relations.

    • India can also provide joint stockpiling opportunities to even producers.g. under an agreement with the UAE’s ADNOC, Two-thirds of the volume at SPR, Mangalore would be available for India, and ADNOC could store the remaining volumes.

    • With India now an associate member of the IEA, it could coordinate with the Agency in times of supply shortages as well as manage demand.



  6. Global Scenario: The global practice is to maintain strategic reserves of at least 90 days of oil imports. Thus, India is on the right path.

In short, Strategic petroleum reserves add a necessary layer to India’s energy security.

Economics

Dec. 12, 2018

Article
12 Dec 2018

INS ARIHANT: ANALYSIS

 India declared that its nuclear triad is operational after indigenous ballistic missile nuclear submarine INS Arihant conducted its first deterrence patrol.

INS Arihant, a 6,000-tonne submarine is the lead ship of India's Arihant class of nuclear-powered ballistic missile submarines built under the Advanced Technology Vessel (ATV) project. About:



  • Power source: INS Arihant is propelled by an 83 MW pressurised light-water reactor at its core with enriched uranium fuel.

  • Builder: Shipbuilding Centre (SBC), Visakhapatnam. It’s India’s first indigenously built nuclear submarine.

  • SSBN: It is a ‘Ship Submersible Ballistic Nuclear Submarine’ (SSBN). SSBN's are those class of submarines which can go deep beneath the ocean making them virtually undetectable for months, they also carry nuclear-tipped ballistic missiles.

  • Armament:
    • It is capable of carrying ballistic missiles with nuclear warheads.

    • It is presently armed with the K-15 Sagarika missiles with a range of 750 km.

    • Later, it will also be armed with K-4 missiles, being developed by the DRDO, which are capable of striking targets at a distance of up to 3,500 km.

    • These 'K' series of missiles are named after former President APJ Abdul Kalam.



 Timeline:

  • 1980s & 1990s: The Advanced Technology Project (ATV) project began in the 1980s, although actual construction started in late

  • 2009: First of the ATV Submarine was Launched by PM Manmohan Singh.

  • 2013: The nuclear reactor of the submarine went ‘critical’.

  • 2016: According to Media Reports, Arihant was quietly commissioned into service in August 2016 by PM Modi but its induction was never officially acknowledged.

  • 2018 (November): INS Arihant conducted its first deterrence patrol. This means that Arihant is now prowling the deep seas carrying ballistic missiles equipped with nuclear warheads.

 What next?

  • Besides INS Arihant, India has plans to build three more similar vessels under the ATV program, two of which will be larger in size and capable of being armed with longer range missiles.

  • The second submarine of its class, INS Arighat, is currently undergoing trials and expected to join service three years from now.

 Significance:

  1. Nuclear triad: With its induction India completed its ‘nuclear triad’ i.e. India can launch nuclear missile from all three key defence bastions — land, air and sea. Triad is important because in an enemy strike, even if the other wings are destroyed, the third can launch a retaliatory strike thus providing a guaranteed ‘second strike’ capability to the country.

  2. Stealth capability: Due to satellites, other legs of our nuclear triad (missile sites and air-bases) remain exposed to enemy attack. However, being a SSBN, it can stay deep inside the ocean making them virtually undetectable for months.

  3. Part of Elite club: INS Arihant places India in the league of select group of five Countries — US, Russia, France, UK and China — which can design, construct and operate Strategic Strike Nuclear Submarines.

  4. Boost to submarine fleet: Adding Arihant is a boost to depleting submarine fleet of India.
    1. In August 2016 it was reported that only seven submarines are available for deployment, though India owns 14 conventional submarines.

    2. Further these submarines have to be split on either coast; are run on either battery or diesel; have already completed a life-span of 20 years or more, on average.



  5. Countering Sino-Pak axis:
    1. In the words of PM Modi, while India “remains committed to the doctrine of Credible Minimum Deterrence and No First Use,” the success of INS Arihant gives a fitting response to those who indulge in ‘Nuclear Blackmail’.

    2. It also comes against the backdrop of news reports of presence of Chinese submarines in the Indian Ocean region.



  6. Indigenous: Apart from its strategic significance, the Arihant is a live manifestation of PM Modi’s “Make in India” vision as It is India’s first indigenously built nuclear submarine.

 Challenges and Way ahead:

However, India cannot afford to rest on its laurels, though. Much more needs to be done to deal with the challenges that lie ahead.

  1. More submarines:
    1. Experts believe that in addition to the 4 large SSBNs, India would require an inventory of at least 3-4 SSBNs to maintain a real sea-based deterrence on the eastern and western seaboards.

    2. India will also need a force of 6 to 8 tactical attack nuclear submarines (SSNs) for protection of SSBNs.



  2. Time Lag: The entire process of developing INS Arihant till completion of deterrence patrol, took about 20 years. It is expected that, based on the experience gained, next lot of nuclear submarines in this important programme shouldn’t take as long.

  3. Enhanced Missile range: To retain its stealth and avoid detection, an SSBN needs to operate from a larger sea area, and hence would need a submarine-launched ballistic missile (SLBM) of 6,000-8,000-km range to counter regional powers.

  4. The command and control structures for an SSBN on a fully-loaded deterrence patrol have to be robust and fool-proof, because any error can lead to mass destruction.

In short, India has a long way to go, though the INS Arihant deterrence patrol is a significant milestone.

Defence & Security

Dec. 11, 2018

Article
11 Dec 2018

OUTREACH PROGRAMME for MSMEs

The Prime Minister Narendra Modi, launched a support and outreach programme for the Ministry of Micro, Small & Medium Enterprises (MSME) sector. Under it 12 key initiatives were unveiled to help the growth of MSMEs across the country. 

There are 5 key categories for facilitating the MSME sector which include: (1) Access to Credit, (2) Access to Market, (3) Technology Upgradation, (4) Ease of Doing Business, and (5) Sense of Security for Employees.About:



  • The 12 initiatives announced will address each of these five categories with special focus on making access to credit easier for MSMEs and reduces their cost of funds.

  • Implementation of this programme will be intensively monitored over the next 100 days.

 

List of initiatives:

Category

List of 12 initiatives

Access to Credit

 

1.       Through 59-minute loan portal, Loans upto Rs. 1 crore to MSMEs can be granted in-principle approval in just 59 minutes. Link to this portal will be made available through the GST portal.

2.       A 2% interest subvention for all GST registered MSMEs has been announced on fresh or incremental loans. For exporters who receive loans in the pre-shipment and post-shipment period, the interest rebate has been increased from 3% to 5%.

3.       All companies with a turnover of more than Rs. 500 crores will be compulsorily brought on the Trade Receivables e-Discounting System (TReDS).

Access to Markets

 

4.       Public sector Undertakings (PSUs) companies will have to compulsorily procure 25%, instead of 20% of their total purchases from MSMEs. Out of the 25%, 3% must now be reserved for women entrepreneurs.

5.       All PSUs of the Union Government (including their vendors) must now compulsorily be a part of Government-e-marketplace (GeM). More than 1.5 lakh suppliers have now registered with GeM, out of which 40,000 are MSMEs.

Technology Upgradation

 

6.       Tool rooms across the country are a vital part of product design. Thus, 20 hubs will be formed across the country, and 100 spokes in the form of tool rooms will be established.

Ease of Doing Business

 

7.       Clusters of pharma MSMEs will be established. 70 % cost of establishing these clusters will be borne by the Union Government.

8.       Government Procedures will be simplified. The return under 8 labour laws and 10 Union regulations must now be filed only once a year.

9.       The establishments to be visited by an Inspector will be decided through a computerised random allotment.

10.   Presently, an entrepreneur needs two clearances namely, environmental clearance and consent for establishing a unit. From now onwards, under air pollution and water pollution laws, now both these have been merged as a single consent.

11.   Under a new Ordinance brought, entrepreneur can correct minor violations under the Companies Act through simple procedures, instead of approaching courts.

Social Security for MSME Sector Employees

12.   A mission will be launched to ensure that they have Jan Dhan Accounts, provident fund and insurance.

 

 

Why the need to boost lending to the MSME sector?

  1. Small businesses had a tough time in the past two years due to the cash crunch caused by the demonetization and the business disruption caused by the launch of

  2. In recent years, Non-Banking Financial Companies (NBFCs) have increased their share of financing MSMEs. However, the fund crunch faced by NBFCs in the aftermath of IL&FS crisis, threatens to cut off credit to a substantial number of MSMEs too.

  3. Boosting MSMEs will help the Indian economy as MSMEs contributes about 30% of the country’s economic output, 40% of total exports and 45% of manufacturing output. About 65 million MSMEs account for about 120 million jobs.

Thus it is an important credit stimulus package for MSMEs.

Critique/Concerns:

  1. The biggest risk of a credit stimulus is the misallocation of productive economic resources.

  2. Public sector banks already have significant NPAs in the MSME sector and a push by the government can increase the risk.
    1. Conceptually, the latest credit scheme is no different from the MUDRA loan scheme,



which has been troubled by soaring bad loans.

  1. In September, former RBI Governor Raghuram Rajan had warned that loans extended under the MUDRA scheme could turn out to be the source of the next financial crisis.

  1. The demand that PSUs must procure a quarter of their inputs from MSMEs could breed further inefficiency in the economy.

  2. Pumping extra credit into MSMEs now may well lead to a temporary boom, but it can lead to a painful bust when the stimulus ends someday.

  3. According to critiques, the recent announcement has political rationales. Politically, the government would like to be seen as supporting MSMEs, as the people engaged in the sector are considered a core constituency of the BJP.

  4. Although government intervention will help the sector, the actual impact for a large number of small firms will remain limited as more than 90% of MSMEs operate in the informal sector who depend informal sources of credit at higher interest rates.

Way ahead:

  1. More lending to MSMEs is all very well, but public sector banks need to ensure better credit assessment so that higher lending now doesn’t translate into NPAs later.

  2. Meanwhile, the government should work to improve the overall regulatory architecture that would incentivize smaller firms to scale up.
    1. Simplification of processes is required so that more firms can access formal finance.

    2. Small businesses also demand access to land at competitive rates, lower power tariff, easier rules for inter-state business and tax breaks. This should be taken care-off.



Economics

Dec. 10, 2018

Article
10 Dec 2018

APPOINTMENT OF ELECTION COMMISSIONERS AND CEC: A DEBATE

 Recently, the Supreme Court found ambiguity in the appointment process of Election Commissioners & CEC and referred the question to a Constitution Bench for a “close look.”

The Supreme Court (SC), in exercise of powers under Article 145(3) of the Constitution, observed that the issue involves a substantial question of law and interpretation of constitution. Thus, it has been referred to a Constitution Bench. Recent Development:

  • The order came on a PIL filed by Anoop Baranwal seeking an “independent mechanism for appointment of Chief Election Commissioner (CEC) and the Election Commissioners (ECs).”

Appointment: Key Facts

  • View of Constitution:
    • The power to appoint the CEC and the ECs lies with the President of India under Article 324(2) of the Constitution, which states that “the President shall fix the number of ECs in a manner he sees fit, subject to the provisions of any law made by Parliament”.

    • Thus, Article 324(2) left it open for the Parliament to legislate on the issue.



  • Procedure: But, in the absence of any Parliamentary law governing the appointment issue, the ECs are appointed by the government of the day, without pursuing any consultation process. There is no concept of collegium and no involvement of the opposition.

  • Tenure: The Commissioners are appointed for a 6-year period, or up to the age of 65 years, whichever is earlier.

    • There are no prescribed qualifications for their appointment, although convention dictates that only senior (serving or retired) civil servants, of the rank of the Cabinet Secretary or Secretary to the GoI or an equivalent rank, will be appointed.


    • The Supreme Court in Bhagwati Prashad Dixit Ghorewala vs Rajiv Gandhi rejected the contention that the CEC should possess qualifications similar to that of a Supreme Court judge, despite being placed on par with them in terms of the removal process.
      Qualification:




Arguments in favour of Status Quo:

Recently, Attorney-General K.K. Venugopal for the Centre gave the following arguments for retaining the current appointment process –

  • Election commission of India (ECI) is “consciously and deliberately” a part of the executive function of the State.

  • The current appointment process has in the past given eminent persons, including T.N. Seshan who have set high standard in terms of Impartiality.

  • At least 15 other top constitutional functionaries, including the Comptroller and Auditor General of India, are appointed by the President acting on the advice of the Union Cabinet. Changing Appointment Procedure for ECI will lead to similar demands.

Arguments in favour of a consultative process:

  • Ensuring Impartiality and preventing executive interference: Over the years, the ECs have occasionally been accused of being committed to the government that appointed them. In one case, even the CEC (N Gopalaswamy) publicly demanded dismissal of his fellow commissioner (Navin Chawla, who was accused of favouring the Congress Party).

  • Like a judge, an election commissioner must not only be fair and just but must be seen to be fair and just. The ECI is responsible for conducting elections which is the bedrock of democracy.

  • Parity with other top Bodies: When the collegium system is considered necessary for Lokpal, NHRC, CIC, CVC and the judges, what is the rationale for leaving out ECI and CAG?

  • Global Scenario: According to Law Commission Report No. 255 on electoral reforms, in most of the countries from Canada to South Africa, the appointment of the Election Commissioners is a consultative process.

  • Legislative loophole: In 2017, Supreme Court observed that it is necessary to “plug the gap in the law” wrt appointment of ECs to ensure the independence of ECI. Even the selection procedure of the CBI Director is formalised by a written law.

  • The Goswami Committee, way back in 1990 recommended the collegium system for appointment of ECs. The same was reiterated in Law Commission report No. 255 (in 2015) with certain modifications.

Recommendations made by Law Commission report No. 255:

  • Make appointment process consultative: The appointment of all the Election Commissioners (including the CEC) should be made by the President on the recommendations of a Committee consisting of the:
    • Prime Minister of India – Chairperson

    • Leader of the Opposition (or leader of largest opposition party) in Lok Sabha – Member

    • Chief Justice of India – Member



  • Seniority principle: The elevation of an Election Commissioner to CEC should be on the basis of seniority.

  • For implementing it, amend the Election Commission (Conditions of Service of Election Commissioners and Transaction of Business) Act, 1991 in accordance with the Article 324(2).

Way ahead: Judicial intervention?

  • Recently, the court had indicated to the government that it may intervene in the issue to achieve the constitutional objective under Article 324 (2) of the Constitution.

  • Those who say the judiciary should not 'overreach' need to remember that 'separation of powers' exists along with another constitutional doctrine of 'checks and balances'.

  • The credibility of the ECI must be protected at all costs, if our democracy has to survive. Thus, if the other two branches of the state fail to act, Judicial intervention is the only option left.

  • Along with the appointment, the system of removal of Election Commissioners also needs review. The protection given to the CEC from removal must extend to all three commissioners.

Polity & Governance

Dec. 7, 2018

Article
07 Dec 2018

BHUTAN ELECTIONS 2018

 Druk Nyamrup Tshogpa (DNT) has emerged the winner in the final round of parliamentary elections in Bhutan, votes for which were cast on October 18.

Recent development: 

  • The DNT won 30 seats in the National Assembly, the 47-seat elected lower House of Bhutan’s Parliament. The Druk Phuensum Tshogpa (DPT) has won 17 seats.

  • Lotay Tshering, a surgeon and urologist by training, is the leader of the DNT, Bhutan’s new ruling party.

 Impact on Bhutan:

  1. Bhutan’s three elections so far have produced three different winners. The DPT won in 2008, and PDP in 2013. This points to a feeling of discontent in a country generally known as a whole for its Gross National Happiness (GNH)

  2. Centre-Left choice: DNT’s slogan, “Narrowing the Gap” between the rich and the poor, has socialist overtones. It struck a chord with the electorate of Bhutan which is witnessing rising inequality in income and access to services like health and education.

  3. Deepening of Democracy: These parliamentary elections were the third since Bhutan transitioned to a constitutional monarchy 10 years ago. Also, 71% of the registered voters voted in Final Round. All this points to healthier democracy.

 Impact on India-Bhutan relations / Challenges for India:

Reports suggest that India was not a factor in the elections this time, but the elections can and will have consequences for Indo-Bhutan relations.

  1. The defeat of the incumbent PDP government, which was seen as being close to India and with whom India successfully managed the Doklam crisis over, may not be comfortable for India. Also, the attitude DNT, formed recently in 2013, towards India is not clear.

  2. The DNT wants to diversify the economy and reduce its reliance on hydropower. 80% of the country’s external public debt (equal to 77% of GDP) stems from loans for hydropower projects, mostly financed by India. India is also the largest buyer of Bhutanese hydropower.

  3. Given that more than 80 % of Bhutan’s total imports and exports are to and from India, self-reliance has emerged as a significant theme in Bhutan in last few years.

  4. Bangladesh, Bhutan India (BBIN) Motor Vehicles Agreement did not figure in the elections, which clearly indicates popular sentiment against the agreement which would have smoothed the motor vehicle movement between the three countries.

  5. In the case of Bhutan, a small state with lack of resources, the challenge lies in balancing the China factor. China does not yet have an embassy in Thimphu, Bhutan’s capital. However earlier this year, China sent a top official to Bhutan to open a diplomatic channel.

  6. Big brother perception:
    1. There have been murmurs in Bhutanese social media over a perceived “Indian veto” on how and to what extent Bhutan should engage with the world.

    2. Also, much has been written about the India factor in Bhutan’s domestic in 2013 elections, although this was not the case this time.



Way ahead for India:

  • In Bhutan, the PM concerns himself with the day-to-day functioning of the country, while the monarchy has the decisive say in matters of national security and foreign policy. It is in India’s interest to have the incoming PM aligned with his predecessor and the monarchy.

  • As Bhutan is planning to diversify its economy, it will therefore be prudent for India to move towards other facets of development cooperation and strengthen the strategic partnership.

  • People of Bhutan are no longer satisfied by the philosophy of “Gross National Happiness” as concrete economic challenges loom. They are looking towards India for enhanced Indian generosity in providing it with development support.

  • This year also marks the 50th anniversary of formal relations between India and Bhutan. It is expected that Prime Minister Narendra Modi will lose no time in visiting Bhutan to consolidate the relationship once the new Prime Minister settles down.

 

International Relations

Dec. 6, 2018

Article
06 Dec 2018

SIKH TAKHTS

A proposal by the Shiromani Akali Dal (SAD) Delhi president for a 6th Sikh takht at Guru Nanak Dev’s birth place in Nankana Sahib in Pakistan has sparked a debate in the Sikh community.

Sikh takhts: An Overview

  • Takht is a Persian word that means imperial throne.

  • Number of Takhts: At present Sikhs recognise five places as takhts (Refer Table below). Apart from Akal Takht, the rest four takhts are linked to Guru Gobind Singh, the tenth Guru.

  • Role of takhts:
    • Takhts are known to issue hukumnamas from time to time on issues that concern the community.

    • Akal Takht is the supreme Takht. So, any order concerning the entire community is issued only from Akal Takht. Also, it is from Akal Takht that Sikhs found to be violating the Sikh code of conduct are awarded religious punishment (declared tankhaiya).



  • Governance:
    • The three takhts in Punjab are directly controlled by the Shiromani Gurdwara Parbandhak Committee (SGPC), which is dominated by Shiromani Akali Dal (SAD) party.

    • The two takhts outside Punjab have their own trusts and boards.



List of Sikh Takhts:

 

Name

Location

Religious significance

1

Akal Takht

Amritsar, Punjab

 

Akal Takht is considered supreme among the five.

It is the oldest of the takhts. It was set up in 1606 by Guru Hargobind.

It houses the Guru Granth Sahib.

2

Takht Keshgarh Sahib

Anandpur Sahib, Punjab

It was here that Guru Gobind Singh raised Khalsa, the initiated Sikh warriors, in 1699.

3

Takht Damdama Sahib

Talwandi Sabo, Punjab

Guru Gobind Singh spent several months in Damdama Sahib.

It was the last one to be recognised as a takht, through a resolution of the SGPC in 1966, after Punjab became a separate state.

4

Takht Patna Sahib

Bihar

Patna Sahib is the birthplace Guru Gobind Singh.

5

Takht Hazur Sahib

Nanded, Maharashtra

Guru Gobind Singh spent his final days in Hazur Sahib, where he was cremated in 1708.

 

Proposal on declaring a new takht at Nankana Sahib:

  • In November 2018, a gathering of Sikh devotees at Nankana Sahib in Pakistan adopted a proposal presented by Shiromani Akali Dal (Delhi) president Paramjit Singh Sarna to declare Guru Nanak Dev’s birth place as the sixth Takht of Sikhs.

  • Arguments against it:
    • It’s location in Pakistan has led to questions being raised about its independence, as gurdwaras across the border are not controlled by the community as is the practice in India, but by a department of the government called Evacuee Trust Board.

    • Even gurdwaras are not independent in Pakistan. So, how can a takht be independent there?



  • Way ahead: As this issue relates to the entire community, the proposal has to be deliberated upon by the head priests of the five takhts.

https://indianexpress.com/article/explained/sikh-takhts-debate-proposal-nankana-sahib-guru-nanak-shiromani-akali-dal-5480414/

History & Culture

Article
06 Dec 2018

GLOBAL CLIMATE RISK INDEX 2019

Germanwatch has developed Global Climate Risk Index (CRI) 2019 which analyses impacts of extreme weather events, in terms of fatalities and economic losses.

About the Index:

  • The Global Climate Risk Index 2019 analyses to what extent countries and regions have been affected by impacts of weather-related loss events (storms, floods, heat waves etc.) in last 20 years.

  • The 2019 Index is the 14th edition of the annual analysis. For this, the most recent data available — for 2017 and from 1998 to 2017 — were taken into account.

  • Methodology: It analyses quantified impacts of extreme weather events, in terms of fatalities and economic losses. It accounts for these impacts in absolute as well as relative terms.

  • Developed by: The index is prepared by Germanwatch, an independent development organisation.

Key Findings:

  • Countries most affected: The countries affected most in 2017 were Puerto Rico, Sri Lanka as well as Dominica. For the period from 1998 to 2017 Puerto Rico, Honduras and Myanmar rank highest.

  • Loss: Altogether, more than 526 000 people died as a direct result of more than 11,500 extreme weather events; and losses between 1998 and 2017 amounted to around US$ 3.47 trillion (in Purchasing Power Parities).

  • India and its neighbours: Neighbours are worse hit than India. Myanmar is at rank 3, Bangladesh at 7, Pakistan at 8 and Nepal at 11 and India at 14 for the year 2017.

  • Of the ten most affected countries and territories (1998–2017), eight were developing countries in the low income or lower-middle income country group. This reconfirms earlier results that less developed countries are generally more affected than industrialised countries.

Link between climate change and extreme weather events

  • Climate change-related impacts stemming from extreme events such as heat waves, extreme precipitation and coastal flooding can already be observed as the Fifth Assessment Report of the 2014 IPCC stresses.

  • Due to climate change, extreme events will become more frequent or more severe in future.

  • Way ahead: Therefore, effective climate change mitigation is in the self-interest of all countries worldwide. Countries should adopt the 'rulebook' needed for implementing the Paris Agreement, including the global adaptation goal and adaptation communication guidelines

https://indianexpress.com/article/explained/explained-snippets-extreme-weather-report-neighbours-worse-hit-than-india-kilkenny-cats-5480432/

 

Environment & Ecology
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